Insurance Terms

The insurance industry is full of jargon just like any other industry. There are many types of insurance available: auto, home, life and health insurance. We have compiled a list of some common insurance terms and what they mean.

Making sense of common insurance jargon

General terms – for buzzwords that apply to all insurance policies
Auto insurance terms – for terms that apply exclusively to car insurance
Health insurance terms – for accident and health insurance industry buzzwords
Home insurance terms – for terms often used in property insurance such as homeowners’, landlord, and renters’ policies
Life insurance terms – for jargon commonly found in life insurance policies

Basic Insurance Terms

Accelerated Death Benefit – An insurance policy that includes an accelerated death benefits provision has the capability to disburse all or some death benefits to the policyholder while they are still alive, depending on certain circumstances.

Accident – An unforeseen, unintended event.

Accidental Death Benefit -If a life insurance policy includes accidental death benefits, the cause of death will be evaluated to decide if it fits the policy’s definition of an accident.

Annuitant – Someone who receives income from an annuity over the course of their life is called an annuitant.

Annuity – An annuity is an agreement where an individual makes an investment with a life insurance provider by giving them money. The agreement stipulates that specific sums must be paid out at specified times for a set duration, or to last forever.

Annuity Certain – An annuity certain gives a pay out that continues to come no matter whether the holder is alive or not, for a particular timeframe.

Annuity Term – The time frame between the payments issued through an annuity agreement is referred to as the annuity term.

Beneficiary – The policyholder will choose a recipient to get the death benefit, and this is called the beneficiary. This could conceivably be the insured person’s partner, individuals within their family unit, other family, acquaintances, work allies, or even a philanthropic establishment. Life insurance policy holders can designate multiple beneficiaries and specify how much of the benefit each recipient should get.

Covered Expenses – These refer to the general expenditure for health care services acquired by the insured, such as medical and hospital costs, that have been paid by the insurer.

Bodily Injury Liability – This coverage pays for medical bills incurred by someone else if the policyholder is responsible for an accident. It is sometimes referred to as bodily injury liability. This policy also provides financial protection in case the insured is taken to court due to a lawsuit involving damages.

Insurance Claim – A policyholder may make a formal request to their insurer for compensation for any covered losses or damages; this is referred to as an insurance claim. Examples of insurance claims could include car crashes for automobile coverage, destruction caused by storms for homeowner policies, and emergency medical procedures for health insurance policies.

Claimant – The individual who submits the claim is referred to as the claimant. In most cases, this is the policyholder.

Conditions – The part of a policy which outlines the terms and obligations of the insurance firm and the individual that owns the policy is referred to as the Conditions. The document specifies the conditions necessary for the insurance to be in effect.

Start Date – This is when the insurance policy begins to be active. It is also known as the effective date.

Life Insurance – A sum of money that is given to the beneficiary when the person who was insured passes away.

Declarations Page – The page within an insurance policy that shows the contact information of the insurer, the timeframe in which coverage will be active, the premium payment, and the amount of coverage provided is called the declarations page.

Deductible – The insured must pay a specific sum of money, known as the deductible, in the event of a loss before any payment is given by the company.

Deferred Annuity – An annuity where the timeline for receiving payouts has been set at a date in the future is known as a deferred annuity.

Depreciation – The value of property can go down over time due to being utilized or from general damage with being in use. This is known as depreciation.

Diminished Value – The worth of a vehicle may be lessened, either objectively or in the eye of the beholder, due to damage caused by being in a crash. This is called diminished value.

Disability Insurance – Insurance company coverage designed to pay your wages if you cannot work due to an illness or injury.

Disease Policies – Policies which provide payment solely in the event of getting a designated sickness.

Earned Premium – The portion of a policy premium that has been paid for coverage that has already been used is called the earned premium. For example, if a policyholder holds a six-month policy that was entirely prepaid, two months into the policy, the insurance company would have “earned” two months of the premium. The remaining four months of premium is “unearned premium.”

Emergency Health Coverage – Medical attention provided in an emergency facility or comparable location with the objective of quickly and thoroughly evaluating and improving sudden and extreme health issues.

Face Value – The initial sum of the death benefit apparent on the cover page of the policy is known as the face value. The death benefit amount may differ based on the selections made, any outstanding loans on the policy or unpaid premiums.

Free Examination Period – The “Free Examination Period,” sometimes referred to as the “10-day free look” or “free look,” gives the policy owner time to read over a life insurance policy, annuity policy, or health insurance policy after it is delivered. If they don’t like what they see, they can return the policy to the company and get their initial premium back in full.

Gap Coverage – A type of insurance that covers the difference between the actual worth of a car and the remaining balance owed on the loan. In some cases, a gap policy may reimburse for the amount of the deductible.

Grace Period – The amount of time permitted to pass before the cancellation of an insurance policy after the premium is due, which typically lasts for 31 days, is known as a grace period. The policy will be void from the day the premium was originally due unless the premiums are paid within a period of 31 days or if the person insured passes away.

Employee Health Benefit Plan – Organizations or employers offering group health coverage will provide a policy that covers not just the employees but also their dependents under a single plan.

An employer typically offers health care services to their employees as part of a health benefit plan. It could be either an insurance policy that provides coverage for losses or a health maintenance organization plan.

A worker who satisfies the criteria for participation in a group insurance policy. In order to qualify for a small group plan, a person must typically be employed on a full-time basis for a minimum of 30 hours a week. Certain job designations or salary levels may be necessary to qualify for certain group plans.

Health Care Reimbursement Accounts – You can use pre-tax funds to pay for treatments or other medical expenses that are not included in your normal health coverage by making use of health care reimbursement accounts, even though these are not insurance benefits.

A Health Maintenance Organization (HMO) is a type of managed care arrangement that gives its members access to health care services from an organized network of doctors, hospitals, and related health care providers. HMOs are commonly chosen in preference to health insurance plans due to their offering of an array of treatments typically at a lesser price.

Insured – The individual or business that is safeguarded by an insurance plan is referred to as being “insured”.

Insurer – The insurance company.

Insurance Gap – This is a description of a timeframe when insurance is not in effect. If a person, say, neglects to extend their car insurance coverage, they now have a gap in protection.

Long-Term Care Insurance (LTCI) is a type of policy that pays for medical and non-medical assistance for elderly people who can no longer look after themselves. Individuals who are receiving care in their residences, nursing homes, assisted living establishments, or adult day care centers are included in the scope of this.

Health Insurance – Policies for extensive health care coverage which usually encompass both treatments in the hospital and medical services received outside the hospital.

Managed Health Care is a system where doctors, hospitals, and other health care facilities are grouped together in order to decrease costs while still providing adequate medical services. Lots of managed care plans concentrate on preventive treatments and handling cases in order to dodge dealing with diseases that are pricier to address.

Required Benefits – Health care advantages that must be offered by the organization or company funding a group policy. The sponsor does not have to include any advantages in its collective plan.

Market Value – The current value of an item. The worth of a house takes into account the cost of the land it is on.

The Policyholder, who is also known as the named insured, is the individual or company stated in the insurance policy. A single insurance policy can list multiple people as the insured. The people who the insurance policy concerns are listed on the declarations page of the policy document.

Named Perils – The policy outlines certain specific types of losses or damages which are referred to as ‘named perils’. A named perils coverage provides protection against these.

Out Of Network Health Care – Health care services from providers not affiliated with an HMO or PPO. In most cases, HMOs will only cover medical services received from healthcare providers within their network. If you are on a Preferred Provider Organization (PPO) health plan, you will need to pay extra if you need services which are not part of the PPO’s network.

Lifetime Deductible – The most you can be expected to pay in a given policy year before your part of the cost (usually a proportion of the bill) for covered health services will no longer be your responsibility. Once you have spent the maximum amount of your own money on health care, then your health plan will typically cover the entire cost of your medical expenses. You are still responsible for paying your premium.

Personal Injury Protection (PIP) is a part of an auto insurance plan that pays out for medical and other costs associated with a car accident, regardless of who is responsible. Insurance paying out to the policyholder, any passengers in the car, and anyone driving the car who may have been hurt in an accident, even if they did not have their own coverage.

Premium – The payment charged by an insurance company in return for protection is referred to as the premium. There are several factors that impact premiums. Factors such as age, gender, driving history are taken into consideration for car insurance; homeowners’ insurance considers risks that are weather-linked and crime-linked; and medical records and smoking habits affect life cover.

Bringing Back – The technique a life coverage firm uses to make a protection active once more after it ended due to an absence of installment of renewal premiums.

Reinstatement – Keeping a policy in effect beyond its termination date.

Term Life Insurance – This type of life insurance policy requires only one payment in order to be established, and the coverage it provides is for a limited duration.

Title Insurance is a form of protection that financially guards against any losses due to issues with the title of a piece of real estate or a loan taken out related to the property.

Underwriter – The individual who looks over a request for insurance and determines if the applicant is eligible and what rate of premium they will pay is called an Underwriter.

Unearned Premium – The sum of a premium payment that has been made in advance but has not yet been utilized to purchase coverage is referred to as an unearned premium. For example, if a customer obtained a coverage plan for six months, but later canceled the plan after two months, the insurer must reimburse the unutilized four months of premium.

Variable Life Insurance – A kind of whole life policy in which the death benefit and the money value vary according to the return produced by a discrete fund that the policyholder has elected. This is known as variable life insurance.