Insurance Terminology 101
Almost every person in the country has some insurance whether it be health insurance, life insurance, auto insurance, Medicare or something else. Consumers know the general reason for having insurance, but some of them are unclear about the complex terminology that describes insurance components. The following are some common insurance terms. The list is not exhaustive, and it is merely an introduction to the subject:
A deductible is perhaps one of the most important insurance terms. The term describes the amount of money that an insurance carrier has to pay out of his or her pocket before the insurance company will cover any costs. Health insurance and auto insurance policies have such deductibles.
Beneficiary is a term that describes the people who will receive benefits if anything happens to a life insurance policyholder. The policyholder can choose one beneficiary, or that person can choose several beneficiaries.
A death benefit is an amount of money that a person’s beneficiary receives upon the policyholder’s death.
A co-pay is an amount of money that a health insurance policyholder has to pay when he or she visits a doctor or specialist. The co-pay may be as small as $10 or as large as $250, depending on the procedure.
The annual allowance is the amount of money that an insurance company pays out for a covered person per year. For example, a dental insurance policy may only pay out $2,000 worth of benefits in any given year.
A premium is a monthly amount that a person has to pay to continue coverage on an insurance policy. All insurance policies have monthly or annual premiums, and they vary according to the benefits and insurance components that the policyholder requests.
A network is a group of medical specialists that work together with an insurance company to provide services. Some policies restrict their customers to particular networks to get assistance. People who have health maintenance organization health insurance plans are familiar with networks.
Riders are additional benefits or features that a person can add to an insurance policy. For example, a person who has medical insurance can add dental or vision coverage to the policy. The dental or vision coverage is the rider benefit.
The previously mentioned list is just a few of the terms that relate to insurance coverage. They can educate a beginner who is buying insurance for the first time.