Insurance is a topic with many industry terms that are often unfamiliar to consumers. We’ve included some terms below to help you better understand and navigate the policies that are available to you.
Activities of Daily Living include: bathing, continence, dressing (tying shoes, bending to put shoes and socks on, etc), eating (ability to prepare and eat healthy food and drink), toileting, transferring (getting out of bed or a chair).
Agent: An individual who sells and services insurance policies in either of two classifications:
Independent agent represents more than one insurance company and services clients by searching the market for the most advantageous price for the coverage. The agent’s commission is a percentage of premiums paid and often includes a fee for servicing the policy.
Direct or career agent represents only one insurance company and sells only its policies. The agent is paid in much the same manner as the independent agent but may also get other compensation.
Benefit: Payment or services provided by insurance company as per the insurance policy.
Claim: A demand made by the insured or the insured’s beneficiary for payment of the benefits as provided by the policy.
Coverage: The scope of protection provided under an insurance policy.
Deductible: Amount of loss for which the insured pays before the insurance policy begins to pay.
Elimination Period: The time which must pass after filing a claim before the policyholder can collect the insurance benefits. Also known as “waiting period”.
Grace Period: The length of time, usually 31 days after a premium is due and unpaid during which the policy will remain in force if the premium is made during the grace period.
Guaranteed Renewable: The policy owner has the right to decide whether to pay premiums and continue the policy. The insurance company does not have the right to cancel coverage. However, the company may raise the cost of the insurance if they are able to obtain state approval.
Inflation Protection: An optional annual increase in coverage/benefits of a specific percentage stated in a rider to the policy.
Own Occupation: Insurance contract provision that permits policyholder to collect benefits if they can no longer work in their own occupation.
Policy: The written insurance contract including all clauses and riders and endorsements.
Premium: The price of insurance protection for a specified risk for a specified period of time.
Residual Benefit: In disability insurance, a partial benefit paid on a covered disability and loss of income.
Rider: An optional addition to the basic insurance policy.
Term Life Insurance: Life insurance that provides protection for a specified period of time. It is pure protection and does not build up cash.
Universal Life Insurance: A combination of flexible premium and adjustable life insurance policy which usually builds cash value inside the policy.
Waiver of Premium: A provision in some insurance contracts which enables an insurance company to waive collection of premiums while keeping the policy in force if the policyholder becomes unable to work due to injury or illness or, in the case of long term care insurance, once the insured is collecting benefits.