Glossary of Insurance Terms

Union Plus Insurance Education

 

Glossary of Insurance Terms

 

 

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z 

A

Accelerated Death Benefit
Coverage that allows the insured to receive a specified portion of the death benefit due to specified life-threatening or catastrophic conditions if certain conditions are met (also known as Living Benefit)
Insurance providing payment if the insured's death results from an accident.
A form of insurance that provides payment to the beneficiary (or insured) in the event of death or specific bodily losses resulting from an accident.
Accidental Death Benefit Rider
A life insurance policy rider that provides an additional benefit when death results from an accident.
Actively At Work
You are performing all the regular duties of your occupation for the employer, on the date immediately preceding the date the strike, or lockout, or involuntary lay off begins.
Application
A signed statement that the insurer uses as the basis to decide whether or not to issue a policy.

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B

Beneficiary
The person the insured member designates to receive the insurance benefits in the event of the insured's death. The various types of beneficiaries are: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies).
Benefit
The amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss covered by the policy.
Benefit Period
The period of time for which benefits are payable under an insurance contract.
Billing Method
The different method(s) of payment you can use to pay your insurance premiums, such as credit card, EFT (electronic funds transfer) or billing you directly.

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C

Certificate of Insurance
A document delivered to the insured, which summarizes the benefit and principal provisions of a group insurance contract.
Claim
A request to the insurer by, or on behalf of, the insured person for the payment of benefits under a policy.
Contingent Beneficiary
Person or persons named to receive proceeds in case the original beneficiary is not alive. Also referred to as secondary or tertiary beneficiary.
Contestability Period
The period of time (generally two years) during which the life insurance company may challenge the validity of a life insurance contract. One area that may be contested is whether the applicant represented truthfully his or her health condition and history at the time of application.
Conversion Privilege
Allows the policy-owner to elect to have a new policy issued that will continue the insurance coverage before an original life insurance policy expires.
Covered Expenses
Those specified health care expenses that an insurer will consider for payment under the terms of a health insurance policy.

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D

Declined
A decision by the life insurance company based upon the results of its underwriting on the case. Cases that are declined usually involve health problems that exceed the company's willingness to accept the risk.

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E - H

Exclusions
Specified situations - such as causes of injury or death - that are not covered by the policy. Exclusions are always spelled out in the policy.
Grace Period
Period of time after the premium payment due date that the policy remains in force without penalty. After the due date, the individual loses the insurance coverage and typically would have to apply again for new coverage.
Group Insurance
An arrangement for insuring a number of people under a single, master insurance policy.
Guaranteed Insurability (Guaranteed Issue)
Insurance coverage that is issued to all who apply and make their premium payments.
Hospital Accident Plan
Supplemental insurance protection to help pay out-of-pocket expenses for a covered accident.
Hospital Income Plan
A form of health insurance that provides daily, weekly or monthly payments to an insured during hospital confinement, without regard to actual expense of the confinement.

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I

Insured
The person whose life or health is insured under an insurance policy.
Insurer
The party to the insurance contract that promises to pay losses or benefits. Also, any corporation licensed as an insurance company, engaged in the business of furnishing insurance to the public.
Issue age
The age of the insured at the time the contract was issued.

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J - M

Lapse
Termination of a policy upon the policy owner's failure to pay the premium within the grace period.
Level Term Insurance
Term coverage on which the face value and premiums remain unchanged from the date the policy comes into force to the date the policy expires.
Medical Examination
Usually conducted by a licensed physician or paramedic; the medical report is part of the application, becomes part of the policy contract and is attached to the policy. A "non-medical" is a short-form medical report filled out by an applicant. Various company rules, such as amount of insurance applied for or already in force, applicant's age, past physical history, etc., may determine whether the examination will be "medical" or "non-medical."
Medical Information Bureau (MIB)
An organization that serves as a clearinghouse of medical information for the life insurance industry. When a person applies for life insurance, the life insurance company generally sends out the applicant's medical test results and any other collected medical information that suggests health impairment to the MIB. Access to MIB information is restricted to authorized medical, underwriting and claims personnel in life insurance companies who participate in MIB services. No insurance company can request MIB information on a life insurance applicant without the applicant's permission. An insurance company cannot base its underwriting decision solely upon MIB supplied information.
Medicare
A program of insurance protection for the elderly that provides Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) provided under the Social Security Act.

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N - P

National Association of Insurance Commissioners (NAIC)
A national organization of state officials who are charged with the regulation of insurance. The Association was formed to promote national uniformity in the regulation of insurance.
Notice and Proof of Strike, Lockout or Involuntary Lay Off
Before benefits begin, we must receive at our Administrative Office, written notice and proof satisfactory to us of the strike, or lockout, or involuntary lay off (i.e. proof from the Member's labor union). This benefit must be in force before the date the strike, or lockout or involuntary lay off begins. To receive benefits, proof of the status of the strike, or lockout or involuntary lay off must be given to us when and as often as we may require, but in no event less than every 30 days. We will stop providing benefits if proof is not provided under the provisions of the benefit. You must notify us as soon as the strike, or lockout, or involuntary lay off is resolved; when You return to work or are offered the option to return to work for your employer, or when your employment is terminated.
Paramedical Examination
A national organization of state officials who are charged with the regulation of insurance. The Association was formed to promote national uniformity in the regulation of insurance.
Policy
The legal document or contract issued by the insurer to the insured that contains all the conditions and terms of the insurance.
Policy Issue
The transmittal of a policy to the insured by an insurer.
Policy Holder (Also Policy Owner)
The owner of a life or health insurance policy.
Pre-Existing Condition
Any disability diagnosed or undiagnosed, for which medical care is received by you for a certain period of time, usually 12 or 24 months prior to the date your insurance starts; or with respect to the limitation for any increase in coverage, within the 12 or 24 months prior to the effective date of your increase in coverage.
Premium
A mental or physical problem suffered by an insured prior to the effective date of insurance coverage.
Proceeds
Net amount of money payable by the company at the insured's death or at policy maturity.

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Q - S

Re-entry Option
An option in a renewable term life policy under which the policy-owner is guaranteed to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.
Rider
Strictly speaking, a rider adds something to a policy. However, the term is used loosely to refer to any supplemental agreement attached to and made a part of the policy, whether the policy's conditions are expanded and additional coverages added, or a coverage or condition is waived.
Right to Review
Policyowners have a specified amount of time to examine their new policies with a right to return if not satisfied.
Suicide Clause
Policy language that says if the insured commits suicide within a specified period, usually two years after the issue date, the company's liability will be limited to a return of premiums paid.

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T - Z

Term Insurance
Life insurance designed to cover the insured for a specified period of time (or term). Term policies provide life insurance protection without any "cash value" features (which can increase the cost of the coverage). Term insurance generally offers the most protection for your premium dollars.
Underwriter
Company receiving premiums and accepting responsibility for fulfilling the policy contract.