Insurance 101

I'll be going into a lot more about insurance in the coming weeks, but today we're just going to go over a few of the basics.

Most of us know what insurance is.  It is basically a form of risk management to provide individuals and businesses reimbursement in the event of a significant loss.  Usually insurance is taken out on something of significance, because if the potential loss is small, it doesn't make sense to pay a premium to protect against the loss.  A premium is a monthly payment toward your insurance plan.

Insurance Types and Premium Prices

Monthly premium prices differ greatly depending on what it is you're insuring, whether it's health, group health, dental, auto, homeowners, or life insurance.  Your insurance premiums may be surprisingly lower if your employer offers a plan.  Take health insurance for example.  My job offers a group health plan, making my premium $30 less per month than I was paying before on my own.  Cha-ching!

With something like auto insurance, be sure to remember that your driving record dictates your monthly premium.  If you're in the habit of getting traffic tickets or have had your license suspended, it can cause your premiums to spike.

Deductibles

A deductible is the amount of money you pay before your insurance plan kicks in.  Deductibles vary from state to state, but most are in amounts of $100, $250, $500, or $1000.  Let's say you're in a car accident that causes $2,500 worth of damage and your deductible is $500, you are required to pay the $500 and the insurance company will take care of the remaining $2,000.  This helps the insurance company avoid paying out benefits on relatively small claims.

Claims

In the event of a loss, an insurance claim must be filed.  This is what identifies the amount that will be paid out by the insurance company.  Claims may be filed by insureds directly with the insurer or through brokers or agents.

More coming soon

Premiums, deductibles, and claims are just a few of the more common terms in the insurance field.  In the coming weeks, I'll be breaking down the details about insurance and making sure that you're in the know!

Signing off...

Rob Cartwright