Insurance Agents Help Consumers Understand Insurance Terminology

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Insurance Agents Help Consumers Understand Insurance Terminology

A simple way to gauge your clients' understanding of insurance, especially if you are not in contact with them regularly, is to ask them some basic questions about insurance.The National Association of Insurance Commissioners (NAIC) conducted a survey recently about American consumers' understanding of insurance. The results showed that only less than half of the respondents feel confident enough to make decisions about insurance. The majority is still confused about the basics of insurance.Some of the things that consumers are uncertain of:- Auto insurance coverage, especially regarding personal property stolen from the vehicle

- Age requirement for Medicare

- Effect of credit rating on auto insurance premiumThere were 1,000 respondents in the survey, and most of them got the answers wrong. The correct responses were: (1) No, auto insurance does not cover personal property inside the vehicle, (2) You have to be 65 years or older to qualify for Medicare, and (3) Yes, your credit standing affects the cost of your auto insurance premium.The survey consisted of two sections. The first section contained questions about general consumer perception of insurance. The second section contained specific questions about insurance. The results showed that most of the survey participants answered only 40 percent of the specific questions correctly. By US education standards, this is a failing grade.A surprising 86 percent of survey participants admitted that they do not understand all of the insurance terms used in discussions of the new health care legislation.Here are the other results of the survey:- More than half of the respondents do not know what "pre-existing condition" means. This is significant, because pre-existing conditions are an important consideration when selecting health insurance.- Forty percent (40%) are not aware of age requirement for Medicare (65 years or older)- The majority of the survey participants are not aware when they can make changes to their group health insurance, or, if they are aware, they believe that changes can only be made during the open-enrollment period specified by the employer. The truth is, aside from the open-enrollment period, there are other instances when changes to the coverage are permitted. This applies to new employees or employees who got married or had a baby. The survey result also showed auto insurance basics as another area not fully understood, even by people who get them.According to the survey:- More than half of the respondents (63 percent) don't know that personal property stolen from the vehicle is not covered by auto insurance. It is actually covered by another kind of insurance (homeowners / renters policy).- Some 54 percent of the respondents are not aware that their credit rating can have an effect on their auto insurance premiums. In some states, credit history is a factor in calculating the auto insurance premium, together with the driving history, vehicle type and selected deductible/s.- A significant number (86 percent) are not aware that, in a 100/300/100 liability coverage, the last number represents the maximum amount that their insurance provider will pay in case of property damage in an accident.The survey shows agents the importance of contacting clients regularly (at least once a year) in order to review their insurance policy and to address any and all of their concerns and questions about insurance. People do not need to become experts in insurance, but the knowledge of the basics will go a long way in enabling them to make an informed decision about insurance.

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