Glossary of Terms

Beneficiary - The money or services provided by an insurance policy. In a health plan, benefits take the form of health care.

Benefits - The money or services provided by an insurance policy. In a health plan, benefits take the form of health care.

Cash Value - The equity amount or cash accumulation in a whole life or universal life policy.

Claim - Notification to an insurance company that payment of an amount is due under the terms of the policy.

Conditional Receipt - Given to policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.

Coinsurance - The percentage of the Medicare-approved charge that you have to pay; after you pay the Part A deductible; and after you pay the $100 deductible each year for Part B.

Contestable Clause - A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested. Example: Suicide.

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.

Convertible Term - A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.

Co-payments -  In some Medicare health plans, the amount that you pay for each medical service, like a doctor visit.

Coverage - Another word for insurance. Insurance companies use the term coverage to mean either the dollar amounts of insurance purchased ($200,000 of liability coverage), or the type of loss covered (coverage for theft).

Death Benefit - The amount of money paid to the beneficiary when the insured person dies.

Evidence of Insurability - Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Exclusions - Specified hazards listed in a policy for which benefits will not be paid.

Expiry - The termination of a term life insurance policy at the end of its period of coverage.

Face amount - The amount of insurance provided by the terms of an insurance contract, usually found on the first page of the policy. In a life insurance policy, the death benefit.

Final expense - Expenses incurred at the time of a person's death. These include funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes. Depending on their circumstances, the survivors may also want to pay the outstanding balances of mortgage and loans.

Free look - Provision required in most states whereby policy owners have up to 30 days to examine their new policies at no obligation.

Grace period - Period of time after the due date of a premium during which the policy remains in force and the premium can be paid.

Guaranteed Term - A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.

Insurability - All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.

Insurance policy - The printed form which serves as the contract between an insurer and an owner, and which provides coverage on an insured.

Lapse- Termination of a policy upon the policy owner's failure to pay the premium within the grace 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.

Limiting Charge - The maximum amount doctors and other health care providers who don't accept assignment can charge you for a covered service. The limit is 15% over Medicare's approved payment amount.

Nonmedical Insurance - A contract of life insurance underwritten on the basis of an insured's statement of his health with no medical examination required.

Occupational hazard - A condition in an occupation that increases the peril of accident, sickness, or death. It usually will mean higher premiums.

Preferred risk - A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age.

Premium - The periodic payment required to keep an insurance policy in force.

Primary Beneficiary - In life insurance, the beneficiary designated by the insured as the first to receive policy benefits.

Provider - A doctor, hospital, health care professional, or health care facility.

Rated - Coverage issued at a higher rate than standard because of some health condition, or impairment of the insured.

Replacement - A new policy written to take the place of one currently in force.

Standard risk - Person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

Sub-Standard risk - Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.

Term - Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.

Term Insurance - Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.

Underwriter - Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.

Uninsurable risk - A person who is not acceptable for insurance due to excessive risk.

Whole Life Insurance - Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained.

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