Making Sense of It All
Life Benefit Terms
A | B | C | D | E | F | G | H | I | J |
K | L | M | N | O | P | Q | R | S |
T | U | V | W | X | Y | Z
Accelerated Death Benefits
A life insurance policy under which policy proceeds are paid prior to death if the insured is terminally ill.
Accident
An unexpected, unforeseen event not under the control of an insured and resulting in a loss.
Accidental Death
Coverage in the event of death due to an accident, usually in combination with dismemberment insurance.
Act of God
Natural occurrence beyond human control or influence. Such acts of nature include hurricanes, earthquakes, and floods. (A snow storm is an act of God. Driving in a snow storm is an act of man or woman or teenager.)
Actuary a professional trained in the mathematics of insurance and risk management.
Add-ons
Additional coverage to your basic policy.
Adjuster
A person employed by a property/casualty insurer to evaluate losses and settle claims.
Agents
Two types of agents sell insurance: Independent agents are self employed business people who typically represent two insurance companies and are paid on a commission basis. Exclusive agents represent only one insurance company and may be salaried employees or work on a commission basis.
Alien Insurance company
An insurance company incorporated under the laws of a foreign country.
Annuity
A life insurance company contract that pays a periodic income benefit for a specific period or lifetime.
Application
A signed statement by a prospective insured person which becomes part of the health insurance contract.
~B~
Beneficiary
Designation by the owner of a life insurance policy indicating to whom the proceeds are to be paid upon the insured's death or when an endowment matures.
Binder
Temporary insurance contract providing coverage until a permanent policy is issued.
Broker
A sales and service representative who handles insurance for clients, generally selling insurance of various kinds and for several companies.
~C~
Cancelable Policy
A policy which may be terminated by the company or the insured by proper notification sent to the other party according to the terms set forth in the policy.
Carrier
An insurer or insurance company.
Cash Surrender Value
Money the policyholder is entitled to receive from the insurance company upon surrendering a life insurance policy with cash value.
Chartered Life Underwriter (CLU)
A professional designation conferred by the American College. Recipients must pass examinations in business courses, including insurance, investments and taxation and must have professional experience in life insurance planning.
Claim
(1) A formal request for payment of a loss under an insurance contract or bond. (2) The actual amount of the final settlement.
Claimant
One who seeks reimbursement for loss under the terms and conditions of his/her insurance contract.
Clause
A section or paragraph in an insurance policy that explains, defines or clarifies the conditions of coverage.
Coinsurance
In property insurance, a coinsurance clause requires the policyholder to carry insurance equal to a specified percentage of the value of the property in order to receive full payment of a loss. In health insurance, coinsurance is a percentage of each claim, above the deductible, that is paid by the policyholder.
Conversion Privilege
A right granted to group certificate holders, by which they may obtain an individual policy (upon leaving the group) regardless of physical condition.
Coverage
A term usually referring to the type and extent of benefits provided by an insurance contract.
Credit Insurance
Coverage that pays off an outstanding loan in the event of the policyholder's death and/or makes loan payments if the policyholder is disabled.
~D~
Death Benefits
Amount payable, as stated in a life insurance policy, upon the death of the insured.
Declaration Page
That page of the insurance policy which lists the insurance company, its address, name of the policyholder, starting and ending dates of coverage, and the actual coverages given in the contract, including the locations and amounts.
Deductible
The amount of loss paid by the policyholder before the insurance policy benefits become payable.
Defense Clause
A provision in a casualty insurance policy that provides additional coverage for expenses of judicial assistance.
Domestic Insurance Company
An insurer domiciled in this state.
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Earned Premium
That part of the premium applicable to the expired part of the policy period, including the short-rate charge on cancellation.
Effective Date
The date on which an insurance policy coverage starts.
Evidence of Insurability
Any statement or proof of a person's physical condition, occupation, etc., affecting his acceptance for insurance.
Exclusions
Specified hazards for which a policy will not provide benefit payments. They are often called exceptions.
Experience
The record of claims made or paid within a specified time period.
Experience Rating
Determination of the premium rate for an individual risk, made partially or wholly on the basis of that risk's own past claim experience.
~F~
Fee for Service
The traditional model for health insurance, in which patients go to the doctor or hospital of their choice and the insurer pays the largest portion of the bill.
Flat Cancellation
Cancellation of an insurance policy as of the date of its start with no premium charge.
Foreign Insurance Company
An insurer domiciled in another state.
~G~
Guaranteed Renewable Policy
A policy which the insured has the right to continue in force by the timely payment of premiums to a specified age, (usually age 50) during which period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force but may make changes in premium rates for the entire policyholder. classification.
Guarantee Funds
All 50 states, the District of Columbia and Puerto Rico require licensed insurers to assume some of an insolvent insurance company's policyholder liabilities. These funds (life & health and property & casualty) are the mechanism by which solvent insurers bail out the policyholders of companies that fail.
~I~
Insurance
A system to protect persons against the risks of financial loss by transferring the risks to a large group who share the financial losses.
Insurer
The company offering protection through the sale of an insurance policy to an insured.
Insured
The person whose risk is transferred and shared.
Life Insurance
Protection against the death of the insured in the form of payment to a designated beneficiary, typically a family member or business.
~M~
Mortgage Insurance
Life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.
~N~
cancelable or cancelable and Guaranteed Renewable Policy
A policy which the insured has the right to continue in force by the timely payment of premiums set forth in the policy to a specified age, (usually age 50) during which period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force.
~O~
Ordinary Life Insurance
Life insurance usually issued in amounts of $1000 or more to an individual policyholder.
~P~
Paid-up Insurance
Life insurance policy under which all premiums have already been paid, with no further premiums due.
Personal Injury Protection (PIP)
Coverage present in no-fault states which pays medical, loss of income, death and/or disability, and loss of services incurred as a result of an automobile accident.
Pre-existing Conditions
A physical condition of an insured person which existed prior to the issuance of the policy.
Premium
The payment for an insurance policy, usually paid periodically, i.e., annually, semi-annually, quarterly or monthly.
Pro-rata
Cancellation of an insurance contract by the insurance company, allowing the policyholder a share of the premium relating to the remainder of the time under the contract that bears to the total contract premium.
~R~
Rebate
A reduction of a premium.
Reinsurance
A form of insurance that insurance companies buy for their own protection.
Rider
An endorsement to an insurance policy that modifies clauses and provisions of the policy, adding or excluding coverage.
Risk
A term used to designate an insured or a peril insured against.
~S~
Short Rate
Cancellation of an insurance contract at the request of the policyholder with a refund of premiums to the policyholder of less than would be given under pro-rata consideration.
Solvency
One of MIA's primary responsibilities is to make sure insurance companies remain solvent, i.e., have sufficient assets and income, in order to have the ability to pay the claims of their policyholders.
~T~
Term Insurance
Life insurance issued for a stated temporary period of time.
Twisting
An unfair trade practice, in insurance, whereby an agent or broker attempts to persuade a life insurance policyholder through misrepresentation to cancel an existing policy and buy a new one.
~U~
Underwriting
Process of examining, accepting, or rejecting insurance risks, and classifying those selected, in order to charge the proper premium for each.
Universal Life Insurance
A flexible premium policy that combines protection against premature death with a savings account that typically earns a money market rate of interest.
~W~
Whole Life Insurance
Life insurance payable to a beneficiary at the time of death of the insured whenever that occurs.
Group Insurance
