Glossary
Insurance Contract
An agreement concluded between an insurer and a policyholder when purchasing an insurance policy, under which the insurer undertakes to provide protection against specified risks, and the insured or policyholder pays the agreed premium. A contract concluded when purchasing an insurance policy between the consumer and the insurer.
Insurance Contributions
Monthly monetary payments made by employees and/or their employers into the social and health insurance system. They fund pensions, unemployment benefits, maternity or temporary disability allowances, healthcare, and other social payments. The amount and distribution of social security contributions are determined by law and depend on income, the type of employment relationship, and the insurance risk. Social security contributions ensure access to social protection in certain events, such as illness, old age, or unemployment. Contributions can be compulsory (e.g. state social insurance, supplementary compulsory pension insurance, health insurance) or voluntary (e.g. voluntary pension insurance).
Insurance Coverage
The scope of rights and obligations arising from the insurance contract, under which the insurer undertakes to pay compensation or the sum insured upon the occurrence of certain events (risks), within the agreed terms, limits, periods, and exclusions. It encompasses the covered risks, territorial and temporal scope, amounts and liability limits, as well as the methods and conditions for making claims.
Insurance Indemnity (Payout, Compensation)
Insurance compensation (insurance indemnity) — the monetary amount that the insurer pays to the insured, a third-party beneficiary, or the harmed party upon the occurrence of an insured event, with the purpose of compensating for the incurred losses within the agreed insurance coverage. In property insurance, the amount of insurance compensation cannot exceed the value of the loss at the time the insured event occurs.
Insurance Intermediation
Activities involving the provision of services related to the offering, consulting, preparation, and conclusion of insurance contracts, as well as assisting in their management and execution, including upon the occurrence of an insured event.
Insurance Policy
A document containing the details of the insurer and the insured, information about the insured object, the insurance coverage, the sum insured, and the premium. It specifies the territorial scope, the duration, and the start date of the insurance, as well as other parameters depending on the type of insurance product. In everyday language, it is used as a synonym for “insurance.”
Insurance Premium
The amount the insured is obliged to pay to the insurer under the insurance contract as compensation for the risk assumed by the insurer and the insurance coverage provided. The premium may be a one-time payment or periodic (e.g. monthly, quarterly, yearly), depending on the terms of the contract.
Insurance Risk
The risk that an event covered by an insurance policy may occur, obliging the insurer to pay compensation or cover a loss in accordance with the contract. Key characteristics of insurance risk are that it must be possible but uncertain, unpredictable, measurable, and independent of the insured’s will. Insurers use statistical and actuarial models to assess the likelihood of such a risk and determine the insurance premium accordingly.
Insured Event
A future, uncertain event, beyond the control of the parties, the occurrence of which gives rise to the insurer’s obligation to provide the agreed insurance coverage, usually in the form of payment of compensation or the sum insured. The insured event must be specified in the insurance contract and represents the realization of a risk covered by the insurer.
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