Insurance can be really confusing. It is actually pretty simple once you understand the basics. You do not have to be an expert to make decisions about Insurance and protecting yourself and your things.
What Is Insurance Really?
At its core Insurance is simple: you pay money to an Insurance company. They agree to help you if something bad happens. It is like sharing risks with people so if something bad happens to you you will not have to pay for everything by yourself. Insurance is about sharing risks with people. It helps you avoid getting into trouble.
Types of Insurance You Should Understand
Health Insurance
This type of Insurance helps pay for doctor visits and hospital stays. There are some words you should know about Health Insurance:
Premium: this is the money you pay to the Insurance company
Deductible: this is the amount of money you have to pay before the Insurance company starts helping you
Copay: this is a fixed amount of money you pay when you see a doctor or get a service
Co-insurance: this is the percentage of the cost that you have to pay after you pay the Deductible
Out-of-pocket maximum: this is the money you will have to pay in a year for medical expenses
Auto Insurance
You need Auto Insurance to drive a car in most places. Auto Insurance helps protect you and other people on the road. There are types of Auto Insurance:
Liability: this pays for damage or injuries you cause to people
Collision: this helps pay for accidents that involve your car
Comprehensive: this helps protect your car from theft, bad weather or vandalism
Motorist: this helps protect you if someone hits you and they do not have Insurance
Homeowners Insurance
This type of Insurance helps protect your house and the things you own. Homeowners Insurance includes:
coverage: this is the part of the Insurance that helps pay for your house and the foundation
Property: this is the part of the Insurance that helps pay for the things you own inside your house
Liability coverage: this is the part of the Insurance that helps pay if someone gets hurt on your property
Living expenses: this is the part of the Insurance that helps pay for a place to stay if you cannot live in your house for a little while
Life Insurance
Life Insurance helps take care of the people who depend on you. There are two types of Life Insurance:
Term life: this type of Insurance lasts for a certain amount of time like 10 or 20 years
Permanent life: this type of Insurance lasts your whole life and has a special savings part
Disability Insurance
Disability Insurance helps replace your income if you get hurt or sick and cannot work. Disability Insurance is really important for making sure you are financially stable.
Common Insurance Misconceptions
Some people think they do not need Insurance if they are young and healthy.. Accidents can happen to anyone and one medical emergency or car accident could cause a lot of debt.
Some people think that having Insurance is always better.. What is really important is having the right amount of Insurance for your needs.
Some people think they cannot afford Insurance.. You can often lower your payments by choosing a higher Deductible.
Some people think that Insurance companies always say no to claims.. Most of the time Insurance companies do pay for legitimate claims. Problems usually happen when people do not understand what their policy says.
Key Insurance Concepts Explained
Deductible: this is the amount of money you have to pay before the Insurance company starts helping you. If you choose a Deductible you will pay less for your Insurance but you will have to pay more out-of-pocket.
Premium: this is the money you pay for your Insurance. You usually pay this every month every months or every year.
Coverage limit: this is the amount of money the Insurance company will pay for a claim.
Exclusion: this is something that is not covered by your Insurance policy.
Grace period: this is the amount of time you have to pay your Insurance payment before you lose your coverage.
Smart Insurance Shopping Tips
Think about what you need: do not buy Insurance that you do not need but make sure you have enough to protect yourself.
Compare prices: different Insurance companies charge prices so shopping around can help you save money.
Ask about discounts: many companies offer discounts if you buy types of Insurance if you are a good driver or if you have certain safety features.
Review your Insurance every year: your life might. You might need to adjust your Insurance.
Read the print: make sure you understand what is not covered by your policy.
Ask questions: the people who sell you Insurance should be able to explain things
The Bottom Line
Insurance does not have to be confusing. If you understand the basics know about the types of Insurance and think about what you really need you can make good choices. You do not have to be an expert you just need to be a consumer. Take the time to understand your Insurance ask questions if you are confused and review your policies regularly. Insurance can give you peace of mind. That is really valuable.
Start today by looking at one of your Insurance policies. You will be surprised at how you can go from being confused to feeling confident, about Insurance.
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