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)

Accidental Death Insurance

Insurance providing payment if the insured's death results from an accident.

Accidental Death & Dismemberment

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.

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.

Best's Insurance Report

A guide, published by A.M. Best, Inc., that rates insurers' financial integrity and managerial and operational strengths.

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

Casualty Insurance

Type of insurance that deals primarily with areas relating to automobiles, liability, bonding, theft, and Workers' Compensation.

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.

Decrease in Coverage

Any type of change that reduces the risk assumed by the insurer.

Decreasing Term Insurance

Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level.

Deductible

The amount of covered expenses that must be incurred and paid by the insured before benefits become payable by the insurer.

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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.

Face Amount

Commonly used to refer to the principal sum (death benefit amount) involved in the original policy. The actual death benefit may be decreased by policy loans or increased by additional benefits payable under specified conditions or stated in a rider.

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 Indemnity 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

Indemnity

Benefits paid in a predetermined amount in the event of a covered loss.

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 Premium

Term policies frequently come in versions of 5-year level term, 10-year level term, 15-year level term, 20-year level term, 25-year level term, and 30-year level term. The premium charged throughout the period remains the same, or "level," throughout the specified term. The death benefit provided also remains the same throughout the selected 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 Expense Insurance

A form of health insurance that provides benefits for various expenses incurred for medical care. Benefits for prevention and diagnosis, as well as for treatment, are sometimes included.

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.

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.

Preexisting Condition

A mental or physical problem suffered by an insured prior to the effective date of insurance 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.

Whole Life

A policy that builds cash value and gives protection through the policyholder's lifetime as long as premiums are paid.

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