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What Type of Insurance is Right For You: Coinsurance vs. Supplemental Insurance

November 27, 2012  |   Posted by :   |   General   |   0 Comment»

by Michael Grace

Some people believe that all insurance policies are the same. All you need to do is ask your employer or an insurance provider, such as Blue Cross Blue Shield or United Health Care for insurance and all your worries will be taken care of. This is a common misconception. There are many different kinds of insurances that are beneficial in different ways such. Two major differentiators are: coinsurance and supplemental insurance.

Coinsurance is basically the sharing of risks between multiple insurance companies. In health insurance, coinsurance is an agreement between the healthcare company and you. This works is by dividing the risk of loss according to the amount of insurance paid by each policy-holder through the payment of premiums. The insurance premiums are mainly based on the value of the property covered by the policy. If you fail to insure a property for an amount close to its actual value, then you hold a greater responsibility for the risks of loss. Coinsurance is typically applied for primary insurance coverage. In other words, your health, home, and auto insurance is most likely set-up this way.

On the other hand, supplemental insurance is extra or additional insurance that you can purchase to help you pay for services and expenses that your regular insurance does not cover. Often, supplemental insurance is a secondary insurance to Medicare and insurance plans with high deductibles or limited coverage.

Some of the most common things supplemental insurance covers are:

  • Child care and household help
  • Deductibles
  • Experimental treatment, usually related to cancer therapy
  • Normal living expenses, such as your car payment, utility bills, and groceries
  • Out-of-network specialists
  • Travel and lodging when treatment is far from home

Supplemental plans can be used to pay for any expenses outside of an individual’s basic health needs. For example, a supplemental insurance plan can cover deductibles and co-payments, whereas the primary policy does not provide this kind of coverage. Some supplemental plans may provide you with a cash benefit that can be paid over time. This cash is then used to cover lost wages, transportation related to your health, or food, medication, and other unexpected expenses you have due to an injury or illness.

When shopping for insurance, remember that not all insurance policies are the same. It’s important to have a general idea of what you’re looking for to get the best bang for your buck and have a reliable plan to keep yourself and your wallet happy.