Insurance Dictionary

401(k) plan: Employer-sponsored retirement plan funded by employee contributions. Employers may, or may not, match employee contributions.

 

accelerated death benefits: In the event of terminal illness, accelerated death benefits allow policy owners to receive money from the base value of their life insurance policies.

 

accident and health insurance: An insurance policy that pays benefits in the event of illness, injury, or accidental death.

 

actuary: An insurance firm employee responsible for calculating and analyzing statistical life expectancies, risks, and premiums for insurance policies.

 

additional living expenses: An aspect of homeowner's insurance that pays for temporary housing, food, and other expenses should the home be uninhabitable due to damage or repairs.

 

adjuster: An employee of the insurance company who determines how much the company must pay for a submitted claim.

 

affinity sales: The sale of insurance through business associations and other large professional groups.

 

agent: An individual who interacts with a policy holder on behalf of the insurance company.

 

alternative dispute resolution (ADR): Mediation and resolution of a dispute by a third party.

 

annuitant: The entitled recipient of annuity payments.

 

annuity: An insurance contract in which, after making a set period of payments, the insurance company pays the policy holder periodic payments for the life of the policy owner.

 

annuity accumulation phase or period: The phase or period in an annuity contract in which the insured makes payments to the insurance company to build assets.

 

annuity death benefits: Benefits from an annuity policy paid to a beneficiary in the event that the policy holder dies before annuity payments begin.

 

antitrust laws: Laws forbidding unfair business practices and anti-competitive activities.

 

appraisal: The evaluation of property to determine its insured value.

 

arbitration: The third party mediation of a dispute between two parties without the involvement of the courts.

 

assets: Property owned by the insurance company that ensures the company's ability to make claims.

 

bank holding company: Any legal entity which owns ten percent or more of a bank.

 

basis point: A financial unit equal to 1/100^th of one percent, commonly used to calculate changes in interest rates.

 

bond: A document obligating the payment of a set sum of the performance of a contract.

 

broker: A representative of the insurance buyer. Brokers are not employed by insurance companies, and help buyers select the most appropriate coverage.

 

capital: Earnings and equity of a publicly traded insurance company's shareholders.

 

COBRA: The Consolidated Omnibus Budget Reconciliation Act. Federal legislation requiring businesses over a certain size to keep ex-employees and dependants on group health plans for a period of time after leaving the company, presuming the ex-employee pays premiums.

 

collateral: A guarantee for the repayment of a loan should the loan holder be unable to pay. Property and other assets can be used as collateral.

 

collision coverage: The portion of an auto insurance policy that covers automobile repairs after a collision.

 

commission: A portion of an insurance premium paid to the insurance agent for his or her services.

 

comprehensive coverage: Insurance in the event that a car is stolen or is totaled (suffers damage so extensive repairs cost more than replacement of the car).

 

compulsory auto insurance: The minimum amount of auto liability insurance required by law in order to legally drive the vehicle.

 

coverage: The extent of the risk taken by the insurer. Also, the amount for which the insurer is liable.

 

credit: The granting of a financial loan and the promise to repay said loan.

 

credit score: A numerical score (typically between 300 and 850) indicating an individual or business' credit worthiness.

 

declaration: The portion of an insurance policy that includes the policy holder's name, address, property insured, policy period, and similar information.

 

deductible: A financial amount insurance policy holders agree to pay towards an insurance claim. For instance, in the cash of a $500 home insurance policy, the policy owner would pay $500 of the total insurance claim.

 

deferred annuity: Annuity payments made at a specified point in the future.

 

deregulation: The reduction of control over insurance rates.

 

direct premiums: Property and / or premiums collected by the insurance company before the deduction of reinsurance premiums.

 

dividends: The return on a portion of premiums by a mutual or stock insurer to participants.

 

earthquake insurance: Additional property insurance covering damage sustained due to earthquakes.

 

endorsement: An attachment to a policy that alters the contract.

 

equity: The value of an insurance company after its liabilities.

 

exclusion: The denial of coverage under certain conditions, depending on property, geographic location, person or circumstances.

 

extended coverage: A clause specifying that, if the holder has a condition that begins during the term of the policy, the condition will be covered even if the policy expires.