As an insurance agent you have probably gone over every aspect of an insurance policy thousands of times. When selling group insurance, you want to know your products and industry inside and out. You might find yourself using industry terms more often than you use plain English. It can be easy to forget that this terminology is not necessarily "common talk" for everyone.

Even people with strong reading and math skills can find it difficult to understand health care and health insurance. That’s why having health literacy is important for all people.

When your client leaves your office or enrollment meeting, he or she will have a certain perception about their insurance product. Whether or not that perception is correct is entirely up to you.

It is dangerous to assume that your clients fully understand you when you speak to them using industry terms. Because a misunderstanding on the part of your client can lead to substantial out-of-pocket expenses. It's estimated that improving health literacy can prevent nearly 1 million hospital visits and save over $25 billion a year.

Don't assume your clients know all of the terminology. Even if it seems as though your clients understand, it is very possible they don't. Take the initiative to clearly explain not only what is covered, but how it is covered, and when it is covered.

These tips will allow your clients to feel they can trust you and help maintain long-term relationships. Let’s take a closer look now.

Common insurance terms

There are many terms that insurance agents and brokers use daily. And often clients are not familiar with them. Here are the key terms you will need to clearly define to your clients during the process of selling group benefits:

• Deductible: A deductible is the amount of money a policyholder must pay out of pocket before their insurance coverage kicks in. For example, a client has a $500 deductible on their policy. If they have a planned procedure at a cost of $1,000, they would be responsible for paying the first $500. Then their insurance would start paying a percentage of the cost.
• Out-of-pocket maximum: This refers to the maximum amount of money a policyholder is required to pay out of their own pocket for covered services. Once the maximum is reached, the insurance will cover the rest of the costs.
• Annual maximum: The annual maximum is the amount of money an insurance policy will cover each year. Once this maximum is reached, the policyholder will be responsible for any additional expenses.
• Lifetime maximum: A lifetime maximum is the amount of money an insurance policy will cover over the entire duration of the policyholder's life. If this maximum is reached, the policyholder will be responsible for any additional expenses.
• Waiting period: This refers to the amount of time a policyholder must wait before receiving certain dental services. The insurance will not cover the cost before the waiting period.
• Policy period: The policy period is the duration of time that the insurance policy is in effect. For example, if a client's policy period is from January 1st to December 31st, their coverage will only apply to dental services received within that period. This will allow them to schedule dental appointments accordingly and maximize their insurance benefits.
• Covered service: This includes the dental procedures, treatments, and services that are paid for by the insurance. It is important for clients to understand what services are covered under their insurance plan to avoid any unexpected expenses.
• Co-insurance: It refers to the percentage of costs that the policyholder is required to pay out of pocket for covered services, after the deductible has been met. Let's say a client has 20% co-insurance and the total cost of a covered service is $1,000. The client would be responsible for paying $200, while the insurance would cover the remaining $800.
• Co-payment: A co-payment refers to the fixed amount of money that a policyholder is required to pay out of pocket for specific covered services. For example, a client has a $20 co-payment for a doctor's visit and the total cost of the visit is $100. The client would be responsible for paying the $20, while the insurance would cover the remaining $80.
• Network: A health insurance network is a group of doctors, facilities, and care providers that the insurance contracts with to provide services. Types of insurance networks include exclusive provider organization (EPO), preferred provider organization (PPO) and health maintenance organization (HMO). Understanding these networks will help clients select the right type of insurance for their financial situation and health care needs.
• Provider: A provider is a healthcare professional or facility that has an agreement with an insurance company. Clients will typically pay a lower co-payment or coinsurance amount. And the insurance company will cover a larger portion of the cost. On the other hand, if a client opts for an out-of-network provider, they may be responsible for a higher percentage of the cost. They may even have to meet a separate out-of-network deductible.
• Exclusion: An exclusion refers to specific services or conditions that are not covered by an insurance policy. For example, a policy excludes coverage for cosmetic dentistry. Any procedures for improving the appearance of the teeth would not be covered.

Why it’s important to explain health care terms.

Often it is hard for clients to admit that they do not understand you. They may be shy about asking questions. You have them come to your office to fill out the application together. They nod approvingly as you read over the conditions of the plan and agree to the policy. They smile, shake your hand, thank you for your help, and leave your office seemingly pleased. What could go wrong? They nodded, smiled, and were happy, right?

The problem is many clients don’t know insurance at all. They may have never had a dental plan before and rarely use their medical insurance. They don’t understand the answer to questions like: what is a deductible? how does co-insurance work? They may not even know they have an annual maximum. You can see how this will be a problem not only for them, but for you as their agent. Leaving these questions unanswered will give your client the capacity to feel misguided or let down by you – leading to distrust.

As an agent or broker selling group insurance, it is crucial to explain these above terms and concepts clearly. You want to ensure your clients are fully informed. Making insurance simple will help put your clients in the best possible position. Plus, it will help build trust and enhance relationships for years to come.