Since there are so many different types of insurance available in Canada, it can be tough to figure out which kind you actually need, especially if you don’t know all the right lingo. Even basic insurance terminology can sound pretty confusing when someone tries to explain a particular product, service, or feature aloud.
If you’re thinking about purchasing insurance but are thrown off by the complicated financial language that’s involved, don’t worry, because we’ve compiled a list of 14 simple insurance terms that can help you make the right choice.
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Your premium is the fee your insurance provider charges in exchange for coverage. Every provider offers different policy and payment options. Depending on what type of insurance you’re looking to buy, an algorithm is often used to tabulate which policy and premium you’re eligible for. That algorithm can be affected by factors like:
A deductible is what you pay after you’ve filed an insurance claim. If you’re covered, the deductible amount is usually a portion of the overall cost required to resolve the issue. For example, if you get in a car accident that wasn’t your fault, your vehicle insurance provider should cover most, if not all of the final cost of any repairs.
However, if the collision was your fault or the damage was caused by factors that are beyond anyone’s control, like poor road conditions, you may have to pay a deductible that’s based on the value of the issue that’s being insured. Plus, if you are held responsible for an accident, your future premium and deductible amount may increase.
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Like its title suggests, a beneficiary is someone who stands to benefit from an insurance policy once it’s been claimed. This could be you, as would be the case with certain types of car, home, or medical insurance. It could also be your spouse, children, or other family members after you die and your life insurance is paid out.
As mentioned, a claim occurs when you file for insurance coverage following some type of incident. For instance, if you bought travel insurance and get injured in a foreign country, you can claim any required medical costs on your insurance, such as ambulance rides and professional care (as long as you have adequate coverage).
Remember, if you need to insure a home in an area that’s prone to natural disasters or other negative occurrences, you may be subject to higher premiums. That said, a peril relates to any force or event that can cause damage to the thing or person you’re trying to insure, including your vehicle, personal possessions or yourself.
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The policyholder is the person that purchases an insurance policy. However, the term doesn’t necessarily refer to the person or property that’s “insured”. While the insurance package may be in your name, the policy itself may provide coverage for someone or something else, like your personal property or beneficiaries. Then again, if you’re the policyholder for a car insurance policy, you may be listed as the insured.
When an insured property is damaged in some way, it’s known as a loss. If your loss is “covered” by your policy, it means your insurance provider will protect you financially until the issue is resolved. Sadly, the opposite goes for any losses that aren’t covered. For example, if you willingly bought a home in an area with a high potential for earthquakes, you may not be fully covered when one wrecks your property.
The insurance or claims adjuster is the person who investigates the circumstances of the incident that led you to file a claim, then determines who is liable and whether or not you’re eligible for coverage. Like a detective, common tasks performed by an insurance adjuster include interviewing claimants and witnesses, inspecting damages to a person or property, and looking into any police or hospital records.
Similar to a peril, risk refers to the chance of something unpredictable or harmful happening to the insured person or property. Common risks that insurance providers must assess include losses, damages, injuries and other health issues. For example, if you’re a habitual smoker, your provider will perceive this as a medical risk and may charge you a higher premium than someone with better health would receive.
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A declarations page is a summary of any essential details of a particular insurance policy, including but not limited to the policyholder’s:
Typically, insurance brokers have a distribution agreement with several insurance providers, which allows them to compare different policies and rates, then offer the best one(s) for your situation. Due to the administrative work involved, insurance brokers may earn commission fees for referring customers to those providers and policies.
Unlike a broker, an insurance agent works directly for a single provider. While they may not get the same type of commission fees, they’ll receive a fixed salary and could earn bonuses for completing a certain number of sales. So, even though a broker can help you locate the best policies and rates, an agent may allow you to save on service fees.
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Found on a declaration page, an insurance limit refers to the maximum amount of coverage a policyholder can get during a claim and is predetermined before the policy is activated. For instance, most travel insurance policies can cover you for several hundred thousand dollars worth of medical costs, stolen items, or other incidents.
This type of coverage relates to the cost required to replace a property, without deducting value depreciation from regular use or wear n’ tear. So, if your car gets destroyed beyond repair after a collision, your insurance coverage may be adequate enough to replace it with an identical model or a vehicle of equal value.
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| Type of Life Insurance | Availability | Number of Partners | |
 | - Term life insurance - Permanent life insurance | - | - |
 | - Term life insurance - Critical illness insurance | BC, AB, SK, MB, ON, NS, PEI, YT, NWT, NT | - |
 | - Term life insurance - Whole life insurance - Disability life insurance - Critical illness life insurance - No medical life insurance | ON | 16 |
 | - Term life insurance - Permanent life insurance - Critical illness life insurance | BC, AB, SK, MB, ON, NB, NS | 50+ |
 | - Term life insurance - Permanent life insurance | All of Canada | 30+ |
Although the above terminology can relate to almost any kind of insurance, there may be a few terms that you’ll only encounter with specific insurance types, such as:
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No matter what kind of insurance policy you want or which broker/provider you’re buying it from, it’s always a smart idea to brush up on the relevant terminology before applying. After all, the more you understand about a particular kind of insurance, the easier it will be to find the best providers, policies and premiums for your financial situation.
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Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.
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