Because not everyone is familiar with insurance terms, we have included a dictionary for your convenience. All

the terms are in alphabetical order, but Types of Insurance are listed first and link down the page to definitions.

 

Comprehensive Health Insurance or Major Medical
Health Insurance
Health Maintenance Organization (HMO)
Major Medical Insurance
Term Insurance
Decreasing Term Insurance
Level Term Insurance
Universal Life
Disability Income Insurance
Mortgage Insurance Policy
Long Term Care Insurance

A - B - C - D - E - F - G - H - I - J - K - L - M - N - P - R - S - T - V - W

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Accident: A fortuitous event, unforeseen and unintended.

Agent: The individual appointed by an insurance company to solicit negotiate, effect, or countersign insurance contracts on its behalf.

Annuity: 1) An amount of money payable yearly or, by extension, at other regular intervals. 2) An agreement by an insurer to make periodic payments that continue during the survival of the annuitant(s) or for a specified period.

Applicant: The party making application to the insurance company for the policy.

Application: A form on which the prospective insured states facts requested by the insurer and on the basis of which (together with any information from medical examiners, attending physicians, hospitals, investigators, and the agent) the insurer decides whether or not to accept the risk, modify the coverage offered, or decline the risk. An application without premium money is a Request for an Offer. With premium money, it is an Offer itself. If attached to the policy at issue, it becomes part of the Entire Contract.

Assignee: The person to whom policy rights are assigned in whole or in part by the policyholder.

Assignment: Transfer of rights in a policy to other than the policyholder.

Authorized Company: An insurer permitted to sell insurance within a state. Must obtain a Certificate of Authority from the Director.

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Beneficiary: A person who may become eligible to receive, or is receiving, benefits under an insurance plan, other than as a participant.

Business Insurance: Life or Health insurance written to cover business situations such as key person, sole proprietor, partnership, corporations, etc.

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Cancellation: Termination of contract of insurance in force by voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.

Cash Surrender Value: The value reposing in a policy that is the legal property of the policyholder, and that may be expected by him should he surrender it for cash. Synonymous with Cash Value.

Claim: A demand for payment under the insurance policy.

Coinsurance: 1) In Property insurance, a clause under which the insured shares in losses to the extent that he is underinsured at the time of the loss. 2) In Health insurance, a provision that the insured and insurance company will share covered losses in agreed proportion. In Health insurance, the preferred term is percentage participation.

Collateral Assignment: Assignment of part of the proceeds of an insurance policy to a bank as collateral to settle the loan balance that may exist at the insured's death.

Comprehensive Health Insurance or Major Medical: A form of Health insurance that combines the coverage of Major Medical and Basic Medical Expense contracts into one broad contract that provides coverage for almost all types of medical expense with few internal limits, usually subject to a Corridor Deductible for some or all expenses and to a Percentage Participation clause (sometimes called Coinsurance) applicable to all or some of the covered expenses.

Concealment: The withholding of facts by an applicant for insurance that materially affects an insurance risk or loss.

Conditional Receipt: The more exact term for what is often called a "binding receipt" in Life and Health insurance. It provides that if premium settlement accompanies the application, coverage shall be in force from the date of application (whether the policy has yet been issued or not) provided the insurance company would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information.

Conditionally Renewable: A contract of Health insurance that provides that the insured may renew the contract to a stated date or an advanced age, subject to the right of the insurer to decline renewal only under conditions defined in the contract.

Contingent Beneficiary: Person or persons named to receive benefits if the Primary Beneficiary is not alive.

Contract: A legal agreement between two parties for consideration, such as an insurance policy.

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Death Benefit: The policy proceeds to be paid upon the death of the insured.

Deductible: Dollars or percentage of expense that will not be reimbursed by the insurer.

Decreasing Term Insurance: Term insurance whose amount of coverage starts out at the full amount then gradually decreases until the expiration date of the policy.

Deferred Annuity: An Annuity on which payments to the annuitant are delayed until a specified future date.

Disability Income Insurance: A form of Health insurance that provides periodic payments to replace income, actually or presumptively lost when the insured is unable to work as a result of sickness or injury.

Dividend: The return of part of the premium paid for a Participating policy.

Dividend Options: Ways an insured may receive policy dividends.

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Earned Premium: That portion of the premium for which policy protection has already been given during the now-expired portion of the policy term.

Effective Date: The date on which an insurance policy or bond goes into effect and from which protection is furnished.

Endorsement: A form attached to an insurance contract changing part of the contract. Sometimes called a rider.

Exclusions: Causes, conditions, or property listed in the policy that are not covered and for which no benefits are payable.

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Face Amount: The amount indicated on the face of the policy that will be paid at death or when the policy matures.

Fiduciary: A person who occupies a position of special trust and confidence (for example, in handling or supervising the affairs or funds of another).

Fraud: An intentional misrepresentation made by a person with intent to gain advantage, and relied upon by a second party that suffers a loss.

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Group Life Insurance: Life insurance that a person is eligible to purchase through membership in a group. The group may not be formed just to buy insurance.

Guaranteed Insurability: A rider in Life and Health contracts that permits the insured to buy additional prescribed amounts of insurance at prescribed future time intervals without evidence of insurability.

Guaranteed Renewable: A contract that gives the insured the right to continue in force by the timely payment of premiums for a substantial period of time as set forth in the contract. During that period of time, the insurer has no right to make any change in any provision of the contract other than a change in the premium rate for all insureds in the same class.

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Hazard: Any factor tending to make a policyholder a less-desirable risk for the insuring company. May be Physical or Moral (health, occupation, dangerous sports, criminality, immorality).

Health Insurance: Broadly, coverage to provide benefits upon the occurrence of disabling sickness or accident, or accidental death or dismemberment, or loss of income due to disability.

Health Maintenance Organization (HMO): An organization of health providers. Each member pays a premium for which he receives medical care when desired. The emphasis is on preventative medicine as an alternative to traditional employee benefit plans. Employers of more than 25 persons are required to offer this alternative to employees, if an HMO is located in the area, but not if the cost exceeds that of present employee health plans.

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Immediate Annuity: A lump-sum Annuity on which the income payments to the annuitant are to begin at once.

Indemnify: To restore the victim of a loss, in whole or in part, by payment, repair, or replacement.

Indemnity: Insurance is designed to restore the policyholder to the same financial condition enjoyed prior to a loss. The intent is to cover the amount of the actual loss only and to avoid paying amounts that allow an insured to profit from a loss situation.

Individual Contract: A contract of Health -insurance made with an individual that covers her and, in certain instances, specified members of the household. In general, any insurance policy except Group or Blanket.

Insurability: Acceptability of an applicant for insurance to the insurance company.

Insurance: A contract or device for the transfer of pure risk to an insurer, who agrees, for a consideration, to indemnify or pay a specified amount for losses suffered by the insured.

Insured: The party to an insurance arrangement to whom, or on behalf of whom, the insurance company agrees to indemnify for losses, provide benefits, or render service. In Prepaid Hospital Service plans, the insured is called the subscriber.

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Joint Life and Survivorship Annuity: Payments are made to two annuitants with the survivor continuing to receive payments after the first annuitant dies.

Joint Life Annuity: Payments continue to two annuitants for only as long as both live.

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Key Person Insurance: Life or Health insurance on important employees whose absence would cause the employer financial loss. The insurance is usually owned by or payable to the employer.

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Lapse: Termination a policy because of failure to pay the premium.

Level Term Insurance: The amount of insurance protection in the Term policy remains constant during the policy period.

Loan Value: That amount of Cash Value reposing in a policy that may be borrowed by the insured.

Long Term Care Insurance: An insurance which pays for care giving services for an elderly or chronically ill person. This care may be provided in a facility (nursing home, mental hospital, etc.) or in an individual’s home by a nurse or aide.

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Major Medical Insurance: A type of Health insurance that provides benefits for most types of medical expenses incurred up to a high limit, subject to a deductible. Such contracts may contain a Percentage Participation clause (sometimes called the Coinsurance clause). A Major Medical policy pays expenses both in and out of the hospital.

Mortgage Insurance Policy: In Life and Health insurance, a policy from which the benefits are intended to pay off the balance due on a mortgage or meet the payments on a mortgage as they fall due upon or after the death or disability of the insured.

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National Association of Insurance Commissioners (NAIC): An organization of the insurance Commissioners designed to provide a way to exchange information and work toward uniformity of insurance regulation among the states.

Non-cancelable: A contract of Health insurance that the insured has a right to continue in force by payment of premiums, as set forth in the contract for a substantial period of time, and that the insurer has no right to change any provision of the contract.

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Policy: The written contract effecting insurance or the certificate thereof by whatever name called, and papers attached thereto and made a part thereof.

Policyowner: The person who has the right to exercise the privileges and rights in the policy contract. Also called policyholder.

Pre-existing Condition: A condition of health or physical condition that existed before the policy was issued.

Premium: 1) Consideration for the insurance. 2) Periodic payment made to keep a policy in force.

Proof of Loss: A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy.

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Reinstatement Clause: Provides the conditions under which a lapsed policy may be reinstated, if approved by the insurance company.

Reinsurance: Agreement between insurance companies under which one accepts all or part of the risk of loss of the other.

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Scheduled Property: Examples include jewelry, antiques, furs, silver, fine rugs, golf equipment, electronics equipment

Single-Premium Annuity: An Annuity purchased with one lump-sum payment.

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Term Insurance: Life insurance that normally does not have cash accumulation and is issued to remain in force for a specified period of time, following which it is subject to renewal or termination.

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Underwriting: The process of evaluating a risk for the purpose of issuing insurance coverage on it.

Universal Life: A Life policy that runs for the insured's whole life - that is, until death or the ultimate age on the mortality table being used (age 100). Premiums for a Universal Life policy may be paid for the whole life or for a limited period (for example, 20-Pay-Life or LP65) during which the higher premium charged pays up the policy.

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Variable Annuity: An Annuity contract in which the amount of the periodic benefits varies, usually in relation to security market values, a cost-of-living index, or some other variable factor in contrast to a Fixed or Guaranteed Return Annuity

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Waiting Period: A period of time between the beginning of a disability and the date benefits begin. Also known as Elimination Period.

Warranty: A statement made on an application for insurance that is wan-anted to be true in all respects. If untrue in any respect even though the untruth may not have been known to the person giving the warranty, the contract may be voided without regard to the materiality of the statement. Statements on Life and Health insurance applications are, in the absence of fraud, not warranties, but representations.

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For more information, please contact us.