Also called "cash surrender value." Certificates of coverage - Printed material showing members of a group health benefit plan the benefits provided by the group master policy. Auto insurance terms - for terms that apply exclusively to car . Net premium - Calculated on the basis of a given mortality table and a given interest rate, without any allowance for loading. Medical Information Bureau (MIB) - A service organization that collects medical data on life and health insurance applicants for member insurance companies. Limited pay life insurance - A form of whole life insurance characterized by premium payments only being made for a specified or limited number of years. (See twisting), Representation - Statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief, but that are not warranted as exact in every detail. Whole life insurance - Permanent level insurance protection for the "whole of life," from policy issue to the death of the insured. Points are assigned to each surgical procedure and a dollar per point amount, or conversion factor, is used to determine the benefit. Home health care - Skilled or unskilled care provided in an individual's home, usually on a part-time basis. Morbidity - The relative incidence of disability due to sickness or accident within a given group. Insurability receipt - A type of conditional receipt that makes coverage effective on the date the application was signed or the date of the medical exam (whichever is later), provided the applicant proves to be insurable. Disability buy-sell agreement - An agreement between business co-owners that provides that shares owned by any one of them who becomes disabled shall be sold to and purchased by the other co-owners or by the business using funds from disability income insurance. Law of large numbers - Basic principle of insurance that the larger the number of individual risks combined into a group, the more certainty there is in predicting the degree or amount of loss that will be incurred in any given period. Fixed-period settlement option - A life insurance settlement option in which the number of payments is fixed by the payee, with the amount of each payment determined by the amount of proceeds. Insuring clause - Defines and describes the scope of the coverage provided and limits of indemnification. Replacement - Act of replacing one life insurance policy with another; may be done legally under certain conditions. During the early policy years, the cash value is the reserve less a "surrender charge"; in later policy years, it usually equals or closely approximates the reserve value at time of surrender. Insurer - Party that provides insurance coverage, typically through a contract of insurance. Medicaid - Provides medical care for the needy under joint federal-state participation (Kerr-Mills Act). Parol evidence rule - Rule of contract law that brings all verbal statements into the written contract and disallows any changes or modifications to the contract by oral evidence. Peril - The immediate specific event causing loss and giving rise to risk. It can only be performed by or under the supervision of skilled medical professionals and is available 24 hours a day. Spendthrift provision - Stipulates that, to the extent permitted by law, policy proceeds shall not be subject to the claims of creditors of the beneficiary or policy owner. Settlement options - Optional modes of settlement provided by most life insurance policies in lieu of lump-sum payment. Renewable option - An option that allows the policyowner to renew a term policy before its termination date without having to provide evidence of insurability. Life Insurance Terminology You Should Know. Consideration - Element of a binding contract; acceptance by the company of payment of the premium and statements made by the prospective insured in the application. Mortality - The relative incidence of death within a group. (See limited risk policy), Specified disease insurance - (See limited risk policy). Medicare Part A - Compulsory hospitalization insurance that provides specified inhospital and related benefits. Per stirpes rule - Death proceeds from an insurance policy are divided equally among the named beneficiaries. Competent parties - To be enforceable, a contract must be entered into by competent parties. Renewable term - Some term policies prove that they may be renewed on the same plan for one or more years without medical examination, but with rates based on the insured's advanced age. Service insurers - Companies that offer prepayment plans for medical or hospital services, such as health maintenance organizations. Dependency period - Period following the death of the breadwinner up until the youngest child reaches maturity. Immediate annuity - Provides for payment of annuity benefit at one payment interval from date of purchase. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt. (See loss sharing). Revocable beneficiary - Beneficiary whose rights in a policy are subject to the policyowner's reserved right to revoke or change the beneficiary designation and the right to surrender or make a loan on the policy without the beneficiary's consent. (See representation). Broker - Licensed insurance representative who does not represent a specific company but places business among various companies. Defined benefit plan - A pension plan under which benefits are determined by a specific benefit formula. A competent party is one who is capable of understanding the contract being agreed to. By. Employee stock ownership plan (ESOP) - A form of defined contribution profit-sharing plan, an ESOP invests primarily in the securities or stock of the employer. It allows employees to defer part of their pretax income to the plan, lowering their taxable income. Also, person assigned by a state insurance company to audit the affairs of an insurance company. Primary beneficiary - In life insurance, the beneficiary designated by the insured as the first to receive policy benefits. Funding - In a retirement plan, the setting aside of funds for the payment of benefits. Also called accident and health, accident and sickness, sickness and accident, or disability insurance. Health Savings Account. What Is Health Insurance? Deferred annuity - Provides for postponement of the commencement of an annuity until after a specified period or until the annuitant attains a specified age. Without insurance, this is the . Managed care - A system of delivering health care and health care services, characterized by arrangements with selected providers, programs of ongoing quality control and utilization review, and financial incentives for members to use providers and procedures covered by the plan. Benefits and conditions are set by law, although in most states the insurance to provide the benefits may be purchased from regular insurance companies. Risk selection - The method of a home office underwriter used to choose applicants that the insurance company will accept. Private insurer - An insurer that is not associated with federal or state government. Contributory plan - Group insurance plan issued to an employer under which both the employer and employees contribute to the cost of the plan. Waiver of premium - Rider or provision included in most life insurance policies and some health insurance policies exempting the insured from paying premiums after the insured has been disabled for a specified period of time, usually six months in life policies and 90 days or six months in health policies. It is illegal and cause for license revocation in most states. Following is the health and life insurance glossary of terms and definitions that are commonly used in the insurance industry: Absolute assignment - Policy assignment under which the assignee (person to whom the policy is assigned) receives full control over the policy and also full rights to its benefits. Medical Care - Medical services received from a healthcare provider or facility to treat a condition. This person is the natural parent or was made caretaker by a court of law. Buy-sell agreement - Agreement that a deceased business owner's interest will be sold and purchased at a predetermined price or at a price according to a predetermined formula. To put it simply, life insurance protects your loved ones financially if you pass away. Generally, when a policy is assigned to secure a debt, the owner retains all rights in the policy in excess of the debt, even though the assignment is absolute in form. Fully insured - A status of complete eligibility for the full range of Social Security benefits: death benefits, retirement benefits, disability benefits, and Medicare benefits. Trust - Arrangement in which property is held by a person or corporation (trustee) for the benefit of others (beneficiaries). Employee benefit plans - Plans through which employers offer employees benefits such as coverage for medical expenses, disability, retirement, and death. Self-insured plan - A health insurance plan characterized by an employer (usually a large one), labor union, fraternal organization, or other group retaining the risk of covering its employees' medical expenses. May be individual or group policy. Results provision - (See accidental bodily injury provision). If you are dehydrated, it can also help lower blood pressure. When making decisions about health coverage, consumers should know the specific meanings of terms used to discuss health insurance. Viatical settlement contract - An agreement under which the owner of a life insurance policy sells the policy to another person in exchange for a bargained for payment, which is generally less than the expected death benefit under the policy. Continuing care - Type of health or medical care designed to provide a benefit for elderly individuals who live in a retirement community; addresses full-time needs, both social and medical. Glossary 501 Index 519. Contract - An agreement enforceable by law whereby one party binds itself to certain promises or deeds. Exclusion or limitation any specific situation, condition, or treatment that a health insurance plan does not cover. A term life policy with a death benefit that increases each year. Every industry has its own jargon, and the health and life insurance business is no exception. If borrower dies, benefits pay balance due. Nondisabling injury - Requires medical care, but does not result in loss of time from work. Noncontributory plan - Employee benefit plan under which the employer bears the full cost of the employees' benefits; must insure 100% of eligible employees. It is characterized by a low deductible amount, a coinsurance clause, and high maximum benefits. (See warranties). For instance, in a major medical policy, the company may agree to pay 75% of the insured expenses, with the insured to pay the other 25%.
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