Lapse: The termination
of an insurance policy due to non-payment of premium(s).
Lapsed Policy: A
policy terminated for non-payment of premiums.
Larceny: The unlawful
taking of personal property of another.
Law of Large Numbers:
A concept that the greater number of exposures, the more
closely actual results approach the probable results
expected from a number of exposures.
Legal Reserve: The
minimum reserve which an insurance company must keep to
meet future claims and obligations, as calculated under
their state insurance code.
Level Premium: A
premium which remains unchanged throughout the life of a
policy, example: level term insurance and long term care
insurance.
Level Premium Life
Insurance: Life insurance for which the premium remains
the same from year to year.
Liability: Any legally
enforceable act or obligation.
Liability Insurance:
Insurance covering the legal liability of the insured
resulting from injuries to a third party to their body or
damage to their property.
Liability Limits: The
maximum sums listed on a liability policy which an
insurance company provides protection.
License and Permit
Bond: A type of surety bond guaranteeing that a person
bonded will comply with all laws and regulations that
govern their activities.
Life Annuity: A series
of payments which once begun, continue throughout the
remaining lifetime of the annuitant but not beyond.
Life Expectancy: The
average number of years of life remaining for a group of
persons of a given age.
Life Income: A life
insurance settlement option in which the policy proceeds
are paid during the lifetime of the beneficiary.
Life Insurance:
Insurance providing payment of a specified amount on the
insured's death, either to his or her estate or to a
designated beneficiary.
Life Insurance in
Force: The total sum of the face amount, plus dividend
additions, of life insurance polices outstanding at a
given time.
Lifetime Disability
Benefit: A disability benefit to replace income lost by
an insured person as long as they are totally disabled,
even for a lifetime.
Limited Policy: A
contract which covers only certain specified diseases or
accidents.
Liquidation: The
dissolving of a company by selling its assets for cash.
Liquor Liability
Insurance: Provides protection for the owners of an
establishment that sells alcoholic beverages against
liability arising out of accidents caused by intoxicated
customers.
Living Benefits Rider:
A rider that allows insureds to add Long Term Care
benefits to a life insurance policy.
Living Trust: A trust
created while the creator of the trust is living.
Long-Term Care: The
care of broad-ranged maintenance and health services to
the chronically ill or disabled. Services may be provided
on an inpatient (rehabilitation facility, nursing home,
mental hospital), outpatient, or at-home basis. Most long
term care premiums are level.
Long-Term Disability
Insurance: Insurance to provide a reasonable replacement
of a portion of an employee's earned income lost through
serious illness or injury during the normal work career.
Loss: The reduction in
the value of an insured's property caused by a covered
peril.
Loss Control: Any
actions intended to reduce the frequency or severity of
losses.
Loss Payable Clause: A
mean of protecting a mortgagee's interest in property by
directing the insurer to make a loss payment to the
mortgagee in the event of a loss.
Loss Prevention: A
measure which reduces the probability of a particular
loss but does not eliminate completely all possibility of
that loss
Loss Ratio: The ratio
of claims to premiums.
Loss Reserve: An
amount set up as the estimated cost of a claim.
Lump-Sum: Payment
within one taxable year of the entire balance payable to
a beneficiary.
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Glossary
Mail Order Insurer: An
insurance company that sells insurance policies through
the mail, or other mass media, eliminating a need for
agents.
Maintenance Bond: A
bond that guarantees against defects in workmanship or
materials for a stated period of time after the
acceptance of the completed work.
Major Medical
Insurance: Health insurance that provides benefits for
major illness and injury. Usually characterized by a
large benefit maximum ranging up to $5,000,000.00, or no
limit. This insurance, above an initial deductible,
reimburses the major part of charges for hospital,
doctor, private nurses, medical appliances, prescribed
out-of-hospital treatment, drugs, and medicines.
Malpractice: Improper
care, conduct, or treatment by a physician, hospital, or
other provider of health care.
Malpractice Insurance:
Coverage for a professional practitioner, such as a
doctor or a lawyer, against liability claims resulting
from alleged malpractice while professional services were
performed.
Managed Care: A health
care system that delivers appropriate health care
services to covered individuals by arrangements with
selected providers.
Manual Rate: The
premium rate developed for a group insurance coverage
from standard rate tables normally referred to as its
rate manual.
Marine Insurance: A
form of insurance primarily concerned with means of
transportation and communication, and with goods in
tmransit.
Marital deduction: A
reduction of an estate for estate tax purposes, which is
available if the decedent is survived by his or her
spouse.
Master Policy: Two
definitions: (1) An insurance policy that is issued to an
employer or trustee, establishing a group insurance plan
for designated members of an eligible group, or (2) A
property insurance policy issued to an insured who may
issue certificates of insurance to cover properly of
others.
McCarran-Ferguson Act:
The Federal Law passed in 1945 stating that continued
regulation of the insurance industry by the states is in
the public interest and that federal antitrust laws apply
to insurance only to the extent that the industry is not
regulated by state law.
Medicaid: State
programs of public assistance to persons whose income and
resources are insufficient to pay for health care.
Medical Examination:
An examination given by a qualified physician to
determine to the insurability of an applicant.
Medical Expense
Insurance: A type of health insurance that provides
benefits for expenses incurred for medical care, such as:
expenses of physicians, hospital, nursing, and related
health services, and supplies.
Medical Payments
Insurance: A coverage, available in various automobile
and liability insurance policies, in which the insurer
agrees to reimburse the insured and others, without
regard for liability.
Medicare: The United
States federal government program of Hospital Insurance
(Part A) and Supplementary Medical Insurance (Part B)
protection provided under the Social Security Act.
Miscellaneous
Expenses: Any expenses in connection with hospital
insurance, hospital charges other than room and board,
such as X-rays, drugs, laboratory fees, etc.
Misrepresentation: A
false, incorrect, or incomplete statement of a material
fact, made in the application for a policy.
Mode of Premium
Payment: The frequency which premiums are paid monthly,
quarterly, semiannually, or annually.
Moral Hazard: A hazard
arising from any nonphysical, personal characteristic of
a risk that increases the possibility of loss.
Morbidity: Relative
incidence of a disease.
Morbidity Tables:
Actuarial statistics showing the frequency and duration
of a sickness.
Mortality Table: A
table showing how many members of a group, starting at a
certain age, will be alive at each succeeding age.
Multi-Peril Policy: A
package policy which provides protection against a number
of separate perils in one contract.
Mutual Insurance
Company: An insurance company in which the ownership and
control is vested in the policyholders and a portion of
surplus earnings returns to the policyholders.
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the Glossary
Name Position Bond: A
fidelity bond which covers losses caused by the
dishonesty of only those employees named in the bond.
Named Perils:
Coverages in a property policy that provides protection
from loss of perils specifically listed in the insurance
policy. Examples of named perils are fire, windstorm,
theft, smoke, etc.
National Association
of Insurance Commissioners (NAIC): The association of
insurance commissioners of various states formed to
promote national uniformity in the regulation and
practice of insurance.
Negligence: The
failure to use the reasonable care that a prudent person
would have used under the same or similar circumstances.
Net Premium: A portion
of the premium rate designed to cover benefits of the
policy, but not expenses, contingencies, or profit.
No-Fault: A type of
auto insurance mechanism whereby the right to sue another
party for damages caused by negligence is limited and, in
exchange, first party benefits are offered.
No-Fault Automobile
Insurance: A type of insurance in which financial losses
resulting from an automobile accident are paid by your
own insurer, regardless of who was at fault.
Non-Admitted Insurance
Company: An insurance company not licensed to do business
in a particular state.
Noncancellable: A
contract that the insured has the right to continue in
force by the timely payments of premiums set forth in the
contract. No changes are made by the insurer during this
period of time.
Nonconfining Sickness:
A sickness that does not confine an insured to his home
or a hospital.
Noncontributory: A
term applied to employee benefit plans or insurance,
which the employer pays the full cost of the premium for
all of the employees.
Non-Disabling Injury:
An injury which does not qualify for total or partial
disability.
Nonforfeitable
Benefits: A benefit under a pension plan that belongs
unconditionally to the participant of that plan.
Nonoccupational
Policy: An insurance contract which insures a person
against off the job accidents or sickness.
Nonowned Auto: Any
automobiles not owned, leased, hired, or borrowed which
are used within the scope of business.
Nonparticipating:
Insurance under which the policy holder is not entitled
to share in the dividend distribution of the company.
Nonrenewal:
Termination of insurance coverage at an expiration date
or anniversary date.
Notice of
Cancellation: Written notice by an insurance company of
their intent to cancel the policy.
Back to
the Glossary
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Obligee: Anyone in whose
favor an obligation runs. This term is used with surety
bonds referring to a person, firm, or corporation protected
by the bond.
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Obligor: The principal,
term used in bonds, one who is bound by an obligation.
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Occupational Hazards:
An occupational exposure the insured has that is greater
than a normal physical danger by the very nature of the
work in which the insured is engaged.
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Occurrence: An event
that results in a loss that is insured.
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Occurrence Coverage:
A liability insurance policy that covers claims arising
out of occurrences that take place during the policy period.
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Ocean Marine Insurance:
Insurance for sea-going vessels, including liabilities
connected with them, and their cargoes.
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Optionally Renewable
Contract: A contract of health insurance in which the
insurer has the right to terminate the policy at any anniversary
and, in a few cases, at any premium due date.
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Ordinary Life Policy:
A Whole Life insurance policy in which premiums are paid
as long as an insured in living.
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Out-of-Pocket Limit:
The maximum coinsurance an individual is required to pay,
after which an insurer will pay 100% of any covered expenses
up to the policy limit.
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Outpatient: A patient
who is not a bed patient and does not need to be hospitalized
for treatment.
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Overhead Expense Insurance:
A type of health insurance designed to help offset overhead
expenses such as office rent, utilities, and employees'
wages incurred during total disability.
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Owners and Contractors
Protective Liability Policy: An insurance policy that
protects an insured against losses caused by the negligence
of a contractor (or hired subcontractor by the contractor).
Back to
the Glossary
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