Get a free, no obligation personal loan quote with rates as low as 6.99%
Get Started You can apply with no effect to your credit score

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.

Check out these undervalued forms of insurance.

Common Insurance Terms You Should Know

Premium 

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:

  • Age – Some types of insurance have higher premiums if you’re younger or older. For example, car insurance can be pricier if you’re under a certain age (25 – 30). 
  • Gender – According to some providers, women have longer life expectancies than men, who can be more prone to accidents and general health problems.
  • Health – This is an important factor for life insurance. For instance, if you’re a smoker or have pre-existing medical conditions, you may be subject to higher premiums.
  • Car Model – Car insurance premiums can be lower if your vehicle has been statistically proven to be safe on the road or has less chance of being stolen.  
  • Living Conditions – Home insurance premiums can increase if you live somewhere with a high rate of natural disasters, such as earthquakes.
Square One insurance

Deductible

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. 

Check out if your car insurance covers your friend driving your car

Beneficiary

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.

Claim

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). 

Perils

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. 

Do you own rental property? Then you should consider buying landlord insurance.

Loss

Thinking of switching your home insurance provider? Check out how to cancel your home insurance policy

Policyholder

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.

Insurance Adjuster

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.

Risk

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. 

Here are 5 insurance mistakes to avoid

Declarations Page 

A declarations page is a summary of any essential details of a particular insurance policy, including but not limited to the policyholder’s:

  • Personal information (name, address, etc.) 
  • Policy number
  • Coverages
  • Dates of coverage
  • Limits
  • Premiums
  • Deductibles

Insurance Broker

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. 

Insurance Agent

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.

Check out things your car insurer doesn’t want you to know

Limits

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.

Replacement Cost Coverage

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.

Find out if you should repair your car or buy a new one

Canadian Insurance Providers

 Type of Life Insurance Availability Number of Partners
emma- Term life insurance
- Permanent life insurance
--
PolicyMe- Term life insurance
- Critical illness insurance
All of Canada-
Policy Advisor- Term life insurance
- Whole life insurance
- Disability life insurance
- Critical illness life insurance
- No medical life insurance
BC, AB, MB, ON16
Rates.ca logo- Term life insurance
- Permanent life insurance
- Critical illness life insurance
BC, AB, SK, MB, ON, NB, NS50+
Insurance Hotline- Term life insurance
- Permanent life insurance
All of Canada30+

Additional Insurance Terms You Should Know By Insurance Type

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:

Life Insurance

  • Cash Surrender Value – If you’re the policyholder and you want to cancel your policy before its official maturity age, your life insurance provider may pay you a specific “cash surrender value” amount. Unfortunately, this may not be an option with all life insurance policies or providers.

Check out if you can cancel your life insurance policy.

  • Maturity Age – This is the date your life insurance policy expires or gets terminated. The maximum maturity term can be set for a number of years or it can last until you reach a certain age. There’s also permanent life insurance, which provides coverage as long as you’re alive and protects your beneficiaries when you die.
  • Riders – This can be purchased when you buy life insurance or when your policy’s anniversary comes around. While you may pay a higher premium, riders are additional benefits that can expand the parameters of a base life insurance policy. Common life insurance riders include:
  • Waiver of Premiums  
  • Accidental Death Benefit Rider
  • Accidental, Total or Permanent Disability Rider
  • Hospital Cash  
  • Critical Illness Coverage                

Home Insurance

  • Actual Cash Value – Similar to replacement cost coverage, the actual cash value can help you cover the cost of rebuilding or replacing a piece of damaged property, minus its depreciation from natural occurrences.
  • Appraisal – Before you can file a claim, a professional inspector must figure out your property’s value, as well as how much coverage you’re eligible for, if any. While some insurance providers supply their own in-house appraisers, you can also hire a third party inspector to help resolve any disputes. 
  • Material Misrepresentation – If there’s a discrepancy between the conditions of your home insurance claim and the information on your application, your provider may launch an investigation to confirm that you’re actually covered. So, if you go through any major life changes, be sure to inform your provider right away.

Check out how renovating your home increases your property value.

Car Insurance

  • No Fault – This system allows you to deal directly with your provider to address any damages, injuries or claims after a car accident. Regardless of who was at fault, claims are managed by each party’s provider. Currently, the no fault system is only available in Ontario, Quebec, Nova Scotia, New Brunswick, and PEI. 
  • Third-Party Liability – If another person causes an accident or injury while driving your vehicle, you’ll be held legally responsible, even if you weren’t in the car when the incident occured. This coverage protects you in that scenario and when damages or injuries happen to a third-party while you’re driving.
  • Accident Forgiveness – Also known as “claims forgiveness”, some insurance providers won’t increase your premium following a collision that you were deemed fully or partially responsible for, as long as it was your first accident.

What Type of Insurance Are You Looking For?

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. 

Bryan Daly avatar on Loans Canada
Bryan Daly

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.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2023/09/GlobeMailTopCompanies2023-1.png
Loans Canada places No. 228 on The Globe and Mail’s fifth-annual ranking of Canada’s Top Growing Companies.

By Caitlin Wood, BA
Published on September 29, 2023

Loans Canada is excited to announce it has made it onto the Globe and Mail’s Top Growing Companies list for the second year in a row.

https://loanscanada.ca/wp-content/uploads/2023/09/Finder-Awards.png
Finder Awards Finalists: Personal Loans Customer Satisfaction Awards 2023

By Priyanka Correia, BComm

Loans Canada is happy to announce it received the finalist award in the Best Personal Loan Search Platform category.

https://loanscanada.ca/wp-content/uploads/2016/12/caution-1.jpg
Beware of Fraudulent Lenders Impersonating Loans Canada

By Caitlin Wood, BA

A note to our clients about fraudulent lending practices and illegal upfront fees.

https://loanscanada.ca/wp-content/uploads/2024/04/Conditional-Offer.png
Conditional Offer: Meaning And How It Works

By Lisa Rennie

Find out how a conditional offer can protect buyers financially and protect them from purchasing properties with hidden problems.

https://loanscanada.ca/wp-content/uploads/2021/04/Alberta-Child-and-Family-Benefit-ACFB.png
Alberta Child And Family Benefit (ACFB) Payment Dates 2024

By Chrissy Kapralos

The Alberta Child and Family Benefit (ACFB) is a program that gives lower- and middle-income families with children under 18 financial assistance.

https://loanscanada.ca/wp-content/uploads/2024/03/Buying-A-House-As-A-Common-Law-Couple.png
How Does Buying A House As A Common Law Couple Work In Canada?

By Lisa Rennie

Are you buying a house as a common law couple In Canada? Find out how it'll affect your mortgage and how it affects the property title.

https://loanscanada.ca/wp-content/uploads/2021/06/Compassionate-Care-Benefit.png
Understanding The Compassionate Care Benefits Available To Canadians

By Lisa Rennie

Government programs known as "compassionate care benefits" are designed to help caregivers financially while they're off work.

https://loanscanada.ca/wp-content/uploads/2021/08/Average-Home-Prices-In-Calgary-2021-1.png
Average House Price In Calgary 2024

By Lisa Rennie

Calgary is a great place to live and plant some roots. And compared to other cities across Canada, it's relatively affordable.

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card