Insurance/Medical Glossary
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| Absolute Assignment | Policy assignment under which the assignee (person to whom the policy is assigned) receives full control over the policy and also full rights to its benefits. Generally, when a policy is assigned to secure a debt, the owner retains all rights in the policy in excess of the debt, even though the assignment is absolute in form. |
| Accelerated Death Benefit | A feature of a life insurance policy that lets you use some of the policy's death benefit prior to death. |
| Activities of Daily Living (ADLs) | Everyday functions and activities individuals usually do without help. ADLs functions include bathing, continence, dressing, eating, toileting and transferring (from bed to chair, or in and out of a wheelchair, for example) |
| Acute Illness | A serious condition, such as pneumonia, from which the body can fully recover with proper medical attention. |
| Adjustable Life Insurance | Combines features of both term and whole life coverage with the length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be increased or decreased to fit the specific needs. Such adjustments are not retroactive and apply only to the future. |
| Adult Day Care | Care provided during the day at a community-based center for adults who need assistance or supervision during the day including help with personal care, but who do not need round-the-clock care. |
| Alzheimer's Disease | A progressive, degenerative form of dementia that causes severe intellectual deterioration. |
| Ambulatory Surgery | Surgery performed on an outpatient basis. |
| Annually Renewable Term (ART) | A form of renewable term insurance that provides coverage for one year and allows the policyowner to renew his or her coverage each year, without evidence of insurability. |
| Any Occupation | A definition of total disability that requires that for disability income benefits to be payable, the insured must be unable to perform any job for which he or she is "reasonably suited by reason of education, training or experience." |
| Assignee | Person (including corporation, partnership or other organization) to whom a right or rights under a policy are transferred by means of an assignment. |
| Assignment | Signed transfer of benefits of a policy by an insured to another party. The insurance company does not guarantee the validity of an assignment. |
| Assignor | Person (including corporation, partnership or other organization or entity) who transfers a right under an insurance policy to another by means of an assignment. |
| Assisted Living Facility | A residential living arrangement that provides individualized personal care and health services for people who require assistance with activities of daily living. The types and sizes of facilities vary; they can range from a small home to a large apartment-style complex. They also vary in the levels of care and services that can be provided. Assisted living facilities offer a way to keep a relatively independent lifestyle for people who don't need the level of care provided by nursing homes. |
| Automatic Premium Loan Provision | Authorizes insurer to automatically pay any premium in default at the end of the grace period and charge the amount so paid. |
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| Bathing | Washing oneself by sponge bath, in either a tub or shower. This activity includes the task of getting into or out of the tub or shower. |
| Best's Insurance Report | A guide, published by A.M. Best, Inc, that rates insurers' financial integrity and managerial and operational strengths. |
| Benefit Triggers (Triggers) | Term used by insurance companies to describe the criteria and methods they use to determine when you are eligible to receive benefits. |
| Benefits | Monetary sum paid or payable to a recipient for which the insurance company has received the premiums. |
| Binding Receipt | Given by a company upon an applicant's first premium payment. The policy, if approved, becomes effective from the date of the receipt. |
| Blackout Period | Period following the death of a family breadwinner during which no Social Security benefits are available to the surviving spouse. |
| Business Continuation Plan | Arrangements between the business owners that provide that the shares owned by any one of them who dies or becomes disabled shall be sold to any purchased by the other co-owners or by the business. |
| Buy-Sell Agreements | Agreement that a deceased business owner's interest will be sold and purchased at a predetermined price or at a price according to a predetermined formula. |
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| Cafeteria Plan | Employee benefit arrangements in which employees can select from a range of benefits. |
| Care Management Services | A service in which a professional, typically a nurse or social worker, may arrange, monitor, or coordinate long-term care services (also referred to as care coordination services). |
| Cash Surrender Value | The amount of money you may be entitled to receive from the insurance company when you terminate a life insurance or annuity policy. The amount of cash value will be determined as stated in the policy. |
| Chronic Illness | An illness with one or more of the following characteristics: permanency, residual disability, requires rehabilitation training, or requires a long period of supervision, observation, or care. |
| Chronically ill | A term used in a tax-qualified long term care contract to describe a person who needs long term care either because of an inability to do everyday activities of daily living (ADLs) without help or because of a severe cognitive impairment. |
| Cognitive Impairment | A deficiency in a person's short-or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness. |
| Collateral Assignment | Assignment of a policy to a creditor as security for a debt. The creditor is entitled to be reimbursed out of policy proceeds for the amount owed. The beneficiary is entitled to any excess of policy proceeds over the amount due the creditor in the event of the insured's death. |
| Community-Based Services | Services designed to help older people stay independent and in their own homes. |
| Continence | The ability to maintain control of bowel and bladder function; or when unable to maintain control of these functions, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag). |
| Continuing Care Retirement Communities (CCRC) | A retirement complex that offers a broad range of services and levels of care. |
| Continuous Payment Option | A premium payment option that requires you to pay premiums until you trigger your benefits. Premiums are usually paid on a monthly, quarterly, semi-annual or annual basis. The policy is not cancelable except when premiums aren't paid; however, the insurance company can increase premiums on an entire class of policies. Premiums are usually the lowest available. |
| Conversion Privilege | Allows the policyowner, 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 or original issue). |
| Convertible Term | Contract that may be converted to a permanent form of insurance without medical examination. |
| Cost of Living (COL) Rider | A rider available with some policies that provides for an automatic increase in benefits (typically tied to the Consumer Price Index), offsetting the effects of inflation. |
| Cross-Purchase Plan | An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance policies owned by each principal on the lives of all other principals. |
| Custodial Care (Personal Care) | Care to help individuals meet personal needs such as bathing, dressing, and eating. Someone without professional training may provide care. |
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| Daily Benefit | The amount of insurance benefit in dollars a person chooses to buy for long-term care expenses. |
| Decreasing Term Insurance | Term life 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. |
| Dependency Period | Period following the death of the breadwinner up until the youngest child reaches maturity. |
| Disability | A physical or mental impairment making a person incapable of performing one or more duties of his or her occupation. |
| Disability Buy-Sell Agreement | An agreement between business co-owners that provides that shares owned by any one of them who becomes disabled shall be sold to and purchased by the other co-owners or by the business using funds from disability income insurance. |
| Disability Income Insurance | A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury. |
| Disability Income Rider | Typically a rider to a life insurance policy, it provides benefits in the form of income in the event the insured becomes totally disabled. |
| Disability Method | Method of paying benefits that only requires you to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit. |
| Dividend Options | The different ways in which the insured under a participating life insurance policy may elect to receive surplus earnings: in cash; as a reduction of premium; as additional paid-up insurance; left on deposit at interest; or as additional term insurance. |
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| Eating | Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously. |
| Elimination Period | A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin to make payments. The longer the elimination period in a policy, the lower the premium. Sometimes also called a "waiting period." |
| Employee Benefit Plans | Plans through which employers offer employees benefits such as coverage for medical expenses, disability, retirement and death. |
| Employee Stock Ownership Plan (ESOP) | A form of defined contribution profit-sharing plan, an ESOP invests primarily in the securities or stock of the employer. |
| Evidence of Insurability | Any statement or proof regarding a person's physical condition, occupation, and so forth, affecting acceptance of the applicant for insurance. |
| Expected Mortality | Number of deaths that theoretically should occur among a group of insured persons during a given period, according to the mortality table in use. Normally, a lower mortality rate is anticipated and generally experienced. |
| Expense-Incurred Method | Method of paying benefits where the insurance company must decide if you are eligible for benefits and if your claim is for eligible services. Your policy or certificate will pay benefits only when you receive eligible services. Once you have incurred an expense for an eligible service, benefits are paid either to you or your provider. The coverage will pay for the lesser of the expense you incurred or the dollar limit of your policy. Most policies bought today pay benefits using the expense-incurred method. |
| Extended Term Benefits | Full benefits for a reduced time period, applicable for use during a certain period of time. If not used in a set number of years after the lapse, then you lose it. Once the period has expired, the contract terminates. |
| Extra Percentage Tables | Mortality or morbidity tables indicating the percentage amount increase of premium for certain impaired health conditions. |
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| Family Income Policy | Combination of ordinary life and decreasing term insurance covering a period of 5, 10, 15 or 20 years. The term insurance is sufficient to provide (often when supplemented by interest on the ordinary life insurance) a specified monthly income from the date of death until the end of the specified income period. The principal sum of the ordinary insurance is payable when monthly income from the term insurance ceases or upon subsequent death. |
| Family Maintenance (Family Protection) Policy | Similar to the Family Income Policy. Combines ordinary and term insurance, but without the decreasing insurance feature. Beginning at the insured's death, provides for payment of an income for a fixed period of 10, 15 or 20 years, as selected, from the date of death (not from the date of issue, as in the Family Income Policy), with payment of the principal sum of the ordinary insurance at the end of the fixed period. |
| Family Plan Policy | All-family plan of protection, usually with permanent insurance on the primary wage earner's life and with spouse and children automatically covered for lesser amounts of protection, usually term, all included for one premium. |
| Fixed-Amount Settlement Option | A life insurance settlement option whereby the beneficiary instructs that proceeds be paid in regular installments of a fixed dollar amount. The number of payment periods is determined by the policy's face amount, the amount of each payment and the interest earned. |
| Fixed-Period Settlement Option | A life insurance settlement option in which the number of payments is fixed by the payee, with the amount of each payment determined by the amount of proceeds. |
| Free Look | Provision required in most states whereby policyholders have either 10 or 20 days to examine their new policies at no obligation. |
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| Grace Period | Period of time after the due date of a premium during which the policy remains in force without penalty. |
| Graded Premium Whole Life | Variation of a traditional whole life contract providing for lower than normal premium rates during the first few policy years, with premiums increasing gradually each year. After the preliminary period, premiums level off and remain constant. |
| Guaranteed Issue | (Guaranteed Insurability) Arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability. |
| Guaranteed Renewable | When a policy cannot be cancelled by an insurance company and must be renewed when it expires unless benefits have been exhausted. The company cannot change the coverage or refuse to renew the coverage for other than nonpayment of premiums (including health conditions and/or marital or employment status). In a guaranteed renewable policy, the insurance company may increase premiums, but only on an entire class of policies, not just on your policy. |
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| Hands-On Assistance | Physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living. |
| Health Insurance Portability and Accountability Act (HIPAA) | Federal health insurance legislation passed in 1996 that allows, under specified conditions, long-term care insurance policies to be qualified for certain tax benefits. |
| Home Health Care | Services for occupational, physical, respiratory, or speech therapy, or nursing care. Also included are medical, social worker, home health aide, and homemaker services. |
| Homemaker Services | Household services done by someone other than yourself because you're unable to do them. |
| Home for the Aged | A general term for a facility that cares for elderly people. It is often not covered under a long term care policy. |
| Hospice Care | Continuous care provided at home or in a facility with a homelike setting for a terminally ill person. A terminally ill person has a life expectancy of six months or less. |
| Human Life Value | An individual's economic worth, measured by the sum of his or her future earnings that is devoted to his or her family. |
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| Increasing Term Insurance | Term life 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. |
| Indemnity Method | Method of paying benefits where the benefit is a set dollar amount and is not based on the specific service received or on the expenses incurred. The insurance company only needs to decide if you are eligible for benefits. Once the company determines you are eligible and you have received eligible long term care services, the insurance company will pay that set amount directly to you up to the limit of the policy. |
| Indexed Whole Life | A whole life insurance policy whose death benefit increases according to the rate of inflation. Such policies are usually tied to the Consumer Price Index (CPI). |
| Inflation Protection | A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of long-term care services. |
| Insurability | All conditions pertaining to individuals that affect their health, susceptibility to injury, or life expectancy; an individual's risk profile. |
| Insurable Interest | Requirement of insurance contracts that loss must be sustained by the applicant upon the death or disability of another and loss must be sufficient to warrant compensation. |
| Interest-Sensitive Whole Life | Whole life policy whose premiums vary depending upon the insurer's underlying death, investment and expense assumptions. |
| Interim Term Insurance | Term insurance for a period of 12 months or less by special agreement of the insurance company; it permits a permanent policy to become effective at a selected future date. |
| Intermediate Nursing Care | Level of health or medical care that is occasional or rehabilitative, ordered by a physician, and performed by skilled medical personnel. |
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| Joint and Last Survivor Policy | A variation of the joint life policy that covers two lives but pays the benefit upon the death of the second insured. |
| Joint Life Policy | Covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy automatically terminates. |
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| Key-Person Insurance | Protection of a business against financial loss caused by the death or disablement of a vital member of the company, usually individuals possessing special managerial or technical skill or expertise. |
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| Lapse | Termination of a policy when a renewal premium is not paid. |
| Level Premium Funding Method | The insurance plan (used by all regular life insurance companies) under which, instead of an annually increasing premium that reflects the increasing chance of death, an equivalent level premium is paid. |
| Level Term Insurance | Term coverage on which the face value remains unchanged from the date the policy comes into force to the date the policy expires. |
| Limited Payment Option | A premium payment option in which the person pays premiums for a set time period. After the last premium payment, neither the insurance company nor the person can cancel the policy. These plans are more expensive than continuous payment policies; however, their guaranteed fixed payment and no-cancel features make them attractive to some persons. |
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| Medicaid | A joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets. |
| Medicare | The federal program providing hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons. Benefits for nursing home and home health services are limited. |
| Medicare Supplement Insurance | A private insurance policy that covers many of the gaps in Medicare coverage (also called Medigap insurance coverage). |
| Morbidity | The relative incidence of disability due to sickness or accident within a given group. |
| Morbidity Rate | Shows the incidence and extent of disability that may be expected from a given large group of person; used in computing health insurance rates. |
| Mortality | The relative incidence of death within a group. |
| Mortality Table | Listing of the mortality experience of individuals by age; permits an actuary to calculate, on the average, how long a male or female or a given age group may be expected to live. |
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| National Association of Insurance Commissioners (NAIC) | Membership organization of state insurance commissioners. One of its goals is to promote uniformity of state regulation and legislation related to insurance. |
| Noncancelable Policies | Insurance contracts that cannot be cancelled by the insurance company and the rates cannot be changed by the insurance company. |
| Noncontributory Plan | Employee benefit plan under which the employer bears the full cost of the employees' benefits; must insure 100% of eligible employees. |
| Nondisabling Injury | Requires medical care, but does not result in loss of time from work. |
| Nonforfeiture Benefits | A policy feature that returns at least a part of the premiums to you if you cancel your policy or let it lapse. |
| Nursing Home | A licensed facility that provides general nursing care to those who are chronically ill or unable to take care of daily living needs. May also be referred to as a Long Term Care Facility. |
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| Paid-up Policy | When you prematurely stop paying your premiums, your insurance policy is deemed to be paid-in-full. You do not pay any more premiums, but the benefits you receive under this policy will be determined based on the amount of premiums you have already |
| Partial Disability | Illness or injury preventing insured from performing at least one or more, but not all, of their occupational duties. |
| Partnership Policy | A type of policy that allows you to protect (keep) some of your assets if you apply for Medicaid after using your policy's benefits. Only a few states have these policies. |
| Per Stirpes Rule | Death proceeds from an insurance policy are divided equally among the named beneficiaries. If a named beneficiary is deceased, his or her share then goes to the living descendants of that individual. |
| Personal Care (Custodial care) | Care to help individuals meet personal needs such as bathing, dressing, and eating. Someone without professional training may provide this care. |
| Personal Care Home | A general term for a facility that cares for elderly people. It is often not covered under a long term care policy. |
| Pre-Existing Condition | Illnesses or disability for which you were treated or advised within a time period before applying for a life or health insurance policy |
| Premium Factors | The three primary factors considered when computing the basic premium for insurance: mortality, expense and interest. |
| Presumptive Disability Benefit | A disability income policy benefit that provides that if an insured experiences a specified disability, such as blindness, he or she is presumed to be totally disabled and entitled to the full amount payable under the policy, whether or not he or she is able to work. |
| Probationary Period | Specified number of days after an insurance policy's issue date during which coverage is not afforded for sickness. Standard practice for group coverages. |
| Pure Risk | Type of risk that involves the chance of loss only; there is no opportunity for gain; insurable. |
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| Rate-Up in Age | System of rating substandard risks that assumes the insured to be older than he or she really is and charging a correspondingly higher premium. |
| Rating | The making of insurance also creates the premium classification given an applicant for life or health insurance. |
| Reduced Paid-up Benefits | A nonforfeiture option that reduces your daily benefit but retains the full benefit period on your policy until death. For example, you buy a policy for three years of coverage with $150 daily benefit. Then if you let the policy lapse, the daily benefit will be reduced to $100. The exact amount of the reduction depends upon how much premium you have paid on the policy. The benefit period on your policy continues to be three years. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use reduced paid-up benefits at any time after your lapse (until death). |
| Re-entry Option | An option in a renewable term life policy under which the policyowner is guaranteed, at the end of the term, to be ble to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy. |
| Reinstatement | Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums. |
| Renewable Term | Some term policies prove that they may be renewed on the same plan for one or more years without medical examination, but with rates based on the insured's advanced age. |
| Rescind | When the insurance company voids (cancels) a policy. |
| Residual Disability Benefit | A disability income payment based on the proportion of income the insured has actually lost, taking into account the fact that he or she is able to earn some income. |
| Respite Care | Care provided by a third party that relieves family caregivers for a few hours to several days and gives them an occasional break from daily caregiving responsibilities. |
| Rest Home | A general term for a facility that cares for elderly people. It is often not covered under a long term care policy. |
| Rider | Addition to an insurance policy that changes the provisions of the policy. |
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| Shortened Benefit Period | A nonforfeiture option that reduces the benefit period but retains the full daily maximums applicable until death. The period for which benefits are paid will be shorter. For example, you buy a policy for three years of coverage with $150 daily benefit, but if you let the policy lapse, the benefit period is reduced to one year, with full daily benefits paid. The exact amount of the reduction depends upon how much premium you have paid on the policy. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use shortened benefits at any time after you let the premium lapse (until death). |
| Single Dismemberment | Loss of one hand or one foot, or the sight of one eye. |
| Skilled Care | Daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. This care is usually needed 24 hours a day, must be ordered by a physician, and must follow a plan of care. Individuals usually get skilled care in a nursing home but may also receive it in other places. |
| Spend Down | A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements. |
| Spendthrift Provision | Stipulates that, to the extent permitted by law, policy proceeds shall not be subject to the claims of creditors of the beneficiary or policyowner. |
| Split-Dollar Life Insurance | An arrangement between two parties where life insurance is written on the life of one, who names the beneficiary of the net death benefits (death benefits less cash value), and the other is assigned the cash value, with both sharing premium payments. |
| Stand-by Assistance | Caregiver stays close to the individual to watch over the individual and to provide physical assistance if necessary. |
| State Health Insurance Program | Federally funded program to train volunteers to provide counseling on the insurance needs of senior citizens. |
| Substandard Risk | 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. |
| Substantial Assistance | Hands-on or standby help required to do ADLs. |
| Substantial Supervision | The presence of a person directing and watching over another who has a cognitive impairment. |
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| Tax-Qualified Long-Term Care Insurance Policy | A policy that conforms to certain standards in federal law and offers certain federal tax advantages. |
| Term Life Insurance | Covers a person for a period of one or more years. It pays a death benefit only if you die during that term. It generally does not build a cash value. |
| Third Party Administrator (TPA) | An organization outside the members of a self-insurance group which, for a fee, processes claims, completes benefits paperwork and often analyzes claims information. |
| Third Party Notice | A benefit which lets you name someone who the insurance company would notify if your coverage is about to end because the premium hasn't been paid. This can be a relative, friend, or professional such as a lawyer or accountant, for example. |
| Toileting | Getting to and from the toilet, getting on and off the toilet and performing associated personal hygiene. |
| Transferring | Moving into and out of a bed, chair or wheelchair. |
| Triggers (Benefit Triggers) | Term used by insurance companies to describe when to pay benefits. |
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| Underwriting | The process of examining, accepting, or rejecting insurance risks, and classifying those selected, to charge the proper premium for each. |
| Uniform Simultaneous Death Act | Model law that states when an insured and beneficiary die at the same time, it is presumed that the insured survived the beneficiary. |
| Universal Life Insurance | A kind of flexible policy that lets you vary your premium payments and adjust the face amount of your coverage. |
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| Viatical Settlement Contract | An agreement under which the owner of a life insurance policy sells the policy to another person in exchange for a bargained-for payment, which is generally less than the expected death benefit under the policy. |
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| Waiver | Agreement waiving the insurance company's liability for a certain type of risk ordinarily covered in the policy; a voluntary giving up of a legal, given right. |
| Waiver of Premium | A provision in an insurance policy that relieves the insured of paying the premiums while receiving benefits. |
| Whole Life Insurance | Policies that build cash value and cover a person for as long as he or she lives if premiums continue to be paid. |
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