Whether you recently entered the workforce or have gone far in your career, you’ve probably heard your loved ones say, “Get insured while you’re young.”
If you considered their advice and searched for insurance products online, you’re probably confused by the variety of policies available. Plus, they all use complicated terms. What does it mean when you have “PhP 100,000 coverage against accidents?” or you have to pay a “PhP 500” premium?
Learn all about these terms and how to use them in finding the right insurance for you in this MICI Insurance 101 article.
A Refresher on Insurance
To understand terms like premiums and coverages, you should first know the basic definition of insurance. The Republic Act No. 10607, also known as the “Insurance Code,” defines this as a contract where an insurer (the insurance company) agrees to compensate the insured (you or your business) for damage, loss, or liability from an unexpected event.
So, if you have personal accident insurance and you trip and break a bone while jogging, your insurance company will pay you an agreed amount. You can use this to help with your hospital bills and to make up for lost income due to your injury. This way, you can recover physically and financially.
What is Coverage?
Insurance coverage is the risk an insurer is willing to take for you. This is often expressed in monetary terms. For example, if you break a bone, a personal accident insurance policy could give you up to PhP 5,000 cash assistance coverage, depending on how much your hospital bill costs.
An insurance policy often has specific coverages to protect different kinds of situations. A great example of this is motor vehicle insurance. It covers theft, acts of nature, and damage to the insured and third party’s vehicle. It also compensates for the injury or death of a third party in case of a road accident.
What is a Premium?
A premium is the amount you pay your insurer for your policy. Think of it as a monthly or yearly subscription to keep you protected. Some insurance products have different tiers that increase your coverage. The higher and more comprehensive your coverage is, the more expensive your premium will be.
Another factor that could affect your premium is the cost of the property you’re insuring. Luxury car parts are harder to find and far more expensive than entry-level vehicles. The same applies to houses and electronics. Your coverage must match the price of the repair or replacement of the item you’re insuring. So, you’ll have to pay more to get insured.
What is a Deductible?
For some property and motor vehicle insurance policies, you must pay your insurer a certain amount to activate your coverage in an emergency. This is called a deductible. It may seem like you’re paying double to get your coverage, but it can save you money in the long run. This is because the higher your deductible, the lower your premium will be.
There is no one-size-fits-all when it comes to insurance. If you want to start protecting what matters to you, you need to know your insurance options, how they work, and how they’ll affect your finances in the long run. The terms explained above give you a fundamental understanding of insurance. Use them to assess your current plans and negotiate with your agent or insurance representative to craft a policy tailored to your needs and budget.
Start Protecting What Matters
Accidents and other unfortunate events cause significant emotional and financial stress. As such, it’s vital to protect what matters most to you with insurance. Metropolitan Insurance Company Inc. (MICI) offers a wide range of non-life insurance products that cover you, your loved ones, your property, and even your fur baby. Many of our plans are customizable, so you can get a policy that perfectly fits your income and needs.
Shop at the MICI Online Store today to get insured in just a few clicks.