So, you have an insurance policy, or are thinking about getting some, but all the jargon and technical words are confusing. This may make you feel like the insurance company uses them so that they can get out of paying you when a claim arises.
Here is a list of the TOP 5 common jargon terms that are used in insurance and what they mean.
Trauma insurance: This can create confusion as different companies use different terms for the same product (Living Assurance, Critical Condition, Trauma Cover). It is essentially for Critical sickness or a Severe injury. Think Stroke, Heart Attack, Cancer (for illness), and Loss of limbs (or the use of limbs), Blindness and Severe burns (for injury). There are up to 63 different events that can trigger a claim (with good companies).
Standalone cover and Accelerated cover: This can also cause confusion, especially at claim time. Standalone cover means (if you have Trauma cover) it is an individual policy and not linked to your Life cover. So if you need to claim you receive the amount stated in the policy and it DOES NOT affect your Life insurance. Accelerated on the other hand, means that if you claim on the Trauma cover, the amount you receive is taken away from the Life cover (as they are linked together). When Trauma cover is accelerated it is cheaper because of this reason.
Reinstatement or Buy back option: This means if you claim on the Trauma cover, and you have this option then after 1 year the amount you used will be reinstated back to the original sum. If it has affected the Life cover and this option is in place then the Life cover will also be reinstated. This means you can double dip (but not usually for the same event, however different companies have different wordings).
Waiting period: This will apply to your Income cover, and usually with Trauma and Health products as well. With Income cover it means that you need to wait for the period that you chose before you receive payment. This doesn’t mean the insurance company will back pay on the period you waited (this is a common misconception). With Trauma cover there is generally a 3 month waiting period from receiving cover before a claim can be made, however, if you’ve moved from a Trauma product to another Trauma product then this is usually waived. With health cover Doctors and Prescriptions usually have a 90 day wait period for making a claim, but Surgical and Specialist & Test covers don’t.
Offsets: This may be complicated as the product you have may vary considerably to other products on the market. BUT offsets are what Insurance Companies take into consideration when paying out on a claim (this does not affect Life or Trauma cover). Offsets are usually for income protection, and are the “other” sources of income that you may be receiving while on claim. In New Zealand this could be ACC (if its an accident), rental income you are receiving while on claim, or other insurance products you may be claiming on at the time e.g. Household expenses cover, Business expenses cover. These are taken into consideration by Insurance Companies before a claim is paid, and will “OFFSET” the amount you receive.
This may seem like a lot of information to digest. If you still don’t understand please contact me for further explanation, or to answer any questions you may have at any time.
