This glossary provides insurance terms definition and explanation commonly used in insurance business world.
Our insurance terms glossary is divided alphabetically by insurance terms in a quick reference guide to assist understanding the language commonly used by insurance companies. Policy documents contain a number of insurance terms because they typically define the limitations of risk and liability on the insured and any exclusions of coverage.
If you plan to start a new policy or renew your current policy with a different carrier or agency, it is important to review and understand the policy differences behind individual quotes from multiple carriers. Lower policy premiums may be the result of decreased payout benefits, higher deductibles, or maximum damages allowed. It is important to identify these unique features in any policy comparison, otherwise a lower price may come at a much higher cost when you have to file a claim for loss or damages in the future.
Select the first letter of the word or term to locate a definition and brief description. For example, to get help with the terms “Automobile Liability Insurance” or “Premium”, select either the letter A or P from the menu bar below:
Liability for damages even though fault or negligence cannot be proven. Certain situations create absolute liability for the manufacturer a product or the provider of a service.
An event or occurrence which is unforeseen and unintended. Accidental is an important concept of risk for insurance. The more unlikely the accident or the occurrence, the less expensive it is to insure.
A type of coverage that pays benefits, when an accident occurrs or a medical problem arrises, sometimes including reimbursement for loss of income, in case of sickness, accidental injury, or accidental death.
A benefit in addition to the face amount of a life insurance policy, payable if the insured dies as the result of an accident. Sometimes referred to as double indemnity.
ACOs are groups of hospitals, doctors and other healthcare providers that organize to provide quality care to their collective Medicare patients.
The process of recording, summarizing, and allocating all items of income and expense of the company and analyzing, verifying, and reporting the results.
Process by which regulatory organizations determine whether an entity (i.e. healthcare providers) meet the acceptable standards for the services the entity wishes to provide.
(1) The time between the first premium payment and the first benefit payout under a deferred annuity; (2) A specified period of time, such as 90 days, during which the insured person must incur eligible medical expenses at least equal to the deductible amount in order to establish a benefit period under a major medical expense or comprehensive medical expense policy.
The mechanism used to account for the insured‘s deposits in a variable annuity contract during the premium paying period. The number of units purchased depends upon the current valuation of a unit in dollars.
The insurer‘s cost of putting new business in force, including the agent’s commission, the cost of clerical work, fees for medical examinations and inspection reports, sales promotion expense, etc.
A list of activities, normally including mobility, dressing, bathing, toileting, transferring, and eating which are used to assess degree of impairment and determine eligibility for some types of insurance benefits.
Exclusion in most marine cargo policies, which states that coverage is not provided when due to capture, seizure, arrest, detainment, confiscation, preemption, requisition, or nationalization, whether in time of peace or war. This clause also excludes from coverage loss due to hostilities or warlike operations (including atom bombs), embargoes or other interferences with the free flow of trade. Coverage for these hazards can be obtained through the Cargo War Risk policy. See also Cargo Insurance.
The replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual Cash Value cannot exceed the applicable liability limits shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.
One of several systems for determining either the contributions to be made under a retirement plan, or the level of benefits when the contributions are fixed. In addition to forecasts of mortality, interest and expenses, some of the methods involve estimates of future labor turnover, salary scales and retirement rates.
If the present values of two series of payments are equal, taking into account a given interest rate and mortality according to a given table, the two series are said to be actuarially equivalent on this basis. For example, a lifetime monthly benefit of $67.60 beginning at age 60 (on a given set of actuarial assumptions) can be said to be the actuarial equivalent of $100 a month beginning at age 65. The actual benefit amounts are different but the present value of the two benefits, considering mortality and interest, is the same.
A person professionally trained in the technical aspects of pensions, insurance, and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future benefits.
An assured party specifically named under an insurance policy that is not automatically included as an insured under the policy of another, but for whom the named insured’s policy provides a certain degree of protection. An endorsement is typically required to effect additional insured status. The named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).
An additional person(s) specifically named on the policy, similar to Additional Insured, except that each named insured person(s) are fully covered under the terms of the policy. Parents who insure their teenage son or daughter on their existing auto insurance policy, can do so by adding them as an Additional Named Insured.
A contract that is drafted by one party and accepted or rejected by the other, with no opportunity to bargain with respect to its terms.
A type of insurance that allows the policyholder to change the plan of insurance, raise or lower the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.
Approximately the net worth of a deceased’s estate—the beginning point for the computation of estate taxes. In addition to the deceased’s assets while alive, the value will also generally include the proceeds of life insurance.
The process of investigating and settling losses with or by an insurance carrier. This service is usually conducted by a claims adjustor. Sometimes they are employees of the insurance company and sometimes they are independent.
Organization for adjusting insurance claims that is supported by insurers using the bureau’s services. Sometimes for specialized adjusting or for smaller insurance companies this bureau provides better service.
An arrangement under which an insurance carrier or an independent organization will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group.
Admitted insurance companies have been formally licensed to operate by the various state insurance agencies where the company operates. Conversely, non-admitted insurance companies (often called excess or surplus insurers) are not state regulated, and as a result, are not backed financially by the state.
Pension-funding method in which the employer systematically and periodically sets aside funds prior to the employee’s retirement.
Mutual insurance company owned by the policyholders that does not issue assessable policies but charges premiums expected to be sufficient to pay all claims and expenses.
A federal tax credit that reduces the amount you pay for monthly health insurance when such insurance is purchased on the Marketplace.
The tendency of persons who present a poorer-than-average risk, to apply for, or continue, insurance to a greater extent than do persons with average or better-than-average expectations of loss. An insurance company that experiences adverse selection will also experience poor financial results.
Injury rising out of an offense committed in the course of your advertising activities, if such injury rises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan.
Stipulated minimum and maximum ages below and above which an insurance company will not accept applications and may not renew policies.
An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance and provides service to the policyholder on behalf of the insurer.
Deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
The maximum dollar amount that may be collected for any disability or period of disability under the policy.
The maximum total dollar amount an insurance company will pay to the insured per individual policy.Example: An insured causes $100,000 in liability damage in one accident and $114,000 in liability damage in a second accident for an aggregate of $214,000 in damages. If the aggregate limit is $200,000, then the insured would be responsible for $14,000, even if the liability limits of coverage for this policy are $200,000 per incident.
An endorsement to a policy made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim. By combining an Agreed Amount Endorsement with a Replacement Cost Endorsementyou can obtain an unusually high quality of insurance coverage.
Acquired immune deficiency syndrome. A fatal, incurable disease caused by a virus that can damage the brain and destroy the body’s ability to fight off illness.
An exclusion that eliminates coverage for property damage liability to premises sold by an entity. For example, a person owns a lot and builds a house on it. After the house is completed and sold, a subcontractor’s faulty wiring causes the house to burn. The buyer, or his/her insurance company, sues for the cost of repairing or rebuilding the house. There is no coverage for this exposure under standard liabilitypolicies.
All-Risks Policies provide cover where all losses are insured, unless they are specifically excluded from the policy. These policies are not so common today as insurers and legal counsel have advised against their use, because one might know what they cover today, but they could provide unintended coverage in the future, given today’s legal climate.
A term for forms of property insurance allied with fire insurance, covering such perils as windstorm, hail, explosion, and riot.
Health services provided in other than an in-patient, acute-care hospital. Examples include skilled and intermediary nursing facilities, hospice programs, and home health care. Alternate delivery systems are designed to provide needed services in a more cost-effective manner.
Rating agency that provides news, credit ratings and financial performance data for companies operating in the insurance industry.
Medical services that are provided on an outpatient (nonhospitalized) basis. Services may include diagnosis, treatment, and rehabilitation.
A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.
Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.
The annual report, as of December 31, of an insurer to a state insurance department, showing assets and liabilities, receipts and disbursements, and other financial data, presented according to Statutory Accounting Principles.
A contract that provides an income for a specified period of time, such as a number of years or for life. Click here to shop for an Annuity at einsure.com!
A signed statement of facts made by a person applying for insurance and then 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.
Unique series of numbers/letters that is provided to you after applying for healthcare coverage in the Marketplace.
A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to reponsibility for or extent of a loss.
The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
Hazard generally covered under a marine cargo policy, which includes loss due to thievery when accompanied by violence, but does not include petty thievery. See also Cargo Insurance.
A policy that comes with an assessment provision. Mutual insurance companies used to offer these policies as a way of collecting more premium in the future if the coverages that they offered turned out to be more costly than originally contemplated. This type of coverage is not offered much today. Some older policies might have such a provision.
An insurer that does not charge a fixed premium for insurance, but rather assesses its members periodically to pay its losses. Assessment insurers usually collect an advance premium which is estimated to cover losses and expenses, but reserve the right to make additional assessments whenever the premium collected is insufficient.
All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under Generally Accepted Accounting Principles.
Type of captive insurer owned by members of a sponsoring organization or group, such as a trade association.
A group formed from members of a trade or a professional association for group insurance under one master health insurance contract.
Health insurance plans designed for members of a professional association or trade association. Members may be protected under a group health insurance policy or by individual franchise policies.
The mission of the Association of Health Insurance Advisors is to provide leadership in sustaining and improving the business environment for the marketing of a broad range of health related products and services. AHIA takes a lead advocacy role on issues that impact members involved in the sale of group and individual health related products including major medical, disability, long-term care, critical illness, and Medicare Supplement Insurance. Click here to visit AHIA online.
Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.
Conditions and rules underlying the calculation of a pension benefit, including expected interest, mortalityand turnover.
A statement signed by a life insurance applicant’s physician, intended to disclose any serious illnesses that might impact the insurer‘s decisions regarding acceptance and pricing of coverage. Part of the underwriting process.
Condition that can attract and injure children. Owners or occupants of land on which such a condition exists are liable for injuries to children.
Sometimes factors that enter into determining appropriate premiums for insurance coverage can’t be known in advance; therefore, accurate premiums for the coverage provided can’t be billed by the insurance carrier. This often is true in the case of Worker’s Compensation and Product Liability Insurance, where such things as payroll and sales can’t be determined ahead of time. An audit serves as an examination of the insured‘s records after the fact to adjust the initial premium billed to reflect the actual coverage.
Cash borrowed from a life insurance policy‘s cash value to pay an overdue premium after the grace period for paying the premium has expired.
An agreement that the insurer must cede and the reinsurer must accept all risks within certain explicitly defined limits. The reinsurer undertakes in advance to grant reinsurance to the extent specified in the agreement in every case where the ceding company accepts the application and retains its own limit. See also Treaty.
One of several types of shared market mechanisms where persons who are unable to obtain such insurancein the voluntary market are assigned to a particular company, usually at a higher rate than the voluntary market. Formerly called Assigned Risk. Compare Automobile Reinsurance Facility, Residual Market.
Coverage designed to provide protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property. Click here to shop for Personal Auto Insurance at einsure.com.
Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils. Click here to shop for Automobile Physical Damage Insurance at einsure.com!
One of several types of shared market mechanisms used to make automobile insurance available to persons who are unable to obtain such insurance in the regular market.
Automobile Shared Market Insurance is 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. This is called uninsured motorist coverage in most states.
Under the OASDI program, a person’s actual earnings are indexed to determine his or her primary insurance amount.
Aircraft insurance including coverage of aircraft or their contents, the owner’s liability, and accident insurance on the passengers.
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An individual or entity who holds property of another. Examples are dry cleaners, jewelers, repairers.
Coverage designed to protect for loss or damage to property of customers regardless of a bailee‘s legal liability. Bailee Insurance is inland marine coverage on property entrusted to the insured for storage, repair, or servicing. It is typically purchased by businesses such as dry cleaners, jewelers, repairers, furriers, etc.
The practice of a healthcare provider billing you for an outstanding balance after your insurance company has paid its portion of the bill.
An action of the master of a ship which violates the trust given to him, provided such action is not taken in connivance with the shipowner. Hazard covered in the marine cargo policy.
An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift (except donations to charities, which generally are recorded at the current value of the asset at the time the gift is made).
The person or entity designated or provided for by an insurance policy‘s terms to receive any benefitsprovided by the policy or plan upon the death of the insured.
A period of time, typically one to three years, during which major medical benefits are paid after the deductible is satisfied. When the benefit period ends, the insured must then satisfy a new deductible in order to establish a new benefit period.
The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.
A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to receipt of the premium and all the terms of the policy to be issued. It is a legal agreement that serves to effect insurance coverage for a specified period of time until the actual insurance policy can be issued.
A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the receipt.
A biological product that has no clinically meaningful difference from an existing FDA-approved product.
The period during which Social Security benefits are not paid to a surviving spouse; between the time the youngest child reaches age sixteen and the widow’s sixtieth birthday.
A contract of health insurance affording benefits, such as accidental death and dismemberment, for all of a class of persons not individually identified. It is used for such groups as athletic teams, campers, travel policy for employees, etc.
A policy designed to provide coverage under a single limit for two or more items (e.g., building and/or contents), two or more locations, or a combination of items and/or locations
A provision which entitles the insured to collect up to a maximum established in the policy for all hospital and medical expenses incurred, without any limitations on individual types of medical expenses.
A form of inland marine insurance designed to cover loss to the property of a merchant, wholesaler, or manufacturer including: property of others in the insured‘s care, custody, or control, property on consignment and property sold but not delivered. Common block policies are jeweler’s block and furrier’s block policies.
An independent, nonprofit membership corporation providing protection on a service basis against the cost of hospital care in a limited geographical area.
An independent, non-profit membership corporation providing protection on a service basis against the cost of surgical and medical care in a limited geographical area.
When you are found legally culpable for a car accident, BI coverage pays for the costs associated with injuries to the other people involved. BI also provides coverage for a legal defense if you are sued.
Coverage for loss arising out of the operation of pressure, mechanical, and electrical equipment. It covers loss of the boiler and machinery itself, damage to other property, and business interruption losses.
(1) A certificate issued by a government or corporation as evidence of a debt. The issuer of the bond promises to pay the bondholder a specified amount of interest for a specified period and to repay the loan on the expiration (maturity) date. (2) A certificate or policy issued by an insurance company guaranteeing performance, fidelity or surety.
A bondholder is the owner of a bond. This can be, and frequently is, different from the person/corporation that purchased the bond. The bondholder is entitled to the proceeds of the bond: in investment terms, principal and interest; in insurance terms, the value the bond supports. For example, a surety bond holder would be entitled to the value that is guaranteed by the surety bond.
The number, size and type of accounts (policyholders) that an agent services, and upon which he earns commissions.
Type of marketing system under which branch offices are established in various areas. Salaried branch managers, who are employees of the company, are responsible for hiring and training new agents.
A calendar year, plan year or other consecutive 12-month period designated by the plan during which a plan participant does not complete more than 500 hours of service.
Broad Form Property Insurance is a coverage extension to the general contractor. Broad form policies are usually preferable, even though they cost more, because they cover so much. Without Completed Operations coverage, the normal Comprehensive General Liability policy will not cover “completed operations” claims (i.e., claims rising out of work performed on behalf of the insured by subcontractors).
The legal liabilities of a broadcaster are numerous and vary from the use of incorrect news stories, libel and slander, invasion of privacy, copyright infringement, and unauthorized use of plot, characters, or music. Broadcasters’ Liability Insurance covers these exposures, as well as defense costs in contesting suits or claims. Employees are covered as insureds while acting within the scope of their duties as such.
Regarding liability coverages, these coverages will automatically apply to “… any affiliated, associated, allied or subsidiary company or entity (including subsidiaries thereof), now held or hereinafter acquired or constituted…”
A marketing specialist who represents buyers of property and liability insurance and who deals with either agents or companies in arranging for the coverage required by the customer.
Bronze plans are a category of coverage offered in the Health Insurance Marketplace. Bronze plans typically carry the lowest monthly premiums and must cover certain services.
Builders risk Insurance provides coverage to insure building contractors for damage to property under construction. The completed value form requires a 100% coinsurance because insurance value purchased must equal the completed value of the structure. The reporting form type of coverage allows coverage to be carried according to the stage of completion of the structure. Perils insured against are fire, lightning, vandalism, malicious mischief, the types of risks common to a builder’s site. Smoke, sprinkler leakage, water damage, windstorm, and hail are also usually covered.
A standard element of commercial property insurance providing coverage against loss of operating income due to fire, explosion, or other insured perils. Generally takes the limited form of business interruption insurance, but can be broadened through the addition of indirect loss, consequential loss, extra expense, and other coverages.
A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Business Interruption insurance, covers the loss of earnings as a result of damage or loss of business property. Reimbursement for salaries, taxes, rents, and other expenses, even net profits that would have been earned during the period of interruption can be included.
Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee.
Business insurance that combines protection from liability and property risks in one package. Typically purchased by small to medium sized businesses.
Moveable property owned by your business. Typically includes office supplies, machinery, computers, furniture and everything else excluding the building.
An agreement made by the owners of a business to purchase the share of a disabled or deceased owner. The value of each owner’s share of the business and the exact terms of the buying-and-selling process are established before death or the beginning of disability.
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Generic term for an employee benefit plan that allows employees to select among the various group life, medical expense, disability, dental, and other plans that best meet their specific needs. Also called flexible benefit plans.
Amount payable by an insured during a calendar year before a group or individual health insurance policybegins to pay for medical expenses.
A contract of health insurance that may be canceled during the policy term by the insurer or insured.
The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.
(1) The amount of capital available to an insurance company or to the industry as a whole for underwritinggeneral insurance coverage or coverage for specific perils. (2) The amount of insurance a company or the industry are able to write, due to limitations on or availability of capital.
Profit realized on the sale of securities. An unrealized capital gain is an increase in the value of securities that have not been sold.
A method used to estimate the amount of life insurance to own. Under this method, the insurance proceeds are retained and are not liquidated.
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.
A company owned solely or in large part by one or more non-insurance entities for the primary purpose of providing insurance coverage to the owner or owners. The company’s stock is controlled by one interest or a group of related interests so as to provide coverage for their business operations. A Captive Insurance Company may be a nonadmitted, nonresident, or foreign insurer. Sometimes it may provide reinsurance to a self-insured or a domestic company. See also Association Captive.
A pension plan formula that bases retirement benefits on earnings during all years of service to the employer.
Type of ocean marine insurance designed to protect the shipper of the goods against financial loss if the goods are damaged or lost.
The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by death or maturity.
Insurance concerned with the insured‘s legal liability for injuries to others or damage to other persons’ property; also encompasses such forms of insurance as plate glass, burglary, robbery and workers’ compensation.
A high-end deductible health plan sod in the Marketplace. To qualify you must be under 30 years of age, or receive a ‘hardship exemption;’ essentially, recognition that you cannot afford health care coverage.
Form added to commercial property insurance policy that indicates the causes of loss that are covered. There are four causes-of-loss forms: basic, broad, special, and earthquake.
To transfer all or part of a risk written by an insurer (the ceding, or primary company) to a reinsurer.
A federal agency within the Department of Health and Human Services (HHS) that governs Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.
Professional who has attained a high degree of technical competency in financial planning and has passed a series of professional examinations by the College of Financial Planning.
Professional in property and liability insurance who has passed a series of examinations by the Society of Certified Insurance Counselors.
Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.
Provision in a health insurance policy stipulating that if the insured changes to a more hazardous occupation, the benefits are reduced based on the amount of benefits the premium would have purchased for the more hazardous occupation.
An individual who has attained a high degree of technical competency in the fields of financial planning, investments, and life and health insurance and has passed ten professional examinations administered by The American College.
An individual who has attained a high degree of technical competency in the fields of life and health insurance and who is expected to abide by a code of ethics. Must have minimum of three years of experience in life or health insurance sales and have passed ten professional examinations administered by The American College.
Professional who has attained a high degree of technical competency in property and liability insuranceand has passed ten professional examinations administered by the American Institute for Property and Liability Underwriters.
Allows auto insureds the choice of remaining under the tort system or choosing no-fault at a reduced premium.
CDM programs are proactive, integrated approaches focused on managing the needs and illnesses of a defined population of patients.
Claims-Made liability insurance, is different that Occurrence Form coverage. In a claims made policy, only those claims brought against the insured during the policy period and are reported during the policy period are covered. In an Occurrence form policy, the claims brought against the insured or insurance company are based on the insurance that was in-force at the time of the accident or event. A claims made policy can begin to look more like an occurrence form policy if the insured has been with the same insurance carrier for many years and has purchased “prior acts coverage”, similarly that same insured should purchase an “extended reporting or tail cover” to cover exposures known as incidents when the policy is in-force but do not develop into claims until after the policy is expired.
Rate-making method in which similar insureds are placed in the same underwriting class and each is charged the same rate. Also called manual rating.
Consolidated Omnibus Budget Reconciliation Act. Contains provisions giving certain former employees, retirees, spouses and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available in specific instances. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer formerly paid a part of the premium. It is ordinarily less expensive, though, than individual health coverage.
(1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required; (2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 percent by the insurer and 20 percent by the insured.
A legal rule, which states that the defendant cannot introduce any evidence that shows the injured party has received compensation from other collateral sources.
Protection against loss resulting from any damage to the policyholder‘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.
Basically, a measure of the relationship between dollars spent for claims and expenses and premium dollars taken in; more specifically, the sum of the ratio of losses incurred to premiums earned and the ratio of commissions and expenses incurred to premiums written. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions.
Protects businesses from the loss of money, securities or inventory resulting from risks such as theft, embezzlement, forgery or alteration of checks, robbery, counterfeit currency and documents, disappearance and destruction of money, securities and documents, employee dishonesty, safe burglary, computer fraud, wire transfer, audit and investigation expense. Click here to shop for Commercial Crime Insurance at einsure.com!
Commercial liability policy drafted by the Insurance Services Office containing two coverage forms: an occurrence form and a claims-made form. Click here to shop for a Commercial General Liability Policy at einsure.com!
Insurance for businesses, organizations, institutions, governmental agencies, and other commercial establishments.
A package of insurance that includes a wide range of essential coverages for the commercial establishment.
A commercial policy that can be designed to meet the specific insurance needs of business firms. Propertyand liability coverage forms are combined to form a single policy. Click here to shop for a Commercial Package Policy at einsure.com.
The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.
A state officer who administers the state’s insurance laws and regulations. In some states, this regulator is called the director or superintendent of insurance.
A special ownership form requiring that one-half of all property earned by a husband or wife during marriage belongs to each. Community property laws do not generally apply to property acquired by gift, by will, or by descent.
A concept which requires health insurance providers to provide healthcare policies within a given territory at the same price regardless of medical underwriting and health status.
Under this concept a plaintiff (the person bringing suit) may recover damages even though guilty of some negligence. His or her recovery, however, is reduced by the amount or percent of that negligence.
Completed Operations is insurance that cover’s a contractor’s liability for accidents arising out of jobs, projects or operations that were completed by the contractor.
Coverage designed to provide protection against loss resulting from damage to the insured auto, other than loss by collision or upset. Click here to shop for Comprehensive Automobile Insurance at einsure.com!
Comprehensive Coverage pays for the repair/replacement of your covered vehicle for those damages outside of a collision; for example, theft, vandalism or even hitting an animal.
Under this form of insurance and regarding a covered occurrence, the company will pay all sums the insured becomes legally obligated to pay as damages due to bodily injury (Coverage A) or propertydamage (Coverage B). Click here to shop for Comprehensive General Liability Insurance at einsure.com!
A policy designed to give the protection offered by both a basic and a major medical health insurancepolicy. It is characterized by a low deductible amount, a coinsurance feature, and high maximum benefits. Click here to shop for Comprehensive Major Medical Insurance at einsure.com!
A form of health insurance that provides, in one policy, protection for both basic hospital expense and major medical expense coverages. The major medical part of a comprehensive policy is characterized by a deductible amount, coinsurance, and high maximum benefits. Click here to shop for Comprehensive Medical Expense Insurance at einsure.com!
Protection against loss arising out of legal liability to pay money for damage or injury to others for which the insured is responsible. It does not include automobile or business operation liabilities.
Insurance laws in some states require motorists to carry at least certain minimum auto coverages. This is called compulsory insurance.
Law protecting accident victims against irresponsible motorists by requiring owners and operators of automobiles to carry certain amounts of liability insurance in order to license the vehicle and drive legally within the state.
Coverage designed to provide protection if computer or EDP equipment is damaged or destroyed by fire or any other insured peril. In such an event it would probably be necessary to incur certain extra expenses to continue business operations.
Legal doctrine that states when a property loss is due to two causes, one that is excluded and one that is covered, the policy provides coverage.
A receipt given for premium payments accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of the prepayment or the date on which the last of the underwriting requirements, such as a medical examination, has been fulfilled.
Continuance provision of a health insurance policy under which the company cannot cancel the policy during its term but can refuse to renew under certain conditions stated in the contract.
Provisions inserted in an insurance contract that qualify or place limitations on the insurer‘s promise to perform.
Consequential loss or damage coverage — as distinguished from direct loss or damage — is indirect loss or damage resulting from that event caused by or covered under a covered peril, such as fire or windstorm. Where windstorm is a covered peril, if a tree is blown down and cuts electricity to a home, the food in the refrigerator would have coverage for consequential loss.
One of the elements for a binding contract. Consideration for an insurance policy is acceptance by the insurance company of the payment of the premium and the statement made by the prospective policyholder in the application, balanced by the insurance company’s promise to provide benefits in the case of loss.
The clause that stipulates the basis on which the company issues the insurance contract. In health policies, the consideration is usually the statements in the application and the payment of premium.
An initial period—generally the first two years that the policy is in force—during which the insurance company has the right to cancel a policy based on any false statements made by the insured.
An option under which an employee may elect to receive, under certain conditions, a reduced amount of annuity with the same income, or a specified fraction, to be paid after his death to another person designated as his contingent annuitant, for that person’s lifetime. The contingent annuitant is usually the husband or the wife. See Joint-and-Survivor Annuity.
The person or persons designated to receive the benefits of a policy or plan if the primary beneficiary dies while the insured is living.
Liability arising out of work done by independent contractors for a firm. A firm may be liable for the work done by an independent contractor if the activity is illegal, the situation does not permit delegation of authority, or the work is inherently dangerous.
A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
Insurance that only restores the insured back to their original financial position, after a loss occurs. The insured cannot gain from the restoration.
Contractor’s Liability Insurance provides coverage for liability exposures that result from manufacturing and/or contracting operations in process. For example, the contractor, off-premises, (away from the office), operations at a construction site. Independent contractors, damage to property by explosion, collapse, and underground property damage are excluded.
Legal liability of another party that the business firm agrees to assume by a written or oral contract. It is common in construction and other agreements (written or oral) for one party to assume the liability of another. This is sometimes referred to as a hold harmless agreement. The extent to which one holds another harmless varies from contract to contract, job-to-job, etc.
Type of other-insurance provision often found in liability insurance contracts that requires each company to share equally in the loss until the share of each insurer equals the lowest limit of liability under any policy or until the full amount of loss is paid.
A group insurance plan issued to an employer under which both the employer and employee contribute to the cost of the plan. Seventy-five percent of the eligible employees must be insured. Compare Noncontributory.
Negligence of the damaged person that helped to cause the accident. Some states bar recovery to the plaintiff if the plaintiff was contributorily negligent to any extent. Others apply comparative negligence.
The right given to an insured person to change insurance without evidence of medical insurability, usually to an individual policy upon termination of coverage under a group contract.
A bond that offers the holder the privilege of converting the bond into a specified number of shares of stock.
Term insurance that can be exchanged, at the option of the policyholder and without evidence of insurability, for another plan of insurance.
The mechanism used in group health insurance to designate the order in which the multiple carriers are to pay benefits and to prevent duplicate payments.
A fixed amount you pay, established by your insurance provider for the sharing of the cost of certain services you receive under your insurance plan.
Major medical plan deductible that excludes benefits provided by a basic plan if both a basic and a supplemental group major medical expense policy are in force.
An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
The controller reduction of inefficiencies in the consumption, allocation, or production of health care services that contribute to higher than necessary costs.
Benefit that can be added to a life insurance policy under which the policyowner can purchase one-year term insurance equal to the percentage change in the consumer price index with no evidence of insurability.
Often considered ‘out-of-pocket costs,’ cost sharing is the portion of healthcare costs you pay that are not covered by your insurance.
Subsidies paid under the Patient Protection and Affordable Care Act that help lower your out-of-pocket costs and deductibles.
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
That part of the personal auto policy insuring payment for damage or theft of the insured automobile. This optional coverage can be used to insure both collision and other-than-collision losses. Click here to shop for Personal Auto Insurance at einsure.com!
A person covered by a pension plan is one who has fulfilled the eligibility requirements in the plan, for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
Hospital, medical, and miscellaneous health care expenses incurred by the insured that entitle him/her to a payment of benefits under a health insurance policy. Found most often in connection with major medical plans, the term defines, by either description, reasonableness, or necessity to specify the type and amount of expense that will be considered in the calculation of benefits.
A person covered by a pension plan is one who has fulfilled the eligibility requirements in the plan, for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
The weight given to an individual insured‘s past experience in computing premiums for future coverage.
A form of health insurance on a borrower, usually under an installment purchase agreement. The benefitscover the obligations of the borrower and are payable to the creditor.
A guarantee to manufacturers, wholesalers, and service organizations that they will be paid for goods shipped or services rendered. Applies to that part of working capital which is represented by accounts receivable.
Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase, or other obligation, in case of death.
Health benefit plans that meet a minimum set of qualifications; includes group, student and individual health plans, as well as government-backed plans.
Coverage designed to provide financial protection against damage to growing crops as a result of hail or certain other named perils.
In the event of claim by one insured for which another insured covered by the same policy may be held liable, this endorsement covers the insured against whom the claim is made in the same manner as if separate policies had been issued. However, it does not operate to increase the insurance company‘s overall limit of liability.
Specifies the terms for the surviving partners or shareholders to buy a deceased’s share of the business’s ownership.
Nonparticipating whole life policy in which the cash values are based on the insurer‘s current mortality, investment, and expense experience. An accumulation account is credited with a current interest rate that changes over time. Also called interest-sensitive whole life insurance.
Status of a covered person under the Old-age, Survivors, and Insurance (OASDI) program who has at least six quarters of coverage out of the last thirteen quarters, ending with the quarter of death, disability, or entitlement to retirement benefits.
Customer Service Representatives support the work of insurance agents with a variety of tasks that must be done within a company or agency to deliver services to and handle requests from clients.
Insurance coverage for your business’ liability regarding any data breaches involving sensitive customer information.
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Coverage for an insured who damages another’s property. Payment is made despite the lack of legal liability. Coverage is included in Section II of the homeowners policy.
A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.
This clause extends insurance coverage to include the cost of debris removal resulting from damage caused by a covered loss up to a specified limit of loss. The clause is an additional property insurancecoverage.
Statements in an insurance contract that provide information about the property or life to be insured. Used for underwriting and rating purposes and identification of the property or life to be insured.
The insurer‘s refusal to insure an individual after evaluation of the application for insurance and any other pertinent factors.
Term Life Insurance is designed to provide a fixed death benefit that is available for premium paid during a given term. Decreasing Term Life Insurance is similar, except that the of the policy limit decreases, while the premium is generally flat. This type of insurance is useful for guaranteeing mortgage payments and other credit balances that decrease by a fixed amount over time.
An amount that a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.
An annuity providing for the income payments to begin at some specified future date. Click here to shop for Deferred Annuities at einsure.com!
Arrangements by which compensation to employees for past or current services is postponed until some future date.
A type of group annuity providing for the purchase each year of a paid-up deferred annuity for each member of the group, the total amount received by the member at retirement being the sum of these deferred annuities.
A pension plan stating either (1) the benefits to be received by employees after retirement or (2) the method of determining such benefits. The employer’s contributions under such a plan are actuarially determined.
A plan under which the contribution rate is fixed and benefits to be received by employees after retirement depend to some extent upon the contributions and their earnings.
Individual or group plan that helps pay costs of normal dental care as well as damage to teeth from an accident. Click here to shop for Dental Insurance at einsure.com!
HHS is a department of the federal government that protects the health of all Americans and provides essential human services.
Period of time following the readjustment period during which the surviving spouse’s children are under eighteen and therefore dependent of the parent.
A type of group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased as the individual members of the group retire.
The money paid by a prospective policyholder when an application is made for an insurance policy. It is usually equal, at least, to the first month’s estimated premium and is applied toward the actual premium when billed.
A form of term insurance, not really involving a “deposit,” in which the first-year premium is larger than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases the partial endowment can be applied toward the purchase of a new term policy, or, perhaps, a whole lifepolicy. Click here to shop for Term Life Insurance at einsure.com!
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
System that reimburses health care providers fixed amounts for all care given in connection with standard diagnostic categories.
Difference-in-Conditions Insurance policies insure against losses not usually covered by Fire and Business Interruption polices like those caused by flood, earthquake, landslide and other unusual accidental occurrences.
Sale of an entire issue of bonds or stock by the issuer to one or a few large institutional customers such as an insurance company without trying to market the issue publicly.
Property and casualty insurance premiums written (less return premiums), without any allowance for premiums for assumed or ceded reinsurance.
A marketing method where insurance is sold without the services of an agent. Potential customers are solicited by advertising in the mail, newspapers, magazines, television, radio, and other media.
The industry term for a company that uses its own sales employees to write its policies. Sometimes refers to companies that contract with exclusive agents.
Covers the exposure of corporate managers to claims from shareholders, government agencies, and employees, and others alleging mismanagement. Click here to shop for Directors’ & Officers’ Liability Insurance at einsure.com!
A physical or a mental impairment that substantially limits one or more major life activities of an individual. It may be partial or total. See Partial Disability; Total Disability.
(1) Periodic payments, usually monthly, payable to participants under some retirement plans, if such participants are eligible for the benefits and become totally and permanently disabled prior to the normal retirement date. (2) A feature added to some life insurance policies providing for waiver of premium, and sometimes payment of monthly income, if the policyholder becomes totally and permanently disabled.
A form of health insurance that provides periodic payments to replace income when an insured person is unable to work as a result of illness, injury, or disease.
Status of an individual who is insured for disability benefits under the Old-Age, Survivors, and Disability Insurance (OASDI) program. The covered person must be fully insured and have at least twenty quarters of coverage out of the last forty, ending with the quarter in which the disability occurs. Fewer quarters are required for persons under age thirty.
Deductible in an insurance contract that provides for a decreasing deductible amount as the size of the loss increases, so that small claims are not paid but large losses are paid in full.
A form 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 the sight of one or both eyes.
Personal income less personal tax and basic nontax payments. It is the income available to people for discretionary spending and saving.
(1) A return of part of the premium on participating insurance to reflect the difference between the premium charged and the combination of actual mortality, expense and investment experience. Such premiums are calculated to provide some margin over the anticipated cost of the insurance protection. (2) In capital stock companies, a share of the profits distributed to stockholders.
An amount of paid-up insurance purchased with a policy dividend and added to the face amount of the policy.
No-fault auto insurance states with the dollar threshold prevent individuals from suing in tort to recover for pain and suffering unless their medical expenses exceed a certain dollar amount.
An insurance company is a domestic company in the state in which it is incorporated. See also Foreign Insurer, Alien Insurer.
A couple who form a union, who desire to share an exclusive life together, and are of the same sex. See also Insurance Considerations for Domestic Partners.
Coverage gap that begins once you and your drug plan have spent a certain amount of money on covered drugs, now you must pay out-of-pocket.
A policy provision usually associated with death, which doubles payment of a designated benefit when certain kinds of accidents occur.
Law that imputes negligence to the owner of a business that sells liquor in the case that an intoxicated customer causes injury or property damage to another person. Usually excluded from general liabilitypolicies.
Insurance providing an unallocated benefit, subject to a maximum amount, for expenses incurred in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis and spinal meningitis.
Student discount or reduction in premium amount for which young drivers become eligible on completion of a driver education course.
Overlapping or identical coverage of the same insured under two or more health plans, usually the result of contracts of different insurance companies, service organizations, or pre-payment plans; also known as multiple coverage.
DME includes items such as canes, crutches, walkers, kidney machines, nebulizers, ventilators and several other healthcare equipment.
Dwelling insurance is a type of insurance policy used to provide coverage to only a dwelling. It is essentially a very stripped down homeowners policy, where the land and any personal property on the land or in the home is not covered, just the dwelling.
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Retirement of a participant prior to the normal retirement date, usually with a reduced amount of annuity. Early retirement is generally allowed at any time during a period of 5 to 10 years preceding the normal retirement date.
EPSDT benefits provide comprehensive and preventive healthcare services for children who are enrolled in Medicaid.
The portion of a premium that is the property of an insurance company, based on the expired portion of the policy period. For example, an insurance company is considered to have earned 75 percent of an annual premium after a period of nine months of an annual policy has elapsed.
Determination of the amount of Social Security benefits payable to a beneficiary after adjusting for earnings.
The estimated total cost, both insured and uninsured, of mishaps (such as motor vehicle accidents, work accidents, and fires); includes such factors as property damage, funeral expenses, wage loss, insuranceadministration costs, and medical, hospital and legal costs.
Special type of participating whole life insurance in which the dividends are used to buy term insuranceor paid-up additions equal to the difference between the face amount of the policy and some guaranteed amount.
Four elements an injured person must show to prove negligence: existence of a legal duty to use reasonable care, failure to perform that duty, damages or injury to the claimant, and proximate cause relationship between the negligent act and the infliction of damages.
The date on which an individual member of a specified group becomes eligible to apply for insurance under a group life or health insurance plan.
A specified length of time, such as one month, following the eligibility date, during which an individual member of a particular group will remain eligible to apply for insurance under a group life or health insurance policy without evidence of insurability.
For retirement plans, (1) the conditions which an employee must satisfy to participate in a retirement plan, for instance completion of 1 to 3 years of service with the employer, the attainment of a specified age, such as 25, or (2) conditions which an employee must satisfy to obtain a retirement benefit, such as the completion of 15 years of service and the attainment of age 65.
Those members of a group who have met the eligibility requirements under a group life or health insurance plan.
A period of time between the period of disability and the start of disability income insurance benefits, during which no benefits are payable. The elimination period may be as short as a few days or as long as one year or more. See Waiting Period.
Medical Condition that involves symptoms of such severity, that if immediate medical attention isn’t provided, it could be reasonably assumed the individual will lose bodily functions or organs.
Coverage designed to protect the employer against claims by employees or former employees resulting from negligent acts or omissions in the administration of the insured‘s employee benefit programs. Coverage is intended to extend to the administration of these plans, including counseling employees, interpreting employee benefit programs, handling records, enrolling, terminating or canceling employees in specified plans on a timely basis, etc.
Programs designed to benefit employees, arranged by the employer, which are not paid for primarily or directly by the employee, including for instance group life insurance and group accident and/or health insurance; profit sharing plans; employee stock subscription plans; workers’ compensation; unemployment insurance; social security benefits; disability benefits, etc..
Commercial crime insurance form drafted by the Insurance Services Office that covers the loss of money, securities, and other covered property because of any dishonest act of a covered employee or employees.
Legislation passed in 1974 applying to most private pension and welfare plans that requires certain minimum standards to protect participating employees.
Healthcare law that requires applicable large employers to offer health care coverage to full-time employees and their dependents.
Coverage designed to protect the corporation, directors, officers and employees for claims resulting from wrongful termination, discrimination, sexual harassment, wrongful discipline and failure to employ or promote. Click here to shop for Employment Practices Liability Insurance at einsure.com!
A defined contribution pension plan which is designed to invest primarily in securities of the employer, such as common stock and debentures.
An additional piece of paper, not a part of the original contract, that cites certain terms and that, when attached to the original contract, becomes a legal part of that contract. See Rider.
Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date.
A person who performs actuarial service for a plan and who is enrolled with the Federal Joint Board for the Enrollment of Actuaries.
A document signed by an employee as notice of his/her desire to participate in the benefits of a group insurance plan.
Provision in life insurance policies stating that the policy and attached application constitute the entire contract between the parties.
The injurious presence in or on land, the atmosphere, or any water course or body of water of solid, liquid, gaseous, or thermal contaminants, irritants, or pollutants.
Investments in the form of ownership of property, usually common stocks, as distinguished from fixed income bearing securities, such as bonds or mortgages.
Amount by which an unearned premium reserve is overstated because it is established on the basis of gross premium rather than net premium.
Also called Professional Liability Insurance. Coverage designed to protect an insured against loss due to a claim of some negligent act, error, or omission by the insured. Click here to shop for Errors and Omissions Insurance at einsure.com!
EHB require that everyone in the small group and individual health insurance market have access to comprehensive coverage that falls into 10 designated categories (Ambulatory patient services, Emergency services, Hospitalization, Maternity and newborn care, Mental health and substance use disorder services, Prescription drugs, Rehabilitative services, Laboratory services, Preventive and wellness services and chronic disease management and Pediatric services, including oral and vision care)
The process of developing a plan to transfer property from one generation to the next, or within a generation (eg., from husband to wife).
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.
Any statement of proof of a person’s physical condition and/or other factual information affecting his/her acceptance for insurance.
(1) Coverage designed to protect against losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance for a risk for which coverage is unavailabe in the normal market. Such risks are frequently unusual, e.g., damage to a musician’s hands or the multiple perils of a convention. See also Umbrella Liability and Surplus Lines.
Specific condition or circumstance listed in the policy for which the policy will not provide benefit payments.
The portion of an annuity payment, considered by tax law to be a return of your initial investment, that is not subject to income tax when received.
An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.
People who belong to an Exclusive Provider Organization must receive their care from affiliated providers; services rendered by unaffiliated providers are not reimbursed. See also Health Maintenance Organization.
Doctrine in workers’ compensation insurance which states that workers’ compensation benefits should be the exclusive or sole source of recovery for workers who have a job-related accident or disease. The doctrine has been eroded by legal decisions.
A unique number sent to you after you have applied in the Marketplace, to be exempt from the requirement of have qualifying health coverage, and they have granted you a coverage exemption.
The ratio of an insurance company‘s operating expenses including acquisition costs to premiums written or earned.
A term used to describe the relationship, usually expressed as a percent or ratio, of premium to claims for a plan, coverage, or benefits for a stated time period.
Used in workers’ compensation rating to reflect the degree to which a particular employer has experiencethat is better or worse that expected for that industry. Weighted by employer’s credibility factor.
The process of determining the premium rate for a group risk, wholly or partially on the basis of that group’s experience.
A provision in most group policies for the return of premium to the policyholder because of lower than anticipated claims.
A violent expansion, with force and noise, generally due to rapid chemical change; term covered under various property/casualty insurance policies.
The risk or loss potential an insurance company assumes from its policyholder in exchange for premium.
Protection for the insured against property damage caused by windstorm, hail, smoke, explosion, riot, riot attending a strike, civil commotion, vehicle and aircraft. This is provided in conjunction with the fireinsurance policy and the various package policies.
Endorsement that can be added to an automobile liability insurance policy that covers the insured while driving any nonowned automobile on a regular basis.
An additional period of time after policy expiration during which valid claims will be paid under a claims-made policy of liability insurance
Added to a claims-made policy of liability insurance to provide an additional period of time during which valid claims will be paid.
A form of insurance available as a nonforfeiture option. It provides the original amount of insurance for a limited period of time. The policy cash value is used to purchase term life insurance for the amount of coverage (or death benefit) under the original life insurance policy, less outstanding loans. The duration of the extended term insurance is based on the cash surrender value at the time of termination and the extended term insurance table provided in the life insurance contract.
Additional cash benefits paid by federal-state unemployment insurance programs to workers who are involuntarily unemployed and who have exhausted their regular weekly cash benefits during periods oh high unemployment.
The process whereby an Independent Review Organization reviews an insurance company’s decision to deny a benefit or pay for service.
Type of business interruption insurance that covers the extra expenses incurred to continue operations after a loss has occurred.
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The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.
A pooling mechanism for insureds not able to obtain insurance in the voluntary market. Insurers write and issue policies but cede premium and losses on those policies to a central pool in which all insurers share.
A contractual provision that allows the insurer, under stated conditions, to pay insurance benefits of up to $1,000 to a person or persons other than the insured, the designated beneficiary, or the insured’s estate.
Mutual insurance company that aims to insure only properties that meet high underwriting standards. Emphasizes loss prevention.
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
A facility, operating under a government-insurance industry cooperative program, to make fire insuranceand other forms of property insurance readily available to persons or in locations that have difficulty obtaining such coverage.
Amount payable to an insured homeowner for loss of rental income due to damage that makes an insured premises uninhabitable.
Federal Law that guarantees certain employees up to 12 weeks of unpaid leave each year, without the threat of losing their jobs.
A policy that insures both the policyholder and his/her immediate dependents (usually spouse and children).
Special life insurance policy combining decreasing term and whole life insurance that pays a reduced monthly income (e.g., $10 for each $1,000 of life insurance) if the insured dies within the specified period. The monthly income is paid to the end of the period, at which time the face amount of insurance is paid.
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car.
Local mutual insurance company that insures farm property in a limited geographical area primarily through assessable policies.
A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.
Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.
Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake. See also Crop Hail Insurance.
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.
FQHCs are federally funded, community-based healthcare providers that provide primary care services to underserved areas.
Type of surety bond required by federal agencies that regulates the actions of business firms. It guarantees that the bonded party will comply with federal standards, pay all taxes or duties accrued, or pay any penalty if the bondholder fails to pay.
Common law defense blocking an injured employee from collecting workers’ compensation benefits if he or she sustained an injury caused in any way by the negligence of a fellow worker.
A Fidelity Bond is a form of insurance protection, not to be confused with a surety bond. The fidelity bond covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. In a bank for example, it usually insures the bank for losses caused by the dishonest acts of its employees.
Fiduciary Liability Insurance protects the fiduciaries from mistakes and wrongful acts. It covers claims arising from: (1) a breach of the responsibilities or duties imposed on a fiduciary such as a plan administrator; or (2) a negligent act, error, or omission of the administrator or fiduciary. Example: directors, and officers of employee welfare plans (group insurance, pension plans, 401k plans) are covered for actual or alleged wrongful acts.
A pension plan formula that bases retirement benefits on earnings during the final few years of employment.
A state law that may require motorists to furnish evidence, either before or after involvement in an auto accident (depending on the individual state’s law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.
Coverage designed to protect against losses caused by fire and lightning, plus resultant damage caused by smoke and water.
Liability of a firm or person for fire or explosion damage caused by negligence of and damage to property of others. Coverage is needed for leased or rented property for which the insured could be held legally liable for damage to the property.
A demand for payment under an insurance policy made by a policyholder reporting an insured event directly to his company.
An insurance coverage under which the policyholder collects for losses from the insured‘s own insurer rather than from the insurer of the person who caused an accident.
One of the Big Three credit rating agencies that analyze the financial strength of companies in the insurance industry.
Annuity whose periodic payment is a guaranteed fixed amount. Click here to shop for Fixed Annuities at einsure.com!
A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
Type of rating law in which prior approval of the rates is required only if the rates exceed a certain percentage above and below the rates previously filed. · Floaters: Insurance policies designed to cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
Plans that employees can use to pay for out-of-pocket health or dependent care expenses. Plans include retirement benefits, reimbursement accounts, health insurance and others.
Also known as a Flexible Premium Policy. A life insurance policy or annuity under which the policyholderor contract holder may vary the amounts or timing of premium payments. Click here to shop for Flexible Premium Annuities at einsure.com!
A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance. Click here to shop for Flexible Premium Variable Life Insurance at einsure.com!
Also known as a flexible spending arrangement, is an account that you contribute tax-free dollars to, and can use to pay certain out-of-pocket healthcare costs.
Insurance policies designed to cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government.
An insurer is a foreign company in any state other than the one in which it is incorporated. See also Domestic Insurer, Alien Insurer.
Amounts contributed on behalf of terminated, non-vested participants. In a pension plan, such amounts must be applied to reducing future employer contributions. In a profit-sharing plan, such amounts may be allocated to the accounts of remaining participants.
Commercial crime insurance form by the Insurance Services Office that covers loss resulting from the forgery or alteration of checks, drafts, bills of exchange, promissory notes, and similar instruments.
Coverage designed to protect from loss sustained through forgery or alteration of outgoing negotiable instruments made or drawn by or on the accounts of the insured, or made or drawn by one acting as the insured’s agent. This includes loss caused by (1) checks or drafts made or drawn in the insured’s name, payable to a fictitious entity, (2) checks or drafts, including payroll checks, executed through forged endorsements, and (3) alteration of the amount of a check or draft.
Deductible commonly found in marine insurance contracts in which the insurer has no liability if the lossis under a certain amount, but once this amount is exceeded, the entire loss is paid in full.
Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer.
Full Coverage typically refers to an auto policy which has comprehensive, collision, and liability coverage, and every insurance company usually has its own definition for it.
Insured status of a covered person under the Old-Age, Survivors, and Disability Insurance (OASDI) program if he or she meets certain criteria: forty quarters of coverage or one quarter of coverage for each year after 1950 (or after age twenty-one, if later) up to the year of death, disability or attainment of age sixty-two.
A financial institution or individual that provides for the accumulation or administration of the pensioncontributions that will be used to pay pension benefits.
An insurance contract or trust agreement that states the terms under which the funding agency will accumulate, administer, and disburse pension funds.
A provision found in some policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured’s physical condition.
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See Generally Accepted Accounting Principles. GAAP is important in insurance accounting, because the states, who regulate insurance, use STAT accounting which is more conservative.
Type of life insurance marketing system in which the general agent is an independent businessperson who represents only one insurer, is in charge of a territory, and is responsible for hiring, training, and motivating new agents. This is different from the Independent Agency System where such agents represent a number of companies.
In ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Frequently called pain and suffering. General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.
Coverage that pertains, for the most part, 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. For small businesses, this coverage can be included in the BOP or “Business Owners Policy”.
Coverage designed to protect against claims of loss against a general partner, for failure to properly exercise his fiduciary duty. Also known as General Partners’ Liability and Limited Partnership Reimbursement coverage. A general partner’s management and fiduciary responsibilities to a limited partnership closely parallel the director’s or officer’s to a corporation. Exposure occurs when general partners become the financial managers of a limited partnership. The directors and officers of corporate general partners share this type of exposure.
Principles of accounting and reporting business results developed by the American Institute of Public Accountants. As regards the insurance business, this convention varies from Statutory Accounting (State Mandated Accounting) in a number of key areas; asset valuations, expense recognition, tax treatments are some of the most significant. Generally statutory accounting is more conservative.
A transfer tax imposed on gift or inheritance to those at least two generations younger than the person making the transfer
Protection for loss of or damage to glass and its appurtenances. Due to the variety of exposures that exist for plate glass windows on store fronts and elsewhere a special insurance product was created.
A type of plan sold in the Marketplace. Gold Plans typically carry higher premiums but have better cost-sharing than Silver and Bronze health plans.
Reduction of automobile premium for a young driver at least sixteen who ranks in the upper 20 percent of his or her class, has a B or 3.0 average, or is on the Dean’s list or honor roll. It is based on the premise that good students are better drivers.
A 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.
A commission scale providing for payment of a high first-year commission and lower renewal commissions.
Health plans that were in place before March 23, 2010, when the Affordable Care Act was signed into law. These plans could still offer the coverage they did prior to the ACA.
the intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another. This is a term of art in the insurance and legal world where damages can be quite severe.
The premium paid by the policyholder. Gross premium is distinguished from Net premium. Net premium is ususally net of reinsurance costs and policy cancellations and endorsements. Gross premium is the best measure of the size of a policy or an insurance company.
A pension plan providing annuities at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.
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 single master contract provides that the group of persons participating in the plan will receive annuities during retirement. Individual certificates stating coverage may be issued to members of the group.
A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals by reference to their relationship to the entity.
Life insurance provided to debtors by a lending institution to provide for the cancellation of any outstanding debt should the borrower die. Normally term insurance limited to the amount of the loan.
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.
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Group insurance plan providing life insurance for employees. Traditional whole life policy is split into decreasing insurance protection and increasing cash values.
Accumulating units of single premium whole life insurance and decreasing term insurance, which together equal the face amount of the policy. Provided through a group life insurance plan.
Type of pension plan in 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.
Most common form of group life insurance. Yearly renewable term insurance on employees during their working careers.
Universal life insurance plans sold to members of a group, such as individual employees of an employer. There are some differences between GULP plans and individual universal life plans; for instance, GULP expense charges generally are lower than those assessed against individual policies.
In the event of a total vehicle loss, GAP insurance covers the difference between your net auto insurance payout and your outstanding balance on the vehicle’s retail loan or lease contract.
An investment contract with an insurer in which the insurer guarantees both principal and interest on a pension contribution.
Benefit that can be added to a life insurance policy permitting the insured to purchase additional amounts of life insurance at specified times in the future without requiring evidence of insurability.
An insurance policy feature that obligates the insurer to continue coverage (renew policy) if your premium is paid.
A provision in an insurance policy that gives the insured the right to continue the policy in force by the timely payment of premiums for a substantial period of time, during which period the insurer is prohibited from making unilaterally any change in any provision of the contract, while the contract is in force, other than a change in the premium rate for classes of policyholders.
A fund, derived from assessments against solvent insurance companies, to absorb losses of claimants against insolvent insurance companies.
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Healthcare services that help a person keep, learn or improve skill and functioning for day to day living.
That part of the insurance sales cycle in which competitive pricing is at a minimum as companies charge the premiums necessary to meet their underwriting losses in order to avoid insolvency and boost capacity; usually associated with a sharp decline in capacity. See also Soft Market.
Coverage designed to protect against financial losses resulting from sickness or accidental bodily injury. Health insurance coverages include accident insurance, disability income insurance, medical expense insurance, and accidental death and dismemberment insurance.
The four types of health insurance plans that were created under the Patient Protection and Affordable Care Act enacted March 23, 2010, that are based on the percentage of healthcare expenses that will be paid by the respective plan. These plans are often referred to as the ‘metal’ plans; Bronze, Silver, Gold and Platinum.
An organization that provides a wide range of comprehensive health care services for a specified group at a fixed periodic payment. The HMO can be contracted with and sponsored by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies, and hospital-medical plans.
An IRS approved, tax advantaged health benefit that is funded by your employer, that reimburses you for out-of-pocket healthcare expenses.
A tax advantaged savings account available to people enrolled in high-deductible health plans, whereby the funds in the account can be used towards approved healthcare related expenses, tax free and without penalty.
A healthcare plan that has a lower premium but much higher deductible than the average healthcare plan and is also required to have a Health Savings Account.
Company that specializes in insuring motorists who have poor driving records or have been canceled or refused insurance. Hold-Harmless Clause: Clause written into a contract by which one party agrees to release another party from all legal liability, such as a retailer who agrees to release the manufacturer from legal liability if the product injures someone.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was the result of efforts by the Clinton Administration and congressional healthcare reform proponents to reform healthcare. The goals and objectives of this legislation are to streamline industry inefficiencies, reduce paperwork, make it easier to detect and prosecute fraud and abuse and enable workers of all professions to change jobs, even if they (or family members) had pre-existing medical conditions.
People that are guaranteed the right to purchase individual health coverage without pre-existing condition exclusions when they leave group coverage.
HCBS organizations provide Medicaid clients with he opportunity to receive in home, or community services, rather than in institutions.
Industrial life insurance and monthly debit ordinary life insurance contracts that are serviced by agents who call on the policyowners at their homes to collect the premiums. The amount of life insurance per policy generally is larger than $1000.
A package of insurance designed to provide homeowners with a broad range of property and liability coverages, pertaining to events at home as well as away from home (although not automobile-related).
Moral uprightness – the quality, condition, or characteristic of being fair, just, truthful, and morally upright. Truthfulness – truthfulness, candor, or sincerity, (i.e.: In all honesty, I really didn’t know.)
Health care facility providing medical care and support services such as counseling to terminally ill persons.
An arrangement to facilitate admission of persons covered by health insurance to hospitals and to assure the prompt payment of applicable insurance benefits to hospitals.
A form of health insurance designed to provide specific benefits for daily hospital room and board and hospital services during hospital confinement. Generally the policy also provides benefits for surgical operations and for in-hospital doctor’s visits, in which case the policy is referred to as a Hospital and Surgical Expense Policy.
A form of health insurance which provides a stipulated daily, weekly, or monthly indemnity during hospital confinement. The indemnity is payable on an unallocated basis without regard to the actual expense of hospital confinement.
A term used to indicate protection which provides benefits for the cost of any or all of the numerous health care services normally covered under various health care plans.
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 thereof), and use of operating room.
(1) Class of ocean marine insurance that covers physical damage to the ship or vessel insured. Typically written on an “all-risks” basis. (2) Physical damage insurance on aircraft, similar to collision insurance in an automobile policy.
For purposes of life insurance, the net present value of the family’s share of the deceased breadwinner’s future earnings.
A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.
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Type of pension plan in which all pension contributions are deposited in an unallocated fund and used directly to pay benefits to retirees.
Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.
Occurs when the information entered in the Marketplace by a consumer does not match the Marketplace’s trusted resources.
A provision in life insurance policies that states that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable during the lifetime of the insured after the policy has been in force for two years .
An optional clause which may be used in noncancelable or guaranteed renewable health insurance contracts providing that the insurer may not contest the validity of the contract after it has been in force for two (sometimes three) years.
Coverage for loss caused by the requirement, under law, to repair damaged buildings. Older buildings often require more expensive material or upgraded electrical or HVAC to become current with building codes. This is often referred to as ‘Building Ordinance Coverage.’
Expense account in an insurance company’s Income Statement reflecting the claims paid during the policy year plus the loss reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred losses.
Liability account on an insurer’s balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position that existed before the loss.
Type of property and liability insurance marketing system, sometimes called the American agency system, in which the agent is an independent business person representing several companies. The agency has legal right to income from the expirations and renewal rights to the business, and the agent is compensated by commissions.
An independent business person who usually represents two or more insurance companies in a sales and service capacity and who is compensated by commissions.
Nonparticipating whole life policy that permits the insurer to adjust premiums based on anticipated future experience. Initial premiums are guaranteed for a certain period. After the initial guaranteed period expires, the insurer can increase premiums up to some maximum limit.
Insurance policy that provides the holder the opportunity to invest in either an equity index or fixed account.
A contract of health insurance made with an individual called the policyholder or the insured, which normally covers the individual and, in certain instances, members of his family.
Amount that an insured and each person of his or her family covered by the policy must pay before the group or individual medical insurance policy begins to pay for medical expenses.
Policies which provide protection to the policyholder and/or his/her family. Sometimes called Personal Insurance as distinct from group and blanket insurance.
A type of pension plan, frequently used for small groups, administered by trustees who are authorized to purchase individual level premium policies or annuity contracts for each member of the plan. The polices usually provide both life insurance and retirement benefits.
An account to which an individual can make annual contributions of 100% of earnings up to $2,000 ($2,250 for a one-income married couple). These contributions are tax deductible for most workers, and income earned in the account is deferred until withdrawn.
Life insurance issued in small amounts with premiums payable on a weekly or monthly basis. The premiums are generally collected at the insured’s home each week by an agent of the company. Sometimes referred to as debit insurance.
Endorsement added at the insured’s request to a homeowners policy to increase periodically the face amount of insurance of the dwelling and other policy coverages by a specified percentage.
The actuarial value (single sum) of the past service benefits as of the effective date of the establishment of a retirement plan, or at the date of the latest adjustment.
A form of insurance designed to cover articles in transit as well as bridges, tunnels and other means of transportation and communication. Besides goods in transit (generally excepting ocean cargo), it includes numerous floater policies, such as those covering personal effects, personal property, jewelry, furs, fine arts, and other items.
A report (usually written) of an investigation of an applicant, generally conducted by an independent agency that specializes in insurance investigations. The report covers such matters as occupation, financial status, health history, and moral problems.
The conditions that make a risk insurable are (a) the peril insured against must produce a definite loss not under the control of the insured, (b) there must be a large number of homogeneous exposures subject to the same perils, (c) the loss must be calculable and the cost of insuring it must be economically feasible, (d) the peril must be unlikely to affect all insureds simultaneously, and (e) the loss produced by a risk must be definite and have a potential to be financially serious.
A arrangement under which individuals, businesses, and other organizations or entities, in exchange for payment of a premium, are guaranteed compensation for losses resulting from certain perils under specified conditions.
(1) An organization chartered to operate as an insurer. (2) Any corporation primarily engaged in the business of furnishing insurance protection to individuals or organizations.
The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.
Term used to describe a facility that exists in a few states to provide a market for reinsurance and for the insurance of large or unusual domestic and foreign risks that are difficult to insure in the normal markets. Examples are the New York Insurance Exchange, the Insurance Exchange of the Americas, and the Illinois Inurance Exchange.
State Funds that provide for the payment of unpaid claims of insolvent insurers. Such funds are frequently notional, in that they are commingled as part of a state government’s general funds.
Major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.
The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public. See also insurance company.
The clause in an insurance contract which sets forth the type of loss being covered by the policy and the parties to the insurance contract.
A coordination of pension, disability or other benefit with the other sources of income, such as Social Security benefit, through a specific formula designed to ensure reasonable income replacement.. Qualified plans must integrate so that total benefits are non-discriminatory between rank and file employees and owners, officers or highly compensated employees.
Life insurance settlement option in which the principal is retained by the insurer and interest is paid periodically.
Method of determining cost to an insured of a life insurance policy that considers the time cost of money by applying an interest factor to each element of cost.
Line reported in the Income Statement of a company’s financial statements that states the income generated by a company’s portfolio of investments (such as in bonds, stocks, or other financial ventures).
Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the beneficiary’s consent.
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Hazard covered under a Marine Cargo Insurance policy, defined as the throwing overboard of cargo when done to preserve property from loss. Coverage is not provided under this clause for goods jettisoned because of spoilage, such as foods, plants, hides, etc. (The spoilage may be covered under another clause, or another policy, which can be determined by consulting with your insurance agent). See also Cargo Insurance.
Coverage designed to protect the insured’s stock, property left with the insured for repair or other purposes, and the insured’s interest in and legal liability for property on consignment from others in the jewelry trade. The policy is written on a special form. Some of the more prevalent perils covered are fire, open stock burglary, inside and outside holdup, safe burglary, theft, pilferage, kidnapping, shoplifting, window smashing, damage or loss of salesman’s samples in transit, loss in transit by registered mail, water damage, sprinkler leakage, and smoke damage. See also Bailee Insurance.
Policy that covers two people, typically on a ‘first death’ basis; whereby, a chosen amount is paid to the survivor when the first person dies, if the death occurs within the length of the policy.
A form of joint property ownership with right of survivorship, i.e., in which the survivors automatically own the share of a deceased co-owner.
A device used to provide insurance to those who cannot obtain insurance in the voluntary market. Certain companies (called carriers) issue policies at one rate and handle claims, but the ultimate costs are borne by all companies writing insurance in that state.
A legal principle that permits the injured party in a tort action to recover the entire amount of compensation due for injuries from any defendant who is able to pay, regardless of the degree of that party’s negligence, once any liability by that defendant has been established.
A contract that provides income periodically, payable during the longer lifetime of two persons. The amount payable may decrease at the death of one or the other. See Contingent Annuity Option.
Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter’s judgment.
Type of surety bond used for court proceedings and guaranteeing that the party bonded will fulfill certain obligations specified by law, for example, fiduciary responsibilities.
Life insurance purchased by parents for children under a specified age. Provides permanent life insurance that increases in face value five times at age 21, with no increase in premium.
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Concept permitting a property/casualty insurer to write $2 of new net premiums for each $1 of policyholders surplus.
An account to which a self-employed person can make annual tax deductible contributions and which may be withdrawn without penalty after the age of 59 1/2. Income generated in the account accumulates tax-deferred.
Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.
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Law which controls conditions under which an employer may pay any money to a representative (eg., union representative) of employees.
(1) A policy terminated for non-payment of premiums. (2) A policy terminated for non-payment occurring before the policy has a cash or other surrender value.
Statutory modification of the contributory negligence law allowing the claimant endangered by his or her own negligence to recover damages from a defendant if the defendant has a last clear chance to avoid the accident but fails to do so.
Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
Coverage designed to protect a tenant in the event his or her lease is terminated. It is a form of time element coverage that serves to provide coverage for the difference between the old rental and a new, likely more expensive rental.
The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under state insurance regulations.
A life insurance company operating under state insurance laws specifying the minimum basis for the reserves the company must maintain on its policies.
A commission scale providing for payment of commissions at the same rate every year the policy is in force.
Life insurance for which the premium remains the same from year to year. The premium is more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The overpayments in the early years, together with the interest that is earned, serve to balance out the underpayments of the later years.
Portion of an insurer’s balance sheet which denotes legal obligations of the company, including anticipated future payments of losses covered under policies issued.
Insurance designed to protect the policyholder from financial loss due to liability resulting from injuries to other persons or damage to their property.
The sum or sums stipulated in an insurance contract beyond which an insurance company is not liable to protect the insured.
Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.
Type of surety bond guaranteeing that the person bonded will comply with all laws and regulations that govern his or her activities.
A contract that provides for a series of payments under which payments, once begun, continue throughout the remaining lifetime of the annuitant but not beyond.
A annuity contract which pays an income for as long as the annuitant lives, but if death occurs within 10 years after the annuity payments begin, payments are continued to a named beneficiary for the remainder of the 10 years.
The average number of years of life remaining for a group of persons of a given age according to a particular mortality table.
Life insurance settlement option in which the policy proceeds are paid during the lifetime of the beneficiary. A certain number of guaranteed payments may also be payable.
Insurance providing for payment of a specified amount on the insured’s death, either to his or her estate or to a designated beneficiary; or in certain cases to the policyholder at a specified date.
Amount reported in an insurance company’s financial statements that sets out the sum of the face amounts, plus dividend additions, of life insurance polices outstanding at a given time. Additional amounts payable under accidental death or other special provisions are not included.
Systematic method of determining the insured’s financial goals, which are translated into specific amounts of life insurance, then periodically reviewed for possible changes.
A max amount an insurance company will pay for a covered benefit over the course of your enrollment in the plan.
Plans available to members of federally-recognized tribes, that must be applied for through the Marketplace.
Whole life insurance on which premiums are payable for a specified number of years or until death (if death occurs before the end of the specified period).
Coverage designed to protect an individual or entity for bodily injury or property damage to another for which an insured may be held liable by reason of causing or contributing to the intoxication of any person; furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.
A rider that allows insureds who are terminally ill or who suffer from certain catastrophic diseases to collect part of their life insurance benefits before they die, primarily to pay for the care they require.
The amount that must be added to the pure premium for expenses, profit, and a margin for contingencies.
Loan/Lease Payoff Coverage pays the difference between what you may owe under the terms of your vehicle loan or lease, and what your insurance company has paid for your vehicle in the event your vehicle is stolen or declared a total loss (less your deductible).
The continuum of broad-ranged maintenance and health services to the chronically ill, disabled, or retarded. Services may be provided on an inpatient (rehabilitation facility, nursing home, mental hospital), outpatient, or at-home basis.
Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee’s earned income lost through serious and prolonged illness or injury during the normal work career. See also Integration.
A risk management technique whereby a situation or activity that may result in a loss for a firm is avoided or abandoned.
Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
Handling expenses, such as legal or independent adjuster fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim.
Coverage designed to protect an association (such as a condominium association) against the loss of maintenance fees when occupancies have been interrupted or impaired by the occurrence of any insured peril. This is a form of business interruption insurance for the association. It assures continuous income while a building is untenantable.
Means 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.
Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss
Payment within one taxable year of the entire balance payable to an employee from a trust which forms part of a qualified pension or employee annuity plan on account of that person’s death, separation from service or attainment of age 59 1/2.
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Type of insurance company that sells policies through the mail or other mass media, eliminating need for agents.
A form of health insurance that provides benefits for most types of medical expense up to a high maximum benefit, such as $250,000 or higher after a substantial deductible, such as $500 or more. Such contracts may contain internal limits and are normally subject to coinsurance.
Health insurance designed to finance the expense of major illness and injury. Characterized by large benefit maximums ranging up to $250,000 or higher above an initial deductible, which reimburses the major part of all charges for hospital, doctor, private nurses, medical appliances, prescribed out-of-hospital treatment, drugs, and medicines. The insured person pays the remainder.
Coverage for a professional practitioner, such as a doctor or a lawyer, against liability claims resulting from alleged malpractice in the performance of professional services.
Health care systems that integrate the financing and delivery of appropriate health care services to covered individuals by arrangements with selected providers to furnish a comprehensive set of health care services.
The premium rate developed for a group’s insurance coverage from the company’s standard rate tables normally referred to as its rate manual or underwriting manual.
A form of insurance primarily concerned with means of transportation and communication, and with goods in transit See Inland Marine Insurance and Ocean Marine Insurance.
A reduction of an estate for estate tax purposes, which is available if the deceased is survived by his or her spouse.
A policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.
Automobile insurance designed to provide financial protection against damage to an insured vehicle. It includes automobile comprehensive, collision, fire and theft. Material damage and physical damage are terms that often are used interchangeably.
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.
State programs of public assistance to persons whose income and resources are insufficient to pay for health care. Title XIX of the Federal Social Security Act provides matching federal funds for financing state Medicaid programs, effective January 1, 1966.
The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.
A form of health insurance that provides benefits for expenses incurred for medical care. This form of health insurance provides benefits for expenses of physicians, hospital, nursing, and related health services, and supplies. These benefits may be related to actual expense, specified sums, or services rendered. Such insurance sometimes includes benefits for prevention and diagnosis as well as treatment.
A general liability coverage in which the insurer reimburses, without regard to the insured’s liability, the insured and others (as specifically provided in the policy) for medical and funeral expenses incurred by such persons as a result of bodily injury or death sustained by accident under the conditions specified in the policy.
An association of over 500 U.S. and Canadian life insurance companies providing information and database management services to the financial services industry. Organized in 1902, MIB’s core fraud protection services protect insurers, policyholders and applicants from attempts to conceal or omit information material to the sound and equitable underwriting of life, health, disability, and long term care insurance. Fair pricing of insurance products is largely dependent on accurate “risk assessment”, “risk classification”, and “risk selection”. A determination of these factors begins with the assurance of accurate health information supplied on the insurance application concerning the proposed insured. Visit MIB on the Web…
A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insured’s liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.
National health insurance program for people age 65 and older. A program of Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) protection provided under the Social Security Act.
Health insurance that provides coverage within Part C of Medicare, and is based on a monthly fee, instead of a fee-for-service model.
Often called Medicare Prescription Drug Benefit, is an optional program intended to help Medicare recipients pay for prescription drugs through premiums.
A provision that a minimum amount of annuity will be paid if the regular benefit formula produces less. This minimum is usually payable only if certain service requirements are met at retirement.
The least number of employees permitted under a state law to effect a group for insurance purposes; the purpose is to maintain some sort of proper division between individual policy insurance and the group forms.
An arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group.
Expenses in connection with hospital insurance, hospital charges other than room and board, such as X-rays, drugs, laboratory fees, and other ancillary charges. (Sometimes referred to as ancillary charges.)
A provision in a hospital expense policy providing for the payment of a benefit for expenses for necessary hospital services and supplies during a period of hospital confinement. Expenses commonly covered under this benefit include those for x-ray examinations, laboratory tests, medicines, surgical dressings, anesthetics (including administration thereof), and use of operating room.
A false, incorrect, improper, or incomplete statement of a material fact, made in the application for an insurance policy.
Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss, for instance, bad habits, low integrity, poor financial standing.
The rate at which members of a group die in a specified period of time. Actual mortality rates are compared to the mortality table.
A chart showing how many members of a group, starting at a certain age, will be alive at each succeeding age. It is used to calculate the probability of dying in, or surviving through, any period, and for determining the value of an annuity. To be appropriate for a specific group, it should be based on the experience of individuals having common characteristics, including such variables as sex and occupation.
A plan maintained according to a collective bargaining agreement, to which more than one employer contributes (eg., multiple school districts). Under ERISA, at the beginning of the plan, no single employer may contribute as much as 50% of the total, and thereafter as much as 75%. An employee may change employers within the group without losing retirement benefits unless a break in service (under the plan) cancels credits earned before the break.
A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.
A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis.
An insurance company in which ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends. No capital stock (e.g. common stock) exists.
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The person or entity, typically the policyholder, whose interests are protected under the insurance contract.
Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy (rather than protection from physical loss). Examples of named perils are fire, windstorm, theft, smoke, etc. See also Basic Form, Special Risk Insurance.
The association of insurance commissioners of various states formed to promote national uniformity in the regulation of insurance.
Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
(1) The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit. (2)The portion of the premium remitted to the home office by an agent after deduction of the agent’s commission. (3) Net written premium.
The value today of an asset to be received in the future, either as a single payment or a series of payments (such as an annuity). The value is considered to be different if received at a later date because of the time value of money.
Premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.
A form of insurance by which a person’s financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault.
An agreement by the insurance company to keep a permanent life insurance policy in force although its value may be zero or negative, if the agreed minimum continuation premium is paid.
An insurance company not licensed to do business in a particular state; such a company may sell excess and surplus insurance in the state if admitted insurers decline to write a risk.
A clause stating that the insured has the right to continue a policy in force by the timely payments of premiums set forth in the contract for some extended period of time specified, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force.
A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. Generally, under noncontributory policies one hundred percent of the eligible employees must be insured.
A benefit in some disability income policies providing payment for medical expense due to injury when medical care is necessary but the insured is not totally disabled.
One of the choices available in many life insurance policies if the policyholder discontinues premium payments on a policy with a cash value. This, if any, may be taken in cash, as extended term insurance or as reduced paid-up insurance.
The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.
(1) Contract which insures a person against off-the-job accident or sickness. It does not cover disability resulting from injury or sickness covered by Workers’ Compensation. Group accident and sickness policies are frequently non-occupational. (2) One that provides off-the-job coverage only; it does not cover loss resulting from accidents or sickness arising out of or in the course of employment or covered under any workers’ compensation law.
Plan of insurance under which the policy-holder is not entitled to share in the dividend distribution of the company.
A life insurance policy, generally issued only by mutual insurance companies, in which the company does not distribute to policyholders any part of its surplus. Premiums for nonparticipating polices are usually initially lower than for comparable participating polices, but premiums can be varied. The current premium reflects anticipated experience that is more favorable than the company is willing to guarantee, and it may be changed from time to time. See also Participating Insurance.
Persons organized under special state laws to provide hospital, medical, or dental insurance on a nonprofit basis. The laws exempt them from certain types of taxes.
This is the opposite of tail coverage, although it fulfills the same need. Nose coverage most commonly provides prior acts coverage for insureds who are moving from a claims-made coverage form to an occurrence coverage form. It is provided by the replacement policy.
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The Patient Protection and Affordable Care Act, that was signed into law by president Barack Obama on March 23, 2010. Obamacare represents the most significant change in the U.S. healthcare market since Medicare and Medicaid.
Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.
An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.
A liability insurance policy that covers claims arising out of occurrences that take place during the policy period, regardless of when the claim is filed.
Period of time when individuals can purchase healthcare insurance in the Marketplace, and when employees can make changes to their elected healthcare options.
A contract of health insurance in which the insurer reserves the right to terminate the coverage at any anniversary or, in some cases, at any premium due date, but does not have the right to terminate coverage between such dates.
Coverage designed to provide protection against financial loss for (1) the loss of value of an undamaged portion of the existing building which must be demolished and/or removed to conform with municipal ordinance, code, etc. (2) the cost of demolition of the undamaged portions of the building necessitated by the enforcement of building, zoning or land use ordinance or law. (3) any increased expenses incurred to replace the building with one conforming to building laws or ordinances, or to repair the damaged building so that it meets the specifications of current building laws or ordinances.
Life insurance usually issued in amounts of $1,000 or more with premiums payable on an annual, semi-annual, quarterly or monthly basis. Compare Whole Life and Straight Life: The three terms are applied to the type of policy which continues during the whole of the insured’s life and provides for the payment at death of an amount insured.
Coverage designed to protect employees or executives of a company or any other person who is supplied a company vehicle, but who does not own a his or her own vehicle, therefore not having personal automobile coverage. The coverage is generally added by endorsement to the automobile policy of the company that furnishes the automobile, giving protection while the named individual or a member of his family is driving a car borrowed from a third party (other than the vehicle named in the policy).
A means of buying and selling securities that are not listed on a stock exchange. Negotiations are carried out by telephone or computer network.
A special form of health insurance designed to help offset overhead expenses such as office rent, utilities, employees’ wages, and auditors’ fees, incurred during total disability. The monthly payments during disability are not a fixed amount of indemnity as on regular disability polices, but the amount of overhead expense actually incurred, or a percentage thereof, up to the limit specified in the policy.
A type of short-term disability income contract that reimburses the insured person for specified, fixed monthly expenses, normal and customary in the operation and conduct of his/her business or office.
A commission paid to general agents or agency managers in addition to the commission paid to the soliciting agent or broker.
Coverage designed to provide for payment on behalf of the insured all damages the insured becomes legally obligated to pay due to bodily injury or property damage caused by an occurrence rising from (1) operations performed for the named insured by independent contractors, (2) acts or omissions of the named insured in connection with his/her general supervision of such operations. This does not include maintenance and repair at premises owned by or rented to the named insured, or structural alterations at such premises that do not involve changing the size of or moving buildings or other structures.
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A combination of two or more individual polices or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.
(1) Insurance on which all required premiums have been paid. (2) The reduced paid-up insurance available as a nonforfeiture option.
The result of an illness or injury which prevents an insured from performing one or more of the functions of his/her regular job. See also Disability.
A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.
Life insurance under which an insurance 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. Such a distribution serves to reduce the premium the policyholder had paid. See also: Policy Dividend; Nonparticipating Policy.
Also known as the Affordable Care Act, ACA, or Obamacare, is a law enacted on March 23, 2010, that governs healthcare coverage in the U.S.
A series of payments to be provided to past employees in accordance with the rules of pension plan of a company or other organization.
A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement.
A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions. Also see Coinsurance.
Bond issued by a surety or insurance company to guarantee performance under or in conjunction with a contract.
The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot, covered in an insurance policy.
All perils which are unique to transportation and which could not be prevented by reasonable efforts, including sinking of the vessel, stranding, heavy weather, lightning, collision with other vessels or submerged objects (such as Titanic’s iceberg), and damage by sea water when caused by an insured peril.
A phrase used to cover any form of life insurance except term; generally accrues cash value, such as whole life or endowment.
A form of coverage designed to meet the needs for insurance on moveable property. The coverage usually protects against all physical loss, subject to specific exclusions and conditions. Examples of property that can be covered include jewelry, furs, silverware, fine arts.
Coverage designed to protect against false arrest, detention or imprisonment, or malicious prosecution; libel, slander, defamation, or violation of right of privacy; and wrongful entry, eviction, or other invasion of right of private occupancy.
First-party no-fault coverage in an automobile insurance policy in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.
Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.
A person appointed through the will of a deceased or by a court to settle the estate of one who dies.
Coverage which provides benefits toward the cost of such services as doctor’s fees for nonsurgical care in the hospital, at home or in a physician’s office, and X-rays or laboratory tests performed outside the hospital. (Also called Regular Medical Expense Insurance.)
The person or persons controlling the money or property contributed to a pension, health or other plan, usually designated in the plan agreement.
Coverage designed to provide special protection, except for the perils of war, nuclear reaction, and fire. (Fire is covered under the building policy.) This coverage is for full replacement cost and covers the expense of repairing frames, installing temporary plates, or boarding up openings of plate glass windows.
An ACA Plan designed to yield the lowest out-of-pocket expenses among the four metal plans, but usually carries the highest premium.
Often known as open-ended HMOs or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.
The legal document issued by an insurance company to a policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.
A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.
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.
The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims. Compare Reserve.
A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.
Sum left after liabilities are deducted from assets. Sums such as paid-in capital and special voluntary reserves are included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses.
Coverage designed to protect for (1) all sums the insured is legally obligated to pay as a result of emission, discharge, release, or escape of any contaminants, irritants, or pollutants into or on land, the atmosphere, or any water course or body of water, provided this results in environmental damage; (2) to reimburse reasonable and necessary cleanup costs incurred in the discharge of a legal obligation validly imposed through governmental action, provided such expense is incurred because of environmental damage, and (3) for defense of any claim or suit that is the subject of this insurance.
An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.
Process in which a health care professional evaluates an attending physician’s request for a patient’s admission to a hospital by using established medical criteria.
A physical and/or mental condition of an insured which first manifested itself prior to the issuance of his/her policy or which existed prior to issuance and for which treatment was received.
An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.
Evidence of ownership which entitles the holders to receive dividends from the corporation before the common stockholders, but after bondholders, and which usually also provides a claim prior to common holders to corporate assets if the corporation is dissolved.
Payment terms that allow the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.
A refundable tax credit available to those households that have obtained healthcare coverage in the Marketplace.
A plan under which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment in advance made by or on behalf of each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. Such a plan is one form of Health Maintenance Organization (HMO).
Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.
Your primary residence, is your main residence, where you typically live. You can only have one primary residence.
The amount payable, under life and health insurance policies, in one sum in the event of accidental death and in, some cases, accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.
The court-supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.
Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product.
Coverage designed to provide 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.
An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under Medicare and Medicaid.
Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured, and for health insurance claims by the insured’s attending physician. For medical expense insurance itemized bills must also be included.
An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.
Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke. Available on Special and All-risk forms, depending on the property being insured.
Coverage designed to pay on behalf of the insured all sums he/she becomes legally obligated to pay by reason of any act, error, or omission rising out of services rendered or that were failed to render. Such services include arranging for property maintenance, renting or leasing, construction, alteration, land development, etc. Coverage also provides for defense of any claim or suit that is the subject of this insurance.
The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.
A standardized life insurance plan, approved and qualified as to its concept by the Internal Revenue Service, which is made available by companies, banks and mutual funds for employers’ use.
A clause, sentence or paragraph of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.
(1) The principal cause of loss or damage; (2) An unbroken chain of events between an event and damage.
A court-awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff.
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The period during which the insured must be totally disabled before becoming eligible for residual disability benefits.
A form of substandard or special class insurance, which restricts benefits for the insured person’s particular condition.
A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. Such plans receive tax advantages.
A category of property, created by the Economic Recovery Tax Act, which by a deceased spouse’s will entitles the surviving spouse to all income from the property for life, with that income payable at least annually, and precludes anyone including the spouse from appointing the property to anyone else during the spouse’s life.
Events that trigger changes to your insurance policy due to new life or business circumstances. Under the ACA, these events include loss of health insurance (turning 26), changes in residence, having a baby and several others.
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In efforts to hold insurers accountable and further transparency, ACA requires that insurance companies that are looking to raise rates substantially, submit their proposed increases to the state or federal government for review, first.
An insurance policy issued at a higher-than-standard premium rate to cover a higher-than-standard risk; for example, an insured who has impaired health or a hazardous occupation.
The statistical process by which insurers determine probability of loss and pricing for the basic classes of insurance.
A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.
A charge for health care which is consistent with the going rate or charge in a certain geographical area for identical or similar services.
Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is illegal.
A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.
A provision in some 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.
A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount. The policy cash surrender value is used to purchase whole life insurance. No additional premiums are required to maintain the reduced death benefit amount under this reduced paid up whole life policy.
Supervision of business practices by a governmental entity. Regulation of insurance companies is through respective state insurance commissioners.
(1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.
The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.
The acceptance by one or more insurers, called reinsurers, of a portion of the risk accepted by another insurer who has contracted for the entire coverage. Reinsurance can be treaty or facultative.
An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market. See also Residual Market.
Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.
Continuance of coverage under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term.
A form of business interruption insurance for a landlord, designed to protect building owners against loss of income when rentals have been interrupted or rental value has been impaired by the occurrence of any of the insured perils. It assures continuous income while an insured’s building is untenantable.
Often referred to as ‘Rental Car Coverage,’ Rental Reimbursement Coverage is optional coverage that helps pay the cost of a rental car when you have a covered claim under your auto policy.
A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.
The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. Contrast Actual Cash Value.
Insurance designed to provide coverage on the basis of full replacement cost without deduction for depreciation on any loss sustained, subject to the terms of the co-insurance clause. This coverage applies to both building and contents items as specified on the face of the policy. No deduction is taken for depreciation in arriving at the proper amount of insurance needed to comply with the coinsurance clause.
The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.
Statements made by an applicant in an insurance application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.
Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses clause set forth in the policy, but takes effect as of the effective date of the policy, thus voiding the contract from its inception.
An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.
(1) An amount representing an insurer’s estimate of its liabilities on future commitments under policies outstanding. (2) An amount allocated for a special purpose.
A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.
A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.
A source of insurance available to applicants who are unable to obtain insurance through ordinary methods in the voluntary market. See Automobile Insurance Plan, Joint Underwriting Association.
The net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured.
Rating procedure which allows adjustment of an insured’s final rate on the basis of the insured’s own loss experience.
A document that modifies an insurance policy. It may increase or decrease benefits, waive a condition or coverage, or in any other way amend the original contract. See Endorsement.
Legal rule which states that at the death of one co-owner of property, that person’s interest in the property automatically passes to the surviving joint tenant or tenants.
The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications. See also Underwriting.
Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
Roadside Assistance Coverage helps you when your car breaks down. Services typically include things such as towing, battery charging, flat tire service or fuel deliver.
A retirement investment vehicle that allows you to consolidate your retirement savings from other sources, such as a 401k or 403b into one account.
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Condition seen in the selling of insurance in which premium prices rise and fall over time in relation to capacity. The sales cycle is generally completed over several of years.
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.
A vehicle title which states that the vehicle has been damaged and/or designated a total loss by the insurance company that paid the claim regarding it. State laws govern what vehicles require a Salvage Title.
An insurance policy amendment or endorsement that specifies items covered, in contrast to blanket coverage, which would cover all items fitting a given description. Auto insurance is the principal scheduled insurance purchased by consumers.
An independent agency of the federal government tasked with regulating the U.S. securities industry and overall financial markets.
A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, which directly invests the accumulated funds. Retirement payments are made from the fund as they fall due.
The procedure where an employer maintains all records regarding the employees covered under a group insurance plan.
Coverage which applies to the value of goods which have been damaged or destroyed by an insured peril. The purpose is to assure the profit that would have been incurred through a sale. It defines the insurable value of merchandise which has been sold, but not delivered, at the amount at which it was sold, less any charges not incurred.
Contracts insuring persons 65 years of age or more. In most cases, these policies supplement the coverage afforded by the government under the Medicare program. For example, see Medigap.
An asset account established by a life insurance company separate from other funds, used to match specific assets with corresponding liabilities such as pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.
Plans that provide their benefits in the form of services rendered rather than cash (for example, Blue Cross and Blue Shield).
The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.
Coverage designed to cover a disabled person as long as he/she remains disabled up to a specified period not exceeding two years.
One of the metal plans that is included in the ACA and offered in the Marketplace. This plan typically has lower out-of-pocket costs than Bronze, but higher out-of-pockets costs than Gold and Platinum.
Retirement vehicle that allows you to make one lump sum premium payment, in exchange for a stream of income payments during retirement.
A long-term disability policy provision which establishes that the subtraction from benefits paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.
An option available in some annuity contracts under which the employee may elect that monthly payments of an annuity before a specified age (62 or 65) be increased, and that payments thereafter be decreased to produce, as nearly as practical, level total annual payments, including Social Security benefits when they become due.
That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices. See also Hard Market.
Compensation awarded for actual economic losses, such as medical expenses and lost wages. See also General Damages.
Under ACA regulations, you typically are only able to sign up for healthcare coverage or make changes to your plan during Open Enrollment Period. However, if you’ve experienced a Qualifying Event, you qualify for a Special Enrollment Period, whereby you can sign up or make changes to your plan.
Coverage designed to provide financial protection against risks or hazards of a special or unusual nature.
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 invested through a corporate trustee, primarily in equities.
Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor’s remarriage or death.
Sometimes referred to as a ‘Financial Responsibility Filing,’ is a liability document required by most DMV offices for insurance policies considered ‘high risk’ (individuals convicted of certain traffic violations).
Life insurance written on the basis of regular morbidity underwriting assumptions used by an insurance company and issued at normal rates.
Insurance companies for which the majority of people or organizations qualify. See also Domestic Insurer.
A set of provisions set forth in laws that prescribed certain rights and obligations of both the insured and the company under personal health insurance policies. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.
A financial services company that produces research and analysis as it relates to the financial soundness of corporations.
A person who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
A plan for accident and sickness, or disability insurance required by state legislation of those employers doing business in that particular state.
State law, similar to Cobra, that allows employees of smaller firms (typically under 20 employees) to continue their group healthcare plan for up to nine months after losing coverage due to loss of their job, or a reduction of hours.
A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance. See also Insurance Commissioner.
An argument used in product liability cases that the technology needed to avoid the loss in a particular case did not exist at the time of the product’s manufacture.
Special accounting practices for insurance companies required by state law, prescribing a greater level of detail than required by GAAP and designed to provide greater protection for the public against potential insolvency of these essential institutions.
Rules of financial computation and presentation required by statute which must be followed by an insurance company when submitting its financial statements to state insurance departments. Such principles differ from Generally Accepted Accounting Principles.
A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.
An insurance company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.
An organization that provides a facility for buyers and sellers of listed securities to come together to make trades in those securities.
A life insurance company owned by stockholders who elect a board to direct the company’s management. Stock companies, in general, issue nonparticipating insurance, but may also issue participating insurance.
an entity purchase form of buy-sell agreement within a corporation that involves the corporation buying back shares from a departing owner.
Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.
A risk that cannot meet the normal requirements of a standard insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge.
Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.
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.
An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.
Health insurance, which provide benefits toward the physician’s or surgeon’s operating fees. Benefits may consist of scheduled amounts for each surgical procedure.
A list of maximum amounts payable by the policy for various types of surgery, with the amount based on the severity or complexity of the operation.
(1) A risk or a part of a risk for which there is no standard insurance market available. (2) Insurance written by non-admitted insurance companies.
Policy that covers two individuals and pays out to a beneficiary, only when both covered individuals have passed.
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The life expectancy figures provided by the Internal Revenue Service to be used in calculating the exclusion ratio for life contingent annuities after June 30, 1986. Separate tables provide the figures for joint and last survivor annuities, annuities that contain a refund or minimum payment guarantee, and for annuities that pay quarterly, semiannually, or annually.
Coverage for claims made after a claims-made policy has terminated; the extended reporting or discovery period. See Nose Coverage.
An annuity payable while the annuitant lives but not beyond a specified period, such as five years. No payments are to be made after the end of the stipulated temporary period or the death of the annuitant.
A notice on the first page of health insurance policies that the insured has ten days in which to examine the policy and return it for a refund of premium if he is not satisfied with the policy.
A form of joint property ownership in which the owners may have unequal shares and which does not involve a right of survivorship. See also Joint Tenants
Life insurance payable to a beneficiary only when an insured dies within a specified period. The coverage expires without value if the insured survives the stated period.
A geographical grouping whereby similar hazards permit insurance companies to establish an equitable rate for the territory regarding certain coverages.
Coverage designed to provide protection against financial loss for loss of money and securities resulting directly from theft (any act of stealing), disappearance and destruction. Coverage applies while the money and securities are on the insured’s premises, while in the custody of the insured or the insured’s messenger while conducting business at the bank, and while off the insured’s premises in the custody of the insured or the insured’s messenger.
The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract.
A demand made by a third party against a policyholder of an insurer and any payment that will be made by that company.
A lawsuit where a third party tries to recover damages assessed against that party by bringing suit against his or her employer.
The point, measured in money, time or other ways, beyond which tort liability can be established. Until that point is reached, reparations must be paid within the provisions of the no-fault plan, with no recourse to the courts.
Coverage designed to provide insurance for a covered incident resulting in loss of use of property for a period of time. For example: Business Interruption and Extra Expense insurance.
The 2-year or 3-year time period in health insurance policies after which the insurer cannot deny a claim or void a policy because of pre-existing conditions or misstatements on the application.
A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles.
A civil wrong, other than a breach of contract, for which a court of law will afford legal relief, e.g. harming another by an act of negligence in driving an auto.
An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/her occupation or engaging in any other type of work.
Any arrangement under which the accumulated benefit credits of a terminating participant, or their actuarial value, are transmitted from one plan to another, or to a central agency.
Coverage of the insured’s property while in transit over land from one location to another. Property insurance policies typically provide coverage only at locations identified in the policy. See also Inland Marine Insurance.
A limited contract covering only accidents while an insured person is traveling, usually on a commercial airline carrier.
An agreement between a reinsurer and a ceding insurer setting forth details of the reinsurance arrangement.
Agreement whereby the lessee, in addition to rent, is responsible for ongoing expenses such as property taxes, building insurance and maintenance.
The practice 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 in another company.
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Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.
A policy provision providing reimbursement up to a maximum amount for the cost of all extra miscellaneous hospital services, but not specifying how much will be paid for each type of service.
1) a company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; 2) the company employee who decides whether or not the company should assume a particular risk; 3) the agent who sells the policy.
The process of reviewing, selecting, and approving risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
The amount of money which an insurance company gains or loses as a result of its insurance operations. It excludes investment transactions and federal income taxes.
The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.
A one-time credit of $192,800, usually applied against Federal Estate Taxes, that is available to every individual’s estate. The credit also can be used for payment of Federal Gift Taxes during that individual’s lifetime.
A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.
Statutory policy provisions of health insurance policies which specify some of the rights and obligations of the insured and the company. These provisions, with some modifications, are part of the insurance laws of all 50 states and the District of Columbia.
Vehicle insurance available in some jurisdictions to physical pay for damage due to uninsured motorists (only)
A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.
A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rate which may change from time to time
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(1) An annuity contract in which the amount of each periodic income payment may fluctuate. The fluctuation may be related to securities market values, a cost of living index, or some other variable factor. (2) An annuity under which the benefit varies according to the investment results of a life insurance company’s separate account (usually invested primarily in common stocks).
Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The amount of death benefit payable would, under variable life policies that have been proposed, never be less than the initial death benefit payable under the policy.
A unique 17 letter and/or number code given to each on-road vehicle that can be used to identify the make, model and year of a vehicle.
In no-fault auto insurance states with a verbal threshold, victims are allowed to sue in tort only if their injuries meet certain verbal descriptions of the types of injuries that render one eligible to recover for pain and suffering.
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.
Renewal commissions payable to the writing agent or his estate, whether or not he remains with the company.
The assignment of liability to a person or entity that did not cause the injury or loss but has a legal relationship to the party that was negligent.
The market where one seeking insurance obtains insurance in the open market with no help from the state, through an insurer of his or her own selection.
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The length of time an employee must wait from his/her date of employment or application for coverage, to the date his/her insurance is effective. See Elimination Period.
An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
A provision in some policies to relieve the insured of premium payments falling due during a period of continuous total disability that has lasted for a specified length of time, such as three or six months.
Life insurance 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).
A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.
Insurance against liability imposed on certain employers to pay benefits and furnish care to employees injured, and to pay benefits to dependents of employees killed in the course of or arising out of their employment.
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Permissions beyond the scope of this license may be available at http://www.EINSURANCE.com/creativecommons under terms and conditions which establish fair use and ethical business pratices in accoradance with EINSURANCE. (2010)
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Permissions beyond the scope of this license may be available at http://www.EINSURANCE.com/creativecommons under terms and conditions which establish fair use and ethical business pratices in accoradance with EINSURANCE. (2010)
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Permissions beyond the scope of this license may be available at http://www.EINSURANCE.com/creativecommons under terms and conditions which establish fair use and ethical business pratices in accoradance with EINSURANCE. (2010)
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Permissions beyond the scope of this license may be available at http://www.EINSURANCE.com/creativecommons under terms and conditions which establish fair use and ethical business pratices in accoradance with EINSURANCE. (2010)
A salary reduction plan that allows employees to contribute a portion of their salaries on a tax-deferred basis. When this type of employee benefit is available to you, you should give it serious consideration. Many employers match contributions that you make to a 401(k) plan. See also Defined Contribution Plan.
Also referred to as a Tax -Sheltered Annuity Plan, and similar to the 401(k) Plan, the 403(b) is a retirement plan available to employees of certain tax-exempt organizations (i.e. public schools).
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