Want to Know How To Buy The Best Insurance Coverage?

December 5, 2016 · Posted in General Articles on Car Insurance 

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 simply the amount you or your company pays to the insurance company in exchange for their coverage and benefits provided.

Property and Casualty – Property and casualty is the term for that segment of the insurance industry that pays for damage to property or for personal injury. This includes auto, home-owners and business liability insurance among other things.

Life and Health – This is the other section of the insurance industry that doesn’t fit under the property and casualty category.

Umbrella Insurance – This is wider insurance coverage than the original fundamental policy. For instance, a householder’s insurance policy that also admits a universal liability provision of $1,000,000 for personal lawsuits may be considered an umbrella policy.

Car Insurance:

Collision – Collision insurance covers the damages to your vehicle from a collision or accident.

Comprehensive – Comprehensive insurance covers the “non-collision” types of losses to your vehicle like fire, flood, vandalism or theft.

Liability Insurance – Liability insurance pays the losses of a third party such as personal injury, property or pain and suffering. Homeowner insurance also has liability provisions to protect you from personal injury lawsuits.

No-fault – Half of the states have no-fault insurance which pays for losses no matter who is at fault in the accident.

Medical Insurance:

Ancillary Care – Ancillary simply means “additional” or “related” or “extra”. It applies to policies that not only have basic coverage but have additional (ancillary) coverage for prescription drugs or eye care, for example.

Cobra – The “Consolidated Omnibus Budget Reconciliation Act” is a Federal law that requires companies to offer extended health care coverage to terminated employees for a period of time. This coverage is typically paid for by the ex-employee but at group rates.

Co-payment – This is a health insurance term for how much you are required to pay for a visit to the doctor’s office, or for some other type of medical care. After your co-payment and deductibles the insurance company typically pays for the remainder of the bill.

Fee for Service – With this health Insurance you to select any doctor and the insurer will pay an agreed percentage of “reasonable and customary” fees for that type of doctor in your area. You then pay any remainder.

H,M.O. – “HMOs” are created to deliver complete health coverage for a predetermined fee. But, these organizations generally call for you to use their MD’s and hospitals thus restricting your selection.

P.P.O. – “Preferred Provider Organizations” are networks of doctors who charge on a fee for service basis but typically at a discount pre-negotiated by the insurance company. Thus insurance companies will usually pay a larger share of your bill if you go to one of their “preferred providers.”

Life Insurance:

Annuity – These are policies that pay while a person is alive for a specified period of time. They are usually offered by life insurance companies.

Term Life – Term life is a form of insurance bought for a specified time (or term). If the insured dies during this time period, the insurance is paid. If not, the insurance coverage expires or must be renewed to keep 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 standard life policy that accrues cash value over the life of the policy and with preset premiums. The insurance benefit is also a set at an assured amount.

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