Insurance Terms and Definitions
- Coinsurance: The percentage of each claim you must pay after your deductible is met.
- Copayment: A predetermined amount you must pay for certain health care services.
- Deductible: The amount you must pay before your health insurance benefits kick in.
- Exclusions: Terms and or conditions that are not covered by your health insurance plan.
- Health Maintenance Organization (HMO): A health insurance plan that allows you to use the services of participating in-network physicians, hospitals and clinics.
- Health Savings Account: A plan that allows you to contribute and use pre-tax money for qualified medical expenses. These accounts are portable and must be linked to a high-deductible health insurance plan.
- High-Deductible Health Plan: A health insurance plan with lower premiums that covers health care expenses only after you meet your deductible each year.
- Out-of-Pocket Maximum: A predetermined amount of money you must pay before your health insurance plan covers eligible costs at 100 percent.
- Point-of-Service Plan (POS): A health insurance plan that allows you to choose between in-network and out-of-network care each time you need medical treatment.
- Pre-Existing Condition: A coverage limitation on certain medical conditions for a specified period of time under a new policy.
- Preferred Provider Organization (PPO) Plan: Robust coverage with an expansive provider network. Allows you to go to your provider of choice without a referral.
- Waiting Period: The time that must pass before you can collect insurance benefits.
- Term Life Insurance: Life insurance that provides protection for a specified period of time.
- Accidental Death Benefit (ADB): A payout if a death was caused by an accident, subject to timing and policy restrictions.
- Cash Value (CV): A portion of your premium that grows tax-deferred and may be borrowed against, withdrawn, or used to pay premiums.
- Class: A risk category assigned during underwriting based on health history, lifestyle, family history, hobbies, and occupation.
- Death Benefit (DB): The funds your beneficiaries receive upon your death, generally paid income tax-free.
- Fully Paid-Up Policy: A life insurance policy with all required premiums already paid, allowing it to remain in force with no further payments.
- Loan Value (LV): The amount available to borrow against the accumulated cash value of a whole or universal life policy.
- Replacement of an Existing Policy: Canceling current coverage and securing a new policy because rates, coverage, or needs have changed.
- Underwriting: The process an insurance carrier uses to assess the risk of providing coverage.
- Waiver of Premium (WP): A rider that waives premium payments if the policyholder becomes critically ill, seriously injured, or physically impaired.
Frequently Asked Questions
How much Disability Insurance Coverage do I need?*
Everyone’s circumstances are different, so the benefit will vary. Consult with an insurance professional or financial advisor for personalized advice.
- Figure out your gross annual income, minus bonuses and incentive payments.
- Add your monthly expenses, including housing, food, transportation, and other essential costs.
- Decide how much of your income you want to protect, typically 60-80% of your after-tax income.
How much Life Insurance Coverage do I need?*
In order to calculate the amount of life insurance you need:
- Multiply your annual salary by the number of years you want to replace that income.
- List your mortgage, line of credit, and HELOC balances.
- List other debts.
- List current and future expenses you deem necessary such as school tuition, final expenses, estate taxes, and daycare.
How much Long Term Care Coverage do I need?*
In order to calculate the amount of Long-Term Care Insurance Coverage you need:
- Account for your location, healthcare costs, and personal financial situation.
- Review your monthly income and determine how much you can afford to spend on long-term care.
- Subtract the cost of services from your income to find the remaining amount.
- Use that amount as the minimum coverage needed to meet your expenses.
- Consider the duration of care and whether you may want additional coverage.
Can a DI, Life or LTC Insurance Policy ever be canceled due to health reasons?
The answer is no.
- These policies are guaranteed renewable.
Can changes be made to a DI, Life or LTC Insurance Policy?
The answer is yes.
- Disability: extend the policy term or add riders.
- Life insurance: increase or decrease coverage, add riders, or switch providers.
- Long term care: upgrade or exchange the policy to avoid a premium increase.
Can one person have more than one DI, Life or LTC Insurance Policy?
The answer is yes.
- There are no legal limits on the number of policies a person can have.
- Insurance companies may still limit coverage based on income, net worth, age, and insurer guidelines.
*Consult with a financial advisor and insurance professional for personalized advice. Make sure to account for your location, healthcare costs, and personal financial situation.
Contact Me
Mike Tamburino
Individual & Group Health Benefit Consultant
Leave me a voicemail: 215-801-7070
