Basic Terms Miami Insurance Policy Holders Should Understand (Including Deductibles and Premiums)

Basic Terms Miami Insurance Policy Holders Should Understand (Including Deductibles and Premiums)

Insurance can bit when first reviewing your policy. From car insurance Florida has or to business insurance, there is a multitude of terms that may be unfamiliar. Premiums, deductibles, co-pays, and limits are easily explained. Review the terms to be in the know.

In short:

Premium: What you pay monthly to maintain insurance

Deductible: The amount that must be paid before insurance steps in for the rest

Co-pay: Fees outside the deductible that is owed as a cost for routine services

Limit: The highest amount an insurance company will pay for a claim

 

Premium

A premium is what you pay monthly to maintain insurance. Having insurance is needed from business to boating to have solid peace of mind. This payment is needed on a consistent basis to maintain insurance. Employer-based plans can deduct premiums from paychecks and the government will consider it pre-tax dollars. Those with independent policies, such as freelancers, may pay premiums as they do their taxes: annually or quarterly. Health insurance premiums may differ depending on the plan and pre-existing medical conditions.

Deductible

Deductibles are the amount that must be paid before insurance steps in for the rest. In the car insurance world, if a collision causes $3,000 of damage to the policyholder’s vehicle and their deductible is $500, the policyholder will only have to pay $500 for the total repair. The auto insurance company will pay to pay the remaining $2,500. Increasing deductibles can be a smart way to save money as it can greatly reduce the cost of repairs. A yacht policy dictates that the percentage of the worth determines the deductible.

Your health insurance deductible is the amount that you will have to pay annually for your healthcare (such as surgical procedures, blood tests, or hospitalizations — but not some routine care) before the health insurance pays anything.

For example, if you have a $2,500 deductible and undergo three $1,000 procedures in a year, you will have to pay the full bill for the first two procedures and $500 of the third … your insurance will cover half of the third procedure.

Co-pay

A co-pay is a fee outside the deductible that is owed as a cost for routine services. Payment will be relatively the same regardless of the extent of the visit or the price of the prescription. Plans will have to define what is considered a routine service.

Limit

A limit is the highest amount an insurance company will pay for a claim that your auto policy covers. A limit of $ 15, 000 will cover the said amount in the event of a collision. However if the repairs add up to $17,000, the overage will be paid out-of-pocket. The higher coverage limit equals to a higher payout for a covered loss.

Takeaway

Review the most commonly misunderstood terms and how they apply to the different forms of insurance to be informed and gain the ability to decipher policies without breaking a sweat.

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