Choose the first letter of the term you wish to define:
Abandonment Clause: A clause often contained in a property insurance policy stating that the insured cannot abandon damaged property and then file a claim with an insurer.
Absolute Liability: The liability for damages even though fault / negligence cannot be proven.
Accident: Any sudden event which is unintended.
Accident Insurance: Insurance coverage against loss by accidental bodily injury.
Accidental Bodily Injury: Injury to a person from the result of an accident.
Accidental Death Benefit: An additional paid death benefit in addition to the face amount value of a life insurance policy.
Accounts Receivable Coverage Form: An inland marine coverage form that insures against loss the insured suffers when not able to collect account receivables from customers.
Accumulation Period: A specific time period that the insured must establish before benefits begin or are paid out.
Activities of Daily Living: Activities that are considered an everyday part of normal life. Some of these are: dressing, bathing, toileting, transferring (example: moving from and into a chair), and eating. These activities are used to measure the degree of impairment and can effect the eligibility for certain types of insurance benefits.
Actual Cash Value (ACV): The cost to replace an item or property at the time of loss, less any allowance for depreciation.
Actuarial Cost Method: A method used for determining contributions to be made under a retirement plan. Usually applied to the level of benefits when the contributions are fixed.
Actuary: A professional in the insurance business, usually working for the insurance company, that can estimate how a certain sum of money can be contributed to a pension plan, insurance, or other related area to fund that plan for years to come.
Additional insured: An individual or entity that is not included as an insured under the insurance policy of another, but may be added to provide a certain degree of insurance protection.
Adhesion (Contract of): Parties are of unequal bargaining power, and one party (the insured) cannot negotiate any terms, having to accept the offer of the other party.
Adjustable Life Insurance: A type of life insurance that allows the owner of a policy to change the plan of insurance, raise or lower the face amount, increase or decrease the premium, and lengthen or shorten the protection period.
Adjusted Gross Estate: Approximate net worth of a deceased, known as the beginning point for the computation of estate taxes.
Adjuster: A person who investigates and settles losses for an insurance company, or may be hired independently to resolve any issues (leverage) between the insurance company adjuster and the insured.
Adjusting: The investigation process of settling claims by an insurance company.
Administrative Services Only (AS0) Plan: An arrangement under which an insurance company or an independent agent will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group. This is very popular with larger corporations.
Advance Funding: Pension funding method in which an employer sets aside funds prior to the employee’s retirement.
Age Limits: Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew a policy. Read your policy.
Agent: An insurance company representative licensed by the state who solicits, markets, negotiates, binds, and administers contracts of insurance while providing a valuable service to a policyholder for the insurer.
Aggregate Deductible: A deductible in some property and health insurance contracts which all covered losses during a year are figured together and an insurer pays only when the aggregate deductible amount is exceeded.
Aggregate Indemnity: A maximum dollar amount that can be collected for any disability or period of disability under an insurance policy.
Alien Insurer: An insurance company domiciled in another country.
Allocated Benefits: Benefits for which the maximum amount payable for specific services is itemized in your insurance contract.
All-Risk Policies: Coverage through an insurance contract that promises to cover all losses except those losses specifically excluded in your policy.
Alternate Delivery Systems: This system of care is designed to provide needed services in a cost-effective manner. This provides an insured with health services other than an in-patient, acute-care hospital, or other type of facility. Some examples include: skilled and intermediary nursing facilities, hospice programs, and home health care.
Ambulatory Care: These are medical services that are provided as an outpatient (nonhospitalized). Services could include diagnosis, treatment, and rehabilitation.
Amendment: A formal document revising the provisions of an insurance policy. Usually, signed jointly by an insurance company officer and the policy owner or his authorized representative.
Annual Statement: An annual report of an insurance company to a state insurance department, showing financial data relating to the operation of the insurance company.
Annuitant: The person that will receive annuity benefits for a period of time.
Annuity: Considered to be the opposite of life insurance where a death benefit is paid, an annuity provides a benefit while the insured is alive. This is a contract that provides an income for a specified period of time.
Annuity Certain: A contract that provides an income for a specified number of years, regardless whether living or deceased.
Annuity Consideration: A payment, or one of the regular periodic payments, an annuitant makes for their annuity.
Application: A signed statement of facts made by a person applying for insurance. The application is used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.
Arson: The willful and malicious act of burning, or attempt to burn, any structure or property, usually with with criminal or fraudulent intent.
Assets: Any funds, goods, property, rights of actions, securities, or resources of any kind owned by an insurance company.
Assignment: A legal transfer of one person’s interest in an insurance policy to another person.
Association Captive: A type of captive insurer owned by the members of a sponsoring organization or group, such as a trade association.
Association Group: Group formed from members of a trade or a professional association for group insurance under one master health insurance contract.
Association Group Plan: A health insurance plan designed for the members of a professional association or trade association. A members may be protected under a grop health insurance policy or by individual franchise policy through this plan.
Assumptions: The many conditions and rules underlying the calculation of a pension benefit.
Attractive Nuisance: Condition that can attract and injure children. The occupants of land on which such a condition exists are liable for injuries to children. In Florida, pool owners are required to fence the area around the pool.
Automatic Premium Loan: The cash borrowed from a life insurance policy’s cash value (to pay an overdue premium).
Automobile Liability Insurance: Protection for an insured against financial loss because of legal liability act that has car related injuries to others or damage to their property.
Automobile Physical Damage Insurance: Coverage to pay for damage to, or loss, of an insured automobile resulting from covered perils.
Automobile Shared Market: A program in which all automobile insurers in each state make coverage available to car owners who are unable to obtain auto insurance in the voluntary market.
Aviation Insurance: Aircraft insurance including coverage of aircraft or their contents. The owner’s liability, and accident insurance on the passengers can be covered.
Bailee: Person or concern having the possession of personal property entrusted to him by the owner of said property.
Bailees Customers Insurance: Policy that covers the loss or damage to personal property of customers.
Beneficiary: The designation by the owner of a life insurance policy that indicates who will receive the proceeds upon the insured’s death or when a policy endowment matures.
Benefit Period: The period of time which an insurance company pays benefits to the named insured or dependents.
Benefits: Monetary sum payable by the insurance company to a claimant, assignee, or beneficiary.
Binder: A written or oral contract issued temporarily to place insurance in force until a permanent policy is issued. When an oral binder is issued, you should request a written one to follow.
Binding Receipt: The (evidence or) receipt given for a premium payment accompanying an application for insurance.
Blanket Contract: A policy that covers an insured’s property at several different locations.
Boiler and Machinery Insurance: Coverage for loss arising out of malfunction, the operation of pressure, mechanical, and electrical equipment. Most property insurance policies exclude these types of risks.
Bond: A three party contract that guaranteeing that if the principal fails to perform as obligated to, the obligee (person whom duty would be owed), will be financially protected by the issuer of the bond. We can assist you with your bond needs.
Broker: One who represents an insured and who may render solicitation, negotiation, or services that deal with a contract of insurance on behalf of the insured.
Broker of Record: Also known as Agent of Record, this is a broker who is designated to handle certain insurance contracts for the named insured.
Broker: One who represents an insured and who may render solicitation, negotiation, or services that deal with a contract of insurance on behalf of the insured.
Burglary and Theft Insurance: Coverage against property losses due to burglary, robbery, or larceny.
Business Income Insurance: Provides protection for a business owner against losses resulting from a temporary shutdown of an insured peril. This provides reimbursement for lost profits and necessary continuing expenses. A common exposure that most people have added in Florida, thanks to Hurricane Andrew.
Business Insurance: A commercial insurance policy which provides coverage to a business. Many forms of business insurance are available and depend on your specific needs.
Builders Risk: A contract that will insure building contractors for damage to property under construction. Once erected, the Builders Risk policy may usually be converted to a specific type of homeowners or commercial property form.
Business Personal Property: Known as “contents,” this refers to furniture, fixtures, equipment, machinery, merchandise, and all other personal property owned by the insured and used in the insured’s business.
Buy Sell Agreement: An agreement made by the part-owners of a business to purchase the interest of a disabled or deceased owner. Values of the owner’s share of the business and the terms of the buying and selling are established before death or at the beginning of a disability.
Cafeteria Benefit Plan: arrangement which employees may select their own employee benefit structure.
Cancelable: A contract of insurance that may be terminated during the policy term by the insurer or insured at any time.
Cancellation: Termination of a policy in force by a voluntary act of the insured or insurer.
Cancellation Clause: A provision in an insurance contract that permits an insurance company or insured to cancel a policy at any time before its expiration date.
Capacity: The largest amount of insurance or reinsurance available from a company.
Capital Retention Approach: A method used to estimate the amount of life insurance to own. Under this method, the insurance proceeds are retained and are not liquidated.
Capital Sum: The maximum lump sum payment payable in the event of an accidental death or dismemberment.
Capitation: A method of payment for health services in which a physician or hospital is paid a fixed, per capita amount for each person served regardless of the actual number of services provided to each person.
Captive Agent: A licensed agent who sells insurance for only one company.
Captive Insurance Company: A company formed to insure the risks of a parent company. This is usually done when business insurance for a certain commercial risk cannot be obtained through markets.
Cargo Insurance: An insurance policy protecting cargo being transported by carrier.
Cash Surrender Value: The amount of money received when the policyowner surrenders a life insurance policy with cash value.
Casualty Insurance: The type of insurance concerned with the legal liability for losses caused by injury to others or damage to property of others.
Catastrophe: An event which loss is of extraordinary magnitude, such as a hurricane or tornado.
Causes of Loss Form: Commercial property forms stating the perils insured against, additional coverage’s, and exclusions that may apply to your policy. It is important to read your policy.
Cede: The transfer of all or part of a risk written by an insurer to a reinsurer.
Certificate of Insurance: A document issued to a member of a group insurance plan, outlining the insurance benefits and principal provisions of the policy.
Claim: A request by the insured for indemnification by the insurance company for a loss that is a covered peril.
Claims Made Policy: A liability insurance policy under which a written claim is made during the policy period or any extended reporting period.
Class Rating: A rate applied to those risks that are similar.
Clause: In an insurance policy, sentences and paragraphs describing coverage’s, exclusions, duties of an insured, and termination of coverage, and other such parts of the insurance policy.
Coinsurance: Two meanings here: (1) In property insurance, a clause that states the insured will share in losses to the extent that he is underinsured at the time of loss, (2) In medical insurance, the insured person and the insurer share the covered procedures under a policy in a specified ratio (80 percent by the insurer and 20 percent by the insured). Collision Insurance: A form of automobile insurance, provides protection against loss resulting from any damage to the policyowner’s car caused by collision with another vehicle or object, (or by upset of the insured car), whether it was the insured’s fault or not.
Combined Ratio: A measure of the dollars spent for claims and expenses and premium dollars taken in.
Commercial General Liability Policy (CGL): Provides separate limits of general liability, fire legal liability, medical payments, products and completed operations, and advertising and personal liability.
Commercial Lines: Insurance for businesses, professionals, and commercial establishments.
Commercial Package Policy (CPP): A commercial insurance policy that is designed to meet specific insurance needs of businesses.
Completed Operations Insurance: A type of insurance that cover’s a contractor’s liability for accidents arising out of jobs or operations that was completed by the contractor.
Comprehensive Major Medical Insurance: A health insurance policy that has a low deductible, high maximum benefits, a coinsurance feature, and may feature a copayment.
Comprehensive Personal Liability Insurance: Provides individuals and family members with protection from legal liability for most accidents caused by them in their personal lives. Note that any legal liability claims submitted while in the course of business activities are not covered.
Compulsory Insurance: Any form of insurance which is required by law.
Concealment: Failure of an applicant for insurance to reveal a material fact to the insurance company.
Conditional Binding Receipt: A receipt given for premium payments accompanying an application for insurance.
Conditionally Renewable: Provision in a health insurance policy which the company cannot cancel the policy during its term, but may refuse to renew under certain conditions stated in the policy.
Conditions: Provisions stated in an insurance contract that state the rights and duties of the insured, or the rights and duties of the insurer. Typical duties have to do with the insured’s duties after a loss, cancellation provisions, the insurance companies right to inspect damaged property.
Condominium Unit Owners Coverage Form: A commercial property form designed to cover the needs of commercial condominium unit owners.
Confining: A disability or sickness that confines an insured indoors.
Consideration: One of the elements that make up an insurance contract, consideration is the offer made by the insurance company to the insured for payment of the premium and the statements made by the prospective policyholder on their application.
Consequential Loss: A financial loss occurring as the result of some other loss. Also known as an indirect loss.
Construction Bond: This bond will protect the owner of a building or other structure should the contractor be unable to fulfill his contractual duty to the insured. In such a case, the insurer is obligated to see that the work is completed.
Contingent Annuity: An annuity that is payable upon a contingent occurrence or event, such as death of a person (spouse) to the annuitant.
Contingent Beneficiary: A person designated to receive policy benefits if the primary beneficiary is deceased at time benefits are payable.
Contingent Liability: Any liability arising out of work done by independent contractors for a firm. The firm could be liable for the work done by an independent contractor if the activity is illegal, the situation did not permit delegation of authority, or the work is inherently dangerous.
Contract: An agreement between the insurer and the insurance company that provides a legally enforceable obligation to provide benefit payments for all premium amounts received.
Contract Bond: A bond used to guarantee the performance of a construction contract and the payment of all materials and labor bills.
Contractual Liability Insurance: Provides protection to the insured in the event a loss occurs for which liability is assumed, express or implied, under a written contract.
Contributory: A general term used with group health insurance plans in which the employee pays a portion of the premium.
Contributory Negligence: A “law” of principle that states a person may have contributed to their own injury.
Conversion Privilege: A privilege granted in a group life or group health insurance policy to convert to a different plan of insurance without providing evidence of insurability and a medical exam.
Conversion Privilege: A right given to an insured person who can change insurance without evidence of medical insurability, usually to an individual policy upon termination of coverage, under a group contract.
Convertible Term Insurance: Term insurance which can be exchanged into a permanent policy without evidence of insurability or a medical exam.
Coordination of Benefits (COB): Used in group health insurance, this distinguishes the order that two or more insurance companies will pay benefits for the same claim.
Copay: An arrangement where the insured pays a specified amount for various services and the health carrier pays the remaining charges.
Cost Basis: An amount of money that has already been taxed, used in taxation of investment money.
Cost of Living Rider: Adjusts life insurance policy benefits in relation to changes in the Consumer Price Index (CPI).
Crop-Hail Insurance: Protection against damage to growing crops as a result of named perils.
Cross Purchase Agreement: Agreement that specifies the terms and conditions for the surviving partners or shareholders to buy a deceased’s share of a business’s ownership.
Currently Insured Status: A Social Security provision under which the family of a deceased worker may receive survivor benefits.
Custodial Care: Care that is needed for a person that cannot dress, eat, or perform other personal needs that requires someone to assist them.
Data Processing Insurance: Coverage for electronic media, computers, and other electronic data processing equipment. No coinsurance is applied to this type of coverage.
Death Benefit: A life insurance payment made to a designated beneficiary upon the death of the insured.
Declarations: Information such as name, description, and location of insured property, premiums payable, coverage amounts, are placed on what agents call the Declarations Page.
Declination: The insurer’s rejection of an insurance application.
Deductible: The amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.
Deferred Annuity: An annuity deferring income payments to begin at some specified future date.
Deferred Compensation: Arrangements by which compensation to employees for past or current services is postponed until some future date.
Defined Contribution Plan: A plan which the contribution rate is fixed and benefits to be received by employees after retirement depend upon the contributions and their earnings.
Dental Insurance: An individual or group insurance plan that will pay for costs of normal dental care as well as damage to teeth from an accident.
Dependent: An individual, usually a spouse or child, who depends on another for financial support and maintenance.
Deposit Premium: The premium deposit paid when an application is made for an insurance policy. It is usually equal to the first month of estimated premium and is applied toward the total premium when billed.
Depreciation: The decrease of value in property over a period of time due to wear and tear or obsolescence.
Direct Loss: Any financial loss that results directly from an insured peril.
Direct Writer: An insurance industry term for which an insurance company uses their own sales employees to write insurance policies.
Directors’ and Officers’ Liability Insurance: The protection of corporate directors and officers from liability arising out of errors in judgement, duty breachments, and any wrongful acts related to their organizations.
Disability: A physical or mental impairment that limits major life activities of an individual.
Disability Benefit: The payment, made usually monthly, payable to participants under a Disability Income policy or a provision of some other policy.
Disability Income Insurance: A type of health insurance that provides a periodic payment to replace income when the insured is unable to work as a result of illness, injury, or disease.
Disappearing Deductible: A deductible in an insurance contract that provides for a decreasing deductible amount as the size of the loss increases.
Dismemberment: Loss of a body member (limbs), or use thereof, or loss of sight due to injury.
Dismemberment Insurance: A type of health insurance that provides payment in case of loss by bodily injury of one or more body members (such as: hands or feet) or sight of one or both eyes.
Disposable Personal Income: Personal income minus personal tax and nontax payments. This is the income available to people for spending and saving.
Dividend: An amount returned to a policyholder by an insurance company out of its earnings.
Dividend Additions: An option to where an insured can pay-up insurance purchased with a policy dividend and add to the face amount of the policy.
Dollar Threshold: In Florida, and other no-fault auto insurance states with the dollar threshold, this prevents individuals from suing in tort to recover for pain and suffering unless their medical expenses exceed a certain dollar amount.
Domestic Insurer: An insurance company is considered a domestic company in the state in which it is incorporated.
Double Indemnity: An insurance policy provision usually associated with death, which doubles payment of a designated benefit when specified causes or under specific circumstances occur.
Driver Education Credit: A student discount or reduction in premium amount for which younger drivers become eligible on completion of a driver education course. These courses are available in most public school systems.
Duplication of Benefits: A situation where identical or overlapping coverage of the same type exists between two or more health insurance plans.
Dwelling Forms: An insurance policy designed to cover a dwelling and the personal property that is in it plus some additional coverage’s. There are several forms available, check with us for your dwelling insurance needs.
Earned Income: An employment income earned while working at some occupation.
Earned Premium: An amount of “used up” policy premium during the term of an insurance policy.
Economic Loss: An estimated total cost, insured and uninsured, of mishaps (such as: vehicle accidents, work accidents, and fires); including such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.
Effective Date: The date on which the insurance under a policy will begin.
Eligibility Date: The date which an individual is eligible for benefits.
Eligibility Period: A specified period of time during which an individual member of a particular group may enroll without evidence of insurability.
Eligibility Requirements: This term could be defined as either: (1) conditions which an employee must satisfy to participate in a retirement plan, or (2) conditions which an employee must satisfy to obtain a retirement benefit.
Eligible Dependent: A dependent of an insured that is eligible for benefits.
Eligible Employee: A member of a group who has met the eligibility requirements under a group life or health insurance plan.
Elimination Period: Two definitions: A period of time between the period of disability and the start of disability income insurance benefits, during which no benefits are payable.
Employee Dishonesty Coverage Form: A commercial crime insurance form that covers the loss of money, securities, and other covered property because of a dishonest act of a covered employee.
Endorsements: An additional piece of paper, not a part of the original insurance policy, in which certain terms and conditions, when attached to the original insurance policy, becomes a legal part of that contract.
Endorsement: An amendment of an insurance policy that alters the provisions of the contract.
Enrollment Card: A document signed by an employee as notice of their participation in the benefits of a group health insurance plan.
Entire Contract Clause: A provision in insurance policy stating that the life insurance policy and attached application constitute the entire contract between the parties.
Entity Purchase Agreement: Specifies the terms and conditions which the business will buy back a deceased’s share of the business’s ownership.
Errors and Omissions Insurance: A liability insurance policy that provides protection against loss incurred by a client because of some negligent act, error, oversight, or omission by the insured.
Estate: The assets and liabilities of a person left at death.
Estate Planning: Developing a plan to transfer all of your property from one generation to the next or within a generation.
Estoppel: Legal doctrine that prevents a person from denying the truth of a previous representation of fact, especially when such representation has been relied on by the one to whom the statement was made.
Errors and Omissions Insurance: A form of insurance that indemnifies the insured for any loss sustained because of an error or oversight on his or her part.
Evidence of Insurability: Any statement of proof of a person’s physical condition and/or other factual information affecting his/her acceptance for insurance.
Excess and Surplus Insurance: (1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician’s hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. (See also “Umbrella liability” and “surplus lines.”)
Exclusions: The specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.
Exclusive Agent: An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.
Exclusion ratio: Portion of an annuity payment that is not subject to income tax when received.
Expense Ratio: The ratio of a operating expenses to premiums.
Experience Modification Factor: Used in workers compensation rating to reflect the degree to which a particular employer has experience that is better or worse that expected for that industry.
Experience Rating: Process of determining the premium rate for a group risk, wholly or partially on the basis of that group’s experience.
Experience Refund: A provision in some group policies for the return of premium to the policyholder because of lower than anticipated claims.
Extended Nonowned Coverage: Endorsement that can be added to an automobile insurance policy that covers the insured while driving any nonowned automobile on a regular basis.
Extended Reporting Period: An additional period of time after policy expiration during which valid reported claims will be paid under a claims-made policy of liability insurance
Extended Term Insurance: A form of insurance available as a nonforfeiture option. This provides the original amount of insurance for a limited period of time, normally 5, 10, 15, or 20 years.
Extra Expense Insurance: Type of business income insurance that provides reimbursement to an insured for the extra expense incurred to continue a business operation when property had been damaged or destroyed by a covered peril.
Face: The first page of a life insurance contract.
Face Amount: An amount stated on the face that will be paid in case of death or at the maturity of the policy.
Factory Mutual: Mutual insurance company insuring only properties that meet high underwriting standards.
Facultative Reinsurance: Type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Fair Rental Value: An amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable.
Family Expense Policy: A policy which insures the medical expenses of both the policyholder and immediate dependents.
Family Income Policy: A insurance policy that pays an income up to a specific period of time to the beneficiary after the death of the insured.
Family Policy: A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and smaller amounts of term insurance on the other spouse and children.
Farmowners-Ranchowners Policy: A package policy for a farm or a ranch, providing property and liability coverage’s.
Federal Crop Insurance: A comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses.
Federal Flood Insurance: A type or insurance sold by private insurers (with rates subsidized by the federal government) to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.
Fidelity Bond: A bond that will reimburse an employer for losses caused by dishonest or fraudulent acts of employees.
Fiduciary: A person who holding the funds or property of another in trust.
Financial Responsibility Law: A state law which may require motorists to furnish evidence, either before or after involvement in an auto accident of ability to pay for damages up to certain minimum dollar limits.
Fire: Combustion accompanied by a flame or glow, which escapes normal confines to cause damage.
Fire Legal Liability: Liability of a business or a person for damage caused by negligence to property of others.
First Party Insurance: Insurance coverage which the policyholder collects compensation for losses from the insured’s own insurer.
Fixed Annuity: Annuity whose periodic payment is a guaranteed fixed amount.
Fixed Period Installments: Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.
Floater: An insurance policy that covers property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
Flood Insurance: Coverage against loss resulting from rising water.
Forfeitures: Amounts contributed on behalf of terminated, non-vested participants.
401(k) Plan: A salary reduction plan that allows employees to contribute a portion of their salaries on a tax-deferred basis.
Franchise Deductible: Deductible in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded, the entire loss is paid in full.
Franchise Insurance: A type of insurance in which individual polices are issued to the employees of a common employer or the members of an association.
Fraternal Insurance: Insurance offered to a social organizations for their members.
Fund: Money held in trust to pay pension benefits.
Future Increase Option: An option that allows the insured to purchase additional disability income insurance at a specified future date without evidence of insurability.
Garage Liability Insurance: Type of insurance that protects garage owners or automobile dealers for liabilities they may have in their business operations.
General Agency System: A type of life insurance marketing system in which the general agent is an independent businessperson who represents only one insurer.
General Average: In ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
General Liability Insurance: The insurance coverage that pertains to claims arising out of the insured’s liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.
Glass Insurance: A commercial insurance policy used to insure plate glass, lettering, frames, and ornamentation.
Good Student Discount: The reduction of an automobile premium for a young driver who ranks in the upper percent of their class.
Grace Period: The specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.
Gross Estate: All of the assets and liabilities owned at death.
Gross Negligence: Intentional failure to perform a duty, reckless disregard of the consequences as affecting the life or property of another.
Gross Premium: Premium paid by the policyholder.
Group Annuity: A pension plan providing annuities at retirement to a group of people under a master contract.
Group Annuity Contract: A contract issued by a life insurance company that may be used as the funding instrument for benefits to be made in accordance with a pension plan. A master contract provides that the group of persons participating in the plan will receive annuities during retirement. Individual certificates stating coverage are usually issued to members of the group.
Group Contract: A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals within an entity.
Group Health Insurance: Health insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.
Group Life Insurance: Life insurance usually without medical examination, on a group of people under a master policy.
Group Permanent Plan: A type of pension plan which cash value life insurance is issued on a group basis and cash values in each policy are used to pay retirement benefits when a worker retires.
Group Term Life Insurance: The most common form of group life insurance. Yearly renewable term insurance on employees during their working careers.
Guaranteed Renewable Contract: An insurance contract that the insured has the right to continue in force by the timely payment of premiums to a specified age. During this period of time the insurer has no right to make any change in any provision of the contract while the contract is in force, except that the insurer may make changes in premium rate by classes.
Guardian: A court appointed person who takes care of the affairs of another.
Hail Insurance: Insurance against loss of crops from hail.
Hazard: A condition that creates or increases the chance of loss.
Health Insurance: Insurance against financial losses resulting from sickness or accidental bodily injury.
Health Insurance: Any insurance policy that provides payment for benefits of a covered sickness or injury. Included under this definition are various types of insurance such as: accident insurance, disability insurance, medical expense insurance, and accidental death and dismemberment insurance.
Health Maintenance Organization (HMO): An HMO is a prepaid medical service plan that provides a wide range of comprehensive health care services for a specified group (members) at a fixed periodic payment.
High-Risk Automobile Insurer: A insurance company that specializes in insuring motorists who have poor driving records.
Hold-Harmless Clause: A clause written into an insurance policy which one party agrees to release another party from any legal liability.
Homeowners Policy: A package policy providing home owners with a broad range of property and liability coverage’s.
Hospice: A health care facility providing medical care and support services for terminally ill persons.
Hospital Expense Insurance: A health insurance policy that covers daily hospital room and board charges and some miscellaneous hospital expenses.
Hospital Miscellaneous Services: Any services other than room and board (and general nursing services) provided by a hospital during hospital confinement. Included are such items as: X- ray examinations, laboratory tests, medicines, surgical dressings, anesthetics (including the administration of), and use of operating room.
Hull Insurance: A class of ocean marine insurance that covers physical damage to the ship or vessel insured. Usually, written on an “all-risks” basis. Also can provide physical damage insurance on a aircraft, similar to collision insurance in an automobile policy.
Human Life Value: A method of determining Life insurance needs by taking into account a person’s income, expenses, remaining years of earning, and the depreciation of money over time.
Hurricane: A tropical storm marked by extremely low pressure and circular winds with a velocity of 75 miles an hour or more.
Immediate Annuity: An annuity providing payment to begin immediately.
Incontestable Clause: A clause which provides that the insurer may not contest the validity of the contract after it has been in force for a period of years.
Indemnification: The compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Independent Agent: An independent agent is a business person who represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.
Independent Agency System: The type of property and liability insurance marketing system, sometimes called the American agency system, in which the agent is an independent businessperson representing several companies.
Individual Contract: A contract of insurance made with an individual called the insured, which normally covers such individual and, in certain instances, members of their family.
Individual Deductible: The amount that an insured and each person of his or her family covered by the policy must pay before a group or individual medical insurance policy begins to pay for medical expenses.
Individual Insurance: An insurance policy which will provide protection to the policyholder and / or family.
Individual Retirement Account (IRA): A qualified account which an individual (under age 70) can make annual contributions of of earnings up to to a certain dollar limit.
Industrial Life Insurance: Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis.
Inflation-Guard Endorsement: Endorsement added to a homeowners policy to increase (periodically) the face amount of insurance of the dwelling and other policy coverage’s by a specified percentage.
Initial Reserve: For life insurance, the reserve at the beginning of any policy year.
Inland Marine Insurance: A broad form of insurance, generally covering articles in transit as well as bridges, tunnels and other means of transportation and communication. Also covering goods in transit, excluding ocean voyages, it includes numerous “floater” policies, such as: personal effects, personal property, jewelry, furs, fine arts, and other items.
Innkeepers Legal Liability: A coverage for motel and hotel operators, protecting them from the legal liability they have for the property of guests.
In-Patient: A patient admitted to a hospital or other medical facility.
Insolvent: Not having sufficient financial resources to meet financial obligations.
Insurability: The accepting of the insurer an applicant for insurance.
Insurable Risk: The conditions that make a risk insurable are: (1) It must be accidental, (2) The loss must be defined, (3) The peril insured against must produce a definite loss and hardship not under the control of the insured, (4) There must be a large number of exposures subject to the same perils, (5) The loss must be calculable and the cost of insuring must be economically feasible, (6) The peril must be unlikely to affect all insureds simultaneously, and (7) The loss produced by a risk must be definite and have a potential to be financially serious.
Insurance: A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (called a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions in a contract.
Insurance Company: An organization chartered to operate as an insurer.
Insurance Commissioner: The top insurance regulatory official in a state.
Insured: A person or organization, covered by an insurance policy, including the “named insured” and any other parties for whom protection is provided under the policy.
Insurer: The party to the insurance contract who promises to pay losses or benefits, or any corporation engaged primarily in the business of furnishing insurance to the public.
Insuring Agreement: The part of a insurance contract stating the promises of the insurer.
Insuring Clause: A clause which sets forth the type of loss being covered by the insurance policy and the parties to the insurance contract.
Interest: Money paid for the use of money.
Intestate: Dying without a will, thus allowing the probate court to appoint an administrator of the estate.
Investment Income: The portion of a company’s income which is derived from its investments, including interest and dividends on stocks and bonds.
Irrevocable Beneficiary: Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the consent of the named beneficiary.
Irrevocable Trust: A type of trust that cannot be revoked by the creator.
Jettison: Act of throwing overboard part of a vessel’s cargo or hull in hopes of saving a ship from sinking.
Jewelers Block Insurance: An all risk insurance contract that provides jewelers with coverage to losses which they would be exposed.
Joint and Several Liability: The legal principle that permits an injured party to recover the entire amount of compensation due for injuries regardless of the degree of that party’s negligence.
Joint-and-Survivor Annuity: An annuity that provides income periodically, payable during the longer lifetime of two persons.
Joint Underwriting Association: A device used to provide insurance to those who cannot obtain insurance in the voluntary market. Certain companies issue policies at one rate level and handle claims, but the ultimate costs are shared by all companies writing insurance in that state.
Jumping Juvenile Insurance Policy: A life insurance policy purchased by parents for children under a specified age.
Keogh (HR 10) Account: An account to which a self-employed person can make annual tax deductible contribution.
Key-Person Insurance: Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.
Lapse: The termination of an insurance policy due to non-payment of premium(s).
Lapsed Policy: A policy terminated for non-payment of premiums.
Larceny: The unlawful taking of personal property of another.
Law of Large Numbers: A concept that the greater number of exposures, the more closely actual results approach the probable results expected from a number of exposures.
Legal Reserve: The minimum reserve which an insurance company must keep to meet future claims and obligations, as calculated under their state insurance code.
Level Premium: A premium which remains unchanged throughout the life of a policy, example: level term insurance and long term care insurance.
Level Premium Life Insurance: Life insurance for which the premium remains the same from year to year.
Liability: Any legally enforceable act or obligation.
Liability Insurance: Insurance covering the legal liability of the insured resulting from injuries to a third party to their body or damage to their property.
Liability Limits: The maximum sums listed on a liability policy which an insurance company provides protection.
License and Permit Bond: A type of surety bond guaranteeing that a person bonded will comply with all laws and regulations that govern their activities.
Life Annuity: A series of payments which once begun, continue throughout the remaining lifetime of the annuitant but not beyond.
Life Expectancy: The average number of years of life remaining for a group of persons of a given age.
Life Income: A life insurance settlement option in which the policy proceeds are paid during the lifetime of the beneficiary.
Life Insurance: Insurance providing payment of a specified amount on the insured’s death, either to his or her estate or to a designated beneficiary.
Life Insurance in Force: The total sum of the face amount, plus dividend additions, of life insurance polices outstanding at a given time.
Lifetime Disability Benefit: A disability benefit to replace income lost by an insured person as long as they are totally disabled, even for a lifetime.
Limited Policy: A contract which covers only certain specified diseases or accidents.
Liquidation: The dissolving of a company by selling its assets for cash.
Liquor Liability Insurance: Provides protection for the owners of an establishment that sells alcoholic beverages against liability arising out of accidents caused by intoxicated customers.
Living Benefits Rider: A rider that allows insureds to add Long Term Care benefits to a life insurance policy.
Living Trust: A trust created while the creator of the trust is living.
Long-Term Care: The care of broad-ranged maintenance and health services to the chronically ill or disabled. Services may be provided on an inpatient (rehabilitation facility, nursing home, mental hospital), outpatient, or at-home basis. Most long term care premiums are level.
Long-Term Disability Insurance: Insurance to provide a reasonable replacement of a portion of an employee’s earned income lost through serious illness or injury during the normal work career.
Loss: The reduction in the value of an insured’s property caused by a covered peril.
Loss Control: Any actions intended to reduce the frequency or severity of losses.
Loss Payable Clause: A mean of protecting a mortgagee’s interest in property by directing the insurer to make a loss payment to the mortgagee in the event of a loss.
Loss Prevention: A measure which reduces the probability of a particular loss but does not eliminate completely all possibility of that loss.
Loss Ratio: The ratio of claims to premiums.
Loss Reserve: An amount set up as the estimated cost of a claim.
Lump-Sum: Payment within one taxable year of the entire balance payable to a beneficiary.
Mail Order Insurer: An insurance company that sells insurance policies through the mail, or other mass media, eliminating a need for agents.
Maintenance Bond: A bond that guarantees against defects in workmanship or materials for a stated period of time after the acceptance of the completed work.
Major Medical Insurance: Health insurance that provides benefits for major illness and injury. Usually characterized by a large benefit maximum ranging up to $5,000,000.00, or no limit. This insurance, above an initial deductible, reimburses the major part of charges for hospital, doctor, private nurses, medical appliances, prescribed out-of-hospital treatment, drugs, and medicines.
Malpractice: Improper care, conduct, or treatment by a physician, hospital, or other provider of health care.
Malpractice Insurance: Coverage for a professional practitioner, such as a doctor or a lawyer, against liability claims resulting from alleged malpractice while professional services were performed.
Managed Care: A health care system that delivers appropriate health care services to covered individuals by arrangements with selected providers.
Manual Rate: The premium rate developed for a group insurance coverage from standard rate tables normally referred to as its rate manual.
Marine Insurance: A form of insurance primarily concerned with means of transportation and communication, and with goods in transit.
Marital deduction: A reduction of an estate for estate tax purposes, which is available if the decedent is survived by his or her spouse.
Master Policy: Two definitions: (1) An insurance policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group, or (2) A property insurance policy issued to an insured who may issue certificates of insurance to cover properly of others.
McCarran-Ferguson Act: The Federal Law passed in 1945 stating that continued regulation of the insurance industry by the states is in the public interest and that federal antitrust laws apply to insurance only to the extent that the industry is not regulated by state law.
Medicaid: State programs of public assistance to persons whose income and resources are insufficient to pay for health care.
Medical Examination: An examination given by a qualified physician to determine to the insurability of an applicant.
Medical Expense Insurance: A type of health insurance that provides benefits for expenses incurred for medical care, such as: expenses of physicians, hospital, nursing, and related health services, and supplies.
Medical Payments Insurance: A coverage, available in various automobile and liability insurance policies, in which the insurer agrees to reimburse the insured and others, without regard for liability.
Medicare: The United States federal government program of Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) protection provided under the Social Security Act.
Miscellaneous Expenses: Any expenses in connection with hospital insurance, hospital charges other than room and board, such as X-rays, drugs, laboratory fees, etc.
Misrepresentation: A false, incorrect, or incomplete statement of a material fact, made in the application for a policy.
Mode of Premium Payment: The frequency which premiums are paid monthly, quarterly, semiannually, or annually.
Moral Hazard: A hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss.
Morbidity: Relative incidence of a disease.
Morbidity Tables: Actuarial statistics showing the frequency and duration of a sickness.
Mortality Table: A table showing how many members of a group, starting at a certain age, will be alive at each succeeding age.
Multi-Peril Policy: A package policy which provides protection against a number of separate perils in one contract.
Mutual Insurance Company: An insurance company in which the ownership and control is vested in the policyholders and a portion of surplus earnings returns to the policyholders.
Name Position Bond: A fidelity bond which covers losses caused by the dishonesty of only those employees named in the bond.
Named Perils: Coverages in a property policy that provides protection from loss of perils specifically listed in the insurance policy. Examples of named perils are fire, windstorm, theft, smoke, etc.
National Association of Insurance Commissioners (NAIC): The association of insurance commissioners of various states formed to promote national uniformity in the regulation and practice of insurance.
Negligence: The failure to use the reasonable care that a prudent person would have used under the same or similar circumstances.
Net Premium: A portion of the premium rate designed to cover benefits of the policy, but not expenses, contingencies, or profit.
No-Fault: A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchange, first party benefits are offered.
No-Fault Automobile Insurance: A type of insurance in which financial losses resulting from an automobile accident are paid by your own insurer, regardless of who was at fault.
Non-Admitted Insurance Company: An insurance company not licensed to do business in a particular state.
Noncancellable: A contract that the insured has the right to continue in force by the timely payments of premiums set forth in the contract. No changes are made by the insurer during this period of time.
Nonconfining Sickness: A sickness that does not confine an insured to his home or a hospital.
Noncontributory: A term applied to employee benefit plans or insurance, which the employer pays the full cost of the premium for all of the employees.
Non-Disabling Injury: An injury which does not qualify for total or partial disability.
Nonforfeitable Benefits: A benefit under a pension plan that belongs unconditionally to the participant of that plan.
Nonoccupational Policy: An insurance contract which insures a person against off the job accidents or sickness.
Nonowned Auto: Any automobiles not owned, leased, hired, or borrowed which are used within the scope of business.
Nonparticipating: Insurance under which the policy holder is not entitled to share in the dividend distribution of the company.
Nonrenewal: Termination of insurance coverage at an expiration date or anniversary date.
Notice of Cancellation: Written notice by an insurance company of their intent to cancel the policy.
Obligee: Anyone in whose favor an obligation runs. This term is used with surety bonds referring to a person, firm, or corporation protected by the bond.
Obligor: The principal, term used in bonds, one who is bound by an obligation.
Occupational Hazards: An occupational exposure the insured has that is greater than a normal physical danger by the very nature of the work in which the insured is engaged.
Occurrence: An event that results in a loss that is insured.
Occurrence Coverage: A liability insurance policy that covers claims arising out of occurrences that take place during the policy period.
Ocean Marine Insurance: Insurance for sea-going vessels, including liabilities connected with them, and their cargoes.
Optionally Renewable Contract: A contract of health insurance in which the insurer has the right to terminate the policy at any anniversary and, in a few cases, at any premium due date.
Ordinary Life Policy: A Whole Life insurance policy in which premiums are paid as long as an insured in living.
Out-of-Pocket Limit: The maximum coinsurance an individual is required to pay, after which an insurer will pay 100% of any covered expenses up to the policy limit.
Outpatient: A patient who is not a bed patient and does not need to be hospitalized for treatment.
Overhead Expense Insurance: A type of health insurance designed to help offset overhead expenses such as office rent, utilities, and employees’ wages incurred during total disability.
Owners and Contractors Protective Liability Policy: An insurance policy that protects an insured against losses caused by the negligence of a contractor (or hired subcontractor by the contractor).
Package Policy: Any combination of two or more lines of coverage’s into a single policy.
Paid-Up Insurance: Insurance on which all required premiums have been paid.
Paramedical Examination: Physical examination of an applicant by a trained person other than a physician, usually done for a life insurance policy or a individual health insurance policy.
Partial Disability: The result of an illness or injury which prevents an insured from performing one or more of the functions of their occupation.
Participating Policy: A life insurance policy under which the company agrees to distribute to policyholders the part of its surplus which its Board of Directors determines is not needed at the end of the business year.
Pension Benefits: A series of payments to be provided in accordance with the plan of benefits.
Pension Plan: A plan established and maintained by an employer, group of employers, or union to provide for the payment of determinable benefits to participants after retirement.
Percentage Participation: A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions.
Peril: The cause of a loss insured against in a policy.
Permanent Life Insurance: A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life.
Permit Bond: A bond that guarantees a person who has been issued a permit will comply with any laws and ordinances in which the permit was issued.
Persistency: A term used to refer to the length of time insurance remains continuously in force with a company.
Personal Articles Floater: A type of insurance designed to meet the needs for insurance on property of a moveable nature. This coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of this type of property include jewelry, furs, silverware, fine arts, and valuable collectors pieces.
Personal Injury Protection (PIP): First party no fault coverage in which an insurer pays, within specified limits, the medical, hospital, loss of work income, and funeral expenses of the insured.
Personal Lines: Those types of insurance, such as individual automobile or home insurance rather than for businesses or organizations.
Physical Damage: Damage to or loss of an automobile resulting from a named peril.
Plan Administrator: The person(s) controlling money or property contributed to the plan, usually designated in the plan agreement.
Point-of-Service Plans: These plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers. A hybrid of a HMO and PPO.
Policy: The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.
Policy Dividend: A refund of part of the premium on a participating insurance policy reflecting any difference between the premium charged and actual experience.
Policy Loan: A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
Policy Reserves: The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations.
Policy Term: The period of time for which an insurance policy provides coverage.
Policyholder: The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.
Policyholders’ Surplus: Sum over and above liabilities available for an insurer to meet future obligations to its policyholders.
Pool: An organization of insurers or reinsurers through which particular types of risk are underwritten.
Pre-Admission Certification: The process in which a health care professional evaluates an attending physician’s request for a patient’s admission to a hospital to evaluate whether or not inpatient care is necessary.
Preexisting Condition: A physical and / or mental condition of an insured which first manifested itself prior to the effective date of a policy.
Preferred Provider Organization (PPO): An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish medical services at lower than usual fees in return for prompt payment and a certain volume of patients.
Premium: The sum paid by a policyholder to keep their insurance policy in force.
Premium Finance: Allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period through arranged payments.
Primary Insurance: Insurance that pays compensation for a loss ahead (first) of any other insurance coverage’s the policyholder may have.
Principal Sum: An amount payable in one sum in the event of accidental death and in, some cases, accidental dismemberment.
Probate: A court-supervised process of validating or establishing distribution of assets of a deceased including the payment of outstanding obligations.
Probate Estate: That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
Probationary Period: A period from the policy date to a specified time during which no sickness coverage is effective. This is designed to eliminate any sickness actually contracted before the policy went into effect.
Product Liability: Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of their product.
Product Liability Insurance: Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.
Proof of Loss: Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy.
Property Insurance: Insurance providing financial protection against the loss of, or damage to, real and personal property caused by a covered peril.
Provision: A clause, sentence, or paragraph which of an insurance contract describes or explains a feature, benefit, condition, or requirement of any insurance protection afforded by the contract.
Proximate Cause: The effective cause of loss or damage; an unbroken chain of events between the occurrence and damage.
Punitive Damages: A court awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff because of reckless or malicious acts.
Pure Risk: Uncertainty whether a loss will occur. Only pure risks are insurable.
Qualification Period: A period during which an insured must be totally disabled before becoming eligible for disability benefits.
Qualified Impairment Insurance: A form of substandard or special class insurance, which restricts benefits for the insured person’s particular condition.
Qualified Plan: A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. These plans receive tax advantages.
Qualifying Event: An occurrence (death, termination of employment, divorce, etc.) that triggers the insureds protection under COBRA.
Quick Assets: Assets that can be converted into cash quickly.
Radius of Operation: Used to determine rates for automobiles owned by a business.
Rate: The pricing factor upon which an insurance premium is based.
Reasonable and Customary Charge: A charge for health care, which is consistent with the going rate or charge in a certain geographical area, for identical or similar services.
Rebating: Giving any valuable consideration (commission) to a prospect or insured as an inducement to buy.
Recurring Clause: A provision in health insurance policies, which specifies a period of time during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.
Reduced Paid-up Insurance: Provides for continuation of the original insurance plan, but for a reduced amount.
Rehabilitation: Two meanings here: (1) Restoration of a totally disabled person to a occupation, or (2) a provision in a long term disability policy that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume employment.
Reimbursement: Payment of the expenses actually incurred as a loss covered by the policy.
Reinstatement: The resumption of coverage under a insurance policy which lapsed.
Reinsurance: The acceptance by one or more insurers of a portion of the risk underwritten by another insurer.
Renewable Term Insurance: Term insurance which can be renewed at the end of the term, at the option of the policyholder.
Renewal: A continuance of insurance under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term.
Rental Insurance: A type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.
Replacement: The substitution of insurance coverage from one policy contract to another.
Replacement Cost: The cost to repair or replace property without considering depreciation.
Representation: Statements made by an applicant in the application, which represents as being true to the best of his knowledge and belief, but which are not warranted as exact in every detail.
Rescission: Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance.
Reserve: The amount required to be carried as a liability in the financial statement of an insurer, a sum set aside by an insurance company as a liability to fulfill future obligations.
Residual Disability: A period of partial disability that immediately follows a period of total disability.
Residual Market: A source of insurance available to applicants who are unable to obtain insurance through ordinary methods in the voluntary market.
Retention: The amount of risk retained by an insurance company and not the insured.
Retrocession: A process by which a reinsurer obtains reinsurance from another company.
Retrospective Date: The first date for which claims will be paid under a claims-made policy of liability insurance.
Retrospective Rating: Rating procedure which allows adjustment of an insured’s final rate on the basis of the insured’s own loss experience.
Rider: A document which amends an insurance policy or certificate. It may increase or decrease benefits, waive the condition of coverage or in any other way amend the original contract.
Risk: The chance of loss. Also used to refer to the insured or to property covered by a policy.
Risk Retention Groups: These are liability insurance companies owned by their policyholders.
Robbery: The taking of property from a person by force or threat of violence.
Rollover: Transfer of an IRA or other qualified pension funds from one financial institution to another.
Running Down Clause: Additional coverage which can be added to an Ocean Marine Hull policy to provide protection for damage to another ship caused by collision.
Salvage: The recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.
Schedule: A list of individual items covered by an insurance policy with their descriptions and values.
Self-Administration: A procedure where an employer maintains all records regarding the employees covered under a group insurance plan.
Self-Insurance: A form of risk financing through which a firm assumes all or a part of its own losses.
Settlement: A policy benefit of claim payment.
Settlement Options: The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid out.
Short-Term Disability Income Insurance: A group or individual policy usually written to cover a short term disability (13-26 weeks).
Sickness Insurance: A form of health insurance providing benefits for loss resulting from illness or disease.
Special Damages: Compensation awarded for actual economic losses, such as medical expenses and lost wages. (See general damages)
Special Risk Insurance: Coverage for risks or hazards of a special or unusual nature.
Split Funding: The use of two or more funding agencies for the same pension plan. An arrangement whereby a portion of the contributions to the pension plan are paid to a life insurance company and the remainder of the contributions are invested through a corporate trustee, primarily in equities.
Standard Insurance: Insurance written on the basis of regular morbidity underwriting assumption used by an insurance company and issued at normal rates.
Standard Markets: Insurance companies for which the vast majority of people qualify for insurance.
Standard Provision: The contract provisions required by state statutes until superseded by the uniform policy provision.
Standard Risk: An individual who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
State Fund: A fund set up by a state government to provide a specific line or lines of insurance, such as Workers Compensation.
State Insurance Department: A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance.
Step-Rate Premium: A rating structure in which the premiums increase periodically at pre-determined times.
Stockholder: A person who owns shares of stock in a corporation.
Stock Insurance Company: A company in which the legal ownership and control is vested in the stockholders.
Stock Life Insurance Company: A life insurance company owned by stockholders who elect a board to direct the company’s management.
Stock Redemption Agreement: A buy-sell agreement within a corporation that involves the corporation buying back shares from a deceased stockholder.
Strict Liability: Usually dealing with property insurance, the liability that manufacturers and merchandisers may be subject to for defective products sold by them for damages, regardless of fault or negligence.
Subrogation: The process by which an insurance company seeks reimbursement from another company or person for a claim it has already paid.
Substandard Insurance: Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.
Substandard Risk: An individual, who, because of poor health history or physical limitations, does not measure up to the qualification of a standard risk.
Supplementary Contract: An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.
Surety Bond: A bond guaranteeing that a principal will carry out the obligation for which they are bonded for. Most often this is issued to a contractor.
Surgical Expense Insurance: Health insurance policies, which provide benefits toward the physician’s or surgeon’s operating fees. Benefits may consist of scheduled amounts for each surgical procedure.
Surgical Schedule: A list of maximum amounts payable by the policy for various types of surgery, with the amount based on the severity of the operation.
Surplus: An amount by which the value of an insurer’s assets exceeds their liabilities.
Surplus Lines: A risk or a part of a risk for which there is no normal insurance market available, insurance written by non-admitted insurance company.
Syndicate: A group of insurers or underwriters who join to insure property that may otherwise be to high of a hazard.
Tax Basis: Money which has yet to be taxed.
Tenants Improvements and Betterment’s: The property affixed to an owner’s building by the lessee or tenant which may not be legally removed when the tenant leaves.
Term: A period of time a policy or bond is issued.
Term Insurance: Life insurance payable to a beneficiary only when an insured dies within a specified period, (5, 10, 15, or 20 years). This is the quickest way to “build” an estate.
Testamentary Trust: A trust created after the grantor’s death, according to the provisions of the the will of its creator.
Third Party Insurance: The claimant under a liability policy. This person making the claim is not one of the other two parties, the insured and insurer.
Threshold Level: The point, measured in money, time, or other ways, which tort liability can be established.
Time Limit on Certain Defenses: The time period in health policies after which the insurer cannot deny a claim or void the policy because of pre-existing conditions or misstatements on the application.
Tort: A private wrong, other than a breach of contract, for which a court of law will afford legal relief.
Travel Accident Insurance: A limited insurance contract covering only accidents while an insured person is traveling.
Trust: A legal instrument allowing one party to control property for the benefit of another.
Turnover Rate: Rate at which employees terminate covered service other than by death or retirement.
Twisting: The act of inducing by misrepresentation, or inaccurate or incomplete comparison, a policyholder in one company to lapse, forfeit or surrender his insurance for the purpose of taking out a policy from another company.
Umbrella Liability Policy: Provides excess amounts of insurance above the primary policy as well as additional liability coverage’s.
Underwriter: A company employee who decides whether or not the company should assume a particular risk.
Underwriting: The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
Underwriting Profit or Loss: The amount of money which an insurance company gains or loses as a result of its insurance operations.
Unearned Premium: The portion of a premium that a company has collected but has yet to earn because the policy still has time to run.
Uniform Premium: A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.
Uninsured / Underinsured Motorist Coverage: A type of insurance that pays the policy holder and passengers in their automobile for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.
Universal Life Insurance: A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time and vary the amount or timing of premium payments.
Valuable Papers and Records: An all risk insurance coverage form that provides coverage for physical loss or damage to valuable papers and records.
Variable Annuity: An annuity contract in which the amount of each periodic income payment may fluctuate.
Variable Life Insurance: Life insurance under which the benefits relate to the value of assets behind the contract at the time payment is due.
Vesting: A provision that a pension participant will, after meeting certain requirements, retain a right to all or part of the accrued benefits, even though the employee may leave the job before retirement.
Voluntary Market: The market where one obtains insurance in the open market with no help from the state, through an insurer of their own selection.
Waiting Period: The length of time an employee must wait from a date of employment or application for coverage, to the date his/her insurance is effective.
Waiver: An agreement attached to a insurance policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
Waiver of Premium: A provision in some policies to continue premium payments due during a period of continuous total disability that has lasted for a specified length of time.
Whole Life Insurance: A life insurance policy that allows benefits to be payable to a beneficiary at the death of the insured whenever that occurs. Premiums may be payable for a specified number of years (limited payment life) or for life (straight life).
Will: A legal statement of an individual’s wishes concerning the disposal of his or her property after death.
Workers Compensation: A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.
Workers’ Compensation Insurance: Insurance against liability imposed on certain employers to pay benefits and furnish care to employees that are: injured, killed, or are sick due to occupational hazards.
Written Premiums: The total amount of premiums written in a year for all polices issued by an insurance company.
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Yacht Insurance: A type of insurance providing hull coverage and liability insurance on pleasure boats.
Yearly renewable Term Insurance: Term life insurance that may be renewed annually without evidence of insurability to a stated age.
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