It doesn’t matter if you’re shopping for Car, House, Health, Life or Commercial insurance - if you don’t know the jargon you’re likely to wind up over-paying or buying the wrong insurance coverage. Here’s a useful guide to some of the more crucial insurance terms to keep you on the right track.
General terms:
Deductible - Deductibles are used in auto, health and homeowners insurance to reduce the overall cost of insurance by you assuming some of the damages or expenses BEFORE the insurance company pays for the remainder. Usually you choose the amount of the deductible and the higher the amount you choose, the lower your insurance premium.
Premium - This is merely the sum you or your company antes up to the insurance firm in exchange for their coverage and benefits rendered.
Property and Casualty - this describes a part of the insurance industry that covers damage to property or persons injured in an accident. Auto, home-owners and business liability insurance fall under this category.
Life and Health - This is the other segment of the insurance industry that does not fit under the property and casualty label.
Umbrella Policy - This is a general term implying broader coverage than a basic policy would typically offer can. For example, homeowner insurance that includes coverage for general lawsuits would be considered umbrella insurance.
Car Insurance:
Collision - Like the name implies, this is the aspect of your car insurance that compensates for fixing damages to your car following the deductible.
Comprehensive - This term also applies to car insurance and it’s that aspect of your insurance coverage that compensates for “non-collision” types of damage like fire, water, malicious mischief or theft.
Liability - this is the part of your coverage that pays for damage done to a third party such as bodily injury, property damage or pain and suffering. Homeowners policies also typically have liability provisions to protect you against various types of personal injury lawsuits.
No-fault - About 50% of the states have “no fault” laws which require insurance companies to pay for damages to vehicles, property and person no matter who is at fault in the accident.
Ancillary Care/Coverage - Ancillary is a term for “extra” or “additional” or “associated.” It is for insurance policies that not only cover common health benefits but also have additional (ancillary) insurance coverage for prescription medicine or eye care, etc.
Cobra - A Federal law that requires companies to offer health coverage to employees for a period of time after they have left the company. The ex-employee generally pays for this insurance at group rates.
Co-payment - An amount much your insurance requires you to pay for each visit to the doctor’s office, or for other care. The insurance company then pays the remainder of the bill assuming the deductible has been met.
Fee for Service - This is health Insurance that permits you to choose any Doctor and covers some predetermined share of “reasonable and customary” fees. You then pay the remainder.
H,M.O. - “Health Maintenance Organizations” are designed to provide comprehensive medical coverage for a set fee. However, these organizations typically require that you use their Doctors and facilities thus limiting your choice.
P.P.O. - PPOs are networks of care providers who charge a fee for service that is discounted based on a negotiated amount with the insurance company. Insurers thus cover a larger portion of your expense when you use their “preferred providers.”
Life Insurance:
Annuity - Annuities are special types of policies that pay benefits while a person is alive for a specified period of time. They are sometimes connected to Life insurance policies.
Term Life - Term life is a form of life insurance purchased for a specific period (term) of time. If the person dies during this period, the insurance is paid. If not, the coverage expires or must be renewed to maintain the benefit.
Universal Life - A Life policy connected to an investment account and market rates. The benefits are not set but change based on the returns achieved.
Whole Life - A traditional life insurance policy that accumulates cash value over the life of the policy at a fixed rate and with pre-determined premiums. The insurance benefit is also a fixed and guaranteed amount.
Chris Carbukel enjoys showing people how to get the most economical insurance for their needs. If you’d like to learn more visit his new website Insurance-Price-Quotes.org where you can learn how to get the best deals on all kinds of insurance including finding the best House Insurance Quote.