Insurance Basics – What You Need to Know

What is insurance?

When you have a financial obligation, such as buying a house or an apartment with a bank loan, you “reserve” part of your future income. If an accident (disability) occurs, or an unfavorable economic situation arises for you, your ability to meet your financial obligations decreases and the possibility of losing the property you have acquired becomes real. To protect yourself from these and other kinds of losses, there is a financial instrument that you can buy, called insurance.

Insurance is a means of providing protection if something unwanted happens to you and your family, or to your movable and immovable property (personal belongings, house, apartment, car, etc.). Insurance is bought by concluding an insurance contract (a policy).

How does insurance work?

All insured persons pay their premium into a common fund at the insurance company. The more insured persons the insurance company has, the larger the common fund. Whenever a client claims a payout for damage, the payout is made from the common fund. Your property is exposed to the risk of various types of loss (fire, flood, traffic accident, theft, etc.). The price of insurance, that is, the premium, depends on the assessment of the risk in accordance with the insurance terms laid down by the insurance company.

Life insurance

Life insurance is coverage under which the insurer undertakes, on the basis of the insurance premiums paid, to pay the insured person (the insurance beneficiary) the insured sum in the event of death, survival or the onset of serious illness. This insurance protects you, your children and parents, or members of your family. The period of coverage is usually longer than one year, and you can choose to pay the premium monthly, quarterly, semi-annually or annually, for as long as the insurance contract is in force.
The main life insurance products are:

• insurance in the event of death (risk insurance)
• insurance in the event of survival, insurance in the event of death and survival (endowment insurance)
• whole-life insurance in the event of death
• annuity insurance
• insurance with investment risk (life insurance linked to units in investment funds)
• insurance with a return of premiums, etc.

What is important when you conclude a life insurance contract?

If you conclude a life insurance contract in which the insured person is a third party, the written consent of that person is required for the contract to be valid.
Several life insurance contracts can be concluded on the life of one person with different insurers, and the beneficiary is entitled to the payout of the insured sums under each of them, in accordance with the concluded insurance contracts. Persons with impaired health can be insured
under special insurance terms. When concluding a life insurance contract, always be honest when completing the questionnaires you are given. Your honest answer is crucial for:

• determining the coverage that will fully meet your insurance needs
• determining the actual premium for that coverage
• avoiding undesirable consequences regarding the payout of the insured sum, if it is established in the future that the information given in the questionnaire was not reliable.

Life insurance companies invest the funds that their insured persons entrust to them in the form of premiums in safe and low-risk placements. The investment of the funds is subject to special oversight by the Insurance Supervision Agency. In cases determined by the insurance terms, life insurance policyholders have the right to participate in the profit that insurance companies earn from the investment of the funds collected through insurance premiums.

The obligation to inform the insured who are individuals, that is, consumers, when the insurance contract is concluded, must be in written form and contain information on the following:
→ the name, legal status, registered office and address of the insurance company, as well as the branch through which the insurance contract was concluded;
→ the name, legal status, registered office, address and contact telephone number of the insurance agency company or insurance brokerage company, where the insurance contract was concluded through an insurance agency company or insurance brokerage company;
→ the general and special policy terms that apply to the insured and the insurer, and the law that governs the insurance contract;
→ cases in which the general and special policy terms do not apply to the relationship between the insurer and the insured, the performance, the scope and the due date of the obligations of the insurance company;
→ the period of validity of the insurance contract;
→ the amount of the premium, as well as the breakdown of the premium by individual risks (if the insurance contract covers risks arising from several classes of insurance) and the amounts of taxes, fees and other costs based on the premium and the total amount to be paid;
→ the right to postpone or terminate the insurance contract;
→ a reference to the Insurance Supervision Agency, as the competent supervisory authority over the insurance company, to which a complaint can be submitted regarding insurance companies, insurance brokerage companies, insurance agency companies and insurance agents;
→ the manner of submitting a claim for compensation to the insurance company and, where the insurance contract was concluded through an insurance brokerage company, informing the insured of their option to ask the insurance brokerage company for assistance in the event of an insured event;
→ the manner of submitting an objection or complaint against the operations of the insurance company, the insurance agency company or the insurance brokerage company, and the manner of out-of-court dispute resolution between the contracting parties; and
→ the body responsible for supervising the operations of the insurance company.

During the term of the insurance contract, the insurance company, the insurance brokerage company, the insurance agency company or the insurance agent are obliged to inform the insured of:

– A change of name, legal status, registered office or address of the insurance company, or of the branch through which the insurance contract was concluded, through the means of public information.
– A change in data resulting from an amendment of certain regulations.

During the term of the insurance contract, the insurance company, the insurance brokerage company, the insurance agency company or the insurance agent are obliged to inform the insured once a year of their participation in the profit.

The text of the General and Special Policy Terms and the notification to be given to the insured must be drawn up in a clear and understandable way in the Macedonian language.
The insurance company is obliged to publish the general and special insurance terms, as well as any amendments to them, on its website within five days of their adoption.

1. events on the basis of which the insurance company becomes obliged to make payments arising from the insurance contract, as well as events due to which the insurance company’s obligation to pay ceases;
2. the manner of performance, scope and due date of the obligations of the insurance company;
3. the amount and conditions of premium payment, as well as the legal consequences in case of non-payment;
4. the period of validity of the insurance contract, in which the following in particular must be stated: 4.1. the manner of automatic renewal of the insurance contract, 4.2. the manner in which the insurance contract can be canceled, or partially or fully terminated, as well as the obligations of the company in those cases;
5. the consequences for claims arising from insurance contracts in case of missing the prescribed deadlines;
6. the name of the insurance agent, the name of the insurance agency company or insurance brokerage company, if the insurance contract was concluded through an agent, agency company or brokerage company;
7. the actions required to be taken by the insured in the event of an insured event in order to realize a claim for compensation from the insurance company;
8. with regard to life insurance, the deadlines and conditions, as well as the scope of advance payments under the insurance policies, the deadlines and conditions relating to the participation of the insured in the profit of the insurance company, as well as the criteria for calculating their participation and the conditions and methods for calculating and paying the surrender value.

1. Insurance companies,
2. Insurance brokerage companies,
3. Insurance agency companies,
4. Insurance agents,
5. Banks – through their authorized agents.

Non-life insurance

Insurance contracts that do not belong to the group of life insurance are called non-life insurance contracts. The main products of non-life insurance are:

• compulsory traffic insurance (the most widespread is motor third-party liability insurance)
• motor vehicle insurance
• home insurance
• travel insurance
• insurance of personal belongings
• insurance against the consequences of an accident
• health insurance
• liability insurance, etc.