Policy assignment under which assignee (person to whom the policy is assigned) receives full control over the policy and also full right or rights to its benefits. Generally, when a policy is assigned to secure debt, the owner retains all rights in the policy in excess of the debt, even thought the assignment is absolute in form.
Accelerated Benefit Rider - A life insurance riders that allow for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.
The part of a contract that says when a loan may be declared due and payable.
Accident and Health Insurance
Insurance under which benefits are payable in case of disease, accidental injury or accidental death. Also called health insurance, personal health insurance and sickness and accident insurance.
Accidental Bodily Injury Provision
Disability income or accident policy provision that requires that the injury be accidental in order for benefits to be payable.
Accidental Death Benefits Rider
A life insurance policy rider providing for payment of an additional benefit when death occurs by accidental means
Accidental Death or Dismemberment (AD&D)
Insurance providing payment if the insured's death results from an accident or if the insured accidentally severs a limb above the wrist or ankle joints or totally and irreversibly loses his or her eyesight
Often defined as "the severance of limb at or above the wrists or ankle joints, or the entire irrevocable loss of sight". Loss of use in itself may or nor be considered dismemberment.
Accidental Means Provision
Unforeseen, unexpected, unintended cause of an accident. Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim to be payable.
Premiums and annuitant pays into a variable annuity are credited as accumulation units. At the end of the accumulation period, accumulation units are converted to annuity units.
Acquired Immune Deficiency Syndrome (AIDS)
A life threatening conditions brought on by the human immunodeficiency virus; insurers must adhere to strict underwriting and claims guidelines in regard to AIDS risk and AIDS-related conditions.
Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.
Activities of Daily Living
Bathing, preparing and eating meals, moving from room to room, getting into and out of beds or chairs, dressing, using a toilet.
Actual Cash Value
Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old sofa will not be replaced at current full value because of a decade of depreciation.
A specialist in the mathematics of insurance who calculates rates, reserves, dividends and other statistics. (Americanism: In most other countries the individual is known as "mathematician.")
A serious condition, such as pneumonia, from which the body can fully recover with proper medical attention.
A life insurance policy is a "contract of adhesion" because buyers must "adhere" to the terms of the contract already in existence. They have no opportunity to negotiate terms, rates, values and so on.
Adjustable Life Insurance
Combines features of both term and whole life coverage with the length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be increased or decreased to fit the specific needs. Such adjustments are not retroactive and apply only to the future.
An interest rate that changes, based on changes in a published market-rate index.
A representative of the insurer who seeks to determine the extent of the insurer's liability for loss when a claim is submitted.
Administrative-services-only (ASO) Plan
Arrangement under which an insurance company or an independent organization, for a fee, handles the administrative functions for a self – insured.
Assets permitted by state law to be included in an insurance company's annual statement. These assets are an important factor when regulators measure insurance company solvency. They include mortgages, stocks, bonds and real estate.
An insurance company that has met the legal and financial requirements for operation within a given state
Adult Day Care
Type of care (usually custodial) designed for individuals who require assistance with various activities of the daily living while their primary caregivers are absent. Offered in Care Centers.
Selection "against the company". Tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others. Also tendency of policyowners to take advantage of favorable options in insurance contracts.
Rules established by NAIC to regulate insurance advertising.
Situation wherein one party (an agent) has the power to act for another (the principal) in dealing with third parties
Anyone not a duly licensed broker, who solicits insurance or aids in placing risks, delivering policies or collecting premiums on behalf of an insurance company.
The section of an insurance application's where the agent reports his or her personal observation about the applicant.
Usually refers to liability insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents might occur.
Feature of insurance contracts in that there is an element of chance for both parties and that the dollar given by the policyholder (premiums) and the insurer (benefits) may not be equal.
Company incorporated or organized under the laws of any foreign nation, providence or territory.
Surgery performed on an outpatient basis.
Difference between the face amount of the policy and the reserve or policy value at a given time. In other words, the dollar amount over what the policyowner has contributed of cash value toward payment of his or her own claim. Because the cash value increases every year, the net amount at risk naturally decreases until it finally reaches zero when the cash value or reserve become the face amount.
Annual Administrative Fee
Charge for expenses associated with administering a group employee benefit plan.
Annual Crediting Cap
The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper limit, or cap, of 7 percent and the index linked to the annuity gained 7.2 percent, only 7 percent would be credited to the annuity.
Annually Renewable Term (ART)
A form of renewable term insurance that provides coverages for one year and allows the policyowner to renew his or her coverage each year without evidence of insurability. Also called yearly renewable term (YRT).
One to whom an annuity is payable or a person upon the continuance of whose life furthered payment depends
Process by which you convert part or all of the money in a qualified retirement plan or nonqualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant. Once you choose to annuitize, the payment schedule and the amount is generally fixed and can't be altered.
Choices in the way to annuitize. For example, life with a 10-year period certain means payouts will last a lifetime, but should the annuitant die during the first 10 years, the payments will continue to beneficiaries through the 10th year. Selection of such an option reduces the amount of the periodic payment.
A contract that provides a stipulated sum payable at certain regular intervals during the lifetime of one or more persons, or payable for a specified period only.
The number of annuity units denotes the share of the funds an annuitant will receive from a variable annuity account after the accumulation period ends and benefits begin. A formula is used to convert accumulation units to annuity units.
A definition of total disability that require that for disability income benefits to be payable, the insured must be unable to performance any jobs for which he or she is reasonably suited by reason of education, training or experience
The authority an agent appears to have, based on the principal's (the insurer's) actions, words, deeds or because of circumstances the principal (the insurer) created
Form supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives information to the home office underwriting department so it may consider whether an insurance policy will be issued and, if so in what classification and at what premium rate.
The authorization or certification of an agent to act for or represent an insurance company
Approval Receipt - Rarely used today, a type of conditional receipt that provides that coverage is effective as of the date the application is approved (before the policy is delivered)
Approved for Reinsurance
Indicates the company is approved (or authorized) to write reinsurance on risks in this state. A license to write reinsurance might not be required in these states.
Approved or Not Disapproved for Surplus Lines
Indicates the company is approved (or not disapproved) to write excess or surplus lines in this state.
1905: Investigation a large number of insurance companies in the United States in 1905 that led to the enactment of sticker state supervision and insurance requirements
Plan by which either the amount of insurance is variable or the number and amount of the assessments are variable. It is offered by assessment associations, either pure or advance
Assessment Mutual Insurer
An insurance company characterized by member-insureds who are assessed an individual portion of each loss that occurs. No premium payment is payable in advance
Assets refer to "all the available properties of every kind or possession of an insurance company that might be used to pay its debts." There are three classifications of assets: invested assets, all other assets, and total admitted assets. Invested assets refer to things such as bonds, stocks, cash and income-producing real estate. All other assets refer to nonincome producing possessions such as the building the company occupies, office furniture, and debts owed, usually in the form of deferred and unpaid premiums. Total admitted assets refer to everything a company owns. All other plus invested assets equals total admitted assets. By law, some states don't permit insurance companies to claim certain goods and possessions, such as deferred and unpaid premiums, in the all other assets category, declaring them "nonadmissable."
Person (including corporation, partnership or other organization) to whom a right or rights under a policy are transferred by means of an assignment
Signed transfer of benefits of a policy by an insured to another party. The company does not guarantee the validity of an assignment
Assignment Provision (Health Contracts)
Commercial health policy provision that allow the policyowner to assign benefit payments from the insurer directly to the health care provider
erson (including corporation, partnership or other organization or entity) who transfers a right or rights under an insurance policy to another by means of an assignment
Insured's age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured's then attained age. Upon conversion, the premium usually rises substantially to reflect the insured's age and diminished life expectancy.
The actions and deeds an agent is authorized to conduct on behalf of an insurance company, as specified in the agent's contract
Company duly authorizes insurer to automatically pay any premium in default at the end of the grace period and charge the amount so paid against the life insurance policy as a policy loan.
Authorized Under Federal Products Liability Risk Retention Act (Risk Retention Groups)
Indicates companies operating under the Federal Products Liability Risk Retention Act of 1981 and the Liability Risk
Retention Act of 1986.
Automatic Premium Loan Provision
Authorized insurance to automatically pay any premium in default at the end of the grace period and charge the amount so paid against the life insurance policy as a policy loan
Automobile Liability Insurance
Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile.
Average Indexed Monthly Earning (AIME)
The basis used for calculating the primary insurance amount (PIA) for Social Security benefits.
Average Monthly Wage (AMW) - The average wage base for computing virtually all Social Security benefits prior to 1979
Either attached by rider or included in standard policy language excepting from coverage certain death or disabilities to aviation, such as "other than a fare - paying passenger"
The practice of making a policy effective at an earlier date than the present
An accounting term referring to a listing of a company's assets, liabilities and surplus as of a specific date.
Basic Medical Expense Policy
ealth Insurance policy that provides "first dollar" benefits for specified (and limited) health care, such as hospitalization, surgery or physician services. Characterized by limited benefits period and relatively low coverage limits.
Person to whom the proceeds of a life or accident policy are payable when the insured dies. The various type of beneficiaries are: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies; and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies)
May be either money or a right to the policyowner upon the happening of the conditions set out in the policy.
In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a calendar year consist of the days beginning on Jan. 1 and ending on Dec. 31 of each year.
Best's Capital Adequacy Relativity (BCAR)
This percentage measures a company's relative capital strength compared to its industry peer composite. A company's BCAR, which is an important component in determining the appropriateness of its rating, is calculated by dividing a company's capital adequacy ratio by the capital adequacy ratio of the median of its industry peer composite using Best's proprietary capital mode. Capital adequacy ratios are calculated as the net required capital necessary to support components of underwriting, asset, and credit risks in relation to economic surplus.
Best's Insurance Report
A guide published by A.M. Best Inc. that rates insurers financial integrity and managerial and operational strengths
Given by a company upon an applicant's first premium payment. The policy, if approved, becomes effective from the date of the receipt
Period following the death of family breadwinner during which no Social Security benefits are available to the surviving spouse.
Cover a number of individuals who are exposed to the same hazards, such as members of an athletics team, company officials who are passengers in the same company plane, and so on
Licensed insurance representative who does not represent a specific company, but places business among various companies. Legally, the broker is usually regarded as a representative of the insured rather than the companies
Independent insurance salesperson who represents particular insurers but also might function as a broker by searching the entire insurance market to place an applicant's coverage to maximize protection and minimize cost. This person is licensed as an agent and a broker.
Business Continuation Plan
Arrangement between the business owners that provides that the shares owned by any one of them who dies or becomes disabled shall be sold to and purchased by the other co - owner or by the business
Business Health Insurance - Issued primarily to indemnity a business for the loss of services of a key employee, partner or active close corporation stockholder
Business Net Retention
This item represents the percentage of a company's gross writings that are retained for its own account. Gross writings are the sum of direct writings and assumed writings. This measure excludes affiliated writings.
Business Overhead Expense Insurance - A form of disability income coverage designed to pay necessary business overhead expenses, such as rent should the insured business owner become disabled
Informational consumer guide books that explain insurance policies and insurance concepts: in many states, they are required to be given to applicants when certain types of coverages are being considered
Agreement that a deceased business owner's interest will be sold and purchased at a predetermined price or at a price according to a predeterminated formula
Employee benefits arrangements in which employees can select from a range of benefits
Health Insurance Contract that may be terminated by the company or that is renewable at its option
Equity of shareholders of a stock insurance company. The company's capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company's policyowners in the event it develops financial problems; the policyowners' benefits are thus protected by the insurance company's capital. Shareholders' interest is second to that of policyowners.
Amount provided for accidental dismemberment or loss of eyesight. Indemnities for loss of one member or sight of one eye are percentages of the capital sum
Capitalization or Leverage
Measures the exposure of a company's surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.
Representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first refusal rights on a sale. In exchange, that insurer usually provides its captive agents with an allowance for office expenses as well as an extensive list of employee benefits such as pensions, life insurance, health insurance, and credit unions.
Career Agency System
A method of marketing selling and distributing insurance, it is represented by agencies or branch offices committed to the ongoing recruitment and development of career agents
The professional arrangement and coordination of health services through assessment, service plan development and monitoring
Cash or Deferred Arrangements
A qualified employer retirement plan under which employees can defer amounts of their salaries into a retirement plan. These amounts are not included in the employee's gross income and so are tax deferred. Also called 401 K plans
Cash Refund Annuity
Provides that, upon the death of an annuitant before payments totaling the purchase price have been made, the excess of the amount pay by the purchaser over the total annuity payments received will be paid in one sum to designated beneficiaries
Cash Surrender Options
A nonforfeiture option that allows whole life insurance policyowners to receive a payout of their policy's cash values.
Cash Surrender Value
Amount available to the owner when a life insurance policy is surrendered to the company. During the early policy years, the cash value is the reserve less a "surrender charge", in later policy years, it usually equals or closely approximates the reserve value al time of surrender.
The equity amount or "saving" accumulation in a whole life policy
Liability or loss resulting from an accident.
That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others. It also includes such diverse forms as plate glass, insurance against crime, such as robbery, burglary and forgery, boiler and machinery insurance and Aviation insurance. Many casualty companies also write surety business.
Ceded Reinsurance Leverage
The ratio of the reinsurance premiums ceded, plus net ceded reinsurance balances from non-US affiliates for paid losses, unpaid losses, incurred but not reported (IBNR), unearned premiums and commissions, less funds held from reinsurers, plus ceded reinsurance balances payable, to policyholders' surplus. This ratio measures the company's dependence upon the security provided by its reinsurers and its potential exposure to adjustment on such reinsurance.
Change in Net Premiums Written (IRIS)
The annual percentage change in Net Premiums Written. A company should demonstrate its ability to support controlled business growth with quality surplus growth from strong internal capital generation.
Change in Policyholder Surplus (IRIS)
The percentage change in policyholder surplus from the prior year-end derived from operating earnings, investment gains, net contributed capital and other miscellaneous sources. This ratio measures a company's ability to increase policyholders' security.
Chartered Property and Casualty Underwriter (CPCU)
Professional designation earned after the successful completion of 10 national examinations given by the American Institute for Property and Liability Underwriters. Covers such areas of expertise as insurance, risk management, economics, finance, management, accounting, and law. Three years of work experience also are required in the insurance business or a related area.
The practice by which policy values in an existing life insurance policy or annuity contract are used to purchase another policy or contract with that the same insurer for the purpose of earning additional premiums or commissions without an objectively reasonable basis for believing that the new policy will result in an actual and demonstrable benefit
A demand made by the insured, or the insured's beneficiary, for payment of the benefits as provided by the policy.
Class 3-6 Bonds (% of PHS)
This test measures exposure to noninvestment grade bonds as a percentage of surplus. Generally, noninvestment grade bonds carry higher default and illiquidity risks. The designation of quality classifications that coincide with different bond ratings assigned by major credit rating agencies.
A beneficiary designation. Rather than specifying one or more beneficiaries by name, the policyowner designates a class or group of beneficiaries. For example, "my children"
Occupational category of a risk
A congenital furrow or groove in the upper lip that results from incomplete embryonic development. This condition may be associated with a cleft palate. Also called a hare lips.
A congenital furrow or groove in the root of the mouth that results from incomplete embryonic development. This condition may be associated with a cleft lip
A corporation owned by a small group of stockholders, each of whom usually has a voice in operating the business.
Consolidated Omnibus Budget Reconciliation Act of 1985, extending group health coverage to terminated employees and their families for up to 18 or 36 month
Coinsurance (Percentage Participation)
Principle under which the company insures only part of the potential loss, the policyowners paying the other part. For instance in a major medical policy, the company may agree to pay 75 percent of the insured expenses, with the insured to pay the other 25 percent.
Assignment of a policy to a creditor as a security for a debt. The Creditor is entitled to be reimbursed out of policy proceeds over the amount due the creditor in the event of the insured's death
Covers physical damage to the insured's automobile (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.
Company whose agent sell both weekly premium life and health insurance and ordinary life insurance. Also called a multi-line company
Combined Ratio After Policyholder Dividends
The sum of the loss, expense and policyholder dividend ratios not reflecting investment income or income taxes. This ratio measures the company's overall underwriting profitability, and a combined ratio of less than 100 indicates an underwriting profit.
Commercial Health Insurers
Insurance company that function on the reimbursement approach, which allows policyowners to seek medical treatment then submit the charges to the insurer for reimbursement
Refers to insurance for businesses, professionals and commercial establishments.
Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer and the marketing methods.
Head of State Insurance department; public officer charged with supervising the insurance business in a state and administrating insurance laws. Called "superintendent" in some states, "director" in others
Commissioner's Standard Ordinary (CSO) Table
Table of mortality based on intercompany experience over a period of time, which is legally recognized as the mortality basis for computing maximum reserves on policies issued within past year. The 1980 CSO Tables replaced the 1958 CSO Table.
A business or agency that is available to the public for transportation of persons, goods or messages. Common carriers include trucking companies, bus lines and airlines.
Common Disaster Provision
Sometimes added to a policy and designed to provide an alternative beneficiary in the event that the insured as well as the original beneficiary dies as the result of a common accident
To be enforceable a contract must be entered into by competent parties. A competent party is one who is capable of understanding the contract being agreed to.
Auto insurance coverage providing protection in the event of physical damage (other than collision) or theft of the insured car. For example, fire damage or a cracked windshield would be covered under the comprehensive section.
Comprehensive Major Medical Insurance
Designed to give the protection offered by booth a basic medical expense and major medical policy. It is characterized a low deductible amount, coinsurance clause and high maximum benefits
Failure of the insured to disclose to the company a fact material to the acceptance of the risk at the time application is made
In hospital income protection, when a patient is confined to a hospital due to more than one injury and/or illness at the same time, benefits are paid as if the total disability resulted from only one cause.
Characteristic of an insurance contract in that the payment of benefits in dependent on or a condition of the occurrence of the risk insured against
Given to the policyowners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for subject to any other conditions stated on the receipt
This item represents the aggregate of various reserves which, for technical reasons, are treated by companies as liabilities. Such reserves, which are similar to free resources or surplus, include unauthorized reinsurance, excess of statutory loss reserves over statement reserves, dividends to policyholders undeclared and other similar reserves established voluntarily or in compliance with statutory regulations.
Conditionally Renewable Contract
Health Insurance policy providing that the insured may renew the contract from period to period, or continue it 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
Element of binding contract, acceptance by the company of payment of the premium and statements made by the prospective insured in the application
The part of an insurance contract setting forth the amount of initial and renewal premiums and frequency of future payments
Period during which the company may contest a claim on a policy because of misleading or incomplete information in the application
Person (s) named to receive proceeds in case the original beneficiary in not alive. Also referred to as secondary or tertiary beneficiary
Type of health or medical care designed to provide a benefits for elderly individuals who live in a retirement community: addresses full - time needs, both social and medical. Also know as residential care.
An agreement enforceable by law whereby one party binds itself to certain promise or deeds.
Contract of Agency - A legal document containing the term of the contract between the agent and company signed by both parties. Also called agency agreement
Group insurance plan issued to an employer under which both the employer and the employee contribute to the cost of the plan. Generally 75 percent of the eligible employees must be insured
A stated dollar - per - point amount used to determine benefits amounts paid for the cost of a procedure under a health insurance plan. For example, a plan with a $5 per-point conversion factor would pay $1,000 for a 200 point-procedure.
Allows the policyowner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be affected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue)
Term life insurance coverage that can be converted into permanent insurance regardless of an insured's physical condition and without a medical examination. The individual cannot be denied coverage or charged an additional premium for any health problems.
Coordination of Benefits (COB) Provision
Designed to prevent duplication of group insurance benefits. Limits benefits from multiple group health insurance policies in a particular case to 100 percent of the expenses covered and designates the order in which the multiple carriers are to pay benefits
A predetermined, flat fee an individual pays for health-care services, in addition to what insurance covers. For example, some HMOs require a $10 copayment for each office visit, regardless of the type or level of services provided during the visit. Copayments are not usually specified by percentages.
In superimposed major medical plans, a deductible amount between the benefits paid by the basic plan and the beginning of the major medical benefits
Cost of Living (COL) Rider
A rider available with some policies that provides for an automatic increase in benefits (typically tied to the Consumer Price Index) offsetting the effects of inflation
The scope of protection provided under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits are listed.
The geographic region covered by travel insurance.
Standards of coverage that prevent retirement plans from discriminating in favor of highly compensated employees. A plan must pass an IRS coverage test to be considered qualified
Credit Accident and Health Insurance
If the insured debtor becomes totally disabled due to an accident or sickness, the policy premiums are paid during the period of disability or the loan is paid off. May be individual or group policy.
Credit Life Insurance
Usually written as decreasing term on a relatively small decreasing balance installment loan that may reflect direct borrowing or a balance due for merchandise purchased. If borrower dies benefits pay balance due. May be individual or group policy
A summary of an insurance applicant's credit history made by an independent organization that has investigate the applicant's credit standing.
Term means that benefits provided by other drug plans are at least as good as those provided by the new Medicare Part D program. This may be important to people eligible for Medicare Part D but who do not sign up at their first opportunity because if the other plans provide creditable coverage, plan members can later convert to Medicare Part D without paying higher premiums than those in effect during their open enrollment period.
Cross - Purchase Plan
An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, other with funds from life insurance policies owned by each principal on the lives of all other principal
Current Liquidity (IRIS)
The sum of cash, unaffiliated invested assets and encumbrances on other properties to net liabilities plus ceded reinsurance balances payable, expressed as a percent. This ratio measures the proportion of liabilities covered by unencumbered cash and unaffiliated investments. If this ratio is less than 100, the company's solvency is dependent on the collectibility or marketability of premium balances and investments in affiliates. This ratio assumes the collectibility of all amounts recoverable from reinsurers on paid and unpaid losses and unearned premiums.
Under Social Security, a status of limited eligibility that provides only death benefits
Level of health or medical care given to meet daily personal needs, such as dressing, bathing, getting out of bed, and so on. Though it does not requires medical training, it must be administered under a physician's order
The limit of insurance or the amount of benefit that will be paid in the event of the death of a covered person.
Proportion of person in each age group who died within a year, usually expressed as so many deaths per thousand person
Decreasing Term Insurance
Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy expire, while the premiums remains level. The intervals between decreases as usually monthly or annually
Deductible - Amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits
Provides for postponement of the commencement of an annuity until after a specified period or until the annuitant attains a specified age. May be purchased either on single - premium basis
Deferred Compensation Plan
The deferral of an employee's compensation to some future age or date. These plans are frequently used to provide fringe benefits, such as retirement income, to selected personnel
Defined Benefits Plan
A pension Plan under which benefits are determined by a specific benefit formula
Defined Contribution Plan
A tax - qualified retirement plan in which annual contributions are determined by a formula set forth in the plan. Benefits paid to a participant vary with the amount of contributions made on his or her behalf and the length of service under the plan.
Delayed Disability Provision
A disability income policy provision that allow a certain amount of time after an accident for a disability to result, and the insured remains eligible for benefits
A relatively new form of health insurance coverage typically offered on a group basis, it covers the costs of normal dental maintenance as well as oral surgery and root canal therapy
Period following the death of the breadwinner up until the youngest child reaches maturity
Has modest endowment feature. Normally is sold for ten year terms with a higher first - year premium than for subsequent year. If policy lapses, insured forfeits his or her "deposit" and receives no refund
Developed to Net Premiums Earned
The ratio of developed premiums through the year to net premiums earned. If premium growth was relatively steady, and the mix of business by line didn't materially change, this ratio measures whether or not a company's loss reserves are keeping pace with premium growth.
Development to Policyholder Surplus (IRIS)
The ratio measures reserve deficiency or redundancy in relation to policyholder surplus. This ratio reflects the degree to which year-end surplus was either overstated (+) or understated (-) in each of the past several years, if original reserves had been restated to reflect subsequent development through year end.
Direct Premiums Written
The aggregate amount of recorded originated premiums, other than reinsurance, written during the year, whether collected or not, at the close of the year, plus retrospective audit premium collections, after deducting all return premiums.
An insurer whose distribution mechanism is either the direct selling system or the exclusive agency system.
Physical or mental impairment making a person incapable of performing one or more duties of his or her occupation
Disability buy - sell agreement
An agreement between business co - owners that provides that shares owned by any one of them who becomes disabled shall be sold to and purchased by the other co-owners or by the business using funds from disability income insurance
Disability Income Insurance
A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury
Disability Income Rider
Typically a rider to a life insurance policy, it provides benefits in the form of income in the event the insured becomes totally disabled
An insurance, the act of treating certain groups of people unfairly in the sale and/or pricing of policies; treating any of a given class of risk differently from other like risk. Discrimination is expressly prohibited in most state insurance codes.
A system of coordinated health-care interventions and communications for patients with certain illnesses.
The return of part of the policy's premium for a policy issued on a participating basis by either a mutual or stock insurer. A portion of the surplus paid to the stockholders of a corporation.
The different ways in which the insured under a participating life insurance policy may elect to receive surplus earnings: in cash; as a reduction of premium, as additional paid-up insurance; left on deposit at interest; or as additional term insurance.
Company within the state in which it is chartered and in which its home office is located.
The amount of the premium that as been paid for in advance that has been "earned" by virtue of the fact that time has passed without claim. A three-year policy that has been paid in advance and is one year old would have only partly earned the premium.
Duration of time between the beginning of an insured's disability and commencement of the period for which benefits are payable
Employee Benefit Plans
Plan through with employers offer employees benefits such as coverage for medical expenses, disability, retirement and death
Employee Stock Ownership Plan (ESOP)
A form of defined contribution profit-sharing plan, an ESOP invests primarily in the securities or stock or the employer.
Employers Liability Insurance
Coverage against common law liability of an employer for accidents to employees, as distinguished from liability imposed by a workers' compensation law.
A claim on property, such as a mortgage, a lien for work and materials, or a right of dower. The interest of the property owner is reduced by the amount of the encumbrance.
Contract providing for payment of the face amount at the end of a fixed period, at a specified age of the insured, or at the insured's death before the end of the stated period.
Period specified in an endowment policy during which, if the insured dies. If the insured is still living at the end of the endowment period, he or she receives the endowment as living benefit.
Enhance Whole Life
A whole life insurance policy issued by a mutual insurer, in which policy dividends are used to provide extra death benefits or to reduce future premiums
Period during which new employees can sign up for coverage under a group insurance plan
Entire Contract Provision
An insurance policy provision stating that the application and policy contain all provisions and constitute the entire contract
An agreement in which a business assumes the obligation of purchasing a deceased owner's interest in the business thereby proportionately increasing the interest of surviving owners
Equity Indexed Annuity
A fixed deferred annuity that offers the traditional guaranteed minimum interest rate and an excess interest feature that is based on the performance of an external equities marketing index.
Errors and Omissions Insurance
Professional liability insurance that protects an insurance producer against claims arising from service he or she rendered or failed to render
Most commonly the quantity of wealth or property at an individual's death
Federal Tax imposed on the value of property transferred by an individual at his or her death
Legal impediment to denying the consequence of one's actions or deeds if they lead to detrimental actions by another
Evidence of Insurability
Any statement or proof regarding a person's physical condition, occupation, and so forth, affecting acceptance of the applicant for insurance.
Physician authorized by the medical director of an insurance company to make medical examination. Also, person assigned by a state insurance company to audit the affairs of an insurance company.
Difference between the rate of interest the company guarantees to pay on proceeds left under settlement options and the interest actually paid on such funds by the company.
A fraction used to determine the amount of annual annuity income exempt from federal income tax. The exclusion ratio as the total contribution or investment in the annuity divided by the expected ratio.
Health Insurance policy rider that waives insurer's liability for all future claims on a preexisting condition.
Specified hazards listed in a policy for which benefits will not be paid.
Exclusive Provider Organization (EPO)
A variation of the PPO concept, an EPO contracts with an extremely limited number of physicians and typically only one hospital to provide services to members; members who elect to get health care from outside the EPO receive no benefits.
Number of deaths that theoretically should occur among a group of insured persons during a given period according to the mortality table in use. Normally, a lower mortality rate is anticipated and generally experienced.
The ratio of underwriting expenses (including commissions) to net premiums written. This ratio measures the company's operational efficiency in underwriting its book of business.
Review of the previous year's claims experience for a group insurance contract in order to establish premiums for the next period.
Measure of vulnerability to loss, usually expressed in dollars or units.
The specify authority given in writing to the agent in the contract of agency.
Extended Replacement Cost
This option extends replacement cost loss settlement to personal property and to outdoor antennas, carpeting, domestic appliances, cloth awnings, and outdoor equipment, subject to limitations on certain kinds of personal property; includes inflation protection coverage.
Extended Term Insurance
Nonforfeiture option providing for the cash surrender value of a policy to be used as a net single premium at the insured's attained age to purchase term insurance for the face amount of the policy less indebtedness, for as long a period as possible, but no longer than the term of the original policy
Extra Percentage Tables
Mortality or morbidity tables indicating the percentage amount increase of premium for certain impaired health conditions.
Commonly used to refer to the principal sum involved in the contract. The actual amount payable may be decreased by loans or increased by additional benefits payable under specified conditions or stated in a rider.
Facility - of - Payment Provision
Clause permitted under a uniform health insurance policy provision allowing the company to pay up to $1,000 of benefits or proceeds to any relative appearing entitled to it if there is no beneficiary or if the insured or beneficiary is a minor or legally incompetent
Fair Credit Report Act
Federal Law requiring an individual to be informed if he or she is being investigated by an inspection company.
Family Plan Policy
All-family plan of protection, usually with permanent insurance on the primary wage earner's life and with spouse and children automatically covered for lesser amount of protection, usually term, all included for one premium.
Contributions made by employees and employers to fund Social Security benefits (OASDI)
Person in a position of special trust and confidence, e.g. in handling or supervising affairs or funds of another.
File-and-Use Rating Laws
State-based laws which permit insurers to adopt new rates without the prior approval of the insurance department. Usually insurers submit their new rates with supporting statistical data.
Final Expense Fund
Basic use for life insurance settlement option whereby the beneficiary instructs that proceeds be paid in regular installments of a fixed dollar amount. The number of payment periods is determined by the policy's face amount, the amount of each payment and the interest earned
Provides money for purchases.
Fixed - Amount Settlement Option
A life insurance settlement option whereby the beneficiary instructs that proceeds be paid in regular installments of a fixed dollar amount. The number of payment period is determined by the policy's face amount, the amount of each payment and the interest earned.
A type of annuity that provides a guarantee fixed benefits amount, payable for the life of the annuitant
Fixed-Period Settlement Option
A life insurance settlement option in which the number of payments is fixed by the payee, with the amount of each payment determined by the amount of proceeds
Amount of covered expenses payable by the insured before medical benefits are payable
A separate policy available to cover the value of goods beyond the coverage of a standard renters insurance policy including movable property such as jewelry or sports equipment.
Florida Comprehensive Health Association
Guarantee health insurance to Florida residents who cannot get coverage because of poor health rate up to 250 percent of standard rates. All health insurers, service organizations and fraternal benefits societies selling health insurance must belong to the association.
Florida Employee Health Care Access Act
State law governing provisions of group health insurance provided by insurers of HMOs to small employers
Florida Health Insurance Coverage Continuation Act
Legislation that requires insurer selling health plans to small employer to offer a right to elect continued coverage without providing evidence of insurability, to the covered employee or their dependents who will lose employer - sponsored group coverage and who is unable to obtain replacement insurance.
Florida Viatical Settlement Act
State law that provides for regulation of viatical settlement contracts and providers by the Department of Insurance.
Company operating in a state in which it is not chartered and in which its home office is not located.
Life or health insurance plan for covering groups of persons with individual policies uniform in provisions although perhaps different in benefits. Solicitation usually takes places in an employer's business with the employee's consent. Generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance.
Fraternal Benefit Insurer
Nonprofit benevolent organization that provides insurance to its members
n act of deceit, misrepresentation of a material fact made knowingly, with the intention of having another person rely on that fact and consequently suffer a financial hardship.
Provision required in most states whereby policyholders have either 10 or 20 days to examine their new policies at no obligation.
A status of complete eligibility for the full range of Social Security benefits, death benefits, retirement benefits, disability benefits and Medicare benefits.
In a retirement plan, the setting aside of funds for the payment of benefits
Future Purchase Option
Life and health insurance provisions that guarantee the insured the right to buy additional coverage without proving insurability. Also known as "guaranteed insurability option."
All premiums are paid into an insurer's general account. Thus, buyers are subject to credit-risk exposure to the insurance company, which is low but not zero.
Independent agent with authority, under contract with the company, to appoint soliciting agents within a designated territory and fix their compensation.
General Liability Insurance
Insurance designed to protect business owners and operators from a wide variety of liability exposures. Exposures could include liability arising from accidents resulting from the insured's premises or operations, products sold by the insured, operations completed by the insured, and contractual liability.
An organization that, as an extension of the federal or state government, provides a program of a social insurance.
The length of time (usually 31 days) after a premium is due and unpaid during which the policy, including all riders, remains in force. If a premium is paid during the grace period, the premium is considered to have been paid on time. In Universal Life policies, it typically provides for coverage to remain in force for 60 days following the date cash value becomes insufficient to support the payment of monthly insurance costs. Period of time after the due date of a premium during which the policy remains in force without penalty.
Graded Premium Whole Life
Variation of a traditional whole life contract providing for lower than normal premium rates during the first few policy years, with premiums increasing gradually each year. After the preliminary period, premiums level off and remain constant.
The sum of net leverage and ceded reinsurance leverage. This ratio measures a company's gross exposure to pricing errors in its current book of business, to errors of estimating its liabilities, and exposure to its reinsurers.
The total premium paid by the policyowner, it generally consists of the net premium plus the expense of operation minus interest.
Group Credit Insurance
A form of group insurance issued by insurance companies to creditors to cover the lives of debtors for the amount of their loans.
Insurance that provides coverage for a group of persons, usually employees of a company, under one master contract.
Guaranteed Insurability (Guaranteed Issue)
Arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability
Guaranteed Issue Right
The right to purchase insurance without physical examination; the present and past physical condition of the applicant are not considered.
A policy provision in many products which guarantees the policyowner the right to renew coverage at every policy anniversary date. The company does not have the right to cancel coverage except for nonpayment of premiums by the policyowner; however, the company can raise rates if they choose.
Guaranteed Renewable Contract
Health insurance contract that the insured has the right to continue in force by payment of premiums for a substantial period of time during which the insurer has no right to make unilaterally any change in any provision, other than a change in premium rate for classes of insureds
Established by each state to support insurers and protect consumers in the case of insurer insolvency, guaranty associations are funded by insurers through assessments.
A circumstance that increases the likelihood or probable severity of a loss. For example, the storing of explosives in a home basement is a hazard that increases the probability of an explosion. Any factor that gives rise to peril
Bungee jumping, scuba diving, horse riding and other activities not generally covered by standard insurance policies. For insurers that do provide cover for such activities, it is unlikely they will cover liability and personal accident, which should be provided by the company hosting the activity.
Health Care and Insurance Reform Act
This 1993 act establishes a new model for health care delivery in Florida called "managed competition".
Insurance against loss through sickness or accident bodily injury. Also called accident and health, accident and sickness, sickness and accident or disability insurance.
Health Maintenance Organization (HMO)
Health care management stressing preventive health care, early diagnosis and treatment on an outpatient basis. Persons generally enroll voluntarily by paying a fixed fee periodically.
Health Reimbursement Arrangement
Owners of high-deductible health plans who are not qualified for a health savings account can use an HRA.
Health Savings Account
Plan that allows you to contribute pre-tax money to be used for qualified medical expenses. HSAs, which are portable, must be linked to a high-deductible health insurance policy.
Holocaust Victims Insurance Act
Requires insurers that receive claims from Holocaust victims or beneficiaries, descendents or heirs, to allow, investigate and pay their rightful claims under the policy regardless of any statute of limitations. Claimants must have submitted their claims within 10 years of the effective date of the law or by July 1, 1998.
Home Health Care
Skilled or unskilled care provided in an individual's home, usually on a part time
Home Service Insurer
Insurer that offers relatively small policies with premiums payable on a weekly basis, collected by agents at the policyowner's home
Payable for charges incurred while the insured is confined to, or treated in, a hospital, as defined in a health insurance policy.
Hospital Expense Insurance
Health insurance benefits subject to a specified period of time while the injured is confined to a hospital, plus a limited allowance up to a specified amount for miscellaneous hospital expenses, such as operating room, anesthesia, laboratory fees, and so on. Also called hospitalization insurance.
Form of Health Insurance providing a stipulated daily, weekly or monthly indemnity during hospital confinement; payable on an unallocated basis without regard to actual hospital expense.
Human Life Value
An individual's economic worth, measured by the sum of his or her future earnings that is devoted to his or her family.
Amount you must pay out-of-pocket before hurricane insurance will kick in. Many insurers in hurricane-prone states are selling homeowners insurance policies with percentage deductibles for storm damage, instead of the traditional dollar deductibles used for claims such as fire and theft. Percentage deductibles vary from one percent of a home's insured value to 15 percent, depending on many factors that differ by state and insurer.
Provides for payment of annuity benefit at one payment interval from date of purchase. Can only be purchased with a single payment.
An insurer which is in financial difficulty to the point where its ability to meet financial obligations or regulatory requirements is in question.
Authority not specifically granted to the agent in the contract of agency, but which common sense dictates the agent has. It enables the agent to carry out routine responsibilities.
Incurred income taxes (including income taxes on capital gains) reported in each annual statement for that year.
Provides that, for certain reason such as misstatements on the application, the company may void a life insurance policy after it has been in force during the insured's lifetime, usually one or two years after issue.
Increasing Term Insurance
Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.
Restoration to the victim of a loss by payment, repair or replacement.
Indemnity Agency System
A system for marketing, selling and distributing insurance in which independent brokers are not affiliated with any one insurer but represent any number of insurers
A method of paying health policy benefits to insureds based on a predetermined, fixed rate set for the medical services provided, regardless of the actual expenses incurred.
Independent Insurance Agents & Brokers of America (IIABA)
Formerly the Independent Insurance Agents of America (IIAA), this is a member organization of independent agents and brokers monitoring and affecting industry issues. Numerous state associations are affiliated with the IIABA.
Indexed Whole Life
A whole life insurance policy whose death benefits increases according to the rate of inflation. Such policies are usually tied to the Consumer Price Index (CPI)
Policies providing protection to the policyowner, as distinct from group and blanket insurance. Also called personal insurance.
Individual Retirement Account (IRA)
A personal retirement account through which eligible individuals accumulate tax deferred income up to a certain amount each year, depending on the person's tax bracket.
Life insurance policy providing modest benefits and relatively short benefits period. Premiums are collected on a weekly or monthly basis by an agent calling at insured's homes.
An optional property coverage endorsement offered by some insurers that increases the policy's limits of insurance during the policy term to keep pace with inflation.
A receipt obtained from an insurance applicant when a policy (upon which the first premium has not been paid) is left with him or her for further inspection. It states that the insurance is not in effect and that the policy has been delivery for inspection only.
Report of an investigator providing facts required for a proper underwriting decision on applications for new insurance and reinstatements.
Installment Refund Annuity
An annuity income option that provides for the funds remaining at the annuitant's death to be paid to the beneficiary in the form of continued annuity payments.
All conditions pertaining to individuals that affect their health, susceptibility to injury, or life expectancy; an individual's risk profile.
A type of conditional receipt that makes coverage effective on the date the application was signed or the date of the medical exam (whichever is later) provided the applicant proves to be insurable.
Requirement of insurance contracts that loss must be sustained by the applicant upon the death or disability of another and loss must be sufficient to warrant compensation.
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
A representative of the insurer who seeks to determine the extent of the insurer's liability for loss when a claim is submitted. Independent insurance adjusters are hired by insurance companies on an "as needed" basis and might work for several insurance companies at the same time. Independent adjusters charge insurance companies both by the hour and by miles traveled. Public adjusters work for the insured in the settlement of claims and receive a percentage of the claim as their fee. A.M. Best's Directory of Recommended Insurance Attorneys and Adjusters lists independent adjusters only.
An attorney who practices the law as it relates to insurance matters. Attorneys might be solo practitioners or work as part of a law firm. Insurance companies who retain attorneys to defend them against law suits might hire staff attorneys to work for them in-house or they might retain attorneys on an as-needed basis. A.M. Best's Directory of Recommended Attorneys and Adjusters lists insurance defense attorneys who concentrate their practice in insurance defense such as coverage issues, bad faith, malpractice, products liability, and workers' compensation.
The laws that govern the business of insurance in a given state.
Insurance Institute of America (IIA) - An organization which develops programs and conducts national examinations in general insurance, risk management, management, adjusting, underwriting, auditing and loss control management.
Insurance Regulatory Information System (IRIS)
ntroduced by the National Association of Insurance Commissioners in 1974 to identify insurance companies that might require further regulatory review.
Party that provides insurance coverage, typically through a contract of insurance.
Defines and describes the scope of the coverage provided and limits of indemnification.
In superimposed major medical plan, a deductible amount between the benefits paid by the basic plan and those benefits paid by the major medical. All or part of the integrated deductible may be absorbed by the basic plan.
Interest Only Options (Interest Option)
Mode of settlement under which all or part of the proceeds of a policy are left with the company for a definite period at a guaranteed minimum interest rate. Interest may either be added to the proceeds or paid annually, semiannually, quarterly or monthly.
Interest Sensitive Whole Life
Whole life policy whose premiums vary depending upon the insurer's underlying death, investment and expense assumptions.
Interest Adjustable Net Cost Method
A method of comparing costs of similar policies by using an index that takes into account the time value of money.
There are at least 35 interest-crediting methods that insurers use. They usually involve some combination of point-to-point, annual reset, yield spread, averaging, or high water mark.
Interim Term Insurance
Term insurance for a period of 12 month or less by special agreement of the company; it permits a permanent policy to become effective at a selected future date.
Intermediate Nursing Care
Level of health or medical care that is occasional or rehabilitative, ordered by a physician, and performed by skilled medical personnel.
The return received by insurers from their investment portfolios including interest, dividends and realized capital gains on stocks. It doesn't include the value of any stocks or bonds that the company currently owns.
Investments in Affiliates
Bonds, stocks, collateral loans, short-term investments in affiliated and real estate properties occupied by the company.
Beneficiary whose interest cannot be revoked without his or her written consent, usually because the policyowner has made the beneficiary designation without retaining the right to revoked or change it.
Joint and Last Survivor Policy
A variation of the joint life policy that covers two lives but pays the benefits upon the death of the second insured.
Joint and Survivor Annuity
Covers two or more lives and continues in forces so long as any one of them survives.
Joint Life Policy
Covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy automatically terminates.
Written on the lives of children who are within specified age limits and generally under parental control.
Designed to fund retirement of self - employed individuals, name derived from the author of the Keogh Act (HR-10) under which contributions to such plans are given favorable tax treatment.
Key Person Insurance
Protection of a business against financial loss caused by the death or disablement of a vital number of the company, usually individuals possessing special managerial or technical skill or expertise.