What is Insurance and how it works

 

Insurance 

Using an insurance policy generally involves two main actions: maintaining the policy by paying premiums and filing a claim when a covered event occurs. The specific steps vary depending on the type of insurance, such as health, auto, or life. 

When you need to use your insurance

When an incident or loss happens, follow these general steps: 

1. Gather documentation. Collect all relevant information and evidence related to the event. For example, after a car accident, you would gather details from the scene and take photos of the damage. For a medical visit, you'll need your insurance card.
2. Contact your insurer. Notify your insurance company as soon as safely possible. Your policy documents or insurance card should include contact details for their claims department.
3. Review your policy. Confirm that the specific event or loss is covered under your policy and understand your deductible, which is the amount you must pay out-of-pocket before coverage kicks in.
4. Work with an adjuster. The company will assign an adjuster to investigate the claim, assess the damage, and confirm eligibility. Be prepared to provide them with any requested information.
5. Submit your claim. This formal request may be done online, by phone, or through a claim form sent by your insurer.
6. Receive payment. If your claim is approved, the insurance company will make a payment based on your policy's limits and terms. 

For health insurance

Using a health insurance policy often follows a slightly different process: 

1. Find an in-network provider. Most plans provide a list of doctors, hospitals, and clinics that are part of their network. Using in-network providers typically results in lower costs.
2. Present your insurance card. Always have your card ready when visiting a healthcare provider. The provider will handle most of the communication with your insurance company.
3. Pay your portion. Depending on your plan, you may need to pay a copayment (a fixed fee per visit) or a percentage of the costs (coinsurance).
4. Track your costs. Review your Explanation of Benefits (EOB), a statement sent by your insurer that details the services you received and how much your plan paid. This helps you track your progress toward meeting your deductible. 

Before you need to use your policy

To use your insurance effectively, it is vital to take proactive steps while you are healthy or before an incident occurs: 

• Understand your coverage: Familiarize yourself with your policy's key terms, including what is covered, any exclusions (what is not covered), and your premiums, limits, and deductible.
• Maintain your premiums: Consistently pay your monthly or yearly premiums to keep your policy active. Your coverage could lapse if you stop making payments.
• Keep your records safe: Store your policy number and all policy documents in a secure place. For beneficiaries of a life insurance policy, inform them of the policy's existence and location.
• Ask questions: If you do not understand a part of your policy, contact your insurance agent or company for clarification