Package Policy: Any
combination of two or more lines of coverage's into a
single policy.
Paid-Up Insurance:
Insurance on which all required premiums have been paid.
Paramedical
Examination: Physical examination of an applicant by a
trained person other than a physician, usually done for a
life insurance policy or a individual health insurance
policy.
Partial Disability:
The result of an illness or injury which prevents an
insured from performing one or more of the functions of
their occupation.
Participating Policy:
A life insurance policy under which the company agrees to
distribute to policyholders the part of its surplus which
its Board of Directors determines is not needed at the
end of the business year.
Pension Benefits: A
series of payments to be provided in accordance with the
plan of benefits.
Pension Plan: A plan
established and maintained by an employer, group of
employers, or union to provide for the payment of
determinable benefits to participants after retirement.
Percentage
Participation: A provision in a health insurance contract
that the insurer and insured will share covered losses in
agreed proportions.
Peril: The cause of a
loss insured against in a policy.
Permanent Life
Insurance: A phrase used to cover any form of life
insurance except term; generally insurance that accrues
cash value, such as whole life.
Permit Bond: A bond
that guarantees a person who has been issued a permit
will comply with any laws and ordinances in which the
permit was issued.
Persistency: A term
used to refer to the length of time insurance remains
continuously in force with a company.
Personal Articles
Floater: A type of insurance designed to meet the needs
for insurance on property of a moveable nature. This
coverage usually protects against all physical loss,
subject to special exclusions and conditions. Examples of
this type of property include jewelry, furs, silverware,
fine arts, and valuable collectors pieces..
Personal Injury
Protection (PIP): First party no fault coverage in which
an insurer pays, within specified limits, the medical,
hospital, loss of work income, and funeral expenses of
the insured.
Personal Lines: Those
types of insurance, such as individual automobile or home
insurance rather than for businesses or organizations.
Physical Damage:
Damage to or loss of an automobile resulting from a named
peril.
Plan Administrator:
The person(s) controlling money or property contributed
to the plan, usually designated in the plan agreement.
Point-of-Service
Plans: These plans permit insureds to choose providers
outside the plan yet are designed to encourage the use of
network providers. A hybrid of a HMO and PPO.
Policy: The legal
document issued by the company to the policyholder, which
outlines the conditions and terms of the insurance; also
called the policy contract or the contract.
Policy Dividend: A
refund of part of the premium on a participating
insurance policy reflecting any difference between the
premium charged and actual experience.
Policy Loan: A loan
made by a life insurance company from its general funds
to a policyholder on the security of the cash value of a
policy.
Policy Reserves: The
measure of the funds that a life insurance company holds
specifically for fulfillment of its policy obligations.
Policy Term: The
period of time for which an insurance policy provides
coverage.
Policyholder: The
person who owns a life insurance policy. This is usually
the insured person, but it may also be a relative of the
insured, a partnership or a corporation.
Policyholders'
Surplus: Sum over and above liabilities available for an
insurer to meet future obligations to its policyholders.
Pool: An organization
of insurers or reinsurers through which particular types
of risk are underwritten.
Pre-Admission
Certification: The process in which a health care
professional evaluates an attending physician's request
for a patient's admission to a hospital to evaluate
whether or not inpatient care is necessary.
Preexisting Condition:
A physical and / or mental condition of an insured which
first manifested itself prior to the effective date of a
policy.
Preferred Provider
Organization (PPO): An arrangement whereby a third-party
payer contracts with a group of medical care providers
who furnish medical services at lower than usual fees in
return for prompt payment and a certain volume of
patients.
Premium: The sum paid
by a policyholder to keep their insurance policy in
force.
Premium Finance:
Allows the insured to pay part of the premium when
coverage takes effect and pay the rest during the policy
period through arranged payments.
Primary Insurance:
Insurance that pays compensation for a loss ahead (first)
of any other insurance coverage's the policyholder may
have.
Principal Sum: An
amount payable in one sum in the event of accidental
death and in, some cases, accidental dismemberment.
Probate: A
court-supervised process of validating or establishing
distribution of assets of a deceased including the
payment of outstanding obligations.
Probate estate That
portion of the assets and liabilities whose distribution
is supervised by the courts in the probate process.
Probationary Period: A
period from the policy date to a specified time during
which no sickness coverage is effective. This is designed
to eliminate any sickness actually contracted before the
policy went into effect.
Product Liability:
Legal liability incurred by a manufacturer, merchant, or
distributor because of injury or damage resulting from
the use of their product.
Product Liability
Insurance: Protection against financial loss arising out
of the legal liability incurred by a manufacturer,
merchant, or distributor because of injury or damage
resulting from the use of a covered product.
Proof of Loss:
Documentation presented to the insurance company by the
insured in support of a claim so that the insurer can
determine its liability under the policy.
Property Insurance:
Insurance providing financial protection against the loss
of, or damage to, real and personal property caused by a
covered peril.
Provision: A clause,
sentence, or paragraph which of an insurance contract
describes or explains a feature, benefit, condition, or
requirement of any insurance protection afforded by the
contract.
Proximate Cause: The
effective cause of loss or damage; an unbroken chain of
events between the occurrence and damage.
Punitive Damages: A
court awarded amount that exceeds the economic losses and
general damages of a defendant and is intended solely to
punish the plaintiff because of reckless or malicious
acts.
Pure Risk: Uncertainty
whether a loss will occur. Only pure risks are insurable.
Back to
the Glossary
Radius of Operation:
Used to determine rates for automobiles owned by a
business.
Rate: The pricing
factor upon which an insurance premium is based.
Reasonable and
Customary Charge: A charge for health care, which is
consistent with the going rate or charge in a certain
geographical area, for identical or similar services.
Rebating: Giving any
valuable consideration (commission) to a prospect or
insured as an inducement to buy.
Recurring Clause: A
provision in health insurance policies, which specifies a
period of time during which the recurrence of a condition
is considered a continuation of a prior period of
disability or hospital confinement.
Reduced Paid-up
Insurance: Provides for continuation of the original
insurance plan, but for a reduced amount.
Rehabilitation: Two
meanings here: (1) Restoration of a totally disabled
person to a occupation, or (2) a provision in a long term
disability policy that provides for continuation of
benefits or other financial assistance while a totally
disabled insured is retraining or attempting to resume
employment.
Reimbursement: Payment
of the expenses actually incurred as a loss covered by
the policy.
Reinstatement: The
resumption of coverage under a insurance policy which
lapsed.
Reinsurance: The
acceptance by one or more insurers of a portion of the
risk underwritten by another insurer.
Renewable Term
Insurance: Term insurance which can be renewed at the end
of the term, at the option of the policyholder.
Renewal: A continuance
of insurance under a policy beyond its original term by
the insurer's acceptance of the premium for a new policy
term.
Rental Insurance: A
type of insurance that includes coverage similar to a
homeowners policy to cover the personal property of a
renter or tenant in a building.
Replacement: The
substitution of insurance coverage from one policy
contract to another.
Replacement Cost: The
cost to repair or replace property without considering
depreciation.
Representation:
Statements made by an applicant in the application, which
represents as being true to the best of his knowledge and
belief, but which are not warranted as exact in every
detail.
Rescission:
Termination of an insurance contract by the insurer on
the grounds of material misstatement on the application
for insurance.
Reserve: The amount
required to be carried as a liability in the financial
statement of an insurer, a sum set aside by an insurance
company as a liability to fulfill future obligations.
Residual Disability: A
period of partial disability that immediately follows a
period of total disability.
Residual Market: A
source of insurance available to applicants who are
unable to obtain insurance through ordinary methods in
the voluntary market.
Retention: The amount
of risk retained by an insurance company and not the
insured.
Retrocession: A
process by which a reinsurer obtains reinsurance from
another company.
Retrospective Date:
The first date for which claims will be paid under a
claims-made policy of liability insurance.
Retrospective Rating:
Rating procedure which allows adjustment of an insured's
final rate on the basis of the insured's own loss
experience.
Rider: A document
which amends an insurance policy or certificate. It may
increase or decrease benefits, waive the condition of
coverage or in any other way amend the original contract.
Risk: The chance of
loss. Also used to refer to the insured or to property
covered by a policy.
Risk Retention Groups:
These are liability insurance companies owned by their
policyholders.
Robbery: The taking of
property from a person by force or threat of violence.
Rollover: Transfer of
an IRA or other qualified pension funds from one
financial institution to another.
Running Down Clause:
Additional coverage which can be added to an Ocean Marine
Hull policy to provide protection for damage to another
ship caused by collision.
Back to
the Glossary
Salvage: The 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.
Schedule: A list of
individual items covered by an insurance policy with
their descriptions and values.
Self-Administration: A
procedure where an employer maintains all records
regarding the employees covered under a group insurance
plan.
Self-Insurance: A form
of risk financing through which a firm assumes all or a
part of its own losses.
Settlement: A policy
benefit of claim payment.
Settlement Options:
The several ways, other than immediate payment in cash,
which a policyholder or beneficiary may choose to have
policy benefits paid out.
Short-Term Disability
Income Insurance: A group or individual policy usually
written to cover a short term disability (13-26 weeks).
Sickness Insurance: A
form of health insurance providing benefits for loss
resulting from illness or disease.
Special Damages:
Compensation awarded for actual economic losses, such as
medical expenses and lost wages. (See general damages)
Special Risk
Insurance: Coverage for risks or hazards of a special or
unusual nature.
Split Funding: 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
are invested through a corporate trustee, primarily in
equities.
Standard Insurance:
Insurance written on the basis of regular morbidity
underwriting assumption used by an insurance company and
issued at normal rates.
Standard Markets:
Insurance companies for which the vast majority of people
qualify for insurance.
Standard Provision:
The contract provisions required by state statutes until
superseded by the uniform policy provision.
Standard Risk: An
individual who, according to a company's underwriting
standards, is entitled to purchase insurance protection
without extra rating or special restrictions.
State Fund: A fund set
up by a state government to provide a specific line or
lines of insurance, such as Workers Compensation..
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.
Step-Rate Premium: A
rating structure in which the premiums increase
periodically at pre-determined times.
Stockholder: A person
who owns shares of stock in a corporation.
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 Redemption
Agreement: A buy-sell agreement within a corporation that
involves the corporation buying back shares from a
deceased stockholder.
Strict Liability:
Usually dealing with property insurance, the liability
that manufacturers and merchandisers may be subject to
for defective products sold by them for damages,
regardless of fault or negligence.
Subrogation: The
process by which an insurance company seeks reimbursement
from another company or person for a claim it has already
paid.
Substandard Insurance:
Insurance issued with an extra premium or special
restriction to those persons who do not qualify for
insurance at standard rates.
Substandard Risk: An
individual, who, because of poor health history or
physical limitations, does not measure up to the
qualification of a standard risk.
Supplementary
Contract: 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.
Surety Bond: A bond
guaranteeing that a principal will carry out the
obligation for which they are bonded for. Most often this
is issued to a contractor.
Surgical Expense
Insurance: Health insurance policies, which provide
benefits toward the physician's or surgeon's operating
fees. Benefits may consist of scheduled amounts for each
surgical procedure.
Surgical Schedule: A
list of maximum amounts payable by the policy for various
types of surgery, with the amount based on the severity
of the operation.
Surplus: An amount by
which the value of an insurer's assets exceeds their
liabilities.
Surplus Lines: A risk
or a part of a risk for which there is no normal
insurance market available, insurance written by
non-admitted insurance company.
Syndicate: A group of
insurers or underwriters who join to insure property that
may otherwise be to high of a hazard
Back to
the Glossary
Tax Basis: Money which
has yet to be taxed.
Tenants Improvements
and Betterment's: The property affixed to an owner's
building by the lessee or tenant which may not be legally
removed when the tenant leaves.
Term: A period of time
a policy or bond is issued.
Term Insurance: Life
insurance payable to a beneficiary only when an insured
dies within a specified period, (5, 10, 15, or 20 years).
This is the quickest way to "build" an estate.
Testamentary Trust: A
trust created after the grantor's death, according to the
provisions of the the will of its creator.
Third Party Insurance:
The claimant under a liability policy. This person making
the claim is not one of the other two parties, the
insured and insurer.
Threshold Level: The
point, measured in money, time, or other ways, which tort
liability can be established. .
Time Limit on Certain
Defenses: The time period in health policies after which
the insurer cannot deny a claim or void the policy
because of pre-existing conditions or misstatements on
the application.
Tort: A private wrong,
other than a breach of contract, for which a court of law
will afford legal relief.
Travel Accident
Insurance: A limited insurance contract covering only
accidents while an insured person is traveling.
Trust: A legal
instrument allowing one party to control property for the
benefit of another.
Turnover Rate: Rate at
which employees terminate covered service other than by
death or retirement.
Twisting: The act of
inducing by misrepresentation, or inaccurate or
incomplete comparison, a policyholder in one company to
lapse, forfeit or surrender his insurance for the purpose
of taking out a policy from another company.
Back to
the Glossary
