Deductibles, premiums and limits are the most frequently terms that appear in insurance policy. These concepts determine your payment for your insurance and how much you receive after a covered loss. You need to understand the meaning of each terms.

Deductible

Deductible is the amount you pay out of pocket before insurer pay for the expense. The amount of coverage depends on the limit you choose. For example, you have $400 deductible and have $10,000 of expense after damage caused in your home, car or something else, you have to pay for $400 before the insurer pay the remaining $9,600. Deductible for any types of insurance generally apply each time you have a claim, except for health insurance. Health insurance mostly have a single deductible for a full year. 

Insurance companies usually set deductibles for certain policies, however many insurance companies also let the insured choose their deductible. If you want a lower premium, you need to set your deductible higher. You have to understand your need in order to adjust your amount of deductible. Check your policies and talk with your insurance agent, if needed.

Premium

Premium is the amount you pay regularly to your insurer. Premium can be paid monthly, quarterly, every six months or annually depend on the insurance company and specific policy. 

Insurance Limit

Limit is the maximum amount of cover that your insurance company will pay for claims. Typically, the higher your coverage limit, the higher your premium will be. On auto insurance, insurance company will apply separate limits for different types of coverage. The state might require minimum limits for certain coverage. 

It is important to talk with your insurance agent before you purchase any coverage. Make sure your insurance suitable with your financial state. Purchase insurance which make sense for you.