Feel like you don’t know enough about insurance but have an urging suspicion you might need it?
Most 20-somethings cannot wait for the day when they are officially “on their own.” Even if you’re among the 40 percent of millennials in Connecticut still living with your parents, you’re beginning to earn money, making big purchases and thinking about the next stage of your life. It is now time to think about how to protect yourself, your loved ones and your assets if things do not go as planned.
Here is a list of things to help ever millennial better understand insurance.
1. What are Deductibles?
According to a study done by Alfac Workforce Report, 39% of 20-somethings say they understand their annual deductible cost only somewhat, not very or not at all. We’re here to change that. A deductible is an amount that you as a policyholder must pay each year toward your expenses before the insurance company begins to pay its share.
For example, let’s say you have a health plan with a $1,000 deductible. After a stay at the hospital, you might have a medical bill for $15,000. You would be responsible for paying the first $1,000 out of pocket. At that point, your health plan would begin to pay benefits for the remaining $14,000 according to the terms of the policy. The purpose of the deductible is to help keep premiums low through cost-sharing and by reducing the number of small claims and unnecessary doctor visits.
2. What is Coinsurance?
Wait do you mean a copayment? Nope. Unlike copays, which are flat fees, coinsurance is a percentage of the cost for a health service or prescription drug paid by a member after they have reached their deductible. The remaining percentage of the cost is paid by their health insurance company.
For example, a health insurance plan might include a 20% coinsurance payment for a medical service. If that medical service costs $5,000 then the member would pay $1,000 and the provider, or health insurance company, would pay the remaining $4,000. Similar to copayments, different health services such as seeing a primary care physician, lab work, x-rays, a visit to the emergency room or prescription drugs can have independent coinsurance percentages. Nonpreferred brand and specialty drugs commonly have coinsurance.
3. How much am I covered for?
When you purchase insurance, it is important to understand that the policy does not cover any little thing that comes your way. Especially for health insurance, it is important to review the health benefits you receive from your employer. Your major medical insurance might not cover as much as you think and you could possibly need supplemental insurance for added protection. Supplemental insurance includes accident, hospital, cancer or critical illness.
4. Are there limits to my policy?
If you have taken the time to understand your coverage, you also need to make sure to check for any limitations or exclusions. Some plans no longer have lifetime or annual limits on essential health benefits. But, there could be limits related to other items, such as the number of refills for certain prescriptions, the number of visits to certain specialists or the number of days cover for certain benefits. It is important to know these limits before accident or emergency happens because you will end up paying cash up front.
5. How prepared should I be?
Many people in their 20s are still building up savings accounts, for either a vacation, house, wedding, or some sort of emergency. However, because you are currently in the building stage you may not be prepared to shell out thousand of dollars for an accident like a hospital visit. Accident insurance can help you stay ahead of the unexpected and prevent you from shelling out money from your savings accounts.
6. Are there limits to my policy?
Why would I need Life Insurance, as a 20-something if I am healthy and nowhere near kicking the bucket. One major reason, you would want to consider life insurance is if you have debt, especially from student loans. You need life insurance so your estate can pay the tax on your discharged student loans. Also if you have children and you pass away, life insurance will keep your children and family financially secure for years to come. Life insurance tends to be less expensive the younger you are, so it should definitely be considered if you have debt and a family to support.
7. What is an insurance claim?
The unexpected has happened, but you are prepared and have insurance now it is time to file a claim. Aninsurance claim is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. The insurance company reviews the claim for its validity and then pays out to the insured or requesting party (on behalf of the insured) once approved. Claims can typically be filed using an online submission form to remove the guesswork and avoid lengthy conversation over the phone
8. How long does it take to receive my money?
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Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. Statements on this website as to policies and coverages provide general information only. This information is not an offer to sell insurance.