About this Flash Card Set
14 Cards
by daniel_carter
Decode your insurance policies: premiums, deductibles, copays, coverage types, and the difference between term and whole life. Practical terms for real-world decisions.
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Premium
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The amount you pay (usually monthly) to keep an insurance policy active.
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Deductible
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What you pay out of pocket before insurance starts covering costs. A higher deductible usually means a lower premium.
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Copay
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A fixed amount you pay for a specific service (like $25 for a doctor visit), with insurance covering the rest.
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Coinsurance
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The percentage of a cost you share with your insurer after meeting your deductible (e.g., you pay 20%, insurer pays 80%).
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Out-of-pocket maximum
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The most you'll pay in a year for covered care; after that, insurance covers 100% of covered costs.
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Premium vs. deductible trade-off
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Plans balance the two: low premium + high deductible (cheaper monthly, more when you use it) vs. high premium + low deductible.
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Term life insurance
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Coverage for a set period (e.g., 20 years). Simple and affordable; pays out only if you die during the term.
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Whole life insurance
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Permanent coverage that also builds cash value. More expensive than term; part investment, part insurance.
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Liability coverage
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Pays for damage or injury you cause to others. Required for auto insurance in most states.
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Comprehensive vs. collision (auto)
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Collision covers crash damage to your car; comprehensive covers non-crash events like theft, weather, or hitting an animal.
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Beneficiary
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The person or entity you designate to receive an insurance payout (like life insurance) when you die.
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Claim
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A formal request to your insurer for payment on a covered loss.
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Why you need insurance
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It transfers the risk of a large, unaffordable loss (a wreck, illness, or death) to an insurer in exchange for a predictable premium.
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Term vs. whole — the common advice
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For most people, 'buy term and invest the difference' is cheaper and simpler than whole life, unless there's a specific permanent need.
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