A - Z of Personal Insurance
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
ACCIDENT
An event or occurrence which is unforeseen and unintended and occurs suddenly
and at a definite place.
ACCIDENTAL DEATH BENEFIT
Provides for additional benefit in case of death by accidental means.
ACQUISITION COST
The immediate cost of issuing a new policy, including cost of clerical work,
agent's commission, and medical inspection fees.
ACTUARY
A person trained in mathematics, statistics, and accounting who is responsible
for determining premium rates, reserves, and dividends as well as conducting
various other statistical studies.
ADJUSTABLE LIFE POLICY
A participating life insurance contract that offers the insured flexibility
to change: (1) premium payments, (2) the face amount, and (3) the mix of
whole life and term insurance.
ADJUSTABLE PREMIUM
A premium which an insurance company may modify under certain special conditions
in accordance with a policy provision. Also may refer to an option by the
owner to elect a change in premium amount.
ADJUSTER
A person who represents an insurance company who seeks to determine the extent
of the firm's liability for a loss when a claim is submitted.
AGENT
One who solicits, negotiates or effects contracts of insurance on behalf of
an insurer.
ALLOCATED BENEFITS
Benefits for which the maximum amount payable for specific services is itemized
in the contract.
APPLICATION
A signed statement of facts requested by the company on the basis of which
the company decides whether or not to issue a policy. This becomes a part
of the contract; places reliance on statements by the applicant.
BENEFICIARY
A person designated by the policyholder to receive a specified payment upon
the insured's death.
BENEFIT DURATION
The maximum period during which the disability income benefits are to be payable.
BINDER
A temporary insurance contract made by an agent of an insurance company.
BROKER
One who represents an insured in the solicitation, negotiation or procurement
of contracts of insurance.
CAPACITY
The financial ability of an insurer to under-write new insurance. It is generally
measured by the relation-ship of premiums written to surplus (net worth)
and is modified by access to reliable reinsurance.
CLAIM
A demand to the insurer by the insured person for the payment of benefits under
a policy.
COINSURANCE CLAUSE
A clause under which the insured shares in losses to the extent that he is
underinsured at the time of loss or in a proportion agreed to in advance.
CONDITIONAL BINDING RECEIPT
A receipt given for a premium payment accompanying the application for life
insurance. This binds the company if the applicant is insurable to make the
policy effective from the date of receipt. If you die while your application
is being processed, a claim for the death benefit will be paid only if you
are insurable.
CONVERSION PRIVILEGE
Right to change from term to permanent or whole life insurance without insurability.
COORDINATION OF BENEFITS
A method of integrating benefits payable under more than one health insurance
plan so that the insured's benefits from all sources do not exceed 100 percent
of allowable medical expenses.
DEDUCTIBLE
(or Policy Excess) A provision that requires the policyholder to contribute
up to a specified sum per claim or accident toward the amount of insured
loss.
DISABILITY INCOME POLICY
DISMEMBERMENT
Loss of, or loss of use of, specific members of the body resulting from accidental
bodily injury.
DOUBLE INDEMNITY
Life insurance policy provision which doubles the death benefit when death
is caused by accident.
ENDORSEMENT
A document which modifies the protection of a policy, either expanding or decreasing
its benefits, or adding/excluding certain conditions from the policy.
ENDOWMENT
Life insurance contract that pays the face amount if the insured dies during
the premium paying period or at the end of this period.
EVIDENCE OF INSURABILITY
Any statement or proof of a person's physical condition and/or other factual
information affecting his/her acceptance for insurance. This may include
medical exam or records.
EXCLUSIONS
Specific perils or losses listed in the policy which will not provide benefit
payments.
FACE AMOUNT
The amount stated in a life insurance policy to be paid upon death of the insured
or the maturity date of an endowment policy.
GRACE PERIOD
A period after a premium payment is due, in which the policyholder may make
payments and during which the policy remains in force.
GROUP INSURANCE
Insurance plan under which a number of persons and their dependents are insured
by a single policy, issued to their employer or an association with which
they are affiliated. Individual certificates are given to each insured person.
GUARANTEED INSURABILITY
Allows the periodic purchase of additional amounts of life insurance without
proof of insurability.
GUARANTEED RENEWABLE
A policy the insured has the right to continue in force by the timely payment
of premiums to a specified age. During this period the insurer has no right
to make changes in any provision of the contract while it is in force, other
than a change in the premium rate for classes of insured, usually age related.
INDEMNITY
A principle that says an insured should not collect more from insurance than
the amount of loss.
INDEPENDENT AGENT
An agent who represents several companies as an independent contractor rather
than an employee.
INSURED
In life insurance, the person on whose life a policy is issued; the subject
of insurance.
JOINT LIFE POLICY
A special contract that insures two lives (such as husband and wife) and pays
upon the first or last death.
KEY-PERSON INSURANCE
Life or health insurance to protect the firm from the loss caused by the death
or disability of an employee who makes significant contributions.
LAPSE
Termination of a policy caused by the policyholder's failure to pay the premium
within the time required.
LEVEL PREMIUM
A premium which remains unchanged throughout the life of a policy.
LIFE EXPECTANCY
The average number of years of life remaining for a group of persons of a given
age according to a particular mortality table.
MORTALITY TABLE
Shows the number of persons living, dying and the death rate starting at a
certain age by year. It is used to calculate the probability of dying in,
or surviving through any period.
MORTGAGE PROTECTION
A term life insurance contract in which the amount of insurance decreases at
the same pace as the principal on a mortgage loan.
OPTIONALLY RENEWABLE
A contract of health insurance in which the insurer reserves the right to terminate
the coverage at any anniversary or, in some cases, at any premium-due date,
but does not have the right to terminate coverage of the insured between
such policy dates.
ORDINARY LIFE POLICY
Whole life insurance on which premiums are paid for life and after an initial
period has a cash-in value.
PAID-UP POLICY
A policy that will remain in force without further premium payments.
POLICY LOAN
A loan made by the insurer to the owner of a life insurance policy, using its
surrender value as collateral.
POLICY TERM
The period for which an insurance policy provides coverage.
PRE-EXISTING CONDITION
A physical and/or mental condition of an insured which existed prior to the
issuance of his or her policy.
PREMIUM
The payment made of insurance policy.
PRO RATA LIABILITY CLAUSE
If a loss covered by this policy is also covered by other insurance, the insurer
will pay only the proportion of the loss that the limit of liability that
applies under this policy bears to the total amount of insurance covering
the loss.
RECURRING CLAUSE
A provision in some health insurance policies which specifies a period of time
during which the recurrence of a condition is considered continuation of
a prior period of disability or hospital confinement.
REINSTATEMENT
The resumption of coverage under a policy which has been lapsed.
RENEWAL
The continuation of coverage under a policy beyond its original term by the
acceptance of a premium for a new policy.
RIDER
A document which modifies the protection of policy, either expanding or decreasing
its benefits or adding/excluding certain conditions from the policy.
SUBROGATION
Gives the insurer whatever right against third parties you may have as a result
of the loss for which the insurer paid you.
SUICIDE CLAUSE
A provision that precludes the payment of life insurance death benefits for
a specified period of one or two years after which suicide is paid the same
as death from natural causes.
TERM LIFE INSURANCE
A type of life insurance that pays if you die during a specified time such
as a year. Term insurance usually has an increased pattern of premiums over
time and is pure protection (no savings).
UNDERWRITING
The process by which the insurer decides whether or not and on what basis it
will issue a policy.
VARIABLE LIFE INSURANCE
An ordinary or whole of life policy in which the face amount of insurance changes
in relation to the performance of its investment elements subject to a guaranteed
minimum face amount.
WAITING PERIOD
Time between the beginning of an insured's disability and the beginning of
benefit payments.
WAIVER
An agreement attached to a policy which excludes from coverage certain disabilities
or injuries which are normally covered by the policy.
WARRANTY
A statement made by the applicant for insurance which, if false, provides the
basis for voiding of the policy.
WHOLE LIFE POLICY
A protection policy with an investment element that builds a cash in value
after a number of years.
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