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Glossary of Insurance Terms - P

Glossary of terms used in insurance - P

  1. Plan Administration: Attending to the routine activities of running a plan. This includes answering queries, collecting premiums and enrolling new members.
  2. Pre Admission Certification: This is a type of permission granted to a member by an insurance provider or its representative before a person is admitted to a hospital. The certification must be obtained before the individual is admitted. The purpose of such a certification is to ensure that the individual does not expose himself to unnecessary medical procedures.
  3. Pre Admission Review: A review of an individual’s health condition before he is accepted into a hospital. These reviews are usually undertaken by an insurance representative, sometimes a nurse, together with the health care provider.
  4. Pre Existing Condition: A medical condition not covered by a health plan as it was present before cover started for the individual.
  5. Pre Admission Testing: Medical tests conducted on an individual before his admission to a hospital or in patient facility.
  6. Primary Care Provider: A health care professional who is in charge of a person’s overall health care needs. He refers the individual to specialist care when needed.
  7. Provider: These are health care providers providing health care facilities to individuals. Sometimes the term may refer to doctors only. Others may also include nurses, chiropractors, hospitals etc.
  8. POS (Point Of Service): It is a kind of managed health insurance plan. The benefits offered depend on whether you are availing of services within the network or outside it. These plans have elements of both HMO and PPO type of plans. As a member of this type of plan, you will be expected to find a primary care physician. He will then make further referrals to a specialist when needed. You may go for providers out of network. But in that case, out of pocket costs will be more.
  9. PPO (Preferred Provider Organization): This is a system of health insurance which allows you to visit any provider within the network without first consulting a primary care physician. Of course you will receive better benefits if you go for a provider within the network. These plans typically require co payments and co insurance. It may also include a certain amount of deductibles to be paid before your cover begins.
  10. Private Health Insurance: It is an insurance plan provided through an employer, association or a union or bought by an individual from a private health insurance company.
  11. Partial Day Treatment: This is a service offered by a licensed psychiatric facility. It includes day and evening treatment programmes for dealing with mental health or substance abuse issues. This may be an alternative to inpatient treatment.
  12. Participating Provider: The term refers to a licensed provider of health care services who has entered into a contract with a company to provide services to an enrolled member.
  13. Pharmacy Network (Unicare): This is a prescription drug programme which offers certain advantages.1) a nationwide network of participating pharmacies. (2) An easy mail order choice that helps save money and time. (3) Reduced co payments and no claim forms when service is provided by a participating pharmacy.
  14. Physical Therapy: A pain relieving treatment involving physical movement. It also prevents disability after a disease, injury or loss of limb.
  15. Physician’s Current Procedural Terminology (CPT): This refers to a list of services and procedures provided. Each of the services or procedures is identified by a unique code.
  16. Preventive Care: Preventive care undertaken to stop a person falling sick. It refers to procedures like immunizations and screenings. It may also include health improvements like lifestyle alterations.
  17. Pre Certification: The certification provided for a medical necessity or level of care. This does not however guarantee that benefits will be available.
  18. Pre Certification Review: This is the management of utilization procedures done before a patient is admitted or before any other procedure is undertaken.
  19. Prescription: A written directive by a licensed medical practitioner asking for drugs available only at pharmacies.
  20. Prosthetic Devices: A device used to replace all or a part of the body. The replacements are usually done to a part which has been permanently damaged or is not functioning properly.
  21. Policy: The printed certificate which is given to a member clearly stating the terms of insurance and benefits to be given to him.
  22. Policy Holder: A person paying premiums to a company in order to obtain insurance from it.
  23. Premium: The amount of money spent by a member to keep a cover in place.
  24. Probation Period: A period, usually of 180 days, during which no sickness cover is available. The time is calculated from the policy date. It aims at eliminating risks for illnesses contracted before the policy came into effect.
  25. Package Policy: This refers to a combination of coverage packages that were sold separately previously. For example, homeowners’ policies and commercial multi -peril insurance.
  26. Paid Up Additional Insurance: This is an option available to owners of participating life insurances. It allows the owner of the policy to use dividends to buy extra insurance on the life of the insured. The additional insurance is given on the same plan i.e. the basic policy. Additionally, the insurance is provided according to the face amount the dividends can provide at the particular age of the person.
  27. Paid Up Policy: This is a policy whose premium requirements have been met and which requires no further premiums to be paid. However, it continues to provide coverage.
  28. Participating Policy: This is a type of insurance policy that lets policy owners receive dividends. It is also known as par policy.
  29. Pay At the Pump: This as a system that was put forward in 1990s. It proposed the payments of auto insurance via a surcharge on per gallon of gasoline.
  30. Payout Options: This is a method by which the owner of an annuity contract can distribute the accumulated value. There are different methods available. He can receive the amount in a single payment through the lump sum distribution method. The fixed payment option allows the payment through a specified period of time. The fixed amount method allows for the payment through a fixed amount over a period of time. Finally, the life annuity option allows periodic payments to be made and it is linked in some way to the life expectancy of the insured.
  31. Pension Benefit Guaranty Corporation: This is the federal govt. agency that regulates the Pension Plan Termination Insurance Plan programme. It ensures that the just dues of the employees are suitably paid. The plans which are defined receive coverage. The benefits are provided up to a certain limit.
  32. Pensions: These are the programmes which provide retirement benefits to employees after they have attained minimum service and age requirements. There has been an increasing trend to shift the responsibility to the employees since the 1970s.
  33. Per Capita Beneficiary Designation: This is a type of insurance plan where the benefits are equally divided amongst multiple beneficiaries after the death of the insured. For example, if the plan specifies the provision of two beneficiaries and only one is surviving after the insured, he receives the entire benefit amount.
  34. Per Stirpes Beneficiary Designation: This is a type of insurance policy where the benefits are divided amongst a certain class or group of beneficiaries e.g. the children of the insured. The living members of the class and the surviving descendants of the class receive the benefits equally. It is the opposite of per capita beneficiary designation.
  35. Period Certain: This is the particular period during which an insurer makes payments of benefits under an annuity certain.
  36. Personal Articles Floater: This refers to an addition to an existing policy or a separate policy altogether which provides for coverage of articles of personal use E.g. furs and jewels.
  37. Personal Injury Protection Coverage: This is a part of an auto insurance policy covering treatment of injuries to the drivers and also the passengers of the car insured by the policy holder.
  38. Personal Lines: These are casualty or property insurance products that are made for and purchased by individuals. It includes automobiles and homeowners’ policies.
  39. Policy Dividend Options: These refer to the different ways in which the member of a participating insurance policy receives dividends on policy.
  40. Political Risk Insurance: This is a type of coverage provided to businesses operating out of the country. It is provided against political turmoil in that country e.g. wars, confiscation of property, revolution etc.
  41. Pollution Insurance: These plans cover such damage caused to property and the liabilities involved due to factors causing pollution. These refer to sites which have been inspected and found to be uncontaminated. The policies are usually provided on claims -made basis. They provide coverage to claims made during a specific period within the timeframe of the policy and a particular period after its expiry.
  42. Preferred Risk Class: This refers to a group or class of individuals who are less prone to risks of loss related to the underwriting policies of the company. It is the opposite of a declined risk class, substandard risk class and standard risk class.
  43. Premises: This refers to specified location of the property or a part of it as designated in the insurance policy.
  44. Premium Reduction Option: This is an option available to the members of participating insurance policies. It allows the provision of policy dividends to pay for renewal premiums.
  45. Premium Tax: This a state tax on premiums. It is paid by businesses and residents and is collected by insurers.
  46. Premiums in Force: This refers to the sum total of face amounts and additions of dividends available to insurance policies at a particular time.
  47. Premiums Written: This refers to the total amount of premiums written by an insurer at any given time. It does not exclude the portions that have not been earned. Net premiums refer to the premiums written after transactions in reinsurance.
  48. Primary Beneficiary: This is the person who would receive the benefits in the event of the death of the insured.
  49. Primary Company: The insurance company that is reinsured in a reinsurance transaction is called the primary company.
  50. Primary Market: This is the market where new issue securities are brought forward. The proceeds from these new securities go directly the insurer.
  51. Prime Rate: These are the interest charged from the credit worthy customers of the bank. These rates are fixed according to the market forces and cost of funds.
  52. Prior Approval States: These are the states where a change in rates must be filed with state regulators before they are enforced. The regulators must approve of the rates before they are put into effect.
  53. Private Placement: These are securities which are sold directly to the investors and are not registered with the Securities and Exchange Commission.
  54. Product Liability: This is a part of tort law. It decides on the person to be sued in case of damages due to a defective product. There are no federal laws directing liability on the part of the manufacturer. But under strict liability laws, the injured can sue the manufacturer responsible. There would be no need to prove negligence in this case.
  55. Product Liability Insurance: This is a product which protects manufacturers and distributors from lawsuits by people who have sustained injuries or damages to property by using this product.
  56. Professional Liability Insurance: These provide coverage to professionals for damages to their clients due to negligence or mistakes on the part of the insured.
  57. Proof of Loss: These refer to documents provided to the insurance company proving that losses have taken place.
  58. Property or Casualty Insurance: These plans cover damages to the property of the insured or liabilities arising out of damages to other peoples’ properties by an act of the insured. It includes auto and commercial insurance. It is one half of the insurance industry. The other half is the life or health sector.
  59. Property or Casualty Insurance Cycle: These refer to the business cycles occurring in the industry with alternating periods of hard and soft market environments. The 1950s and 1960s were marked by fixed periods of such alterations. Recently, such changes have been minimized.
  60. Proposition 103: This as a ballot initiative conducted in California in the year 1988. It called for a rollback in the rates of auto insurance. It called for regulation of rates according to the records of the driver and not on the geographical conditions. It brought about changes in many aspects of the insurance system. A number of lawsuits were brought against this initiative also.
  61. Purchasing Group: This refers to an entity offering insurance to groups which have similar business interests and similar risk profiles.
  62. Pure Endowment: This is a life insurance contract which pays an income at particular periods to the owner of the annuity. The payments may be quarterly, annually, semi annually or monthly.
  63. Pure Life Annuity: This is a type of annuity where the payment of the plan ends with the death of the owner of the annuity. The payments made may be fixed or variable.
  64. Participation Rate: This is a provision in an equity indexed annuity which decides how much of the profit in the index would be given to the annuity. For example, if the company fixes the rate at 85%, the value of 85% of the gains would be credited to the annuity.
  65. Personal Injury: These plans pay for the basic expenses for the insured and his family in states which have provisions for no fault auto insurance. Usually, no fault laws mandate the carrying of both personal injury protection and liability insurance to pay for the basic needs of the member. These may include medical insurance in case of an accident.
  66. Policy Holder Dividend Ratio: This is the ratio obtained from dividends paid to policy holders in relation to net earned premiums.
  67. Policy Holder Surplus: This refers to the sum total of paid in surplus, paid in capital and net earned surplus. It also includes voluntary contingency reserves. It is the difference between total admitted assets and total liabilities.
  68. Policy/Sales Illustration: This refers to the material that is used by the agent and insurer to display how a policy might perform over a period of time under various conditions.
  69. Preferred Auto: This is the coverage provided to auto drivers who have never had accidents and drivers who drive according to law. Drivers are not risks for companies providing auto insurance and such records make them attractive as risks.
  70. Premium Balances: These refer to the agents’ balances and premiums that are in the course of being collected, that have been booked but have been deferred. It also includes bills receivable for premiums ad retrospective premiums.
  71. Premium Earned: This refers to the premiums that have been paid beforehand and those that have been earned in the sense that no claims have been made in the particular time. A three year policy paid in advance, would be partly earning premiums if a year passes without claims.
  72. Premium to Surplus Ratio: This ratio basically measures the financial strength of the company and its ability to absorb losses that are more than average. It is calculated by dividing net written premiums by the surplus. The surplus refers to the excess of assets over liabilities. The lower the ratio, the higher is the financial strength of the company. The guideline ratio is about 3 to 1 set by state regulators.
  73. Premium Unearned: This is the part of the premium which is applicable to the part of the policy period which has not expired.
  74. Pretax Operating Income: These refer to the pretax earnings before capital gains have been generated from investing and underwriting operating sources.
  75. Pretax Return on Revenue: This measures the operating profitability of the company. It is calculated by dividing pretax earnings by net earned premiums.
  76. Private and Auto Insurance Policy Holder Risk Profile: This refers to the risk profile of policy holders holding auto policies. It can be divided into preferred, standard and non standard. For an insurance company, it refers to the kind of business he company has taken up.
  77. Profit: This measures the ability and competence of the management in providing insurance covers at competitive prices. It gauges the ability of a company to provide a financially strong company for stock holders and policy holders.
  78. Protected Cell Company (PCC): It is a single legal body operating separated accounts. Each of the entities has a separate legal identity. Each of the clients is protected from losses and gains of the other entities. So, each of the identities is insulated. They are protected against liquidation procedures suffered by other entities in case of insolvencies.

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