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Glossary of Insurance Terms - A

Glossary of terms used in insurance - A

  1. Actuary: He is a mathematician working for the health insurance company. His job is to decide on the premiums to be paid for a particular plan which will make the business profitable. The premiums are decided based on a favorable ratio between payments by customers against possible claims.
  2. Admitting Privileges: The right given to a doctor to admit a patient to a particular hospital.
  3. Advocacy: An activity undertaken to secure the interests of the enrolling members.
  4. Agent: A sales person with a license representing one or more health insurance companies. They are authorized to present the products of the company to the people.
  5. Association: A group catering to a particular interest. They often offer individual health plans designed for the particular interests of the group.
  6. Accident: An unexpected and unpleasant circumstance.
  7. Accident Insurance: A type of health insurance against injuries to the body caused by accidents.
  8. Actual Charge: The real dollars charged for medical services provided as different from the amount allowed under the plan.
  9. Acute Care: The medical care that is provided in a hospital or by professionals for a serious injury. These conditions are mostly temporary in nature.
  10. Adjuster: A person who examines and settles losses on behalf of the insurance company.
  11. Adverse Selection: This refers to an inclination on the part of some individuals to go for any sort of cover because they are high risk. When this selection increases, insurance companies may raise rates.
  12. Age Limit: The age group decided upon by the company for which it will offer insurance.
  13. Alternative Medication: This refers to those medical practices which are not generally recognized by the medical community. The services included may be large, ranging from acupuncture, homeopathy to naturopathy etc.
  14. Application: A signed statement provided by the person seeking insurance. This is used by the company when it is deciding on whether to offer insurance. It becomes a sort of contract between the two later on.
  15. Arbitration: A way of resolving a dispute. In this way, a neutral person decides on the extent of responsibility of the insurance company.
  16. ASO (Administration Services Only): A contract under which an insurance company performs specific functions to maintain a self funded health insurance plan.
  17. Attending Physicianís Statement (APS): These are your medical records obtained by the insurance company prior to the start of your coverage. It helps the company in understanding your medical status before the start of your cover.
  18. Absolute Assignment: The complete and permanent transfer of ownership of an insurance policy from one party to another. This is the opposite of collateral assignment.
  19. Accelerated Death Benefits: This is a life insurance policy which provides proceeds to members with terminal illnesses. This is done within their lifetimes.
  20. Accidental Death Benefit: The insurance providing an additional death benefit in addition to the death cover provided in an existing policy.
  21. Accumulation at Interest of Dividend Option: This is an option given to policy owners to earn an interest on deposits left with the insurers.
  22. Active Participant: It refers to a person whose absence would result in the trigger of a benefit in case the event is postponed or cancelled.
  23. Actual Cash Value: This form of insurance pays covers on damaged property after subtracting the depreciation value of the property.
  24. Additional Living Expenses: These are extra covers provided by homeownerís policies. They kick off when the member needs temporary cover due to a damage which makes his home uninhabitable for the present.
  25. Additional Term Insurance Option: this is an option available to owners of insurance policies. In this option, the policy dividend is used as a premium to buy a year long term insurance on the memberís life. This is also known as a fifth dividend option.
  26. Adjustable Life Insurance: This type of life insurance gives the member the option to change the covers provided by his policy to match a change in his needs.
  27. Admitted Company: This refers to an insurance company that has been authorized to do business in a state.
  28. Affinity Sales: This is the selling of insurance plans through professional groups and associations.
  29. Agency Companies: These are companies handling the marketing and sales of products through independent agents.
  30. Aggregate Limit: This refers to liability insurance. It refers to the amount of coverage a person has over a period of time, no matter the number of accidents.
  31. Aleatory Contract: This is basically a contract between two parties. One gives something valuable to a party for a promise from the other. The promise is that in the case of an unforeseen event, the said party will act in a said manner. This is the contract between the insurer and the insured.
  32. Alien Insurance Company: This refers to an insurance company that has been formed on foreign soil. This is in contrast to a company that is formed outside a state and just does business there.
  33. Allied Lines: This is a type of property insurance that is usually bought together with fire insurance.
  34. Alternative Markets: These are innovative mechanisms used to finance risks. It includes captives, risk retention groups and self insurance.
  35. Annual Administrative Fee: These are the charges paid yearly for the administration of a group insurance plan.
  36. Annual Crediting Cap: This refers to the maximum rate amount that can be credited to an annuity that is equity indexed. For e.g. If the cap is of 6 and the index of that annuity goes up to 6.2, only 6 would be paid.
  37. Annual Statement: This is a summary of the insurerís operations in a year. It is provided to the state department of insurance each year.
  38. Annuitant: This refers to the person who usually receives the benefits of an annuity. It usually relates to the owner of the annuity or his spouse.
  39. Annuitization: This is the change of an account balance from a deferred contract to income payments.
  40. Annuitization Options: These are the ways in which you can annuitize. E.g. a life with a 10 year period certain will give you payouts through life. But if the member dies before that term, the benefits will continue throughout the period remaining.
  41. Annuity: It is a life insurance product which periodically pays the policy holder a sum of money. There are two types of annuity-immediate and deferred. Immediate annuity plans allow payments to be made within a year of purchase of the plan. Deferred plans on the other hand allow the assets to grow before being converted to payments to the member.
  42. Annuity Accumulation Period or Phase: This is the period of time during which payments are made by the member of a deferred annuity plan to build up assets.
  43. Annuity Administrative Charges: These are the charges paid by owners of variable annuity schemes for customer services.
  44. Annuity Beneficiary: The beneficiary of an annuity plan who accepts payments on behalf of a member who has passed away while payments are due.
  45. Annuity Certain: This is an annuity contract which pays benefits even when the annuitant is dead. This is also called period certain annuity.
  46. Annuity Contract: This is an agreement made for other insurances like auto insurance etc.
  47. Annuity Contract Owner: A person or entity who buys an annuity and has the rights of the said plans. This usually refers to the annuitant.
  48. Annuity Cost: This is the amount of money that is equal to the current value of periodic income payments.
  49. Annuity Death Benefits: The guarantee provided to a buyer of an annuity plan. This states that if a buyer dies before payments are completed, the benefits of the remaining amount will be made to the beneficiary.
  50. Annuity Insurance Charges: These are the covers provided to mortality, expense risks and administrative costs.
  51. Annuity Investment Management Fee: This is the fee paid for managing a variable annuity invested asset.
  52. Annuity Issuer: The company which issues the annuity.
  53. Annuity Prospectus: This is a legal document which details the variable annuity contract. This has to be given to each prospective buyer.
  54. Annuity Purchase Rate: It refers to the cost of an annuity. It is determined by the gender and age of the applicant.
  55. Antitrust Laws: These refer to laws preventing companies from forming groups which sets prices and procedures to stop competition. The insurance companies are subject to state antitrust laws even though they enjoy limited exemptions under federal laws.
  56. Apportionment: The division of losses incurred between two or more insurers covering the same loss.
  57. Appraisal: This is a survey conducted to fix the insurable value of a property.
  58. Approved for Re Insurance: This indicates that the company is authorized to write re insurance in the particular state. A separate license may not be required in these states to conduct rewritings.
  59. Approved for Surplus Lines or Not Disapproved: This indicates that the company may write surplus lines in the state.
  60. Arson: A deliberate setting of fire.
  61. Assets: These refer to the property owned by an insurance company including real estate, bonds and stocks. It decides on the solvency of the company and its ability to settle claims. State laws are quite stringent in these matters. Companies are not allowed to show assets whose values are not certain on their balance sheet.
  62. Assigned Risk Plans: This is a facility through which drivers can get auto insurance if they are unable to get it in the regular market in this type of a plan; all insurers are offered these drivers to insure. The decision is based on the amount of insurance sold by the insurers in the market.
  63. Assignment: This is an act by which all the property of a person, in this case an annuity contract or insurance policy, is transferred to another person.
  64. Attained Age: The age of the insured person at the particular time.
  65. Authorization Under Federal Products Act: This means that the companies are operating under the liability risk retention act of 1986 and federal products liability risk retention act of 1981.
  66. Auto Insurance Policy: These are the insurance policies offered to auto owners and drivers. Coverage may include damage caused to another person by the driver, medical treatment for the driver or his passenger and property damage liability. It may also include covers for uninsured motorists involved in hit and run cases.
  67. Auto Insurance Premium: It refers to the price charged to provide coverage for auto theft and potential accidents. The costs are determined by the above factors.
  68. Aviation Insurance: The aviation industry holds insurances for airplanes and liability insurance for damages caused due to negligent acts. Coverage is provided both on the ground and in the air.

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