Insurance Terms
Insurance - transfer of the risk of a loss, from one entity to another in exchange for payment (premium); a form of risk management used to protect against the risk of a loss.
premium - The money you pay to insurance company for the cost of coverage/protection
Insurance claim - Paperwork you fill out and turn in to your insurance company when you've had a loss you'd like paid
deductible - The amount of money you must pay when making an insurance claim before the insurance will start to pay
Homeowner’s Insurance - Pays to protect (replace) your belongings (like clothes, furniture...) if something happens to your house (theft, fire...); also provides liability if someone gets hurt on your property
Renter’s Insurance - Pays to protect (replace) your belongings (like clothes, furniture...) if something happens to your apartment (theft, fire...) also provides liability if someone gets hurt on your property
Professional Liability Insurance - Liability insurance if you are sued because of something you did on the job (example: malpractice insurance for doctors)
Auto Insurance - Pays for automobiles if loss occurs (many different kinds for different needs)
Auto Liability Insurance - Auto liability is REQUIRED by state law; Liability insurance is coverage for bodily injury you cause to another person or for property damage you cause to another's property through negligent operation of your vehicle. Liability insurance also affords coverage if the accident was caused by a member of your household driving your vehicle or by a person using your vehicle with your permission. *Pays when you are accused and found at fault for something you've done (car accident, someone falls and gets hurt at your house...)
Uninsured Motorist - Helps pay medical payments and other losses should an “at-fault driver” not carry enough insurance to cover all damages and recovery
Collision insurance - Pays for damages to your car when caused by collision with another vehicle or object.
Comprehensive insurance - protects you against damage to your own car from such perils as fire, theft, glass damage, windstorm, flood, vandalism and other causes.
Life Insurance - Pays money to people who survive you (beneficiaries) after death; consider what your loss of income would do to your beneficiaries.
Term Life Insurance - Life insurance for a specified period of time; CHEAPER!; no savings built into it (RECOMMENDED BY DAVE RAMSEY!) used for pure income replacement.
Whole Life or Cash Value Insurance - Life insurance that includes a "savings" plan that can be cashed out for the value you've put in; more expensive than term life insurance; (NOT recommended by Dave Ramsey)
Insurance - transfer of the risk of a loss, from one entity to another in exchange for payment (premium); a form of risk management used to protect against the risk of a loss.
premium - The money you pay to insurance company for the cost of coverage/protection
Insurance claim - Paperwork you fill out and turn in to your insurance company when you've had a loss you'd like paid
deductible - The amount of money you must pay when making an insurance claim before the insurance will start to pay
Homeowner’s Insurance - Pays to protect (replace) your belongings (like clothes, furniture...) if something happens to your house (theft, fire...); also provides liability if someone gets hurt on your property
Renter’s Insurance - Pays to protect (replace) your belongings (like clothes, furniture...) if something happens to your apartment (theft, fire...) also provides liability if someone gets hurt on your property
Professional Liability Insurance - Liability insurance if you are sued because of something you did on the job (example: malpractice insurance for doctors)
Auto Insurance - Pays for automobiles if loss occurs (many different kinds for different needs)
Auto Liability Insurance - Auto liability is REQUIRED by state law; Liability insurance is coverage for bodily injury you cause to another person or for property damage you cause to another's property through negligent operation of your vehicle. Liability insurance also affords coverage if the accident was caused by a member of your household driving your vehicle or by a person using your vehicle with your permission. *Pays when you are accused and found at fault for something you've done (car accident, someone falls and gets hurt at your house...)
Uninsured Motorist - Helps pay medical payments and other losses should an “at-fault driver” not carry enough insurance to cover all damages and recovery
Collision insurance - Pays for damages to your car when caused by collision with another vehicle or object.
Comprehensive insurance - protects you against damage to your own car from such perils as fire, theft, glass damage, windstorm, flood, vandalism and other causes.
Life Insurance - Pays money to people who survive you (beneficiaries) after death; consider what your loss of income would do to your beneficiaries.
Term Life Insurance - Life insurance for a specified period of time; CHEAPER!; no savings built into it (RECOMMENDED BY DAVE RAMSEY!) used for pure income replacement.
Whole Life or Cash Value Insurance - Life insurance that includes a "savings" plan that can be cashed out for the value you've put in; more expensive than term life insurance; (NOT recommended by Dave Ramsey)