Are you looking for your first insurance policy in the US ? Do you want to know the basics of a policy before making the final decision? Then this article is for you. In this guide we talk about insurance policies , how they work, special features and more. Do you want to know more information? So, keep reading.
Index of Contents
What is an insurance policy in the US?
An insurance policy is often also called an adhesion contract and it is an agreement between you and the insurer you chose. When you decide to buy a policy, you are accepting the terms and conditions of the contract; In general, insurance policies provide coverage in various areas such as: Health, life, house and home, cars, motorcycles, pets, travel and more.
In general, after you register on the issuer’s website, and make your first official payment, you will receive your insurance policy by conventional mail. Also, in some cases you can receive your registration form directly by email. In the registration forms a series of data is described such as:
- Insurance policy number
- Coverage time
- Coverage price
- Scope of coverage
- The deductible
- Policy terms and conditions
Important: When it comes to choosing an insurance policy, it is always a good idea to check in advance what is covered and what is not covered by your insurance policy.
All important details about policy contracts are in a section called ” Coverages “. Likewise, if you are looking to look at the total amount of coverage , you can find that information on your declarations page (it is usually on the first page of your policy). Finally, in these documents you can see information about the breakdown of the premium , as well as its deductible and the total duration of your coverage.
What is a personal insurance policy?
Personal lines of insurance are types of insurance that you buy to protect yourself from risks that could create financial losses that you cannot cover on your own. That is, personal insurance is related to the risks that you, as an individual, may face due to accidents, illness, death or damage to the property that is in your name.
How does an insurance policy work in the US?
When you buy insurance, you will normally pay a pre-agreed amount called “the premium”; In exchange for the premium you pay, the issuer agrees to compensate you for loss or damage , should something happen. Likewise, personal insurance is based on the principle that the distribution of a risk among several people makes it much more manageable. Many people pay for protection against loss through their insurance policy premium. The premium is collected by the insurance company when it comes time to pay a claim; that is, they take money from that “charge” to compensate the insured.
Should all US citizens buy an insurance policy?
Not everyone has to buy insurance, however, it is a good idea to buy insurance when you have some financial or investment risk that may be affected in the future. Therefore, and depending on the type of insurance, some policies can be completely optional; while other insurance, such as automobile insurance, is mandatory because it is required by law.
Basic Concepts of Insurance Policies in the US
Here are some basic terms that are part of the vocabulary of an insurance policy . In this way, you will be able to know and understand which ones may affect you when you decide to purchase an insurance policy …
- The deductible . It is the amount of money you will pay on a claim. Remember, the higher your deductible, the more risk you personally assume and, therefore, the less you will pay in the form of a premium or monthly fee . In fact, some people use the deductible as a strategy to save money.
- Type of policy . Insurance companies offer various levels of coverage. Most of the time you get a really low price on an insurance quote, you should ask what type of policy they have or what the coverage limits are and compare these details.
- Special limits . All insurance policies contain certain sections that list limits on the amounts payable. This point is really important when making a claim. So, it is best to ask about the types of coverage and whether or not they are limited.
- Exclusions . These are aspects that are not covered in the insurance policy that you will buy. It is very important to ask about the exclusions in any policy you purchase so that the fine print does not surprise you when you need to make a claim .
- Waiting periods and special clauses . Some types of insurance have waiting periods before coverage takes effect. It is important to ask when coverage begins and if there are waiting periods or special clauses that could affect your coverage when purchasing a new policy.
- Claims settlement . The basis of the claims settlement represents the terms under which the claim will be paid. The terms and conditions of claims settlement make a significant difference to the total amount that the insurer must pay you.
Types of Insurance Policies
If you are looking for insurance , first you need to know what are the different types of policies that you can find in the market; in addition to informing you about its various uses and benefits . Next, we show you the most common policies, their general characteristics and their importance in everyday life.
Health Insurance Policy in US
Who needs it? Everyone.
Because you need it? You will get medical coverage in case of emergencies.
Health insurance is a contract between a health insurer and a policy holder; where it is specified that the insurer will pay all or at least part of the medical expenses. This is a basic type of insurance that all families should have and can have many variations depending on the issuer of the policy . Likewise, this type of policy covers medical care expenses , both expected and unexpected. It generally includes:
- Routine doctor visits
- Emergency stays
- Serious surgeries.
Health insurance in the US is easily one of the most important types of insurance you can have. If you develop a serious illness or have an accident without being insured, you may not be able to receive treatment or even have a debt with the hospital. Fortunately, many employers provide health insurance benefits to their full-time and even some part-time employees. If you don’t currently have health insurance coverage, this is the first option to consider.
Important: When choosing a health insurance policy, consider co-payments, deductibles, premium costs, network coverage, and covered expenses to determine the best option.
Car Insurance in the US
Who needs it? Frequent drivers.
Because you need it? Driving without auto insurance is illegal in the US
It is a car insurance that generally offers policies for motorcycles, boats, trucks, conventional cars and other vehicles. The main function of this policy is to protect against collision, theft, vandalism, physical damage or bodily injury that could result from driving; also known as liability coverage . This policy can be of great help against recklessness on the road , accidents with uninsured drivers and more.
Most states require by law that you have basic auto insurance that covers accident liability. However, the use of this policy can be very varied. For example, if you are buying a car through a loan, you may also need to cancel collision coverage. On the other hand, the most common reason to have car insurance is to cover the replacement of an expensive asset. Like a house, cars can be quite expensive, and if they do get damaged, you’ll want to be able to repair or replace them.
Life Insurance in the US
Who needs it? All / People with dependents (children or spouse).
Because you need it? Funeral expenses can be expensive, these policies ease the financial burden on the family.
It is an insurance policy that is activated in the event of death ; Generally, a life policy pays the beneficiary an agreed amount of money to cover the expenses left by the deceased. Remember, a beneficiary is the person or entity named on a policy that receives benefits, such as a spouse.
If you don’t currently have life insurance, the best thing to do is check with your employer first. Since, many employers offer basic group life insurance as a priority one (1) benefit; Also, some companies allow you to purchase additional coverage at a very affordable price. The life insurance are divided into two main groups are:
- Permanent life insurance . This type of insurance offers you coverage for a lifetime, as long as you pay your premiums or monthly installments on time. This type of coverage also allows you to generate cash value with which you can borrow or invest to grow.
- Term life insurance . It is also called term life insurance and offers coverage for a specific period , usually 10 to 30 years. Term life insurance tends to be more flexible and less expensive , but if you are looking for an investment component, you may prefer permanent coverage.
Home Insurance in US
Who needs it? Property owners.
Because you need it? You will save money on maintenance costs; you will have coverage for incidents such as floods or fires.
This type of insurance is one of the most requested within the US . Insurers offer policies with various coverages for the home. This type of benefit will help you in the event of fire, flood, environmental catastrophe loss, theft, vandalism and more. Also, homeowners insurance covers the home you live in and any associated structures, such as a porch, garage, and balcony.
Like any other type of insurance, take the time to compare coverage and premiums . Homeowners insurance, for example, may not cover flood damage or earthquake damage. So if you live in an area prone to such events, you may need to supplement your policy with additional coverage against natural disasters . At the end of the day, all these special features may vary depending on the issuer.
Renters insurance in the US
Who needs it? Tenants of real estate.
Because you need it? It is convenient to have this type of insurance when we want to avoid paying for possible accidents during the stay in the rented property.
This insurance is intended for people who rent a property. It is a fact that tenants are exposed to costly accidents and many times must pay the full cost of repairs within the rental unit . By applying for this type of insurance, you will save time and a lot of money. Likewise, tenants use this insurance to cover the personal property of third parties in case of partial or total damage or theft, which is not the responsibility of the owner .
Who needs it? Frequent travelers.
Because you need it? Before traveling, it is best to pay for a travel policy that covers cancellations, lost luggage and medical care .
Travel insurance covers trip cancellations , lost or misplaced luggage, travel accidents and even medical expenses while on vacation or while abroad. If you are a frequent traveler, it is best to make sure you have this policy; Remember, accidents happen and can be really expensive when you’re away from home.
The vast majority of typical major health insurance policies offer only one element of travel insurance to the extent that it involves emergency care. Generally, there are very restrictive provisions on what is and is not covered, so we must pay attention to the fine print. Likewise, if you are a person who plans to travel, it is best to buy a travel policy with specific benefits .
Some of the features to look for in a travel insurance policy include:
- Major medical coverage, accident and immediate transfer.
- Immediate transportation home in the event of a serious illness or accident
- Cancellation / interruption of the trip.
Who needs it? Anyone who is already insured.
Because you need it? People looking for additional coverage, for example: Protection for a second vehicle, or home.
General insurance will further protect you from the risk of having to face payments for damages, theft, vandalism and any other unexpected accident. Many times, policy issuers can offer customized packages based on your needs. This insurance was designed to cover expenses that exceed the policies already contracted.
Think of an umbrella insurance policy as an additional option. For example, in the event of a car accident, your basic car insurance will pay and compensate you for the loss. However, your auto insurance may not fully cover damage to your vehicle; in this case, having additional coverage is best.
Who needs it? Pet owners.
Because you need it? Cover your pet’s medical expenses.
The insurance pet s (primarily for dogs and cats) covers most of the expenses for veterinary treatment when a pet is injured or ill. In general, paying for insurance of this type is much more profitable in the long run ; And it is usually a better option than paying the pet’s medical expenses separately . In this section, there are two main types of pet insurance that are:
- Basic plan . Wellness insurance that covers routine visits and vaccinations.
- Complete plan . Health insurance that focuses on routine visits, vaccinations, genetic diseases, treatment of diabetes, cancer, and major surgeries.
Other requested insurance:
- Wedding insurance
- Additional wildfire policies
- Dental insurance
How do you decide what insurance policy you need?
The insurance you need may vary depending on the stage of life where you are, what type of assets you have and what your long-term goals and responsibilities are . Therefore, it will always be important that you take the time to weigh your options and consider which insurance policy is right for you. Remember, finding the right insurance products is a good part of a sound financial strategy that will help you stay stable in the long run. Finally, we have prepared a series of questions that you can ask yourself in order to choose the ideal policy for you.
Before making your final decision, consider:
- Do you have the money to cover your costs or debts if you have an accident?
- Do you have enough savings to cover an accident or illness?
- Can You Pay Higher Deductibles To Lower Your Insurance Policy Costs?
- What worries you most?
Important: Insurance policies can be adapted to your needs if you can identify what you need to protect the most. By making the right decision you will be considerably reducing the costs of being an insured person.
How to apply for an insurance policy in the US?
There are several ways to request and enroll in the coverage of various insurance policies in this 2020. Here are the most conventional methods to request coverage:
- Find and contact an agent, broker, or assistant . In this case, you will need to provide your zip code to get a list of local people and organizations. Also, some insurance brokers offer help in languages other than English (particularly Spanish).
- Try to have an insurance agent or broker contact you . Visit the issuer’s official website and fill out the form with your information and a registered agent or broker will contact you directly.
- Use the website of a certified enrollment partner . You can apply for and enroll in commercially available policies through the website of an approved enrollment partner. For example: An insurance company or an online health, auto or home insurance seller.
- Use HealthCare.gov . Create an account and apply for a health policy online on the official website of HealthCare.gov
How to get the best price on an insurance policy in the US?
Remember that the premium is the amount of money that an insurance company will charge you on a monthly basis, in exchange for the financial protection provided by your insurance policy . First of all, and to lower your premium, the best thing you can do is compare prices with different companies or use the services of an insurance broker who can make the comparisons for you.
It will always be important to see which insurance companies can offer you the best rate for your insurance. Keep in mind that some insurance companies may have discounts geared towards the type of customer you are; Based on that, the insurer may charge lower rates. For example: When insurers are interested in young clients, with small families or recent graduates, they will skew their offerings towards life, home and health insurance. There is no magic formula to know which is the best option, this is only possible when you evaluate several insurances at the same time.
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