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Insurance Terms
Accelerated Benefits
Benefits available in some life insurance policies prior to death, which may be used to help pay the costs of long-term care or terminal illness. There may be an additional cost for these benefits.
Accidental Death Benefit
A provision added to a life insurance policy for payment of an additional benefit if death is caused by an accident. This provision is often referred to as “double indemnity.”
Agent
An authorized representative of an insurance company who sells and services insurance contracts.
Annuity
A financial product that allows a person to save for the future on a tax-deferred basis and then allows the person to choose a payout option that best meets needs for income when the person retires. Payment options include a lump sum, income for life, or income for a certain period of time.
Automatic Premium Loan
A provision in a life insurance policy that any premium not paid by the end of the grace period (usually 30 or 31 days) will be paid automatically by a policy loan if there is sufficient cash value.
Beneficiary
The person or entity (for instance, a trust) named in a life insurance policy as the recipient of policy proceeds in the event of the policyholder's death.
Cash Value
Also known as the cash surrender, this is the amount available in cash upon surrender of a permanent life insurance policy before it becomes payable upon death or maturity.
Deferred Annuity
A contract in which the annuity payout begins at a future date.
Dividend
In life insurance, an amount of money returned to the holder of a participating policy. The money is a partial refund of the premium paid. It results from actual mortality, interest and expenses that were more favorable than expected when the premiums were set.
Evidence of Insurability
A requirement for potential insurance policyholders to obtain proof of physical or medical tests, such as blood pressure or cholesterol screening, before purchasing an individual insurance policy.
Face Amount
The amount stated on the face of a life insurance policy that will be paid in the case of death or policy maturity. It does not include dividend additions, or additional amounts payable under accidental death or other special provisions.
Fixed Annuity
An annuity contract in which the premiums you pay are invested in the general assets of the life insurance company, and the company guarantees fixed payout every month.
Flexible-Premium Deferred Annuity
An annuity contract that permits varying the amount and frequency of premium payments from year to year for payouts that will occur in the future.
401(k) Plan
An employer-sponsored retirement savings plan which allows employee contributions to be made on a before-tax basis.
403(b) Plan
A retirement savings plan similar to a 401(k) plan for employees of charitable and educational organizations.
Grace Period
A period (usually 30 or 31 days) following each insurance premium due date, other than the first due date, during which an overdue premium may be paid. All provisions of the policy remain in force throughout this period.
Immediate Annuity
A contract in which annuity payouts begin immediately or within one year.
Insured
The person on whose life an insurance policy is issued.
Joint and Survivor Annuity
An annuity where payouts are made as long as a person lives, and after death, to a designated beneficiary as long as he or she lives.
Lapsed Policy
An insurance policy terminated at the end of the grace period because of nonpayment of premiums. (See nonforfeiture values.)
Long-Term Care Insurance
An insurance contract that helps provide financial protection if a person is unable to care for himself or herself because of a chronic illness, disability, or cognitive impairment, such as Alzheimer's disease.
Nonforfeiture Values
The value of a life insurance policy if it is cancelled or lapsed, either in cash or in another form of insurance.
Ordinary Life Insurance
This is the most common type of permanent life insurance. With this type of policy, premiums generally remain constant over the life of the policy and must be paid periodically in the amount specified in the policy.
Permanent Life Insurance
Life insurance designed to provide lifelong financial protection. As long as the person pays the necessary premiums, the death benefit will be paid. Most permanent policies have a feature known as cash value that builds up, tax-deferred, over the life of the policy and can be used to help fund financial goals, such as retirement or education expenses.
Policy
The printed document issued to the policyholder by a company stating the terms of the insurance contract.
Policy Illustration
A policy illustration shows how your life insurance policy will work. It illustrates premiums, death benefits, cash values, and information about other factors that may affect your costs.
Policy Loan
The amount that can be borrowed under an insurance policy at a specified rate of interest from the issuing company by the policyholder, who uses the value of the policy as collateral for the loan. In the event the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the amount payable to beneficiaries.
Premium
The payment, or one of regular periodic payments, that a policyholder makes to own an insurance policy.
Reinstatement
The restoration of a lapsed insurance policy. The company requires evidence of insurability and payment of past-due premiums plus interest.
Rider
An amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or excluding certain conditions from coverage. There may be an additional cost for these benefits.
Roth IRA
An individual retirement account (IRA) in which earnings on contributions are not taxed, as long as the contributions have been in the account for five years, and the account holder is at least age 59 ˝, disabled or deceased. Contributions to a Roth IRA are not tax deductible.
Settlement Options
One of several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have policy proceeds paid.
Straight Life Annuity
An annuity whose periodic payouts stop when the annuitant dies.
Term Insurance
Life insurance that covers the insured for a certain period of time, known as the term. The policy pays death benefits only if the insured dies during the term.
Traditional IRA
An individual retirement account set up by an individual to provide retirement income that allows contributions to be deducted from income and permits earnings on contributions to accumulate tax- deferred until retirement.
Underwriting
The process of classifying applicants for insurance by identifying characteristics such as age, gender, health, occupation and hobbies. People with similar characteristics are grouped together and are charged a premium based on the group's level of risk.
Universal Life Insurance
A type of permanent life insurance that allows you, after your initial payment, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums. This policy also permits the insured to reduce or increase the death benefit more easily than under a traditional whole life policy. To increase a death benefit, the insurance company usually requires a person to furnish satisfactory evidence of continued good health.
Waiver of Premium
A provision that sets certain conditions under which an insurance policy will be kept in full force by the company without the payment of premiums. It is used most frequently for those policyholders who become totally and permanently disabled, but may be available in certain other cases.
Whole Life Insurance
The most common type of permanent life insurance. With this type of policy, premiums generally remain constant over the life of the policy and must be paid periodically in the amount specified in the policy.
Senior Health Insurance Terminology
Actual Charge
The amount a physician or supplier actually bills for a particular medical service or supply.
Approved Amount
The amount Medicare determines to be reasonable for a service that is covered under Part B of Medicare. It may be less than the actual charge. For many services, including physician services, the approved amount is taken from a fee schedule that assigns a dollar value to all Medicare-covered services that are paid under that fee schedule.
Assignment
An arrangement whereby a physician or medical supplier agrees to accept the Medicare-approved amount as full payment for services and supplies covered under Part B. Medicare usually pays 80% of the approved amount directly to the physician or supplier after the beneficiary meets the annual Part B deductible of $100. The beneficiary pays the other 20%.
Benefit Period
A benefit period is a way of measuring a beneficiary's use of hospital and skilled nursing facility services covered by Medicare. A benefit period begins the day the beneficiary is hospitalized. It ends after the beneficiary has been out of the hospital or other facility that primarily provides skilled nursing or rehabilitation services for 60 days in a row. If the beneficiary is hospitalized after 60 days, a new benefit period begins, most Medicare Part A benefits are renewed, and the beneficiary must pay a new inpatient hospital deductible. There is no limit to the number of benefit periods a beneficiary can have.
Benefit Period (Part A)
As defined by Medicare, this begins when you first enter a hospital or skilled nursing facility. It ends when you have been discharged, and not readmitted to a hospital or other facility for at least 60 consecutive days.
CMS
The Centers for Medicare and Medicaid Services is the federal government agency responsible for administering Medicare and federal participation in Medicaid. (Formerly known as the Health Care Financing Administration)
Coinsurance
The portion or percentage of the Medicare-approved amount that a beneficiary is responsible for paying.
Copayment
The amount of payment that is the patient’s responsibility to pay.
Custodial Care
Care provided primarily to meet the personal needs, including help in walking, bathing or dressing.
Deductible
The amount of expense a beneficiary must first incur before Medicare begins payment for covered services.
Durable Medical Equipment
Equipment which can withstand repeated use, is primarily and usually used to serve a medical purpose, is generally not useful to a person in the absence of illness or injury, and is appropriate for use in the home. To be covered, durable medical equipment must be medically necessary and prescribed by a contracting physician for use in the home. Examples are oxygen equipment, wheelchairs and hospital beds. These items are covered in accordance with Medicare laws, regulations and guidelines.
Emergency
A sudden, serious or unexpected acute illness, injury or condition which could permanently endanger your health if medical treatment is not received immediately.
Excess Charge
The difference between the Medicare-approved amount for a service or supply and the actual charge, if the actual charge is more than the approved amount.
Experimental Procedures
Procedures that are mainly limited to laboratory and/or animal research, but which are not generally accepted as proven and effective procedures within the organized medical community.
HMO (Health Maintenance Organization)
An organization that provides a wide range of comprehensive health care services through a designated group, or network of doctors, hospitals, laboratories and other providers. To receive benefits, the member must see the doctor he selects as his primary care physician first for care or a referral, except in the case of an emergency. The choice of doctors is restricted to those in the network.
Home Health Agencies and Visiting Nurse Associations
These are home health care providers, licensed according to state and local laws, that provide skilled nursing and other services on a visiting basis in person’s home. They must be approved as home health care providers under Medicare and the Joint Commission on Accreditation of Hospitals.
Hospice
An organization or agency, certified by Medicare, that is primarily engaged in providing pain relief, symptom management, and supportive services to terminally ill people and their families.
IPA (Independent Practice Association)
A partnership, association, or corporation that delivers or arranges for the delivery of health services and which has entered into a contract with health professionals, a majority of whom are licensed to practice medicine or osteopathy.
Individual Insurance
Health care coverage for individuals or single family units.
Limiting Charge
The maximum amount a physician may charge a Medicare beneficiary for a covered physician service if the physician does not accept assignment of the Medicare claim. The limit is 15% above the fee schedule amount for non-participating physicians. Limiting charge information appears on Medicare's Explanation of Medicare Benefits (EOMB) form.
Medicare Carrier
An insurance organization under contract to the federal government to process Medicare Part B claims from physicians and other suppliers. The names and addresses of the carriers and areas they serve are listed in the back of The Medicare Handbook, available from any Social Security Administration office.
Medicare Hospital Insurance
This is Part A of Medicare. It helps pay for medically necessary inpatient care in a hospital, skilled nursing facility or psychiatric hospital, and for hospice and home health care.
Medicare Medical Insurance
This is Part B of Medicare. This part helps pay for medically necessary physician services and many other medical services and supplies not covered by Part A.
Mental or Nervous Disorders
Conditions that affect thinking and the ability to figure things out, perception, mood and behavior. A mental or nervous disorder is recognized primarily by symptoms or signs that appear as distortions of normal thinking, distortions of the way things are perceived (for example seeing or hearing things that are not there), moodiness, sudden and/or unusual behavior such as depressed behavior.
Participating Physician and Supplier
A physician or supplier who agrees to accept assignment on all Medicare claims.
PPO (Preferred Provider Organization)
Health care providers who are under contract to provide care at discounted or fixed fees. Unlike HMOs, health plans with a PPO allow the insured to choose any doctor at any time. However, if the insured selects a non-PPO provider he will pay more out of pocket for services than he would if he selected a PPO "network" provider.
Skilled Nursing Care
Refers to services that can only be performed by, or under the supervision of, licensed nursing personnel.
Skilled Nursing Facility
Provides skilled nursing care, continuous 24-hour nursing service, and maintains daily medical records for each patient. It must be licensed under all applicable state and local laws. It must be approved for payment of Medicare benefits or be qualified to receive that approval if so requested. It does not include any home or facility used primarily for rest, educational care, treatment of mental or nervous disorders or a facility for the aged which furnishes primarily custodial care, including training in routines of daily living.
Urgently Needed Services
Services needed immediately as a result of an unforeseen illness, injury, or condition.
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