5 insurance terms you need to know (part 2)

Insurance may seem complicated at first but when you really delve into it, you’ll realize that it’s pretty straightforward.

A lack of understanding of insurance can put people off into getting one. An Asian Development Bank blog story that talks about why people don’t buy life insurance in Asia says that despite the fact that “many among the middle-class can afford health insurance, they choose not to buy it. What they don’t realize is that a major injury or illness can cost far more than they think.”

Don’t be part of the uninsured! Life is hard enough as it is—you want to be prepared for uncertain times and secure your future. In a previous article, , we discussed insurance terms people frequently encounter. Here, we explain five more commonly used insurance terms that’ll help you understand insurance plans better and, hopefully, get you to realize their importance and usefulness.

1. Insured

This is the person whose life is covered by the insurance plan. Should this person die or get diagnosed with critical illness, a cash benefit will be given to his or her chosen beneficiary. This is one of the best ways to make sure the family’s financial future is taken care of.

2. Owner/payor

The owner/payor of the insurance plan is the one who purchased or is paying for the plan. Most of the time, the owner and insured are the same. But there are also times when they are two different people.

3. Coverage period

This is the amount of years or period of time that you are covered by the insurance plan. Outside of this period, you will no longer be covered.

4. Pre-existing condition

This is a health condition or problem that you were diagnosed with, or are being treated for, before you purchased the plan. Examples of this are asthma, diabetes, allergies, etc. Pre-existing conditions could impact your claims in the future so make sure you declare all of them.

5. Rider/add-on

A rider/add-on is a feature or product that you have added to your plan, usually a benefit or feature that’s not in the original plan offered. Riders allow people to customize their plans according to their own needs. FWD Life Insurance, for instance, has add-ons that provide protection against critical illness and accident. There’s also a waiver of premium riders for both the owner and the insured.

Note that these explanations are general. Find what insurance plan suits you best by consulting an FWD financial advisor by clicking here. After a session with an expert, you may find that what would help you to achieve your goals is an investment-linked insurance plan like FWD Set for Life. Or, assuming you have reached financial security, what you may want is to make sure your heirs do so too. If you want to protect your wealth, family, and legacy, FWD Set for Tomorrow—Estate Protector Life Insurance may be the best plan for you.

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