If you are intimidated by insurance, you're not alone. However, you have to keep in mind that insurance is there to protect you and help you. There may be times when it doesn't feel that way, but insurance companies help you take risks that you cannot afford to take alone.

Part of the problem with insurance is the jargon. Unfortunately, everything isn't written in plain English. This section should help you get a grasp on what those guys are talking about at the insurance company.

Deductibles

A deductible is the part of a claim that the insurance company will not pay. Essentially, it's your share of the cost. You will find deductibles in health, auto, homeowner's, and other policies. When you choose insurance plans, note that the deductible affects your pricing: the higher the deductible, the lower your premium payments. This is because you are taking on more risk with a higher deductible.

Coinsurance

After you pay the deductible, you may have coinsurance. Like a deductible, coinsurance keeps you involved in the process so that the insurance company is not writing all of the checks. The goal is to keep you from spending all of the insurance company's money for no good reason; if it comes out of your pocket, you'll make sure it's needed.

Coinsurance is usually talked about as a percentage. For example, 80/20 coinsurance usually means that the insurer pays 80 percent of costs and you pay 20-percent. Typically, you'll also have an out-of-pocket limit, which shifts any risk above a certain level back to the insurance company. For example, you might pay 20 percent coinsurance on costs up to $5000 ($1000 out of your pocket), and then the insurance company pays the rest.

Elimination Period

For long-term disability and long-term care insurance, you have something called an elimination period. This is a set period of time where your condition exists, but the insurance company hasn't started to pay you benefits yet. For example, assume you buy a long-term disability policy with a ninety-day elimination period. You have to be disabled for ninety days before they start paying you benefits. The purpose is to avoid claims where you are disabled for a short period of time. You might as well call the elimination period a waiting period.

Benefit Period

The benefit period also shows up in long-term disability and long-term care policies. It is the amount of time that the insurance company will pay benefits to you. You might have a long-term disability insurance policy that has a two-year benefit period. This means that they will pay you your monthly benefits for up to two years; after you've satisfied the elimination period, of course. If your disability is shorter than two years, that's great. However, if your disability lasts longer than two years, you are on your own.

As you may have guessed, longer benefit periods (or shorter elimination periods) result in higher costs to you. You have to pay more each month for the luxury of knowing that you have a less-restrictive policy. Some benefit periods go up until you reach age sixty-five, or whenever your maximum Social Security benefits kick in. These plans are more expensive, but they give you more protection.