Life Insurance Glossary of Common Terms
We recognize you are looking to make the best decisions for you and your family by comparing online insurance quotes. We feel it is important for you to be informed about the rates available to you in order to make intelligent decisions about your coverage. This glossary can assist you in understanding some of the terms you may encounter when researching online life insurance quotes and life insurance rates.
Accelerated Benefits Rider
A policy rider that allows for the early payment of some portion of the policy’s face amount should the insured suffer from a terminal illness or injury.
Accidental Death and Dismemberment
Insurance providing payment if the insured’s death results froman accident, if the insured accidentally severs a limb above the wrist or ankle joints, or if the insured irreversibly loses his or her eyesight.
Accidental Death Benefit Rider
A policy policy rider providing for payment of an additional benefit related to the face amount of the base policy when death occurs by accidental means.
The pre-determined amount of time that must pass before the benefits are to go into effect for the claimant.
Activities of Daily Living (ADLs)
The basic activities and functions performed on a daily basis that are usually done without assistance. The six ADLs are:
Benefits that have a stated maximum amount payable for specific services itemized in the contract.
A signed statement of facts filled out by the person applying for the insurance policy, which is then used by the insurance company to decide whether or not to issue a policy. The application then becomes part of the policy.
Annually Renewable Term
A form of renewable term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year, without evidence of insurability. Also called Yearly Renewable Term (YRT).
Determination of the person’s level of physical ability or mental capability, and the type and extent of services available and needed.
The legal transfer of one person’s insurance policy to another person.
Assisted Living Facility
A facility providing 24 hour, around the clock care to resident patients in need of assistance with any number of the Activities of Daily Living (ADLs).
Person to whom the proceeds of a life policy are payable when the insured dies. The various types of beneficiaries: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies).
The amount of time an insurance company will make payments to the individual to pay for care, etc., after the deductible has been satisfied.
Best’s Insurance Report
A guide, published by A. M. Best, Inc., that rates insurers’ financial integrity and managerial and operational strengths.
The individual who cares for someone with a disability or illness. The primary caregiver is usually a spouse, child or other relative.
An individual employed by the insurance company to handle all matters, financial and otherwise, regarding the welfare of the claimant for cost effective purposes. This includes, but is not limited to, selecting physicians, specialists, care centers, hospitals, etc. as well as coordinating time periods of care.
Given to policy owners when they pay a premium at the time of application. Interim coverage during the underwriting process provided subject to terms and conditions of the receipt.
Person or persons named to receive proceeds in case the original beneficiary is not alive. Also referred to as a secondary or tertiary beneficiary.
Allows the policy-owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue).
Contract that may be converted to a permanent form of insurance without medical examination.
Daily Benefit Period
The length of time which your daily benefits cover.
Daily Benefit Rate
The rate predetermined by your policy provider to cover your daily benefits.
Decreasing Term Insurance
Term insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.
Disability Income Rider
A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury.
A period of time between the initial need for care and the beginning of the payments from the insurance company.
The number of days that you have to pay benefits before your coverage begins to pay for benefits.
Evidence of Insurability
Statements or proof or a person’s physical condition affecting the acceptance for insurance.
Home Care Providers
A person who provides home health care or hospice services and who meets the following criteria:
- Under the Medicare Program, has an agreement to be a provider of home health care services
- Is licensed by their state as a home health care agency or hospice if licensing is required in the state in which they are practicing
- Is a licensed therapist, a registered nurse (R.N), a licensed practical nurse(L.P.N), or a licensed vocational nurse (L.V.N.) providing services under the guidelines of their license
Home Care Services
Household services done by someone else because you are unable to do them. These include nursing services, personal hygiene, house chores, errands, and preparation of meals, laundry and small house maintenance.
Home Health Aid
Licensed individual that performs daily care for those in need of assistance in their homes. Generally these people provide help with basic daily activities such as bathing, eating, and dressing.
Generally in combination with a Home Health Aide, this person will cook, clean, run errands, etc.
Hospice Care Services
Outpatient services provided by a licensed hospice provider to help ease the pain of terminally ill patients in their last stages of their terminal disease. They also provide support to the primary care giver and the family.
Compensation to the claimant for disability or illness suffered – security against loss.
A state licensed person that represents two or more insurance companies in sales and service and who is paid on a commission basis.
A person who provides home health care services or hospice care who:
- Is licensed to provide the care they are giving and are working independently from a home health care agency. They must be licensed in the state where they work.
- Is chosen by you and has been qualified under the Independent Caregiver Certification Benefit
- Is not a member of your immediate family living with you
Usually a spouse or relative, an informal caregiver is an unpaid individual who takes on the responsibility of providing care for the individual in question.
The rate, which the cost of long-term care is expected to increase in the future. Generally this rate is 1-2% higher than the overall U.S inflation rate.
Insurance Company Ratings
There are five major insurance industry ratings services; A. M. Best, Standard & Poor’s, Moody’s, Fitch, and Weiss. These services provide information on insurance company financial performance, stability, claims paying ability, and more. The top ratings are: A. M. Best= A++, Standard & Poor’s=AAA, Moody’s=AAA, Fitch=AAA, Weiss=A+. Generally, IntelliQuote Insurance Services, LLC recommends companies that carry at least an A+ rating from A. M. Best. Occasionally, an A- rated company may be quoted if price and company performance justifies the selection.
A legal contract issued by the insurance company to secure coverage for claimant.
The pre-specified amount an individual pays to guarantee coverage for a policy.
A person covered under an insurance policy, including any persons named as receiving protection under the policy.
The insurance company that agrees to pay losses of benefits. Also, the insurer can be any company whose primary business is selling insurance to the public.
Increasing Term Insurance
Term insurance in which the death benefit increases periodically over the policy’s term. Usually purchased as a cost of living rider to a whole life policy.
Level Term Insurance
Term coverage on which the face value and premiums remain unchanged from the date the policy comes into force to the date the policy expires.
Long Term Care
Care given in the form of medical and support services to persons who have lost some or all of their capacity to function due to an illness or disability. These services are generally provided away from the primary health care facility and are of a long time frame.
Long Term Care Insurance
The insurance which pays for a succession of care giving services for the elderly or chronically ill. This care may be provided in a facility (nursing home, mental hospital, etc.) or in the individual’s home with a nurse or aide.
Maximum Lifetime Benefit
The total amount your insurance company will pay you in your lifetime for all benefit provided under your policy.
Public assistance funded through the state to individuals unable to pay for health care. Medicaid can be accessed only when all prior assets and funds are depleted.
Typically, the medical examination is conducted by a licensed paramedical professional. The medical report is part of the application process, becomes part of the policy contract, and is attached to the policy. A “non-medical” is a short-form medical report filled out by the insurance agent. Various company rules, such as amount of insurance applied for or already in force; applicant’s age, sex, past physical history; data revealed by inspection report, etc., determine whether the application will be accepted on a “medical” or “non-medical” basis.
A Government program, administered by the Social Security Administration, which provides financial assistance to individuals over the age of 65 for hospital and medical expenses. Medicare does not cover long-term care expenses.
Private health insurance used to pay costs not covered by Medicare, such as deductibles and co-insurance.
Other Insured Rider
A term rider covering an eligible family member or business member other than the insured attached to the base policy covering the insured.
Payment of Claim
Timely payment, generally monthly after services provided to patient and the filed claim is valid.
A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age. (See Standard Risk.)
The periodic payment required to keep an insurance policy in force.
A written legal contract of insurance issued by the company to the policyholder, which outlines the terms of the insurance.
Individual that has a written and signed agreement with their insurance provider.
The length of time the insurance policy provides coverage.
The annual payment from the individual to the insurance policy to keep the policy active.
Rates that determine amount of the premium. It is important to research the history of rate increases for each perspective company.
The beneficiary designated by the insured as the first to receive the policy benefits.
Net amount of money payable by the company at the insured’s death or at policy maturity.
A proposed estimation of the needs of the assessed individual to determine an appropriate policy.
The pricing factor that the insurance company bases their insurance buyer’s premium.
The continuance of the coverage of a policy that is beyond the original length of time set in the original policy based on the acceptance of the new policy’s premium.
Care provided through a long-term care facility to temporarily relieve the informal caregiver’s burden of responsibility.
Strictly speaking, a rider adds something to a policy. However, the term is used to refer to any supplemental agreement attached to and made a part of the policy, whether the policy’s conditions are expanded and additional coverage is added, or a coverage or condition is waived.
An alternate beneficiary designated to receive payment, usually in the event the original beneficiary predeceases the insured.
Severe Cognitive Impairment
A loss or breakdown of the mental capability that is similar to Alzheimer’s Disease and similar forms of dementia. It is measured by clinical evidence and standard tests that provide valid information regarding the patient’s impairment including (1) memory both short-term and long-term, (2) orientation to people, places, or time, and (3) deductive or abstract reasoning.
Skilled Nursing Care
This is the highest level of care provided by a Registered Nurse (R.N) or a Licensed Practical Nurse (L.P.N) 24 hours a day. Prescribed by a physician for the most severely impaired who cannot perform their own personal needs.
Insurers will give a lower premium rate to consumers who do not smoke or use tobacco. If you have smoked in the past, most companies will consider you a non-smoker, if you have not smoked for one year prior to applying for coverage. Consumers should be aware that nicotine may be detected in a variety of routine screenings tests that are now commonly required by most insurance companies.
A person who is entitled to insurance protection without extra rating or special restrictions according to company underwriting standards.
A person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Most policies provide that if the insured commits suicide within a specified period, usually two years, after the issue date, the company’s liability will be limited to a return of premiums paid.
Tax Qualified (TQ) Policies
Beginning January 1, 1997, long-term policies meeting certain requirements qualify for favorable tax treatment. Buyers of these plans may deduct the premiums if they itemize their deductions on their Federal Tax return. Premiums are treated as medical or health insurance expenses and must be equal to more then 7.5% of adjusted gross income. Also, benefits received from a Tax Qualified Plan (TQ Plan) are not taxable up to $175.00 a day.
Term Life Insurance (Term Insurance)
Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to 20 years, because such periods usually cover the needs for temporary protection.
Term of Policy
Period for which the policy runs.
Steps through which a submitted insurance application to an insurance company for review by a licensed insurance counselor approved for coverage.
Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.
Individual not acceptable for insurance due to excessive risk.
Period of time lost while waiting for home health care.
An agreement attached to the policy that exempts from coverage specific disabilities and injuries that normally would be covered under the policy.
Waiver of Premium
Rider or provision included in most policies exempting the insured from paying premiums after insured has been disabled for a specified period of time, usually six months.
Whole Life Insurance
Whole life is also known as ordinary, standard or permanent life insurance. Unlike term insurance, whole life provides coverage for the lifetime of the insured. Whole life policies also provide tax-deferred buildup of cash value, payable upon surrender or payment default. Generally, permanent insurance has fixed premiums and death benefits. Other types of permanent coverage, such as graded premium life, universal life, and variable life, offer variable premiums and death benefits.
The total amount of premiums due in a year for all policies issued by an insurance company.