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Sometimes, it can seem like insurance companies speak a different language with unique terms to describe important insurance details.
Bosworth Insurance, a trusted local insurance company in Tyler, Texas, has been serving the local community for multiple generations and understands how confusing it can be.
To help make things easier, here’s a brief list explaining insurance jargon you might come across.
You’ll probably often see this insurance term. A premium is another word for how much you pay per month to your insurance company for the agreed-upon coverage. Your premium can be influenced by multiple factors, depending on the policy.
You’ll also often see this term appear regarding your insurance. A deductible is a monetary amount the policyholder must pay before the insurance company pays their part of the overall cost. Generally, if the deductible is higher, the premium will be lower because there’s less financial risk to the insurers. Paying a deductible is a necessary part of paying insurance.
Once the deductible has been met, the costs of covered healthcare services will be split between the insured individual and the insurance company. Co-pays are typically due at the time of service, with the insurance company covering the remaining costs according to the terms of the insurance plan. One of the more common co-pay splits is 80/20, where the insurance company pays for 80% of the service, while the insured individual is responsible for the remaining 20%.
This is an important term to know and understand, especially regarding your health insurance coverage. Your deductible and co-pays are all coming “out of pocket” or out of your own pocket. Many policies will have a maximum out-of-pocket amount you are responsible for paying before the insurance company takes over 100% of the costs. Once you have paid the out-of-pocket maximum through your deductible and co-pay, your insurance will fully cover in-network services for the remainder of the insurance year.
If you’re looking for a provider and/or specific medical services, you might come across this term. An out-of-network provider is someone that’s not a part of your health plan’s network. When it comes to your medical insurance, that doesn’t mean you can’t utilize their services, but it does mean you’ll probably pay additional out-of-pocket costs to utilize their services.
It’s important to have a full understanding of the conditions of your insurance policy. The conditions are the terms you and your insurance provider agreed on and the requirements of the policy.
Comprehensive coverage refers to when you have an auto insurance policy that covers different things depending on your unique vehicle coverage. Comprehensive coverage pays for damages that can happen outside of an accident, such as theft, natural disaster, or fire.
That’s where Underinsured/Uninsured Motorist Coverage comes in. This type of coverage works mostly the same way, except that underinsured motorist coverage also gives you protection in the event the driver who is at fault has insurance but not enough to cover the damages. Uninsured coverage gives you protection when an accident happens, and the driver who is at fault isn’t covered by liability insurance.
More and more people are caretaking their loved ones these days. If you’re a part of this demographic, you might want to investigate long-term care coverage. This type of insurance helps cover the financial cost of both medical and nonmedical care for elderly individuals who can no longer care for themselves. Long-term care insurance covers necessary services such as assisted living facilities, nursing homes, and adult care centers.
When it comes to your home insurance, this is an important term to be familiar with. The actual cash value coverage refers to how much your property is valued at the time of a loss, which is different than the replacement cost coverage. The replacement cost coverage refers to how much it will be to fix or replace your house and personal effects in the event of a loss. These terms may also apply to your renter’s insurance, but it’s important to discuss that with your insurance provider.
When you take out a life insurance policy, you will need to designate a beneficiary. The beneficiary can be either a person or an entity (such as a charity or university) that receives the death benefit when a policyholder passes away. A beneficiary doesn’t have to be just one person but can also refer to multiple family members or even friends. They will receive the death benefit, which refers to the monetary amount paid by the insurer after the policyholder’s death.
There are multiple different types of life insurance:
Term insurance refers to a policy that applies only for a specific period of time.
Permanent life insurance refers to a policy that provides lifetime coverage and a cash value that a policyholder has access to in the event they want to borrow from it. The cash value builds over time.
Universal life insurance is also a market-based permanent insurance policy that builds savings over time.
If at any time you’re confused by the terms and “jargon” within your insurance policy, don’t hesitate to reach out to your local insurance company and ask for an explanation. It’s important to understand all aspects of your insurance to ensure your coverage fully works for you.
