She Strengthens

Unlocking the Power of Insurance: A Millennial’s Guide

As a child, I used to tune out whenever insurance ads came on TV. But now, as a young adult working in the industry, I’ve come to realize the importance of understanding insurance. It’s not just about being financially stable (although, let’s be real, that’s pretty cool too!). Insurance can be a powerful tool that protects you from life’s uncertainties.

Demystifying Insurance Jargon

Before you dive into the world of insurance, it’s essential to know the key terms that will help you navigate the landscape. Here are the top 10 insurance terms you need to know:

1. Premium: Your Ticket to Coverage

Your premium is the amount you pay to be covered by your insurer. This can be a one-time payment or a monthly direct debit. Think of it as the cost of having peace of mind.

2. Warranty: The Fine Print Matters

A warranty is a condition in your insurance contract that, if breached, can suspend your coverage. For example, if you have homeowner’s insurance with a warranty to double-lock your front door, and you fail to do so, your insurer might not pay out if you’re burgled.

3. Third Party: Protecting Others

Third-party coverage refers to the people who are protected by your policy, aside from the policyholder. If you’re involved in a car accident, third-party coverage will pay for the repairs to the other person’s vehicle.

4/5. Deductible/Excess: Your Share of the Cost

Your deductible or excess is the amount you need to pay towards a claim before your insurance kicks in. This can vary depending on the type of insurance and policy.

6. Coinsurance: Sharing the Cost

Coinsurance is a percentage of each claim you pay after your deductible has been applied. This percentage can vary depending on the policy.

7. Copayment (Copay): A Flat Fee

A copayment is a fixed fee you pay for medical treatments or prescriptions before your insurance coverage kicks in. This was introduced to discourage people from making minor claims.

8. Conditions Precedent to Liability: Reading the Fine Print

These are the requirements you need to fulfill before making a valid claim. This might include notifying your insurer within a certain timeframe or obtaining a police report for stolen property.

9. Exclusion: What’s Not Covered

Exclusions are everything that’s not covered by your policy. Make sure you understand what’s excluded to avoid any surprises.

10. All Risks Policy: Comprehensive Coverage

All risks policies cover everything unless it’s explicitly excluded. These policies can provide comprehensive coverage, but be aware of the exclusions.

Choosing the Right Insurance for You

The type of insurance you buy should reflect your financial situation. If you have a small emergency fund, a high-deductible insurance might not be the best choice. Conversely, if you have a sizable emergency fund, increasing your deductible could reduce your monthly payments.

Take Control of Your Insurance

Insurance doesn’t have to be dull and confusing. By understanding these key terms, you can make informed decisions and take control of your financial stability. Remember, it’s always a good idea to seek advice from a financial planner to determine the best insurance options for your unique situation.