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Glossary of Insurance Terms - C

Glossary of terms used in insurance - C

  1. Capitation: This is a fixed dollar amount you pay to the HMO. This is not dependant on the amount of services you use. The term providers usually refer to health care professionals. They include doctors and sometimes nurses also.
  2. Carrier: The insurance company or health maintenance organization who is offering the health plan.
  3. Case Management: It is a system followed by insurance companies to ensure that the members receive appropriate health care services.
  4. Certificate Of Insurance: A printed copy of the benefits and coverage to be provided to the enrolling member. It describes what is covered under the plan. It also sets out the dollar limit.
  5. Claim: A request by the enrolling member to the insurance company to pay for the services the member has bought through his health care plan.
  6. Co Insurance: This is the amount an individual is expected to pay for services. This is generally charged after a particular amount has been paid as deductible. It is usually charged as a percentage. For e.g. if a cost of $100 is incurred for a service, the member pays $20 under a 20% co insurance. The insurance company pays $80.
  7. Co Payment: It is a flat fee in dollar amounts that is paid for a health care service. This is in addition to what is paid by the company. E.g. some plans require a $10 co payment for an office visit. This is irrespective of the type or level of services provided. This is usually referred to as a percentage.
  8. COBRA: This is a federal legislation that lets you continue covers even after you have left your current employment. This is applicable for groups of over 20 employees. Cover can extend for 18 months after you have left your current job.
  9. Credit for Previous Coverage: This is a cover that may or not continue when you change employers or your plan. A pre existing condition or waiting period under a previous plan may be continued by the current plan.
  10. COB (Co Ordination of Benefits): This is the process that determines whether the company will be your primary or secondary payer of claims. This usually applies to people who have multiple health plans.
  11. Certification Chemotherapy: Treatment of a malignant disorder by chemical, biological or other anti neo plastic means.
  12. Chiropractic Care: The adjustment of the spine and joints to reduce pain. It is an alternative form of medication.
  13. Concurrent Review: The review of the health status of a patient who is hospitalized to ensure that he is getting the best healthcare possible.
  14. Contraception: Deliberate means employed in order to prevent pregnancies. Methods include oral or injectible drugs and implants.
  15. Contract: The legal agreement between an individual (or employer) and the company that describes the benefits of the cover.
  16. Contract Holder: This is the individual who is to receive the benefits according to the insurance contract. He may also be a part of the group to which the plan has been provided.
  17. Conversion Option: the opportunity given to an individual to change from a group plan to an individual plan at retirement.
  18. Covered Services: This term refers to the hospital or medical and other such costs that will be covered in a plan.
  19. Credentialing: This is the examination of the qualifications and experience of the health care provider. This is done in order to find out their eligibility for a managed care organization.
  20. Custodial Care: The care that is provided to a patient to help him lead his daily life. This does not include services requiring expert help.
  21. Cancelable: This refers to an insurance that can be cancelled during the life time of the policy by the insurer or the insured.
  22. Cancellation: The ending of an insurance contract before its time. This can be done by either the insurer or the insured.
  23. Commission: The amount paid by the insurer to the agent or the broker for helping it secure business.
  24. Composite Rate: A single rate for all members in a group, whether they are single or with family.
  25. Comprehensive Major Medical Insurance: A policy that combines the advantages of both basic and major health insurance policies. It typically has low deductible levels, co insurance and high maximum benefits.
  26. Concealment: Deliberate suppression of a fact by an applicant.
  27. Conditionally Renewable: This provision specifies that an insurance company may refuse to renew an existing policy.
  28. Contributory: A group insurance plan where the employer and the employee both pay a sum towards costs of the plan. At least 75% of the eligible employees must enroll.
  29. Conversion Privilege: The privilege given to a member to convert to an individual plan when his group plan expires.
  30. Capital: This refers to the equity of shareholders in an insurance company. It is measured by calculating differences between assets and liabilities. This safeguards the interests of the policy owners in case the company faces financial losses. The interest of the shareholders is of course secondary to that of the policy holders.
  31. Capitalization/Leverage: This measures the exposure of the company’s surplus to various practices. A company that is poorly capitalized might be exposed to high levels of instability.
  32. Captive Agent: This refers to a person who is bound to submit business to one insurance company only. Or at least give that company the right to refuse the first time. In return, the insurer pays him expenses on his office and usually, an allowance also.
  33. Casualty: This is the liability or loss that results from an accident.
  34. Casualty Insurance: This type of insurance basically related losses caused by injuries or damage to property. It also includes insurance against crimes like forgery, burglary and robbery. It also includes aviation insurance.
  35. Ceded Reinsurance Leverage: This refers to the ratio between the sum of the net and reinsurance premiums ceded to policy holder’s surplus. It measures the company’s dependence on the security given by the reinsurers.
  36. Change In Written Net Premiums (IRIS): This is the change in percentage of net premiums. The company should have the capacity to afford growth together with quality surplus growth from internal capital generation.
  37. Change In Policy Holder Surplus: This refers to the difference in policy holder surplus between the current and the previous years. This is obtained from operating earnings, net contributed capital and investment gains.
  38. Chartered Property And Casualty Underwriter (CPCU): It refers to a person who has passed the 10 exams conducted by American Institute for Property and Liability Underwriters. The syllabi include topics such as risk management, insurance and finance management.
  39. Collision Insurance: This covers the physical damage to the automobile of an insured. This is apart from the cover provided by comprehensive insurance. This insurance deals with damage resulting from contact with a separate inanimate object.
  40. Combined Ratio After Dividends For Policyholders: This ratio measures the overall underwriting profitability of the company. An underwriting ratio of less than 100 indicates a profit.
  41. Commercial Lines: This indicates insurance for professionals, businesses and commercial establishments.
  42. Concurrent Periods: When a patient is in hospital owing to various illnesses or injuries, the benefits paid will treat the cause of hospitalization as one. This is called the concurrent period.
  43. Convertible: This refers to term life insurance that can be converted to permanent insurance without a medical examination or without taking into account the physical condition of the insured at the time.
  44. Cost Of Living Adjustment (COLA): This is an automatic adjustment of social security payments which comes into play when the price index for consumer goods increases by at least 3%. This is calculated between the first quarter of one year to the first quarter of the next.
  45. Creditable Coverage: This term basically means that the cover provided by other companies is at least as good as the cover offered by the new Medicare Part D. This may be significant for people who have not yet signed up for Medicare as their plans cover these points.
  46. C Share Variable Annuities: This is a type of annuity contract where the holder does not pay sales fee or charges for surrender. The owners are allowed to claim a full liquidity at any time.
  47. Capacity: The total amount of insurance available to meet demand. It is dependent on the capacity of the industry to undertake risks. This is again determined by its financial position. It decides on the solvency of the insurer.
  48. Captives: These are insurers who are wholly owned by one or multiple non insurers. These provide coverage to the owners. It is a form of self insurance.
  49. Car Year: This refers to a total of 365 days of coverage for a vehicle. It is a measurement standard for the automobile industry.
  50. Cash Dividend Option: This is a dividend option under participating insurance plans. In this system, the insurer gives the policy owner a cheque for the amount of policy dividend.
  51. Cash Payment Option: This allows the policy owner to receive the cash value for a surrender of an insurance policy or an annuity in a single payment. It is also referred to as cash surrender option.
  52. Catastrophe: This is a term that refers to an incident or related incidents that cover property losses totaling more than a stated amount, usually $25 million.
  53. Catastrophic Bonds: These are risk based securities paying high interest rates. These provide insurance companies with reinsurance to pay for losses resulting from catastrophes.
  54. Catastrophic Deductible: This is an amount a home owner has to pay before the insurance starts. It restricts insurers’ potential losses.
  55. Catastrophic Factor: This refers to the chance of a catastrophic loss. It is based on the total number of catastrophes in a state during a 40 year period.
  56. Catastrophic Model: This is an amalgamation of long term information on disaster and demographics and other data. It is used to determine the potential cost of disasters.
  57. Catastrophic Reinsurance: This is the reinsurance offered for catastrophes. Losses are spread out among companies on a global basis.
  58. Cell Phone Insurance: This is a separate insurance provided to cover damage to cell phones and its theft.
  59. Chartered Property Or Casualty Underwriter: This is a designation provided by the American Institute for Chartered Property Casualty Underwriters. It is provided after examinations and experience.
  60. Collateral Assignment: This is the temporary transfer of the rights to a property. It includes life insurance policies. On payment of the loan, the property goes back to the owner. It is the opposite of absolute assignment.
  61. Combined Ratio: This is the percentage of each dollar that a property insurer spends on expenses and claims. A fall in this ratio means that the results are improving and vice versa.
  62. Commercial General Liability Insurance (CGL): This refers to a commercial policy that covers all aspects of a business unless specifically excluded. This includes operations, product liabilities etc.
  63. Commercial Lines: These are specifically products designed for and bought by businesses. The coverages include business income, fire and allied lines, medical malpractice, professional liability and others. Most of these covers can, of course be bought separately except for business income. This can only be bought with fire insurance.
  64. Commercial Multi Peril Policy: This is a package policy including boiler and machinery, crime, property and general liability coverage.
  65. Commutative Contract: This is an agreement through which the parties decide on the values they will exchange. The items exchanged are of the same value usually. This is the opposite of an aleatory contract.
  66. Competitive State Fund: This refers to a facility by which states sell workers’ compensation in competition with private insurers.
  67. Complaint Ratio: This is a way in which state departments keep track of complaints against insurance companies. It is generally calculated as a percentage of premiums paid. Complaints from medical providers are also included in some states.
  68. Complete Operations Coverage: This refers to coverage for injury to the body or property damage caused by a project or job that has been completed. It provides protection to businesses selling services against liability claims.
  69. Contestable Period: This is the time given to the insurer to cancel an insurance policy if it contained misrepresentation of material facts.
  70. Contingent Beneficiary: This is the party who would receive the proceeds of an insurance plan in case the primary beneficiary passes away.
  71. Contingent Liability: This refers to the liability of corporations and individuals for causing accidents by people other than its employees for whom the company is responsible.
  72. Crash Parts: The metal parts that are damaged most commonly in accidents.
  73. Credit Enhancement: This is a technique used to reduce the interest payment on a bond. This is done by increasing the credit rating of the bond through insurance. This often takes the form of financial guarantee by a bank.
  74. Credit Insurance: This is the commercial coverage provided to businesses against losses from nonpayment of obligatory amounts, mainly due to insolvency. It is mainly provided to wholesalers, manufacturers and providers of service. It is coverage for incomes dependant on a few accounts which could cause it to go into insolvency.
  75. Credit Life Insurance: This is the coverage to be provided to a borrower that is to repay the balance of a loan in the event of his death. It may include disablement. It may be offered optionally with credit cards and auto loans.
  76. Credit Score: This is basically a scorecard of a person’s credit history. This affects all consumers in many ways. This score is reviewed regularly by insurers before giving out a commercial policy.
  77. Crime Insurance: This is a coverage provided to property owners against theft, robberies and burglaries.
  78. Critical Illness Insurance: This is a type of individual health insurance to cover a specific illness. It is also known as critical diagnosis insurance.
  79. Crop Hail Insurance: This is the cover provided to crops against hail, lightening and fire. In contrast, multi peril crop insurance offers cover to a wider variety of conditions which reduce yields. These may be insect infestations, droughts and others. It is subsidized by the federal government.

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