An insurance premium is the amount of money you pay to get insurance coverage. Sometimes referred to as an insurance rate, your premium is determined by several factors. With auto insurance, your driving record, the age of the car you drive, and even how far you commute to work can affect your premium. Factors that impact your homeowner’s premium include the value of your home, and whether it’s located in a part of the country that experiences a lot of crime or natural disasters. Age, health history, and even where you live are just a few things taken into consideration when determining your health insurance premium. No matter what type of insurance you’re looking into, you’ll generally pay more for more comprehensive coverage.
A deductible is the amount you pay before your insurance takes over. Typically, the higher deductible you set, the less your premium will be. The downside is, when you file a claim you’ll have to pay out-of-pocket more before your insurance kicks in. On the other hand, if you have a low deductable, your premium will be more, but you’ll pay less when you file a claim. If your medical insurance deductible is $1,000, you’ll be responsible for all of your medical bills until you’ve paid $1,000, and “met your deductible.” After that, your insurance will start contributing to your bills.
Exclusions refer to losses that your insurance policy does not cover. For example, a car insurance policy typically “excludes,” or will not pay for, damage the policy owner makes to their own car or for a mechanical or electrical breakdown.
A co-pay is a predetermined amount you pay for a medical service or a prescription at the time you receive it. Your co-pay is outlined in your health insurance policy and varies depending on what service you receive. For example, your policy may stipulate a $40 co-pay for a doctor’s visit, a $100 co-pay for an emergency room visit and a $20 prescription co-pay. If you visit the doctor often or need expensive prescriptions, it’s a good idea to choose a policy with low co-pays.
As the name implies, your out-of-pocket maximum is the most you’ll pay annually for healthcare related expenses that can be claimed on your insurance. For example, if your policy has an out-of-pocket maximum of $5,000, but you incur $15,000 in coverable healthcare bills, you’ll still only pay $5,000. The remaining $10,000 will be paid by your insurance provider. If you are unhappy with how convoluted your insurance policy is, or have questions about how an insurance policy works, give the insurance professionals a call today. They can help you compare policies from different insurance providers to find one that is best for your specific circumstances.
Study Source: www.forbes.com