- Actual Cash Value – The replacement cost of
property damaged or destroyed at the time of loss, with deduction
for depreciation. Actual cash value cannot exceed the applicable
limit of liability shown in the declarations of the policy, nor the
amount it would cost to repair or replace such property with
material of like kind and quality within a reasonable amount of time
after a loss.
- Aggregate – A limit in an insurance policy
stipulating the most it will pay for all covered losses sustained
during a specified period of time, usually one year. Aggregate
limits are commonly included in liability policies. While not often
used in property insurance, aggregates are sometimes included with
respect to certain catastrophic exposures, e.g., earthquake and
flood.
- Attained Age – The insured's age at a
particular time. For example, many term life insurance policies
allow an insured to convert to permanent insurance without a
physical examination at the insured's then attained age. Upon
conversion, the premium usually rises substantially to reflect the
insured's age and diminished life expectancy.
- Benefit Period – In health insurance, the
number of days for which benefits are paid to the named insured and
his or her dependents. For example, the number of days that benefits
are calculated for a calendar year consist of the days beginning on
Jan. 1 and ending on Dec. 31 of each year.
- Binder – A legal agreement that serves to
effect insurance coverage for a specified period of time until the
actual insurance policy can be issued. A binder can be issued by
either an insurance agent or company and must contain the name of
the insured, the name of the insurance company, the type of
insurance coverage, the covered perils, and the limits of the
insurance.
- Claim – A demand made by the insured, or the
insured's beneficiary, for payment of the benefits as provided by
the policy.
- Coverage – The scope of protection provided
under an insurance policy. In property insurance, coverage lists
perils insured against, properties covered, locations covered,
individuals insured, and the limits of indemnification. In life
insurance, living and death benefits are listed.
- Convertible – Term life insurance coverage that
can be converted into permanent insurance regardless of an insured's
physical condition and without a medical examination. The individual
cannot be denied coverage or charged an additional premium for any
health problems.
- Copayment – A predetermined, flat fee an
individual pays for health-care services, in addition to what
insurance covers. For example, some HMOs require a $10 copayment for
each office visit, regardless of the type or level of services
provided during the visit.
- Death Benefit – The limit of insurance or the
amount of benefit that will be paid in the event of the death of a
covered person.
- Deductible - Amount of loss that the insured
pays before the insurance kicks in.
- Elimination Period – The time which must pass
after filing a claim before policyholder can collect insurance
benefits. Also known as a "waiting period."
- Grace Period – The length of time (usually 31
days) after a premium is due and unpaid during which the policy,
including all riders, remains in force. If a premium is paid during
the grace period, the premium is considered to have been paid on
time. In Universal Life policies, it typically provides for coverage
to remain in force for 60 days following the date cash value becomes
insufficient to support the payment of monthly insurance costs.
- Health Maintenance Organization (HMO) – Prepaid
group health insurance plan that entitles members to services of
participating physicians, hospitals and clinics. Emphasis is on
preventative medicine, and members must use contracted health-care
providers.
- Indemnity – Restoration to the victim of a loss
by payment, repair or replacement.
- Insurable Interest - Interest in property such
that loss or destruction of the property could cause a financial
loss.
- Living Benefits – This feature allows you,
under certain circumstances, to receive the proceeds of your life
insurance policy before you die. Such circumstances include terminal
or catastrophic illness, the need for long-term care, or confinement
to a nursing home. Also known as "accelerated death benefits."
- Noncancellable – Contract terms, including
costs that can never be changed.
- Out-of-Pocket Limit – A predetermined amount of
money that an individual must pay before insurance will pay 100% for
an individual's health-care expenses.
- Point-of-Service Plan – A health insurance
policy that allows the employee to choose between in-network and
out-of-network care each time medical treatment is needed.
- Policy – The written contract effecting
insurance, or the certificate thereof, and including all clause,
riders, endorsements, and papers attached thereto and made a part
thereof.
- Pre-Existing Condition – A coverage limitation
included in many health policies which states that certain physical
or mental conditions, either previously diagnosed or which would
normally be expected to require treatment prior to issue, will not
be covered under the new policy for a specified period of time.
- Preferred Provider Organization (PPO) – Network
of medical providers who charge on a fee-for-service basis, but are
paid on a negotiated, discounted fee schedule.
- Umbrella Policy – Coverage for losses above the
limit of an underlying policy or policies such as homeowners and
auto insurance. While it applies to losses over the dollar amount in
the underlying policies, terms of coverage are sometimes broader
than those of underlying policies.
- Underwriting – The process of selecting risks
for insurance and classifying them according to their degrees of
insurability so that the appropriate rates may be assigned. The
process also includes rejection of those risks that do not qualify.
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