GLOSSARY
• Abandonment Clause: A clause in a property insurance policy stating that the insured is not allowed to abandon damaged property and then make a claim for it with the insurer.
• Absolute Liability: Liability for damages even in cases where no fault or negligence can be proven.
• Accident: A sudden, unexpected event.
• Accident Insurance: Coverage against losses resulting from accidental bodily injuries.
• Accidental Bodily Injury: Injury sustained by an individual due to an accident.
• Accidental Death Benefit: An additional death benefit paid alongside the face value of a life insurance policy upon accidental death.
• Accounts Receivable Coverage Form: Inland marine insurance that covers the losses an insured suffers when unable to collect accounts receivable from clients.
• Accumulation Period: The time frame that must pass before insurance benefits are activated or paid out.
• Activities of Daily Living: Essential activities required for daily life, such as dressing, bathing, toileting, transferring, and eating. These activities are used to measure impairment and determine eligibility for specific insurance benefits.
• Actual Cash Value (ACV): The replacement cost of property at the time of loss, with depreciation factored in.
• Actuarial Cost Method: A method used to determine contributions required for funding a retirement plan, typically based on a fixed contribution amount.
• Actuary: An insurance professional who calculates financial contributions needed to fund insurance plans, pensions, or related areas over time.
• Additional Insured: A person or entity not initially covered under an insurance policy but added later for a specific degree of insurance protection.
• Adhesion (Contract of): An insurance contract where the insured has no negotiating power and must accept the insurer’s terms as they are.
• Adjustable Life Insurance: A flexible life insurance policy that allows the policyholder to modify the insurance plan, face amount, premium payments, and protection duration.
• Adjusted Gross Estate: The approximate net worth of a deceased individual, used as a starting point for calculating estate taxes.
• Adjuster: A professional who assesses and resolves insurance claims, either as an employee of the insurance company or an independent representative.
• Adjusting: The process of investigating and settling insurance claims.
• Administrative Services Only (ASO) Plan: A plan under which an insurance company or independent agent manages administrative duties for a self-insured group, typically for a fee.
• Advance Funding: A method in which an employer sets aside funds for an employee’s retirement before retirement begins.
• Age Limits: Minimum and maximum age limits under which an insurance company will not issue or renew a policy. Always review your policy.
• Agent: A representative of an insurance company licensed to sell, market, and manage insurance contracts on behalf of the insurer.
• Aggregate Deductible: A deductible applied to property and health insurance that combines all covered losses during a year, with the insurer paying only when the deductible limit is exceeded.
• Aggregate Indemnity: The maximum benefit payable for a disability or period of disability under an insurance policy.
• Alien Insurer: An insurance company headquartered in another country.
• Allocated Benefits: Benefits listed individually with specific amounts for various services under an insurance contract.
• All-Risk Policies: Insurance contracts that provide coverage for all losses except those specifically excluded.
• Alternate Delivery Systems: Methods of providing health services through less costly alternatives like skilled nursing facilities, home healthcare, and hospice programs.
• Ambulatory Care: Medical services delivered to patients who are not admitted to a hospital. This includes diagnosis, treatment, and rehabilitation.
• Amendment: A formal document that modifies the terms of an insurance policy, usually signed by an officer of the insurance company and the policyholder or representative.
• Annual Statement: A report filed annually by an insurance company with the state insurance department, detailing financial information.
• Annuitant: A person entitled to receive benefits under an annuity.
• Annuity: A financial contract providing income for a specified time, often seen as the opposite of life insurance because it pays while the insured is alive.
• Annuity Certain: An annuity that provides income for a fixed number of years, whether the recipient is living or deceased.
• Annuity Consideration: The payment or series of payments an annuitant makes toward funding their annuity.
• Application: A signed statement from an insurance applicant that provides information used by the insurance company to decide on coverage issuance.
• Arson: The intentional act of burning or attempting to burn property, usually for illegal or fraudulent purposes.
• Assets: Any resources owned by an insurance company, including funds, property, and securities.
• Assignment: The legal transfer of a person’s interest in an insurance policy to someone else.
• Association Captive: An insurer owned by members of a sponsoring association, such as a trade group.
• Association Group: A group formed from members of a trade or professional association to secure group insurance coverage.
• Association Group Plan: A health insurance plan provided to members of an association, allowing either group or individual franchise policy coverage.
• Assumptions: Conditions and guidelines used to calculate pension benefits.
• Attractive Nuisance: A condition, such as an unfenced pool, that can attract and potentially injure children, often leading to liability for the landowner.
• Automatic Premium Loan: A feature of a life insurance policy allowing overdue premiums to be paid from the policy’s cash value.
• Automobile Liability Insurance: Insurance providing coverage for liability related to injuries to others or damage to their property caused by a car.
• Automobile Physical Damage Insurance: Insurance that pays for the repair or loss of an insured vehicle due to covered events.
• Automobile Shared Market: A program where insurers must provide automobile coverage for individuals unable to obtain it through the standard market.
• Aviation Insurance: Insurance covering aircraft, their contents, passenger accidents, and liability.
• Bailee: A person or entity entrusted with the property of others.
• Bailees Customers Insurance: Insurance coverage for loss or damage to customers’ personal property in the possession of a bailee.
• Beneficiary: The person or entity designated to receive proceeds from a life insurance policy upon the insured’s death.
• Benefit Period: The time during which an insurance company pays benefits to the insured or dependents.
• Benefits: Payments made by an insurance company to a claimant, beneficiary, or assignee under the terms of a policy.
• Binder: A temporary insurance contract issued to provide coverage until a permanent policy is issued.
• Binding Receipt: A receipt issued for a premium payment accompanying an insurance application, serving as temporary proof of coverage.
• Blanket Contract: An insurance policy that covers property at multiple locations under one contract.
• Boiler and Machinery Insurance: Insurance covering loss from the malfunction or operation of pressure, mechanical, or electrical equipment, which are typically excluded from standard property insurance.
• Bond: A three-party agreement guaranteeing that, if the principal does not meet their obligation, the obligee will be compensated by the bond issuer.
• Broker: A representative of the insured who assists in the solicitation, negotiation, or servicing of insurance contracts.
• Broker of Record: A broker designated to manage specific insurance contracts for the insured.
• Burglary and Theft Insurance: Insurance covering losses due to burglary, theft, or robbery.
• Business Income Insurance: Insurance for business owners that covers lost profits and ongoing expenses resulting from a temporary shutdown due to an insured peril.
• Business Insurance: A commercial insurance policy that provides coverage for a business, with various forms available based on specific needs.
• Builders Risk: Insurance for contractors that covers property under construction. Once construction is completed, the policy can often be converted into a homeowner’s or commercial property policy.
• Business Personal Property: Also called “contents,” it refers to property like furniture, equipment, and inventory used in a business and owned by the insured.
• Buy-Sell Agreement: An agreement between business co-owners to purchase a deceased or disabled owner’s share of the business.
• Cafeteria Benefit Plan: A plan allowing employee to select their own benefit structure.
• Cancelable: An insurance contract that can be terminated at any time by the insurer or insured during the policy term.
• Cancellation: Termination of an insurance policy before its expiration by either the insurer or the insured.
• Cancellation Clause: A clause in an insurance contract allowing the policy to be canceled at any time by the insurer or insured.
• Capacity: The maximum amount of insurance or reinsurance that an insurance company can underwrite.
• Capital Retention Approach: A method of estimating the necessary amount of life insurance in which the proceeds are retained rather than liquidated.
• Capital Sum: A lump sum payment made for accidental death or dismemberment.
• Capitation: A healthcare payment system where a provider is paid a fixed amount per enrolled patient, regardless of services provided.
• Captive Agent: An insurance agent who only represents one insurance company.
• Captive Insurance Company: An insurance company created to cover the risks of its parent company, often when coverage is unavailable through regular channels.
• Cargo Insurance: Insurance that covers goods while they are in transit.
• Cash Surrender Value: The cash value that the policyholder receives if they surrender a life insurance policy.
• Casualty Insurance: Insurance that covers legal liability for injuries or damages caused to others.
• Catastrophe: A significant event, such as a hurricane or tornado, resulting in extraordinary loss.
• Causes of Loss Form: A commercial property insurance form listing covered perils, exclusions, and additional coverages.
• Cede: The act of transferring risk from an insurer to a reinsurer.
• Certificate of Insurance: A document summarizing the coverage, terms, and benefits provided by an insurance policy.
• Claim: A formal request made by the insured to the insurance company for payment due to a covered loss.
• Claims Made Policy: A liability insurance policy that covers claims made during the policy term, regardless of when the incident occurred.
• Class Rating: A premium rate applied to groups of similar risks.
• Clause: A specific paragraph or section in an insurance policy describing coverage, exclusions, and other relevant terms.
• Coinsurance: A clause in insurance policies where the insured shares in losses either due to underinsurance (property insurance) or by contributing a percentage of covered costs (health insurance).
• Collision Insurance: Automobile insurance that covers damage to the insured’s car resulting from a collision or overturning.
• Combined Ratio: A measure of an insurance company’s expenses and claim costs compared to the premiums received.
• Commercial General Liability Policy (CGL): Insurance providing general liability coverage, including fire, medical payments, and personal injury liability.
• Commercial Lines: Insurance coverage for businesses and commercial entities.
• Commercial Package Policy (CPP): A business insurance policy designed to cover specific insurance needs of businesses.
• Completed Operations Insurance: Insurance covering a contractor’s liability for incidents occurring after a job has been completed.
• Comprehensive Major Medical Insurance: Health insurance with low deductibles, high benefits, and coinsurance for major illnesses or injuries.
• Comprehensive Personal Liability Insurance: Insurance for individuals and families that covers personal liability for accidents, excluding those related to business activities.
• Compulsory Insurance: Insurance coverage mandated by law.
• Concealment: The act of withholding important information by an insurance applicant that could affect the underwriting decision.
• Conditional Binding Receipt: A receipt issued for premium payments accompanying an insurance application that provides coverage under specific conditions.
• Conditionally Renewable: A health insurance policy provision that allows renewal under specified conditions, though the insurer can choose not to renew.
• Conditions: Sections of an insurance policy outlining the responsibilities of the insurer and insured.
• Condominium Unit Owners Coverage Form: Commercial property insurance for condominium unit owners.
• Confining: A disability or illness that keeps the insured confined indoors.
• Consideration: One of the essential components of an insurance contract, consisting of the premium paid by the insured and statements made in the application.
• Consequential Loss: Indirect financial loss resulting from a direct loss, often referred to as an “indirect loss.”
• Construction Bond: A bond that guarantees a contractor will complete the construction project as specified.
• Contingent Annuity: An annuity paid upon a specific occurrence, such as the death of a spouse.
• Contingent Beneficiary: A person designated to receive benefits if the primary beneficiary cannot do so.
• Contingent Liability: Liability resulting from work performed by an independent contractor.
• Contract: An agreement between an insurer and insured establishing a legally enforceable obligation for benefit payments.
• Contractual Liability Insurance: Insurance providing coverage for liability assumed under a contract.
• Contributory: A group insurance plan in which employees contribute toward the premium.
• Contributory Negligence: A principle stating that an individual may be partially responsible for their injury.
• Conversion Privilege: A policy provision allowing an insured to convert group insurance to individual insurance without a medical exam.
• Convertible Term Insurance: Term life insurance that can be converted into a permanent policy without evidence of insurability.
• Coordination of Benefits (COB): A provision to determine the order in which multiple insurance policies will pay claims.
• Copay: The fixed amount an insured pays for specific services, while the insurance company covers the remainder.
• Cost Basis: The value of an investment that has already been taxed.
• Cost of Living Rider: A rider that adjusts life insurance policy benefits according to changes in the Consumer Price Index (CPI).
• Crop-Hail Insurance: Insurance covering damage to crops caused by hail or similar perils.
• Cross Purchase Agreement: An agreement between partners or shareholders to purchase a deceased partner’s interest in a business.
• Currently Insured Status: A status under Social Security allowing the family of a deceased worker to receive survivor benefits.
• Custodial Care: Non-medical care for individuals needing assistance with daily activities like eating, dressing, and bathing.
• Data Processing Insurance: Insurance covering electronic media, computers, and data processing equipment, without coinsurance requirements.
• Death Benefit: The amount paid under a life insurance policy to the beneficiary upon the insured’s death.
• Declarations: Information such as the insured’s name, description of insured property, coverage amounts, and premium payments found on the declarations page of an insurance policy.
• Declination: The refusal by an insurer to accept an insurance application.
• Deductible: The amount an insured must pay before insurance coverage kicks in for each claim or accident.
• Deferred Annuity: An annuity where income payments are postponed until a future date.
• Deferred Compensation: Compensation for services that is postponed until a later date, usually for tax advantages.
• Defined Contribution Plan: A retirement plan in which the contribution rate is fixed, and the benefits depend on the total contributions and their investment growth.
• Dental Insurance: Insurance covering dental care expenses, including accidents affecting teeth.
• Dependent: A person, usually a spouse or child, who relies on someone else for financial support.
• Deposit Premium: The initial premium payment made when applying for an insurance policy, often used toward the first month’s coverage.
• Depreciation: The decrease in value of property due to wear, tear, or obsolescence.
• Direct Loss: A financial loss directly resulting from an insured peril.
• Direct Writer: An insurance company that sells policies directly to consumers through its employees.
• Directors’ and Officers’ Liability Insurance: Insurance protecting corporate directors and officers against liability arising from wrongful acts, errors, or breaches of duty.
• Disability: A physical or mental condition that limits an individual’s major life activities.
• Disability Benefit: A regular payment made to replace income lost due to disability under a disability insurance policy.
• Disability Income Insurance: Insurance providing income replacement when the insured cannot work due to illness, injury, or disease.
• Disappearing Deductible: A deductible that decreases as the size of the covered loss increases.
• Dismemberment: The loss of a limb or use thereof, or the loss of sight due to an accident.
• Dismemberment Insurance: Insurance that provides compensation for the loss of limbs, eyesight, or other body parts due to an accident.
• Disposable Personal Income: Personal income minus personal taxes and other payments, representing income available for spending or saving.
• Dividend: An amount returned to a policyholder by an insurance company out of its earnings.
• Dividend Additions: Paid-up additional insurance purchased using dividends to increase the face amount of the policy.
• Dollar Threshold: The dollar amount that must be exceeded before an individual can sue for pain and suffering under certain no-fault auto insurance laws.
• Domestic Insurer: An insurance company licensed and operating within the state where it is domiciled.
• Double Indemnity: A life insurance provision that pays double the policy benefit when death occurs due to specified circumstances.
• Driver Education Credit: A premium discount for young drivers who have successfully completed a driver education course.
• Duplication of Benefits: Identical or overlapping health coverage under multiple insurance policies.
• Dwelling Forms: Insurance forms that cover a dwelling and the personal property it contains, with several coverage options.
• Earned Income: Income received from employment.
• Earned Premium: The portion of the policy premium that has been earned by the insurer, based on the amount of time the policy has been active.
• Economic Loss: The total cost, including both insured and uninsured expenses, associated with a mishap, such as an accident or natural disaster.
• Effective Date: The date an insurance policy becomes effective.
• Eligibility Date: The date an individual is eligible for insurance coverage.
• Eligibility Period: A specific time during which a person may enroll in an insurance plan without requiring proof of insurability.
• Eligibility Requirements: Requirements that must be met to participate in a pension plan or receive retirement benefits.
• Eligible Dependent: A dependent eligible to receive benefits under an insurance policy.
• Eligible Employee: A person eligible to receive group health or life insurance benefits based on their employment status.
• Elimination Period: The time between the onset of a disability and the start of disability insurance payments.
• Employee Dishonesty Coverage Form: A commercial crime insurance form that covers losses caused by employee dishonesty.
• Endorsements: Amendments that modify the terms of an insurance policy by adding, altering, or removing coverage.
• Endorsement: An amendment to an insurance policy that changes the coverage provided.
• Enrollment Card: A form signed by an employee to indicate participation in a group insurance plan.
• Entire Contract Clause: A clause in an insurance policy stating that the policy and attached application constitute the complete agreement between the insurer and the insured.
• Entity Purchase Agreement: An agreement for a business to buy back a deceased owner’s share.
• Errors and Omissions Insurance: Liability insurance covering losses incurred due to an error, omission, or negligence by the insured.
• Estate: The assets and liabilities owned by a person at their death.
• Estate Planning: Creating a plan for transferring property to the next generation or within a generation.
• Estoppel: A legal doctrine that prevents a person from contradicting their previous statements or behaviors if someone else has relied on them.
• Evidence of Insurability: Proof of an individual’s physical health and other relevant factors needed to determine their eligibility for insurance.
• Excess and Surplus Insurance: Insurance covering either risks beyond a certain threshold or unique risks not covered by the standard market.
• Exclusions: Specific conditions or circumstances listed in an insurance policy that are not covered by the policy.
• Exclusive Agent: An insurance agent who exclusively represents one insurance company.
• Exclusion Ratio: The portion of an annuity payment that is exempt from taxation.
• Expense Ratio: The ratio of an insurance company’s operating expenses to the premiums it has earned.
• Experience Modification Factor: A factor used in workers’ compensation insurance to adjust premium rates based on an employer’s past claim history.
• Experience Rating: A method of determining premiums based partly on the loss experience of the insured group.
• Experience Refund: A provision that allows a group policyholder to receive a refund of a portion of the premium if claims are lower than expected.
• Extended Non-owned Coverage: An endorsement for automobile insurance that provides coverage when driving non-owned vehicles regularly.
• Extended Reporting Period: An extended period after the expiration of a liability policy during which claims can still be reported.
• Extended Term Insurance: Insurance provided as a nonforfeiture option, allowing the policyholder to keep coverage for a limited period with the original face amount.
• Extra Expense Insurance: Business income insurance that reimburses a business for additional expenses incurred to keep operating after property damage.
• Face: The first page of a life insurance policy that provides key details about coverage.
• Face Amount: The death benefit amount shown on the life insurance policy.
• Factory Mutual: A mutual insurance company that insures only properties meeting high standards.
• Facultative Reinsurance: A type of reinsurance where the reinsurer can accept or reject risks presented by the insurer seeking reinsurance.
• Fair Rental Value: The compensation paid to an insured homeowner for the loss of rental income due to damage that makes the property uninhabitable.
• Family Expense Policy: Insurance covering medical expenses for the policyholder and their immediate dependents.
• Family Income Policy: A life insurance policy that provides an income for a certain period after the insured’s death.
• Family Policy: A life insurance policy covering multiple family members under one contract.
• Farm owners/Ranch owners Policy: A package policy providing property and liability coverage for farms or ranches.
• Federal Crop Insurance: Government-subsidized insurance that provides coverage against unavoidable crop losses.
• Federal Flood Insurance: Flood insurance offered by private insurers with government rate subsidies for residents in flood-prone areas.
• Fidelity Bond: A bond that reimburses an employer for losses caused by dishonest or fraudulent acts by employees.
• Fiduciary: An individual holding funds or property for another person in a position of trust.
• Financial Responsibility Law: A state law that may require drivers to demonstrate they can cover the costs of damages resulting from an accident.
• Fire: Combustion with a visible flame that escapes normal containment and causes damage.
• Fire Legal Liability: Liability insurance for damage caused by negligence to others’ property involving fire.
• First Party Insurance: Insurance coverage where the insured collects compensation directly from their insurer.
• Fixed Annuity: An annuity that provides periodic payments of a fixed amount.
• Fixed Period Installments: A life insurance settlement option where the policy proceeds are paid in fixed installments over a specified period.
• Floater: An insurance policy providing coverage for movable property, protecting against perils during transit or while located at various places.
• Flood Insurance: Insurance that provides protection against loss caused by rising water or floods.
• Forfeitures: Contributions made on behalf of employees who leave a pension plan without vesting.
• 401(k) Plan: A tax-deferred retirement savings plan offered by employers, allowing employees to contribute a portion of their earnings.
• Franchise Deductible: A deductible where the insurer is not liable if the loss is below a specified amount but pays the entire amount once it is exceeded.
• Franchise Insurance: Insurance in which individual policies are issued to employees of a common employer or members of an association.
• Fraternal Insurance: Insurance provided by a social organization for its members.
• Fund: Money set aside in trust to pay pension benefits.
• Future Increase Option: An option allowing the insured to purchase additional disability income insurance in the future without proof of insurability.
• Garage Liability Insurance: Insurance for garage owners or auto dealers that covers liabilities arising from business operations.
• General Agency System: A type of life insurance distribution system where an independent agent represents only one insurer.
• General Average: In marine insurance, a loss shared by all parties in the venture for the common good.
• General Liability Insurance: Insurance covering legal liability for injuries or damage caused by property ownership, business operations, or product sales.
• Glass Insurance: Insurance covering plate glass, lettering, frames, and ornamentation.
• Good Student Discount: A discount on automobile insurance premiums for young drivers who are academically successful.
• Grace Period: A specific period after a premium is due during which the insurance remains in force, allowing the policyholder to make the payment.
• Gross Estate: The total assets and liabilities owned by an individual at death.
• Gross Negligence: Intentional failure to perform a duty, showing reckless disregard for consequences.
• Gross Premium: The total premium paid for an insurance policy.
• Group Annuity: A pension plan providing annuities at retirement to a group of people under one contract.
• Group Annuity Contract: A contract used as a funding instrument for pension benefits for a group.
• Group Contract: An insurance policy covering a group of people, typically issued to an employer or association.
• Group Health Insurance: Health insurance covering a group of people under a single policy, usually through an employer or association.
• Group Life Insurance: Life insurance covering a group of people under a master policy without individual medical exams.
• Group Permanent Plan: A pension plan using cash value life insurance on a group basis, with cash values funding retirement benefits.
• Group Term Life Insurance: A type of life insurance covering employees during their working years, renewed annually.
• Guaranteed Renewable Contract: An insurance contract that allows the insured to renew until a specific age, without changes except premium adjustments by class.
• Guardian: A court-appointed person responsible for managing the affairs of another.
• Hail Insurance: Insurance protecting against losses to crops from hailstorms.
• Hazard: A condition increasing the likelihood of a loss.
• Health Insurance: Insurance covering financial losses due to illness or injury, including hospital, medical, and disability coverage.
• Health Maintenance Organization (HMO): A prepaid medical service plan offering a range of health services for members at a fixed fee.
• High-Risk Automobile Insurer: An insurance company specializing in covering drivers with poor driving records.
• Hold-Harmless Clause: A clause in an insurance policy releasing one party from liability.
• Homeowners Policy: A package policy providing broad property and liability coverage for homeowners.
• Hospice: A healthcare facility providing care and support for terminally ill patients.
• Hospital Expense Insurance: Insurance covering hospital room, board, and miscellaneous expenses.
• Hospital Miscellaneous Services: Hospital services other than room and board, such as X-rays, lab tests, and anesthesia.
• Hull Insurance: Marine insurance covering physical damage to a ship, also used to describe aircraft physical damage coverage.
• Human Life Value: A method for calculating the amount of life insurance needed based on income, expenses, earning years, and inflation.
• Hurricane: A tropical storm with extremely low pressure and winds exceeding 75 mph.
• Immediate Annuity: An annuity that begins making payments immediately after purchase.
• Incontestable Clause: A clause preventing the insurer from contesting the policy’s validity after it has been in force for a specified period.
• Indemnification: Compensation for a loss, either through payment, repair, or replacement.
• Independent Agent: An agent representing multiple insurance companies on a commission basis.
• Independent Agency System: A system in which an independent agent represents several insurers.
• Individual Contract: An insurance policy issued to an individual for coverage.
• Individual Deductible: The deductible amount each insured must pay before insurance benefits begin.
• Individual Insurance: Insurance providing coverage for an individual or family.
• Individual Retirement Account (IRA): A retirement account allowing individuals to contribute earnings, with tax advantages.
• Industrial Life Insurance: Life insurance in small amounts, typically less than $1,000, with premiums payable weekly or monthly.
• Inflation-Guard Endorsement: An endorsement that periodically increases the insured amount in a homeowner’s policy to account for inflation.
• Initial Reserve: The reserve held by an insurer at the beginning of a policy year.
• Inland Marine Insurance: Insurance covering property in transit, movable property, and specific types of fixed property like bridges or tunnels.
• Innkeepers Legal Liability: Liability coverage for hotel or motel owners for the property of their guests.
• In-Patient: A person admitted to a hospital for medical treatment.
• Insolvent: Unable to meet financial obligations due to insufficient assets.
• Insurability: The insurer’s acceptance of an applicant for coverage.
• Insurable Risk: A risk that meets certain criteria making it suitable for insurance, such as being accidental and calculable.
• Insurance: A system under which individuals, businesses, or entities pay a premium in exchange for compensation for specific losses under predetermined conditions.
• Insurance Company: An organization licensed to provide insurance services to the public.
• Insurance Commissioner: The state official responsible for regulating the insurance industry.
• Insured: The person or organization covered by an insurance policy.
• Insurer: The party in an insurance contract that promises to pay for losses or provide benefits.
• Insuring Agreement: The part of an insurance contract that outlines the insurer’s obligations.
• Insuring Clause: A clause specifying the type of loss covered by the insurance policy.
• Interest: Money paid for the use of money, often relevant in loan or investment contexts.
• Intestate: Dying without leaving a legal will, causing the distribution of assets to be managed by the courts.
• Investment Income: The income earned by an insurance company from investments, such as interest and dividends.
• Irrevocable Beneficiary: A beneficiary designation that cannot be changed without the beneficiary’s consent.
• Irrevocable Trust: A type of trust that cannot be altered or canceled by the trust’s creator.
• Jettison: The act of throwing cargo overboard from a vessel to prevent it from sinking.
• Jewelers Block Insurance: Comprehensive insurance coverage for jewelers against losses to which they are exposed.
• Joint and Several Liability: A legal principle allowing an injured party to recover full compensation from any one of the parties responsible for an injury, regardless of the degree of each party’s fault.
• Joint-and-Survivor Annuity: An annuity that provides income for the longer lifetime of two people.
• Joint Underwriting Association (JUA): An organization providing insurance to individuals unable to obtain it in the regular market, with costs shared by insurers.
• Jumping Juvenile Insurance Policy: Life insurance purchased for children under a specific age, with coverage that increases as they grow.
• Keogh (HR 10) Account: A retirement savings account available to self-employed individuals, allowing tax-deductible contributions.
• Key-Person Insurance: Insurance that protects a business from financial loss due to the death or disability of a key employee.
• Lapse: Termination of an insurance policy due to non-payment of premiums.
• Lapsed Policy: A policy that has been terminated for non-payment of premiums.
• Larceny: The unlawful taking of someone else’s property.
• Law of Large Numbers: A concept that states that the greater the number of exposures, the closer actual results will align with the expected results.
• Legal Reserve: The minimum reserve an insurance company must maintain to meet future claims, as calculated by state law.
• Level Premium: A premium that remains consistent throughout the term of a policy.
• Level Premium Life Insurance: Life insurance where premiums remain the same throughout the policy’s term.
• Liability: A legally enforceable obligation to pay for damages or losses caused by one’s actions or negligence.
• Liability Insurance: Insurance covering the legal liability of the insured for injuries or damages to others, such as bodily injury or property damage.
• Liability Limits: The maximum amount an insurance company will pay under a liability policy for a covered loss.
• License and Permit Bond: A surety bond that guarantees a person will comply with laws and regulations when issued a license or permit.
• Life Annuity: A series of payments made throughout the lifetime of the annuitant.
• Life Expectancy: The average number of years a person of a given age is expected to live, based on statistical data.
• Life Income: A life insurance settlement option in which proceeds are paid out for the lifetime of the beneficiary.
• Life Insurance: Insurance providing a death benefit to a beneficiary upon the death of the insured.
• Life Insurance in Force: The total face value of all life insurance policies that are active at a given time.
• Lifetime Disability Benefit: A disability benefit paid to an insured for as long as they remain totally disabled.
• Limited Policy: Insurance that covers only specific diseases or accidents, rather than general coverage.
• Liquidation: The process of dissolving a company by selling off its assets for cash.
• Liquor Liability Insurance: Insurance for businesses that sell alcohol, covering liability arising from customers’ intoxication.
• Living Benefits Rider: An insurance rider allowing the insured to add long-term care benefits to a life insurance policy.
• Living Trust: A trust created while the trust’s creator is still alive, often used for estate planning.
• Long-Term Care: Maintenance and healthcare services provided to the chronically ill or disabled. Services can be provided in a facility or at home.
• Long-Term Disability Insurance: Insurance providing income replacement for an employee who is unable to work due to a long-term illness or injury.
• Loss: The reduction in value of an insured’s property caused by an insured peril.
• Loss Control: Measures taken to reduce the frequency or severity of potential losses.
• Loss Payable Clause: A clause directing the insurance company to pay a mortgagee or other party with an interest in the insured property.
• Loss Prevention: Actions taken to reduce the probability of a specific loss occurring.
• Loss Ratio: The ratio of claims paid to premiums received.
• Loss Reserve: The estimated amount set aside by an insurer to cover future claims.
• Lump-Sum: A single payment of the entire benefit amount under an insurance policy.
• Mail Order Insurer: An insurance company selling policies directly to consumers via mail or other mass media channels, eliminating the need for agents.
• Maintenance Bond: A bond that guarantees the quality of workmanship or materials for a specified period after project completion.
• Major Medical Insurance: Health insurance providing high coverage limits for major medical expenses with a focus on catastrophic healthcare needs.
• Malpractice: Improper or negligent treatment by a healthcare provider, potentially leading to patient harm.
• Malpractice Insurance: Insurance providing liability protection to healthcare professionals against claims of malpractice.
• Managed Care: A healthcare system designed to provide services cost-effectively by coordinating care through a network of selected providers.
• Manual Rate: A rate developed for insurance coverage using standard tables, referred to as rate manuals.
• Marine Insurance: Insurance primarily covering transportation risks, including goods in transit and means of communication.
• Marital Deduction: An estate tax deduction available to a deceased person’s estate when the decedent is survived by a spouse.
• Master Policy: An insurance policy covering a group of people, with individual certificates issued to members of the group.
• McCarran-Ferguson Act: A 1945 federal law affirming state regulation of the insurance industry while exempting insurers from federal antitrust laws to the extent that state regulation exists.
• Medicaid: A state-administered public assistance program providing healthcare for individuals with low income and resources.
• Medical Examination: An examination performed by a healthcare professional to assess the health of an insurance applicant.
• Medical Expense Insurance: Health insurance covering medical expenses such as doctor visits, hospital stays, and medical supplies.
• Medical Payments Insurance: Insurance that reimburses the insured for medical expenses without regard to liability, available under certain automobile and liability policies.
• Medicare: A federal government program providing hospital insurance (Part A) and supplementary medical insurance (Part B) under the Social Security Act.
• Miscellaneous Expenses: Hospital expenses other than room and board, such as laboratory fees and medical supplies.
• Misrepresentation: Providing false, incorrect, or incomplete information on an insurance application.
• Mode of Premium Payment: The frequency of premium payments, such as monthly, quarterly, semiannually, or annually.
• Moral Hazard: A risk arising from an individual’s lack of integrity or honesty, increasing the likelihood of loss.
• Morbidity: The frequency of disease or illness within a defined population.
• Morbidity Tables: Actuarial tables showing the likelihood of sickness or injury in a population.
• Mortality Table: A table that shows how many individuals of a given age are expected to be alive at each future age.
• Multi-Peril Policy: An insurance policy that provides coverage for several different types of risks or perils under one contract.
• Mutual Insurance Company: An insurance company owned by its policyholders, with any surplus earnings returned to the policyholders as dividends.
• Name Position Bond: A fidelity bond covering losses caused by the dishonesty of specifically named employees.
• Named Perils: Specific risks listed in an insurance policy for which coverage is provided, such as fire, theft, or windstorm.
• National Association of Insurance Commissioners (NAIC): An association of state insurance regulators working to promote national standards in insurance regulation.
• Negligence: Failure to act with the level of care that a reasonable person would have exercised in the same circumstances.
• Net Premium: The portion of an insurance premium that covers policy benefits, excluding expenses and profit.
• No-Fault: A type of auto insurance system in which compensation is paid by an insurer without regard to who was at fault.
• No-Fault Automobile Insurance: Auto insurance that pays compensation for financial losses regardless of fault in an accident.
• Non-Admitted Insurance Company: An insurer not licensed to do business in a particular state.
• Noncancellable: A policy that cannot be canceled by the insurer, as long as premiums are paid on time, with guaranteed rates.
• Nonconfining Sickness: An illness that does not require the insured to stay indoors.
• Noncontributory: A plan in which the employer pays the full cost of insurance premiums, with no contributions required from employees.
• Non-Disabling Injury: An injury that does not qualify the insured for total or partial disability benefits.
• Nonforfeitable Benefits: Pension plan benefits that cannot be taken away, even if the employee leaves the job.
• Nonoccupational Policy: An insurance policy covering off-the-job accidents or illnesses.
• Nonowned Auto: An automobile that is neither owned, leased, hired, nor borrowed by the insured but is used in connection with business.
• Nonparticipating: Insurance under which the policyholder is not entitled to share in the insurer’s surplus or dividends.
• Nonrenewal: The termination of an insurance policy at its expiration date or renewal date.
• Notice of Cancellation: Written notice from an insurer stating their intention to cancel the policy.
• Obligee: The person or entity to whom an obligation is owed, typically under a surety bond.
• Obligor: The person bound by an obligation, often in the context of surety bonds.
• Occupational Hazards: Specific risks associated with the insured’s job that increase the likelihood of loss.
• Occurrence: An event that results in a covered loss.
• Occurrence Coverage: Liability insurance that covers claims for occurrences taking place during the policy period, regardless of when the claim is filed.
• Ocean Marine Insurance: Insurance covering vessels, cargo, and related liabilities associated with maritime activity.
• Optionally Renewable Contract: A health insurance policy that can be renewed at the insurer’s discretion on the policy anniversary date.
• Ordinary Life Policy: Whole life insurance in which premiums are paid throughout the insured’s lifetime.
• Out-of-Pocket Limit: The maximum amount an insured must pay before an insurer will pay 100% of covered expenses.
• Outpatient: A patient who receives medical care without being admitted to a hospital.
• Overhead Expense Insurance: Insurance covering business expenses, such as rent and utilities, during the insured’s total disability.
• Owners and Contractors Protective Liability Policy: Insurance covering an insured against losses caused by the negligence of contractors or subcontractors.
• Package Policy: A single policy combining multiple types of coverage, such as property and liability.
• Paid-Up Insurance: Life insurance for which all required premiums have been paid.
• Paramedical Examination: A physical examination conducted by a trained healthcare professional other than a physician, often for insurance purposes.
• Partial Disability: A condition in which an illness or injury prevents an insured from performing some functions of their occupation.
• Participating Policy: A life insurance policy that shares a portion of the insurer’s surplus with the policyholder through dividends.
• Pension Benefits: Payments provided according to a pension plan upon retirement.
• Pension Plan: A plan providing retirement income for employees, often funded by employer contributions.
• Percentage Participation: A health insurance provision in which the insurer and insured share the costs of covered losses.
• Peril: The specific cause of a loss that is covered by an insurance policy, such as fire, theft, or natural disaster.
• Permanent Life Insurance: Life insurance that remains in force for the insured’s entire lifetime, usually accumulating a cash value.
• Permit Bond: A surety bond guaranteeing that a person issued a permit will comply with applicable laws and ordinances.
• Persistency: The length of time insurance remains active with a company, showing customer retention rates.
• Personal Articles Floater: A type of insurance policy providing coverage for valuable personal property that can be moved, such as jewelry, furs, or fine art.
• Personal Injury Protection (PIP): First-party, no-fault auto insurance that covers medical, hospital, lost income, and funeral expenses.
• Personal Lines: Types of insurance that protect individuals and families, such as auto and homeowner’s insurance, as opposed to commercial lines.
• Physical Damage: Damage or loss to an automobile caused by a covered peril, such as collision or theft.
• Plan Administrator: The individual or entity responsible for controlling and managing money or property held in a retirement or insurance plan.
• Point-of-Service Plans: Healthcare plans allowing patients to choose between in-network and out-of-network providers, combining elements of HMO and PPO plans.
• Policy: A legal document issued by an insurer to the policyholder, detailing the coverage, exclusions, terms, and conditions.
• Policy Dividend: A refund of part of the premium under a participating insurance policy, depending on the insurer’s financial experience.
• Policy Loan: A loan issued by a life insurance company to a policyholder using the policy’s cash value as collateral.
• Policy Reserves: The funds an insurer sets aside to fulfill its future policy obligations.
• Policy Term: The length of time an insurance policy provides coverage, often one year for most policies.
• Policyholder: The individual or entity who owns an insurance policy.
• Policyholders’ Surplus: The amount by which an insurance company’s assets exceed its liabilities, available to meet obligations to policyholders.
• Pool: An organization of insurers that underwrites particular types of risks, sharing premium income and losses.
• Pre-Admission Certification: A process in which a healthcare professional assesses a physician’s recommendation for hospital admission to ensure it is necessary.
• Preexisting Condition: A physical or mental health condition that existed before the effective date of the insurance policy.
• Preferred Provider Organization (PPO): A healthcare arrangement in which patients use a network of providers for services at reduced fees.
• Premium: The amount paid by the insured to keep their insurance coverage active.
• Premium Finance: A financing arrangement allowing the insured to make a down payment and pay the remainder of the premium in installments.
• Primary Insurance: The insurance that pays first before any other coverage an insured may have.
• Principal Sum: A one-time lump sum payment made in the event of accidental death or dismemberment.
• Probate: The legal process through which a deceased person’s will is validated, and their assets are distributed.
• Probate Estate: The portion of a deceased person’s assets and liabilities managed through probate court.
• Probationary Period: The waiting period between when a policy is issued and when coverage for certain risks, such as sickness, becomes effective.
• Product Liability: Legal liability incurred by manufacturers, distributors, or sellers for injuries caused by their products.
• Product Liability Insurance: Insurance covering financial losses arising from legal claims related to defective products.
• Proof of Loss: Documentation submitted to an insurer by the insured to support a claim for coverage.
• Property Insurance: Insurance that provides financial protection against the loss of or damage to physical property.
• Provision: A specific clause in an insurance policy that outlines coverage, exclusions, conditions, or requirements.
• Proximate Cause: The primary cause of a loss in an unbroken chain of events, leading to a covered loss.
• Punitive Damages: Monetary compensation awarded by a court to punish a defendant for wrongful conduct beyond the actual harm done.
• Pure Risk: A risk that involves only the possibility of loss, with no opportunity for gain, and is generally insurable.
• Qualification Period: The time period that must pass before an insured is eligible to receive benefits.
• Qualified Impairment Insurance: Insurance with restricted benefits for individuals with specific impairments that prevent them from obtaining standard coverage.
• Qualified Plan: A retirement plan that meets IRS requirements for special tax treatment.
• Qualifying Event: An occurrence (e.g., termination of employment, divorce, death) that makes an insured eligible for COBRA continuation coverage.
• Quick Assets: Assets that can be quickly converted into cash.
• Radius of Operation: A term used to determine the rate for business-owned vehicles based on their operational area.
• Rate: The pricing factor used to calculate an insurance premium.
• Reasonable and Customary Charge: A healthcare charge that is consistent with the usual rate for services in a specific geographical area.
• Rebating: The act of providing a portion of the commission to the insured as an incentive to buy insurance.
• Recurring Clause: A clause in a health insurance policy specifying the period during which a recurrence of a condition is treated as a continuation of an earlier claim.
• Reduced Paid-up Insurance: A life insurance policy option where the original policy’s coverage amount is reduced, but coverage continues without the need for further premium payments.
• Rehabilitation: Either the process of restoring a disabled person to employment or a provision in a disability policy allowing continuation of benefits during retraining.
• Reimbursement: Payment made to cover expenses that have been incurred as a result of a loss.
• Reinstatement: The resumption of coverage under a lapsed insurance policy upon fulfillment of specific conditions, such as payment of overdue premiums.
• Reinsurance: An arrangement where one insurer transfers part or all of its risks to another insurer to reduce liability.
• Renewable Term Insurance: Term life insurance that can be renewed at the policyholder’s option without requiring evidence of insurability.
• Renewal: The extension of an insurance policy for an additional period beyond its original term.
• Rental Insurance: Insurance that provides coverage similar to homeowners’ insurance for personal property owned by renters.
• Replacement: The substitution of coverage from one policy to another.
• Replacement Cost: The cost to replace or repair property without deducting for depreciation.
• Representation: Statements made by an insurance applicant that are believed to be true to the best of their knowledge.
• Rescission: The termination of an insurance policy by the insurer due to misrepresentation or nondisclosure by the insured.
• Reserve: An amount set aside by an insurance company to meet future claims and obligations.
• Residual Disability: A condition of partial disability following a period of total disability.
• Residual Market: Insurance options for individuals or businesses unable to obtain coverage in the regular market, often state-provided.
• Retention: The amount of risk retained by the insurer instead of transferring it to a reinsurer.
• Retrocession: A reinsurer’s act of obtaining reinsurance from another company.
• Retrospective Date: The date after which claims are covered under a claims-made liability policy.
• Retrospective Rating: A premium calculation method allowing adjustment based on the insured’s actual experience during the policy period.
• Rider: An amendment or addition to an insurance policy that modifies coverage.
• Risk: The possibility of loss, used to refer to the insured or the subject of insurance.
• Risk Retention Groups: Liability insurance companies owned by their policyholders.
• Robbery: The unlawful taking of property from a person by force or threat.
• Rollover: The transfer of funds from one retirement account to another, maintaining the tax-deferred status.
• Running Down Clause: Coverage added to a marine hull policy for damage to another vessel caused by a collision.
• Salvage: Recovery made by an insurance company from the sale of property taken over as part of a loss settlement.
• Schedule: A list of items covered by an insurance policy, providing descriptions and values.
• Self-Administration: When an employer manages records for employees covered under a group insurance plan.
• Self-Insurance: A form of risk management where a business assumes its own risks instead of purchasing insurance.
• Settlement: The payment made under an insurance policy for a covered loss.
• Settlement Options: Different methods of paying insurance policy proceeds to a beneficiary.
• Short-Term Disability Income Insurance: Insurance that provides income replacement for disabilities lasting a short period, typically 13-26 weeks.
• Sickness Insurance: Health insurance that provides benefits for illnesses.
• Special Damages: Compensation awarded for actual economic losses, such as medical expenses and lost income.
• Special Risk Insurance: Insurance for unusual risks not covered by standard policies.
• Split Funding: Using multiple funding sources, such as a corporate trustee and a life insurance company, for a pension plan.
• Standard Insurance: Insurance issued using the insurer’s regular underwriting standards and at normal rates.
• Standard Markets: Insurance markets that provide coverage for typical risks.
• Standard Provision: Mandatory clauses required by state regulations that must be included in insurance policies.
• Standard Risk: An individual considered to have average risk characteristics and qualifies for insurance without additional rating or restrictions.
• State Fund: An insurance fund operated by a state government to provide specific types of insurance, such as workers’ compensation.
• State Insurance Department: A government body responsible for overseeing the insurance industry and ensuring compliance with state laws.
• Step-Rate Premium: A premium structure that increases periodically according to a set schedule.
• Stockholder: A person or entity owning shares in a corporation.
• Stock Insurance Company: An insurance company owned by its shareholders who provide capital and share profits.
• Stock Life Insurance Company: A life insurance company owned by shareholders who elect the board of directors.
• Stock Redemption Agreement: A buy-sell agreement involving the corporation buying back the shares from a deceased shareholder’s estate.
• Strict Liability: Liability assigned without the need to prove negligence, often used in cases involving hazardous activities or defective products.
• Subrogation: The legal right for an insurer to seek reimbursement from the responsible party after paying out a claim to the insured.
• Substandard Insurance: Insurance issued to individuals who present higher risks, often with special restrictions or higher premiums.
• Substandard Risk: An individual with poor health or other factors that do not meet the requirements of standard underwriting, resulting in extra premiums or coverage limitations.
• Supplementary Contract: An agreement in which an insurer retains a policy’s cash value or death benefit and pays it out according to a settlement option.
• Surety Bond: A bond guaranteeing the performance of certain obligations, often used by contractors to ensure they fulfill contractual duties.
• Surgical Expense Insurance: Health insurance providing coverage for surgical procedures, based on a schedule or other specified benefits.
• Surgical Schedule: A list in a health insurance policy specifying the maximum amounts payable for different types of surgeries.
• Surplus: The amount by which an insurer’s assets exceed its liabilities.
• Surplus Lines: Insurance for unusual or high-risk situations that cannot be covered through standard insurers, often issued by non-admitted insurers.
• Syndicate: A group of insurers or underwriters collaborating to provide coverage for high-risk properties or events.
• Tax Basis: The original value of an investment or asset, used to calculate gains for tax purposes.
• Tenants Improvements and Betterments: Additions or improvements made by a tenant to leased property that cannot be legally removed.
• Term: The duration for which an insurance policy or bond provides coverage.
• Term Insurance: Life insurance that provides coverage for a specified period, paying a benefit only if the insured dies during that period.
• Testamentary Trust: A trust created after the grantor’s death, based on instructions provided in their will.
• Third Party Insurance: Insurance that compensates someone other than the insured or the insurer, such as a liability claim for a third party.
• Threshold Level: The point at which a tort claim for compensation can be pursued, typically determined by a monetary amount or type of injury.
• Time Limit on Certain Defenses: A provision in health insurance policies that limits the time during which an insurer can contest claims based on misstatements in the application.
• Tort: A wrongful act, other than a breach of contract, that results in legal liability.
• Travel Accident Insurance: Limited coverage for accidents that occur while the insured is traveling.
• Trust: A legal arrangement in which one party holds property for the benefit of another.
• Turnover Rate: The rate at which employees leave a job other than by death or retirement.
• Twisting: The practice of misleading a policyholder to replace an insurance policy with another, often to the detriment of the insured.
• Umbrella Liability Policy: Insurance providing coverage beyond the limits of an underlying liability policy, as well as additional protection.
• Underwriter: An insurance professional who assesses risks to determine whether the insurer should provide coverage and, if so, at what terms.
• Underwriting: The process of evaluating a risk to determine if it is insurable, and establishing terms and rates.
• Underwriting Profit or Loss: The financial outcome of an insurer’s underwriting operations, based on claims paid versus premiums received.
• Unearned Premium: The portion of the premium that has not yet been earned by the insurer, representing the period of coverage not yet provided.
• Uniform Premium: A premium that is the same for all insured individuals regardless of factors like age, gender, or occupation.
• Uninsured / Underinsured Motorist Coverage: Auto insurance providing coverage for injuries caused by a driver who has no insurance or insufficient coverage.
• Universal Life Insurance: Life insurance offering flexible premiums, adjustable death benefits, and a cash value component based on current interest rates.
• Valuable Papers and Records: Insurance coverage for important documents and records, providing protection against physical loss or damage.
• Variable Annuity: An annuity in which the periodic payment amount may vary based on the performance of investments.
• Variable Life Insurance: A type of life insurance where benefits are linked to the value of underlying investments.
• Vesting: A provision in a pension plan that grants a participant rights to accrued benefits after meeting certain requirements, even if employment ends.
• Voluntary Market: The insurance market in which coverage is offered without state intervention or requirements, obtained directly from an insurer.
• Waiting Period: The period between the start of coverage and when the insured becomes eligible for benefits.
• Waiver: A clause or rider that exempts the insured from specific policy requirements, such as premium payments in the case of disability.
• Waiver of Premium: A provision allowing the continuation of a life insurance policy without premium payments during periods of total disability.
• Whole Life Insurance: Permanent life insurance that pays a benefit on the death of the insured, with premiums that remain level over time.
• Will: A legal document stating an individual’s wishes regarding the distribution of their assets after death.
• Workers’ Compensation: A statutory system that provides benefits to employees injured in the course and scope of employment, without regard to fault.
• Workers’ Compensation Insurance: Insurance that covers an employer’s liability for employees’ work-related injuries or illnesses, including medical costs and lost wages.
• Written Premiums: The total amount of premiums collected by an insurer for all issued policies during a specific period.
• X-date: The expiration date of an insurance policy.
• Yacht Insurance: Insurance providing coverage for damage to a yacht, as well as liability coverage for injuries or property damage caused by the yacht.
• Yearly Renewable Term Insurance: Term life insurance that can be renewed annually without the need for a medical examination or evidence of insurability.
• Zone System: A system used by the National Association of Insurance Commissioners for examining insurance companies in a specific geographical area, where examination results are accepted by multiple states.