Without a doubt, health and medical insurance have become part and parcel in human life. When your insurer provided you with the policy document, all you do is look over the decorated words in the policy and pile it up with another bunch of financial papers on your desk, right?
If you spend thousands of ringgits each year on 36 critical illnesses, don’t you think that you should know more about it? Nevertheless, your insurance advisors will always there for you in helping you to understand the complicated terms in the insurance forums. Still, you should know for yourself about what stated in your contract policy.
In this article, you will able to comprehend the insurance contract easily, so you will understand the basic principle in online life insurance and how they are put to use in your daily life. Check out Allianz Malaysia to find out more.
Insurance Contract Essentials
Offer & Acceptance
When you are applying for investment-linked insurance, the first thing that you should do is get the proposal form of a specific insurance company. After filling in the requested details, you could send the form to the company.
If your insurance company is agreeing to ensure you, this is called acceptance. In some cases, your insurer might decide to accept your offer after making the changes to your proposed terms.
Generally, this is the premium or the future premiums that you need to pay to the insurance company. For insurers, the consideration also could mean the paid-out money from your insurance claim.
In other words, each party to the contract should provide some value to the relationship.
Next, you need to be legally competent to enter into an agreement with your insurer. If you are minor or in the state of unsound minded, you are not qualified to make any contracts on the house insurance or any other insurances.
Similarly, the insurer is considered to be competent if they are licensed under the prevailing regulations that govern upon them.
· Legal Purpose
If the objective of your contract is to encourage any illegal activities, it is considered to be void.
· Contract Values
You should know that most of the insurance contracts are indemnity insurance contracts. Indemnity contracts apply to the insurance where the loss suffered could be measured in term of money.
Principle of Indemnity
This means that insurers pay no more than the actual loss suffered. The sole objective of the insurance contract is to leave you in the same financial position you were in immediately before the incident leading to an insurance claim.
When your car is stolen, you should not expect your insurer to replace it with a brand-new car. In other words, you will be remunerated by the car insurance according to the total sum you have assured for the car.
There are some variable factors of your insurance contract that could create a situation in which the full value of an insured asset is not remunerated.
If you want to save on premiums, you may insure your house at $70,000 when the total value of the home could be around $90,000. At the time of partial loss, your insurer will have to pay only a proportion of $80,000 while you have to dig into your savings to cover the remaining portion of the loss.
This is the amount that you pay in out-of-pocket expenses before your insurer covers the remaining costs. Therefore, if the deductible is $6,000 and the total insured loss comes to $14,000, your insurance company will have to pay only $8,000.
Nevertheless, not all insurance contracts are indemnity contracts. Family travel insurance contracts and most life insurance contracts are non-indemnity contracts. You may purchase life insurance for $2 million, but that does not mean the value of your life is equal to this amount. This is why the indemnity contract does not apply to it.