Hiring insurance policies to keep you, your family, and your assets protected is super important. Because it is a way to protect your finances and reduce the economic impact. When an unforeseen event occurs.
However, you must be aware that when hiring insurance the premium is not the only payment you must make. Because at the time of using your insurance other payments may be present. And for which you must be prepared, the best known and most. The ones that cause the most confusion are the deductible and the coinsurance, so we explain what each one consists of.
If you are going to take out insurance, in addition to deciding the type of coverage you want. You must pay attention to the disbursements involved. The three most important are the premium (the payment you must make to keep your policy in force). And the deductible and coinsurance (expenses you must make if you use your insurance).
The first thing you should know is that the higher the premium the lower the deductible and the coinsurance. This is recommended because in the unexpected moment the obligation will be lower.
Both the deductible amount and the percentage of the coinsurance are information that is printed on the face of your insurance policy. And that you should check when you go to make a contract. As they must adapt to your needs and, of course. Once you do the recruitment that you prepare for its payment in case of using it.
Deductible
In general, the deductible is expressed as a fixed amount and is the amount that you must pay from your bag before and for the insurance to cover the rest of the expenses. The amount of the deductible depends on the terms of your policy.
Coinsurance
For its part, the coinsurance is represented by a percentage. That defines how much you will have to pay for the total expenses covered by the insurance after the deductible. Because it is a percentage, the higher the cost of the unforeseen, the more you will have to pay.
Some insurers have defined a coinsurance cap that is the maximum amount that you will have to pay for this concept. Having a coinsurance cap on your policy can be especially significant for medical expense insurance since there are serious illnesses that cost very high.
For example, the cost of an illness or a car accident is $200,000 and you have a deductible of $ 10,000 and a 20% coinsurance capped at $20,000. To be able to use your insurance, you must first pay the $10 thousand deductible.
Of the remaining $190 thousand that the insurance will cover, you should pay 20%, which is equivalent to $38 thousand, however, as the ceiling of your coinsurance is lower, you will only pay $20 thousand. So at the end of the day in this situation, you would pay $ 30 thousand and the insurance $170 thousand.
If you are not insured, the disbursement can be exaggeratedly high, and accessing a loan can be very expensive. If you have insurance, although you may have to make an outlay, it will be much less, but in any case, you must be prepared so that those $ 30 thousand (in this example) do not take you by surprise and end up unbalancing your finances.
So taking this into account you can start preparing your emergency fund if you do not have it yet. In addition to considering investing in better protection. Whether you do not have insurance or the deductible and coinsurance are very high. Sometimes it is better to make small sacrifices or even resort to immediate loans. Such as Kueski’s to maintain the validity of your policy than to risk yourself and your finances.
