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What is Insurance? Insurance is a legal document that a person buys from an insurance company; this legal document is called a policy. This policy acts as a financial contract between an individual and an insurance company which an insurance company is required to follow by law.
A person buys a certain coverage for himself through the policy and calculates this coverage in the form of anticipated financial problems that he may face in the future.
Insurance coverage is a cost that a person incurs as reasonable management for anticipated financial problems that may occur in the future. The cost of this coverage is called the premium.
What percentage of Americans had health insurance in 2021?
Source of information by: https://www.aha.org/news/headline/2021-11-17-cdc-reports-uninsured-first-six-months-2021
According to American hospital Association “An estimated 9.6% of U.S. residents, or 31.1 million people, lacked health insurance when surveyed in the first six months of 2021, according to preliminary estimates from the National Health Interview Survey released yesterday by the Centers for Disease Control and Prevention. That’s not significantly different from the survey’s uninsured rate for 2020.
Among children, 4.4% were uninsured, 44.7% had public coverage, and 53.1% had private coverage. Among adults under age 65, Hispanic adults (31.4%) were more likely than Black (14.7%), white (9.0%) and Asian (6.1%) adults to be uninsured. The percentage of people under age 65 with exchange-based coverage increased from 3.7% in 2019 to 4.3% in the first six months of 2021.”
Which organization regulates insurance companies in the United States?
The National Association of Insurance Commissioners (NAIC) is governed by the chief insurance regulators. Also, this organization is a non-profit and non-partisan organization.
The NAIC sets standards and guidelines for the U.S. insurance industry and provides support to insurance regulators; It also provides resources and information to consumers.
Note: In the United States, insurance companies are not regulated by the federal government, instead, they are regulated by the state governments.
What will get readers in this article (about What is Insurance)?
1. Which words are mainly used under the insurance category, and what is their interpretation?
2. How many types of insurance exist in the real world, and what is their definition?
3. Is insurance tax deductible if yes which?
4. Which insurance is not tax deductible?
5. In how many ways can an insurance policy be obtained?
6. How to file claim for insurance?
7. Where to file an insurance company complaint in the United States?
Which organization regulates insurance companies in the United States?
The National Association of Insurance Commissioners (NAIC) is governed by the chief insurance regulators. Also, this organization is a non-profit and non-partisan organization.
The NAIC sets standards and guidelines for the U.S. insurance industry and provides support to insurance regulators; It also provides resources and information to consumers.
Note: In the United States, insurance companies are not regulated by the federal government, instead, they are regulated by the state governments.
Which words are mainly used under the insurance category, and what is their interpretation?
The following words are mainly prevalent under the insurance category, they are shown below:
1. Insurance policy.
2. Insurance coverage.
3. Insurance premium.
4. Supplement insurance.
1. Insurance policy: An insurance policy is a legal contract between the person taking the insurance and the company providing the insurance. A policy is a legal contract a person takes for a specified object (car, motorbike, home), health, life, Etc.
Example 1: Let’s say a person has bought a new car and wants that in case of an accidental accident, he should not have to pay any compensation out of his pocket for any person injured in the accident or crashed object.
Example 2: Let’s assume that the person’s new car is stolen; in this situation, he has to face financial loss, he wants to not have to bear this financial loss from his pocket, and he wants to get this compensation through the insurance company.
Note: According to both these circumstances, if a person wants to avoid financial loss in the future, then he makes a financial contract for his car with an insurance company; it is called an insurance policy.
2. Insurance coverage: Insurance coverage is a fixed amount of something that a person contracts with through an insurance company.
Example 1: Let’s say there is an adult person whose age is 30 years. He is thinking of buying a health insurance plan for his parents, and his younger sister. Their father’s age is 50 years, his mother’s age is 45 years, and his sister’s age is 16 years.
He thinks is young and physically fit and does not need health insurance, so he only wants to get health insurance for his parents and his sister so that he does not have to pay for future medical expenses.
Note: Therefore, the coverage he purchased includes his parents and his sister. When these three persons are included in one health insurance, it is considered one coverage.
3. Insurance premium: It is the amount a person buys from an insurance company for specific coverage. The amount of premium a person can take monthly, quarterly, half-yearly, or for a year.
Note: The time frame for the premium amount is decided by an insurance company and may provide the option to its customer for one insurance policy and provide its customer for another insurance policy as per its guidelines.
4. Supplement insurance: Supplement insurance is another alternative to primary insurance; when the primary insurer pays a specified amount of money, and in such a situation, he refuses to make other payments, then we need supplemental insurance.
Upon payment of a certain amount of primary insurance, supplementary insurance is liable for other expenses, but keep in mind that there is also a fixed limit.
Example 1: Let’s say a person is having liver surgery and the total insurance coverage cost for this surgery is $100000.
If the surgery fails for any reason and the cost of this surgery increases from $100000 to $150000, then the primary insurance will pay only $100000 of the cost of this surgery and not more. The remaining $50,000 can be covered through supplemental insurance.
What type of insurance program do US citizens use in their public life?
US citizens use two types of insurance program in their public life.
1. US government-run insurance programs.
2. Insurance programs operated by private companies.
What insurance programs do US governments operate for their citizens?
Mainly the following types of insurance programs are operated by the US government for its citizens, it is shown below:
1. Medicare
2. Medicaid/CHIP
3. Military – TRICARE
1. Medicare: Medicare is the federal health insurance program for US citizens. But this insurance program is not available to everyone, and there must be certain eligibility to get this program, shown below.
- People who are 65 or older.
- Certain younger people with disabilities.
- People with End-Stage Renal Disease.
Note: Permanent kidney failure requiring dialysis or kidney transplant, also known as ESRD.
There are mainly 4 parts of Medicare:
1. Medicare Part A ( For Hospital Insurance).
1. Medicare Part B ( For Medical Insurance).
1. Medicare Part C ( For Offered by private companies approved by Medicare).
1. Medicare Part D ( For Prescription drug coverage).
2. Medicaid: Medicaid is a public health insurance program. Medicaid is primarily aimed at low-income people, which includes a wide variety of people: children, adults, pregnant women, elderly adults, and people with disabilities.
Medicate is administered by the state as per federal requirement and states and the federal government jointly fund the program.
3. Military – TRICARE: Military – TRICARE is a health insurance program run by the Department of Defense (United States). This TRICARE health insurance program is operated for serving soldiers and their dependents and retired soldiers.
How many types of insurance exist in the real world, and what is their definition?
Mainly insurance is available in various forms, it is shown below:
1. Home Insurance (homeowners insurance).
2. Life Insurance
3. Health Insurance
4. Auto Insurance
6. Disability Insurance
7. Umbrella Insurance
8. Renters Insurance
9. Long-Term Care Insurance
10. Travel insurance
11. Pet insurance.
1. Home Insurance (homeowners insurance):
Home insurance is also known as homeowner insurance. If a house is damaged by a natural or man-made calamity, then home insurance provides compensation for the same.
Who needs it: Landlords and Homeowners.
Legal obligation: No, but if you have financed your home, you will need it.
2. Life Insurance:
Life Insurance is the insurance in which this insurance provides indemnity after the accidental or natural death of a person.
Who needs it: Head of a household whose other family members depend financially on him?
Legal obligation: No.
3. Health Insurance:
Health insurance is a contract policyholder has purchased from a health insurance company. If the policyholder faces any future health problems, he gets compensation from the insurance company. The quantum of indemnity is determined based on the coverage purchased by the policyholder.
Who needs it: From newborn to elderly.
Legal obligation: No.
4. Auto Insurance:
Auto insurance is primarily used for motorcycles, cars, trucks, and other vehicles. This auto insurance covers the financial compensation of the accident if a vehicle is damaged in the future or if there is any damage caused by this vehicle.
Who needs it: For any type of driver.
Legal obligation: It is legally necessary for the drivers of each state.
5. Dental insurance:
Dental insurance is the insurance that is taken to cover the future dental medical expenses incurred by the policy holder.
Who needs it: From small children to elderly person.
Legal obligation: No.
6. Disability Insurance:
If you become disabled due to an illness or an accident, in such a situation that you are unable to work, disability insurance is used to meet the compensation for this critical condition; it is a fixed part of your income as a supplement.
A disability insurance plan provides compensation in place of 40% to 70% of your basic income, and usually, there is a fixed waiting period before the starts coverage. Also, how much will be paid monthly depends on its cap.
Example: Let’s say your monthly income is $1000, and you become disabled due to an accident if your cap is set at 70%, then you will get 70% of your income through disability insurance, which will be $700/month. This income may or may not be taxed; it depends on your state.
Who needs it: This insurance is for everyone who does a job.
Legal obligation: No.
7. Umbrella Insurance:
When you opt for an insurance policy for any reason, you should go for umbrella Insurance if you feel that you may need additional coverage in the future. It helps protect you from the risk of being sued for damages.
Example: If you have taken auto insurance for your car, but feel that the route daily basis is at high risk, that is why you need insurance with additional coverage. Insurance with this additional coverage is called umbrella insurance.
Who needs it: Individuals who already have an insurance policy?
Legal obligation: No.
8. Renters Insurance:
Individuals who do not own a house and live in a rented house, then they get rental insurance to compensate for the loss of their property.
Example: Suppose a person lives on rent and the house catches fire due to an accident, then the landlord will indemnify all his affected goods through home insurance, but the landlord’s insurance will not cover the loss of the renter’s property.
Who needs it: A person lives on rent.
Legal obligation: No.
9. Long-Term Care Insurance:
When a person reaches the age of 65 or more, they start needing the help of others for everyday tasks, and this need increases as time goes on.
Then the older person has to pay for the expenses incurred in taking care of the home or staying in the excessive nursing home.
Long-term care insurance is used to cover these expenses. The appropriate time to take it is between the age of 55 and 60 years because, as the age increases then, the cost of premium of this insurance also increases, which a normal person cannot afford.
Another option is that when you are buying life insurance, you should add insurance covering long-term care with it. It is economical at that time.
Who needs it: For elderly person only.
Legal obligation: No.
10. Travel insurance:
This insurance covers the cost of your trip in case you need a medical emergency while you are traveling or if your journey is blocked due to any other type of accidental event. It becomes more necessary when you travel by air as the cost of air travel is exorbitant.
Who needs it: For traveling persons only
Legal obligation: No.
11. Pet insurance:
If you have taken a pet of an expensive species then any future medical condition can be covered. It covers a large part of the cost of medical treatment to the vet.
Who needs it: Pet owners who raise pets of vulnerable species.
Legal obligation: No.
What are third party insurance and comprehensive insurance?
Third-party insurance: Third-party car insurance is the minimum legal level required to drive a car. It covers you if you damage someone else’s property or injure them while driving. This insurance also covers your passengers.
Comprehensive insurance: Comprehensive insurance provides the following coverage to your car, as shown below.
1. This covers the repair payment if your car is damaged but keep in mind that the cause of your car damage should not be a collision. Usually, this repair work covers repair damages in case the car is damaged due to fire, vandalism or falling of trees.
Is insurance tax deductible if yes which?
Many types of insurance are tax deductible, but there are also some conditions that such insurance is tax deductible if such premium costs pay you out of your pocket.
Which insurance is not tax deductible?
Insurance for which you do not pay the premium cost out of your pocket. Such insurance is not tax deductible.
Example: Health insurance provided by an employer to his employee is not tax deductible.
In how many ways can an insurance policy be obtained?
An insurance policy can be purchased in three ways, as shown below:
1. Directly buy from the insurance company: You can buy a suitable insurance policy for yourself through an authorized insurance company agent.
2. Online: There are different types of insurance companies available on the internet, so you can buy a suitable insurance policy online. This method gives you many options.
3. Through an insurance broker.
Are minimum legal documents required to buy an insurance policy?
Yes, to buy an insurance policy, you need to provide the prescribed documents; then only you will be provided with the insurance policy.
Example: For example, while taking home insurance, you have to ensure the insurance company that the house is yours, and there is no other loan. These are verified with the help of the required documents.
How to file claim for insurance?
As easily as the insurance companies provide you insurance, they do not do the work of indemnifying your claims so easily; for this, they follow their prescribed guidelines, and it can take a long time.
If a person wants compensation based on his insurance policy’s coverage then he should also follow a certain procedure; by doing this, he can get the fixed claim according to his coverage.
Here we will take home insurance, for example, and know the correct procedure to file a claim for home insurance. Its procedure is shown below.
How to file a claim with homeowners insurance?
Example:
You should follow the procedure below to get a fixed claim based on your home insurance policy.
Claim procedure list:
1. Be patient: When a person’s house is damaged due to an accident, theft, or natural calamity, then it is natural for the owner of the house to get upset, but in this situation, you should exercise restraint.
2. Calling the insurance company: You should avoid talking to the representatives of your insurance company immediately in such a situation
3. Call your neighbors or friends who live near your home.
4. Inspect your damaged home: You should thoroughly inspection of your home and make sure to find out the possibility of damage elsewhere in your home because of the damaged structure.
If you think a damaged structure may cause further damage to your home, you should make a plan to repair it immediately.
5. Take photos and make videos: You should take a photo of the damaged part of your house, as well as make a video of it when you file a claim with the insurance company, then this work will come in handy for you.
6. Call the police: If your house has been damaged due to any theft, man-made reason, or natural cause, then you should inform the police station nearest to you.
7. Note down the names and phone numbers of police officers.
8. Liaising with administrative officers: If your house is damaged due to any natural calamity, then you should contact the police and other administrative officers.
9. Talking to representatives of insurance companies: After completing the eight points mentioned above, you should talk to the representative of your insurance company and make them aware of your situation.
10. Collect all documents of the home insurance: Collect all the documents related to your home insurance policy and, if possible, collect the bills of premiums you monthly.
11. Make a photocopy of all the home insurance policy and prepare two sets.
12. Ask for an appointment with an insurance representative.
13. Provide all the documents mentioned by the insurance representative.
14. File an insurance claim as per the procedure suggested by the insurance representative.
15. After claiming the file, ask the insurance representative how much time he will take to pay the compensation.
16. From time to time, you should talk with your insurance representative about the status of your insurance claim.
Where to file an insurance company complaint in the United States?
If an insurance company does not provide you compensation as per the indemnity claim filed by you, you should complain to the relevant organization in your state.
Government institutions for registering an insurance company complaint differ from state to state, so it is not possible to give all of them the helpline number here, so you can do this by gathering information about the concerned institution of your state.
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