Understanding insurance can feel overwhelming, especially with all the industry-specific jargon. However, knowing a few key terms can help you make informed decisions and get the most out of your policy. Below, we’ll break down essential insurance terms in simple language.

1. Premiums

The premium is the amount you pay to the insurance company for your coverage. This can be paid monthly, quarterly, or annually, depending on your policy. Think of it as a subscription fee for the protection your insurance offers.

Example: If you have car insurance with an annual premium of Ksh60,000, you’ll need to pay Ksh60,000 each year to keep your coverage active.

2. Deductibles

A deductible is the amount you agree to pay out-of-pocket before your insurance starts covering costs. Higher deductibles often result in lower premiums, but they mean you’ll pay more upfront if something happens.

Example: If your health insurance has a Ksh50,000 deductibles, you’ll need to pay the first Ksh50,000 of your medical bills before the insurance kicks in.

3. Coverage

Coverage refers to the specific risks or losses your insurance policy protects against. Each policy outlines what is included, such as medical expenses, vehicle repairs, or home damage. The broader the coverage, the more situations it can help you with.

Example: A comprehensive auto insurance policy might cover theft, vandalism, accidents, and natural disasters, while basic liability insurance might only cover damage to other people’s property e.g. Third Party Liability Cover.

4. Exclusions

Exclusions are the things your policy does not cover. These are clearly stated in the policy document and are crucial to understand so you’re not caught off guard.

Example: A travel insurance policy might exclude coverage for pre-existing conditions and also injuries resulting from high-risk activities like bungee jumping or skiing.

5. Riders

Riders, also known as endorsements, are optional add-ons to an insurance policy that provide extra coverage at an additional premium. They allow policyholders to customize their coverage to suit their specific needs.

Example: if you have a group life policy can include a last expense rider, also if you do have a medical policy can have a personal accident rider

6. Copay
A copay is the fixed amount or percentage you are required to pay out of pocket for certain services or claims under your policy. These details are clearly stated in the policy document and are crucial to understand so you’re not caught off guard. The purpose of a copay in medical insurance is to share costs between the insured and the insurer, making healthcare more affordable while discouraging unnecessary use of services. It provides predictable out-of-pocket expenses for specific treatments, encourages preventive care, and helps balance financial risks for the insurance provider.

Example: A medical insurance policy might require a copay for doctor visits or prescription medications, where you pay a set amount, and the insurer covers the rest.

7.Waiting Periods
A waiting period in insurance is the time you must wait after purchasing a policy before you can make a claim. It helps insurers prevent fraud, manage risks, and ensure long-term policy commitment. Common in health, life, and critical illness insurance, it applies to pre-existing conditions, maternity benefits, and specific exclusions.

Why These Terms Matter

Understanding these terms is vital because they define the scope and cost of your insurance. Knowing what your policy covers and excludes, as well as how deductibles and premiums work, ensures that you can choose the right plan and avoid surprises when filing a claim.

Quick Tips for Policyholders

• Read the Fine Print: Always review your policy documents carefully to understand coverage and exclusions.
• Compare Policies: Look at different options to find one that offers the best balance of premiums, deductibles, and coverage, consult your broker on this to get comprehensive comparisons.
• Ask Questions: If something isn’t clear, reach out to your insurance broker for clarification.

Insurance doesn’t have to be confusing. By familiarizing yourself with these key terms, you’re better equipped to choose policies that meet your needs and provide peace of mind.

Contact Us Today!
If you need help understanding these terms or have any questions about your insurance coverage, we’re here to assist you. Contact Hillspan Insurance Brokers today via email at info@hillspangroup.com or by phone at +254 709 075 500 / +254 769 487 794 for personalized assistance!