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 incorrect 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 applied in auto, health and homeowners insurance to trim back the total cost of insurance, by your accepting some of the hurts or disbursements prior to the insurance company paying for the balance. Usually you select the quantity of the deductible and the higher the quantity you select, the lower your 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 – Property and casualty is the term for that segment of the insurance industry that pays for hurt 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 hurts 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 – this is the aspect of your insurance coverage that compensates for losses to a 3rd party like personal injury, property impairment or pain and suffering. Householders policies also usually have liability coverage to protect you from assorted cases of personal injury suits.

No-fault – About 50% of the states have “no fault” laws which require insurance companies to pay for hurts to vehicles, property and person no matter who is at fault in the accident.

Medical 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 – 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 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 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 part 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 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 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 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.

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