Our insurance terms glossary is divided alphabetically by insurance terms in a quick reference guide to assist understanding the language commonly used by insurance companies. Policy documents contain a number of insurance terms because they typically define the limitations of risk and liability on the insured and any exclusions of coverage.
If you plan to start a new policy or renew your current policy with a carrier or agency, it is important to review and understand the policy differences behind individual quotes from multiple carriers. Lower policy premiums may be the result of decreased payout benefits, higher deductibles, or maximum damages allowed. It is important to identify these unique features in any policy comparison, otherwise a lower price may come at a much higher cost when you have to file a claim for loss or damages in the future.
Condition seen in the selling of insurance in which premium prices rise and fall over time in relation to capacity. The sales cycle is generally completed over several of years.
Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.
A vehicle title which states that the vehicle has been damaged and/or designated a total loss by the insurance company that paid the claim regarding it. State laws govern what vehicles require a Salvage Title.
See Statutory Accounting Principles.
An insurance policy amendment or endorsement that specifies items covered, in contrast to blanket coverage, which would cover all items fitting a given description. Auto insurance is the principal scheduled insurance purchased by consumers.
Securities And Exchange Commission (SEC)
An independent agency of the federal government tasked with regulating the U.S. securities industry and overall financial markets.
Self-Administered (Trusteed Or Directly Invested) Plan
A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, which directly invests the accumulated funds. Retirement payments are made from the fund as they fall due.
The procedure where an employer maintains all records regarding the employees covered under a group insurance plan.
A form of risk management through which a firm assumes all or a part of its own losses.
Selling Price Insurance
Coverage which applies to the value of goods which have been damaged or destroyed by an insured peril. The purpose is to assure the profit that would have been incurred through a sale. It defines the insurable value of merchandise which has been sold, but not delivered, at the amount at which it was sold, less any charges not incurred.
Senior Citizen Policies
Contracts insuring persons 65 years of age or more. In most cases, these policies supplement the coverage afforded by the government under the Medicare program. For example, see Medigap.
An asset account established by a life insurance company separate from other funds, used to match specific assets with corresponding liabilities such as pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.
Plans that provide their benefits in the form of services rendered rather than cash (for example, Blue Cross and Blue Shield).
An official agreement meant to resolve a dispute between multiple parties.
The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.
Short-Term Disability Income Insurance
Coverage designed to cover a disabled person as long as he/she remains disabled up to a specified period not exceeding two years.
A form of health insurance providing benefits for loss resulting from illness or disease.
Silver Health Plan
One of the metal plans that is included in the ACA and offered in the Marketplace. This plan typically has lower out-of-pocket costs than Bronze, but higher out-of-pockets costs than Gold and Platinum.
Single Premium Deferred Annuity (SPDA)
Retirement vehicle that allows you to make one lump sum premium payment, in exchange for a stream of income payments during retirement.
A beneficiary who is at least two generations younger than the person making the transfer.
Small Business Health Options Program (SHOP)
Program that helps businesses with between 1-50 full-time employees obtain health coverage.
Social Security Freeze
A long-term disability policy provision which establishes that the subtraction from benefits paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.
Social Security Option
An option available in some annuity contracts under which the employee may elect that monthly payments of an annuity before a specified age (62 or 65) be increased, and that payments thereafter be decreased to produce, as nearly as practical, level total annual payments, including Social Security benefits when they become due.
That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices. See also Hard Market.
Compensation awarded for actual economic losses, such as medical expenses and lost wages. See also General Damages.
Special Enrollment Period
Under ACA regulations, you typically are only able to sign up for healthcare coverage or make changes to your plan during Open Enrollment Period. However, if you’ve experienced a Qualifying Event, you qualify for a Special Enrollment Period, whereby you can sign up or make changes to your plan.
Special Risk Insurance
Coverage designed to provide financial protection against risks or hazards of a special or unusual nature.
The use of two or more funding agencies for the same pension plan. An arrangement whereby a portion of the contributions to the pension plan are paid to a life insurance company and the remainder of the contributions invested through a corporate trustee, primarily in equities.
Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor’s remarriage or death.
Sometimes referred to as a ‘Financial Responsibility Filing,’ is a liability document required by most DMV offices for insurance policies considered ‘high risk’ (individuals convicted of certain traffic violations).
Life insurance written on the basis of regular morbidity underwriting assumptions used by an insurance company and issued at normal rates.
Insurance companies for which the majority of people or organizations qualify. See also Domestic Insurer.
A set of provisions set forth in laws that prescribed certain rights and obligations of both the insured and the company under personal health insurance policies. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.
Standard & Poor’s (S&P)
A financial services company that produces research and analysis as it relates to the financial soundness of corporations.
A person who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
State Disability Plan
A plan for accident and sickness, or disability insurance required by state legislation of those employers doing business in that particular state.
State Continuation Coverage
State law, similar to Cobra, that allows employees of smaller firms (typically under 20 employees) to continue their group healthcare plan for up to nine months after losing coverage due to loss of their job, or a reduction of hours.
A fund set up by a state government to provide a specific line or lines of insurance.
State Health Insurance Assistance Program (SHIP)
Organization that provides Medicare beneficiaries with free information and counseling services.
State Insurance Department
A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance. See also Insurance Commissioner.
An argument used in product liability cases that the technology needed to avoid the loss in a particular case did not exist at the time of the product’s manufacture.
Special accounting practices for insurance companies required by state law, prescribing a greater level of detail than required by GAAP and designed to provide greater protection for the public against potential insolvency of these essential institutions.
Statutory Accounting Principles
Rules of financial computation and presentation required by statute which must be followed by an insurance company when submitting its financial statements to state insurance departments. Such principles differ from Generally Accepted Accounting Principles.
Statutory Underwriting Profit Or Loss
Premiums earned less losses and expenses, as calculated under Statutory Accounting Principles.
A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.
Step-Up In Basis
An increase in the tax basis of property to the value claimed in the taxable estate of a decedent.
An insurance company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.
An organization that provides a facility for buyers and sellers of listed securities to come together to make trades in those securities.
Stock Insurance Company
A company in which the legal ownership and control is vested in the stockholders.
Stock Life Insurance Company
A life insurance company owned by stockholders who elect a board to direct the company’s management. Stock companies, in general, issue nonparticipating insurance, but may also issue participating insurance.
Stock Redemption Plan
an entity purchase form of buy-sell agreement within a corporation that involves the corporation buying back shares from a departing owner.
A person who owns shares of stock in a corporation.
Straight Life Insurance
Whole life insurance on which premiums are payable for life.
Liability for damages even though fault or negligence cannot be proven.
Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.
Substandard (Impaired) Risk
A risk that cannot meet the normal requirements of a standard insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge.
Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.
An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.
An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.
Surgical Expense Insurance
Health insurance, which provide benefits toward the physician’s or surgeon’s operating fees. Benefits may consist of scheduled amounts for each surgical procedure.
A list of maximum amounts payable by the policy for various types of surgery, with the amount based on the severity or complexity of the operation.
The net worth of a company, equal to the amount by which assets exceed liabilities.
(1) A risk or a part of a risk for which there is no standard insurance market available.
(2) Insurance written by non-admitted insurance companies.
Survivorship Life Insurance
Policy that covers two individuals and pays out to a beneficiary, only when both covered individuals have passed.
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