Glossary
Insurance Terms:
1. Life Insurance: A contract between a policyholder and an insurer where the insurer pays a designated beneficiary a sum of money upon the policyholder’s death.
2. Term Life Insurance: A type of life insurance that provides coverage for a specific period (term). If the insured passes away during the term, the beneficiary receives the death benefit.
3. Whole Life Insurance: A permanent life insurance policy that provides coverage for the insured’s entire life, with a guaranteed death benefit and a cash value component that accumulates over time.
4. Indexed Universal Life (IUL) Insurance: A type of universal life insurance where the cash value growth is tied to the performance of a stock market index, such as the S&P 500, offering potential for higher returns while maintaining downside protection.
5. Universal Life Insurance: A type of permanent life insurance with flexible premiums and adjustable death benefits, allowing policyholders to modify coverage and payments over time.
6. Cash Value: A portion of certain life insurance policies (such as whole life and IUL) that accumulates savings, which can be borrowed against or withdrawn.
7. Death Benefit: The payout amount that beneficiaries receive upon the insured’s passing.
8. Beneficiary: The individual(s) or entity designated to receive the death benefit upon the insured’s death.
9. Premium: The amount a policyholder pays to keep an insurance policy active, either monthly, quarterly, or annually.
10. Policy Loan: A loan taken out against the cash value of a permanent life insurance policy.
11. Surrender Value: The amount a policyholder receives if they cancel a permanent life insurance policy before the insured’s death, typically the cash value minus surrender fees.
12. Riders: Optional add-ons to a life insurance policy that provide additional coverage, such as a critical illness rider or waiver of premium rider.
13. Underwriting: The process insurance companies use to assess risk and determine the premium rates and eligibility of an applicant.
14. Convertible Term Life Insurance: A term life policy that allows the policyholder to convert it into a permanent life insurance policy without undergoing a medical exam.
15. Guaranteed Issue Life Insurance: A policy that does not require a medical exam and guarantees acceptance, typically with higher premiums and lower death benefits.b
16. Accelerated Death Benefit: A provision that allows a policyholder to access a portion of the death benefit if diagnosed with a terminal illness.
17. Lapse: When a policyholder stops paying premiums, leading to the termination of the policy and loss of coverage.
18. Face Amount: The original death benefit amount stated in the policy, not including any added benefits or cash value.
19. Modified Endowment Contract (MEC): A life insurance policy that exceeds IRS limits on premium payments, altering its tax treatment.
20. No-Lapse Guarantee: A feature in some permanent life insurance policies ensuring coverage remains in effect even if cash value drops to zero, provided premiums are paid.
Health Insurance Terms:
21. Health Insurance: A type of insurance that covers medical expenses, including doctor visits, hospital stays, and prescriptions.
22. Premium: The monthly or annual payment required to keep a health insurance policy active.
23. Deductible: The amount a policyholder must pay out-of-pocket before the insurance company starts covering medical expenses.
24. Copayment (Copay): A fixed amount the insured pays for covered healthcare services, typically at the time of service (e.g., $20 for a doctor visit).
25. Coinsurance: The percentage of medical costs the insured pays after meeting the deductible (e.g., 20% of hospital bills).
26. Out-of-Pocket Maximum: The most a policyholder will pay in a policy period (usually a year) before the insurance covers 100% of expenses.
27. Network: A group of doctors, hospitals, and other healthcare providers contracted with an insurance company to provide services at discounted rates.
28. HMO (Health Maintenance Organization): A type of health insurance plan that requires members to use a network of doctors and get referrals for specialists.
29. PPO (Preferred Provider Organization): A health insurance plan that allows members to see any doctor but offers lower costs for in-network providers.
30. EPO (Exclusive Provider Organization): A health plan that requires policyholders to use a specific network of doctors without needing referrals.
31. Out-of-Network: Healthcare providers that do not have agreements with an insurer, often resulting in higher costs for the insured.
32. Pre-Existing Condition: A medical condition that existed before obtaining a health insurance policy, which may affect coverage or premiums.
33. Preventive Care: Medical services aimed at preventing illnesses, such as vaccinations and routine check-ups, often covered at no cost.
34. Explanation of Benefits (EOB): A statement from the insurance company detailing what medical services were covered and what the insured owes.
35. COBRA (Consolidated Omnibus Budget Reconciliation Act): A law that allows individuals to continue their employer-provided health insurance after leaving a job, typically at a higher cost.
Disability Insurance Terms:
36. Disability Insurance: A type of insurance that provides income protection to individuals who become unable to work due to injury or illness.
37. Short-Term Disability Insurance (STD): A policy that provides income replacement for a limited period, usually ranging from a few weeks to six months.
38. Long-Term Disability Insurance (LTD): A policy that provides income replacement for extended periods, often lasting several years or until retirement age.
39. Elimination Period: The waiting period between the onset of a disability and the start of benefit payments.
40. Benefit Period: The length of time during which disability benefits are paid out.
41. Own Occupation: A policy definition that provides benefits if the insured cannot perform their specific job, even if they can work in another capacity.
42. Any Occupation: A stricter policy definition where benefits are only paid if the insured cannot work in any job suited to their education and experience.
43. Partial Disability: A provision that provides benefits if the insured can work in a limited capacity but not full-time.
44. Residual Disability: A benefit that compensates for partial loss of income due to disability.
45. Waiver of Premium: A feature that waives premium payments while the insured is disabled and receiving benefits.
46. Social Security Disability Insurance (SSDI): A federal program providing disability benefits to eligible individuals based on work history and severity of disability.
This glossary provides essential terms to understand the different aspects of life insurance, health insurance, and disability insurance policies.
Annuity Terms:
- Annuity: A financial contract with an insurance company that provides a series of payments to an individual, either immediately or at a future date, often used for retirement income.