Common Insurance-Related Terms You Need to Know

Like in any industry, the world of insurance uses its own jargon. They have it for a practical reason, since it makes it easy for professionals in that industry to understand each other. This doesn't make it any easier for you to understand! Some terms tend to confuse, and sometimes even deter you altogether from pushing through with their insurance application.

Here at Rate Detective, our goal is to help make it easy for regular people like you to apply for insurance. That is why we are going to share with you some of the most common insurance-related terms and what they mean. That way, you will be able to easily understand what these terms are and be able to quickly make a decision if a policy is for you or not.

  1. Occupational hazard.This refers to the risks and dangers associated with certain types of jobs, hobbies, and activities.

    Why you need to know this: some insurance companies might refuse to cover you if you have a high-risk job or hobby, such as covering news in war zones, or sky diving. Meanwhile, those companies that would opt to insure you would likely charge you higher premiums due to occupational hazards associated with your work.

  2. Pre-existing condition.Basically, a pre-existing condition is an illness or condition that you already have or had before getting insured.

    Why you need to know this: different insurance companies have different policies on this. Some may refuse to cover a particular condition altogether, while others could provide coverage granted that it has been treated and/or that treatments have already stopped.

  3. Stepped/Level premium. These options are usually used in risk insurance. Stepped premiums change every time you renew your insurance, while level premiums don't.

Why you need to know this: this is important when deciding which one is the best option for you. Stepped premiums can cost higher than level ones, but there's always the potential for you to pay lower premiums in the long run. For example, you might pay higher premiums while you're working as a miner in an isolated location, which could then be reduced once you take on a job at the head office of that miner. Meanwhile, you would be paying the same amount regardless of the position you hold when you choose to pay level premiums.

These are just some of the most common terms used in the insurance industry. If you have more questions about getting the type of insurance that's right for you, consult the consultants at Rate Detective. They will provide you with advice as well as a comparison of quotes of Australia's top 9 insurance companies.

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Published on October 10-th, 2012 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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