Insurance 101: Basic Insurance Terminology to Help You Shop for Insurance Protection

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

Automobile 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.

Health Insurance Terminology

The Patient Protection and Affordable Care Act enables more Americans to have access to quality, affordable health insurance. The federally facilitated marketplaces are just one place where people can compare plans. Here is some of the basic terminology for health insurance:

  • Insured – The person(s) covered by the insurance policy.
  • Deductible – The annual amount of money that you must pay out of pocket for medical expenses 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 insurance coverage.
  • Co-payment – A flat fee that you must pay toward the cost of medical visits, your insurance provider pays the remaining balance. For example, you could be responsible for a $10 co-pay for each visit to the doctor.
  • Coinsurance – The percentage that you must pay to share responsibility for your medical claims after you meet your annual deductible. For example, your insurance provider might pay 80% of your claim leaving you responsible for paying the remaining 20%.

Life Insurance Terminology

Are you starting a new family?  Do you have a spouse or children who you want to provide for in life and in death? Gerber Life Insurance offers adult and children’s life insurance to help you protect your family’s future. Here is some of the basic terminology for life insurance:

  • Insured – The person(s) covered by the insurance policy.
  • Premiums – The monthly or annual amount that you must pay in order to have the insurance coverage.
  • Face Amount – The dollar amount that the insurance policy would pay out upon the death of the Insured.
  • Primary Beneficiary – The person(s) designated to receive the proceeds of the life insurance policy upon the death of the Insured.
  • Contingent Beneficiary – The person(s) designated to receive the proceeds of the life insurance policy if the Primary Beneficiary is no longer living.
  • Term Life Coverage – The type of coverage that lasts for only a specified period of time (the “term”) and has a defined ending date. The face amount would be paid to the designated beneficiary if the Insured dies while the policy is in force.
  • Whole Life Coverage – The type of coverage that can last for as long as the Insured is alive, provided that all of the premiums are paid. This type of coverage usually keeps the same premium rate throughout the life of the policy.

View the expanded Gerber Life glossary of life insurance terms here.

Need Assistance?

If you need help in 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. Call us at 1-800-704-2180 to get started.

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Please note: Articles and other information included on this website are intended for the general interest of our readers, and are not intended to express the positions or views of Gerber Life or to provide or constitute, legal, financial, health or other advice. Gerber Life makes no claims, representations, or warranties as to the accuracy, completeness, or appropriateness of this general interest information for your particular circumstances. If you need legal, financial, health or other services, you should contact a duly licensed professional.

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