Posts Tagged ‘deductible’

Dissecting the Deductible

Friday, March 26th, 2010

While many people may have some form of insurance, they do not always understand exactly what it really means to have a deductible. The fine print is not always clear enough, even if it states the terms in black and white. The layperson does not always read and understand legalese the way the insurance company and a lawyer might. This is especially true for those shopping for insurance and the newly insured.

Deductibles Defined

For the most part, almost any insurance plan will involve a deductible. There are of course a few exceptions, one being life insurance, however, if your insurance plan mentions a deductible, there are a few things you will need to know.

The deductible is the amount that you will have to pay out of pocket before your insurance will take over the costs. Say you have a deductible of $1000 on your car insurance. You will have to pay this much yourself before your insurance will kick in or in the event of an accident before you have fulfilled your deductible requirements, the insurance will pay you the amount of your claim minus the deductible. The exception is a claim that is less than your deductible. if your deductible has not been paid and the claim is less, the insurance company will cover nothing.

Deductible amounts will vary from insurance plan to insurance plan, but are typically in balance with the premiums being paid. If you want a plan with low to no deductible, you will have to pay a higher premium. If you want a lower premium, your deductible will be higher. You really want to pick an insurance plan that has a balance between the two that will make your policy affordable and offer reasonable coverage after the deductible has been met.

What is the Purpose?

The reasoning boils down to three things, really. For one, this is a way to encourage people to take more responsibility for themselves and what is theirs. Secondly, deductibles can reduce your premiums somewhat (and hey, any amount of savings matter these days, right?) because the insurance company will have less to pay out on claims. Finally, deductibles are also about human morality; right and wrong. having a deductible teaches responsibility, as mentioned before, reduces carelessness, and lessens the number of petty claims being made and paid out.

Now that you have a better understanding of deductibles, compare premiums and deductibles to be sure you are getting a good deal, whatever the insurance plan, and remember to pay those premiums and meet your out-of-pocket responsibility so you are guaranteed the full coverage of your plan.

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Health Insurance Lingo Explained

Thursday, December 17th, 2009

When searching for health insurance you must have a good understanding of health insurance lingo. After all, you can’t be sure you are getting the best insurance and the most adequate health insurance coverage for both you and your family if you don’t understand the policy.

There is no reason why you should be confused when you read your health insurance policy. Make it a point to understand commonly used terms in the health insurance field and if you don’t understand something, contact your health insurer for an explanation.

So, what are you waiting for? Pull out that health insurance handbook and start learning about your policy!

Common Health Insurance Terms to Know

  • Deductible - A deductible is the amount of money that you must pay out of pocket before your health insurer begins to pay out benefits. Deductibles are usually calculated on an annual basis, meaning that your satisfied deductible amount starts at $0 every year. Some services, however, in your health insurance policy are covered without the need to meet the deductible, such as annual checkups and doctor visits. Pay close attention to your deductible details if you have a family, as often times each member of the family must meet their own deductible before the insurer begins paying for benefits.

  • Co-Payments/Co-Insurance - Co-payments, often referred to as co-insurance, are amounts that must be paid for receiving care or prescription benefits. There are typically different co-payments for emergency room visits, doctors’ visits and prescriptions, so take the time to educate yourself about your co-payments so that you can be prepared to pay at the time of your next doctor or emergency room visit.

  • Lifetime Maximum - Many consumers are simply unaware of their policy’s lifetime maximum; however, it is important to understand that a lifetime maximum is the maximum amount of money you can spend on healthcare during your lifetime; exceed that amount and you are not covered.

  • Pre-Existing Conditions - If you are switching health insurers and you have an existing medical condition, be aware that many health insurance companies will not cover your “pre-existing medical condition.” Some plans cover pre-existing medical conditions; some plans cover them after a certain grace period has elapsed; and some simply don’t cover them at all. Make it a point to thoroughly understand pre-existing medical conditions before switching health insurance.

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Understanding Health Insurance Terminology for You and Your Family

Thursday, July 16th, 2009

As you examine your health bill, you may notice that the terms, labels, and various titles are not only confusing, but overwhelming! Rest assured that in the case of health insurance confusion, you are not alone. Yet, by understanding the terminology that is used by most health insurance companies, you can easily navigate your way through a clearer understanding of your health insurance policy and claims.

Common Health Insurance Terms

Co- Payment - A co-payment is the amount of money that you must pay in order to receive a medical treatment / service. The co-pay is not covered by your insurance company.

Covered Expenses - While you must pay your co-pay, the insurance company will pay for all “covered expenses. Each health policy has its own list of covered and uncovered treatments. For example, some policies pay for chiropractic care, while others may not.

Deductible - A deductible is how much money you must pay (out of pocket) before the insurance company will begin to cover costs of treatment. For example, if seeing a psychologist, an insurance company may require that a patient pays a $1,000 deductible before the company begins to cover the costs of treatment.

Exclusions - Exclusions are specific treatments, circumstances, conditions, or diseases that the policy will not cover / not pay for treatment.

PPO - PPO stands for Preferred Provider Organization, which basically means that the insurance company covers more of the costs of treatment if a patient visits one of the “cooperating facilities.” While insurance will cover doctors out of their preferred organization, patients will be forced to pay a higher out-of-pocket cost.

Premium - A premium is the amount of money that your employer pays in order for you (as well as fellow employees) to receive health insurance coverage.

Provider - Any hospital, clinic, or institution that provides medical care. This also includes any person, such as a doctor or nurse, who provides medical care.

Also, in addition to understanding basic health insurance terms, be aware that some health insurance policies may challenge certain medical charges. Typically patients with challenged charges will receive a notification in the mail. The notification will explain the details of the challenged charges, as the notification will also inform patients how to refute / oppose any insurance challenges.

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Homeowners Insurance and Neighbor Liability

Tuesday, June 16th, 2009

When your tree falls does your neighbor hear it?  Most certainly if it falls on his property and damages the home, auto, or other personal property.  But the question is, if a tree rooted in your property falls onto someone else’s, are you liable for damages?

The short answer is no.  But look further than that answer at the ultimate liability.  Technically speaking, claims for damage to a home are handled by that specific homeowner’s insurance.  Thus, if your tree falls onto his property and breaks a window (or worse), your neighbor’s insurance will handle the repairs.  Your homeowners policy and premium rates won’t be affected, but don’t discount that a neighbor may request that you pay any deductible amount he owes on a claim since the damage was caused from your tree.

Prevention and Negligence

Tree damage has always been a point of contention for homeowners.  Say, for instance, that you have a large tree on your property that has been diagnosed with Dutch Elm Disease.  The tree is literally dissolving from the inside.  What if a wind storm comes along and blows that tree over and damages your neighbor’s house?  Are you liable for negligence for not having the tree removed earlier?  Most likely if there is documentation existing about the diagnosis and especially if your neighbor had complained previously in the past about potential damage.

However, if you have taken good preventative maintenance on your trees such as pruning branches and checking for disease regularly, then tree damage from a sudden wind storm is just another risk that insurance companies will take.  Your insurance company will defend you in court if they are certain that you were not negligent with maintenance, and pay for damages if the court determines that you were.

Good Fences, Good Neighbors

Ultimately, however, you need to decide how well you want to maintain your neighborly relations.  If you know for certain that a tree accident is your fault then paying for repairs is logical.  And sometimes you may just want to keep good relationships with your neighbor and offer to split repair costs.  In any case, it is always wise to keep trees maintained properly to avoid the situation from happening.

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Is Earthquake Insurance Worth The Cost?

Friday, May 22nd, 2009

Surprisingly, most homeowners who live in an active earthquake region do not have earthquake insurance along with their regular homeowners policy.  But when an earthquake hits you can bet that insurance companies are flooded with phone calls from homeowners suddenly aware of the benefits of the coverage.

Most homeowners insurance policies have exclusions for earthquake damage.  Especially in regions of the country where active faults exist.  Insurance companies like to stack the proverbial deck in their favor as much as possible, so anyplace there is a possible earthquake will likely not include earthquake coverage on a basic policy.

So, what can you do if you own a home in earthquake-prone territory?  There are many things to consider about earthquake insurance in addition to a regular homeowners policy.

Premium cost - Earthquake insurance can be just as, and sometimes even more than, your regular homeowners policy.  You can bet that high risk areas like Seattle or San Francisco are big red flags to insurance companies.  If you want to protect your financial investment in your home from earthquake damage or destruction in one of these places, expect to pay for it.

Deductible - Also, insurance companies will further protect their risk involvement by establishing high deductibles.  It’s not surprising to see deductibles of $50,000 to even $75,000 on earthquake policies.  That means if there is damage from an earthquake that is less than your high deductible amount, you are still responsible for the total cost.

Retrofitting - One way to protect against earthquake damage and save on earthquake insurance premiums is to retrofit an older home, or buy a newer home constructed with earthquake resistant materials and architecture.  Retrofitting means adding elements to match basic seismic standards.  Flexible piping, sheer panels, and bolting the foundation are examples of earthquake retrofitting.

Earthquake insurance is expensive. However, if you live in earthquake territory, have considerable equity in your home, and you cannot afford to rebuild your home on your own, an earthquake policy may be sound financial advice.

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