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Life Insurance Glossary
is terminally ill .
Accident: an unexpected, unforeseen event not under the control of an insured and resulting in a loss.
Accident frequency: the number of times an accident occurs. Used in predicting losses upon which premiums are based.
Accidental death: coverage in the event of death due to an accident, usually in combination with dismemberment
insurance.
Act of God: natural occurrence beyond human control or influence. Such acts of nature include hurricanes, earthquakes,
and floods. (A snow storm is an act of God. Driving in a snow storm is an act of man or woman or teenager.)
Actuary: a professional trained in the mathematics of insurance and risk management.
Add-ons: additional coverage to your basic policy.
Adjuster: a person employed by a property/casualty insurer to evaluate losses and settle claims.
Agents: two types of agents sell insurance. Independent agents are self employed business people who typically represent
two insurance companies and are paid on a commission basis. Exclusive agents represent only one insurance company
and may be salaried employees or work on a commission basis.
Alien insurance company: an insurance company incorporated under the laws of a foreign country.
Annuity: a life insurance company contract that pays a periodic income benefit for a specific period or lifetime.
Application: a signed statement by a prospective insured person which becomes part of the health insurance contract.
insureds death or when an endowment matures.
Binder: temporary insurance contract providing coverage until a permanent policy is issued
Blanket policy: a health insurance contract which protects all members of a certain group against a specific hazard.
Broker: a sales and service representative who handles insurance for clients, generally selling insurance of various kinds
and for several companies.
other party according to the terms set forth in the policy
Carrier: an insurer or insurance company.
Cash surrender value: money the policyholder is entitled to receive from the insurance company upon surrendering a life
insurance policy with cash value.
Chartered Life Underwriter (CLU):
a professional designation conferred by the American College. Recipients must pass examinations in business courses,
including insurance, investments and taxation and must have professional experience in life insurance planning.
Claim: (1) A formal request for payment of a loss under an insurance contract or bond. (2) The actual amount of the final
settlement.
Claimant: one who seeks reimbursement for loss under the terms and conditions of his/her insurance contract.
Clause: a section or paragraph in an insurance policy that explains, defines or clarifies the conditions of coverage.
COBRA (Consolidated Omnibus Budget Reconciliation Act):a federal law under which group health plans sponsored by
employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs, voluntarily or
otherwise, and their dependents; gives individuals and their dependent family members the right to continue their
health care coverage for as long as 18 months.
Conversion privilege: a right granted to group certificate holders, by which they may obtain an individual policy (upon
leaving the group) regardless of physical condition.
Co-payment: the portion, either a percentage or a fixed dollar amount, of a medical bill that a patient pays. The insurer
pays the rest.
Coverage: a term usually referring to the type and extent of benefits provided by an insurance contract.
Credit insurance: coverage that pays off an outstanding loan in the event of the policyholder's death and/or makes loan
payments if the policyholder is disabled.
Declaration page: that page of the insurance policy which lists the insurance company, its address, name of the
policyholder, starting and ending dates of coverage, and the actual coverages given in the contract, including the locations
and amounts.
Deductible: the amount of loss paid by the policyholder before the insurance policy benefits become payable
Defense clause: a provision in a casualty insurance policy that provides additional coverage for expenses of judicial
assistance.
Depreciation: a decrease in the original value of an item because of wear and tear, obsolescence, and deterioration.
Disability insurance: a type of health insurance that pays a monthly income to the policyholder when he or she is unable
to work because of illness or accident.
Domestic insurance company: an insurer domiciled in this state.
charge on cancellation.
Effective date: the date on which an insurance policy coverage starts
Employee Retirement Income Security Act of 1974 (ERISA): federal law that established rules and regulations to
govern private pension plans. Most self-insured health plans are created under this act.
Evidence of insurability: any statement or proof of a person's physical condition, occupation, etc., affecting his
acceptance for insurance.
Exclusions: specified hazards for which a policy will not provide benefit payments. They are often called exceptions.
Experience: the record of claims made or paid within a specified time period.
Experience rating: determination of the premium rate for an individual risk, made partially or wholly on the basis of that
risk's own past claim experience.
and the insurer pays the largest portion of the bill.
Flat cancellation: cancellation of an insurance policy as of the date of its start with no premium charge.
Foreign insurance company: an insurer domiciled in another state.
premiums to a specified age, (usually age 50) during which period the insurer has no right to make unilaterally any change
in any provision of the policy while the policy is in force but may make changes in premium rates for the entire
policyholder classification.
Guarantee funds: all 50 states, the District of Columbia and Puerto Rico require licensed insurers to assume some of an
insolvent insurance company's policyholder liabilities. These funds (life & health and property & casualty) are the
mechanism by which solvent insurers bail out the policyholders of companies that fail.
Sometimes called Accident of Sickness Insurance, Accident and Health Insurance, or Disability Insurance.
Health maintenance organization (HMO): an organization that provides health care for a monthly payment set in
advance. In a traditional HMO, doctors and other providers are salaried employees and the facilities are owned by the
organization. In recent years, however, other forms of HMOs have sprung up that contract with doctors and hospitals to care
for members at set, negotiated fees. Many HMOs are hybrids, offering both kinds of care to members.
share the financial losses.
Insurer: the company offering protection through the sale of an insurance policy to an insured.
Insured: the person whose risk is transferred and shared.
damage caused to another person and covered in the policy.
Life insurance: protection against the death of the insured in the form of payment to a designated beneficiary, typically a
family member or business.
Long Term Care Insurance: covers the cost of long-term custodial care in a nursing facility or at home.
Loss of use insurance: insurance against loss due to the insured's inability to use property, such as a vehicle or a store;
includes additional living expense, business interruption, rent insurance, rental reimbursement, and rental value.
member can use and still receive full coverage. Generally under managed care an insurer negotiates lower fees with
doctors, hospitals, laboratories, for instance, who join in a network that members of the plan are encouraged to use.
Frequently, members of a managed care plan can use health care providers outside the network, but they must pay a
greater share of the cost.
Medicaid: a federal-state program that helps pay for health care for the needy, blind and disabled and for low-income
families with children.
Medicare: a federal health care insurance program for people age 65 and over, and for the disabled.
Medigap: because Medicare does not cover all expenses, private insurers sell "Medigap" policies to supplement federal
insurance benefits.
Mortgage insurance: life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.
the accident.
Non-cancellable or Non-cancellable: and guaranteed renewable policy a policy which the insured has the right to
continue in force by the timely payment of premiums set forth in the policy to a specified age, (usually age 50) during which
period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force.
Pre-existing conditions: a physical condition of an insured person which existed prior to the issuance of the policy.
Premium: the payment for an insurance policy, usually paid periodically, i.e., annually, semi-annually, quarterly or monthly.
Pro-rata: cancellation of an insurance contract by the insurance company, allowing the policyholder a share of the premium
relating to the remainder of the time under the contract that bears to the total contract premium.
Reinsurance: a form of insurance that insurance companies buy for their own protection
Rider: an endorsement to an insurance policy that modifies clauses and provisions of the policy, adding or excluding
coverage.
Risk: a term used to designate an insured or a peril insured against.
policyholder of less than would be given under pro-rata consideration.
Specified disease insurance: a policy which provides stated benefits, usually of large amounts, toward the expense of
the treatment of the disease or diseases named in the policy.
Solvency: one of MIA's primary responsibilities is to make sure insurance companies remain solvent, i.e., have sufficient
assets and income, in order to have the ability to pay the claims of their policyholders.
Title Insurance: indemnifies the owner of real estate in the event clear ownership of property is challenged by discovery of
faults in the title.
Twisting: an unfair trade practice, in insurance, whereby an agent or broker attempts to persuade a life insurance
policyholder through misrepresentation to cancel an existing policy and buy a new one.
Underwriting: process of examining, accepting, or rejecting insurance risks, and classifying those selected, in order to
charge the proper premium for each
Universal life insurance: a flexible premium policy that combines protection against premature death with a savings
account that typically earns a money market rate of interest.
Workers compensation insurance: pays for medical care and physical rehabilitation of injured workers and replaces
their lost wages while they're unable to work.
- A
is terminally ill .
Accident: an unexpected, unforeseen event not under the control of an insured and resulting in a loss.
Accident frequency: the number of times an accident occurs. Used in predicting losses upon which premiums are based.
Accidental death: coverage in the event of death due to an accident, usually in combination with dismemberment
insurance.
Act of God: natural occurrence beyond human control or influence. Such acts of nature include hurricanes, earthquakes,
and floods. (A snow storm is an act of God. Driving in a snow storm is an act of man or woman or teenager.)
Actuary: a professional trained in the mathematics of insurance and risk management.
Add-ons: additional coverage to your basic policy.
Adjuster: a person employed by a property/casualty insurer to evaluate losses and settle claims.
Agents: two types of agents sell insurance. Independent agents are self employed business people who typically represent
two insurance companies and are paid on a commission basis. Exclusive agents represent only one insurance company
and may be salaried employees or work on a commission basis.
Alien insurance company: an insurance company incorporated under the laws of a foreign country.
Annuity: a life insurance company contract that pays a periodic income benefit for a specific period or lifetime.
Application: a signed statement by a prospective insured person which becomes part of the health insurance contract.
- B
insureds death or when an endowment matures.
Binder: temporary insurance contract providing coverage until a permanent policy is issued
Blanket policy: a health insurance contract which protects all members of a certain group against a specific hazard.
Broker: a sales and service representative who handles insurance for clients, generally selling insurance of various kinds
and for several companies.
- C
other party according to the terms set forth in the policy
Carrier: an insurer or insurance company.
Cash surrender value: money the policyholder is entitled to receive from the insurance company upon surrendering a life
insurance policy with cash value.
Chartered Life Underwriter (CLU):
a professional designation conferred by the American College. Recipients must pass examinations in business courses,
including insurance, investments and taxation and must have professional experience in life insurance planning.
Claim: (1) A formal request for payment of a loss under an insurance contract or bond. (2) The actual amount of the final
settlement.
Claimant: one who seeks reimbursement for loss under the terms and conditions of his/her insurance contract.
Clause: a section or paragraph in an insurance policy that explains, defines or clarifies the conditions of coverage.
COBRA (Consolidated Omnibus Budget Reconciliation Act):a federal law under which group health plans sponsored by
employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs, voluntarily or
otherwise, and their dependents; gives individuals and their dependent family members the right to continue their
health care coverage for as long as 18 months.
Conversion privilege: a right granted to group certificate holders, by which they may obtain an individual policy (upon
leaving the group) regardless of physical condition.
Co-payment: the portion, either a percentage or a fixed dollar amount, of a medical bill that a patient pays. The insurer
pays the rest.
Coverage: a term usually referring to the type and extent of benefits provided by an insurance contract.
Credit insurance: coverage that pays off an outstanding loan in the event of the policyholder's death and/or makes loan
payments if the policyholder is disabled.
- D
Declaration page: that page of the insurance policy which lists the insurance company, its address, name of the
policyholder, starting and ending dates of coverage, and the actual coverages given in the contract, including the locations
and amounts.
Deductible: the amount of loss paid by the policyholder before the insurance policy benefits become payable
Defense clause: a provision in a casualty insurance policy that provides additional coverage for expenses of judicial
assistance.
Depreciation: a decrease in the original value of an item because of wear and tear, obsolescence, and deterioration.
Disability insurance: a type of health insurance that pays a monthly income to the policyholder when he or she is unable
to work because of illness or accident.
Domestic insurance company: an insurer domiciled in this state.
- E
charge on cancellation.
Effective date: the date on which an insurance policy coverage starts
Employee Retirement Income Security Act of 1974 (ERISA): federal law that established rules and regulations to
govern private pension plans. Most self-insured health plans are created under this act.
Evidence of insurability: any statement or proof of a person's physical condition, occupation, etc., affecting his
acceptance for insurance.
Exclusions: specified hazards for which a policy will not provide benefit payments. They are often called exceptions.
Experience: the record of claims made or paid within a specified time period.
Experience rating: determination of the premium rate for an individual risk, made partially or wholly on the basis of that
risk's own past claim experience.
- F
and the insurer pays the largest portion of the bill.
Flat cancellation: cancellation of an insurance policy as of the date of its start with no premium charge.
Foreign insurance company: an insurer domiciled in another state.
- G
premiums to a specified age, (usually age 50) during which period the insurer has no right to make unilaterally any change
in any provision of the policy while the policy is in force but may make changes in premium rates for the entire
policyholder classification.
Guarantee funds: all 50 states, the District of Columbia and Puerto Rico require licensed insurers to assume some of an
insolvent insurance company's policyholder liabilities. These funds (life & health and property & casualty) are the
mechanism by which solvent insurers bail out the policyholders of companies that fail.
- H
Sometimes called Accident of Sickness Insurance, Accident and Health Insurance, or Disability Insurance.
Health maintenance organization (HMO): an organization that provides health care for a monthly payment set in
advance. In a traditional HMO, doctors and other providers are salaried employees and the facilities are owned by the
organization. In recent years, however, other forms of HMOs have sprung up that contract with doctors and hospitals to care
for members at set, negotiated fees. Many HMOs are hybrids, offering both kinds of care to members.
- I
share the financial losses.
Insurer: the company offering protection through the sale of an insurance policy to an insured.
Insured: the person whose risk is transferred and shared.
- L
damage caused to another person and covered in the policy.
Life insurance: protection against the death of the insured in the form of payment to a designated beneficiary, typically a
family member or business.
Long Term Care Insurance: covers the cost of long-term custodial care in a nursing facility or at home.
Loss of use insurance: insurance against loss due to the insured's inability to use property, such as a vehicle or a store;
includes additional living expense, business interruption, rent insurance, rental reimbursement, and rental value.
- M
member can use and still receive full coverage. Generally under managed care an insurer negotiates lower fees with
doctors, hospitals, laboratories, for instance, who join in a network that members of the plan are encouraged to use.
Frequently, members of a managed care plan can use health care providers outside the network, but they must pay a
greater share of the cost.
Medicaid: a federal-state program that helps pay for health care for the needy, blind and disabled and for low-income
families with children.
Medicare: a federal health care insurance program for people age 65 and over, and for the disabled.
Medigap: because Medicare does not cover all expenses, private insurers sell "Medigap" policies to supplement federal
insurance benefits.
Mortgage insurance: life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.
- N
the accident.
Non-cancellable or Non-cancellable: and guaranteed renewable policy a policy which the insured has the right to
continue in force by the timely payment of premiums set forth in the policy to a specified age, (usually age 50) during which
period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force.
- O
- P
Pre-existing conditions: a physical condition of an insured person which existed prior to the issuance of the policy.
Premium: the payment for an insurance policy, usually paid periodically, i.e., annually, semi-annually, quarterly or monthly.
Pro-rata: cancellation of an insurance contract by the insurance company, allowing the policyholder a share of the premium
relating to the remainder of the time under the contract that bears to the total contract premium.
- R
Reinsurance: a form of insurance that insurance companies buy for their own protection
Rider: an endorsement to an insurance policy that modifies clauses and provisions of the policy, adding or excluding
coverage.
Risk: a term used to designate an insured or a peril insured against.
- S
policyholder of less than would be given under pro-rata consideration.
Specified disease insurance: a policy which provides stated benefits, usually of large amounts, toward the expense of
the treatment of the disease or diseases named in the policy.
Solvency: one of MIA's primary responsibilities is to make sure insurance companies remain solvent, i.e., have sufficient
assets and income, in order to have the ability to pay the claims of their policyholders.
- T
Title Insurance: indemnifies the owner of real estate in the event clear ownership of property is challenged by discovery of
faults in the title.
Twisting: an unfair trade practice, in insurance, whereby an agent or broker attempts to persuade a life insurance
policyholder through misrepresentation to cancel an existing policy and buy a new one.
- U
Underwriting: process of examining, accepting, or rejecting insurance risks, and classifying those selected, in order to
charge the proper premium for each
Universal life insurance: a flexible premium policy that combines protection against premature death with a savings
account that typically earns a money market rate of interest.
- W
Workers compensation insurance: pays for medical care and physical rehabilitation of injured workers and replaces
their lost wages while they're unable to work.
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