{"id":5068,"date":"2024-12-24T07:24:57","date_gmt":"2024-12-24T15:24:57","guid":{"rendered":"https:\/\/www.vernfonk.com\/blog\/?p=5068"},"modified":"2024-12-24T07:25:00","modified_gmt":"2024-12-24T15:25:00","slug":"insurance-jargon-translation","status":"publish","type":"post","link":"https:\/\/www.vernfonk.com\/blog\/tips\/insurance-jargon-translation\/","title":{"rendered":"Insurance Jargon: Translating the Language of \u2018Insurancese\u2019\u00a0"},"content":{"rendered":"\n

Read any good insurance policies lately? Probably not. They\u2019re not exactly riveting. Part of the problem is the inscrutable coverage jargon. What\u2019s with all this talk about claims, beneficiaries, deductibles, and premiums, anyway? It\u2019s like a foreign language that evokes a whole new set of insurance FAQs<\/a>. <\/p>\n\n\n\n

But not really. All you need is some kind of an insurance jargon translation guide. Sort of like this one. You\u2019re welcome. <\/p>\n\n\n\n

Why Insurance Jargon Can Be Baffling<\/strong> <\/h2>\n\n\n\n

Every industry has its own buzzwords. In the case of industries that don\u2019t regularly interact with the general public, those unfamiliar words and phrases don\u2019t cause any problems. All of the \u201cinsiders\u201d know the language, and that\u2019s all that really matters. <\/p>\n\n\n\n

Insurance jargon is different, though. You become exposed to the baffling terminology every time you insure your car, your home or apartment, and even your life and health. Therefore, what you don\u2019t know \u2026 matters<\/em>. You might have to sign documents and make regular payments that could total many thousands of dollars on a topic you don\u2019t truly even understand. <\/p>\n\n\n\n

That\u2019s why this insurance glossary is worth at least a quick read-through. Here are a few important real-world insurance jargon definitions. <\/p>\n\n\n\n

Premium: The Price You Pay for Adulting<\/strong> <\/h3>\n\n\n\n

This term might sound more positive than it really is. Outside of the industry, a premium is a gift or a valuable item of one kind or another that you\u2019re given. In policy jargon, it means \u2026 what you\u2019ll be charged. It\u2019s the rate that you\u2019ll pay on a monthly, quarterly, or otherwise pre-determined basis for your policy. Disappointing, right? You won\u2019t get<\/em> a premium. You\u2019ll pay<\/em> it. Oh well. <\/p>\n\n\n\n

Deductible: The Price of Your Misfortunes<\/strong> <\/h3>\n\n\n\n

Your deductible is the amount of money you agree to pay for a covered claim before your insurer takes over the rest of the financial responsibility. If you turn in a claim for $2,000 in covered damages to your car and you carry a $500 deductible, you\u2019ll pay $500, and your insurer will pay the remaining $1,500. <\/p>\n\n\n\n

The higher your deductible, the lower your premiums. That\u2019s because your insurer will be responsible for a smaller portion of the claim if you have a higher deductible. So, how do you use that strategy? <\/p>\n\n\n\n

If you know you\u2019re a cautious and responsible driver who\u2019s relatively unlikely to get into an accident that\u2019s your fault and you have full coverage or collision, you might carry a high deductible for the lowest possible premiums. The downside, of course, is that you\u2019ll pay a steep amount out of pocket if your calculations prove wrong and you do have a pricey accident. <\/p>\n\n\n\n

Deductibles are a part of most policies, not just auto coverage<\/a>. Discuss your deductible options with your agent. Crunch the numbers and find the sweet spot between what you pay in premiums and what you\u2019ll accept in deductibles. <\/p>\n\n\n\n

Claim: When Premiums Turn into Benefits<\/strong>\u00a0<\/h3>\n\n\n\n

An insurance claim is when you contact your insurer and tell them, \u201cI\u2019m finally glad I\u2019ve paid all of those premiums over the last several years.\u201d <\/p>\n\n\n\n

You\u2019re glad because you\u2019ve had a car accident, or your kitchen caught fire, or your family heirlooms were stolen, or\u2026 <\/p>\n\n\n\n

In other words, this is when those premiums finally make a little sense. There really is a reason (a lot of them, actually) you have that policy stashed away \u2026 somewhere. You\u2019re about to collect. <\/p>\n\n\n\n

Underwriting: the Art of Judging Your Life Choices<\/strong> <\/h3>\n\n\n\n

Insurers don\u2019t like to lose money. They\u2019re like, well, every company that way. That\u2019s why they have risk evaluators, also known as underwriters, on staff. Underwriting is the process by which the insurer figures out the odds of at least breaking even on your policy if they offer you one. How much will they have to charge you to get reasonable odds of breaking even? Do they want your business at all? <\/p>\n\n\n\n

It\u2019s math. If you\u2019re applying for an auto policy, the underwriters will determine how many at-fault accidents you\u2019ve had in the past. How many moving violations have you had? Are you a careful driver or a reckless one? <\/p>\n\n\n\n

If it\u2019s homeowners insurance<\/a> you\u2019re after, underwriting will explore the safety of your neighborhood. Have there been break-ins? Is vandalism a factor here? Fires? The underwriters do their math magic and set your premiums on their prediction of how much they\u2019ll have to pay out over time based on your lifestyle, record, and other factors. <\/p>\n\n\n\n

Co-Payment: Cover Charge for Healthcare<\/strong> <\/h3>\n\n\n\n

Your co-payment, or co-pay, is sort of your door charge for medical services. It\u2019s what you pay upfront for care, according to the terms spelled out in your healthcare policy. It\u2019s usually not much money, but you must pay it before you receive services. <\/p>\n\n\n\n

For example, your co-pay for a regular checkup at your doctor\u2019s office might be $25. It could cost somewhat more for lab work or to see a specialist. Once you\u2019ve met your deductible, your insurer will pay the majority of the cost for your treatment \u2014 minus your co-pay. <\/p>\n\n\n\n

Beneficiary: The Lucky Winner of Your Insurance Jackpot<\/strong> <\/h3>\n\n\n\n

Break the word down. \u201cBeneficiary\u201d seems to have the word \u201cbenefit\u201d in it, doesn\u2019t it? That\u2019s no accident since your beneficiaries definitely benefit when your life insurance policy pays off. <\/p>\n\n\n\n

Your beneficiaries are the person or persons you designate to receive the death benefit, also known as the face amount. If you carry a $500,000 life insurance policy, its face amount or death benefit is that half-million-dollar figure. <\/p>\n\n\n\n

Your beneficiaries might change over the years as loved ones die or are born or otherwise change status. You can change your beneficiaries as often as you like. Either do it online or contact your life policy agent. <\/p>\n\n\n\n

Rider: The Add-On You Didn\u2019t Know You Needed<\/strong>\u00a0<\/h3>\n\n\n\n

Think of your policy as a living document that can change with the times. When it needs to be amended \u2014 when you want to add benefits, modify terms, or change the policy to confront new realities \u2014 you might add a rider to your life, homeowners, renters, or auto insurance policy. <\/p>\n\n\n\n

Think of a rider as ride-along language that changes your policy slightly. For instance, you inherit a valuable vinyl record collection that\u2019s worth more than your existing renters insurance coverage limits. Your rider might cover your new collection separately but within the framework of the existing plan. <\/p>\n\n\n\n

A rider generally changes the scope of the existing policy, but not by so much that a new policy must be written.\u00a0<\/p>\n\n\n\n

\"Man<\/figure><\/div>\n\n\n\n

Act of God: Nature\u2019s Way of Changing Your Plans<\/strong> <\/h3>\n\n\n\n

Insurers love it when their policyholders are careful, responsible, organized planners. Those are the people who\u2019ll keep the speed down on the road, keep their home well-maintained, and eat nutritiously and regularly exercise to stay healthy and live long, productive lives. <\/p>\n\n\n\n

But what most of us have learned over time is that you can\u2019t avoid every risk. When nature throws a tantrum, the insurance industry calls it an act of God. Such \u201cacts\u201d include tornadoes, hurricanes, earthquakes, floods, hail storms, and other cataclysmic behaviors of nature that can harm people or property. <\/p>\n\n\n\n

These so-called acts of God can be treated differently, depending on your policy and your insurer and the particular cataclysm. Sometimes, you need to purchase a separate policy to cover specific acts of God. For instance, if you live in a flood zone, your standard homeowners policy might not cover flooding because it\u2019s such a likely \u2014 and expensive \u2014 risk at that location. You\u2019ll have to buy separate flood insurance. <\/p>\n\n\n\n

Gap Insurance: Financial Lifesaver for New Car Owners<\/strong> <\/h3>\n\n\n\n

Buy low and sell high. That\u2019s great investment advice. It might work with stocks and bonds, art, jewelry, antiques, homes, and other property. But that wise wealth-building strategy probably won\u2019t cover your car. That\u2019s because most vehicles depreciate. That means they lose their value over time\u2013quickly. <\/p>\n\n\n\n

Let\u2019s say you bought a shiny new $40,000 sports car and totaled it before making your first car payment. Your finance company says you owed $40,000, but your insurer says you now have a \u201cused\u201d car that\u2019s currently worth $30,000. Your insurer promptly sends a check for that amount to your finance company. Then, your finance company informs you that you still owe $10,000 for a ride that no longer exists except in the form of torn metal and broken glass in a scrapyard. You\u2019re in trouble \u2014 unless you have gap insurance. <\/p>\n\n\n\n

A gap policy covers your new vehicle for that narrow window of time in which you owe more than your car is worth. It\u2019s a narrow window because our equity, or ownership value, in the vehicle will increase as you make car payments. And the rate of depreciation will slow down over time. <\/p>\n\n\n\n

Ask your auto insurance agent about carrying low-cost gap insurance for the first several months of your loan until your equity in the vehicle increases sufficiently. <\/p>\n\n\n\n

Annuities: The Gold Mine of Retirement Plans<\/strong> <\/h3>\n\n\n\n

If you have a million-dollar life insurance policy, you\u2019ll have some very happy beneficiaries (that is, once they get over their grief at losing you). You, however, will get nada for that million-dollar policy. Zilch. <\/p>\n\n\n\n

What if you could invest in a policy that lets you pay a lump sum or a regular contribution every month for years in exchange for a guaranteed monthly payment from the insurer? That\u2019s an annuity. <\/p>\n\n\n\n

The idea is to invest in the annuity while you\u2019re young and fully employed and can afford the payment. The insurance company will invest the money you pay in your young and healthy years and send you a check every month once you hit 65, or whatever the annuitization date is, and you\u2019ll keep getting paid \u2026 for potentially the rest of your life. <\/p>\n\n\n\n

In this way, an annuity is sort of like having a life insurance policy in which you\u2019re the beneficiary \u2014 and you get to cash in long before your death. <\/p>\n\n\n\n

Sign Up for Easy-to-Understand Insurance<\/strong> <\/h2>\n\n\n\n

Sure, we use buzzwords at the office. But we also know that our policyholders don\u2019t necessarily know that language. That\u2019s why we keep it simple at Vern Fonk Insurance. We won\u2019t try to impress you with all of the big words and phrases that you don\u2019t know.  <\/p>\n\n\n\n

You won\u2019t need an insurance glossary or insurance terms explained when you meet with us. Just ask us to humanize the language if we start to get a little \u201cbuzzy\u201d on you. <\/p>\n\n\n\n

Call Vern Fonk Insurance at (800) 455-8276<\/a> or get a quick quote online<\/a>. You can also find a Washington office and agent near you<\/a>.\u00a0<\/p>\n\n\n\n

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Read any good insurance policies lately? Probably not. They\u2019re not exactly riveting. Part of the problem is the inscrutable coverage jargon. What\u2019s with all this talk about claims, beneficiaries, deductibles, and premiums, anyway? It\u2019s like a foreign language that evokes a whole new set of insurance FAQs.  But not really. All you need is some […]<\/p>\n","protected":false},"author":22,"featured_media":5070,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[25],"tags":[],"class_list":["post-5068","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tips"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/posts\/5068","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/comments?post=5068"}],"version-history":[{"count":1,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/posts\/5068\/revisions"}],"predecessor-version":[{"id":5071,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/posts\/5068\/revisions\/5071"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/media\/5070"}],"wp:attachment":[{"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/media?parent=5068"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/categories?post=5068"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vernfonk.com\/blog\/wp-json\/wp\/v2\/tags?post=5068"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}