Insurance Jargon Made Simple

In the course of our work, as Financial Advisers we are required to understand and use hundreds of different words that you might think of as “jargon”. We can see our clients’ eyes glaze over when they don’t understand what we’re saying. But, how are you supposed to know what it all means?

Simple, You can’t!  Most Financial Advisers have many years experience in their field and know the terminology like the back of their hand. But we don’t expect you to. (Of course, if you are keen you can visit www.lloyds.com/common/help/glossary and read the 317 pages of words for yourself!)
We want you to understand exactly what you are signing up for, what benefits the insurance policy we are recommending has over others and why it will be the best for you. And we will explain it to you in language that you can understand. But here are a few terms that are commonly used which you may wish to know about.
Indemnity – when a person who has suffered a loss is restored to the same financial position they were in before the loss. Most insurance contracts are contracts of indemnity except life and personal accident insurances.
Underwrite – this has two meanings. It could be the process of evaluating and pricing insurance, or it could be the acceptance of the obligation to pay or indemnify (see above) the insured (that’s you).
Reinsurance – this is a contract under which specified types and amounts of underwriting loss incurred by an insurer are paid for in return for a premium.
Replacement – where an insurer agrees to replace irreparably damaged or stolen goods with those of a similar type and quality under a contract of indemnity (see above) instead of paying a cash sum.
Sum insured – this is the maximum amount that an insurer will pay under a contract of insurance. It is usually used in relation to property and life insurance.
 

© KEPA 2015

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