Insurance Resources

Sometimes insurance agents, brokers and companies use words we don’t understand – here’s a list of all the terms you may face when you talk to your agent.

Adjuster: An expert employed by the insurance companies to evaluate the losses of their policy holders and settle claims.

Agent: A person who sells insurance – you can have an agent that represents only one insurance company or many.

Arbitration: A decision by a third party for an insurance company and the insured to agree on.

Arson: The purposeful setting of a fire.

Binder: Temporary Insurance coverage that is granted before the actual auto insurance policy is written.

Collision insurance: An auto insurance policy that insures and covers damage to the policy holder’s vehicle that was sustained in a car accident with another vehicle or property.

Comprehensive insurance: An auto insurance policy that covers damage to the policy holder’s vehicle that was not sustained in a motor vehicle collision, such as acts of God, impacts with an animal, fire or theft.

Compulsory Insurance: The law requires that you have a minimum level of insurance. This is true throughout the United States and Canada.

Deductible: The amount the policy holder will pay when they make a claim on their collision or comprehensive insurance policy.

Fraud: Obtaining payment from the insurance company by lying about the cause of the claim.

Liability Insurance: The part of your insurance policy that pays for the damages done to other people and their property. This extends to cover medical expenses, death benefits in the event of a fatality, and reparation costs on vehicles and buildings as well as other property.

Limits: This is the maximum dollar amount that your insurance company will pay out in a claim year for your insurance coverage.

Loss of Use: Auto insurance that enables you to have a rental car while yours is being repaired or replaced.

No-Fault Insurance: A policy that pays for each driver’s injuries regardless of who is at fault in the collision. This insurance varies from state to state.

Premium: The amount of money that you pay for your auto insurance.

Total Loss/ Totaled: The absolute destroying of a vehicle so that it is not drivable or fixable. An adjuster will consider your vehicle a total loss if the cost to repair it exceeds 60 percent of the vehicles value. The percentage listed can vary from insurance company to insurance company. Some have higher percentages while others use a lower percentage.

Void: This states when your insurance policy is free from being legally binding. You can have your insurance voided or canceled for many reasons, including non-payment or fraud.

Source: compuquotes.com

Actual Cash Value (ACV): The value of your property at the time of a loss or damage. ACV may be determined as the replacement cost minus depreciation.

Condo Insurance: Condo Insurance is a home insurance policy designed around the specific needs of condo owners. It provides coverage for contents, liability, living expenses, Medical Payments and limited structural coverage. Condo owners will typically also need to purchase a Master Policy from their homeowners association. Read more about master policies and condo insurance.

Contents Coverage: Contents Coverage, sometimes referred to as “Coverage C” or “Personal Property Coverage”, is the portion of your home insurance policy that covers the cost of replacing your possessions, or home’s contents, in the event that they are destroyed in a covered peril (wind, fire, hail, lightening, theft, etc.). Contents coverage limits are usually 50%-70% of your dwelling coverage.

Declarations Page: The page in your policy that shows the name and address of the insurer, the period of time a policy is in force, a description of the insured property, the amount of the premium, and the amount of coverage.

Endorsement: A written amendment attached to a policy that modifies the terms of the insurance contract.

Exclusions: Specific situations, conditions, or circumstances listed in your policy that are not covered by your home insurance policy.

Flood Insurance: Insurance that compensates for physical property damage resulting from flooding. It is required by lenders for properties located in federally designated flood areas. Flood Insurance is purchased separately from your home policy.

Insurance Binder: Written evidence that insurance is temporarily in effect until the specified expiration date. At that time a permanent policy must be obtained.

Loss of Use Coverage: Loss of use coverage, sometimes referred to as “Coverage D”, provides for your living expenses in the event that you cannot live in your home due to a covered claim. This type of coverage typically covers hotel and restaurant bills and other living expenses you may incur while your home is being repaired. Coverage limits for loss of use is usually around 20% of your dwelling coverage.

Medical Payments Coverage: Medical Payments Coverage, sometimes referred to as “Coverage F” or “MedPay”, helps cover medical expenses that you might be held responsible for due to an injury sustained on your premises when there is no lawsuit. Medical Payments limits vary depending on your policy but usually coverage injuries of up to $1,000 per person, per covered incident.

Peril: Refers to a specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, lightening, hail, smoke damage or theft.

Replacement Cost: The cost associated with replacing property at current market prices.

Subrogation: The right of the insurance company after payment of a loss to recover from the responsible party.

Underwriting: The process an insurance company uses to decide whether to accept or reject an application for a policy.

Source: HomeInsurance.com

Accelerated Death Benefit: An accelerated death benefit is the payment of a death benefit prior to the death of the insured. Life insurance policies may have a provision (it may be silent, standard, or attached as a rider) which promises an accelerated death benefit in the event of an exceptional medical condition, such as a terminal illness, disability, or need for long-term care. Under these circumstances—particularly that of a need for long-term care—accelerated benefits are of particular value, since the medical conditions of concern often introduce pressing financial needs, such as the need to alter one’s living arrangements and hire a professional caregiver.

Accelerated death benefits may be less in value than the benefit that the policy would pay in the event of the insured’s death. It is often 70 or 80 percent of the policy’s face value (ordinary death benefit).

Evidence of Insurability: Health information such as attending physician’s statements, medical exams, or lab results required by the life insurance underwriting process.

Free Look: A specified period of time during which the insured can hold a life insurance policy while deciding whether to keep it. At any time during the free look period, the insured may return the policy for a full refund of any monies paid for it. The free look period usually lasts 10 days.

Grace Period: A period of time, usually 30 or 31 days, after the premium due date during which time the insured can pay the premium and bring the life insurance policy current to keep it in force.

Key Man Life Insurance/Key Employee Life Insurance: This life insurance is designed to provide monetary compensation upon the death of a key employee whose death has caused hardship to the company. The employer is usually the owner, beneficiary and payer of the policy.

Power of Attorney: A legal agreement wherein one person has the power and permission to act on behalf of another. This usually applies to legal proceedings and decision making.

Term Life Insurance Dictionary: Usually low-cost life insurance that pays a death benefit upon the death of the insured but does not have an investment or cash accumulation provision in the policy.

Trustee: According to the terms of a trust, the person who is designated to act as guardian and to manage or use the property for the benefit of the trust recipients.

Universal Life Insurance Variable: An adjustable type of life insurance wherein the policy provides a death benefit and additional provisions for an investment with minimum guarantees. The policy face amount and or investment amounts may be subject to change at the discretion of the policy owner and the stated policy provisions.

Whole Life Insurance Definition: A type of life insurance policy that stays in force for the insured’s entire life, as long as the premiums are paid.

Source: WholesaleInsurance.net

Activities of Daily Living (ADLs): Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting, and transferring. Many policies use the inability to do a certain number of ADLs (such as 2 of 6) to decide when to pay benefits.

Adult Day Care: Care during the day for adults, usually at senior or community centers.

Aging in Place: Occurs when an aged individual continues to live and receives care at home, instead of being institutionalized.

Alzheimer’s Disease: A progressive, degenerative form of dementia that causes severe intellectual deterioration.

Assessment: A determination of an individual’s physical and mental health by a health care professional based on established medical guidelines. For qualified long-term insurance policies, the assessment must be made by a licensed health care practitioner.

Assisted Living Facility: A residential living arrangement that provides individualized personal care and health services for people who require assistance with activities of daily living.

Bed Hold Benefit: Will pay for the cost of reserving an insured’s bed in a nursing home or assisted living facility while the individual temporarily leaves the facility up to a certain number of days.

Benefit Period: The maximum period that an individual can receive benefits for a qualified long term care event.

Care Coordinator: A professional care manager, usually with a background in health care, provided by a long term care insurance company. The care coordinator works with the insured and the insurance company. The care coordinator works with the insured and the insurance company to create a plan of care when a long-term-care need arises.

Caregiver – Primary: The main person (usually a relative) who is managing and providing care for a person who is incapacitated.

Caregiver – Secondary: Others who help provide care, usually on a part-time basis.

Chronically Ill Individual: A person who has been certified by a long term care practitioner within the preceding 12 month period as (1) being unable to perform without substantial assistance from another individual at least 2 out of 6 activities of daily living for a period of at least 90 days due to loss of functional capacity or (2) requiring substantial supervision to protect such individual from threats to health and safety due to cognitive impairment.

Continuing Care Retirement Community: A residential Retirement Community where a variety of living and medical services are provided to residents who are in need of continuous care and/or supervision.

Cognitive Impairment: A deficiency in a person’s short or long term memory, orientation as to person, place, and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

Compound Inflation Protection: ∫An option offered on some long term care policies to increase the maximum daily and lifetime benefits each year by a pre-set percentage on a compound basis. It is available at an additional premium.

Custodial Care: Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.

Durable Medical Equipment: This is equipment such as hospital beds, crutches, wheelchairs, ramps and prosthetics used for in-home care.

Elimination Period: A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin making payments. The longer the elimination period in a policy, the lower the premium. The elimination period may also be called the waiting period.

Facility Qualifications: Specific standards required by state or federal regulations and by the long term care insurance company (in states where no licensing or certification is required by the state) for a particular type of facility such as a nursing home or adult day care center, to operate in a state and provide care or services that will be covered by a long term care policy. Standards may include such things as licensing requirements, type of care services that must be provided, hours of operation, and training and experience of caregivers. Facility qualification standards may vary by state and insurance policy.

Free Look Provision: A policy provision allowing the policy owner to inspect the policy for a specified period of time, often 10, 15, or 20 days, and to return the policy to the insurer, if desired, for a refund of the premium paid. Qualified long term care policies are required by federal and state law to provide a free look period of 30 days. If the policy is returned within 30 days, the company must refund all of any premiums paid.

Guaranteed Renewable Policy: The company guarantees that the insured may renew the policy for life as long as the insured pays the premiums. The insurance company may increase the premiums on guaranteed renewable policies for all policies of that particular type, but may not increase the premium for an individual policy. A qualified long term care insurance contract must be guaranteed renewable.

Home Health Aide: A person who is providing home health care services at home under the supervision of a doctor, nurse, or physical, respiratory speech or occupational therapist. An escort, companion or chore worker is usually not considered a home health aide.

Home Health Care: Services for occupational, physical, respiratory, speech therapy, or nursing care. Also included are medical, social worker, home health aide, and homemaker services.

Home and Community – Based Heath Care: Includes nursing and related personal care provided by a home health agency. Policies covering home and community-based care should describe the types of care and types of agencies that are covered and should specify when and where this type of care can be provided. Home and Community – Based health care usually includes home health care, adult day care, and homemaker services.

Hospice Facility: A facility that provides care for individuals with terminal illness. While individuals receive care, they are typically not receiving the type of care that will bring about recovery or can be expected to improve their medical condition. Hospice care is intended to provide comfort for the terminal patient and support for their families.

Informal Care: Care that is received at home, or at a relatives home, by family or friends. A care coordinator or medical professional may supervise the care.

Intermediate Care: Occasional nursing and rehabilitative care provided by a medical professional based on a doctor’s orders. Care may be provided only by, or under the supervision of skilled medical personnel. Frequently, a licensed practical nurse or nurse’s aide gives this type of care to an individual who has limited functional ability, but does not require around the clock care. Often the person needs help with key functions like managing medication. Care is provided on an intermittent rather than continuous basis – for example physical therapy. Intermediate care is excluded under Medicare.

Lifetime Maximum Benefit: The lifetime maximum benefit is the maximum amount that a long term care insurance company will pay for all covered expenses throughout the life of a policy. The lifetime maximum benefit is often described as a pool of money that an insured can draw against. When the lifetime maximum benefit is exhausted, the pool is dry and the policy will not pay any more benefits.

Lifetime Home and Community-Based Care Maximum: The maximum amount that an insurance company will pay for covered expenses for home health care, adult day care and home maker services.

Lifetime Therapeutic Devices Maximum: The maximum amount an insurance company will pay for covered lifetime therapeutic devices, sometimes called durable medical equipment.

Long-Term Care (LTC): The type of care received when someone needs assistance with daily living due to an accident, illness, cognitive impairment or advancing age. Care is provided either in a facility or at home. Long-term care may include a range of formal and informal services for health, personal care, and social needs. Often thought of only as nursing home institutionalization, long-term care can be provided both formally, by medical and health professionals, and informally, by personal, unskilled care givers.

Long-Term Care Facility – See “Nursing Care Facility”

Maximum Daily Benefit (MDB): The pre-set amount that a long term care insurance policy will pay up to for each day during a claim period. The maximum daily benefit is specified in the original long-term care insurance policy, but may increase on an annual basis if the policyholder also purchased a benefit increase rider.

Maximum Benefit Period: The amount of time that a long term care insurance policy holder will be able to collect benefits for a qualified long term care event. The time period is usually specified in years. If an insured had a policy that specified a three year maximum benefit period but was in care for four years, only the first three years of care would be covered by his/ her long term-care insurance.

Medicaid: A joint federal/ state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.

Medicare: The federal program providing hospital and medical insurance to people age 65 and older and to certain ill or disabled persons. Benefits for nursing home and health services are limited.

Medicare Supplement Policy (Medigap Policy): A private insurance policy that covers many of the gaps in Medicare.

Non-Forfeiture Benefit: A policy feature that provides either reduced paid up insurance, extended term or a shortened benefit period upon lapse of the policy due to non- payment of all or part of the premium after the policy has been in force for a specified period of time.

Nursing Care Facility: A facility providing skilled, intermediate or custodial nursing care which must be state licensed.

Personal Care – See “Custodial Care”

Premium: The typically periodic payment that the customer must take to their insurance company to put a policy in-force.

Rate Class: A group of insureds with similar long-term care insurability levels. Extremely healthy people who are less likely to need long term care are usually placed in healthy classes and receive a preferred rating (lower rates). For example, the price of a long term care insurance policy typically increases as an individual’s rate class decreases.

Respite Care: Care that is provided to long-term care patients, at home, by professionals or volunteers for a few hours or a few days while allowing informal caregivers some time away from giving care.

Restoration of Benefits: Occurs when an insurance provider adds benefit dollars back into a policyholder’s lifetime maximum benefit after recovery from a long term care need for which benefits were paid.

Riders: Addition to an insurance policy that changes the provisions of the policy.

Sandwich Generation: A term used to describe individuals who find themselves in the unfortunate situation of caring for their children as well as for their aging parents.

Simple Inflation Protection: This benefit provides for an insured’s long-term care maximum daily benefits and lifetime maximum benefits to increase each year by a set amount. Increases are always based on the initial benefit. Rider is available at an additional premium.

Skilled Care: b Commonly referred to as nursing care, this is the highest level of care an individual can receive without being confined to a hospital. It is almost always based in an institution. The insured requires continual medical attention from nurses or other licensed medical professionals who are supervised by a physician.

Care must be available on a 24 hour basis. Skilled rehabilitation services such as physical, occupational and speech therapy are general included in this definition. The Medicare definition of skilled care requires daily care by a physician.

Skilled (nursing) care is the only type of care Medicare covers (but only on a very limited basis).

See also “Custodial Care” and “Intermediate Care.”

Stand-By Assistance: Refers to the need for someone to assist another individual performing activities that are basic to daily living. Unlike someone who needs continual supervision (i.e. all the time), a person who needs standby assistance has to have the caregiver within arms reach of the individual at all times to prevent, by physical intervention of necessary, injury to the individual while the individual is performing the activity of daily living (ADL) (for example being ready to catch the individual if the individual falls while getting into or out of the bathtub or shower as part of bathing).

Therapeutic devices: Devices such as grab bars and ramps, which help an individual perform the basic activities of daily living without another person’s assistance.

Underwriting: The process of examining, accepting, or rejecting insurance risks and classifying those selected, in order to charge the proper premium for each.