Terminology can be a bit of a bugger in the insurance industry. Whenever I am teaching my students, I always give them the Sneeze Paradox to explain this problem. Think of what happens when someone sneezes. For many, their first reaction is to offer the person a Kleenex. But are they really offering the person a Kleenex or are they actually offering them a tissue? Yep – they are offering a Tissue. We have just become very programmed as a society to always call tissues “Kleenex” thanks to successful marketing and branding campaigns.
What does that mean for insurance?
Ultimately this means that some of the common every day terms that we tend to use are not always used 100% correctly – even in an insurance office. Along with that, it also means some of the terms we use in everyday business transactions are different from the terms that someone like an accountant may use.
Whenever studying for an insurance course, always be sure to keep the Sneeze Paradox in mind. Exams will always ask for the true insurance definition of what something means, not just how it is used every day whether on the street or even in an office.
Looking for all the major insurance definitions? Contact the IBAM office to purchase a Glossary of Insurance Terms book which has all major insurance terms with their definitions clearly laid out in it.