It doesn't matter if you are shopping for Auto, Home, Health, Life or Business insurance - if you don't know the lingo you are liable to end up paying too much or getting the wrong coverage. Here's a handy guide to some of the more important 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 - the premium is the cost of the insurance. It is how much you or your company pays for the coverage.
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 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 - Collision insurance covers the damages to your vehicle from a collision or accident.
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 fifty percent of the states require "no fault" insurance which pays for impairments to vehicles, property and individuals irrespective of 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 - Cobra is a U.S. law that compels organizations to offer extended health-care insurance coverage to dismissed employees for a specified time period. This insurance coverage is generally paid for by the ex-employee but 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. - "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. - "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 - 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 life insurance in effect only for a specified period (term) of time. If death occurs during this period, the insurance is paid. If not, the coverage must be renewed or it expires.
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. - 29954
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 - the premium is the cost of the insurance. It is how much you or your company pays for the coverage.
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 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 - Collision insurance covers the damages to your vehicle from a collision or accident.
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 fifty percent of the states require "no fault" insurance which pays for impairments to vehicles, property and individuals irrespective of 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 - Cobra is a U.S. law that compels organizations to offer extended health-care insurance coverage to dismissed employees for a specified time period. This insurance coverage is generally paid for by the ex-employee but 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. - "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. - "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 - 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 life insurance in effect only for a specified period (term) of time. If death occurs during this period, the insurance is paid. If not, the coverage must be renewed or it expires.
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. - 29954
About the Author:
Chris Carbukel enjoys showing internet users how to buy 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 Home Insurance Comparison.
