Insurance
By Eric Tang
What is Insurance?
Insurance is an agreement by which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Insurance companies make money by pooling losses and aggregating risk across its clients
Insurance policies are used to hedge against risk and losses that result from damaged property, harm, or injury
Most common types of insurance include auto, health, home, and life insurance and most people have at least one of these types of insurance (car insurance is even required by law)
More specific types of insurance exist for more specific use cases
Common Terms
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Premium – the price of a policy, typically expressed as a monthly cost, determined on the risk to the insurer
Policy Limit – the maximum amount an insurer will pay under a policy (can be specified over a specific period of time)
Deductible – the amount the policy-holder must pay out-of-pocket before the insurer covers anything
Co-Pay – a fixed amount paid for a medical service by a patient before receiving medical service
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Provider Network – a group of medical providers that have established a relationship with an insurance company to provide health care services
Pre-existing conditions – injury or illness that an individual may have prior to getting an insurance plan
Beneficiary – the person who would receive insurance benefits if the policy holder were to pass away while on the plan (such as children or spouses)
Home and Auto Insurance
Home and auto insurance typically compensate you when some sort of damage or loss is incurred on the property the plan pertains to (fire, car crash, theft, etc.)
After paying off a deductible you will be compensated based on the outline of the plan, typically as an assessment of the value of the damage or loss incurred
Find a Policy
Search for plans across many insurance companies
Pay a Premium
Pay a monthly, semi-annual, or annual amount to insurance company
Submit a Claim
Take photos or submit police reports to prove an incident occurred
Receive Reimbursement
After deductible is exceeded you will receive payment or compensation
Health Insurance
What is it?
Health insurance is simply a product that covers your medical expenses.
Like auto insurance covers your car if you get into an accident, health insurance covers you if you get sick or injured.
Health insurance also covers preventive care i.e., doctor visits and tests before you get sick.
Do I Need it?
Everyone should have medical insurance because medical expenses are simply too high to cover out of pocket.
Medical bills are a leading cause of consumer debt and related financial problems (e.g., bankruptcy and home foreclosure).
But Don’t Fear! There are many ways to make sure you are covered.
What’s Next?
How Do I Get Covered?
In the US, there are many options to get covered. Typically, health is covered by employers but there are many other options including Medicare, Medicaid, college sponsored, COBRA for self employers, and many more!
To find the right option for you, HealthCare.gov is a great resource
Terminology
Copay: A payment made by you in addition to the insurer. It is important to note that in health care you share the cost with the insurer.
Deductible: The amount paid out of pocket by you before the insurer pays any expenses
While every plan is different, these elements are of a part of many health insurance plans.
Healthcare Recap
01
Find the plan that is right for you
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Pay for premiums and potential co-pays on your healthcare costs
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Feel at ease that you are covered if there is any major medical expense