Insurance Glossary

Plain-language definitions of common insurance terms.

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Assured: A term often used interchangeably with "insured," especially in life and marine insurance, referring to the person whose life, health, or property is protected by the policy.; Example: In life assurance, the assured is the person whose life is insured.

Beneficiary: The person or entity entitled to receive the benefits or proceeds of a life insurance policy upon the death of the assured or when the policy matures.; Example: A father may name his wife as the beneficiary of his life policy.
Benefit: The payment, service, or advantage provided by an insurer to the insured or beneficiary under the terms of an insurance policy, usually when a covered event occurs.; Example: The death benefit in a life policy is the amount paid to the beneficiary when the insured dies.
Broker: An independent insurance intermediary who represents the interests of the insured (client) and helps them find suitable cover from insurers, often providing professional advice and claim support.; Example: A company may engage an insurance broker to obtain the best terms for its industrial all-risk policy.

Compensation: The payment or financial restitution made by an insurer to the insured (or third party) for loss, damage, injury, or death covered by the policy.; Example: After a covered motor accident, the insurer pays compensation to the injured third party.

Deductible: A concept similar to excess, referring to the amount subtracted from a claim before payment is made. Often used in U.S. practice.; Example: A deductible of GH₵500 on a GH₵2,000 claim means the insurer pays GH₵1,500.

Excess: The portion of a claim that the insured must pay before the insurer pays the remaining amount.; Example: If excess is GH₵1,000 and the loss is GH₵5,000, the insurer pays GH₵4,000.
Exclusion: A policy provision that removes certain risks, events, or losses from coverage.; Example: A fire policy may exclude loss caused by war or nuclear radiation.

Indemnity: The principle of restoring the insured to the same financial position held before a loss occurred.; Example: If your insured car worth GH₵10,000 is damaged, compensation equals the loss value, not profit.
Insurable Interest: The legal right to insure due to a financial or emotional relationship with the subject of insurance.; Example: A person has insurable interest in their life, spouse, or property; a creditor has insurable interest in a debtor's life.
Insured: The person or entity covered by an insurance policy and entitled to compensation for covered losses.; Example: In a health policy, the insured is the individual whose medical expenses are covered.

Liability: The legal responsibility to compensate another for injury or damage caused.; Example: A driver may be liable for injuries to a pedestrian.
Life Insurance: A contract where an insurer pays a specified amount to a beneficiary upon death or after a set period.; Example: Under a 20-year policy, if death occurs within the term, payment is made to the family.

NCD (No Claims Discount / Bonus): A premium discount for policyholders who have not made claims during a policy period.; Example: A 3-year claim-free record may earn a 30% discount.

Partial Withdrawal: A withdrawal from a life policy's accumulated value without terminating the policy.; Example: The insured withdraws funds for emergency needs while keeping coverage.
Perils: Specific risks or causes of loss covered by an insurance policy.; Example: Fire, theft, flood, lightning, and explosion.
Policy Period (Policy Term): The duration for which a policy provides coverage.; Example: 1 January 2025 – 31 December 2025 is a one-year policy.
Policy Suspension: Temporary halt of coverage due to conditions like unpaid premiums.; Example: Coverage resumes after payment is made.
Policy Termination: Ending of an insurance contract due to expiration, cancellation, or other factors.; Example: A motor policy ends after one year unless renewed.
Premium: The amount paid by the insured for insurance coverage.; Example: GH₵500 annually for a motor policy.
Proposal Form: A document completed by an applicant when applying for insurance, used by the insurer to assess risk.; Example: A motor insurance applicant provides vehicle and driver details on the proposal form.
Proximate Cause: The main or dominant cause that directly leads to a loss.; Example: If an earthquake causes a fire, the earthquake is the proximate cause.

Reinstatement: Restoring a lapsed or suspended policy to active status after meeting conditions.; Example: Paying arrears within 6 months restores coverage.
Repudiation: Refusal by an insurer to pay a claim due to a breach of policy conditions or invalidity of the claim.; Example: Providing false information on a proposal form can lead to claim repudiation.

Settlement: The final payment or resolution of a claim by the insurer.; Example: An insurer pays GH₵15,000 for vehicle repairs as full and final settlement.
Statute Bar (Statute of Limitation): The legal time limit within which a claim must be filed.; Example: Claims filed after 3 years may be statute-barred and no longer valid.
Sum Assured: The guaranteed amount payable under a life insurance policy.; Example: A GH₵200,000 endowment policy pays the sum assured at death or maturity.
Sum Insured: The maximum amount payable under a non-life insurance policy.; Example: A building insured for GH₵1 million has that as its sum insured.
Surrender: Voluntarily ending a life policy early in exchange for its accumulated cash value.; Example: Surrendering a policy after 10 years may yield GH₵15,000 in cash value.

Utmost Good Faith (Uberrimae Fidei): A core principle of insurance requiring full and honest disclosure of all material facts by both the insured and the insurer.; Example: Failure to disclose a pre-existing illness when applying for health cover may void a policy.

Warranty: A condition in an insurance policy that must be strictly observed by the insured. Breach may void a claim.; Example: A warranty to install fire extinguishers means failure to do so may void a fire claim.