Co-insurance

1)   What do you mean by ‘Deductible’?

Deductible is one of the several types of clause that are used by the insurance company as a threshold for policy payment for health insurance or travel insurance. Deductible is a decided amount that you have to pay from your pocket while claiming the insurance.  For example, you have a deductible of $500, and you have insurance coverage for $2000, then you are responsible for paying for $500 and the remaining amount $1500 will be paid by insurance company.

2)   What is Co-insurance?

Co-insurance term is usually referred to health insurance companies.  In this type of policy, you share the coverage with, the insurance company in percentage of the policy value, after paying deductible or co-payment.  It is the split of insurance coverage between you and insurance company; usually the split would be 80/20 % where you are liable to pay 20% and the remaining amount by the insurance company.  For example, for health policy you have claimed for $200, according to policy clause you have to pay deductible, let say $100, now after paying deductible the remaining amount is $100, now you have a co-insurance which is split into 80/20%. So you will pay $20 out of $100 from your pocket while the $80 will be paid by co-insurance(meaning the insurance company).

3)   What do you mean by term “Annuity”?

An annuity is the term used for the regular amount paid by the insurance company to the insured, after a certain period of time. The payment can be monthly or quarterly, this is often done to supplement income after retirement.

4)   What is the Surrender Value?

Surrender Value is the amount when you stop paying the premium and withdraw the entire amount. The policy ceases as soon as you withdraw the money, and the insured will lose out all the returns on it.

5)   What is Paid Value?

The paid value is something, when the insured stops paying the premium but do not withdraw the amount. The sum assured by the insurance company is reduced proportionally depending when insured has stopped paying the premium.  You will get the amount at the end of the term.