Insurance: Are You As Covered As You Think?
Vague or unclear terminology can be very dangerous if it appears in your insurance policy, as we will explore in this article. Are you prepared for a quick run-through of some common culprits? Follow along as we look at the impact they can have on your insurance coverage and your personal finance.
Definitions
Money Crashers warns insurance consumers that “Valid programs explain the key points before you sign anything (although you may still have to ask for clarification).” This is a vital point - you must ensure that you have fully understood the policy you're buying!
This is the crucial first step: there must be an adequate definition or explanation of the types and extent of the coverage offered. Thus, when you purchase health insurance, for example, you should know what treatment and care you are covered for. This sounds simple, yet it can be a major problem if you misunderstand the coverage provided.
Make sure that you do understand the major terms and definitions involved, then move on to the minor points and "fine print". This means reading through the full policy and any other information provided by the insurer. You should not purchase a policy without understanding what you are buying. Don’t understand it? That leads us into the next point…
Clarifications
Not too many members of the general public hold law degrees. Hence, you might find some difficult-to-understand language when reading through the legal definitions and conditions on a potential health insurance or car insurance policy, for example. There are a couple of possibilities:
Understanding the coverage on an insurance policy is important not only for your existing insurance and during insurance comparison shopping, but also for budgeting: if you know exactly what coverage you currently have from your private health insurance, then you can better predict your overall health care costs, for example. Whatever is not covered by your insurances will have to be paid for by you; don't forget that you may also have to pay an excess on some claims, so make yourself aware of the amounts in question.
When you compare health insurance, home insurance, travel insurance and the like, ambiguous language can certainly undermine your understanding of the coverage. These ambiguities can lead to unfortunate misconceptions that may cost you, as a policy holder, if you've overestimated the extent of your coverage. Do your insurance policies – or the ones that you are comparing – contain vague language? If so, you might want to tackle this before you go any further.
Definitions
Money Crashers warns insurance consumers that “Valid programs explain the key points before you sign anything (although you may still have to ask for clarification).” This is a vital point - you must ensure that you have fully understood the policy you're buying!
This is the crucial first step: there must be an adequate definition or explanation of the types and extent of the coverage offered. Thus, when you purchase health insurance, for example, you should know what treatment and care you are covered for. This sounds simple, yet it can be a major problem if you misunderstand the coverage provided.
Make sure that you do understand the major terms and definitions involved, then move on to the minor points and "fine print". This means reading through the full policy and any other information provided by the insurer. You should not purchase a policy without understanding what you are buying. Don’t understand it? That leads us into the next point…
Clarifications
Not too many members of the general public hold law degrees. Hence, you might find some difficult-to-understand language when reading through the legal definitions and conditions on a potential health insurance or car insurance policy, for example. There are a couple of possibilities:
- Get clarification from the insurer. Talk to them and ask them all your questions. They should be accustomed to answering queries and may have an answer immediately available.
- Talk to a financial or legal professional. This step is one that can benefit your understanding of your own policy and your overall financial situation, but it may well involve fees for professional advice.
- Still no idea what it means? If after speaking to the insurer and showing the policy to an expert, there are points that you still don't quite grasp, you might benefit from reading up on the subject of insurance a little more, or even taking a personal finance course. It's important to understand what you're spending your money on!
Understanding the coverage on an insurance policy is important not only for your existing insurance and during insurance comparison shopping, but also for budgeting: if you know exactly what coverage you currently have from your private health insurance, then you can better predict your overall health care costs, for example. Whatever is not covered by your insurances will have to be paid for by you; don't forget that you may also have to pay an excess on some claims, so make yourself aware of the amounts in question.
When you compare health insurance, home insurance, travel insurance and the like, ambiguous language can certainly undermine your understanding of the coverage. These ambiguities can lead to unfortunate misconceptions that may cost you, as a policy holder, if you've overestimated the extent of your coverage. Do your insurance policies – or the ones that you are comparing – contain vague language? If so, you might want to tackle this before you go any further.
This article is by Brian Neese, a finance blogger who helps people compare car insurance quotes and private health insurance to get a good deal.
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Tags: insurance, Personal finance
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