One of the keys to finding the right income insurance is learning some of the basic terms that many companies use to describe their polices and rules for claims and payouts of benefits. Like many of you in the medical profession, insurance companies, agents and brokers have their own jargon that they use with each other to explain their more concrete points.
Do you think you understand this jargon? You might be surprised – and learning these terms and their definitions can assist you in making the right decision on the type of income insurance policy you buy.
We’re starting a short series about some of these terms and how they’re defined by insurance companies.
This is defined as an unintentional or unforeseen event that results in an injury, or an injury caused by an “accidental” event. Getting injured walking on a sidewalk may be considered an accident, but injury while skydiving may not be; the parachute not opening is an event that may not be intentional, but it could be predicted, and thus a claim may be denied.
Accidental Death Benefit: Some income insurance policies have this, which is an amount paid out when an insured person dies from injuries suffered by an accident. However, if the cause of death cannot be definitively determined, the insurance company may have a right to ask for an autopsy before paying out benefits.
Benefit Limit: The benefit limit is a ceiling of payout to prevent over insurance. Insurance is meant to make a person whole, not give an excess due to a loss. Income insurance usually has a benefit limit that is 60-70 percent of the insured’s gross earned income – which tends to be very close to the net income after taxes and other withholding.
Benefit Period: This is the maximum period of time that benefits would be paid, provided the insured is totally disabled during that period. These periods can be one year, two years, five years or up to age 65. The longer the benefit period, the higher the insurance premium will be.