Insurance policies are long and complicated. There is a reason for that, but it doesn’t make it easier for you when you’re trying to compare different coverage options and make a purchase decision. Take a look at this list of terms you’re likely to come across while buying insurance in Canada.
Money Terms
Cash Value
This refers to the part of your insurance policy that grows interest over time. You can withdrawal or borrow it in future if you need it.
Co-payment
Sometimes called co-pay, this is a fixed cost that you pay for health care services that are covered, after the coverage is applied. For example if your insurance covers $50 per visit to the chiropractor, and the chiropractor charges you $65, your co-pay is $15.
Deductible
This is the amount you pay out-of-pocket before your insurance coverage kicks in. If the deductible is $200, for example, the insurance company will cover the costs above $200.
Direct Billing
Direct billing is the practice of the health care provider, such as your dentist, billing the insurance company directly for the services that are covered. You don’t have to pay first and then submit the claim to the insurance company.
Premium
The regular, ongoing cost you pay for your insurance policy. Usually premium payments are monthly.
Waiver of Premium
Some insurance policies will allow you to stop paying your premiums in the event you become disabled.
Types of Insurance
Disability Insurance
This is insurance that protects you financially if you’re unable to work because of a disability that’s cause by illness or injury.
Group Insurance
This is a type of health insurance typically purchased by an organization for its employees or members. Buying in bulk is more cost-effective and they can pass that savings on.
Health Insurance
Insurance that provides coverage for a wide array of health services that may include medical care, vision, dental, prescriptions, physiotherapy and more.
Life Insurance
This is insurance that pays a pre-defined amount of money to your beneficiaries in the event of your death. There are 2 main types:
- Term life insurance which covers you for a specific period of time.
- Universal life insurance provides death benefit coverage and combines it with a savings component that will grow as you pay into it.
Coverage-related Terms
Coverage
The types of events or risks that an insurance policy protects you against, and the amount the insurance company is willing to cover for taking on that risk. E.g. your health insurance policy provides coverage for prescriptions in the event you get sick and need medication.
All-Perils Coverage
This kind of coverage is for a wide range of risks and events. It covers almost anything except items that are specified. All-perils is sometimes known as an open perils or all-risk policy. In contrast, a Named Perils Policy covers what it states specifically and only that. For example, if the named peril is fire, the policy won’t cover you if there is storm damage.
Beneficiary
This is person or persons that you specify will receive the benefits of your life insurance policy when you die. It may also be called a primary beneficiary.
Benefit Period
Relating to long-term disability insurance, this is the period of time during which you can receive benefits.
Cancellation
Cancellation is the act of terminating your insurance policy before the end of the coverage period.
Claims
A claim is when you request for payment for a service or event that you are covered for, from your insurance company. For example if you have vision coverage and buy a new pair of glasses, you submit a claim for the cost of the glasses.
Contingent Beneficiary
Related to life insurance, this is a person who you designate will receive the insurance policy benefits if your primary beneficiary dies before you.
Exclusions
Exclusions are losses or events your insurance policy does not provide coverage for.
Paramedical Services
This is a blanket term to encompass services provided by health care professionals such as audiologist, chiropractor, dietician, osteopath, physiotherapist, psychologist/social worker, massage therapists. Coverage for these services is provided through health insurance.
The Business of Insuring
Agent
This is a licensed representative who works for an insurance company and sells insurance policies.
Broker
A broker doesn’t work for a specific insurance company. Rather, they are an independent professional who represents many insurance companies. The benefit is that they can offer a wider range of coverage products and compare quotes in order to get the best insurance value and plan for you.
Underwriting
This is the process of evaluating the risk of an event happening to a person and determining how much the premium should be for assuming that risk.
Feeling a little more comfortable with all the insurance terms? Learn more about the Pacific Blue Cross health insurance options we offer.