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Why You Should Learn the Lingo
What is need to know why it’s absolutely necessary to learn the lingo before really digging into common terms is an absolute must. Insurance policies can be lengthy and filled with technical terms. The non-understanding of a term can result in coverage being reduced, one getting a surprise financial whammy, or worse, getting a denied claim. By learning some of the commonly used terms in the insurance, it becomes easier to read and understand what your policy documents have to say, and this will be made possible for you to seek assistance whenever need be.
Basic Insurance Terms You Should Be Familiarized With
1. Premium
The premium is the price at which you pay your insurer for your insurance policy. Premiums can be sent back to your provider monthly, quarterly, or annually. Several factors would change your premium. These include what you are covered for, your risk profile, and the pricing of your insurance provider. For instance, if you have a performance car, the premium charged on your car insurance would be more high as compared to that of a person who uses a standard sedan.
2. Deductible
It is what you pay before your insurance company pays for your bills. Else, it is that percentage of your claim which you are paying for. Suppose under your insurance policy, you have a deductible amount of $500 and the value of your claim is $2,000. Therefore, you pay the first $500 and the rest is paid by your insurance company as $1,500.
3. Coverage
Coverage What your policy pays for There are four types of coverages, each of which insures a different kind of loss. For example, auto has three types of coverages: the kind you select determines how much money your insurance company will pay out if you ever need to file a claim.
4. Policyholder
It refers to the owner of the insurance policy. The term applies to one who is liable for paying the premium and therefore holds legal rights in making changes in the policy. You are if you buy insurance, then the policyholder.
5. Claim
Thus, an insurance claim would amount to a demand issued by the policyholder towards the insurance company for compensation or service, more so based on the terms of the policy. Right after some incident, like an accident with a car or health issue, the policyholder makes a claim, and then the insurer will proceed to evaluate it to check whether it is valid and to what extent they have to be compensated.
Different Kinds of Insurance and What They Mean
There are different kinds of insurance that have special terms. Some common terms which apply to various insurance policies include the following.
Health Insurance Terms
1. Copayment (Copay)
A copayment is an amount paid in dollars form for some specific prescribed medical services or prescriptions. For example, take your health insurance: it may charge $20 copay for any visit to a doctor.
2. Network
A network is a set of doctors, hospitals, as well as other providers that have agreed to reduce their fees with your insurance company. While most insurance companies offer both in-network and out-of-network providers, it often pays to stay in-network to keep out-of-pocket expenses lower.
3. Out-of-Pocket Maximum
That is the amount that you’ll be paid for a year for covered medical care. From there on, your insurer pays 100% of all your remaining medical expenses in that calendar year.
Car Insurance Terms
1. Liability Coverage
Liability Coverage covers some of the parts of car insurance that deal with the cost associated with injuries or damages you cause to other and property. It is one of the most common coverage required by law in most jurisdictions.
2. Collision Coverage
Collision coverage pays to have your car repaired after an accident, regardless of who was at fault. This is usually a form of ancillary insurance, but it may be worth getting if your car tends to get dinged up from a collision.
3. Comprehensive Coverage
Comprehensive coverage insures your vehicle against damage that is caused by anything outside of a collision, such as theft, vandalism, fire, and other natural disasters.
House Insurance Terms
1. Dwelling Coverage
Dwelling Coverage Dwelling coverage will pay to repair or replace your dwelling if fire, storm, or any other covered events destroy or damage it. Basically, it would cover, in most cases, the property structure of the house, along with any built-in appliances and fixtures.
2. Personal Property Coverage
This insurance covers personal property; this would include items like furniture, electronics, clothing, and protects them in case they damage, lose the item, or steal it from one due to a covered cause.
3. Liability Protection
Home insurance may make it much easier to provide liability coverage from injury or damage done to an individual covered under your policy. For example, if a visitor gets injured within your house, liability coverage might be able to help pay for them when they may need medical costs or lawyers to sue you.
Terms to Look Out For: Understanding the Fine Print
There are just a few other important words you want to familiarize yourself with as you flip through your policy of insurance, apart from those above.
1. Exclusion
It also comes with some conditions or circumstances under which your insurance policy will not provide any coverage. For example, whereas a few car insurance packages will cover all of your needs, most will exclude damages caused by off-road activities or some natural disasters, for instance, floods.
2. Underwriting
Underwriting is the process wherein the insurance company would be able to evaluate the risk to the person or party. They would decide whether the policy would be issued and the premium rate attached to it, among others, which include factors such as age, health condition, driving history, home location, among others.
3. Beneficiary
This benefit will accrue from your life insurance on the happening of mishap. Simply, a beneficiary, in life insurance in general, is that person whom you have named to receive the death benefit.
Knowing what all the insurance terms mean then would make you make good decisions over your coverage. This is particularly true in health, auto, home, and life insurance. Understand some of the most common terms, and you’ll well be protected from confusion. Next time you review your policy, then do run through this dictionary once again, and you will feel good knowing what all those terms in your policy really mean.
