Insurance 101
What is an Insurance?
In a sense, all insurance polices are like a bet between you and your insurance company. An insurance company agrees to pay or reimburse you for the costs of your care or losses depending on the types of insurance you buy because they hope that over the long run, you will be safe and healthy and pay more in premiums that they will need so to pay you for insurance claims. Usually, they’re right, but you agree to pay premiums and deductibles to an insurance company anyway in order to protect your assets in case you face major costs at some point. You are paying for the peace of mind that comes with that protection.
What is a premium?
A premium is the price you pay for your insurance coverage, whether you use it or not. Your premiums will vary depending on, among other things, how much protection you want to buy , how long your policy will last, the size of your deductible. your age, your health, and how often you make payments.?
What is a deductible?
If something happens and you actually need to make a claim on your insurance policy, the deductible is the amount of money you will have to pay before your insurance company will begin to pay any benefits. Depending on your policy, your deductible can be a fixed dollar amount or a percentage of the total cost of your claim. In other words, you could be responsible for paying the first $500 or $1000. Deductibles often have an annual limit beyond which you would not be required to pay even if you had additional claims. Charges beyond the deductible should be paid, at least partially, by your insurance company.
What is coinsurance?
Coinsurance is the fixed percentage of the covered fees that you are required to pay after your deductible has been substracted from the amount of money owed on a particular claim. In other words, if you had a policy that required you to pay a $300 deductible and 20 percent coinsurance, and you had medical bills, say of $1,300 you would be responsible for paying #300 (your deductible) plus 20 percent of the remaining $1,000 or $200 ( coinsurance) . In this example the claim would cost you a total o of $500 , and the insurance company would pay $800.
