Insurance is a deal you make with an insurance company. You pay a small amount of money on a regular schedule, and in return, the company agrees to pay a much larger amount if something specific goes wrong. That something could be a car accident, a fire, a death in the family, or a hospital stay. The deal is written down in a contract called a policy. The whole system works because thousands of people pay in, but only a small number of them have a major loss in any given year. The money pools, and the people who need it get paid from that pool.

Because the deal is for the protection itself, not for the payout. Every month you pay your premium, you are buying peace of mind that if a covered event happens, you will not have to pay the full cost out of pocket. The premium is not a savings account. Once you pay it, the insurance company has earned it in exchange for keeping its promise to cover you. The exception is permanent life insurance with cash value, which we cover in the whole life FAQ.

A claim is the official request you make to the insurance company to pay you for a covered loss. You file a claim by calling the company, filling out a form, or using their app. The company sends a claims adjuster who looks at what happened, figures out what the policy actually covers, and decides what gets paid. The claims process is the most important moment in the customer relationship, and a good agent helps you through it.

The price you pay is called a premium, and it is based on risk. The insurance company looks at how likely it is that they will have to pay a claim for someone like you. For car insurance, they look at your driving record, your age, where you live, and what you drive. For life insurance, they look at your age, your health, whether you smoke, and your family medical history. The riskier you look on paper, the more you pay. The lower the risk, the lower the premium.

A premium is the price you pay for your insurance policy. You can pay it monthly, every six months, or once a year. If you stop paying your premium, the policy will eventually lapse, which means you no longer have coverage and the company has no obligation to pay if something happens.

A deductible is the amount of money you have to pay yourself before the insurance company starts paying. If your car insurance has a 1,000 dollar deductible and you have a 3,000 dollar repair, you pay the first 1,000 and the insurance company pays the remaining 2,000. Higher deductibles usually mean lower premiums, because you are taking on more of the risk yourself. Life insurance does not use deductibles. The death benefit pays out in full.

A beneficiary is the person or people you name on a life insurance policy to receive the money when you die. You can name more than one person, you can split the percentages however you want, and you can change them at any time as long as you are alive and competent. The Louisiana Department of Insurance recommends reviewing your beneficiaries every few years and any time a major life event happens, like marriage, divorce, or the birth of a child.

Underwriting is the process the insurance company uses to decide whether to offer you a policy and what to charge. For car insurance, underwriting can take seconds and is mostly automated. For life insurance, underwriting can involve health questions, a medical exam, prescription history, and sometimes a physical. Simplified-issue policies use fewer health questions and skip the exam, which is why those policies usually cost more for the same coverage.

A rider is an add-on to a policy that gives you extra coverage or extra features. Common life insurance riders include a child rider, which covers your kids for a small amount, an accelerated death benefit rider, which lets you tap part of the death benefit early if you are diagnosed with a terminal illness, and a guaranteed insurability rider, which lets you buy more coverage later without medical questions. Riders usually cost a small additional premium.

The policy is the full written contract between you and the insurance company. It can be 20 to 60 pages long and contains every term, condition, exclusion, and definition. The declarations page is the cover sheet that summarizes the key information: who is insured, what is covered, what the limits are, what the premium is, what the deductible is, and who the named beneficiaries are. If you only read one part of your policy, read the declarations page.

A captive agent works for one insurance company only. They can only sell you that one company’s products. State Farm, Allstate, and Farmers are examples of captive operations. An independent agent works with many insurance companies at the same time and can compare options across them to find the policy that fits you best. Prime Harbor is an independent agency. According to industry data reported by Insurance Journal, independent agents place more than 62 percent of all property and casualty insurance in the United States.

No. The commission an agent earns is already built into the premium the carrier charges. Whether you buy directly from the insurance company online or through an independent agent like Prime Harbor, the policy price is the same. The difference is that the agent shops it for you across multiple carriers and stays in your corner when something goes wrong.

A.M. Best is the leading credit rating agency for the insurance industry. It rates the financial strength of more than 16,000 insurance companies on a scale from A-plus-plus (Superior) down to D (Poor). The rating tells you how likely the company is to be able to pay claims, even decades from now. Per the Insurance Information Institute, five independent agencies rate insurance companies: A.M. Best, Fitch, Kroll Bond Rating Agency, Moody’s, and Standard and Poor’s. Prime Harbor only places business with carriers rated A-minus or better.

Because they are quoting different products from different carriers. Each insurance company has its own underwriting rules, its own pricing model, and its own appetite for risk. One company might charge a 35-year-old in New Orleans more for car insurance because they have had bad loss experience in that ZIP code. Another company might be looking to grow there and price aggressively. The whole point of using an independent agent is to find the carrier whose math currently favors you.

The Louisiana Department of Insurance, led by Commissioner Tim Temple, is the state agency that regulates every insurance company and every insurance agent doing business in Louisiana. The LDI licenses agents, reviews policy forms, sets rules carriers have to follow, and helps consumers when they have a complaint. You can reach the LDI at 1-800-259-5300 or at ldi.la.gov. If a carrier or agent treats you unfairly, the LDI is who you call.

Louisiana law gives you a 10-day “free look” period on life insurance policies. Per the Louisiana Department of Insurance Consumer’s Guide to Life Insurance, this means you have 10 days from when you receive the policy to read it, change your mind, and get a full refund of any premium you paid. The free look is your safety net. Use it. Read the policy. Ask questions. If something is not what you were sold, cancel it.

A policy lapses when you stop paying premiums and the grace period runs out. Once a policy lapses, you no longer have coverage and the company has no obligation to pay a claim. Most life insurance policies have a 30-day grace period after a missed premium. After that, the policy can lapse. To avoid this, set up automatic payments and review your bank statements monthly. If money gets tight, call your agent before you skip a payment. There are often ways to reduce coverage or restructure the policy instead of letting it lapse entirely.

You have three paths. First, call your agent. If you bought through Prime Harbor, we advocate for you with the carrier and try to resolve the issue at our level. Second, file a complaint with the Louisiana Department of Insurance at 1-800-259-5300. The LDI investigates consumer complaints against carriers and agents licensed in the state. Third, in serious cases, you can hire an attorney. Per LDI guidance, most disputes can be resolved at the agent or department level without legal action.