Life Insurance concepts

LIFE INSURANCE CONCEPTS

Accident:

An unexpected and unintended event or incident.

Accident and Health Insurance:

One of the insurance covers where benefits include loss of income reimbursement, in case of sickness, accidental injury or accidental death.

Accident Insurance :

For covering loss occurring due to acci­dental physical injury. Accident Insurance is provided.

Accidental Bodily Injury :

Any accident causing injury to the body.

Accidental Death Benefit :

If the insured dies as the result of an accident then the additional benefit payable besides the face amount of a life insurance policy. It is also referred to as Double indemnity.

Actuarial Cost Method :

To determine the contribu­tion to be made under a retirement plan or the level of benefits in case of fixed contribution, this is one of the several affirmed methods. Besides giving the forecasts for mortality, interest, and expenses it also estimates the future labor turnover, salary scales, and retirement benefits.

Actuary :

A professional having expertise in the technical aspects of pensions, insurance, and related fields and estimates the amount of money to be contributed to insurance on pension funds to provide future.

Additional Insured :

Under an insurance policy specifically named assured party.

Adjustable Life Insurance :

The flexibility in the insurance plan allowing the policyholder to change the plan of insurance, raise or cover the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.

Age Limits :

The stipulated minimum and maximum ages below and above which the acceptance of applications renewal of policies by the company is done.

Annuitant :

The person to receive the annuity; during whose life annuity is payable.

Annuity :

A Contract providing an income for a specified period is the number of years or for life.

Annuity Certain :

Providing an income for a specified number of years, regardless of life or death by a contract.

Annuity Consideration :

An annuitant making one of the regular periodic payments for an annuity.

Assignment :

An individual’s interest in an insur­ance policy transferred legally to another person.

Benefit period :

The period, generally is one to three years, for the payment of major medical benefits after the deductible has been satisfied. For a new benefit period, a new deductible needs to be satisfied.

Benefits :

Under each coverage, the amount received by the claimer, assignee or beneficiary by an insurance company.

Brokers :

A person representing the buyers of property and liability insurance, and a marketing specialist deals with either agents or companies to provide proper coverage required by the customer.

Cancellation :

The insured or the company may discontinue an insurance policy before its normal expiration date.

Cash Surrender Value :

The voluntary termination yields available in cash by the owner before the death or maturity of the policy.

Catastrophe :

Any event causing loss of man & material in extraordinarily large magnitude.

Claim :

A request made by the insured under the terms of an insurance contract for payment of loss.

Commission :

The part of an insurance premium which an insur­er shares with an agent or broker for his services in procuring and servicing the insurance.

Concealment :

An insurance applicant’s deliberate failure in revealing a material fact to the insurer.

Conditions :

The provision included in an insurance contract that limits the insurers promise to perform.

Consideration :

A binding contract element towards the ac­ceptance of the payment of the premium, by the insurance company, and the statements made by the prospective policyholder in the application.

Contract :

An agreement that binds two or more parties for doing or not doing certain things. An insurance contract is embodied in the written document referred to as policy.

Convertible Term Insurance :

Term insurance which can be exchanged for and the plan of insurance without evidence of insurability at the option of the policyholder.

Covered Expenses :

Under a health insurance policy, this refers to the hospital, medical and miscellaneous health care expenses incurred by the insured entitling him for the payment of benefits.

Death Benefit :

A payment made on the death of the employee annuitant to a designated beneficiary.

Deferred Annuity :

An annuity plan in which the income benefits begin at some specified future date.

Deferred Group Annuity :

A group annuity plan providing for the purchase each year of a paid-up deferred annuity for each member of the group. The sum of these deferred annuities is the total amount received by the member at retirement.

Deposit Term Insurance :

Term insurance where the first year premium is larger than subsequent premiums and not involving a deposit in real sense. A partial endowment is paid at the end of term period which can be applied towards the purchase of a new term policy, or perhaps, a whole life policy.

Disability Benefit :

An additional feature with some life insurance policies which not only provides for the waiver of premium but also payment of monthly income if the policyholder becomes totally and permanently disabled.

Earned Income :

Individual’s employment income from salary, wages, commissions, or fees.

Earned Premium :

Applies to the portion of the policy period which has already expired and includes the part of total property casualty policy premium.

Endorsement :

An additional paper mentioning certain terms besides the original contract and when attached to original becomes a legal part of the contract.

Endowment :

The amount payable to the policyholder as life insurance on the maturity date if he is living or to a benefici­ary if the insured dies before the maturity period.

Extended Term Insurance :

An insurance plan providing the original insurance amount for a limited period and available as a non-forfeiture option.

Fixed Annuity :

An annuity guarantees a fixed amount for the periodic payments.

Flexible-Premium Policy or Annuity :

Annuity or a life accident policy that facilitates the contract holder or policyholder to vary the amounts or timing of premium payments.

Face Amount :

Refers to the amount mentioned on the face of the policy payable in case of death or maturity excluding addi­tional amounts payable under accidental death or other special provision, acquired through the application of policy dividends.

Flexible-Premium Variable life Insurance :

A life insurance plan developed after continuing the unique feature of premium flexibility in universal life insurance and equity-based benefit feature of variable life insurance.

Grace Period :

A specified period after the due date of premium allowing the policyholder to make the payment as the policy continues without any break during this period.

Group Annuity :

A pension plan issued to the employer for the benefits of their employees wherein under a master contract annuities to a group of people is provided retirement. The certificate is held by individual members evidence of their annuities.

Group Insurance :

A single master policy having insurance written on several people issued generally to the employer or the association to which they are affiliated.

Group Life Insurance :

Under a master policy the life insur­ance given to several people without medical examination and issued generally to the employer for the benefit of their employees.

Health Insurance :

1. a) Insurance plans which provide for the financial losses resulting from sickness or accidental bodily injury.
2. b) An insurance plan or protection providing for the payment of benefits for covered sickness or injury, including various types of insurance such as accident insurance, disability income insurance, medical expense insurance, and accidental death and dismemberment insurance.

Human Life Value :

The term used to indicate the present value of the family’s share of deceased breadwinner’s earnings, for purposes of life insurance.

Immediate Annuity :

An annuity wherein payment begins immediately.

Key Person Insurance :

Protection of business firm against the financial loss caused by its key person loss.

Kurtosis :

Actuarial term to indicate the degree of concentration about the central value of a distribution.

Lapse :

The expiration of forfeiture of an insurance policy by non-payment of due premium.

Lapsed Policy :

A policy terminated because of non-payment of premium.

Participating Policy :

A life insurance policy where the policyholders receive the surplus of the benefit as decided by the Board of Directors of the company and serve to reduce the premium the policyholder had paid.

Pension Benefit :

According to the plan of benefits a series of payments provided to the insured.

Pension Plan :

An insurance plan which is established and maintained by an employer, group of employers, union or any combination where the participants after retirement receive.

Retention :

An insurance company retaining the net amount of risk or the past which is not reinsured.

Rider :

A document allowing the modification of the policy or amending the original contract by increase or decrease in benefits or waiver of a condition or coverage.

Risk :

Any enhance of loss.

Risk Classification :

Based on the risk characteristics of the individuals insured (eg age, occupation, sex, state of health) the company decides on the life insurance premium and then applies the resulting rules to individual applications through this method.

Term Insurance :

An insurance plan where the beneficiary receives the life insurance benefit only if the insured dies within a specified period.

Variable Annuity :

An annuity where the investment results of a life insurance company’s separate account for the variation in the benefit.

Vested Commissions :

The commission paid to the writing agents or his estate on renewal irrespective of the fact, whether he remains with the company or not.

Waiting Period :

After the date of employment, an employee must wait for a specified time before his /her insurance becomes effective.

Waiver :

Exemption of certain disabilities or injuries, other­wise covered in the policy, from the coverage through an attached agreement.

Waiver of Premium :

One of the provisions under an insurance policy where during a period of continuous total disability last­ing for a specified time, the insured is relieved of premium payments falling due during that time.

Whole Life Insurance :

A life insurance plan where the premiums can either be paid a limited number of years (limited payment life) a for life (straight life) and the beneficiary gets the receivable on the death of the insured whenever it occurs.