The terminology used by an insurance agent can be daunting. Most of us have heard the terms numerous times, but cannot explain what they really mean. Not fully comprehending these terms can be problematic for the average consumer. These terms indicate the type of coverage the policy issues. If you choose the wrong one based on ignorance, your entire future could be at stake. The good news is that you don’t have to stay in the dark. Learn the parlance of an insurance agent to get the best policy for yourself.
In the World of Auto Insurance
The first car insurance distinction to know is the difference between insurer and insured. Although this seems fairly intuitive, it is easy to confuse. The insurer is the insurance agency that issues the policy. The insured is the named party on the policy. It can also refer to other parties that the policy covers.
Another often used, but misunderstood term is deductible. In insurance-talk, the deductible is a sum of money the insured will pay to activate the policy coverage. For example, when you are in an accident, you’ll pay a deductible before the policy will pick up the rest of the tab. The deductible is set in the insurance contract. When you sign up for a new policy, you will likely have the choice of several deductible options. The of the deductible will affect your monthly insurance payment.
Since we mentioned monthly payments we should discuss the premium. This term is just a fancy word for the money you must pay monthly or annually to maintain the policy. Premiums differ from agency to agency, and according to the type of coverage.
The term coverage can refer to a few different things. What the coverage means depends on which word it is paired with. Collision coverage means that the policy covers damage to your vehicle following an accident. Comprehensive coverage covers damage to your vehicle that occurs outside of a car accident.
There are other uses of coverage that are immediately recognizable. Medical payments coverage takes care of any health care bills or funeral costs. This coverage usually applies even if the accident is your fault. Bodily injury coverage is triggered when you are at fault. It covers the medical expenses of other parties. Finally, uninsured motorist coverage pays for the injuries of your vehicle’s occupants when an uninsured driver is at fault.
Learning About Life Insurance
One final area of insurance with confusing terminology is life insurance. This area is rife with unintelligible terms. The face amount is what is payable at death. This is usually the first number people look at when shopping policies.
When it comes to coverage, you may be confronted with term life or whole life terminology. With term life, coverage is effective for a predetermined period of time. If the insured dies within this time, his or her beneficiaries will be entitled to the policy funds. Whole life coverage continues throughout the insured’s lifetime. However, the premiums need to be satisfied to keep the policy active.
Traversing Health Insurance
Health insurance shares some general insurance terms with other types of coverage. When looking at health insurance plans, you’ll see the same references to deductibles and premiums. However, there are a couple of terms that are unique to this field of insurance.
You’ll need to have a good understanding of the co-payment. This is a small payment you’ll make for each visit to the doctor. You should also be aware of the meaning of co-insurance. This term will dictate how much you pay after the deductible is met. Typically policies will require you to pay 20% to 40% of the total medical bill.
Using the Jargon
Now that you understand some of the most commonly used insurance terms, you should have no problem choosing a policy. You can also feel confident speaking to an insurance agent without missing a beat. Knowing the jargon helps you comprehend what you are getting into. It also can help you to customize a policy that meets all of your needs.