Absolute Assignment

 

A transfer by the policyholder of all control and rights to a third party.

Accident

A sudden event, unforeseen and unintended.

Accident and Sickness

 

Insurance against bodily injury, disability or death by accident, or against disability or expense resulting from sickness, and the insurance relating thereto.

Accidental Means

The unexpected cause of an accidental bodily injury. Under an Accidental Means definition, which is very restrictive, if you meant to do whatever caused your injury, there is no coverage.  Most Health insurance policies cover Accidental Bodily Injury, which is much broader, in that it covers accidents regardless of the cause.

is.

Actuary

 

One concerned with the application of probability and statistical theory to insurance, utilizing the law of large numbers.

ADB

Accidental Death Benefit (also known as Double Indemnity). A rider added to a Life policy that will

pay doubl

e the face amount if the insured dies as a result of accident, generally within 90 days of the

accident.

AD&D

 

Accidental Death and Dismemberment insurance. A limited form of Health insurance that covers accident only. It is the only type of Health insurance that covers death. AD&D policies do not follow the Principle of Indemnity, in that they pay in addition to any other coverage the insured has.

Adverse Selection

Selection not in favor of the company. The tendency of poorer risks to want insurance more often than standard risks. For example, a person who is already sick would like to buy health insurance.

Adverse Underwriting Decisions, Consumer Rights

 

Under the Fair Credit Reporting Act, when an adverse underwriting decision is made, the insurer must provide the applicant or policyholder with specific written reasons for the decision, or advise the individual that specific reasons are available upon written request. Upon receipt of the written request, the insurer must furnish specific reasons for the adverse decision and the names and addresses of the sources that provided the information.

Agent / Producer

 

The individual appointed by an insurance company to solicit and negotiate insurance contracts on its behalf. Agents or Producers represent the company, not the client. 

Alien Company

An insurer organized and domiciled in a country other than the United States.

Annuitant

The party receiving the benefits of an annuity, similar to the insured on an insurance policy. The annuitant usually also owns the annuity, although you can buy an annuity to benefit another party, who would then be the annuitant.

Annuity

 

An agreement by an insurer to make periodic payments that continue during the lifetime of the annuitant(s) or for a specified

period. Annuities are considered to be the opposite of life insurance,since annuities pay while you’re alive and life insurance pays when you die. Life insurance proceeds create an estate, while annuities are used to liquidate an estate over a period of time. All annuities are insurance products and a life insurance license is required. 

Applicant

The party making application to the insurance company for the policy. Applicants must provide the insurer with the truth to the best of their knowledge, which is known as a “representation.”

Application

A form on which the prospective insured states facts requested by the insurer and on the basis of which (together with any information from medical examiners, attending physicians, hospitals, investigat

ors, and the producer) the insurer decides whether or not to accept the risk, modify the coverage offered, or decline the risk. With premium, the application is considered to be an offer to buy. If attached to the policy at issue, it becomes part of the Entire Contract.

Assignee

The person to whom policy rights are assigned in whole or in part by the policyholder, who is known as the Assignor. On Life insurance there are two types of assignment: Absolute and Collateral.

Assignment

Transfer of rights in a policy to another party by the policyholder. For example, if you bought a life insurance policy on a minor child, you are the owner and the child is the insured. When the child reaches age 21, you could assign all rights of ownership in the policy to the child. This is an absolute assignment.

Attained Age

The present or current age of the insured. Upon conversion, premiums are based on the current age of the insured.

Authorized Company

An insurer permitted to sell insurance within a state. Must obtain a Certificate of Authority from the Commissioner or Director of Insurance of every state they sell in.

Automatic Premium Loan

A rider in a Life policy authorizing the insurance company to use the cash value to pay premiums not paid by the end of the grace period. May be present in Whole Life or Endowment policies only, never Term. This rider is free, but must be selected by the policy owner.

Aviation Clause

Limits or excludes coverage when the insured is participating in specified types of air travel. Coverage is usually confined to regularly scheduled flights of commercial airlines. Often applies to student pilots.

Beneficiary

A person who may become eligible to receive, or is receiving, benefits under an insurance plan. The beneficiary is selected by the policy owner and may be changed at any time, unless “irrevocable.”

Blanket Insurance Contract

A contract of Health insurance that covers all of a class of persons not individually identified. Often written to cover school children or sports teams, such as Little League. No certificates are issued, since coverage applies to everyone that attends or participates.

Blue Plan

Generic term for those insurers (usually on a service rather than reimbursement basis) who are authorized to use the designation “Blue Cross” or “Blue Shield.”

Brokerage

A Producer who represents an insured in the solicitation, negotiation, or procurement of contracts of insurance. For example, you might represent only one insurer as a Producer. If that insurer

declines to write coverage for your client, you might try to “broker” the business elsewhere in an effort to better serve your customer.

Business Insurance

Life or Health insurance written to cover business situations such as key person, sole proprietor, partnership, corporations, etc.