Insurance Terms and Insurance Policies
We all need insurance [http://hubpages.com/hub/Co-insurance] at some point of our lives. Insurance policies can act as a buffer against accidents and all unfortunate events. Although having an insurance policy is a requirement in most states, that does not necessarily mean that you have to buy every single policy offered by an insurance agent. Insurance policies should be treated like an investment and thus, you must analyze every policy you intend to buy with due diligence before committing yourself to any purchase.
The most important step in buying insurance policies is to know the insurance jargon. Let us start with co-pay and co-insurance. Co-pay is the amount charged by the insurance firm every time the insurance service is accessed while co-insurance is an agreement between the insurance company and you to split the losses incurred, often quoted as percentage. A 70/30 co-insurance would mean that the insurance firm would cover 70% of the loss while you as the policy holder would pay for the remaining 30%. Both concepts are designed by insurance firms to protect themselves from frequent frivolous claims by policy holders. The next two terms would be limit and deductible. As the term suggests, a limit is the maximum amount of payout by the insurance company while a deductible is the amount deducted from your total loss. Take for instance a deductible of $1000. If you incur a loss of $5000, the insurance company will only pay you $4000 (unless it is a franchise deductible) but the insurance firm is not responsible for any loss below $1000.
What are some of the things to consider when you are buying an insurance policy, especially life insurance and annuities? The first thing would of course be the insurance premium. You should always buy a policy that fits your overall budget. The second thing to look for is whether you have any dependents or not. If you do not have any dependents, it certainly makes no sense to buy a life insurance. Last but not least, when it comes to annuities, you have to evaluate your own money personality. Are you good at managing your money? If you are, you probably do not need any annuities at all. Annuities are basically a series of fixed payment over a certain period of time. So, when you purchase an annuity, you are actually paying the insurance firm to handle your money for you. Depending on your situation, you might or might not need any annuities.
Now that you have some basic knowledge about insurance terms and policies, I certainly hope that you will do proper research before buying any insurance policies. Only buy policies that you need.
The most important step in buying insurance policies is to know the insurance jargon. Let us start with co-pay and co-insurance. Co-pay is the amount charged by the insurance firm every time the insurance service is accessed while co-insurance is an agreement between the insurance company and you to split the losses incurred, often quoted as percentage. A 70/30 co-insurance would mean that the insurance firm would cover 70% of the loss while you as the policy holder would pay for the remaining 30%. Both concepts are designed by insurance firms to protect themselves from frequent frivolous claims by policy holders. The next two terms would be limit and deductible. As the term suggests, a limit is the maximum amount of payout by the insurance company while a deductible is the amount deducted from your total loss. Take for instance a deductible of $1000. If you incur a loss of $5000, the insurance company will only pay you $4000 (unless it is a franchise deductible) but the insurance firm is not responsible for any loss below $1000.
What are some of the things to consider when you are buying an insurance policy, especially life insurance and annuities? The first thing would of course be the insurance premium. You should always buy a policy that fits your overall budget. The second thing to look for is whether you have any dependents or not. If you do not have any dependents, it certainly makes no sense to buy a life insurance. Last but not least, when it comes to annuities, you have to evaluate your own money personality. Are you good at managing your money? If you are, you probably do not need any annuities at all. Annuities are basically a series of fixed payment over a certain period of time. So, when you purchase an annuity, you are actually paying the insurance firm to handle your money for you. Depending on your situation, you might or might not need any annuities.
Now that you have some basic knowledge about insurance terms and policies, I certainly hope that you will do proper research before buying any insurance policies. Only buy policies that you need.
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