20 Insurance terms you should know in 2025.

For many people, insurance is often a topic that seems very complex. This is largely a result of the lack of knowledge about some of the terms used in the industry. At Tangerine Insurance, we are committed to ensuring that you have all the knowledge you need to make informed financial decisions.

Here are 20 terms that will help you understand insurance, make better financial decisions, and ensure that you sound like a pro when you are discussing insurance.

Insurance
A financial safety net that protects you from unexpected losses. You pay a fee (premium) to an insurance company, and in return, you get cover against certain risks, such as accidents, theft, illness, or death.

Policy
The written contract between you and your insurer. It spells out what is covered, what is not, how much you’ll pay (premium), and what benefits you’ll get.

Premium
The price you pay (monthly, quarterly, or yearly) to keep your insurance coverage active. Think of it as a membership fee for financial protection.

Rider
An optional addition to your policy that lets you customize your coverage. For example, you can add a rider to a life insurance policy to also cover critical illness or accidental death.

Claim
The formal request you make to your insurer when something covered by your policy happens. For example, if your car is damaged in an accident, you file a claim to get the insurer to pay for repairs.

Cancellation
When a policy ends before the agreed expiry date. This could be because you stopped paying premiums, requested to cancel, or the insurer terminated the contract.

Commencement Date
The official start date of your policy. From this day, you are protected under the terms of your insurance.

Insured
The person, family, or business that is covered by the insurance policy. If a loss happens, the insured is the one entitled to make a claim.

Sum Assured
The guaranteed amount of money your insurer will pay if a claim event happens (for example, in life insurance, this is what your family/beneficiary gets when you pass away).

Auto Insurance
Insurance that protects you and your car against accidents, theft, fire, and third-party liability (damage or injury you cause to others while driving).

Group Life Assurance
A life insurance plan that covers multiple people—usually employees in a company—under one policy. It ensures that the families of employees receive financial support if an employee passes away.

Beneficiary
The person or people you choose to receive the insurance benefits when you die or when a covered event occurs. This could be a spouse, child, or even an organization.

Death Benefit
The lump sum of money paid by the insurer to your beneficiary when you pass away under a valid life insurance policy.

Endowment Policy
A savings + insurance plan. It pays out a lump sum either when the policy matures (at the end of a set term) or if the insured person dies during the term.

Insurance Benefits
The payments or services you receive from your insurer when you make a valid claim. Benefits could be cash (like a death benefit) or services (like hospital bill payments).

Term Life Insurance
A type of life insurance that lasts for a set number of years (e.g., 10, 20, or 30 years). If the insured dies during the period, the beneficiary gets a payout. If they live beyond the term, no payout is made.

Deductible
The amount of money you agree to pay out of your own pocket before your insurance kicks in. For example, if you have a deductible of ₦50,000 on auto insurance and an accident costs ₦200,000 in damages, you pay ₦50,000 and your insurer pays ₦150,000.

Surrender

When you voluntarily end a life insurance policy before its maturity date. Instead of the full sum assured, you get back a portion of the money (the surrender value).

Home Insurance
Coverage that protects your house and the valuables inside it against risks like fire, theft, flooding, or other damages.

Insurer
The insurance company that provides coverage, collects premiums, and pays out claims. e.g, Tangerine Life, THT, and Tangerine General.