Insurance Terms You Need to Know Part 2

Learning more about insurance terms and what they mean can only boost your confidence in diving deeper into the world of insurance and investments. We explain five more commonly used insurance terms that will help you understand insurance plans better. Check them out below.

by Nathan Arciaga, 12 August 2017

Investing and purchasing an insurance policy is really easy, especially if you know exactly what you’re getting into. Always be the expert when it comes to protecting yourself and your family and get acquainted with five more  terms, this time focusing more on health insurance policies. As you master these terms and their definitions*, you’ll be more comfortable in making decisions that will keep you and your family healthy today, and for years to come. 

Pre-existing Condition
A health condition or problem that you have been diagnosed with, or are being treated for, prior to purchasing the plan. Examples of this could be asthma, diabetes or allergies. Pre-existing conditions could complicate the terms of your health insurance, so make sure you declare all of them. 

In-Network Provider
This is a healthcare professional or institution that is accredited or preferred by a health plan provider. When you have a health plan, you are usually given a list of doctors, specialists, and hospitals that your plan provider already has a working relationship with. Going to these in-network providers usually result in lower payments or even no payment at all. On the flip side, an Out-of-Network Provider is that doctor and/or that hospital you insist on being taken to, even if they don’t currently have a working relationship with your insurance company. As you have probably already guessed, going to one often results in more out-of-pocket expenses for you. 

Out-of-Pocket Maximum

This is the limit on the amount you’ll pay towards your health in a year. Say you get sick and get hospitalized and your bill eventually runs up to PhP500,000, and that’s excluding what the health insurance is willing to cover. If you have an out-of-pocket maximum clause in your policy that pegs the amount at PhP300,000, for example, your insurance provider will still have to shoulder the extra PhP200,000 regardless. Plus, any and all health expenses you will incur for the rest of the year. Unfortunately, not many health insurance plans in the Philippines offer this—it’s actually the other way around, where they have a set amount that they cover and then ask you to take care of the rest. 

Rider
A rider is an add-on clause or provision to a basic insurance policy, usually to add a benefit not initially offered. This helps in tailor-fitting your insurance policy to your needs. Common health insurance riders are maternity riders, riders for pre-existing conditions your health insurance won’t cover, and riders for critical illnesses like cancer. Riders make you pay additional premium. The great thing about insurance companies nowadays is that they already have specific plans that do away with riders, and target potential policyholders who may need a more specific health plan. FWD’s Fight Plan is an example—it offers protection when you get diagnosed with cancer. 

Explanation of Benefits
This is a document, usually attached to your hospital billing statement, detailing which of the services, procedures, and medicines your insurance provider will cover and which ones they won’t. For procedures and claims that were denied, usually there is a brief explanation as to why they were not covered, and this document is very important in the process of appealing the decisions of your health insurance provider.

*Please note though that these definitions and explanations are generic and are based on common industry understanding. Your policy may specifically set its own definition of some of these terms.