Insurance 101: Basic Insurance Terminology to Help You Shop

3 min read

As you experience changing events in life and take on greater responsibilities, you may need to manage different kinds of life, health, or automobile insurance. To help you get started, we have put together this guide to basic insurance terminology.

Health Insurance Terminology

Thanks to the Patient Protection and Affordable Care Act, more Americans can access quality, affordable health insurance. Whether you're exploring the federal marketplace or shopping through a provider, here are some key terms to understand:

Insured: The person(s) covered by the insurance policy.
Deductible: The annual amount you must pay out of pocket before your insurance begins covering medical expenses.
Premiums: The recurring payment (monthly or annually) required to maintain your health coverage.
Co-payment: A set dollar amount you pay for medical visits, with your insurer covering the rest. Example: a $10 co-pay for a doctor’s visit.
Coinsurance: A percentage of costs you share with your insurer after your deductible is met. Example: you pay 20%, and your insurer pays 80%.

Motor Vehicle Insurance Terminology

Requirements regarding auto insurance vary state by state, but the following definitions can be helpful for understanding the basics when shopping for auto insurance:

Insured: The person(s) covered by the insurance policy.
Deductible: The amount of money that you must pay out of pocket for damages sustained, such as in a collision, before your insurance kicks in and starts to make payments.
Premiums: The monthly or annual amount that you must pay in order to have the exchange for insurance coverage.
Collision Coverage: The type of coverage that pays for the damages to your vehicle sustained as a result of a collision with another vehicle or object.
Comprehensive Coverage: The type of coverage that pays for damage to your vehicle sustained as a result of fire, theft, vandalism, or various other stated causes.
Bodily Injury Coverage: The type of coverage that pays for medical expenses and/or funeral costs of other individuals injured, or killed, in an accident for which you are liable.
Medical Payments Coverage: The type of coverage that pays for medical and funeral expenses for anyone covered under your insurance policy in the event of an accident, regardless of fault.
Uninsured Motorist Coverage: The type of coverage that pays for injuries, including death, which you and/or other occupants of your vehicle sustain as a result of a collision with an uninsured driver who is at fault.

Life Insurance Terminology

Are you starting a new family? Do you have a spouse or children you want to provide for—now and in the future? Gerber Life Insurance offers adult and children’s life insurance to help you protect your family’s financial well-being. Here are some key life insurance terms to know:

Insured: The person(s) covered by the insurance policy.
Premiums: The monthly or annual amount you must pay to maintain coverage.
Face Amount: The dollar amount that the policy will pay to your beneficiaries upon the death of the insured.
Primary Beneficiary: The person(s) designated to receive the policy payout after the insured passes away.
Contingent Beneficiary: The person(s) who would receive the payout if the primary beneficiary is no longer living.
Term Life Coverage: Coverage that lasts for a set period (“term”) and pays the face amount if the insured dies during that time.
Whole Life Coverage: Coverage that lasts the lifetime of the insured as long as premiums are paid. Premiums typically remain level throughout the policy.
Cash Value: A feature of whole life policies that build cash value over time and can be borrowed against or withdrawn, depending on the policy terms.

Need Assistance? If you need help understanding the insurance you are shopping for, you can consult an insurance specialist. Don’t be afraid to ask questions if you find something confusing. For example, Gerber Life customer service representatives can help you to understand basic insurance terminology, decide how much life insurance you need and can afford, find out how to choose the best kind of policy for you, and assist you in other ways. Get a free online adult life insurance quote or call us at 1-800-704-2180 to get started.