Book of Wise Investors

I believe that when it comes to insurance, most of us are almost totally clueless and seeks the advices of a professional financial adviser. But the motto here and what I believe is good for each one of us is to educate ourselves thoroughly and exercise critical thinking as and when it is necessary.

Because no one really cares about you other than you yourself.

Despite weighting off the plus and minus of whole life and term insurance, consumers find it difficult to buy term insurance even though it is more suitable for some, especially if you are the sort of disciplined person to invest the cost savings left over from buying term instead of life.

There are many types of insurances available, covering protection from a person’s backside to every single physical object that he owns.

Regardless of other objectives that buying and holding an insurance policy you have, the most crucial objective in having insurance is for protection.

Deciding on the types and scopes of insurance coverage for each individual is beyond the scope of this blog post but not this blog.

For now, we need to familiarize ourselves with the terminologies used in insurance industry and what every one of us must know. There are many insurance terminologies but as I guess that most of us are busy professionals and don’t have time to read and remember all the terminologies found at this website.

Policyholders and/or dependents

In any types of coverage, there is a person owning the policy and usually, but not always paying for the premiums.

Policyholders will get the monetary benefits for coverage purchased by him while dependents named will get the stated benefits should policyholder die in the event of accident or medical illness. (as in the case of life insurance)

Types and scope of coverage

In other words, what are the events when happened, will result in payouts and the conditions that must be fulfilled before claiming the payouts should the insured events happened.

Take note that there are fine conditions in claiming payouts like if the policyholders commit suicide, and then cannot claim payouts from a life insurance that he owns.

A clear definition of insured events is very important simply because that is what we are paying premiums for.

For example, the conditions behind an insurance policy that covers theft of personal items as discussed previously.

Some examples of types of coverage are,

1. Provide income for policyholders if anything happen to him, resulting in loss of income.
2. Give a sum of money to dependents named by policyholders if policyholders die within the conditions specified.

Premiums

There is no free lunch. You want monetary benefits in the event of both foreseeable and unforeseen circumstances, then you have to pay some money to the insurance company involved in providing you the coverage.

Payments for premiums are usually either in 1 lump sum or some periodic installments like monthly, quarterly or annually.

Take note of the period that you need to pay the premiums for periodic installments as most can only pay by installments, and period of coverage.

Policy Term

This is basically the period of time that the policy is in force.

Only events insured that happened during this period of time which is known as policy term will result in financial compensations.

As a result, the dates are especially important for those who buy term insurance and also travel insurance.

Benefits received

This is basically the monetary benefits received by the policyholders or dependents resulting from insured events happening to policyholders.

Deductible and coinsurance

Many insurance types required policyholders to pay a certain amount out of the pocket first before they can claim reimbursement.

Take note of this figure or how it is calculated, like in the case of medical insurance that covers medical expenses, usually have to cork up own money to pay for what is called deductible and coinsurance.

Thoughts of the day . . .

What happens if you have a medical insurance and have pay for the premiums previously up till the time that you become sick for the illness covered but don’t have money to pay for the deductible and coinsurance?

Related posts:

1. All insurance types that everyone needs
2. Top 4 reasons why you need to buy medical insurance now
3. Learning to decide Insurance purchases for yourself
4. All the different types of life insurance