Insurance Terms
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Accidental Death & Dismemberment (AD&D)
Insurance providing payment if the insured’s death results from an accident or if the insured accidentally severs a limb above the wrist or ankle joints or permanent blindness.
Accidental means provision
Accident policies require that claims must result from an accident, rather than an illness. For example, a dismemberment policy will not pay for amputation of a diseased limb.
Adverse Selection
Selection against the company. Tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others. Also, tendency of policy owners to take advantage of favorable options in insurance contracts.
Any Occupation
A definition of total disability. The insured must be unable to perform any job for which he/she/they is “reasonably suited by reason of education, training, or experience”.
Assignment of Benefits
The policy owner allows a health care provider to bill the insurer and receive benefits on the policy owner’s behalf.
Basic Medical Expense Policy
Health insurance policy that provides first dollar coverage for specific (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits.
Blanket Policy
Covers a number of individuals who are exposed to the same hazards, such as members of an athletic team, company officials who are passengers in the same company plane, and so forth.
Business Overhead Expense Insurance
If a business owner becomes disabled, this policy will not replace the owner’s income, but will instead help pay the expenses of operating the business, such as rent, utilities, and wages.
Capital Sum
Maximum benefit payable for the accidental loss of vision in one or both eyes, or the loss of a limb or above the wrist or the ankle.
COBRA
Extends group health coverage to an employee who loses their job for reasons other than gross misconduct. Coverage may also be extended for family members who lose coverage for various reasons, such as death or divorce.
Contributory Plan
Group insurance plan issued to an employee under which both the employer and employees contribute to the cost of the plan. Generally, 75% of the eligible employees must be insured.
Corridor Deductible
In superimposed or comprehensive major medical plans, a deductible amount is not required until the insurer has paid coverage under the base plan. The deductible then creates what looks like a corridor between the base plans and the major medical benefits.
Credit Accident & Health Accident
In the event of total disability, this policy will pay loan or credit card payments on behalf of the insured.
Custodial Care
Health or medical care designed to help an individual perform the activities of daily living. Coverage for this type of care is only provided by long-term care insurance.
Dental insurance
A scheduled benefit policy which specifies how much it will pay for dental treatments, such as checkups, cleaning, fillings, crowns, and so forth.
Disability Buy-Sell Agreement
A business partner agrees to sell their share of the business to the other partners if they become disabled.
Disability Income Insurance
Provides for the monthly payment of a portion of the insured’s income should the insured become disabled.
Elimination Period
The period of time an insured must wait before receiving benefits from a disability income policy or a long-term care policy. This is a deductible of time as opposed to an amount of money.
Enrollment Period
Period during which new employees can sign up for coverage under a group insurance plan without proof of insurability.
Entire Contract Provision
An insurance policy provision stating the rules in which both the insurer and insured will follow, and includes the policy, application, and any attached riders.
Experience Rating
The method of establishing the premium for a group based on the group’s own previous claims experience.
Guaranteed Renewable
Insurance contract where the insurer may not cancel the contract as long as premiums have been paid. The insurer is only entitled to an increase of premiums if the increase applies to all insureds in the same class.
Health Maintenance Organization (HMO)
Health care management stressing preventive health care, early diagnosis, and treatment on an outpatient basis.
Hospital Expense Insurance
Coverage for hospital room and board as well as other expenses. Often subject to daily and maximum limits.
Impairment Rider
Excludes coverage for a specific ailment or condition that otherwise would be covered (e.g., previous back injury).
Indemnity Approach
Payment based on a predetermined, fixed amount for the medical services provided, regardless of the actual expenses incurred or reimbursement received from other insurance.
Insuring Clause
Found within the insurance policy representing the insurer’s promise to pay under the conditions found in the policy, names the parties to the contract and describes the general scope of coverage.
Inpat
An inpatriate (aka "InPat") is a person who is from a foreign country and who is temporarily or permanently residing and working in a different country
Key-person insurance
Protection of a business against financial loss caused by the death or disability of a vital member of the company.
Lapse
Termination of a policy upon the policy owner’s failure to pay the premium by the end of the grace period.
Limited Policies
Restrict benefits to specified accidents, or diseases, such as travel policies, dread disease (cancer) policies, and so forth.
Lloyds of London
An association of individuals and companies that underwrite insurance on their own accounts for specialized coverages.
Long-Term Care
Refers to the broad range of medical and personal services for individuals who need assistance with daily activities for an extended period of time.
Major Medical Expense Policy
Health insurance policy that provides coverage for reasonable and necessary medical expenses. Characterized by deductibles and coinsurance cost sharing.
Managed Care Organization
An organization or program that seeks to control costs through utilization review and other methods.
Medical Information Bureau (MIB)
A consumer reporting agency that operates a database of medical information on individuals who have previously applied for life and health insurance. Member issuers can access this data with the consent of an applicant.
Medicare
Federally sponsored health insurance and medical program for persons age 65 per older, or who have been receiving Social Security disability for the past 24 months, or who have permanent kidney failure. Medicare Part A - Hospitalization insurance that provides specified in-hospital and related benefits. Hospital admissions are subject to a deductible and possible co-pays. Medicare Part B - Covers physicians and outpatient treatment, subject to a monthly premium, annual deductible and co ...
Multiple Employer Trust (MET)
Several small groups of individuals that need life and health insurance, but do not qualify for true group insurance band together under state trust laws to purchase insurance at a more favorable rate.
Non-Scheduld Plan
Pays on the basis of what is considered usual, customary, and reasonable (UCR) in a certain geographic area, and based on amount physicians in area usually charge for same or similar procedures.
Own Occupation
A definition of total disability. The insured must be unable to work at their own occupation.
Partial Disability
Illness or injury preventing insured from performing at least one or more, but not all, of the insured’s occupational duties.
Preferred Provider Organization (PPO)
Association of health care providers, such as doctors and hospitals, who agree to provide health care to members of a particular group at a discounted rate.
Presumptive Disability Benefit
Regardless if the insured is able to work, he/she/they are eligible for full disability benefits if there is complete loss of speech, hearing, vision or the loss of use of two or more limbs.
Primary Insurance Amount (PIA)
Amount equal to a covered worker’s full Social Security retirement benefit or disability benefit.
Principal Sum
The amount under an AD&D policy that is payable as a death benefit if death is due to an accident.
Probationary Period
A period of time between the issuance of a policy and the date coverage begins (sickness is not covered during this time).
Proof of Loss
A mandatory NAIC (National Association of Insurance Commissioners) provision stating that the insured must submit a completed claim form with documentation of loss to the insurer within 90 days of the date of loss.
Prospective Review
Insurer reviews all proposed non-emergency hospital admissions and requires approval before admission.
Reasonable and Customary Charge
Charge for health care service consistent with the going rate of charge in a given geographical area for identical or similar services.
Recurrent Disability Provision
A disability income policy provision that specifics the period of time during which the reoccurrence of a disability is considered a continuation of a prior disability.
Reinsurance
Insurance purchased by an insurance company from another insurance company as a means of risk management or spreading the risk.
Residual Disability Benefit
While not totally disabled, the policy will pay the insured a portion of the lost income if he/she/they are not able to work as much or is forced to work at a job that pays less.
Respite Care
Type of health or medical care designed to provide a short rest period for a caregiver.
Scheduled Benefit
List of cash allowances payable for various types of benefits which does not reimburse the insured for actual expenses, but pays what is listed.
Stop-Loss Provision
Limits the maximum out-of-pocket expense an insured must pay for health care. Once this threshold has been met, the health insurance policy covers all expenses for the remainder of the policy period at 100%.
