Reading an insurance policy can be somewhat intimidating, especially in reference to health insurance terms. There are terms which are exclusive to the language of health insurance policies which simply aren't used in daily life. Familiarizing yourself with the terms can help you to understand the basics of the health insurance policy with regard to: exclusions, inclusions, and addendums. Knowing these terms and how they are used clears up confusion as to what is covered by a health insurance policy and can help to save in medical costs. A misinterpretation or misconception regarding a health insurance term can mean having to negotiate an unexpected invoice. Three health insurance terms that are critical to understand in health insurance include deductible, co-pay, and limitation in contrast to exclusion.

It is important to thoroughly understand health insurance terms. For example, many policies have a deductible. Failing to understand this health insurance term that can result in a substantial financial problems. For example, a policyholder must be aware of the terms of the annual deductible and not labor under the misconception that only the $20.00 co-payment is due and payable for medical care services. A deductible is a the portion of money the policyholder is expected to contribute toward their care. A deductible can range from zero to a $2,500. Each policyholder must determine whether they wish to have a higher deductible and lower monthly payments or whether they wish to lower the deductible and pay a bit more each month for premiums.

Simply stated, a deductible is the amount that the policyholder must pay out of pocket before health insurance benefits are initialized. After this amount is paid, any subsequent medical visits would only require the $20.00 co-pay, which is the amount that the insured must pay to supplement the amount the health insurance policy would pay; together, the co-pay and the policy benefits would cover the medical care provider for services rendered.

Some policies have a "limitation" clause, such $2,000 in maternity benefits, or a $25,000 lifetime limitation for allergy care. The means in layman's terms that once the medical charges total 2,000 or $25,000 nothing further will be paid for that illness. This is different than an exclusion clause, which means that no benefits will be paid for a stated medical condition. A "limitation" means that the policy will provide benefits only up to a certain amount for a specific illness.

The health indemnification provides security against financial consequences or loss due to illness; an understanding of the health insurance terms instills confidence, empowers the policyholder, and encourages financial preparation for the medical expenses and incidents of life.