Accidental Death Insurance - a limited form of insurance that covers
death by accident only.
Annuity - An agreement by an insurer to make periodic payments during
a lifetime or for a specific period. Annuities can be deferred or immediate and
are considered the opposite of life insurance since they pay while you are alive
and life insurance pays when you die.
Beneficiary - One or more persons that may become eligible to receive
benefits under an insurance policy
Business Insurance - Life or Health insurance written to cover
business situations such as key person, sole proprietor, partnership,
Coinsurance - In Health insurance, a provision that the insured and
the insurance company will share covered losses in an agreed proportion. Often a
percentage participation such as the company paying 80% and the client paying
20%, up to a maximum "stop loss" amount; coinsurance applies after the
deductible has been satisfied.
Contingent Beneficiary - One or more persons that are eligible to
receive benefits if the primary beneficiary is not alive when the insured dies.
For example, your spouse could be the primary beneficiary and your children
could be your contingent beneficiaries.
Death Benefit - The policy proceeds to be paid upon the death of the
insured. Life insurance death benefits are generally not taxable to the
beneficiaries but may be included in the value of the insured's estate for
estate tax purposes.
Deferred Annuity - An annuity on which the periodic income payments
are delayed until some specified future date. They may be purchased with a
single payment (SPDA) or by making multiple flexible premium payments (FPDA).
Interest earned during the "accumulation" or pay in period is tax deferred until
Disability Income Insurance - insurance that provides periodic
payments to replace income when the insured is unable to work due to sickness or
injury. The insured is usually subject to a "waiting" or "elimination" period
prior to the start of the payments.
Group Life Insurance - Life insurance that a person can purchase
through a group plan such as through their employer. This coverage will usually
be discontinued when the person leaves the group.
Guaranteed Insurability - An option in policies that permits the
insured to buy added coverage in the future without evidence of insurability
(qualifying good health).
Guaranteed Renewable - a policy provision that gives the insured the
right to continue so long as the premiums are paid on time. During the
contracted term the insurance company has no right to change any provisions of
the contract other than a change in the premium rate for all all those in the
same class under a group insurance policy.
Health Insurance - In general, provides benefits upon the occurrence
of a disabling sickness, accident or accidental death or dismemberment or loss
of income due to a disability. This type of policy does not provide any death
Immediate Annuity - a contract purchased by a lump sum payment with
the periodic income payments to the purchaser starting immediately. Immediate
annuities do not have an "accumulation" period.
Irrevocable Beneficiary - Once elected, this cannot be changed without
the named beneficiaries consent since they have a "vested" interest in the
policy. Taking a loan against the policy also requires the consent of the
Joint Life and Survivor Annuity - Payments are made to two annuitants
with the survivor continuing to receive payments after the first annuitant dies.
Joint Life Annuity - Payments continue so long as both are alive;
payments stop entirely when the first annuitant dies.
Level Premium Insurance - The insurance premium amount stays at the
same periodic amount throughout the term of the policy.
Level Term Insurance - The amount of coverage remains constant during
the term of the insurance policy. Term polices are usually written for a period
of 5, 10 15, 20, 25 or 30 years. Term insurance policies provide temporary
coverage only and usually do not accumulate any cash value.
Life Annuity - An annuity that provides a periodic income payments
during the annuitants life time. There are no beneficiaries and all payments
stop when the annuitant dies.
Life Annuity with Period Certain - An annuitant will receive payments
for a specified period (i.e. 10 to 30 years) or for the rest of their life,
whichever is longer. If the annuitant dies during the certain period, payments
will continue to be made to the beneficiaries until the end of the certain
Medicaid - A medical benefits program administered by states and
subsidized by the federal government. In Arizona, this program is call the
Arizona Health Care Cost Containment System (AHCCCS). Under this plan, various
medical expenses will be paid to those that qualify, subject to an income/asset
Mortgage Protection Insurance - A term life policy that can be used to
pay off the balance due on a mortgage upon the death of the insured.
Optionally Renewable - A health insurance contract in which the
insurance company reserves the right to terminate the coverage at any
anniversary, or in some cases at any premium due date. The company does not have
the right to terminate the coverage between such dates.
Original Age - The insured's age when the policy was initially
purchased; usually based on the applicant's closest birthday.
Permanent Insurance - Whole Life or Universal Life policies that cover
the purchaser until age 100 or death, depending upon the policy. These policies
also typically accumulate cash surrender values.
Policy Loan - A loan taken by the policyholder from the insurance
company using the policy's cash value as collateral.
Pre-existing Condition - A condition that the insured had treatment
for before the policy was issued. As an example, many individual medical expense
policies contain a 12 month "probationary period" clause stating that any
pre-existing condition for which the insured received treatment within the12
months prior to purchasing the policy will not be covered until the policy has
been in force for 12 months. Note that this probationary period may be waived if
the individual had been previously covered by a group health plan.
Proof of Loss - A formal notice by the insured or beneficiaries to the
insurance company regarding a loss. The purpose is to place the necessary
information before the insurance company that is needed in order to claim the
Rated - A policy issued with an extra premium cost because of a
physical impairment, health risk or dangerous hobby.
Refund Life Annuity - Provides annuity payments for the annuitants
lifetime with the guarantee that in no event will the total income received be
less than the purchase price of the annuity contract . If the annuitant dies
before receiving this amount, the difference is paid to the named beneficiaries
either as a cash refund or in installments.
Renewable Term - Term insurance that can be renewed without proof of
the insured's good health and insurability up to a certain specified maximum
Rider - A form attached to a policy that modifies the conditions of
the basic policy by expanding or decreasing its benefits or excluding certain
conditions from coverage. Also known as an "endorsement", most riders increase
the cost of the policy because they provide additional coverage and/or benefits.
Settlement Option - Generally there are five life insurance settlement
options: cash, interest only, fixed period payout, fixed amount or the
beneficiary may use the proceeds of the policy to purchase an annuity. The death
benefit proceeds from a life insurance policy are generally tax free unless the
beneficiary chooses the interest option in which case the interest received will
Single Premium Annuity - An annuity purchased with one lump sum
payment. This annuity permits either immediate "annuitization" under which
payments begin immediately (SPIA) or deferred annuitization (SPDA) with payments
commencing at a later specified date.
Suicide Clause - A life insurance provision that voids the policy if
the insured commits suicide within a specified period of time; generally within
the first two years. Premiums that were paid prior to the suicide are
usually refunded to the beneficiaries.
Term Insurance - Temporary life insurance that normally does not have
any cash value and is issued for a specified period of time; normally from 5 to
Underwriting - The process of evaluating the risks for the purpose of
issuing an insurance policy. Also known as "risk classification", the insurance
company underwriter evaluates the age and health status of the applicant in
order to determine if and at what cost a policy can be issued.
Variable Annuity - An annuity contract in which the amount of the
periodic benefits varies, usually in relation to the value of securities
invested in a "separate account", that is similar to a mutual fund.
Waiting Period - A period of time between the beginning of a
disability and the date that benefits begin. Also known as the elimination
period, this is similar in concept to a deductible in that the longer the
waiting period, the lower the premium cost.