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Welcome to our Insurance Glossary Section.

Listed below are the most common insurance-related terms and their definitions.

A

Accelerated Death Benefits - If your policy has an accelerated death benefits provision, it will pay you - under certain conditions - all or part of the policy death benefits while you are still alive. These conditions include proof that the policyholder is terminally ill with a life expectancy of less than 12 months, has a specified life-threatening disease or is in a long-term care facility such as a nursing home. If you have a group term life policy or certificate, the amount of accelerated benefit you may receive is limited by law to - the greatest of $25,000 or 50% of the death benefit. By accepting an accelerated benefit payment, a person could be ruled ineligible for Medicaid or other government benefits. The proceeds also may be taxable.

 

Accident - An unforeseen, unintended event; something unexpected; fortuitous.

 

Accidental Death Benefits - If a policy includes an accidental death benefit, the cause of death will be examined to determine whether the Insured's death meets the policy's definition of accidental.

 

Actual Cash Value (ACV) - The value of property, based on current replacement cost less depreciation.

 

Actuary - A mathematician working for an company responsible for determining what premiums the company needs to charge based in large part on claims paid versus amounts of premium generated. Their job is to make sure a block of business is priced to be profitable.

 

Adjuster - A person who investigates and settles insurance claims.

 

Administrative Expense Charge - An amount deducted, usually monthly, from the policy.

 

Admitting Privileges - The right granted to a doctor to admit patients to a particular hospital.

 

Advocacy - Any activity done to help a person or group to get something the person or group needs or wants.

 

Agent - Licensed salespersons who represent one or more insurance companies and presents their products to consumers. The professional responsible for your insurance coverage needs.

 

Annuitant - A person who receives the payments from an annuity during his or her lifetime.

 

Annuity - A contract in which the buyer deposits money with a life insurance company for investment. The contract provides for specific payments to be made at regular intervals for a fixed period or for life.

 

Annuity Certain - An annuity that provides a benefit amount payable for a specified period of time regardless of whether the annuitant lives or dies.

 

Annuity Period - The time span between the benefit payments made under an annuity contract.

 

Application - A form containing underwriting information. The basis upon which a policy is issued.

 

Assignment - The transfer of all or part of a policy owner's legal title and rights to a policy to another person. It is possible to change this type of transfer at a later date.

 

Association - A group. Often, associations can offer individual health insurance plans specially designed for their members. 

 

B

Bankdraft - Occurs when money is being automatically debited from a banking account to for insurance coverage.

 

Benchmark Rate(s) - The rate set annually by the Commissioner of Insurance by line, relative to which the flexibility bands and statutory rate limitations apply.

 

Beneficiary - The person, persons or entity designated to receive the death benefits from a life insurance policy or annuity contract.

 

Benefit - Amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.

 

Binder - Placing insurance temporarily in force, pending issuance of a policy.

 

Bodily Injury (BI) - Physical injury to a person; insured's liability for same covered under Liability Insurance policies.

 

Brand-name drug - Prescription drugs marketed with a specific brand name by the company that manufactures it, usually the company which develops and patents it. When patents run out, generic versions of many popular drugs are marketed at lower cost by other companies. Check your insurance plan to see if coverage differs between name-brand and their generic twins.

 

Broker - Licensed insurance salesperson who obtains quotes and plan from multiple sources information for clients.  

 

C

Cancellation - Termination of an insurance policy by the company or insured.

 

Capitation - Capitation represents a set dollar limit that you or your employer pay to a health maintenance organization (HMO), regardless of how much you use (or don't use) the services offered by the health maintenance provider.

 

Carrier - The insurance company offering an insurance plan.

 

Case Management - Case management is a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care services.

 

Cash Surrender Option ı Non-forfeiture option, which specifies that the policy owner can cancel the coverage and receive the entire net cash value in a lump sum.

 

Cash Value - The amount of money that the policy owner will receive as a refund if he cancels the coverage and returns the policy to the company. Also known as cash surrender value.

 

Certificate of Insurance - The printed description of the benefits and coverage provisions forming the contract between the carrier and the customer. Discloses what it covered, what is not, and dollar limits.

 

Churning - Can occur when an agent persuades a consumer to borrow against an existing life insurance policy to pay the premium on a new one.

 

Claim - A request by an individual (or his or her provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional.

 

Claimant - One who makes a claim against another.

 

COBRA - Federal legislation that lets you, if you work for an insured employer group of 20 or more employees, continue to purchase health insurance for up to 18 months if you lose your job or your employer-sponsored coverage is otherwise terminated. For more information, visit the Department of Labor.

Related terms - Employer-Sponsored Health Insurance

 

Co-Insurance - Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called "co-payment." Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.
Related terms - Co-Payment, Deductible

 

Conditional Receipt - A premium receipt given to an applicant which makes the insurance effective only if or when a specified condition is met.

 

Contestable Period - A period of up to 2 years that an insurance company may deny payment of a claim because of suicide or a material misrepresentation on your application.

 

Contingent Beneficiary - Another party or parties who will receive the proceeds if the primary beneficiary should predecease the person whose life is insured.

 

Contract - In most cases, the term "contract" refers to the insurance policy. The policy is considered to be a "contract" between the insurer and the insured for indemnification.

 

Conversion Privilege - The right to change (convert) insurance coverage from one type of policy to another. For example, the right to change from an individual term insurance policy to an individual whole life insurance policy.

 

Co-Payment - Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some HMOs require a $10 "co-payment" for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.

Related terms - Co-Insurance, Deductible

 

Credit for Prior Coverage - This is something that may or may not apply when you switch employers or insurance plans. A pre-existing condition waiting period met under while you were under an employer's (qualifying) coverage can be honored by your new plan, if any interruption in the coverage between the two plans meets state guidelines.

 

D

Death Benefit - Amount paid to the beneficiary upon the death of the insured.

 

Declarations Page - The contract section containing such information as the name and address of the insured, period a policy is in force, premium payable, lien holder, description of the vehicle, and amount of coverage.

 

Deductible - The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.
Related terms - Co-Insurance, Co-Payment

 

Deferred Annuity - An annuity under which the annuity payment period is scheduled to begin at some future date.

 

Denial Of Claim - Refusal by an insurance company or carrier to honor a request by an individual (or his or her provider) to pay for health care services obtained from a health care professional.

 

Dependent Worker - A worker in a family in which someone else has greater personal income.

 

Dependents - Spouse and/or unmarried children (whether natural, adopted or step) of an insured.

 

Depreciation - The act of lowering an item's value due to use or wear and tear.

 

Dividend - The amount of money an insurance company may decide to distribute to policyholders.

 

E

Earned Premium - The portion of a policy premium that the company has earned; the portion that the insured has "used up."

 

Effective Date - The date on which an insurance policy becomes effective.

 

Employee Assistance Programs (EAPs) - Mental health counseling services that are sometimes offered by insurance companies or employers. Typically, individuals or employers do not have to directly pay for services provided through an employee assistance program.

 

Employer-Sponsored Health Insurance - Of Americans who have health coverage, nearly 60 percent secure that coverage through an employer-sponsored plan, often called group health insurance. Millions take advantage of the coverage for reasons as obvious as employer responsibility for a significant portion of the health care expenses. Group health plans are also guaranteed issue, meaning that a carrier must cover all applicants whose employment qualifies them for coverage. In addition, employer-sponsored plans typically are able to include a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability.

Related terms -  Group Health Insurance, Private Health Insurance, Individual Health Insurance

 

Endorsement - A form attached to a policy to change or modify its conditions.

 

Escrow - Money placed in the hands of a third party until specified conditions are met.

 

Evidence of Insurability - To qualify you for a particular policy at a particular price, companies have the right to ask you for information about your health and lifestyle. An insurance company will use this information - your evidence of insurability - in deciding if your application for insurance is acceptable and at what premium rate.

 

Exclusion - Provision in an insurance policy that indicates what is denied coverage.

 

Experience Period - The period of time that a company will reference when making evaluations of an insuring policy. There is not a standardized amount of time. See annotation for an example of an experience period.

 

Expiration Date - The date on which an insurance policy expires.

 

Explanation of Benefits - The insurance company's written explanation of a claim, showing what they paid and what the client must pay. It is sometimes accompanied by a benefits check.

 

Extended Term Insurance Option - A non-forfeiture benefit under which the net cash value of the policy is used to purchase term insurance for the amount of coverage available under the original policy.

 

F

Face Value - The initial amount of death benefit provided by the policy as shown on the face page of the contract. The actual death benefit may be higher or lower depending on the options selected, outstanding policy loans or premium owed.

 

First Party Loss - A situation involving only the insurer and insured.

 

Free Examination Period - Also known as "10-day free look" or "Free Look," it is the time period after a life insurance policy or an annuity is delivered during which the policy owner may review it and return it to the company for a full refund of the initial premium. Variable life policies are required to include a "free-look" provision. For other coverage, it is at the company's option.

 

G

Generic Drug - A "twin" to a "brand name drug" once the brand name company's patent has run out and other drug companies are allowed to sell a duplicate of the original. Generic drugs are cheaper, and most prescription and health plans reward clients for choosing generics.


Grace Period(s) - The time - usually 31 days - during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the 31 days or the insured dies. This is not a "free-insurance" period.

 

Group Health Insurance - Coverage through an employer or other entity that covers all individuals in the group.

Related terms - Employer-Sponsored Health Insurance, Private Health Insurance, Individual Health Insurance

 

Group Life Insurance - This type of life insurance provides coverage to a group of people under one contract. Most group contracts are sold to businesses that want to provide life insurance for their employees. Group life insurance also can be sold to associations to cover their members and to lending institutions to cover the amounts of their debtor loans. Most group policies are for term insurance. Generally, the business will be issued a master policy and each person in the group will receive a certificate of insurance.

 

Group of Companies - Several insurance companies under common ownership and often common management.

 

H

Health Care Decision Counseling - Services, sometimes provided by insurance companies or employers, that help individuals weigh the benefits, risks and costs of medical tests and treatments. Unlike case management, health care decision counseling is non-judgmental. The goal of health care decision counseling is to help individuals make more informed choices about their health and medical care needs, and to help them make decisions that are right for the individual's unique set of circumstances.

 

Health Maintenance Organizations (HMOs) - Health Maintenance Organizations represent "pre-paid" or "capitated" insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided, Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility, or in a physician's own office (as with IPAs.)


Health Maintenance Organization (HMO) - Prepaid group health insurance plan which entitles members to services of participating physicians, hospitals and clinics. Emphasis is on preventative medicine.

 

HIPAA - A Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care. Full name is "The Health Insurance Portability and Accountability Act of 1996."

 

Home Service Life - Home service refers to a method of selling and servicing insurance, mostly life and health insurance, and does not identify the type or relative cost of the product that is sold. Some companies that market on a home service basis sell what is known as "industrial life insurance." These are most often low death benefit policies with face amounts that may vary from $1000 to $5000 and which accumulate cash values at a very low rate. They are intended primarily to cover the expenses of a last illness and burial. The relative cost of industrial life insurance is extremely high compared to some other cash value policies and term life insurance policies. 

 

I

Incontestability - A provision that places a time limit - up to two years - on a company's right to deny payment of a claim because of suicide or a material misrepresentation on your application.

 

Indemnity Health Plan - Indemnity health insurance plans are also called "fee-for-service." These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose their health care professionals.

 

Independent Adjuster - A person who charges a fee to the insurance company to adjust the company's claim.

 

Independent Practice Associations - IPAs are similar to HMOs, except that individuals receive care in a physician's own office, rather than in an HMO facility.

 

Individual Health Insurance - Health insurance coverage on an individual, not group, basis. The premium is usually higher for an individual health insurance plan than for a group policy, but you may not qualify for a group plan.

 

Indexed Life Insurance - A whole life plan of insurance that provides for the face amount of the policy and, correspondingly, the premium rate, to automatically increase every year based on an increase in the Consumer Price Index (CPI) or another index as defined in the policy.

 

In-network - Providers or health care facilities which are part of a health plan's network of providers with which it has negoiated a discount. Insured individuals usually pay less when using an in-network provider because those networks provide services at lower cost to the insurance companies with which they have contracts.

 

Insurable Interest - A financial interest in the property insured, prerequisite to a valid contract of insurance. In life insurance, a person's or party's interest - financial or emotional - in the continuing life of the insured. Insured - The person or firm covered by an insurance policy.

 

Insurer - The insurance company.

 

Interpleader - This is a procedure when conflicting claims are made on a life insurance policy by two or more people. Using this procedure, the insurance company pays the policy proceeds to a court, stating the company cannot determine the correct party to whom the proceeds should be paid.

 

Irrevocable Beneficiary - A named beneficiary whose rights to life insurance policy proceeds are vested and whose rights cannot be canceled by the policy owner unless the beneficiary consents. 

 

J

 

K

 

L

Lapse - Termination of a policy due to non-payment of renewal premiums. If the policy has cash value, then the policy's insurance coverage may remain effective as extended term or reduced paid up insurance through the use of a nonforfeiture option.

 

Liability - Responsibility to another for one's negligence.

 

Liability Limits - The limits of protection the insured has in a liability policy.

 

Lifetime Maximum Benefit (or Maximum Lifetime Benefit) - the maximum amount a health plan will pay in benefits to an insured individual during that individual's lifetime.

 

Limitations - a limit on the amount of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance.

 

Long-Term Care Policy - Insurance policies that cover specified services for a specified period of time. Long-term care policies (and their prices) vary significantly. Covered services often include nursing care, home health care services, and custodial care.

 

Long-term Disability Insurance - Pays an insured a percentage of their monthly earnings if they become disabled.

 

LOS - LOS refers to the length of stay. It is a term used by health insurance companies, case managers and/or employers to describe the amount of time an individual stays in a hospital or in-patient facility.

 

Loss - Damages through the insured's negligent act and/or omission resulting in bodily injury and/or property damages to a third party; damage to an insured's property; or amount an insurance company has a legal obligation to pay.

 

Loss History - Refers to an insured's history of losses (claims) with other companies, or the company they are currently with. A company will consider "loss history" when underwriting a new policy or considering a renewal of an existing policy. Companies view "loss history" as an indication of an insured's propensity for a claim in the future.

 

M

Managed Care - A medical delivery system that attempts to manage the quality and cost of medical services that individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality, by emphasizing prevention of disease.


Material Misrepresentation - A significant misstatement in an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.

 

Maximum Dollar Limit - The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific time period. Maximum dollar limits vary greatly. They may be based on or specified in terms of types of illnesses or types of services. Sometimes they are specified in terms of lifetime, sometimes for a year.

 

Medigap Insurance Policies - Medigap insurance is offered by private insurance companies, not the government. It is not the same as Medicare or Medicaid. These policies are designed to pay for some of the costs that Medicare does not cover.

 

Mortality Charge - The cost of the insurance protection element of a universal life policy. This cost is based on the net amount at risk under the policy, the Insured's risk classification at the time of policy purchase, and the Insured's current age.

 

Mortality Expenses - The cost of the insurance protection based upon actuarial tables which are based upon the incidence of death, by age, among given groups of people. This cost is based on the amount at risk under the policy, the insured's risk classification at the time of policy purchase, and the insured's current age.

 

Multiple Employer Trust (MET) - A trust consisting of multiple small employers in the same industry, formed for the purpose of purchasing group health insurance or establishing a self-funded plan at a lower cost than would be available to each of the employers individually.  

 

N

Named Driver Policy - A policy whereby ONLY the named insured has coverage under the policy. Generally, all other drivers are excluded from coverage under the policy. This type of policy is usually written by surplus lines companies.

 

Net Cash Value - The cash value amount available to a policy owner after adjustments have been made to the cash surrender value to account for policy loans and dividends.

 

Network - A group of doctors, hospitals and other health care providers contracted to provide services to insurance companies customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.

 

Non-participating Policy - A life insurance policy that does not grant the policy owner the right to policy dividends.

 

Non-renewal - Provision in a policy that states the circumstances under which an insurer may elect not to renew the policy.

 

O

Open-ended HMOs - HMOs which allow enrolled individuals to use out-of-plan providers and still receive partial or full coverage and payment for the professional's services under a traditional indemnity plan.

 

Out-of-Plan (Out-of-Network) - This phrase usually refers to physicians, hospitals or other health care providers who are considered nonparticipants in an insurance plan (usually an HMO or PPO). Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual's insurance company.

 

Out-Of-Pocket Maximum - A predetermined limited amount of money that an individual must pay out of their own savings, before an insurance company or (self-insured employer) will pay 100 percent for an individual's health care expenses.

 

Outpatient - An individual (patient) who receives health care services (such as surgery) on an outpatient basis, meaning they do not stay overnight in a hospital or inpatient facility. Many insurance companies have identified a list of tests and procedures (including surgery) that will not be covered (paid for) unless they are performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe health care facilities where procedures are performed.

 

P

Paid-Up - This event occurs when a policy will not require any further premiums to keep the coverage in force.

 

Paid-Up Additions - Additional amounts of insurance purchased using dividends; these insurance amounts require no further premium payments.

 

Peril - A cause of property losses. Usually used in the context of "a peril insured against."

 

Plan Administration - Supervising the details and routine activities of installing and running a health plan, such as answering questions, enrolling individuals, billing and collecting premiums, and similar duties.

 

Policy - The contract issued by the insurance company to the insured.

 

Policy Loan - An advance made by a life insurance company to a policy owner. The advance is secured by the cash value of the policy.

 

Policy Owner - The person or party who owns an individual insurance policy. This person may be the insured, the beneficiary or another person. The policy owner usually is the one who pays the premium and is the only person who may make changes to a policy.

 

Policy Period - The period a policy is in force, from inception date to expiration date.

 

Pre-Admission Certification - Also called pre-certification review, or pre-admission review. Approval by a case manager or insurance company representative (usually a nurse) for a person to be admitted to a hospital or in-patient facility, granted prior to the admittance. Pre-admission certification often must be obtained by the individual. Sometimes, however, physicians will contact the appropriate individual. The goal of pre-admission certification is to ensure that individuals are not exposed to inappropriate health care services (services that are medically unnecessary).

 

Pre-Admission Review - A review of an individual's health care status or condition, prior to an individual being admitted to an inpatient health care facility, such as a hospital. Pre-admission reviews are often conducted by case managers or insurance company representatives (usually nurses) in cooperation with the individual, his or her physician or health care provider, and hospitals.

 

Pre-Admission Testing - Medical tests that are completed for an individual prior to being admitted to a hospital or inpatient health care facility.

 

Pre-existing Condition - A medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.

 

Preferred Provider Organizations (PPOs) - You or your employer receive discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care.

 

Premium - The consideration for a policy, paid by the insured to the insurer. This term refers to the amount of money being paid to keep insurance coverage in force.

 

Premium Expense Charges - An amount deducted from each premium payment, which reduces the amount credited to the policy.

 

Primary Care Provider (PCP) - A health care professional (usually a physician) who is responsible for monitoring an individual's overall health care needs. Typically, a PCP serves as a "quarterback" for an individual's medical care, referring the individual to more specialized physicians for specialist care.

 

Private Health Insurance - Private health insurance, insurance plans marketed by the private health insurance industry, currently dominates the U.S. health care landscape, with approximately two-thirds of the non-elderly population covered by private health insurance. Coverage includes policies obtained through employer-sponsored insurance, with approximately 62 percent of non-elderly Americans receiving insurance provided as a benefit of employment. Another 5 percent of the non-elderly group buys coverage outside of the workplace on the individual health insurance market.

Related terms - Employer-Sponsored Health Insurance, Group Health Insurance, Individual Health Insurance

 

Property Damage (PD) - Physical damage to property, insured's liability for it covered under Liability policies.

 

Provider - Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to physicians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services.

 

Public Adjuster - A person hired by you to settle the claim with the insurance company to settle the claim on your behalf.

 

Q

 

R

Rated Policy - A policy issued at a higher premium to cover a person classified as a greater-than-average risk, usually due to impaired health or a dangerous occupation.

 

Reasonable and Customary Fees - The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure. If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions his or her physician about the fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary.

 

Redlining - Refusal by an insurance company to underwrite or to continue to underwrite questionable risks in a given geographical area.

 

Refund - Amount of money being returned to the policyholder.

 

Reinstatement - The process by which a life insurance company puts back in force a policy which had lapsed because of nonpayment of renewal premiums.

 

Renewal Policy - A policy issued as a renewal of a policy expiring in the same company or agency; not new business.

 

Replacement Cost - The cost associated with replacing property at current market prices.

 

Rescind - To take away or remove. To avoid so as to restore the involved parties to the positions they would have occupied had there been no contract.

 

Rescission - is a controversial insurance industry practice that has come under fire as an unfair tactic used to deny coverage to policy holders. If you've been a victim of rescission, your insurance company has received a claim from you, and then, after reviewing your application and medical history for undisclosed conditions or inconsistencies, has cancelled your policy at a point when you needed it most.

Related terms - Pre-Existing Conditions

 

Return Premium - The premium returned to an insured for canceling or amending a policy.

 

Rider - A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy.

 

Risk - The chance of loss, the degree of probability of loss or the amount of possible loss to the insuring company. For an individual, risk represents such probabilities as the likelihood of surgical complications, medications' side effects, exposure to infection, or the chance of suffering a medical problem because of a lifestyle or other choice. For example, an individual increases his or her risk of getting cancer if he or she chooses to smoke cigarettes.

 

Rule of 78 - This is a method for calculating the amount of unused premium which takes into account the fact that more insurance coverage is required in the early months of the loan, since the payoff of the loan is greater. As the loan is paid off, less coverage is being paid for, so the refund percentage decreases.

 

Rule of Anticipation - This is a similar method to "Rule of 78" where the amount of unused premium takes into account the fact that more insurance coverage is required in the early months of the loan, since the payoff of the loan is greater. As the loan is paid off, less coverage is being paid for, so the refund percentage decreases.

 

S

Second Opinion - It is a medical opinion provided by a second physician or medical expert, when one physician provides a diagnosis or recommends surgery to an individual. Individuals are encouraged to obtain second opinions whenever a physician recommends surgery or presents an individual with a serious medical diagnosis.

 

Second Surgical Opinion - These are now standard benefits in many health insurance plans. It is an opinion provided by a second physician, when one physician recommends surgery to an individual.

 

Short-Term Disability - An injury or illness that keeps a person from working for a short time. The definition of short-term disability (and the time period over which coverage extends) differs among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual's full or partial wages during a time of injury or illness (that is not work-related) that would prohibit the individual from working.

 

Short-Term Health Insurance - Temporary coverage for an individual for a short period of time, usually from 30 days to six months.

 

Single Interest Insurance - Insurance coverage for only one of the parties having an insurable interest in that property.

 

Single-Premium Whole Life Policy - A type of limited-payment policy that requires only one premium payment.

 

Small Employer Group - Generally means groups with 1 to 99 employees. The definition may vary between states.

 

Staff Adjuster - Employee of the insurance company's claim department.

 

State Mandated Benefits - When a state passes laws requiring that health insurance plans include specific benefits.

 

Stop-loss - The dollar amount of claims filed for eligible expenses at which which point you've paid 100 percent of your out-of-pocket and the insurance begins to pay at 100%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.

 

Student Health Insurance - In recent years, many colleges have begun requiring proof of health insurance for students. Coverage options include insurance through family policies and coverage through school-sponsored student health plans, now offered by more than 80 percent of public four-year colleges. Students may also seek coverage through an employerıs plan if they're employed full time, or they can purchase their own individual health insurance plan from a licensed health insurance provider. And, depending on the state in which a student resides, the student may also be eligible for coverage by a state-sponsored risk pool, a program that provides coverage for individuals denied insurance by private insurers because of their health condition.

 

Subrogation - Assignment of rights of recovery from insured.

 

Suicide Clause - Life insurance policy wording which specifies that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time after the policy's date of issue.

 

Surplus Lines - Insurance coverage not available from an admitted company in the regular market; thus a surplus lines broker/agent representing an applicant seeks coverage in the surplus lines market from a nonadmitted insurer according to the insurance regulations of a particular state.

 

Surrender Charges - Charges that are deducted if your life insurance policy or annuity is cashed in (surrendered). These charges also are deducted if you borrow money on your policy or if your policy lapses for non-payment.

 

T

Third Party Administrator (TPA) - An organization that performs managerial and clerical functions related to an employee benefit insurance plan by an individual or committee that is not an original party to the benefit plan.

 

Third Party Loss - A situation involving a person other than the insurer and insured; i.e., a person making a liability claim against the insured.

 

Triple-Option - Insurance plans that offer three options from which an individual may choose. Usually, the three options are traditional indemnity, an HMO, and a PPO.

 

U

Underwriter - The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate. The company that assumes responsibility for the risk, issues insurance policies and receives premiums.

 

Underwriting - An insurance company issues a policy when it believes you have a certain level of "risk" or chance of a claim. Underwriting is the process the company uses to decide whether to accept or reject an application. Companies do not make their underwriting guidelines public because they are considered to be trade secrets.

 

Unearned Premium - The insured's remaining premium equity in his policy; that part of the policy premium that has not been "used up."

 

Universal Life Insurance - The key characteristic of universal life insurance is flexibility. Within limits, you can choose the amount of insurance and the premium you wish to pay. The policy will stay in force as long as the policy value is sufficient to pay the costs and expenses of the policy. The policy value is "interest-sensitive," which means that it varies in accordance with the general financial climate. Lowering the death benefit and raising the premium will increase the growth rate of your policy. The opposite also is true. Raising the death benefit and lowering the premium will slow the growth of your policy. If insufficient premiums are paid, the policy could lapse without value before the maturity date is reached. (The maturity date is the time your policy ceases and cash surrender value would be payable if the policyholder is still living.) Therefore, it is your responsibility to pay consistently a premium that is high enough to ensure that your policy's value will be adequate to pay the monthly cost of the policy. The company is required to send you an annual report and also to notify you if you are in danger of losing your policy due to insufficient value.

 

Usual, Customary and Reasonable (UCR) or Covered Expenses - rates usually charged by physicians and providers in your area; rate averages compiled by independent rating services; or rate averages compiled by the insurance company. An amount customarily charged for or covered for similar services and supplies which are medically necessary, recommended by a doctor, or required for treatment.

 

V

Variable Annuity - A form of annuity policy under which the amount of each benefit payment is not guaranteed and specified in the policy, but which instead fluctuates according to the earnings of a separate account fund.

 

Variable Life Insurance - A type of whole life policy in which the death benefit and the cash value fluctuate according to the investment performance of a separate account fund that the policyholder selects. Because the investment account is regulated by the Securities and Exchange Commission, you must be presented with a prospectus before you purchase a variable life policy.

 

Viatical Settlement Agreements - Viatical settlements involve the sale of an existing life insurance policy by a viator (person with a life threatening or terminal illness) to a viatical settlement company in return for a cash payment that is a percentage of the policy's death benefit.

 

W

Waiting Period - A period of time when you are not covered by insurance for a particular problem.


Whole Life Insurance - Whole life insurance policies are one type of cash value insurance. Whole life policies offer protection through a lifetime - that is, for a person's "whole life." From the day you buy the policy, you pay a scheduled premium,. The scheduled premium may be level or may increase after a fixed time period, but it will not change from the amount(s) shown in the policy schedule. It is important that you look at the policy schedule to be sure you understand what your premium payments will be and that you can afford them over time. This premium is based on your age at the time of purchase. Initially, it will be higher than the premium paid for a term policy, but you are likely to end up paying less in premiums when you are older, if you keep the policy for a long time. Part of each premium payment will go to cash value growth, part for the death benefit and part for expenses (such as commissions and administrative costs). There is no need to renew whole life policies. As long as you pay your premium when due, your coverage will continue in force throughout your life.

 

X

 

Y

 

Z

 

Disclaimer - This information is intended to be a guide to understanding common insurance terms. MyMajorMedical.com does not intend this information to be official or legally binding. This list should be used as a basic guide to understanding these terms and should not be considered complete or definitive.

Reference Information - Much of the information provided in this glossary comes from the Louisiana Department of Insurance and the Health Insurance Resource Center. We thank them for providing this helpful information to the public.

 

 

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