What exactly is Insurance?

Insurance is a contract that allows parties to share risk. Basically, a person pays their Premiums in exchange for the Insurance Company's commitment to pay a predetermined amount of money for any or all problems (Claims). • Q: What is a Deductible? A: It is a predetermined amount of money that a person commits to pay before the Insurance Company is responsible for any benefit payments. This is done so that people will make sure that any problem that an insured might have really needs medical assistance. It is a way for Insurance Companies to keep premium costs down. • Q: What is Coinsurance? A: Coinsurance is the portion of medical costs that are shared by both the Insured (the patient) and the Insurer. For example, if you have an 80% to $5,000 coinsurance; ~ The Insurer is responsible for 80% of the next $5,000 in covered medical expenses. ~ The Insured is responsible for 20% of that same $5,000 in covered medical expenses. * In the above mentioned policy with $1,000 deductible and ...  more