Accidents happen. It is just a fact of life. Safety is the
best prevention, but sometimes the inevitable cannot be avoided. Having
insurance is a worthwhile investment for protecting you and your loved ones.
However, getting insurance of any kind can involve a lot of jargon that is not
always easy to grasp. Before taking the leap into monthly payments, educate
yourself so that you get a plan that works best for you. An insurance agent can
help fill in the gaps, but below is a group of terms to become familiar with.
Even if you already have a plan, this guide can help you better understand the
terminology.
General Terms
A premium is the amount of money that must be paid to the
insurer who provides coverage. This fee is usually due on a monthly basis. To
achieve a lower premium, shop around for the best possible quote and try to
maintain a good credit record. The deductible is the portion of money that you,
the policyholder, must pay in the case of an accident. The insurer is then
responsible for covering the remainder of costs. Generally, higher deductibles
result in lower premiums. If you decide to go this route, make sure that you
have enough money set aside to cover your higher deductible. A claim is a
request made by the policyholder if an accident occurs. This request is for
costs to be covered by the insurer. The adjuster is the person who analyzes a
claim and provides recommendations for a settlement based on the damage and
policy. Preferred Risk is the term for when an applicant shows lower risk for
accident or injury than the average person. These applicants tend to be
eligible for rate discounts.
Auto
Accident forgiveness is an option provided by some companies
to protect drivers. This option prevents the driver's premium from increasing
after their first at-fault accident. It is especially helpful when the company
extends this forgiveness to others on the policy, such as teen drivers. Other
potential discounts to look into include low annual mileage on your vehicle,
having no accidents in three years, and having multiple cars on the same plan.
Health
There are several different ways of getting health coverage.
Group Health is when an employer provides health insurance plan options for its
employees and their dependents. The policies are normally at a reasonable or
discounted rate. Many people take advantage of this opportunity because it is
convenient and secure. Health Maintenance Organization (HMO) is when the
insured person pays a fixed membership fee ahead of time. In return, they
receive comprehensive health care from a list of approved providers in a
certain area. HMOs are usually more affordable, but they do not provide as much
coverage. Preferred Provider Organization (PPO) is a health plan that lists
preferred health care providers. When patients visit the preferred providers, they
may receive incentives such as a lower copay. Copay is a flat rate that the
patient must pay each time they receive services from their healthcare
provider. Another way to lower copayment is through a cost sharing reduction
subsidy that lowers out-of-pockets expenses.
Hopefully, this guide has helped to clarify some of the
terms that can be found in the fine print of policies. Although insurance can
be expensive, there are options available to help lower premium rates. For
example, if you are a college student who gets good grades, you may be eligible
for a good student discount on your auto policy.
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