Insurance vocab

Actual Delivery

The method of providing possession to the owner of an issued insurance policy which is direct and personal by the representative of the company.

Adhesion Contract

A contract under which one party has a superior bargaining position over the other party to the extent one party must accept or reject a proposal made but has no ability to negotiate or change the terms of the proposal.

Aleatory Contract

A contract with unequal consideration through an element of chance that one party may receive more in value than they have given.

Beneficiary

This is the person or persons who are entitled to collect the proceeds of an insurance policy.

Benefit Period

This the total period of time a contract will cover any single accident or illness under the terms of a health insurance policy. It is also known as the indemnity period.

Binding Receipt

A written acknowledgement by an insurer that insurance coverage exists between the company and the applicant before a policy is issued.

Business Overhead Expense (BOE)

This is a form of disability income insurance through which the policyowner receives benefits for a period of time (usually two years or less) to specifically pay for normal identifiable overhead expenses relating to a business owned by a disabled policyowner.

Capital Sum

Also called a lump sum and found in an accidental death and dismemberment policy, a capital sum is the amount paid to an insured upon a single accidental dismemberment of a covered limb or body part. This payment amount is half of the full amount the contract would pay for total loss.

Capitation

In a managed care plan (HMO), this is the amount a healthcare network provider is paid per subscriber, as compensation regardless of whether or not the subscriber seeks treatment or care from the provider.

Claim Forms

The requirement under an individual health insurance contract that the insurer must supply the insured with claim forms within fifteen days of being notified by the insured of a loss payable under the policy.

COBRA

COBRA, a federal law applying to health insurance groups of 20 or more participants, allows for the continuation of group health insurance to the individual who no longer is eligible for group coverage under certain conditions and for a limited period of time.

Coinsurance

These are shared expenses paid by an insured and insurance company under a health contract, usually on a percentage basis, up to a specified dollar limit after the policy deductible has been paid by the insured.

Comprehensive Major Medical

This is a form of health insurance that requires the insured to pay very little or no out of pocket expenses under a major medical plan which is working in unison with a separate indemnity plan that pays first dollar coverage to the insurance.

Conditional Contract

A contract whose performance by one party is dependent upon the satisfaction of certain conditions first being met by the other party.

Conditional Receipt

A written acknowledgement by an insurer that they are in possession of an application, with or without payment, received from an insurance applicant but that coverage is not in force until the company so acknowledges.

Consideration Clause

This provision requires that the exchange of value between the parties must be satisfied for coverage to exist and to be paid.

Constructive Delivery

The method of providing possession to the owner of an issued insurance policy which is indirect from the company and usually provided by a third party delivery service.

Consumer Report

Basic credit information and employment and criminal history about an insurance applicant obtained by insurers gathered from public sources.

Contingent Beneficiary

This is the second choice of the policyowner to be entitled to collect the proceeds of an insurance policy.

Contributory Group

The employee and employer share the cost in a group plan requiring an employee participation of at least 75%.

Copayments

Usually found in a managed care health plan (such as HMO) these are small, recurring fees paid by the insured to access certain specified services such as a doctor visit or to obtain prescription drugs.

Core Benefit

These are specified benefits, required under Federal law, which must be included in all standardized privately placed Medicare Supplement health insurance contracts offered for sale to Medicare participants.

Corridor and Integrated Deductible

Under a reimbursement approach medical expense policy (such as major medical) this concept uses benefits from a basic health plan to pay some or all of the out-of-pocket expenses required to be paid by the insured. The benefit from the basic plan is "integrated" into the major medical plan to pay the cost "corridor" (deductible and coinsurance requirements) owed by the insured thus creating a "Comprehensive Major Medical" plan.

Critical Illness

This is insurance coverage that pays a specified lump sum payment to the insured in the event of the diagnosis of life threatening diseases specified in the contract.

Eligible Expenses

Under a health contract all expenses incurred by an insured that will be paid under the policy that are deemed to be eligible and therefore paid by the plan on behalf of the insured.

Elimination Period

This is a contractually specified period of time, selected by the policyowner at the time of purchase, during which no benefits are paid although a claim is pending payment. After the period is ended, benefits, usually periodic in nature, begin. It is a deductible of time.

Entire Contract

A life insurance provision that states the agreement between the parties includes the policy and application plus any riders, additional exclusions or changes made to the policy after it was issued.

Flexible Spending Account (FSA)

This is a tax qualified employer sponsored benefit that allows an employee to pay the employee share of an array of employment benefits, including the cost of out-of-pocket healthcare expenses, with income earned on a pre-tax basis.

Free Look

A provision that allows the policyowner a period of time in which to decide whether to keep the policy offer or return it to the company for a full refund of any premiums paid.

Guaranteed Insurability Rider

This is a written additional clause to a health contract, effective upon policy issue, that guarantees the insured the right to purchase additional benefits in the future without regard to the health condition of the insured at the time of any future purchase.

Guaranteed Renewable

This is a written additional clause to a health contract, effective upon policy issue, which states that the insurer can raise premiums in the future but only to an entire class of insureds but must pay benefits, except for fraud during the first two years of issue, if the insured makes timely premium payments.

Health Savings Accounts

This is a tax qualified bank account into which individual consumers can place pre-tax earnings designed to pay out-of-pocket expenses of a consumer selected qualifying high deductible health plan.

High Deductible Health Plans (HDHP)

These are health plans that, because of choosing a qualifying high deductible health plan, allow the insured to receive income tax deductions which help to reduce the insured's out of pocket costs of the insurance.

Impairment Rider

This is a written additional clause to a health contract, effective upon policy issue, that restricts or eliminates benefit if the cause of loss is related to a specified health condition as stated in the contract.

Indemnity Period

This the total period of time a contract will cover any single accident or illness under the terms of a health insurance policy. It is also known as the benefit period.

Inspection Report

This is an investigative consumer report relating to the proposed insured's lifestyle, occupation, and economic standing.

Insurable Interest

The legal requirement stating that a life or health contract may not be issued as a wager on human life or health and that, instead, the owner of a proposed policy must demonstrate a legitimate risk transfer need and/or potential economic loss as a result of the proposed insured's death or health impairment.

Insuring Clause

This provision includes the promises that are exchanged between the parties in an insurance contract.

Investigative Report

Consumer reports based off interviews with family, friends, neighbors, and/or co-workers of a proposed insured who personally know that person and their lifestyle.

Irrevocable Beneficiary

This person or persons who are entitled to collect the proceeds of an insurance policy may not be changed at anytime by the policyowner unless they provide written consent to the policyholder to be changed by the policyowner.

Issue Date

The date, month and year written on the first page of a life insurance contract indicating the first day of coverage.

Managed Care

This health insurance concept is based on trying to keep health costs lower over time by providers closely working with service subscribers to deliver care within a defined provider network.

Master Policy

This is a single contract issued for life or health insurance designed to cover two or more individuals who constitute a group covering each individual participant by certificate rather than individual policy.

Medicaid

Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, like nursing home care and personal care services.

Medical Information Bureau (MIB)

A central database, supported by the life and health insurance industry that accumulates and stores applicant information that may help prevent future insurance fraud by insurance applicants.

Medicare

This is a federal health insurance program for certain people who qualify including those age 65 or older, people under age 65 who meet the Social Security definition of disability and drawing benefits for at least two years and people diagnosed at certain stages of Renal Disease (kidney failure).

Medicare Part A

Under Medicare, Part A, after certain deductibles and other expenses have been met by the insured, pays for hospital costs, hospice care, some home health care and limited nursing care benefit.

Medicare Part B

Under Medicare, Part B, after certain deductibles and other expenses have been met by the insured, pays for medically necessary doctors' services, preventive care, durable medical equipment, hospital outpatient services, laboratory tests, x-rays, mental health care, and some home health and ambulance services.

Medicare Part C

Medicare Part C is a type of Medicare health plan offered by a private company that contracts with Medicare to provide the insured with both Part A and Part B benefits and is referred to as the "Medicare Advantage Plan."

Medicare Part D

Under Medicare, Part D adds prescription drug coverage to Original Medicare. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Medicare Supplement

This is a privately offered health insurance policy designed to pay some or all of the out-of-pocket expenses required by Medicare health insurance of all qualifying participants.

Mode of Premium

This is the frequency of payment made by the policyowner to the insurer for coverage to continue.

Non contributory Group

Group Life whereby 100% of those employees eligible are covered because the employer is paying the entire cost.

Non-Occupational Coverage

These are health insurance benefits paid to an individual for illness or injury that results from causes that are not related to the workplace, usually paid for by individual or group health contracts.

Noncancelable (Noncan)

This is a written additional clause to a health contract, effective upon policy issue, which states that the insurer can neither raise premiums in the future nor contest payments, except for fraud, if the insured makes timely premium payments.

Notice of Claim

The requirement under an individual health insurance contract that the insured must notify the insurance company of a loss payable under the policy within twenty days of the occurrence of the loss.

Occupational Coverage

These are health insurance benefits paid to an individual for illness or injury that results from the workplace, usually paid for by Workers Compensation policies.

Partial Disability

Under older individual disability income contracts, partial disability is the inability of an insured to perform from 20% to 50% of all his or her job duties for a period of time as stated in the policy and benefits paid are based on the value of the job duties as defined by the insurer.

Per Cause Limit

Under certain types of health insurance contracts deductibles and coinsurance amounts due are based on each specific cause of treatment rather than upon a calendar year basis.

Point of Service (POS)

The POS plan is a hybrid between the best features of an HMO (prepaid with no deductible and only small copays) and a PPO (freedom of choice but at a higher cost than an HMO).

Pre-Authorization

This provision in a medical expense policy requires the insured to contact the insurer for approval prior to any medical procedure or the procedure will not be paid by the policy.

Preexisting Conditions

Any health condition for which an insured has sought medical treatment, advice, or been diagnosed with a medical issue within a specified time (usually 24 months or less) BEFORE coverage began which may not be covered as stated by the insurer under certain health insurance contracts.

Preferred Provider Organization (PPO)

This is a method of health insurance permitting the participants to choose service from hospitals and doctors from either within or outside of a network.

Presumptive Disability

Under the terms of some health contracts, presumptive disability occurs when a qualifying event renders the insured unable to work triggering the policy to waive premium cost during the period of disability.

Primary Beneficiary

This is the first choice of the policyowner to be entitled to collect the proceeds of an insurance policy.

Primary Care Physician

This is a physician in a managed care network assigned to, or selected by, a subscriber through whom all managed care resources are facilitated within the network.

Principal Sum

This is the full amount an accidental death and dismemberment policy pays upon the death or double dismemberment of specified limbs or body parts of the insured when such loss was caused by an accident.

Probationary Period

This is a specific number of days, stated in a health contract, during which no illness based claims are covered by the policy from the date of policy issue.

Proof of Loss

The requirement under an individual health insurance contract that the insured must present a completed and signed proof of loss form to the insurer within a ninety day period of the loss to collect a benefit.

Reimbursement Approach

This method of health insurance offers the traditional fee for service approach by which an insurance company pays the health costs for the insured based on actual costs incurred by the insured after the insured has paid agreed upon out-of-pocket expenses.

Representation

A statement made by an insurance applicant which is considered to be the truth to the best of their knowledge and belief.

Residual Disability

Under modern individual disability income contracts, partial disability is the inability of an insured to perform from 20% to 50% of all his or her job duties for a period of time as stated in the policy and benefits paid are based on the dollars not paid by the employer due to the duties not performed.

Revocable Beneficiary

This person or persons who are entitled to collect the proceeds of an insurance policy may be changed at anytime by the policyowner.

Stop Loss Limit

The maximum amount an insured must pay out-of-pocket in a reimbursement health plan (major medical), including the deductible plus the coinsurance paid, during the policy year before achieving one hundred percent coverage until the first day of the next policy year.

Subrogation

This is a clause found in certain insurance contracts that prohibits the insured from collecting a profit on insured loss when that loss is caused by a third party who is liable and the insured's policy has paid any of the loss created by the third party who is liable. In this circumstance, the right of the insured to recover from the at-fault third party transfers to the insurer who can get reimbursement for the payment made.

Subscribers

A subscriber is an individual whose healthcare is delivered by a network of healthcare service providers by contract on a prepaid basis.

Substandard Risk

The issuance of a life contract at a premium cost that is greater, by some percentage, than a standard issue policy.

Total Disability

Under an individual disability income policy, total disability is the inability of an insured to perform more than half of his or her job duties for a period of time as stated in the policy.

Unilateral Contract

A contract under which only one of the parties is bound to perform.

Usual, Customary and Reasonable Charges (UCR)

UCR charges are the amounts an insurer is willing to pay under a health contract for treatment rendered by medical professionals who are outside of an established provider network and to whom the insured seeks medical care instead of using the contracted and preferred provider network. It is also known as "balance billing."

Warranty

A statement made by an insurance applicant which is considered by law to be a statement of absolute truth.

Workers Compensation

This is a health contract purchased under requirement by state law that provides an exclusive remedy, on a no-fault basis, to employees who suffer injury or illness relating to workplace activities.