When you start shopping for insurance, you will quickly notice that there are lots of terms you should know about if you want to choose the best option. Because of all these terms, it is understandable why some people might be confused about health and life insurance. Here is a short guide that should clear up any confusion.
Health Insurance: An Overview
Health insurance is a contract between you and an insurance provider that stipulates the type of financial cover they will offer you when you seek treatment. Under this contract, you (the holder) will pay a monthly or annual premium and the insurance company is obligated to cover your medical expenses as agreed upon.
In most cases, the health insurance will cover the costs at the point of treatment, while in some cases, they will reimburse you for what you paid for the treatment. In addition to treatment, some health insurance providers cover a lot more, like the cost of prescription medication or even screening for illnesses such as cancer.
Health Insurance Categories
When deciding on a health insurance plan, you can choose between three main types of health insurance which include individual, family, or senior citizen plans. Do note that these names can change depending on the insurance provider you choose as well as where you are located.
An individual health insurance plan covers a single person. Most personal health insurance plans cover illnesses, hospitalization, accidents, and other medical emergencies. Because different insurance providers cover different things, it is important to shop around so that you get the most affordable plan that offers as many benefits as possible. The best way of doing this is by getting online health insurance quotes, as doing it this way helps you compare different health insurance providers to find a quote and perks that work best for you.
A family insurance plan covers an entire family under one plan while a senior citizen plan covers those over the age of 60. Due to their unique needs, senior citizen insurance policies will usually cover different things compared to individual and family plans.
Life Insurance: An Overview
Life insurance is a cover that pays out a set sum to a family once the holder passes away. Life insurance is a contract between the insurance company and holder that stipulates that the beneficiary or nominee will be taken care of. To make things easier, think about life insurance as a savings plan for your family.
Life Insurance Categories
You can choose from three main types of life insurance; whole, term, and universal. Whole life insurance, as well as term life insurance, has fixed payouts. The only difference is that term life insurance is limited as to when it can be paid out. This is usually 10, 20, or 30 years and if the term lapses before the holder passes away, the payout is forfeited. Whole life insurance does not have this provision and pays out regardless of when the holder passes away.
Universal life insurance is more of an investment option. To increase the payout, some of the premium paid is invested. Since this investment poses some risk to the insurance company, the premiums are usually higher than those of whole and term life insurance options. Life and health insurance can be confusing for a lot of people, but understanding what they cover and how they pay out is an important first step in understanding them.