Raffel Financial Services, LLC

19105 N. 85th Lane

Peoria, AZ 85382-8715


(623) 266-9362 Office

(623) 521-8008 Cell

(623) 251-4066 Fax



Glossary of Common Insurance Terms

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, corporations, etc.

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 Interest earned during the "accumulation" or pay in period is tax deferred until withdrawn.

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 benefits.

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 Irrevocable Beneficiary.

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 period.

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 test.

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 policy benefit.

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 age.

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 be taxable.

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 30 years.

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.