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  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 All

Accelerated Death Benefit
A provision or rider that allows you (the policyowner) to receive all or part of the benefits of your life insurance policy while you are alive in the event of a terminal illness. Depending on the insurance company issuing the policy, and the policy form involved, these benefits are paid either on diagnosis of a terminal illnesses, such as AIDS, certain organ transplants, or upon a diagnosis that death within two years is almost certain. Some companies permit payout of some of the face amount of the policy by way of accelerated death benefits in the event of nursing home confinement or other health conditions. The circumstances under which such benefits are available varies from company to company, and the manner the payments are accounted for also can vary, in some as an “advance” against the ultimate benefit to be paid and in others as a loan, to be repaid, in some cases with interest, when the face amount is paid out. Also known as “living benefits.” See also viatical settlements, which involve the sale of a policy of an insured who is terminally ill.

Accidental Death and Dismemberment Coverage
Coverage that will pay you, your family members, a set amount, under the terms of the policy, for certain serious injuries or death resulting from an accident while in your car.

Accidental Death and Dismemberment Insurance
A policy that pays the beneficiaries a fixed death benefit but only if the insured person dies in or from a covered accident. Sometimes the policies pay extra benefits if the death occurred while a passenger on a common carrier, or while wearing a seatbelt. That is the “accidental death” portion of the policy. The policy also pays the policyowner a percentage of the face amount for the loss of an arm, leg, eye, etc. in a covered accident; the percentage typically varies with the extent of disablement or loss of bodily function, such as loss of one hand, 25%, one arm, 50%, both arms 100%, if the person loses the bodily parts or functions as a result of a covered accident. It is important to determine what types of accidents are covered and which are not. These policies are typically very inexpensive as most deaths occur from illness or disease, not accidents.

Accidental Death Benefit
A provision or rider to a life insurance policy that pays the beneficiary more than the face amount (such as double) in case you, the insured, die as a result of a covered accident, Formerly known as a “double indemnity” rider, there are some forms that pay 3 times the face amount if the accident occurred while a passenger on a commercial airline or other common carrier.

Act of God
An unpreventable accident or event that is the result of natural causes; for example, floods, earthquakes, or lightning.

Actual Cash Value
An amount equal to the cost of replacing a damaged item with a new one, minus depreciation.

Actual Charge
The charge(s) for a particular service/treatment by a health care provider.

An expert trained in the mathematics of insurance who is responsible for the calculation of reserves, premiums, and other values.

Additional Living Expenses
Extra charges covered by your homeowners polices over and above your customary lifing expenses. These expenses are covered when an insured needs temporary shelter due to a covered peril that makes the home unihabitable for some short period of time.

A person who investigates and evaluates for an insurance carrier the damages caused in an accident.

Administrative Expense Charge
An amount charged by the insurer and/or administrator (sometimes separately delineated) to pay the costs of administering the policy.

Adverse Selection
A tendency for those with higher risk exposure to obtain more insurance coverage than others with lower risk exposure. Adverse selection concentrates carrier risks instead of spreading it evenly across a large group of customers.

An insurance salesperson who sells and services policies. An independent agent usually represents two or more insurers in a sales and service capacity and is paid on a commission basis. An exclusive agent or captive agent represents only one company, usually on a commission basis.

Alternative Medicine
Some medical techniques once considered outside the boundaries of standard practice have become more accepted in recent years and may now be eligible for coverage. Acupuncture, midwives, and osteopathic treatments are examples of formerly excluded treatments that are now covered under many health insurance policies.

An attachment to a policy that modifies certain policy benefits.

Annual Limits
Maximums on the dollar amounts the plan will pay for any given year.

A life insurance product that pays out income benefits at specific intervals of time or over the course of the annuity owners lifetime. There are two types of annuities: deferred and immediate.

A signed request for life insurance giving information about the prospective policyholder, including age, gender, and if the policy is subject to underwriting, typically it also asks a series of health related questions. A false statement by the applicant for life insurance makes the policy “voidable” within the first two years of issue, or “contestable” if the insured dies within the first two years.

A survey by a claims representative or claims appraiser estimating the amount of damage to property and the cost to repair or the determination of a complete loss.

A determination made by impartial persons (often experts) as to the value of property or the extent of damage. In arbitration the proceeding is typically far less formal that a court proceeding, but the decision of the abitrator(s) is final, absent fraud. Arbitration is typically used as an alternative to formal court-based litigation in which the determination is made by a judge and/or jury operating according to all legal rules.

Assigned Risk Plan
A state-supervised insurance plan for people who are unable to obtain insurance coverage in the regular market. The cost of this insurance is substantially higher.

Giving rights and benefits under your insurance policy to someone else.

Assignments of Benefits
The insured allows a hospital or doctor to collect your health insurance benefits directly from your insurance company.

Responsible for an accident.

Auto Insurance Policy
There are six types of auto insurance coverage. Depending on the state you live in, some are required and some are optional. The six basic coverages are: Bodily Injury, Medical or Personal Injury Protection, Property Damage, Collision, Comprehensive, and Uninsured Motorist Coverage

Auto Insurance Premium
The price that you pay for auto insurance coverage from your insurance company. The price is based on the insurance company's experience and expectations of the potential frequency and cost of accidents, theft, and other losses. Prices vary between companies and products. Other factors on price, include: amount and type of coverage purchased, make and model of your car, driving record, how long you've been licensed, your age and gender, where and how much the car is driven, and more recently & controversially, some insurance companies use your credit history to determine pricing.

Automatic Premium Loan
If you cannot pay your premiums, the insurance company takes money from your policy’s cash value to pay the premiums, assuming there is sufficient cash value.

The person, persons or entity designated to receive the death benefits from a life insurance policy when you die.

Benefit Maximum
The time period for which payments for benefits of an insurance policy are available.

Benefit Period
The time period for which payments for benefits of an insurance policy are available.

A temporary insurance contract that provides proof of coverage until you receive a permanent policy from the company. A binder is subject to the payment of a premium.

Bodily Injury Liability
Insurance that pays for another person’s bodily injury or death in an automobile accident caused by you. It compensates those people for pain, suffering, and other personal hardships, and will also pay for some economic damages (i.e., lost wages).

Broad Form Insurance
Coverage for numerous perils.

An insurance salesperson who deals with agents and companies to find insurance for consumers.

Burial Policy
A policy to cover funeral and burial costs.

A termination of a policy before its normal expiration date.

Cash Value
The money that accumulates in your life insurance policy while the policy is in force that the insured can borrow.

Catastrophic Risk
The risk of a large loss by reason of the occurrence of a peril to which a very large number of insured are subject. (Gloss.)

the evidence of coverage received by persons insured under group life policy.

Chronic Condition
prolonged conditions or illness, such as asthma, diabetes, etc.

a fraudulent practice by insurance agents to repeatedly persuade their customers to replace existing policies with new ones. The agent may be tempted to churn because commissions are higher in the first year of the policy (makes more money for himself) or because the agent represents a different insurance company.

a request for reimbursement for damages on an insured loss. Your claims to your company are “first-party claims.” Claims made by one person against another person’s company are known as “third-party claims.”

CLUE Report
Short for Comprehensive Loss Underwriting Exchange which keeps insurance claims history.

A Federal law that gives the right to workers to continue group health care coverage for a specified period for themselves if the worker loses coverage because of reduced work hours or loses the job.

The share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. But because of the coinsurance, the company will pay only a percentage of the covered expenses and the insured must pay the remaining percentage. Between the two of them, they will pay 100%. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the insurer will pay $240 (80% of $300) and the insured will pay $60 (20% of $300).

Collision Coverage
Optional insurance that pays for physical damage caused when your own car hits another car or object, regardless of who is at fault. Collision coverage may carry a deductible -- a stated amount that you must first pay out of your own pocket.

Comprehensive Physical Damage Coverage
Pays for damage to your auto caused by fire, theft, vandalism, flood, falling objects, or hail. This coverage may also carry a deductible.

Part of an insurance policy that states your obligations and those of your insurance company.

Contingent Beneficiary
The party designated to receive proceeds of a life insurance policy following the insured’s death if the primary beneficiary predeceased the insured. 

Conversion Privileges
Group plans generally have a conversion privilege that allows an employee to covert to an individual health insurance plan upon termination of employment. Alternatively, coverage under a COBRA plan may be available.

Convertible Term Insurance
A term life policy that gives the policyowner the option of exchanging the term life insurance policy for another plan of insurance without providing evidence of insurability (e.g., a current medical report and exam and underwriting). Typically, term life insurance can not be continued at older ages (often 70 to 75) and thus without a provision authorizing the right of conversion, people who are older and ill or have significant negative risk factors can not continue their insurance unless they can convert to a whole life or other type of policy form.

Convertible Term Insurance Policy
A term life insurance policy that gives the policy owner the right to convert the policy to a permanent plan of insurance. 

Coordination of Benefits (COB)
When the insured is covered under more than one plan (for example under a group plan at work, and as a family member on a spouse’s plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.

Are fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.

Cost-of-living Rider
Permits you to purchase increasing term insurance coverage, coinciding with an estimated rise in the cost of living.

Covered Dependents
Traditionally, under group health insurance plans dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.

Covered Services and Supplies
Usually, the insured will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.

Death Benefit
Amount paid to the beneficiary upon your death.

Declarations Page
The front page of your policy containing information such as the exact name of your insurance company, the policy number, your coverages, the amounts of your coverages, and your deductibles.

The rejection by a life insurance company of a life insurance application.

Declined Risk
A proposed insured who is considered to present a risk that is too great for an insurer to cover.

Decreasing Term
A term life policy in which the death benefit goes down.

The amount you must pay from your own pocket for each claim or accident before the company pays on a claim. The bigger the deductible, the cheaper the coverage.

The decrease in value of your vehicle or its parts due to wear, tear, and age.

Direct Incurred Loss
The property loss in which the insured peril is the proximate cause of damage or destruction.

Direct Written Premium
The total premiums received by a property and liability insurance company without any adjustments for the ceding of any portion of these premiums to the reinsures.

Disability Benefit
A feature of some policies for the waiver of premium if the policyholder becomes permanently and totally disabled.

Discount Fees for Service to Providers
HMOs contract with health providers to provide services at discounted rates.

Money paid annually to a policyholder as a partial return of the paid premium on participating insurance to reflect a company’s favorable operating experience. Dividends are not guaranteed.

Double Indemnity
See accidental death

Effective Date
The date the insurance policy begins.

Elimination Period
The number of days of care that you pay before your insurance plan picks up the benefits.

An addition to a policy that modifies its benefits.

A cash value policy payable to the policyholder on the maturity date, if living, or to a beneficiary at the time of the insured’s death.

Enrollment Period
The period during which individuals may enroll for an insurance policy, Medicare, HMO benefits.

Employee Retirement Income Security Act, a federal law that regulates employer-sponsored pension and insurance plans for employees.

Evidence of Insurability
Statement or proof of a person’s health, finances, lifestyle, habits, or job to the extent that they affect his or her acceptability for insurance.

A provision in an insurance policy that denies coverage for certain losses, persons, or property.

Exclusions, Homeowners Insurance
Part of an insurance contract that excludes coverage of certain perils, persons, property or locations.

Experience Rating
A method of calculating group insurance premium rates by which the insurer considers the particular group’s prior claims and expense experience. 

Experimental and Investigational Procedures
Health insurance coverage generally excludes medical treatments that are deemed to be unproven, ineffective, or non-standard. This includes surgical techniques and medicines not approved by the Food and Drug Administration. Sometimes such treatments may be available by traveling to another country, but these treatments would generally not be covered.

Explanation of benefits (EOB)
The insurance company’s explanation of its decision regarding your claim.

Extended Term Insurance
Allows for the continuation of the original amount of the insurance with no further premium payments during a limited period of time.

Face Amount
The amount of the death benefit payable under a life insurance policy.

Face Value
The dollar amount on the face of the policy that will be paid by the company at death or at the maturity of the policy. The actual sum may be higher or lower depending on the options selected, outstanding policy loans or premium owed.

Fee for Service
A health plan that allows you, as the patient, to use any doctors you want, but requires you pay for the services yourself and file (or your provider files) claims for reimbursement.

Flexible Premium Policy
A life insurance policy where the policyholder can vary the time or amounts of the premiums.

Flood Plain
A land area adjacent to a river, stream, lake, estuary or other water body that is subject to flooding.  These areas, if left undisturbed, act to store excess floodwater.

Free Look Provision
An individual life insurance and annuity provision that gives the policy owner a stated time, usually 10 days after the policy is delivered, in which to cancel the policy and receive a full refund on the initial premium payment.

GAP Coverage
Pays for the gap between the amount due under a lease and the actual cash value of the car at the time of the accident.

A term applied to a primary care physician

Grace Period
A specified length of time within which a renewal premium that is due may be paid without penalty.

Grievance Procedure
The required appeal process an HMO/insurance company provides to protest a decision regarding a claim payment

Group Life
Life insurance plans provided often through one’s job, association, or other organization where the individual members of the group receive certificates rather than policies as evidence of their insurance.

Guarantee Issue
An insurance policy that is issued to anyone, regardless of prior medical history.

Guaranteed Insurability
An option that allows the policyholder the right to buy additional life insurance at specific times in the future, without having to answer questions about his or her health.

Guaranteed Rate
The minimum interest rate that the insurance company promises to pay to a policyholder’s cash value.

Healthcare Reimbursement Accounts
Accounts that allow you to set aside pre-tax dollars to pay for medical care or costs

Health Insurance Portability & Accountability Act, a federal law that guarantees health care plan eligibility for people who change jobs, if the new employer offers group insurance.

HMO (Health Maintenance Organizations)
Provide health services through a network of hospitals, doctors, laboratories, and so forth.

Hospital Indemnity Policy
Pays a fixed dollar amount for each day you are hospitalized, regardless of the actual costs.

Hospital Pre-certification
Managed care plans often require prior approval before the insured enters the hospital. In the case of an emergency, or other situation where pre-certification is not possible, such plans often require prompt notification – often in 48 hours after admission.

Identification Card
A wallet-size card issued by your insurance company to indicate your policy number and coverage.

A computer-generated printout of an insurance company’s explanation of how the life insurance policy will work for a prospective policyholder. It may project each year’s premium payment, cost index, dividends, and death benefit as well as guaranteed interest payments (if any). Sometimes called a “ledger statement”.

Insurable Interest
The interest an insurance policy owner has in the risk that is insured.  The owner of a life insurance policy has an insurable interest in the insured when the policy owner is likely to benefit if the insured continues to live and is likely to suffer some loss or detriment if the insured dies. 

Insurance To Value
The amount of insurance written on property is approximately equal to its value. An insured most always wants to insure all property to value.

A person on whose life an insurance policy is issued.

Irrevocable Assignment
Under such an agreement you transfer all of your rights to a third party and this agreement can never be changed.

Irrevocable Beneficiary
A life insurance policy beneficiary who has a vested interest in the policy proceeds even during the insured’s lifetime because the policy owner has the right to change the beneficiary designation only after obtaining the beneficiary’s consent.

Lapsed Policy
A policy terminated because of failure to pay the premium(s).

Level Premium Insurance
A policy in which the payments remain the same over the life of the policy.

Liability Insurance
Insurance coverage that offers protection against claims alleging that a property owner’s negligence or inappropriate action resulted in bodily injury or property damage to another party.

Life and Health Guarantee Association
An organization that operates under the supervision of a state insurance commissioner to protect policy owners, insured's, beneficiaries, and specified others against losses that result from the financial impairment or insolvency of a life insurer that operates in the state.

Lifetime Maximum
Is the total dollar amount the plan will pay for all types of medical expenses, for all benefit periods, while the insured person is alive and covered under the plan.

The conditions or circumstances for which benefits are not payable or are limited.

Limited Payment Life Insurance
Whole life insurance where the policyholder pays premiums for a specified number of years, or until death.

The maximum amount of benefits the insurance company agrees to pay on a loss.

Administration costs you pay when buying life insurance.

Borrowing against your policy’s accumulated cash value. The borrowed amount is deducted from the death benefit until you have repaid it.

The basis for a claim under an insurance policy.

Loss Ratio
The dollar amount an insurer pays in claims compared to the amount it collects in premiums.

Low Value Policy
A life insurance policy with a high premium and small death benefit.

Managed Healthcare Plans
A system that organizes a network of doctors, hospitals, and other providers to provide comprehensive health services to their members at lower costs.

Mandated Benefits
Health care benefits that state or federal law says must be included in health care plans.

Material Misrepresentation
A significant misstatement in an application form. For example, you did not tell the truth about a situation or medical condition at the time of applying for coverage which would have caused the company to deny you insurance if they had known the truth.

The time at which the insurance contract is paid to the policyholder, if still alive.

Medical Payments
Insurance that pays the medical and funeral expenses for you or any passengers riding in your car at the time of an accident. Medical payments will provide coverage whether the accident was caused by you or someone else.

Medically Necessary
A provision in a health care insurance policy that excludes coverage for treatment that is not “medically necessary”. This term may be defined differently from one health care plan to another.

Mortality Charge
the charges a company makes against the policy to cover the policy’s share of the cost of death claims, based upon a mortality table used by the insurance company. Also called the “cost of insurance”.

Mortality Tables
Charts that show the death rates an insurer may reasonably anticipate among a particular group of insured lives at certain ages.

Mortgagee Clause
A clause in an insurance policy that makes a claim jointly payable to the policyholder and the party that holds a mortgage on the property.

Mortgagee Insurance
A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage.

Multi Peril Insurance
Personal and business property insurance that combines in one policy several types of property insurance covering numerous perils

Named Peril Policy
The insurance contract under which covered perils are listed. Benefits for a covered loss are paid to the policy-owner. If an unlisted peril strikes, no benefits are paid.

Failure to exercise a generally acceptable level of care and caution that results in injury or damage to a third party.

All physicians, specialists, hospitals and other health care providers who agree to provide medical care to HMO/PPO members under the terms of a contract.

NFIP – National Flood Insurance Program
The program of flood insurance coverage and floodplain management administered under the Act and applicable Federal regulations promulgated in Title 44 of the Code of Federal Regulations, Subchapter B.

No-fault Insurance
A form of insurance available in many states under which each driver in an accident files claims for losses, such as medical expenses, with their own insurance company, regardless of who caused the accident.

Nonforfeiture Options
Choices available to a policyholder when he or she discontinues a cash value policy after several years but before maturity. It may be in a cash payment, extended term insurance, or as reduced paid-up term insurance.

Nonparticipating Insurance
Insurance that does not pay dividends. Also called nonpar policy.

Nonparticipating Policy
A policy in which the company does not distribute any of its surplus to its policyholders.

The termination of the insurance contract by electing not to renew the policy at the anniversary date.

Nonstandard Company
Sells insurance at high rates to drivers with poor driving records or other problems.

An event that results in an insured loss.

One Hundred Year Flood
A flooding condition which has a one percent chance of occurring each year.  The 100-year flood level is used as the base planning level for floodplain management in the National Flood Insurance Program.

Open Enrollment
A specified period of time when new subscribers may enroll in a health insurance plan or HMO regardless of their health.

Ordinary Life Insurance
Usually applied to level premium whole life policies.

Original Age Conversion
A conversion of a term life insurance policy to a permanent plan of insurance at a premium rate, based on the insured’s age when the original term policy was purchased. 

Out-of-pocket Limit
Is a dollar limit on the portion of covered medical expenses that the insured must pay during a benefit period (usually a calendar year). When the out of pocket limit is met, the insured will not have to pay further deductibles or coinsurance for that year. To illustrate, say the out of pocket is $1000 per calendar year and the insured’s coinsurance is 20%. When $5000 of covered medical expenses have been incurred, the $1000 out of pocket limit will be met ($5000 at 20%). Thereafter, the plan will pay benefits at 100% and the insured’s portion will be $0 for the remainder of that year.

Outpatient Services
Services usually provided in clinics, physician or provider officers, ambulatory surgical centers, hospices, home health services, and so forth.

Paid-up life Insurance
Insurance on which no further premiums are due.

Participating Insurance
Insurance that has the possibility of paying dividends to its policyholders. Also called a par policy.

Permanent Life
A phrase that covers any form of life insurance with the exception of term.

Permanent Life Insurance
Life insurance that provides coverage throughout the insured’s lifetime and also provides a savings element.

Physical Examination
Physical examination, as well as information about your medical history, may be required to qualify for health insurance. The requirements will vary for individual or group coverage, for different insurance companies, and for very large or very small groups.

PIP (Personal Injury Protection)
Commonly referred to as “no-fault” insurance. This was designed to pay promptly -- regardless of fault or negligence -- for actual economic losses (e.g., medical expenses, lost earnings, and other reasonable and necessary expenses related to injuries sustained) to a driver or passenger injured in the car and to pedestrians injured by your car, because of its use or operation. It applies to personal injuries only, not for physical damages to the vehicle.

Point-of-service (POS) Plans
These plans allow members the option of using services outside the HMO network without prior approval

Policy Anniversary
As a general rule, the date on which coverage under an insurance policy became effective. 

Policy Dividend
A partial premium refund on a participating life insurance policy

Policy Loan
A loan made by a life insurance company to the policyholder on the cash value of the policy.

Policy Period
the amount of time an insurance contract or policy provides coverage.

Policy Reserves
Funds held by a life insurance company specifically to fulfill its policy obligations.

Policy Rider
An amendment to an insurance policy that becomes part of the insurance contract and either expands or limits the benefits payable under the contract.

The person or party who owns an individual insurance policy. This person may be the insured, a relative, the beneficiary, a corporation, or another person.

Under HIPAA, workers with pre-existing medical conditions must receive credit for time in a previous health plan if they join an employer pla.

A requirement that you notify the insurance company for its approval before you check into a hospital, have elective surgery, visit specialists, have expensive tests (e.g., MRI). Pre-certification does not guarantee the insurance company will pay the medical bills. Also called “utilization review”.

Pre-existing Condition
Health problem/condition/illness you had prior to applying for insurance and for which you received medical advice, diagnosis, care or treatment. Policies can exclude coverage of any medical condition for a period of time.

Preferred Provider Organization (PPO)
A network of doctors, hospitals, and suppliers (preferred providers) who agree to provide services to members of a health plan for discounted fees.

Preferred Risk
A proposed insured who presents a significantly less than average likelihood of loss and who is charged a lower than standard premium rate. 

Premium Waiver Provision
An optional provision that takes effect if the policy owner becomes disabled. The disabled person will not have to pay premiums for the duration of the disability, including lifetime disability.

Primary Care Physician (gatekeeper)
The physician selected by HMO members who serves as a personal doctor and provides all medical treatments and any referrals to medical specialists.

Primary Plan
This is the plan that pays first when you are covered by more than one insurance plan

Prior Qualifying Coverage
Health plan coverage that was in effect before the effective date of the current or new coverage

Proof of Loss
Documents that you give the insurer to support your request for payment of losses.

Property Damage Liability
This coverage protects you from claims and lawsuits by people whose property is damaged as a result of an accident you caused.

Pro-rata Cancellation
Revocation of a policy by an insurance company that returns the unearned premium to the policyholder.

A doctor, hospital, x-ray company, pharmacy, etc. that provides medical health care service.

Rated Policy
A policy issued at a higher than standard premium to cover a person classified as a greater than-average risk, usually due to impaired health or a hazardous occupation. Sometimes called an extra-risk policy.

Reasonable and Customary Fees
When a doctor or other provider of medical services submits a bill, the insurer will make an evaluation of whether the charges are reasonable and customary for that medical service provider and for the type of service performed. What is reasonable and customary depends on factors such as the specific medical service provided, the qualifications and skill level of the doctor (or other care provider), the geographic area (fees can vary widely in different areas) and anything else that the insurer may consider to be pertinent to the evaluation. Companies maintain large computerized databases of information and sophisticated computer programs to determine what is reasonable and customary in a specific situation.

The resumption of coverage under a policy that has lapsed because of nonpayment of the premium after the grace period has ended.

Group health insurance plans are normally 1 year term. Insurers generally review the claims experience of the group at each renewal date and make a renewal offer – often at a different premium. The company then decides whether to accept the renewal offer.

Renewable Term
A term policy that guarantees the policy owner the right to renew coverage at the end of the term, without presenting evidence of insurability. Premiums increase at each renewal since the insured’s age increases.

Replacement Cost
The cost of replacing property without a reduction for depreciation. By this method of determining value, damages for a claim would be the amount needed to replace the property using new materials.

The company voids your policy back to the beginning. There is no coverage at all and the company will return the money you paid.

Retention Limit
A specified maximum amount of insurance that a life insurer is willing to carry at its own risk on any one life without transferring some of the risk to a reinsurer.

A written addition or amendment to an insurance policy that adds or limits the benefits payable under the policy. Common riders are accelerated death benefits, accidental death benefits, automatic premium loan, guaranteed insurability, and premium waivers.

The likelihood that you will die while insured.

Risk Factor
Things about you that affect your risk (e.g., older age, smoking, heart disease, occupation.)

Scheduled Property
Listing specific personal property for a stated insured value. This is usually considered for valuable items that are subject to limited coverage.

Second Surgical Opinion
If surgery is recommended, the insurance company may require, or in some cases the insured may request, a review of the case by a second surgeon. If a second opinion is deemed warranted the insurer would pay a second surgeon to review the case and concur with the first doctor or suggest an alternative treatment.

Secondary Plan
Applies only when you have more than one health insurance plan. The second plan pays only after the primary plan has processed the claim.

Self-insured Plan
An organization that pays health care costs out of the organization’s own pocket

Settlement Option
The several ways the insurance company can pay a policyholder or beneficiary.

Short rate Cancellation
Cancellation by the insured of an insurance policy for which the returned, unearned premium is diminished by administration costs incurred when the insurance company places the policy on its books.

Single Premium Whole Life
Type of whole life insurance where the policy owner pays one premium.

Specific Disease Policy
A plan that covers expenses only for a specific disease identified in the policy. Also called Dread Disease policy.

Spell of Illness Provision
Spell of illness usually refers to a period of time during which a patient is being treated for a particular incidence of an illness. Some companies use the terminology “per cause” rather than “spell of illness.” The exact definition can also vary from plan to plan. Here is one example of how it might work: If a patient is confined in a hospital for 5 days for a specific condition, the spell of illness is 5 days. If the confinement continues for an additional 7 days because of another non-related condition, that might be considered to be another 7 day spell of illness. On the other hand, if the total confinement of 12 days (5 days plus 7 days) results from the initial condition or a related condition -- hospital plans usually have lists of conditions that are considered closely related and so constitute a single spell of illness -- the entire confinement might be considered to be one spell of illness lasting 12 days.

Stop-loss Clause
The clause in the contract between the insurer and the insured that specifies the maximum payment that will be made for particular types of coverages – for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.

The circumstance where an insurance company takes the place of an insured in bringing a liability suit against a third party who caused injury to the insured.

Terminating or canceling a policy before its maturity date and cashing in its cash surrender value.

Surrender Charges
Fees that are deducted if your life insurance policy is cashed in prematurely.

Tenants Insurance
Coverage for the contents of renter’s home or apartment and for liability. Tenant policies are similar to homeowners insurance, except that they do not cover the structure.

Term Life
Life insurance that generally offers no cash value feature payable to a beneficiary when an insured dies within a specified period.

Third-Party Administrator
They administer employee benefit plans under contract with insurance companies, HMOs and self-funded plans.

Umbrella Policy
Insurance coverage that extends the terms of a regular insurance policy once coverage limits for the regular policy have been reached. Specifically, umbrella coverage is for people who want protection against a large jury award that is not covered in their standard policy.

Underinsured Motorist Coverage
Provides coverage for bodily injury caused by a driver who is underinsured. It does not cover damage to your car.

An individual in an insurance company who determines what insurance risks will be accepted and on what terms.

The process of identifying and classifying the degree of risk represented by a proposed insured.

Uninsured Motorist Bodily Injury Coverage
Insurance that covers the insured and family members if injured by a hit-and-run motorist or an uninsured driver, provided the other driver is at fault.

Universal Life
A flexible premium life insurance contract that permits policy owners to adjust their policy’s premiums, timing of payments, and face amount from time to time.

Usual, Customary & Reasonable
The dollar amount the insurance companies believe to be a fair price for the medical service/procedure in a specific geographic area. Companies have developed their own UCR, which often do not reflect the doctor’s actual bill. If the doctor’s chargers are higher than the companies UCR charge, you generally have to pay the balance.

Utilization Review Services
A process that reviews, on a case-by-case basis, the utilization, appropriateness, or quality of medical services provided to a person. Examples of utilization review are pre-hospital admission, pre-inpatient certification, second opinions, etc.

Variable Life
A type of whole life policy in which the death benefit and the cash value relate to the investment performance of a separate account fund that the policyholder selects. The separate account assets are invested in bonds, money market funds, stocks, and other instructions.

Waiting Period
Has two meanings: (1) the time period you must wait before you can get health insurance from a new employer; and (2) the time that must pass after becoming insured before the policy will begin to pay benefits for a pre-existing condition or specified illness.

An amendment to a policy that excludes coverage for certain medical conditions.

Written Premiums
The total premiums generated from all policies written by an insurance company within a given period of time.



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