Discover a clear glossary of insurance terms, including cash value, pre-existing condition, premium holiday, and more.
When purchasing an insurance policy, you’ll often come across the terms "insured" and "policyholder." Although they may sound similar, each plays a different role in an insurance contract. Understanding who the insured is is essential so you can choose coverage that fits your needs.
So, what exactly does "insured" mean in insurance? What are their roles and rights? Here’s a complete explanation.
In insurance, the insured is the party who receives protection or benefits from the insurance policy. If a covered risk occurs—such as an accident, illness, or asset damage—the insured has the right to file a claim and receive benefits according to the agreed terms.
In general, the insured can be an individual or a legal entity, depending on the type of insurance purchased. For example, in life insurance, the insured is the person whose life is covered. In vehicle insurance, the insured is the vehicle listed in the policy.
Who can be the insured in an insurance policy? This depends on the type of insurance. For life insurance, the insured is usually the policyholder themselves or a registered family member. For property or vehicle insurance, the insured is the asset being protected as stated in the policy.
Having a good understanding of insurance terminology is crucial before choosing a product, so you won’t get confused when reading the policy.
To make it clearer, here are some examples of their differences:
In Life Insurance
A father buys life insurance for himself. In this case, he is both the policyholder and the insured. However, if he buys life insurance for his child, he becomes the policyholder, while his child is the insured.
In Vehicle Insurance
A business owner buys vehicle insurance for the company’s operational car. The owner is the policyholder, while the vehicle is the insured.
In Health Insurance
An employee receives health insurance from their workplace. In this case, the company acts as the policyholder, while the employee is the insured.
Understanding this difference makes it easier to identify your role in your insurance policy.
Understanding both aspects is crucial to ensure insurance protection works as it should and avoids issues during claim submissions.
As the insured, you have several rights that the insurance company must fulfill, including:
Right to insurance protection: Once the policy is approved and the premium is paid, you are entitled to protection according to the terms in the policy.
Right to clear information: You are entitled to complete information regarding policy terms, including coverage, exclusions, and claim procedures.
Right to file a claim: If a covered risk occurs, you have the right to file a claim with the insurance company. The claim must follow the applicable procedures to be accepted.
Right to fair service: The insurer must provide professional and transparent service, including during the underwriting process which determines whether a risk is insurable.
Right to cancel or modify the policy: The insured may request to cancel or change the policy—such as increasing or reducing benefits—as long as it complies with the applicable terms.
To enjoy these rights without issues, certain obligations must be fulfilled:
Pay premiums on time: If the insured is also the policyholder, they must pay premiums as scheduled. Late or missed payments may cause the policy to lapse, voiding the coverage.
Provide honest and accurate data: When applying for insurance, you must submit truthful and complete information, such as your health condition for life insurance or usage history for car insurance.
Understand and comply with policy terms: The insured must understand the entire policy, including covered and excluded risks, to avoid misunderstandings during claim submission.
Submit claims with complete documents: To ensure smooth claim processing, you must provide all required documents—such as damage reports, medical statements, or other necessary certificates.
By understanding these rights and obligations, you can ensure your insurance protection provides maximum benefits when needed.
Each type of insurance offers different protections depending on your needs and the risks you want to cover. Here are some common types of insurance coverage:
Life Insurance Coverage
Life insurance provides financial benefits to beneficiaries if the insured passes away. This policy helps the surviving family maintain financial stability. Benefits may include lump-sum payments or additional benefits such as investment components in unit-linked insurance products.
Health Insurance Coverage
Health insurance protects you from financial risks due to medical expenses, hospitalization, or other treatments. It may cover doctor consultations, medications, and surgeries. Some insurers also offer indemnity-based coverage, where reimbursements are made according to actual medical bills.
Vehicle Insurance Coverage
If you own a vehicle, vehicle insurance can protect you from damage, theft, or accidents. There are two main types:
All Risk Insurance: Covers various types of damage, from minor to major.
Total Loss Only (TLO): Covers losses only if the vehicle is stolen or damaged beyond 75% of its value.
Property Insurance Coverage
Property insurance protects against damage or loss of homes, buildings, or other assets due to natural disasters, fires, or theft. Some policies even cover valuable items inside the property.
By understanding these types of coverage, you can choose the insurance that best fits your needs and ensure your assets are well protected.
Understanding the role of the insured in insurance is a vital step before purchasing a policy, so you can choose the most suitable product for your needs.
Always read the policy carefully and ensure you understand all its terms. If you’re still unsure, consult with your insurance provider to avoid future misunderstandings. Visit roojai.co.id if you want to learn more about insurance.