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Your insurance cheat sheet

Insurance isn’t always easy to understand. In fact, for many it can be downright confusing and a lot of consumers don’t understand their benefits. A survey found that only 7 percent of employees could define four basic health insurance concepts: plan premium, deductible, co-insurance and out-of-pocket maximum.1 Below are some common insurance terms that can sometimes trip consumers up, along with simple definitions to help provide a better understanding.
  • Cash value – On many permanent life insurance policies, when you start making payments you are actually paying more than is needed to cover yourself at that point in your life. This overage is known as cash value. You are accumulating cash value so that when you are older, the payments on your policy will remain level because as you age, you become more expensive to insure. This cash value can be used for a loan, but if you do that, it may affect the longevity of the policy.
  • Coinsurance – Coinsurance is similar to a co-payment, but instead of a fixed amount, you pay a percentage of the cost of the healthcare service you receive.
  • Co-payment – Medical insurance policies may have a co-payment, which is a set dollar amount that you make to supplement what's covered by your insurer. This can still be required even after you’ve satisfied the deductible.
  • Deductible – Some policies have a deductible, which is a set amount that you must pay for healthcare before your insurance policy begins making payments.
  • High-deductible health plan (HDHP) – A high-deductible health plan is just what the name implies; it is a lower cost policy that comes with the tradeoff of having a higher deductible.
  • Out-of-pocket maximum – This is a limit of how much you would have to pay for healthcare. It is totaled from the deductible, co-payment and coinsurance.
  • Payroll deduction – Payroll-deducted insurance means that you don’t have to make the payments directly to the insurance carrier. Your employer makes the payment on your behalf after they deduct it from your paycheck.
  • Portability – Portability is a feature of coverage that means you own your insurance policy and you aren’t required to remain at your employer to keep it. You can purchase the coverage at work, but once you do, it can stay with you even when you change jobs or retire.
  • Pre-existing condition – This is a condition that you had prior to purchasing your insurance coverage. Depending on the coverage you purchased, it may affect your coverage, so be sure to check the details of your policy to understand how you may be affected.
  • Premium – Your premium is the amount you have to pay to keep your policy in effect. Depending on the policy, this can be paid bi-weekly, monthly, quarterly or annually.
  • Permanent life insurance – Permanent life insurance is compared more closely to “owning’ insurance. It’s a policy that covers you for life.
  • Rider – A rider is an optional feature on an insurance policy that you or your employer can choose to include as part of your coverage for added benefits.
  • Term life insurance – Term life insurance is often compared to “renting” insurance. It’s a policy that covers you for a given period of time, aka a "term". once this term expires, the cost goes up for each renewal period, should you choose to renew. Or, you can also choose to let the policy expire at that point.
As you can imagine, in a complex industry like insurance, this is far from a comprehensive list. We could fill pages and pages with all the industry jargon that’s out there. But, as a starting point, this list can help clear up some of the most common terms that could cause confusion for policyholders. As always, Trustmark is here to help consumers however they need to assist them with making the best decisions for themselves and their families.

1 “Employees struggle with benefits terminology”. Employee Benefit News. Sept, 2016.

Posted on June 08, 2018 in Life Insurance Wellness

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