Typical Insurance Costs

Typical insurance costs include four areas: premiums, deductibles, coinsurance and copayments. Depending on the type of insurance plan, you may have each of these costs. Costs vary based on the type of plan and insurance risk factors, such as your health for individual health insurance policies, or the make and model of your car for automobile insurance.

Premiums

• Insurance premium is the cost of the actual insurance policy. Premiums are billed and paid on a monthly, quarterly or pre-paid basis, depending on the type of policy and your billing arrangements. Underwriters are professionals who determine the premium costs based on a variety of factors. For health insurance, these factors may include your age, gender and occupation. For property insurance, factors typically include the value of your real estate or automobile and the age and amount you insure the property for determines the premium. The amount of deductible will also affect your insurance premium costs.

Deductibles

• Deductibles are a typical insurance cost. The deductible is a dollar amount on an insurance plan that the policyholder must pay before the insurer begins to pay for claims. Deductibles are a variable selected by the policyholder. Generally, the higher the deductible amount, the lower the cost of the policy. Deductibles can range from zero to thousands of dollars. Your insurer will track your deductible and once met, they will pay their portion of the claim. Some insurance plans will exempt specific services from the deductible, such as preventive medical and dental care.

Coinsurance

• Coinsurance is a feature of certain types of health insurance plans such as Preferred Provider Organizations, or PPO. Coinsurance is the shared percentage that you and the insurer pay. For instance if you have a 20 percent co-insurance for doctor visits, your insurer will pay 80 percent of the costs after applicable deductibles and copayments. Coinsurance can vary by plan and affects premiums. Typically, the higher the coinsurance percentage, the lower the premium cost. Some health insurance plans, such as Health Maintenance Organization, or HMO, do not typically utilize coinsurances.

Copayments

• Another typical health insurance cost is the copayment. Copayments are features of many types of health plans including PPOs and HMOs. The copayment is typically a small amount paid at the time of rendered service. Your doctor's office, facility, lab, pharmacy, hospital or other establishment where you receive care will require payment as you leave. Copayments may vary based on service. A primary care doctor visit may have a smaller copayment than a specialist or hospital visit.