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Business News/ Insurance / From premiums to claims process: Decoding key terms in insurance policies | 8 points
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From premiums to claims process: Decoding key terms in insurance policies | 8 points

Before investing in insurance, understanding key terms like premiums, deductibles, and coverage limits is crucial

The financial side of insurance involves premiums and deductibles. Premium
The financial side of insurance involves premiums and deductibles.

You might be planning to invest in insurance, but reading the terms and conditions diligently can be an overwhelming experience. Before investing in an insurance policy, it is paramount to understand the fundamental terminology. Before you invest in an insurance policy, it's essential to understand the basic terminology for better coverage comprehension. Understanding terms like premiums, deductibles, coverage limits, and policy riders is essential for better usage of insurance policies.

In an interview with Mint,  Sharad Bajaj, COO, ofInsuranceDekho discussed the key components of insurance

1) Policy Terms and Conditions

Understanding both what is covered (inclusions) and what is not (exclusions), as well as any limitations or restrictions, helps avoid surprises when filing a claim.

2)Premiums 

The financial side of insurance involves premiums and deductibles. Premiums, determined by assessing risk and coverage, determine the insurance cost.

3) Deductibles

Deductibles are the amount the policyholder must pay out of pocket before insurance starts. It directly impacts out-of-pocket expenses and monthly premiums.

4)Coverage Limits

Each insurance policy has coverage limits, which represent the maximum amount the insurer will pay for a covered loss. It's essential to comprehend these limits to prevent being underinsured and experiencing financial strain during a substantial loss.

6) Policy Riders and Endorsements

Policy riders and endorsements provide flexibility, which is crucial in insurance. These optional additions enable policyholders to customize their coverage to better suit their needs, whether by adding protection for specific risks or enhancing existing coverage.

7) Claims Process

Submitting an insurance claim can feel overwhelming, especially when facing difficult circumstances. Familiarising oneself with the claims process, including documentation needs and resolution timelines, can simplify the process and ensure a smoother experience during challenging times.

8) Renewal and Cancellation

Insurance isn't a one-time thing; it's ongoing. Understanding how to renew or cancel policies is crucial. Being aware of renewal deadlines, premium adjustments, and any terms that impact policy continuation or termination is essential for continuous coverage.

Understanding insurance rules and regulations may appear daunting, but unraveling its complexities is not impossible. It's always recommended to carefully read and understand all terms and conditions.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.

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ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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Published: 03 Apr 2024, 02:35 PM IST
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