INSURANCE TERMS / TERMINOLOGIES

Insurance terms/terminologies are the language, expressions, vocabularies, jargons, lingo (informal), lexicons, lexis and/or words, or a set of expressions, vocabularies, jargons etc. relating to the day-to-day operation of insurance, used by people involved in the activities or fields of work of insurance.

Term

Definition

Actual cash value		This is the traditional measure of property insurance loss. Usually defined as the cost of replacing the destroyed property with new property, minus an allowance for depreciation.
Actuary		This is a person involved in life assurance, assessing the risks and calculating the premium and handling the matters connected with pension funds.
All-risk insurance		This is a generic term for insurance that covers all risks that are not explicitly excluded.
Annuity		This is an insurance contract for annual (or some other regular interval) payment of a specified amount of money to somebody, either for a stated number of years or for the person's lifetime.
Assurance		Life insurance; or assurance against certainty; or insurance against something that is certain to happen such as death, rather than something that might happen such as loss of or damage to property.
Auto collision coverage		This is the portion of an auto insurance policy that pays for collision damage to the insured auto.
Auto comprehensive coverage		This refers to the portion of an auto insurance policy that pays for loss or damage to the insured auto other than the loss or damage caused by collision.
Auto liability coverage		The portion of an auto insurance policy that protects against claims for legal liability arising out of auto accidents. Provides legal defense and pays sums necessary to settle claims against the insured person.
Automatic premium loan		A life insurance policy provision authorizing the insurer to use the policy's loan value to pay any premium not paid by the end of the grace period.
Beneficiary		This is the person who receives the proceeds of a life insurance policy upon the death of the insured person; or the legal recipient  or somebody entitled to money or property by an insurance policy.
Binder		This refers to a temporary insurance contract (written or oral) that remains in effect until replaced by a regular policy.
Cash surrender value		This is the amount of money payable to a policyholder who discontinues a life insurance policy.
Casualty Insurance		Insurance that covers losses caused by injury to others or damage to property of others. Casualty insurance policies may or may not require that policy-owners determine legal liability (fault) in order to collect payments. It is otherwise referred to as company's liability insurance. It is insurance against claims following negligence by a company's employees who cause injury to people or damage to property. It is also an insurance against physical damage to property, equipment, or machinery.
Coverage		This is the protection provided by insurance. This otherwise referred to as insurance protection i.e. the amount or type of protection provided by an insurance policy.
Cover note		Temporary insurance cover which enables the insured to enjoy the benefits of a policy while it is being processed.
Credit life insurance		Term life insurance issued to cover repayment of a loan if the borrower dies.
Deductible clause		A policy provision defining the specific amount of loss that, if exceeded, will trigger insurance coverage.
Dividend		A partial return of premium, reflecting the difference between the premium charged and the amount needed to cover the company's operations and payments on claims.
Endowment insurance		Life insurance payable to the insured if he or she is living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.
Exclusions		Provisions that explicitly limit the coverage provided by an insurance policy.
Expiration date		The date when an insurance policy ends.
Grace period		A period of time following the date the premium is due, during which a policy remains in force even though the premium has not been paid.
Group insurance		This refers to any insurance plan that covers a number of individuals under a single contract. It is typically issued to an employer for the benefit of employees.
Guaranteed insurability		A life insurance policy provision permitting the purchase of additional insurance at stated times regardless of the condition of the insured person's health.
Incontestable clause		A policy provision that prevents the insurer from challenging or contesting claims after a stated period of coverage, regardless of any misstatements made by the applicant.
Insurable interest		This is a demonstrable interest in something covered by an insurance policy, the loss of which would cause deprivation or financial loss. Insurable interest must be shown whenever somebody takes out an insurance policy or makes a claim.
Insurable value		This is the true value for which a property is insured after deducting the value of the land and other items that are not part of the property.
Insurance broker		This is somebody who is paid to act as an agent for the insurance organization in negotiating insurance contracts/policies between the insurer and the insured. He/she is responsible and acts as an agent in arranging a deal or contract on the selling and buying of insurance policies.
Insurance rate		The price of insurance per unit of coverage, usually expressed as a cost per dollar amount of coverage per year.
Insurance policy		This is the document which sets out the exact terms of the insurance contract.
Insurance protection		This is the amount or type of protection provided by an insurance policy.
Insured		This refers to a person or organization that is protected by insurance is referred to as the insured.
Insurer		This is an insurance company or other organization that provides insurance for the insured.
Liability insurance		An insurance policy that protects against claims for legal liability. Provides legal defense and pays sums necessary to settle claims against the insured.
Limit of liability		The maximum amount an insurer will pay in the event of a covered loss.
Limited payment whole life		Whole life insurance on which premiums are payable for a specified number of years.
Loss		This is any event or circumstance for which insurance may pay.
Major medical expense insurance		Insurance that pays for a broad range of medical services up to a very high maximum amount. It is usually subject to a deductible amount and percentage participation. Also called major medical.
Medical payments coverage		A form of insurance that pays for medical and funeral expenses without regard to liability. It is available in auto policies and other policies that provide liability coverage.
Mutual insurance company		An insuring organization that is owned by its policyholders.
Named peril insurance		Any insurance that specifies the perils (risks) it covers.
No-fault system		A system in which reimbursement for injuries on the basis of fault (tort liability) is not legally available.
Non-forfeiture options		Alternatives available to a policy-owner who discontinues premium payments on a policy of insurance.
Non-participating insurance		Insurance provided by policies on which no policy dividends are payable. Also called nonpar.
Participating insurance		Insurance provided by policies on which dividends are payable.
Permanent life insurance		Loosely, any form of individual life insurance that develops a cash value.
Policy		This is a contract that exists between an insurance company and a person or organization buying insurance services, or the document that lists the contract terms.
Policy loan		A loan made by a life insurance company to a policy-owner on the security of a policy's cash surrender value. Simply put, this is a loan granted to a policyholder using the policy as security.
Policy-holder		The person or entity who pays for, and therefore owns, an insurance policy. This is usually the insured, but it may also be a relative of the insured, a partnership, or a corporation. Also called a policy-owner. Simply put, this is a person, organization, etc., in whose name a policy is held.
Premium		The price of an insurance policy. Payment made to an insurance policy for an insurance policy, it can be paid annually, quarterly or monthly.
Proposal form		This is a form that must be completed by a person wishing to enter into an insurance contract. He must disclose all relevant information truthfully in the form.
Replacement cost		The cost of replacing damaged or destroyed property with new property, without deducting for depreciation.
Risk		The cause of a possible loss. Also referred to as peril.
Settlement options		The alternatives, other than immediate payment in cash, in which a life insurance beneficiary may choose to have policy benefits paid.
Stock insurance company		A corporate insuring organization owned by stockholders.
Straight life insurance		Whole life insurance on which premiums are payable for life.
Subrogation		A legal principle which provides that, to the extent an insurer has paid for a loss, the insurer receives the policyholder's right to recover from any third party who caused the loss.
Surrender value		The amount in cash an insurance company will repay to an endowment policy holder if he wishes to discontinue prior to the date of the maturity. This depends on the premium paid.
Term life insurance		Life insurance payable to a beneficiary when the insured dies within a specified period. If the insured is living at the end of the period, the policy expires without value.
Underwriting		The process by which insurers decide which losses to insure and how to insure them.
Uninsured motorists coverage		A form of auto insurance that pays the damages that insured persons are legally entitled to collect from uninsured motorists.
Waiting period		In disability income insurance, the period of time between the beginning of a disability and the date that the policy's income payments begin. In group insurance, the period an employee must work for a firm in order to qualify for coverage.
Waiver of premium		A life or health insurance policy provision stating that premiums will not be charged if the insured person becomes totally and permanently disabled.
Whole life insurance		Life insurance payable to a beneficiary at the death of the policyholder, whenever that occurs. Premiums may be payable for a specified number of years (limited payment life insurance) or for life (straight life insurance).

Saving...