Understanding Basic Health Insurance Terminology
The following is a glossary of frequently-used health insurance terms. It provides a reference manual for consumers seeking insurance quotes or wishing to make an informed decision when purchasing a policy.
- Agent: A person hired to represent the insurance company and direct business with clients on their behalf.
- Benefit: A sum of money paid out by the insurance company to a medical health provider for treatments and/or services rendered to a client who has taken ill or become injured.
- Claim: A request form submitted by a client asking for compensation through their insurance company for incurred medical treatment costs resulting from an accident or illness. This procedure is typically dealt with by a “third-party administrator” under the insurer.
- Coverage: The terms of protection and details of payment outlined in an insurance policy.
- Critical Illness Policy: A coverage plan offered by most insurance companies to provide a one-time payment should its policyholder become suddenly diagnosed with one of several policy-stated critical or terminal conditions, such as multiple sclerosis, cancer or having a vital organ transplant.
- Deductible: A specified sum of money to be paid annually by the client to the insurance company before the policy can cover the cost of the insured’s medical health care expenses. For example, a plan deductible of $200 means the insured person must initially pay $200 out-of-pocket for medical treatment, and the insurance company will cover the outstanding balance up to the maximum amount stipulated within the contract.
- Dependent: An individual (e.g. spouse, child, etc.) who has insurance coverage under the policyholder’s plan is classified as a dependent.
- Disability Insurance: A type of policy that provides a substitute income each month for the insured person who has sustained a partially or fully disabling health condition as a result of a debilitating disease or an unfortunate accident, whereby the ability to continue working and earn money is consequently compromised.
- Exclusion: Any specific illness or type of injury omitted, that is, not included in the terms of the insurance policy, and therefore not covered.
- Group Insurance: A universal policy bought by a company, corporation or business entity to cover its employees or members.
- No-Claim Discount: A special discount offered by certain insurance companies on the policyholder’s basic monthly premiums should no claims be filed during a period of one year. In such cases, the insured could be given a 5 to 25 percent reduction on their premium rate at the anniversary date of their policy.
- Policy: A certified document standing to authenticate the insurance agreement between the parties involved (the client and the company), specifying the provisions and details of the contract.
- Pre-existing Condition: Any physical or mental health problem that a client may have prior to buying the insurance policy.
- Premium: A fee, usually paid monthly by the client to the insurance company in order to maintain the coverage defined in the policy; in other words, the cost of the insurance plan.
- Renewal: When an insurance policy reaches the end of its coverage period, the client has the option of “renewing” it in order to remain insured with the company.
- Reimbursement: The insurance company refund payable to the policyholder who submitted a claim for medical expenses which he or she paid out-of-pocket.
- Waiting Period: A set duration of time a new client may need to wait prior to entitlement for coverage through their insurance company.
|
