The insurance industry has its own vocabulary, and that can be tricky to translate for clients, especially if you’re a new agent. Thankfully, Farm Bureau equips its agents with the information they need to meet their clients’ needs and become successful insurance agents. In this insurance glossary, we cover 10 common insurance terms you need to know to educate your clients.
1. Mutual Fund
A mutual fund is a professionally managed investment program that trades in diversified holdings. When clients invest in a mutual fund, they’re pooling their money with other shareholders to buy stocks, bonds, short-term securities or a combination of these investments. Mutual funds are affordable and can be a low-risk way to steadily build wealth over time.
An annuity is a contract providing income for a specified period or even the duration of a lifetime. Annuities come in three forms — fixed annuities, variable annuities and indexed annuities — and are designed to pay a steady stream of income into the retirement years.
The deductible is the amount of money that an insurance holder must pay out of pocket before the company will step in. From car insurance to homeowner’s insurance, the insurance policies all carry a deductible.
4. Replacement Cost Coverage
Replacement cost coverage covers the cost of replacing property without deducting depreciation due to normal wear and tear. This optional coverage can replace a client’s damaged vehicle with a new vehicle of a similar model if certain conditions are met.
5. Umbrella Insurance Policy
Umbrella insurance provides liability coverage over and above standard automobile or homeowner’s policies. In many cases, umbrella insurance is written for amounts of $1 million or more, but clients generally find this coverage is reasonably priced for the added peace of mind that it provides.
6. Property-Casualty Insurance
Property-casualty insurance protects against property losses to a business, home or car and/or against legal liability that may result from injury or damage to the property of others. Common types of property-casualty insurance include homeowner’s and auto insurance.
7. Gap Insurance
Gap insurance is common with automobile policies. It is an optional coverage that helps pay off an auto loan if a financed or leased car is totaled or stolen, covering “the gap” between the balance owed on the car and the car’s depreciated value. When added to traditional collision and comprehensive auto coverage, gap insurance adds peace of mind for clients.
Simply stated, a rider is an amendment to a policy agreement. For instance, identity theft coverage can be added as a rider to a homeowner’s insurance policy and roadside assistance can be added as a rider to automobile coverage.
Usage-based insurance is growing in popularity. This form of coverage is particularly relevant with automobile policies that rely on onboard technology and mobile apps to monitor a policyholder's driving habits. Being mindful of telematic key indicators such as speed limits, abrupt braking and sudden acceleration can not only save money on auto premiums, but it can also decrease the chances of getting into an accident while behind the wheel.
The renewal date of an insurance policy is based upon the date the policy took effect (often renewed annually or semi-annually). As the renewal date approaches, agents meet with their clients to review changes in their coverage needs and discuss rate adjustments.
For more insurance industry education, read the full glossary of insurance terms from the National Association of Insurance Commissioners.
Become a Farm Bureau Insurance Agent
Don’t let these terms intimidate you; success as a Farm Bureau agent doesn’t require insurance experience or even past knowledge. We’re looking for people with the skills it takes to build a successful business – a commitment to learning, a passion for service and a drive to do well. Sound like you? Connect with the district manager
in your area to hear more.