Insurance

Insurance Terms What do they mean?

Insurance Terms

If you ever wondered about the exact meaning of certain Insurance Terms, then this page could probably help you.
From A to Z we collected a lot of different insurance terms and try to explain them in a short and easy way.
Stop being confused about certain insurance expressions.
Start to get known of what all these insurance terms are about!

Acceleration Clause: The component of a contract that says after a hire may be documented due and payable.

Accidental Death Benefit: In a life insurance policy, superiority in supplement to the death superiority compensated to the beneficiary, ought death eventuate due to an accident. There can be definite omissions as well as time and age limits.

Activities of Daily Living: Bathing, preparing and eating meals, transferring from room to room, bringing into and out of beds or stools, gravy, engaging a toilet.

Actual Cash Value: Cost of deposing shabby or reduced property with competent novel property, minus depreciation and obsolescence. For case, a 10-year-old sofa not able to be deposed at existing full worth because of a decade of depreciation.

Adjustable Rate: An spare-time activity rate that modifications, grounded on modifications in a issued market-rate index.

Adjuster: A spokesperson of the insurer any person who seeks to determine the distance of the insurer’s obligation for loss after a contend is submitted.

Aggregate Limit: Usually refers to obligation insurance and shows the measure of coverage that the insured has below the contract for a actual time span of time, broadly articulating the contract time span, no material how many separate misfortunes might occur.

Annual Crediting Cap: The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper constraint, or cap, of 7 per 100 and the index linked to the annuity accumulated 7.2 per 100, simply 7 per 100 would be credited to the annuity.

Annuitization: Process by which you transform component or all of the currency in a qualified retirement plan or nonqualified annuity contract into a waterway of regular profits payments, either for your current population or the lifetimes of you and your joint annuitant. Once you select to annuitize, the payment agenda and the measure is commonly set and can’t be altered.

Attained Age: Insured’s age at a individual time. For case, many term life insurance policies sanction an insured to transform to permanent insurance without a physical check at the insured’s afterward evened out age. Upon conversion, the premium broadly articulating growth significantly to reflect the insured’s age and diminished life expectancy.

Authorized Under Federal Products Liability Risk Retention Act (Risk Retention Groups): Indicates businesses operating below the Federal Products Liability Risk Retention Act of 1981 and the Liability Risk Retention Act of 1986.

Automobile Liability Insurance: Coverage if an insured is legally liable for strongly injury or property impairment caused by an automobile.

Benefit Period: In medicinal insurance, the diagram of days for which superiority are compensated to the called insured and his or her dependents. For case, the diagram of days that superiority are calculated for a calendar year consist of the days innovation on Jan.1 and ending on Dec. 31 of each year.

Broker-Agent: Independent insurance salesperson any person who represents individual insurers but also might run as a broker by searching the whole insurance market to location an applicant’s coverage to maximize vindication and minimize cost.

Business Net Retention: This portion represents the fraction of a company’s gross writings that are preserved for its have account. Gross writings are the sum of lead writings and assumed writings. This estimate excludes linked writings.

Casualty Insurance: That breeding of insurance that is at the begin anxious with losses caused by injuries to separate population and lawful liability caused upon the insured for such injury or for impairment to property of others. It also includes such mixed types as plate glass, insurance against crime, such as stealing, burglary and phony, boiler and machinery insurance and Aviation insurance.

Claim: A appeal organised by the insured, or the insured’s beneficiary, for payment of the superiority as granted by the policy.

Collision Insurance: Covers physical impairment to the insured’s automobile (other than that swathed below in individual insurance) resulting from contact with another inanimate object.

Common Carrier: A finance or branch that is available to the public for transportation of separate population, yield or messages. Common carriers include trucking businesses, bus rows and airlines.

Comprehensive Insurance: Auto insurance coverage delivering vindication in the function of physical impairment (other than collision) or theft of the insured car. For case, discharge impairment or a cracked windshield would be swathed below the in individual section.

Coverage: The scope of vindication granted below an insurance policy. In property insurance, coverage records perils insured against, properties swathed, positions swathed, people insured, and the boundaries of indemnification. In life insurance, vibrant and death superiority are listed.

Convertible: Term life insurance coverage that can be transformed into permanent insurance in spite of an insured’s physical condition and without a medical examination. The someone cannot be turned down coverage or charged an other premium for any health problems.

Death Benefit: The constraint of insurance or the measure of superiority that will be compensated in the function of the death of a swathed person.

Deductible: Amount of loss that the insured compensates in the past the insurance kicks in.

Disease Management: A system of directed health-care interventions and communications for patients with definite illnesses.

Elimination Period: The time which must surpass later filing a contend in the past policyholder can receive insurance benefits. Also known as “waiting period.”

Encumbrance: A contend on property, such as a mortgage, a lien for task and materials, or a right of dower. The spare-time activity of the property manager is diminished by the measure of the encumbrance.

Exposure: Measure of vulnerability to loss, broadly articulating passed on in dollars or units.

File-and-Use Rating Laws: State-based laws which sanction insurers to support novel rates without the prior contentment of the insurance department. Usually insurers yield their novel rates with encouraging statistical data.

Financing Entity: Provides currency for purchases.

Floater: A separate policy available to bind the worth of yield beyond the coverage of a yardstick renters insurance police, including movable property such as jewelry or sports equipment.

Future Purchase Option: Life and medicinal insurance provisions that promise the insured the right to pay for other coverage without proving insurability. Also known as “guaranteed insurability option.”

General Account: All premiums are compensated into an insurer’s complete account. Thus, clients are subject to credit-risk exposure to the insurance business, which is low but not zero.

Grace Period: The interval of time (usually 31 days) later a premium is due and unpaid during which the policy, surrounding all riders, stays in force. If a premium is compensated during the grace time span, the premium is examined to have been compensated on time. In

Universal Life policies, it typically provides for coverage to remain in compel for 60 days pursuing the date wealth worth becomes insufficient to encourage the payment of monthly insurance costs.

Gross Leverage: The sum of net effect and ceded reinsurance leverage. This ratio estimates a company’s gross exposure to pricing errors in its existing retain of finance, to faults of deducing its obligations, and exposure to its reinsurers.

Guaranteed Issue Right: The right to pay for insurance without physical examination; the prevailing and past physical condition of the applicant are not considered.

Guaranteed Renewable: A policy furnishes in many goods which promises the policyowner the right to refresh coverage at every policy day of birth date. The business does not have the right to abandon coverage if not for nonpayment of premiums by the policyowner; however, the business can elevate rates if they choose.

Hazardous Activity: Bungee leaping, scuba diving, horse riding and other achievements not commonly swathed by yardstick insurance policies. For insurers that do deliver bind for such achievements, it is doubtful they will bind obligation and bodily misfortune, which ought be granted by the business hosting the activity.

Health Maintenance Organization (HMO): Prepaid assembly medicinal insurance plan that entitles constituents to services of participating physicians, hospitals and clinics. Emphasis is on preventative medicine, and constituents must exercise contracted health-care providers.

Health Reimbursement Arrangement: Owners of high-deductible medicinal prepares any person who are not qualified for a medicinal savings account assertion can use an HRA.

Health Savings Account: Plan that sanctions you to contribute pre-tax currency to be adapted for qualified medical expenses. HSAs, which are portable, must be linked to a high-deductible medicinal insurance policy.

Hurricane Deductible: Amount you must compensate out-of-pocket in the past hurricane insurance will kick in. Many insurers in hurricane-prone states are selling homeowners insurance policies with fraction deductibles for fume impairment, instead of the traditional dollar deductibles adapted for contentions such as discharge and theft.

Inflation Protection: An optional property coverage endorsement submitted by numerous insurers that enhances the policy’s boundaries of insurance during the policy term to save tempo with inflation.

Insurable Interest: Interest in property such that loss or destruction of the property could start a economic loss.

Insurance Adjuster: A spokesperson of the insurer any person who seeks to determine the distance of the insurer’s obligation for loss after a claim is submitted. Independent insurance adjusters are hired by insurance businesses on an “as needed” basis and might task for several insurance businesses at the same time.

Insurance Attorneys: An attorney any person who practices the law as it relates to insurance matters. Attorneys might be solo practitioners or task as component of a law firm. Insurance businesses any person who retain attorneys to look after them against law suits might hire employees attorneys to task for them in-house or they might retain attorneys on an as-needed basis.

Insurance Institute of America (IIA): An organization which grows programs and conducts national examinations in complete insurance, danger authorities, dealing, adjusting, underwriting, auditing and loss calm management.

Interest-Crediting Methods: There are at least 35 interest-crediting processes that insurers use. They broadly articulating involve numerous combination of point-to-point, every year reset, end product spread, averaging, or high water mark.

Investment Income: The return received by insurers from their money portfolios surrounding spare-time activity, dividends and realized capital gains on stocks. It doesn’t include the worth of any stocks or bonds that the business now owns.

Insurance Regulatory Information System (IRIS): Introduced by the National Association of Insurance Commissioners in 1974 to identify insurance businesses that might want further regulatory review.

Least Expensive Alternative Treatment: The measure an insurance business will compensate grounded on its tenacity of charge for a particular procedure.

Liability Insurance: Insurance that compensates and renders service on behalf of an insured for loss originating out of his liability, due to negligence, to others caused by law or assumed by contract.

Licensed: Indicates the business is mixed (or chartered) in another declare but is a licensed (admitted) insurer for this state to write actual rows of finance for which it qualifies.

Licensed for Reinsurance Only: Indicates the business is a licensed (admitted) insurer to write reinsurance on dangers in this state.

Lifetime Reserve Days: Sixty other days Medicare compensates for after you are hospitalized for more than 90 days in a superiority period. These days can simply be adapted once during your lifetime. For each current population open space day, Medicare compensates all swathed expenditures except for a daily coinsurance amount.

Liquidity: Liquidity is the talent of an someone or finance to speedily transform supplies into wealth without incurring a considerable loss.

Living Benefits: This attribute sanctions you, below definite circumstances, to receive the moves of your life insurance policy before you die. Such circumstances include terminal or tragic illness, the deficiency for long-term care, or confinement to a nursing home. Also known as “accelerated death benefits.”

Loss Control: All processes extracted to diminish the frequency and/or severity of losses surrounding exposure hindrance, loss prevention, loss reduction, segregation of exposure cubicles and noninsurance transfer of risk.

Loss Reserve: The presumed obligation, as it would arise in an insurer’s economic assertion, for unpaid insurance contentions or losses that have eventuated as of a given appraisal date. Usually includes losses incurred but not reported (IBNR), losses due but not yet compensated, and measures not yet due. For someone contentions, the loss open space is the approximation of what will ultimately be compensated out on that claim.

Losses Incurred (Pure Losses): Net compensated losses during the existing year plus the modification in loss open space areas since the prior year end.

Medical Loss Ratio: Total medicinal superiority split by total premium.

Member Month: Total diagram of medicinal plan participants any person who are constituents for each month.

Mortality and Expense Risk Fees: A assignment that refuges such annuity contract promises as death benefits.

Mortgage Insurance Policy: In life and medicinal insurance, a policy binding a mortgagor with superiority denoted to compensate off the balance due on a mortgage upon the insured’s death, or to find the payments due on a mortgage in covering of the insured’s death or disability.

Net Investment Income: This portion represents money profits earned during the year smaller diagram money expenses and depreciation on real estate. Investment expenses are the expenses related to producing money profits and finance gains but exclude profits taxes.

Net Leverage: The sum of a company’s net premium written to policyholder overload and net obligations to policyholder surplus. This ratio estimates the combination of a company’s net exposure to pricing faults in its existing retain of finance and faults of estimation in its net obligations later reinsurance, in regard to policyholder surplus.

Net Premiums Written: Represents gross premium written, lead and reinsurance assumed, smaller diagram reinsurance ceded.

Net Underwriting Income: Net premiums earned smaller diagram incurred losses, loss-adjustment expenses, underwriting expenses incurred, and dividends to policyholders.

Nonstandard Auto (High Risk Auto or Substandard Auto): Insurance for motorists any person who have broke supplying the insist itemising or have been canceled or refused insurance. The premium is much higher than yardstick auto due to the other risks.

Non-Recourse Mortgage: A home hire in which the borrower can never owe more than the home’s worth at the time the hire is repaid.

Noncancellable: Contract terms, surrounding expenditures that can never be changed.

Occurrence: An function that results in an insured loss.

Operating Cash Flow: Measures the funds produced from insurance operations, which includes the modification in wealth and invested supplies attributed to underwriting achievements, net money profits and federal profits taxes.

Other Income/Expenses: This portion represents miscellaneous lineages of operating profits or expenses that principally relate to premium account income.

Out-of-Pocket Limit: A predetermined measure of currency that an someone must compensate in the past insurance will compensate 100% for an individual’s health-care expenses.

Own Occupation: Insurance contract furnishes that sanctions policyholders to receive superiority if they can no longer task in their have occupation.

Paid-Up Additional Insurance: An option that sanctions the policyholder to exercise policy dividends and/or other premiums to pay for additional insurance on the same plan as the rudimentary policy and at a face measure motivated by the insured’s evened out age.

Participation Rate: In equity-indexed annuities, a participation rate determines how much of the gain in the index will be credited to the annuity. For case, the insurance business may set the participation rate at 80%, which method the annuity would only be credited with 80% of the gain sophisticated by the index.

Personal Injury Protection: Pays rudimentary expenses for an insured and his or her family in declares with no-fault auto insurance. No-fault laws commonly want drivers to carry both obligation insurance and bodily injury vindication coverage to have funds for rudimentary needs of the insured, such as medical expenses, in the function of an accident.

Personal Lines: Insurance for people and families, such as private-passenger auto and homeowners insurance.

Point-of-Service Plan: Health insurance policy that sanctions the staff to select between in-network and out-of-network care each time medical reporting is needed.

Policy: The written contract effecting insurance, or the certificate thereof, by whatever call summoned, and surrounding all clause, riders, endorsements, and papers bound thereto and organised a component thereof.

Policyholder Surplus: The sum of compensated in finance, compensated in and contributed overload, and net earned surplus. It also is the difference between total admitted supplies and total liabilities.

Policy or Sales Illustration: Material adapted by an staff and insurer to demonstrate how a policy may accomplish below a assortment of conditions and through a diagram of years.

Pre-Existing Condition: A coverage restriction included in many medicinal policies which declares that definite physical or mental conditions, either at one time diagnosed or which would usually be expected to want reporting prior to subject, not able to be covered below the novel policy for a specified time span of time.

Preferred Auto: Auto coverage for drivers any person who have never had an misfortune and operates motor vehicles according to law. Drivers are not a risk for any insurance business that writes auto insurance, and no insurance business would be afraid to take them on as risk.

Premium: The price of insurance vindication for a specified danger for a specified time span of time.

Premium Unearned: That component of the premium pertinent to the unexpired component of the policy period.

Pretax Operating Income: Pretax operating wages in the past any finance gains produced from underwriting, money and other miscellaneous operating sources.

Pretax Return on Revenue: A estimate of a company’s operating profitability and is calculated by splitting pretax operating wages by net premiums earned.

Qualifying Event: An event that starts an insured’s protection.

Quick Assets: Assets that are speedily convertible into cash.

Reinsurance: In appearance, insurance that an insurance business compensates for its have protection. The danger of loss is spread so a disproportionately many loss below a single policy doesn’t drop on one company.

Replacement Cost: The dollar measure was deficient to depose shabby bodily property or household property without deducting for depreciation but limited by the maximum dollar measure published on the assertions page of the policy.

Residual Benefit: In disability insurance, a superiority compensated after you suffer a loss of profits due to a swathed disability or if loss of profits persists.

Standard Auto: Auto insurance for average drivers with relatively small proportion misfortunes during lifetime.

State of Domicile: The declare in which the business is mixed or chartered.

Stop Loss: Any furnishes in a policy arranged to disturb an insurer’s losses at a given point.

Surplus: The measure by which supplies surpass liabilities.

Surrender Charge: Fee charged to a policyholder after a life insurance policy or annuity is surrendered for its wealth value. This fee reflects expenses the insurance business incurs by placing the policy on its stories, and afterwards administrative expenses.

Surrender Period: A set measure of time during which you have to save the majority of your currency in an annuity contract. Most surrender time spans terminal from five to 10 years.

Term Life Insurance: Life insurance that provides vindication for a specified time span of time. Common policy time spans are one year, five years, 10 years or until the insured comes age 65 or 70. The policy doesn’t amass any of the nonforfeiture beliefs associated with every component of life policies.

Tort: A private incorrect, independent of contract and engrossed against an someone, which gives surge to a lawful obligation and is adjudicated in a civil court. A tort can be either intentional or mishap, and obligation insurance is mostly purchased to cover mishap torts.

Total Annual Loan Cost: The projected every year average charge of a reverse mortgage surrounding all itemized costs.

Total Loss: A loss of adequate elevation that it can be said no worth is left. The achieve destruction of the property. The term also is adapted to midpoint a loss calling for the maximum measure a policy will pay.

Umbrella Policy: Coverage for losses above the constraint of an underlying policy or policies such as homeowners and auto insurance.

Unearned Premiums: That component of the premium pertinent to the unexpired component of the policy period.

Uninsured Motorist Coverage: Endorsement to a bodily automobile policy that refuges an insured collision with a driver any person who does not have obligation insurance.

Universal Life Insurance: A combination flexible premium, adjustable life insurance policy. Usual, Customary and Reasonable Fees: An measure usually charged for or swathed for interchangeable services and gives which are medically necessary, recommended by a intern or wanted for treatment.

Variable Life Insurance: A type of life insurance whose face worth fluctuates depending upon the worth of the dollar, securities or other equity goods encouraging the policy at the time payment is due.

Variable Universal Life Insurance: A combination of the attributes of variable life insurance and all over life insurance below the same contract. Benefits are variable grounded on the worth of underlying equity money, and premiums and superiority are adjustable at the option of the policyholder.

Whole Life Insurance: Life insurance which might be saved in compel for a person’s every component of life and which compensates a superiority upon the person’s death, whenever that might be.

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