Glossary of Insurance Terms

An Absolute Assignment is an irrevocable transfer, from one person to another person or entity, of all ownership rights and privileges under an insurance Policy.

A benefit in addition to the face amount of a life insurance Policy, payable if the insured dies as the result of an accident. Sometimes referred to as double indemnity.

Means actually performing, on a full-time basis, the regular duties pertaining to his/her job in a place where and a manner in which the job is normally performed.

Person applying for insurance coverage.

A signed statement of facts made by a person or company applying for insurance and then used by the insurance company to decide whether or not to issue a Policy.

A statement by the Attending Physician relaying the personal health history of an individual. This can be used for both individual medical underwriting or for an eligible claims determination.

The person or entity designated in writing by the Insured or Policy owner or provided for by an insurance Policy’s terms to receive any benefits provided by the Policy or plan upon the death of the Insured.

The percentage of covered covered monthly earnings shown in the group policy for determining the benefit payable.

The amount payable by the insurance company to a claimant, assignee or beneficiary under the insurance policy.

A summary of coverage distributed by the Plan Administrator to an individual insured employee, which outlines the benefits and provisions of the group policy.

A request for payment of a benefit as a result of a covered loss under an insurance contract.

A period of time specified in the Policy during which we may contest the validity of insurance coverage. If an individual is required to make a representation (i.e. statement of health) when enrolling for coverage under a Policy, no misrepresentation on the part of the applicant can be used to make that coverage invalid after the covered person has been insured for a specific period of time, usually two years.

The person or persons designated in writing by the Insured to receive the benefits of a Policy or plan if there is no primary beneficiary or if no primary beneficiary is living at the death of the insured.

If insurance coverage ceases due to termination of employment or another reason as specified in the policy, an insured employee may apply for an individual plan of insurance made available by an insurance carrier at that time without providing evidence of insurability.

The scope of protection provided under a contract of insurance; any of several risks covered by a Policy.

The insured’s monthly rate of earnings from the employer in effect just prior to the date disability begins. CME usually does not include bonuses, overtime pay, and other extra compensation. However, exceptions can be made at the underwriter’s discretion.

The amount payable in accordance with policy provisions upon the death of the Insured.

A physical or mental impairment that prevents or limits an Insured individual’s ability to work.

The date on which the insurance under a policy begins.

Criteria used to define a person who may participate in an insurance plan.

The date on which an individual member of a specified group becomes eligible to apply for insurance under a group life or health insurance plan.

A specified length of time, such as 31 days, following the eligibility date during which an individual member of a particular group will be eligible to apply for insurance under a group long term disability insurance policy without evidence of insurability up to the guaranteed issue limit.

Those members of a group who have met the eligibility requirements under a group long term disability insurance plan.

A period of time between the first day of disability and the date on which Disability Income Insurance Benefits commence. No benefits are paid during the EP.

The period during which employees may enroll for coverage under a group plan.

The procedures by which an eligible group member signs up for group insurance coverage.

Any statement or proof provided by an applicant on an application form of a person’s physical condition and/or other factual information affecting his/her acceptance for insurance.

A specified period of time, usually 31 days, following the premium due date during which the case remains in force and payment of premium may be made without penalty.

A document signed by the employee as notice of a desire to participate or not in the group plan. In a contributory case, this card also provides the employer with authorization to deduct contributions from the employee’s payroll. It also provides the employer with signed evidence that the benefits were offered and declined by those employees not wishing to participate.

Insurance written on a number of people under a single policy, issued to their employer or to an association with which they are affiliated.

The maximum amount of insurance that will be issued to an eligible employee without the requirement of proof of good health (evidence of insurability).

A provision in insurance policies that states, except for non-payment of premium, the coverage may not be contested after the policy has been in force for two years.

The date on which the insured’s coverage will go into effect provided any applicable service waiting period has been completed.

Acceptance by the insurance company of an applicant for insurance.

(1) An organization chartered to operate as an insurer. (2) Any corporation primarily engaged in the business of furnishing insurance protection to individuals or organizations.

A person who meets the eligibility requirements of the policy and is enrolled for insurance.

The party to the insurance contract who promises to pay covered losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.

Beneficiary designation allowing no change to be made in the beneficiary of an insurance Policy without the named irrevocable beneficiary’s consent.

The termination or discontinuance of an insurance policy due to non-payment of a premium.

A person eligible for insurance under a group policy who applies for coverage after expiration of the initial eligibility period. The prospective insured is usually required to furnish evidence of insurability.

Life Event Changes may qualify an Insured to increase his existing coverage up to the guaranteed issue amount. Life Event Changes include, but are not limited to, the following:

Insurance providing for payment of a specified amount on the Insured‘s death, either to his or her estate or to a designated beneficiary.

An Insured who becomes terminally ill can request the insurance company to pay a portion of the policy death benefit prior to his/her death.

Insurance issued to an employer (group) to provide a reasonable replacement of a portion of an employee’s earned income lost through and prolonged sickness illness or injury.

The occurrence of the event for which an insurance benefit may be payable.

An insurance contract that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.

The maximum amount of monthly earnings for which an employee may be insured. The maximum covered payroll for any individual depends on the Maximum Monthly Benefit and the Benefit Percentage.

The maximum monthly amount any one individual may receive under the policy.

A physical examination performed to provide information for an insurance company to determine an individual’s acceptability for insurance or eligibility for additional benefits under existing insurance; or an examination of an Insured by a physician to determine extent, validity or duration of a disability.

A false, incorrect, improper, or incomplete statement of a material fact, made in the application for an insurance policy.

A specified period of time during which employees who did not enroll during their initial eligibility period or subsequent open enrollments may apply for insurance without evidence of insurability being required. Certain guidelines and limits may apply. This may also apply to increases in insurance and must be approved the insurance carrier.

The total amount of money expended by the insurance company on claims submitted by the Policyholder for a specified period of time.

Physical examination of an applicant by a trained person other than a physician.

The legal document issued by an insurance company to a Policyholder, which outlines the conditions and terms of the insurance; also called the Policy contract or the contract.

An entity to which an insurance policy is issued.

The sum remitted by a Policyholder to keep an insurance policy in force.

A clause, sentence or paragraph of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.

The pricing factor upon which the insurance buyer’s premium is based.

The resumption of coverage under a policy that has lapsed after the Insured meets specified requirements.

Continuance of coverage under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term.

Statements made by an applicant in an insurance application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.

Termination of an insurance contract by the insurer on the grounds of material misrepresentation in the application for insurance. The action of rescission must take place within the contestable period clause set forth in the policy, but takes effect as of the effective date of the policy, thus voiding the contract from its inception.

An amendment to an insurance policy. A rider becomes a part of the insurance policy and either expands or limits the benefits payable under the contract.

A temporary employee, working in an industry or business that limits activity to a certain portion or season of the calendar year. Under normal circumstances, such employees are not eligible for coverage.

The continuous length of time an employee must be employed and in an eligible class before becoming eligible for coverage.

Various options listed in the insurance policy from which the insured or beneficiary may choose to have Policy benefits paid.

Life insurance payable to a beneficiary only when an insured dies within a specified period. The coverage expires without value if the insured survives the stated period.

The process of identifying and classifying the degree of risk presented by the proposed insured.

A provision in some policies to waive the payment of premium falling due during a period of continuous total disability of an insured employee that has lasted for a specified length of time subject to approval by the insurance company.

Individual Life insurance coverage that builds cash value. The benefit is payable to a named beneficiary at the death of the insured which occurs while the Policy is in force.