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Accelerated / Living Benefit Coverage A life insurance policy provision that allows an insured to receive a specified portion of the policy’s death benefit before the insured’s death should the insured suffer from a terminal illness or injury.
Accidental Death and Dismemberment (AD&D) Insurance providing payment if the insured’s death results from an accident or the insured accidentally severs a limb above the wrist or ankle joints or totally loses his or her eyesight.
Administrative-Services-Only (ASO) Plan Arrangement under which an insurance company, for a fee, handles the administration of claims, benefits and other administrative functions for a self-insured group.
Admitted Assets Assets permitted by state law to be included in an insurance company's annual statement. These assets are an important factor when regulators measure insurance company solvency. They include mortgages, stocks, bonds and real estate.
Amendment A formal document which corrects or revises an insurance master policy. Also called an endorsement or rider.
Anti-Trust Laws Laws that prohibit companies from working as a group to set prices, restrict supplies or stop competition in the marketplace. The insurance industry is subject to state antitrust laws but has a limited exemption from federal antitrust laws. This exemption, set out in the McCarran-Ferguson Act, permits insurers to jointly develop common insurance forms and share loss data to help them price policies.
Any Occupation A definition of total disability that requires that for disability income benefits to be payable, the insured must be unable to perform any job for which he or she is reasonably suited by reason of education, training or experience.
Applicant The party applying for insurance coverage.
Application A form that must be completed by an individual or other party who is seeking insurance coverage. This form provides the insurance company with much of the information it will need to decide whether to accept or reject the risk. It then becomes part of the contract when the policy is issued.
Assets The items on the balance sheet of the insurer which show the book value of property owned. Under state regulations, not all property or other resources can be admitted in the statement of the insurer. This gives rise to the term "nonadmitted assets." See also admitted assets.
Assignment of Benefits A procedure where a covered person authorizes the insurer to make payment directly to the provider for any allowable benefits rendered.
Attending Physician’s Statement (APS) A written statement from a physician who has treated, or is currently treating, a proposed insured or an insured for one or more conditions. The statement provides the insurance company with information relevant to underwriting a risk or settling a claim.
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Beneficiary The person to whom the proceeds of a life or accident policy are payable when the insured dies. The various types of beneficiaries are: primary beneficiaries (those first entitled to the proceeds); secondary or contingent beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to the proceeds if no primary or secondary beneficiaries are alive when the insured dies).
Benefit The amount of money paid when an insurance claim is approved. Also called the policy benefit.
Book of Business Total amount of insurance on an insurer's books at a particular point in time.
Broker of Record A broker who has been designated to handle certain insurance contracts for the policyholder.
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Cafeteria Plan An employee benefit plan that gives each employee several choices as to the types and/or amounts of group benefits. Also known as a flexible benefit plan.
Capital Equity of shareholders of a stock insurance company. The company's capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company's policyowners in the event it develops financial problems; the policyowners' benefits are thus protected by the insurance company's capital. Shareholders' interest is second to that of policyowners.
Certificate of Insurance A document that describes the coverage provided by a group insurance policy and that is distributed by the group policyholder to each group insured.
Claim A demand made by the insured, or the insured's beneficiary, for payment of the benefits as provided by the policy.
Claim Investigation The process of obtaining necessary claim information in order to decide whether or not to pay a claim.
Claimant The person or party making a formal request for payment of benefits due under the terms of an insurance contract.
Claims Reserve Amounts set aside to meet costs of claims incurred but not yet finally settled. At any given point in time, the reserve would be the funds kept based on the estimate of what the claim will cost when finally settled.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) Legislation providing for a continuation of group health care benefits under the group plan for a period of time when benefits would otherwise terminate. Continuation rights apply to enrolled persons and their dependents. Coverage may be continued for up to 18 months if the insured person terminates employment or is no longer eligible. Coverage may be continued for up to 36 months in nearly all other cases, such as loss of dependent eligibility because of death of the enrolled person, divorce, or attainment of the limiting age.
Combined Ratio The sum of an expense ratio and a loss ratio. An underwriting profit occurs when the combined ratio is under 100% and an underwriting loss occurs when the combined ratio is over 100%.
Commission That portion of the premium paid to the agent or broker as compensation for his services. See also First Year Commission, Flat Commission, Renewal Commission, Level Commission System, Unlevel Commission System and Graded Commission.
Consumer Price Index The Consumer Price Index for All Urban Consumers as published by the United States Department of Labor. The index shows the rate of change in the cost of living in the United States.
Contestable Period The period of time during which an insurer may challenge the validity of a life insurance policy because of misleading or incomplete information furnished on the application.
Contributory Group Insurance Any group insurance plan that calls for the insureds to pay a portion of the cost of the group insurance coverage.
Convention (or Statement) Blank The uniform annual financial statement required by all United States insurance jurisdictions as prescribed by the National Association of Insurance Commissioners. It must be filed annually in an insurer's home state and every state in which it is licensed to do business. Nearly all insurance accounting practices are geared to it.
Conversion Privilege A group life insurance policy provision that allows an insured under a group policy whose coverage terminates for specified reasons to convert his or her group coverage to an individual policy of insurance without presenting evidence of medical insurability.
Coordination of Benefits (COB) A group policy provision which helps determine the primary carrier in situations where an insured is covered by more than one policy. This provision limits benefits from multiple group health insurance policies in a particular case to 100% of the expenses covered.
Copay This is an arrangement where the covered person pays a specified amount for various services and the health care provider pays the remainder. The covered person usually must pay his or her share when the service is rendered. Similar to coinsurance, except that coinsurance is usually a percentage of certain charges where the co-payment is a dollar amount.
Cost-of-Living Adjustment (COLA) Provision An increase in a disability income benefit or life income benefit during periods of disability to compensate for an increase in the cost of living.
Coverage The scope of protection provided under an insurance policy. In life insurance, living and death benefits are listed.
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Death Benefit The amount of money paid or due to be paid when a person insured under a life insurance policy dies.
Death Claim A request for payment under the terms of a life insurance policy.
Decedent Same as deceased.
Declination Rejection of an application for insurance by the insurer.
Dependent Life Insurance Group life insurance made available to group members, usually on an optional and contributory basis, to cover the spouse, children, or other dependents of the group member.
Disability Physical or mental inability to work due to an injury or sickness. See also partial disability and total disability
Disability Benefits Benefits that are payable periodically while an insured continues to be disabled. “Being disabled” is generally defined in terms of inability to work.
Disability Benefits Law A state law requiring an employer to provide disability benefits to covered employees for non-occupational injuries, in contrast to Workers Compensation, which pays for occupational injuries. These laws are currently in effect in New York, New Jersey, Rhode Island, California, and Hawaii.
Disability Insurance A form of health insurance which provides periodic payments when the insured is unable to work as a result of sickness or injury.
Disclosure Authorization Form A form authorizing the disclosure of personal information obtained in connection with an insurance transaction. Insurers are required to give applicants advance notice of their information practices. Among other things, the form must state the kind of information collected and to whom information may be disclosed.
Duration The time during which periodic income benefits will be paid under a disability income insurance policy.
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Eligibility Period In contributory group insurance plans, the period of time, usually 31 days, during which a new group member may apply for group insurance coverage. Also called an enrollment period.
Elimination Period The consecutive number of days for which no benefits are payable at the start of a claim. An insured must be disabled all of those days.
Employee Contribution The employee's share of the premium costs.
Employer Contribution The portion of the cost of a group benefit plan which is borne by the employer.
Endorsement A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Also called an amendment or rider.
ERISA (Employee Retirement Income Security Act) Federal legislation that protects employees by establishing minimum standards for private pension and welfare plans.
Evidence of Insurability Proof that a person is an insurable risk.
Exclusions Losses for which an insurance policy does not provide benefits. For life insurance and accidental death benefit coverages, exclusions describe causes of death for which benefits will not be paid. In disability policies, exclusions describe losses not covered, such as those related to pre-existing conditions or self-inflicted injuries.
Expense Ratio The ratio of underwriting expenses (including commissions) to net premiums written. This ratio measures the company's operational efficiency in underwriting its book of business.
Experience Record of losses.
Experience Rating Review of a previous year’s claims experience for a group insurance contract in order to establish premiums for the next period.
Explanation of Benefits (EOB) The statement sent to a participant in a health plan listing services, amounts paid by the plan, and total amount billed to the patient.
Exposure Measure of vulnerability to loss, usually expressed in dollars or units.
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Face Amount In a life insurance policy in which the benefit is not variable, the amount stated as payable at the death of the insured. It is generally shown on the first page of the policy or in the schedule of benefits. Also called the face value.
Facultative Reinsurance A reinsurance policy that provides an insurer with coverage for specific individual risks that are unusual or so large that they aren’t covered in the insurance company's reinsurance treaties. Reinsurers have no obligation to take on facultative reinsurance, but can assess each risk individually. By contrast, under treaty reinsurance, the reinsurer agrees to assume a certain percentage of entire classes of business up to preset limits.
Family Integration Disability policy provision allowing disability benefits to be reduced by the amount of benefits the disabled insured and his/her family receives from Social Security and other qualified sources.
Fee-for-Service Reimbursement A health care system where physicians and other providers receive payment based on their billed charge for each service provided.
First Year Commission The commission paid on the first year's premium.
Flat Commission A standard scale commission paid to an agent or broker regardless of the type of exposure or the type of policy.
Flexible Benefit Plan An employee benefit plan that gives each employee several choices as to the types and/or amounts of group benefits. Also known as a cafeteria plan.
Fraud An act of deceit; misrepresentations of a material fact made knowingly, with the intention of having another person rely on that fact and consequently suffer a financial hardship.
Fraudulent Claim A type of claim that occurs when a claimant intentionally uses false information in an attempt to collect policy proceeds.
Frequency The number of times a service is provided over a given time period.
Funding Methods The agreed means by which an employer pays for health coverage.
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General Agent (GA) An individual appointed by a Life or Health insurer to administer its business in a given territory. The GA is responsible for building his/her own agency and service force and is compensated on a commission basis, although he/she possibly has some additional expense allowances.
Graded Commission A compensation scale for agents or brokers which provides for varying commission rates depending upon the class, type, or volume of insurance written.
Gramm-Leach-Bliley Act Financial services legislation, passed by Congress in 1999, that removed Depression-era prohibitions against the combination of commercial banking and investment-banking activities. It allows insurance companies, banks, and securities firms to engage in each other’s activities and own one another.
Grievance Procedure A procedure which allows a member of a health plan or a provider of benefits to express complaints and seek remedies.
Group Insurance Insurance that provides coverage for a number of people, usually employees of a company, under one master contract.
Guaranteed Issue Insurance Insurance coverage for which there is usually no individual underwriting. All eligible members of a particular group of proposed insureds who apply for the policy and who meet certain conditions are automatically issued a policy.
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Health History A form used by underwriters to assist in evaluating groups or individuals to determine whether they are acceptable risks.
Human Life Value An individual’s economic worth, measured by the sum of his or her future earnings that is devoted to his or her family.
Hunter Disability Tables Tables which show the probability of total and permanent disability.
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Incontestable Clause Life insurance policy clause that provides a time limit (usually two years) on the insurer’s right to dispute a policy’s validity based on material misstatements made in the application. Also known as an incontestability provision.
Incurred But Not Reported (IBNR) Losses This refers to losses which have occurred during a stated period, usually a calendar year, but have not yet been reported to the insurer as of the date under consideration. For instance, insurance company statements prepared after the end of the calendar year would have to include an estimate of losses that occurred during that year but have not yet been reported.
Incurred Loss Ratio The percentage of losses incurred to premiums earned.
Incurred Losses The losses occurring within a fixed period, whether or not adjusted or paid during the same period. The estimated value of the total claim would be an "incurred loss" for the policy period during which the loss occurred.
Indemnify To restore the victim of a loss to the same position as before the loss occurred.
Indemnity Restoration to the victim of a loss by payment, repair, or replacement.
Indexing A provision which increases the insured's pre-disability earnings every year according to a given formula so residual disability benefits will not lose purchasing power because of inflation.
Individual Insurance Insurance that is issued to insure the life or health of a named person or persons, rather than the life or health of the members of a group. Also called ordinary or personal insurance.
In-Force Business Life or Health Insurance for which premiums are being paid or for which premiums have been fully paid. The term refers to the total face amount of a Life insurer's portfolio of business. In Health Insurance it refers to the total premium volume of an insurer's portfolio of business.
Injury Accidental bodily injury that occurs while a policy is in force.
In-Network Refers to services received within the insurance company's or health plan's network of approved or contracted providers.
Insurability All conditions pertaining to individuals that affect their health, susceptibility to injury or life expectancy; an individual’s risk profile.
Insurable Interest A condition in which the person applying for an insurance policy and the person who is to receive the policy benefit will suffer a genuine loss or detriment if the event insured against occurs. Without the presence of insurable interest, an insurance contract is not formed for a lawful purpose and, thus, is void from the start.
Insurance A system of protection against loss in which a number of individuals agree to transfer risk by paying certain sums of money, called premiums. These premiums create a pool of money which guarantees that the individuals will be compensated for losses caused by events such as fire, accident, illness, or death.
Insured A person whose life is insured by an insurance policy.
Insurer The party in an insurance contract that promises to pay a benefit if a specified loss occurs. Usually an insurance company.
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Key Employee An individual who may have special skills and makes a significant contribution to the business. Executives and managers may be considered key employees, in addition to certain shareholders who actively participate in the ongoing success of the business.
Key Employee Concentration Test A test that demonstrates that no more than 25% of non-taxable benefits are provided to key employees including officers or owners who meets specific compensation and/or ownership criteria.
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Late Enrollee An employee eligible for coverage on a group benefit plan who failed to enroll when first eligible and during the time allocated for enrolling usually within 30 days after the eligibility date.
Level Commission System A system of commissions in which the first year and all renewal commissions are the same percentage of the premium.
Leverage or Capitalization Measures the exposure of a company's surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.
Liabilities Money owed or expected to be owed. Insurance company financial statements, for instance, show assets and liabilities.
Life Insurance Insurance that provides protection against the economic loss caused by the death of the person insured.
Limitations Exceptions to coverage and limitations of coverage as contained in an insurance contract.
Living Benefit Provision See Accelerated / Living Benefit Coverage
Long Term Disability (LTD) Insurance In group insurance, disability income insurance whose maximum benefit period is greater than one year. The maximum benefit period commonly extends to retirement or age 70. In individual insurance, disability income insurance where the maximum benefit period is greater than five years, commonly extending to age 65 or for the insured’s lifetime.
Look Back Period That period of time, when determining a pre-existing condition exclusion period, used to define what is a pre-existing condition based on when it occurred.
Loss Ratio The ratio of incurred losses and loss-adjustment expenses to net premiums earned. This ratio measures the company's underlying profitability, or loss experience, on its total book of business.
Lump Sum A single payment of benefits, with no further payments due. The method of settlement provided by most life insurance companies unless an alternate settlement is elected by the beneficiary.
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Manual Rates Rates based on average claims data for a large number of groups. These rates are then adjusted for specific groups based on that group's characteristics, such as the type of industry, changes in benefits from the standard, etc.
Master Policy Issued to the employer under a group plan; contains all the insuring clauses defining employee benefits. Individual employees participating in the group plan receive individual certificates that outline highlights of the coverage.
Material Fact A fact that is relevant to an insurance company’s underwriting decision regarding issuing or rating a policy.
Material Misrepresentation In insurance, a misstatement by an applicant that is relevant to the insurer’s acceptance of the risk, because, if the truth had been known, the insurer would not have issued the policy or would have issued the policy on a different basis.
Medical Application An application for insurance in which the proposed insured is required to undergo some type of medical examination. The results of the medical examination are then reported to the insurance company.
Medical Report A report on a proposed insured’s health that is completed by a physician and is based on a physical examination and questioning of the proposed insured. Such a medical report serves as part of a medical application.
Misrepresentation (1) A false or misleading statement made to induce a prospect to purchase insurance. Misrepresentation is a prohibited insurance sales practice. (2) A false or misleading statement made by an applicant for insurance. Certain misrepresentations provide a basis for the insurer to avoid the policy.
Misstatement of Age or Sex Provision A provision that is typically included in life insurance and annuity policies and that describes how the amount of the policy benefit will be adjusted if the age or sex of the insured or the annuitant is incorrectly stated.
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National Association of Insurance Commissioners (NAIC) An association of state insurance commissioners designed to promote consistent insurance regulation. Although the NAIC has no legal power, the recommendations of the NAIC and the actions taken at its semiannual meetings carry great weight with the individual state insurance commissioners, the state legislatures, and the insurance industry.
Net Premium The amount of premium minus the agent's commission. Also, the premium necessary to cover only anticipated losses, before loading to cover other expenses.
Net Premiums Written to Policyholder Surplus (IRIS) This ratio measures a company's net retained premiums written after reinsurance assumed and ceded, in relation to its surplus. This ratio measures the company's exposure to pricing errors in its current book of business.
Net Underwriting Income Net premiums earned less incurred losses, loss-adjustment expenses, underwriting expenses incurred, and dividends to policyholders.
Network An insurance company's group or list of approved or contracted providers from which you can obtain service at the plan's highest benefit level.
Non-Contributory Group Insurance A group insurance plan in which the insureds pay no portion of the premium for their insurance. The group policyholder pays the entire premium. If a group plan is noncontributory, the enrollment of group members is automatic; all eligible group members are covered.
Non-Occupational Policy A policy that insures a person only against off-the-job accident and sickness. It does not cover disability resulting from injury or sickness covered by workers’ compensation.
Non-Participating Policy A life insurance policy for which the policyowner does not share in the insurer’s surplus through policy dividends. Also called a nonpar policy.
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Occupation An insured's regular occupation or profession at the time of becoming disabled.
Out-Of-Network Outside an insurance company's list or group of contracted providers where services received, if covered at all, are covered at a lower benefit level.
Overriding Commission A commission which an agent or broker may receive on any business sold in his exclusive territory by subagents. Also sometimes called "overwriting" or "overriding."
Own Occupation (Own Occ) A definition of disability which states that as long as the insured is unable to perform the duties of his or her regular occupation (or occupations, if more than one) at the time of disability, the insured will be considered eligible to receive the full benefit under the policy.
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Paid Claims Loss Ratio Paid claims divided by total premiums.
Partial Disability A disability that prevents an insured from engaging in some of the duties of his or her usual occupation or from engaging in the occupation on a full-time basis.
Partial Disability Benefit An amount specified in a disability income insurance policy that is payable when the insured suffers a partial disability. Usually the partial disability benefit is half the full disability benefit.
Participating Policy An insurance policy under which the policyowner shares in the insurance company’s divisible surplus by receiving policy dividends. Also known as a par policy.
Per Capita Beneficiary Designation A beneficiary designation under which life insurance policy proceeds are shared only by the living primary beneficiaries.
Per Stirpes Beneficiary Designation A beneficiary designation under which the living descendants of a deceased beneficiary receive the deceased beneficiary’s share of the life insurance policy proceeds.
Permanent and Total Disability A condition that prevents an insured from returning to any gainful employment.
Persistency The tendency or likelihood of insurance business not lapsing or being replaced by another insurer's product; an important underwriting factor.
Point-of-Service Plan Health insurance policy that allows the employee to choose between in-network and out-of-network care each time treatment is needed.
Policy All material which constitutes the contract of insurance.
Policy Anniversary The anniversary of the date on which a policy was issued. Sometimes simply called the anniversary.
Policy Provisions The term or conditions of an insurance policy as contained in the policy clauses.
Policy Term The effective period of the policy, usually the period for which premium is paid.
Pool (Risk Pool) Under this rating system, the charge for insurance to all insureds is based on a number of groups put together for the purposes of combining their premium and paying their losses. Individual characteristics of the insureds are not considered at all.
Portability Plan provision which allows employees to continue their coverage when employment ends due to voluntary termination, retirement, or dismissal; or when they are no longer classified as an eligible class for benefits.
Pre-Disability Earnings The earnings level of the insured prior to the onset of disability.
Pre-Existing Condition An injury, illness, or physical condition which existed prior to the policy effective date.
Preference Beneficiary Clause A life insurance policy provision which states that if no beneficiary is named, the insurer will pay the policy proceeds to the first living individual listed in the policy. The provision might list the “spouse of the insured,” followed by the “children of the insured,” etc. Also called a succession beneficiary clause.
Preferred Provider Organization Network of medical, dental or vision providers that charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.
Premium The payment, or one of a series of payments, required by the insurer to put an insurance policy in force and keep it in force.
Premium to Surplus Ratio This ratio is designed to measure the ability of the insurer to absorb above-average losses and the insurer's financial strength. The ratio is computed by dividing net premiums written by surplus. An insurance company's surplus is the amount by which assets exceed liabilities. The ratio is computed by dividing net premiums written by surplus. For example, a company with $2 in net premiums written for every $1 of surplus has a 2-to-1 premium to surplus ratio. The lower the ratio, the greater the company's financial strength. State regulators have established a premium-to-surplus ratio of no higher than 3-to-1 as a guideline.
Primary Beneficiary The party or parties who have first rights to receive the benefits of a life insurance policy following the death of the insured. Also called first beneficiary.
Primary Integration Disability policy provision allowing disability benefits to be reduced by the amount of benefits the disabled insured receives from Social Security and other qualified sources.
Proceeds The amount of money that the insurance company is obligated to pay for the settlement of a life insurance policy, endowment insurance policy, or annuity.
Proof of Loss A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to determine the extent of its liability.
Provider Any individual or group of individuals that provide a health care service such as physicians, vision care professionals, etc.
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Qualified Plan A pension plan or employee-benefit plan that meets a series of federal government requirements and is therefore eligible for certain tax advantages.
Qualifying Event An occurrence (such as death, termination of employment, divorce, etc.) that triggers an insured's protection under COBRA, which requires continuation of benefits under a group insurance plan for former employees and their families who would otherwise lose health care coverage.
Quality Assurance Activities involving a review of quality of services and the taking of any corrective actions to remove any deficiencies.
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Rating Process The steps used to determine a premium rate for a particular group based on the amount of risk that group presents. Items that generally go into the rating process include age, sex, type of industry, benefits, and administrative costs.
Recurrent Periods of Disability In some policies, recurrent periods of disability from the same cause or causes will be considered one continuous period of disability unless each period is separated by a recovery of six months or more.
Reinstatement The process by which an insurer puts back into force a life or health insurance policy that has been terminated for nonpayment of premiums or a life insurance policy that has been continued as extended term or reduced paid-up insurance.
Reinstatement Provision A life insurance policy provision that describes the conditions the policyowner must meet in order for the insurer to reinstate the policy if it has terminated because of nonpayment of renewal premiums.
Reinsurance In effect, insurance that an insurance company buys for its own protection. The risk of loss is spread so a disproportionately large loss under a single policy doesn't fall on one company. Reinsurance enables an insurance company to expand its capacity; stabilize its underwriting results; finance its expanding volume; secure catastrophe protection against shock losses; withdraw from a line of business or a geographical area within a specified time period.
Reinsurer An insurance company that accepts the risk transferred from another company in a reinsurance transaction. Also called the assuming company.
Renewal The reestablishment of the in-force status of a policy, the term of which has expired or will expire unless it is renewed.
Renewal Commission A commission paid on premiums subsequent to the first-year commission.
Reserve An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. A reserve is usually treated as a liability.
Residual Disability Benefit A disability income payment based on the proportion of income the insured has actually lost, taking into account the fact that he or she is able to earn some income.
Retention The portion of the premium which is used by the insurance company for administrative costs.
Retrocession The reinsurance bought by reinsurers to protect their financial stability.
Rider An amendment to an insurance policy that becomes a part of the insurance contract and expands or limits the benefits payable. Also called an amendment or endorsement.
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Secondary Beneficiary An alternative beneficiary designated to receive payment, usually in the event that the primary beneficiary predeceases the insured. Also called a successor beneficiary.
Self-Insurance The concept of assuming a financial risk oneself, instead of paying an insurance company to take it on. Self-insurance also refers to employers who assume all or part of the responsibility for paying the health insurance claims of their employees. Firms that self-insure for health claims are exempt from state insurance laws mandating the illnesses that group health insurers must cover.
Settlement Options Choices available to the beneficiary of a life insurance policy regarding the method by which the insurer will pay policy proceeds in lieu of lump sum payments.
Short Term Disability (STD) Insurance Disability income insurance that provides a benefit for a short disability or for the first part of a long disability. Group short-term disability generally specifies a maximum benefit period of less than one year, commonly 13, 26, or 52 weeks.
Sickness A sickness or disease, including a pregnancy, which is first diagnosed and treated while the policy is in force.
Social Security Programs created by the United States Congress which provide economic security to nearly all employed people. Programs include Old-Age, Survivors, Disability and Health Insurance (OASDHI), Medicare and Medicaid.
Statutory Reserve A reserve, either specific or general, required by law.
Suicide Provision Life insurance policy wording which specifies that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time (usually two years) after the policy’s date of issue.
Summary Plan Description This is a recap or summary of the benefits provided under the plan. It is used most often with employees covered by self-funded plans.
Supplemental Group Life Insurance Life insurance over and above the basic coverage provided by a group policy. The supplemental coverage may provide an additional amount of the same type of insurance or may provide a different type of insurance. Supplemental coverage is usually contributory and subject to stricter underwriting standards than is the basic group coverage.
Surplus The amount by which assets exceed liabilities.
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Term Insurance Life insurance under which the benefit is payable only if the insured dies during a specified period.
Termination The time the coverage under an insurance policy ends, either because its term has expired or because it has been cancelled by either party.
Total Disability Disability preventing insureds from performing any duty of their usual occupations or any occupation for compensation; actual definition depends on policy wording.
Treaty Reinsurance A standing agreement between insurers and reinsurers. Under a treaty each party automatically accepts specific percentages of the insurer’s business.
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Underwriter (1) The person who assesses and classifies the degree of risk that a proposed insured represents. (2) The person or organization that guarantees that money will be available to pay for losses that are insured against. In this sense, the insurance company is the underwriter.
Underwriting (1) The process of assessing and classifying the degree of risk that a proposed insured represents. (2) Providing guarantees that money will be available to pay for losses that are insured against.
Underwriting Profit (or Loss) (1) The profit or loss realized from insurance operations, as contrasted with that realized from investments. (2) The excess of premiums over losses and expenses (profit) or the excesses of losses over premiums (loss).
Underwriting Requirements Printed instructions that indicate what evidence of insurability is required for a given situation and which of several optional information sources will be needed to provide underwriters with necessary information. Sources of information may include medical records and the results of physical examinations. Underwriting requirements are graduated based on the proposed insured’s age and the amount of coverage requested.
Unlevel Commission System A system of commissions under which the first year commission is a higher percentage of the premium than are renewal commissions.
Utilization This refers to how much a covered group uses a particular health plan or program.
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Vision Care Coverage A health care plan usually offered only on a group basis which covers routine eye examinations, and which may cover all or part of the cost of eyeglasses and lenses.
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Waiting Period (1) In disability income insurance, a specified amount of time, beginning with the onset of the disability, during which benefits are not payable. Such waiting periods may last from seven days to six months. The waiting period in a disability income insurance policy is sometimes called the elimination period or the probationary period. (2) In a group insurance plan, the length of time that a new group member must wait before being eligible to join the group plan. Also called a probationary period.
Waiver of Premium In some policies, a provision which relieves the insured of having to make premium payments after he or she has been disabled for 90 days, or the elimination period, if shorter. In addition, premiums paid during those 90 days are refunded and premiums due during the 90 days after recovery are waived.
Worker's Compensation Benefits paid to a worker to compensate for losses caused by a work-related injury or illness.
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