Want to Know The Best Way To Buy The Best Insurance Policy?
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.
Insurance (in general):
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 identifies a part of the insurance industry that handles impairment to property or individuals hurt in an accident. Auto, householders and commercial liability insurance fall into this category.
Life and Health - This is the other section of the insurance industry that doesn't fit under the property and casualty category.
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.
Auto Insurance:
Collision - Just as the name implies, this is the part of your auto insurance policy that pays for repairing damages to your car after the deductible.
Comprehensive - This term also applies to auto insurance and it is that part of your coverage that pays for "non-collision" types of losses like fire, flood, vandalism 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.
Health Insurance:
Ancillary Care/Coverage - Ancillary is just a fancy term for "additional" or "extra" or "related." It applies to comprehensive policies that for example, only cover basic health benefits but also have added (ancillary) coverage for prescription drugs 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 - 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 give comprehensive medical coverage for a set fee. But they require you to use their facilities and medical employees thus limiting your choice.
P.P.O. - "PPOs" are networks of physicians who offer their services at a discount negotiated by the insurance company. Thus insurers will normally pay a bigger portion of your expenses when you use these "preferred providers."
Life Insurance:
Annuity - Annuities are policies that pay while the insured is alive for a specified period of time. They are typically offered by Life insurance companies as a vehicle to supplement retirement or disability.
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 insurance policy attached to a savings vehicle tied to market interest rates and where the benefits are not fixed but may change within limits.
Whole Life - A policy based on a fixed rate of return and with pre-determined premium that build cash value while the policy is in force. The insurance benefit is fixed as well.
Insurance (in general):
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 identifies a part of the insurance industry that handles impairment to property or individuals hurt in an accident. Auto, householders and commercial liability insurance fall into this category.
Life and Health - This is the other section of the insurance industry that doesn't fit under the property and casualty category.
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.
Auto Insurance:
Collision - Just as the name implies, this is the part of your auto insurance policy that pays for repairing damages to your car after the deductible.
Comprehensive - This term also applies to auto insurance and it is that part of your coverage that pays for "non-collision" types of losses like fire, flood, vandalism 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.
Health Insurance:
Ancillary Care/Coverage - Ancillary is just a fancy term for "additional" or "extra" or "related." It applies to comprehensive policies that for example, only cover basic health benefits but also have added (ancillary) coverage for prescription drugs 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 - 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 give comprehensive medical coverage for a set fee. But they require you to use their facilities and medical employees thus limiting your choice.
P.P.O. - "PPOs" are networks of physicians who offer their services at a discount negotiated by the insurance company. Thus insurers will normally pay a bigger portion of your expenses when you use these "preferred providers."
Life Insurance:
Annuity - Annuities are policies that pay while the insured is alive for a specified period of time. They are typically offered by Life insurance companies as a vehicle to supplement retirement or disability.
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 insurance policy attached to a savings vehicle tied to market interest rates and where the benefits are not fixed but may change within limits.
Whole Life - A policy based on a fixed rate of return and with pre-determined premium that build cash value while the policy is in force. The insurance benefit is fixed as well.
About the Author:
Chris Carbukel enjoys helping others get the lowest cost insurance policies 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 Home Insurance Comparison.
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Thanks for sharing this useful post. I think a great way to get the best cover for yourself is to do your own research. If you get to know what is available from different providers in the market you are able to know if you are getting a good deal or not.
Regards,
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