There are different kinds of insurance that are peddled around for people to buy and benefit from. However, there are basically three kinds of insurance that seek to indemnify the insured. To indemnify means to reinstate a person to its former position or to make whole or complete again. Hence, these three types of insurance policies that seek to indemnify a person have, as their primary purpose, the reinstatement or the making whole again of a property after the occurrence of a peril or a specific event. These three types of insurance that are designed to indemnify an insured are: “reimbursement” policies; “on behalf of” policies; and “indemnification” policies. In these types of insurance, the usual outcomes are the same—the companies or the insurers often pay the damage and the concomitant expenses.
Reimbursement policies usually require the insured to pay for the loss or the fixing of the damages. However, the insured can readily reimbursed the expenses he/she has incurred from the insurance company. This reimbursement may include claim expenses. Many types of insurance make use of the reimbursement policy. Likewise, many policyholders avail of insurance that entails reimbursement policy.
Some types of insurance, which seek to indemnify, make use of “on behalf of” policy. This type of indemnification policy requires the insurance carrier to defend and normally pay the specific claim on behalf of the policyholder. Many of modern insurance operate on “on behalf of” policy.
Lastly, there is what we call the “indemnification” policy. Under the “indemnification” policy, the insurer has the option of either utilizing the “on behalf of” policy or the reimbursement policy. The insurer readily selects the most beneficial to the insured, as well as the most advantageous the insurer.
What are Premiums, Deferred Period, and Benefit Limits?
When we apply for an insurance coverage, say for instance, an Income Protection Insurance, we would usually encounter terms such as premiums, deferred period, and benefit limits. These common insurance terms are quite foreign to most of us at the onset of our orientation about the insurance policy. The premium, which is commonly used in insurance policy, refers to the specific amount of money paid on a regular basis by the insured as stipulated in the insurance policy. It is a fixed amount paid by the insured for the guarantee provided by the insurance company that any economic loss incurred under the stipulation of the agreement would be shouldered by the insurance company.
Deferred period, on the one hand, is the specified time between the filing of a valid claim and the start of the payments of benefits. This deferred period, in a way, determines and influences the amount of benefits that a policyholder will receive.
The benefit limits, on the other hand, is the percentage limit that one will receive as in the case of an Income Protection Insurance (IPI). In the case of IPI, the limit usually is around 70% or above 50% of the total income of the policyholder. If you want to know more about IPI, say for instance, in Australia, you can readily review income protection Australia to thoroughly understand this insurance policy.