Insurance

Its a type of program or a practice or an arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. When applied for claims, Individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. Being insured allows you to transfer the risk of a catastrophic financial loss to the insurance company.

Premium

Its the amount of money charged by your insurance company for the plan you’ve chosen. It is usually paid on a monthly basis, but can be billed a number of ways including but not limited to quarterly, semester or annually. You must pay your premium to keep your coverage active, regardless of whether you use it or not. It usually use it or loose it with some exceptions.

Deductible

Its a set amount of money you have to pay out of pocket every year before insurance begins providing coverage. It varies by plan and some plans don’t have a deductible. The lower your deductible, the higher your premium costs -- and vice versa.

For example, you have a $250 deductible on your auto insurance policy and you get into a crash that causes $200 of damage, your insurance won't pay anything because your deductible has not been met, so you're on the hook for the costs. If the damage were $1,000, you'd pay the first $500 in damages and, once your deductible is met, your insurer would pay the remaining $500. 

Coinsurance

Coinsurance is the percentage of your medical bill you share with your insurance company after you’ve paid your deductible. Unless you have a policy with 100 percent coverage for everything, you have to pay a coinsurance amount.

For example,  you have an “80/20” plan. That means your insurance company pays for 80 percent of your costs after you’ve met your deductible. You pay for 20 percent.

Coinsurance is different and separate from any copayment.

Copay

Your copayment, or copay, is the flat fee you pay every time you go to the doctor or fill a prescription. It’s usually a relatively small dollar amount. Copays do not count toward your deductible.

Most popuar types of insurances