Insurance Glossary**

The language we use in the insurance industry can be a little confusing. That's why we've created a glossary of insurance terms to help make things clear. Browse our insurance terms glossary now; if you cannot locate the term you're looking for, please let us know and we'll be happy to explain it to you. Of course, we'll also consider adding it to our glossary of insurance terms.

**The definitions contained in this Glossary are general definitions and are not part of your Combined Insurance policy. This Glossary is provided for your convenience and is for general informational / educational purposes only. See your policy for complete details of your Combined Insurance coverage and applicable definitions.

A-F  |  G-L  |  M-S  |  T-Z

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A-F

Accelerated Benefits Rider

A life insurance rider that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.

Accidental Death and Dismemberment

Insurance providing payment if the insured's death results from an accident or if the insured accidentally severs a limb above the wrist or ankle joints or totally and irreversibly loses his or her eyesight.

Accidental Death Benefit Rider

A life insurance policy rider providing for payment of an additional benefit related to the face amount of the base policy when death occurs by accidental means.

Accidental Death

Death resulting directly and solely from:

1. An accidental injury visible on the surface of the body or disclosed by an autopsy
2. A disease or infection resulting directly from an accidental injury as described, beginning within 30 days after the date of the injury
3. An accidental drowning

Acute Care

Skilled, medically necessary care provided by medical and nursing professionals to restore the person to health or to the ability to function.

Agent

A person or organization who solicits, negotiates, or instigates insurance contracts on behalf of an insurer. Agents can be independent, or employees of an insurer.

Application

Form supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives information to the home office underwriting department so it may consider whether an insurance policy will be issued and at what premium rate.

Beneficiary

Person to whom the proceeds of a life policy are payable when the insured dies. The various types of beneficiaries are: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies).

Benefit

In supplemental insurance, the amount of money that is paid to the insured for specific losses as indicated in the insurance policy.

Benefit Period

The length of time that benefits are paid to the insured for a covered loss. E.g. a Disability insurance policy with a six month benefit period would pay the insured a benefit according to schedule for a total of six months.

Best's Insurance Report

A guide, published by A.M. Best, Inc., that rates insurers' financial integrity and managerial and operational strengths.

Captive Agent

An insurance agent who works exclusively for one insurance company and only sells the insurance products of that one company.

Cash Value

The equity amount or "savings" accumulation in a whole life policy.

Conditional Receipt

Given to policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.

Conditions

In an insurance policy, provisions that explain the duties, rights, and options of the insured and the insurer.

Contingent Beneficiary

Person or persons named to receive proceeds in case the original beneficiary is not alive. Also referred to as secondary or tertiary beneficiary.

Coverage

The word coverage is used synonymously with insurance or protection.

Critical Illness Insurance

A type of supplemental health insurance that pays a lump-sum benefit upon diagnosis of a critical illness or condition.

Decreasing Term Insurance

Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

Definitions

In an insurance policy, provisions that define the words and phrases that have a special meaning when they are used elsewhere in that policy. Words defined in some policies are printed in boldface or enclosed by quotation marks.

Disability Income Insurance

A type of health insurance coverage. It provides for the payment of regular, periodic income should the insured become disabled from illness or injury. Also referred to as Income Protection Insurance.

Dismemberment

In accident and health insurance policies, dismemberment encompasses the loss of limbs or sight. A fixed benefit is paid to insureds who suffer certain types of dismemberment under these policies.

The policy will typically pay the principal sum for the loss of both hands, both feet, or the sight of both eyes, one hand and one foot, or the sight of one eye and one hand or foot. For the loss of any one limb or the loss of sight in one eye, the policy will usually pay a specified percentage (e.g., 50%) or the principal sum.

Elimination Period

A waiting period or a probationary period that must run before benefits are payable under a long-term care or disability income plan or policy.

Exclusion

A stipulation within the policy language that explains situations under which policy benefits will not be paid that otherwise would be payable. For example, many policies that pay a death benefit will not pay for death resulting from suicide.

Face Amount

Commonly used to refer to the principal sum involved in a life insurance contract. The actual amount payable may be decreased by loans or increased by additional benefits payable under specified conditions or stated in a rider.

First Dollar Coverage

Insurance that provides for the payment of all losses up to the specified limit without any use of deductibles.

Free-Look Period

A provision that allows the owner of the policy a specific period of time to review the policy details and cancel the policy without penalty, which includes any premiums paid.

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G-L

Guaranteed Insurability (Guaranteed Issue)

Arrangement, usually provided by rider, whereby additional life insurance may be purchased at various times without evidence of insurability.

Guaranteed Renewable

A provision in a life or disability policy that requires the insurer to renew the policy on its anniversary. The premium can usually be changed if the change applies to the entire class of insureds covered by the policy.

Health Insurance

A category of insurance that provides two major types of benefits: payment of medical costs (hospital bills, doctors' fees, etc.) and disability income (monthly income to disabled workers during their disability).

Health Insurance Portability and Accountability Act (HIPAA)

A US law designed to provide privacy standards to protect patients' medical records and other health information provided to health plans, doctors, hospitals and other health care providers. Developed by the Department of Health and Human Services, these new standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed. They represent a uniform, federal floor of privacy protections for consumers across the country. State laws providing additional protections to consumers are not affected by this new rule. HIPAA took effect on April 14, 2003.

Hospital Income Insurance

Insurance providing a stated weekly or monthly payment during the hospitalization of the insured. The benefits payable are not based on the actual expenses incurred.

Increasing Term Insurance

Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.

Insured

A person, business, or organization that is covered by an insurance policy.

Insurer

Party that provides insurance coverage, typically through a contract of insurance. Also known as an insurance company.

Irrevocable Beneficiary

A beneficiary to a life insurance policy that cannot be changed without his or her consent.

Lapse

Termination of a policy upon the policy owner's failure to pay the premium within the grace period.

Life Insurance

A type of insurance that pays a defined benefit amount upon the insured's death according to the policy.

Level Term Insurance

Term coverage on which the face value and premiums remain unchanged from the date the policy comes into force to the date the policy expires.

Long-Term Care Insurance

Care provided for persons with chronic disease or disabilities.

Long-Term Care (LTC) includes a wide range of health and social services that may involve adult day care, custodial care, home health care, hospice care, intermediate care, respite care, and skilled care. LTC does not include hospital care.

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M-S

Major Medical Insurance

Health insurance that provides benefits up to very high limits, subject to a very large deductible. There may also be internal limits and a participation clause, sometimes called a coinsurance clause.

Maturity Date

The date at which the face amount of a life insurance policy becomes payable either by death or other contract stipulation.

Medicaid

The federal-state health insurance program administered by the states and subsidized by the federal government for low income Americans. Medicaid also pays for nursing-home care for the indigent elderly and mentally disabled.

Medicare

The U.S. government program providing medical expense benefits for persons over the age of 65 or who are disabled if they qualify for benefits under Social Security.

The program was implemented in 1965 as a part of the amendments to the Social Security Act of 1935.

Offer and Acceptance

The offer may be made by the applicant by signing the application, paying the first premium and, if necessary, submitting to physical examination. Policy issuance, as applied for, constitutes acceptance by the company. Or the offer may be made by the company when no premium payment is submitted with the application. Premium payment on the offered policy then constitutes acceptance by the applicant.

Out-of-pocket Costs

The health care costs that a major medical insurance plan does not pay or reimburse. For example, if the health insurance plan pays 80% of a procedure's cost, the remaining 20% paid by the insured would be considered an "out-of-pocket cost."

Outline of Coverage

Provides a brief description of the important features of a policy and may outline the specific losses covered and corresponding benefits that will be paid.

Paid-Up Policy

An insurance policy that only requires premium payments for a specific period of time (e.g. 15 years), after which coverage continues but the insured no longer pays the premium.

Partial Disability

Disability that is not total.

The exact definition of partial disability varies between policies, but it is often defined as the inability of the insured to perform one or more of the important duties of his or her occupation.

When a disability income policy covers partial disability, the benefit is usually equal to a specified percentage (50%, e.g.) of the total disability for a limited period of time, such as 3 or 6 months.

"Pre-existing Condition"

A condition for which you received medical advice or treatment usually within the 24 months preceding the issue date of the policy or showed symptoms within 24 months prior to issue date that would have caused an ordinarily prudent person to seek medical advice or treatment.

Primary Beneficiary

In life insurance, the beneficiary designated by the insured as the first to receive policy benefits.

Rider

Strictly speaking, a rider adds something to a policy. However, the term is used loosely to refer to any supplemental agreement attached to and made a part of the policy, whether the policy's conditions are expanded and additional coverages added, or a coverage or condition is waived.

Secondary Beneficiary

The person named to receive benefits if the primary beneficiary is not alive upon the death of the insured or if the primary beneficiary does not collect all benefits before his or her own death.

Short-Term Disability Income Insurance

A type of disability income coverage that provides disability income benefits for a period of time that lasts anywhere from 6 months to 2 years.

Suicide Clause

Most life insurance policies provide that if the insured commits suicide within a specified period, usually two years, after the issue date, the company's liability will be limited to a return of premiums paid.

Surrender

Withdrawing full cash value and surrendering a policy to the life insurance company.

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T-Z

Term Life Insurance

Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.

Term of Policy

Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.

Totally Disabled

The inability to perform the substantial and material duties of the Covered Person's business or occupation (usual duties if not employed). If the Covered Person is able to perform any of the substantial and material duties of their business or occupation (usual activities if not employed) the Covered Person is not Totally Disabled. The Covered Person must be under the care of a Physician.

Universal Life

Flexible premium, two-part contract containing renewable term insurance and a cash value account that generally earns interest at a higher rate than a traditional policy. The interest rate varies. Premiums are deposited in the cash value accounts after the company deducts its fee and a monthly cost for the term coverage.

Variable Life Insurance

A policy that provides a guaranteed minimum death benefit with the potential for increased benefits, without the necessity of paying additional premium dollars. Under such policies, the insured obtains a right to have the net investment return, in excess of the assumed rate of return, applied to increase the policy benefits.

Waiver of Premium

Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.

Whole Life Insurance

Permanent life insurance that provides for the payment of the face value upon the death of the insured, regardless of when it occurs. This contrasts with term insurance, which pays benefits only if death takes place during the limited term of the policy.

Under whole life policies, the insured pays a level premium rate all of his or her life. This approach results in an overpayment of premiums in the early years of the policy and an underpayment in the latter years - which averages out over the life of the policy. Whole life insurance also accumulates a cash value that may be borrowed or otherwise used by the insured.

Workers' Compensation

The system by which no-fault statutory benefits prescribed in state law are provided by an employer to an employee (or the employee's family) due to a job-related injury (including death) resulting from an accident or occupational disease.

Workers Compensation policies include two basic coverages. The first coverage provides benefits for employees injured on the job. These benefits are determined by state law.

The second coverage is Employer's Liability. This section covers suits by employees against their employers for job related accidents. Suits can also come from family members of employees. Workers Compensation laws often limit the liability of employers to employee suits, but suits are still possible.

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