QuicklyQuoteMe Glossary of Terms
Accelerated Death
Benefit: This benefit is included with many policies today. It provides for
the payment of a portion of the death benefit prior to the insured's death
should the insured be diagnosed as terminally ill. The specific requirements
vary by company.
Accidental Death Benefit (ADB):
This benefit is optional with many policies today. It provides an additional
death benefit when the insured's death is caused by an accident.
Actual Age: A method of
calculating an applicant's insurance age. This method uses the insured's actual
age and is sometimes called Age Last Birthday or Attained Age.
Actuary: An individual employed by
an insurance company to calculate premium rates, reserves, dividends and other
important figures using risk factors obtained from experience tables.
Adjustable Life Insurance: A form
of life insurance which allows the policy owner to change various benefits of
the policy including the face amount, the premium amount, the length of
coverage and the length of the premium payment period.
Adverse Selection: The tendency
of persons with poorer-than-average health expectations (higher risk) to apply
for or continue insurance coverage to a greater extent than persons with
average or better-than-average health expectations (lesser risk).
Age Change: The date on which an
insured's age changes. In most life insurance contracts this is the date midway
between the insured's birthdays. The date of age change depends on whether the
insurer uses an age nearest birthday or age last birthday calculation for
determining premium rates.
Age Last Birthday: A method of
calculating an applicant's insurance age. This method uses the insured's actual
age and is sometimes called Actual Age or Attained Age.
Age Nearest Birthday: A method of
calculating an applicant's insurance age. This method is based on a person's
nearest birth date for rate calculations. If the person's birth date is within
the next six months, they are considered the next age.
Age Limits: The ages above or
below which an insurer will not issue and insurance policy or continue a policy
presently in force.
Agent: An authorized and licensed
representative of an insurance company who sells and services insurance
policies. Agents represent the insurance company and typically only sell
policies from that company.
Allowable Charge: Charges for
medical services or supplies provided by a hospital or physician which qualify
as covered expenses as stated in the health plan's certificate of coverage.
Ambulatory Services: Health care
services provided to patients who are able to return home without an overnight
stay in a medical facility. Typically, ambulatory services include preventive,
diagnostic, and treatment services provided on an outpatient basis.
Ambulatory Surgery: Intermediate
level surgical procedures that usually are too complex to be performed in a
physician's office but do not require inpatient hospitalization.
Amendment: A formal document
which corrects or revises an insurance policy. When authorized by the insurer
and the policy owner, the amendment attaches to or becomes part of the policy.
Annuitize: To begin a series of
payments from an annuity. This term also refers to the settlement of a life
insurance policy under the contract's annuity options.
Annuity: A contract sold by a
life insurance company that provides fixed or variable payments to an
annuitant, either immediately or at a future date.
Applicant: The person applying
for the insurance policy. The applicant may be different from the proposed
insured or the policy owner.
Application: Forms required by
the insurance company which the proposed insured completes when requesting coverage
from an insurer.
Approved: A status that indicates
the insurance company has completed underwriting and agrees to issue a policy
to the proposed insured.
Assignment: The transfer of the
ownership rights of a life insurance policy from one person to another.
Attained Age: The age of an
individual on a given date. Some insurance companies use attained age as a
method of calculating insurance premiums.
Attending Physician's Statement
(APS): Information provided by a proposed insured's physician covering
medical history and results of medical examinations. It is used to determine
the appropriate underwriting classification for the proposed insured.
Aviation Hazard: The increased
risk of death or injury resulting from participation in aviation, usually as a
pilot. The presence of aviation hazard will often result in extra premium or
the exclusion of certain benefits.
Avocation: This refers to either
an occupation or an activity the insured participates in.
Backdating: A procedure used to
make the effective date of a policy earlier than the application date.
Backdating is commonly used to make the insurance age of the insured at policy
issue lower than it actually is in an effort to receive a lower premium. Most
policies can be backdated up to six months. Backdating is also commonly
referred to as Saving Age.
Beneficiary: A person(s)
designated by the policy owner to receive the proceeds of an insurance policy
upon the death of the insured.
Benefit: For life insurance, it
is the amount of money specified in a life insurance contract to be paid to the
beneficiary upon the death of the insured. It is commonly referred to as the
Death Benefit. For health insurance, it is the amount of money payable by a
health plan for the cost of covered services, as defined in the Certificate of
Coverage.
Benefit Period: The maximum
length of time for which benefits will be paid under the terms of the insurance
policy.
Blood Chemistry Panel: A series
of blood tests that an insurance company may require of applicants during the
underwriting process.
Broker: A licensed representative
who sells and services insurance policies. Brokers represent their customers
and are usually contracted to offer insurance products from several different
insurance companies.
Burial Insurance: A life
insurance policy designed to provide just enough insurance to cover funeral and
burial expenses.
Business Life Insurance: Life
insurance purchased for business rather than personal purposes. Examples are
insurance owned by a business on the life of a key employee and insurance owned
by a business partner on the life of another partner.
Buy Sell Agreement: An agreement
for the transfer of business ownership to the remaining owners at the death or
retirement of an owner. The transaction is typically funded through a life
insurance policy carried on the lives of each individual owner.
Carrier: Another name for an
insurance company.
Cash Value: The amount of cash
accumulated inside some types of permanent life insurance policies. The cash
value typically grows over time and often earns a rate of interest, depending
on the type of policy. It can be borrowed by the insured or withdrawn when the
policy is surrendered.
Change of Beneficiary: A contract
provision that allows the policy owner to change the beneficiary whenever
desired, unless the beneficiary has been designated as irrevocable. Changes to
an irrevocable beneficiary require written permission of the beneficiary.
Change of Beneficiary Form: A
form provided by the insurer that the policy owner must complete in order to
change the beneficiary on a policy.
Child(ren) Rider: An optional
policy provision that provides a small amount of life insurance coverage on the
lives of the primary insured's children. The amount of coverage varies by
company and one rider typically covers all of the insured's eligible children.
Claim: Notification to an
insurance company that payment of the benefit is due under the terms of the
policy.
Clause: An article or added
provision in a life insurance contract, such as a Suicide Clause.
COBRA (Consolidated Omnibus Budget
Reconciliation Act): A federal law which, among other things, requires
employers to offer employees and their dependents that would otherwise lose
their group health plan eligibility, continuation of coverage under the firm's
group plan. Employers are required to make health plans available for periods
ranging from 18 to 36 months.
Coinsurance: A provision of a
program by which the insured shares in the cost of covered services on a
percentage basis. The health plan assumes only a certain percentage of the cost
while the covered person pays the remainder. Coinsurance is usually paid after
the insured meets the plan deductible. For example, a plan with 80/20
coinsurance means, after the deductible is paid by the insured, the insurance
company will pay 80% of the remaining covered expenses up to a set amount and
the insured will pay 20%.
Collateral Assignment: The pledge
of a life insurance policy or its value as security for the repayment of a
loan. The assignee receives rights that are superior to the rights of the
original policy owner and beneficiary, to the extent of the obligation owed to
the assignee.
Commissions: A fee or percentage
of premium allowed to a salesperson or agent for services rendered.
Commutation Right: The right of a
beneficiary to receive in a single lump-sum the remaining payments under an
installment option which was selected for the settlement of the proceeds of
life insurance policy.
Conditional Premium Receipt: A
receipt given to an applicant when a payment accompanies an application for
insurance. If conditions of the conditional coverage are met, the receipt
verifies the coverage will be in force from the date of application, provided
the insurer would have issued the coverage on the basis of the facts revealed
on the application, medical examination and other usual sources of
underwriting.
Contestability Period: The time
period during which the insurer is can deny a claim if it finds material
misrepresentations were made in the application. This period usually covers the
first two years a policy is in force. A policy becomes
"incontestable" when the contestability period is over.
Contingent Beneficiary: A
person(s) designated by the policy owner to receive policy proceeds if the
Primary Beneficiary is deceased at the time benefits become payable. This is
often referred to as a secondary beneficiary.
Conversion Benefit: This allows
the policy owner to change one policy type for another. An example is
exchanging a term life insurance policy for a permanent life insurance policy.
Most term life insurance policies offer this benefit.
Conversion Credit: A one-time
credit given when converting term life insurance to permanent life insurance.
Coordination of Benefits (COB):
When the covered person is covered by another plan or plans, the benefits under
the policy and the other Plan(s) will be coordinated so benefits from all
sources do not exceed 100 percent of allowable medical expenses. This means one
Plan pays its full benefits, then the other Plan(s) pay(s).
Copayment or co-pay: A specific
payment by the covered person at the point of each health service visit. It
does not accumulate like a deductible and is not subject to an out-of-pocket maximum.
Covered Expenses: All medical
services that are covered by an insurance policy. Some health insurance plans
will have a list of medical services they do not cover. It would be wise to
make sure you are not in need of any service excluded by any given health
insurance plan.
Death Benefit: The dollar amount
of coverage that is paid to the designated beneficiary(s) of a life insurance
policy upon the insured's death.
Decreasing Term Life Insurance:
A type of term life insurance with a death benefit that decreases each year or
policy anniversary. This type of life insurance is typically used to cover a
loan balance that decreases over time.
Deductible: The amount of
out-of-pocket expenses that must be paid for health services by the covered
person before the health plan benefit payment begins. This is usually based on
a calendar year.
Dental Care: The evaluation,
diagnosis, prevention and/or treatment (nonsurgical, surgical or related
procedures) of diseases, disorders and/or conditions of the oral cavity,
maxillofacial area and/or the adjacent and associated structures and their
impact on the human body; provided by a dentist, within the scope of his/her
education, training and experience, in accordance with the ethics of the
profession and applicable law.
Dependent: An individual other
than a health plan subscriber who is eligible to receive health care services
under the subscriber's contract. Generally, dependents are limited to the
subscriber's spouse and minor children.
Diagnostic Tests: Tests and
procedures ordered by a physician to determine if the patient has a certain
condition or disease based upon specific signs or symptoms demonstrated by the
patient. Such diagnostic tools include, but are not limited to radiology,
ultrasound, nuclear medicine, laboratory, pathology services or tests.
Disability Insurance (DI): A
form of insurance coverage that provides a portion of income lost as the result
of a total or partial disability caused by either an accident or an illness.
Double Indemnity: The payment of
twice the basic benefit in the event of loss resulting from a specific cause or
under specific circumstances. This is commonly referred to as an Accidental
Death Benefit.
Drug Formulary: A listing of
prescription medications which are approved for use and /or coverage by a
Health Plan and which will be dispensed through participating pharmacies to a
covered person. The list is subject to periodic review and modification by the
Health Plan.
Durable Medical Equipment:
Medically necessary equipment that is able to withstand repeated or prolonged
use; primarily and customarily used to serve a medical purpose; not generally
useful to a person in the absence of injury or sickness; and is suited for use
in the home. This included supplies that are necessary for use with the
equipment. This is commonly referred to as Medical Equipment.
Emergency Care: Care for a
person with a medical condition or behavioral condition of sudden onset that
manifests itself by acute symptoms of sufficient severity (including sever
pain) such that a person who possesses an average knowledge of health and
medicine could reasonably expect the absence of immediate medical attention to
result in placing the health of the insured person in serious jeopardy, serious
impairment to bodily functions, serious disfigurement of the insured person,
serious impairment of any bodily organ or part of the insured person, or in the
case of behavioral condition, placing the health of the insured person or other
persons in serious jeopardy.
Employer Contribution: The total
amount of premium an employer is required to pay for each employee covered
under the employer offered group health insurance coverage. An employer is
usually required to contribute at least 50% of each enrolled employee's
premium. Employers are usually only required to contribute to the employee cost
and not the cost for an employee's dependents.
Employee Participation: An
insurance company will usually require a certain percentage of eligible
employees to participate in the employer offered group health insurance plan.
This percentage varies by company and by group size. If this percentage is not
met the insurance company may not offer coverage.
Endorsement: Used to clarify or
make revisions to particular provisions of a health or life insurance policy.
Enrollee: An individual who is
enrolled and eligible for coverage under a health insurance policy. This is
also referred to as a Member, Insured or Participant.
Evidence of Insurability:
Factual information used by insurance companies to determine an applicant'ss
qualification for insurance. Examples of information used may include
paramedical exams, medical records, application statements, and motor vehicle
reports among others.
Examiner: A health care professional
designated to provide paramed or medical exams on insurance applicants.
Exclusions: Specific conditions
or circumstances listed in an insurance policy for which the policy will not
provide benefit payments.
Expiration Date: The date on
which an insurance policy ceases to provide coverage on the insured.
Explanation of Benefits: A
statement sent by a health plan to a covered person who files a claim. The
explanation of benefits (EOB) lists the services provided, the amount billed,
and the payment made. The EOB statement must also explain why a claim was or
was not paid, and provide information about the individual's rights of appeal.
Extra Premium: The amount
charged in addition to the regular premium to cover any extra hazard or special
risk such as aviation or hazardous activities. This is commonly referred to as
Flat Extra.
Face Amount: The amount of
coverage provided by a life insurance policy. This is also referred to as
Coverage Amount.
Face Page: One of the first
pages of a life insurance policy. This page lists the policy specifications
such as the name of the insured, the policy owner, the beneficiary, the policy
number, the amount of insurance and the premium amount among other things.
Final Expenses: Expenses
incurred at the time of a person's death including funeral costs, probate
costs, current liabilities and taxes.
Fixed Benefit: An insurance
policy benefit that remains the same and does not change.
Flat Extra: An extra dollar
amount per $1,000 of insurance that is charged to cover any extra hazard or
special risk such as aviation or hazardous activities. This is commonly
referred to as Extra Premium.
Flexible Premium Policy: A type
of permanent life insurance policy in which the policy owner may vary the
amount or timing of premium payments.
Flexible Premium Variable Life
Insurance: A type of permanent life insurance policy in which the policy
owner may vary the amount or timing of premium payments. Policy values are
variable and depend on the performance of a separate investment account.
Free Look Period: The period of
time in which a policy owner has the legal right to examine a newly issued
policy and return it for a full refund of premium if not satisfied for any
reason. The period of time varies by state and is usually between 10 and 30
days with 10 being the most common.
Generic Drugs: Drugs which are
chemically equivalent to Brand Name Drugs whose patent has expired and which
are approved by the Federal Food and Drug Administration (FDA).
Grace Period: The period of time
between a premium's due date and the date the policy will lapse if the premium
remains unpaid. This period is usually 30 days. If the insured dies during the
grace period, the unpaid premium is deducted from the policy proceeds.
Group Life Insurance: A life
insurance policy issued to a group of people, usually through an employer,
union or association.
Guaranteed Issue An insurance
policy provision that allows a certain amount of insurance or type of insurance
to be issued without medical evidence of insurability.
Guaranteed Rates: A life
insurance policy provision that guarantees the premium rates will not change
during the entire term of the policy. Most guaranteed term life insurance
policies have guaranteed rates.
Guaranteed Term Life Insurance A
type of renewable term life insurance that remains in force provided the policy
premiums are paid on time.
Guaranteed Insurability: An
insurance policy provision that allows the insured to buy additional fixed
amounts of life insurance at fixed time intervals without evidence of
insurability.
Guaranteed Renewable: An
insurance policy provision that guarantees an insurance policy will continue in
force provided the policy premiums are paid on time. An insurance company can
typically only cancel a guaranteed renewable insurance policy for non-payment
of premium.
Hazardous Activities: These are
activities that, if participated in may make you ineligible for coverage from
the insurance carrier. Examples include, but are not limited to scuba diving,
jet, snow, and water skiing, snowboarding, hang gliding, skydiving,
paragliding, bungee jumping, mountain climbing, and amateur racing. Be sure to
check the specific insurance company details and / or brochure for exact
specifics.
HIV Consent Form: A required
form completed by the applicant and submitted with the application for
insurance. The form discloses to the applicant that the insurance company may
test for the presence of HIV in the applicant's blood. By signing, the
applicant acknowledges this and provides authorization for the test.
Home Office: The headquarters of
an insurance company.
Home Office Urine Specimen (HOS):
A full-screen urine test that an insurance company may require of applicants
during the underwriting process. The HOS typically tests for the presence of
alcohol, drugs or nicotine in the system, as well as medical disorders.
Health Benefit Plan: The health
insurance product offered by a health plan.
Health Maintenance Organization
(HMO): A legal entity that provides or arranges for a comprehensive range
of basic and supplemental health care services. HMO's typically have a network
of providers from which the insured must seek services. HMO's also tend to have
lower out-of-pocket expenses than traditional insurance plans.
Hearing Services: The study,
examination, and treatment of defects and diseases of the ear, by inspection,
medical treatment and/or devices.
Home Health Care: Medical care
provided by trained personnel in the patient's home for patients who do not
need the more extensive treatment provided by a hospital, skilled nursing
facility, or extended care facility, or for patients who are not capable of
going to a medical facility for outpatient care
Hospice: A program that provides
care to the terminally ill.
Hospital: A facility which is
licensed by the proper authority in the jurisdiction in which they are located
and provides inpatient services for the care and treatment of patients.
Incidents of Ownership: Various
rights that may be exercised under the policy contract by the policy owner.
Some of the incidents of ownership may include rights: (1) to cash-in the
policy, (2) to receive a loan on the cash value of the policy, and (3) to
change the beneficiary designation.
Incontestability Clause: A life
insurance policy provision that states after the policy has been in force for a
specified period of time, the company cannot deny a claim based on a material
misrepresentation made in the application. The typical period of time for the
clause is two years.
Inspection Report: A report
sometimes required by an insurance company in conjunction with the underwriting
of an application for coverage. The report typically includes information
pertaining to the applicant's occupation, health history and financial status.
The report is usually completed by the insurance company or an investigative
agency.
Insurability: General
acceptability by an insurance company of an applicant for insurance based on
underwriting review, which may include items such as the applicant's current
health status, medical history and driving record among others.
Insurable Interest: The
existence of potential financial loss on the part of the policy owner and/or
beneficiary(s) in the event of the death of the insured. The policy owner and
any beneficiaries must have an insurable interest.
Insurance: A system for reducing
risk by transferring the risks of several individual entities to one entity,
such as an insurance company. Each individual entity contributes monetarily
(premiums) to cover the risk assumed by the insurance company.
Insurance Company: A company
that provides insurance coverage through the issuance of insurance policies.
This is also referred to as the Insurer.
Insurance Department: An area
within each state's government that administers and regulates the insurance
industry within the state.
Insurance Policy: The physical,
written document issued by an insurance company to the policy owner. The
insurance policy represents the written contract between the insurance company
and the policy owner.
Insured: The individual covered
by an insurance policy.
Irrevocable Beneficiary: A type
of beneficiary designation that cannot be changed without the written consent
of the beneficiary.
Irrevocable Trust: A trust that
cannot be revoked or amended by the party who establishes it. This type of
trust is often established when life insurance is purchased to protect an
estate.
Issue Date: The actual date an
insurance policy is issued. This may also be the effective date of the policy.
I.D. Card/Identification Card: A
card issued to a covered person of a health insurance plan. The card is
typically presented by the insured to heath care providers when seeking
services.
Indemnity Plan: A type of
traditional health insurance in which the covered person is reimbursed for
covered expenses without regard to choice of provider. Also known as
fee-for-service plans.
In-Network: Refers to the use of
providers who participate in the health plan's provider network. Many benefit plans
encourage enrollees to use participating (in-network) providers to reduce the
enrollee's out-of-pocket expense.
Inpatient Services: Services
rendered to a person who is admitted to a hospital for medical care, is
assigned a bed designated for routine, special, psychiatric, or rehabilitation
care, and occupies the bed for 24 hours or more.
Juvenile Insurance: Life insurance issued on the life
of a child. This type of life insurance policy is typically whole life
insurance.
Key Person Insurance: An insurance
policy placed on the life of an important person within a company. The policy
proceeds are used to offset the loss experienced by the company due to the
person's death.
Lapse: The termination of an
insurance policy due to non-payment of premium.
Lapse Notice: The notice
provided in writing to the policy owner that the policy has lapsed.
Length of Coverage - The length
of time you will be covered by an insurance policy. Length of coverage is
typically applied to term life insurance products.
Level Premium: A premium that
remains the same throughout the period specified in the insurance policy.
Level Term Insurance: A type of
term life insurance policy where the face value remains the same throughout the
period specified in the insurance policy.
Lifetime Benefit: The total
amount of medical dollars per insured that the insurance company would pay for
covered expenses. A lifetime benefit of $1,000,000 means the insurance company
will pay their portion of all medical expenses for the life of the policy up to
$1,000,000.
Life Expectancy: The average
number of years of life remaining for persons of a given age according to a
particular mortality table.
Life Insurance: Coverage placed
on the life of an individual whereas an insurance company issues a policy and
pays a stated death benefit in the event of the insured's death.
Life Insurance Trust: A type of
life insurance policy where a trust company is named as the beneficiary and
distributes the proceeds of the policy under the terms of the trust agreement.
Living Benefit: A benefit that
provides for the payment of a portion of the death benefit prior to an
insured's death should the insured be diagnosed as terminally ill. The specific
requirements vary by company. This is commonly called an Accelerated Death
Benefit.
Lump Sum: The primary method of
the settlement of a life insurance policy. The policy proceeds are paid to the
beneficiary(s) all at once rather than in installment payments.
Managed Care: A system of
managing and financing health care delivery to ensure that services provided to
managed care plan members are necessary, efficiently provided, and
appropriately priced.
Material Misrepresentation: A
statement made by an applicant or proposed insured in the policy's application
which is not factually correct. If the truth had been disclosed, the insurance
company would not have issued the policy, would have issued it differently, or
would have issued it with limited benefits or a higher premium.
Maternity Care: Care that promotes
the overall health of mother and child from conception, during pregnancy and
delivery, and through the post partum period after delivery.
Medical Examination: An exam
completed by a physician. The exam may be required as a part of medical
underwriting.
Medical Information Bureau (MIB):
A service that compiles medical information and application history of
individuals who have applied for insurance in the past. Most insurance
companies check an applicant's MIB report during underwriting.
Medically Necessary: Those
covered services required to preserve and maintain the health status of a
covered person in accordance with the accepted standards of medical practice in
the medical community in the area where services are rendered. In other words,
services or treatments are considered medically necessary and appropriate if
they could not have been omitted without adversely affecting the patient's
condition or the quality of medical care provided.
Member: An individual or
dependent who is enrolled in and covered by a managed health care plan. Also
referred to as an Enrollee, Beneficiary, Participant, Covered Person,
Subscriber, and Eligible Individual.
Mental Health/Behavioral Health:
A condition or disease regardless of its cause, listed in the most recent
edition of the American Psychiatric Association's Diagnostic and Statistical
Manual of Mental Disorders.
Misrepresentation: The act of
making, issuing, circulating, or causing to be issued or circulated any written
or verbal statement that does not accurately represent the correct policy
terms.
Mode: The term of premium
payments for an insurance policy. Typical modes include monthly, quarterly,
semi-annual and annual.
Moral Hazard: A condition of
morals or habits that could affect and individual's insurability.
Mortality: The frequency of
deaths in proportion to a specific population.
Mortality Rate: The number of
deaths in a group of people, usually expressed as deaths per thousand.
Multi-Year Premium Mode: A
premium payment option where future annual premiums are paid in advance at a
discount.
Mutual Insurance Company: An
insurance company which is owned by its policy owners. Net earnings and savings
of the company are distributed to the policy owners in the form of dividends.
Network: The doctors, clinics,
hospitals, and other medical providers that a health plan contracts with to
provide health care to its members. Members are generally limited to network
providers for full coverage of their health costs.
Network Providers: The doctors,
clinics, hospitals, and other medical providers that are in the network(s) of
the health plan.
Non-Participating Provider: A
provider that has not contracted with a health plan to provide health care
services to covered persons. Generally health care benefits are reduced when a
non-participating provider is utilized.
Non-Contributory: A group
benefit plan typically through an employer, in which the employer pays all of
the premiums.
Non-Tobacco/Non-Smoker: A rating
class assigned to an insurance policy in which the insured has been classified
as a non-user of tobacco and/or nicotine products.
Occupational Hazards: Hazards
associated with an insured's occupation that increases the possibility of
injury, illness or death. Such hazards may have an impact on the insurability
of an applicant.
Optional Coverage: These types
of coverage’s are usually purchased and added to the base policy. Examples
include, but are not limited to dental, prescriptions, maternity, and term life
accidental death & disability (AD&D).
Orphan: A policy owner who is
not currently being serviced by the writing agent/broker.
Overhead Expense Insurance:
Insurance for business owners to help offset continuing business expenses if
the owner becomes disabled.
Out-of-Network: The use of
health care providers who have not contracted with the health plan to provide
services. HMO members are generally not covered for out-of-network services
except in emergency situations. Members enrolled in Preferred Provider
Organizations (PPO) and Point-Of-Service (POS) coverage can go out-of-network,
but will pay some additional costs.
Out-of-Pocket Maximum: The
amount which a covered person must pay for deductibles, coinsurance and copays
in a defined time period (generally calendar year) before the health plan
covers all remaining medical services at 100%.
Outpatient: A patient who
received medical services at a health facility without being admitted to the
facility for an overnight stay.
Outpatient Surgery: Surgery
performed in a facility or center devoted primarily to the performance of one
day or same day surgery without anticipation of the overnight say of patients.
PAC: See Pre-Authorized Check.
Paid-Up Insurance: An insurance
policy that does not require future premium payments to provide the death
benefit of the insured person.
Paramedical Exam/Paramed Exam: A
brief physical examination the insurer typically requires of applicants during
the underwriting process. The exam is usually performed by a registered nurse
at a time and location convenient to the applicant. The exam usually consists
of measurements (e.g. height/weight, blood pressure, and heart rate), body
fluid samples (e.g. urine, blood) and a medical history questionnaire. The
insurance company pays for the exam.
Partial Day Treatment: A program
offered by appropriately licensed psychiatric facilities that includes either a
day or evening treatment program for mental health or substance abuse.
Participating Provider: A
provider who has contracted with a managed care plan to provide medical
services to plan members. The provider may be a hospital or other medical
facility, a pharmacy, a physician, or other practitioner who has contractually
accepted the terms and conditions as set forth by the plan. This is commonly referred
to as a Preferred Provider.
Payment Mode: Most insurance
companies allow you to choose from the following payment modes:
Annually
Semi-annually
Quarterly
Monthly
Payor: The person making premium
payments on a policy.
PCP: See Primary Care Physician.
Permanent Life Insurance: The
type of life insurance that may provide coverage for the insured's entire
lifetime. Permanent life insurance policies may include cash value accounts,
policy loans, surrender options/fees, etc. Examples are Whole Life Insurance
and Universal Life Insurance. Most term life insurance policies can be
converted to permanent life insurance policies.
Physical Therapy: Rehabilitation
concerned with the restoration of function and the prevention of disability
following surgery, injury, disease or the loss of a body part.
Plan Benefit Maximum: The
maximum amount that a health insurance plan will pay toward the cost of
services incurred by an individual or family within a specified period of time,
usually a calendar year.
Point of Service (POS): A health
care plan that permits covered persons to choose providers outside the plan's
network, yet is designed to encourage the use of providers in the network. A
POS plan may have an HMO component and a PPO component. The member chooses
where to seek services at the point of service, rather than choosing at the
time of enrollment.
Policy: The written document
issued by an insurance company to a policy owner. The policy represents the
insurance contract between the insurance company and the policy owner.
Policy Anniversary: The
anniversary of the date of issue as shown in the policy.
Policy Date: The date the
insurance policy becomes effective.
Policy Fee: A charge for policy
administration expenses incurred by the insurance company. The policy fee is
usually included in the premium.
Policy Loan: A loan from the
insurance company to the policy owner secured by the policy's cash value.
Policy Owner: The individual who
owns an insurance policy and who has all contractual rights related to the
insurance policy. The policy owner may or may not be the same person as the
insured, payor or beneficiary.
Pool: A method of distributing
insurance risk in which the individual participants share overall risk with the
other participants.
Pre-Authorization: The process
of obtaining prior approval as to the appropriateness of a service or
medication. Prior authorization does not guarantee coverage.
Preventive Care: Comprehensive
health care that emphasizes priorities for prevention, early detection, and
early treatment of disease or its consequences. Preventive care usually
includes routine physical examinations, immunizations, and wellness programs.
Pre-Certification: An
administrative procedure whereby a health provider submits a treatment plan to
a third party before treatment is initiated. The third party usually reviews
the treatment plan, indicating one or more of the following: patient's
eligibility, guarantee of eligibility time, covered services, amounts payable,
application of appropriate deductibles, copayment factors and maximums.
Pre-Existing Condition: A
physical and/or mental condition of an insured person that existed prior to the
issuance of his or her insurance policy or that existed prior to issuance and
for which treatment was received.
Preferred Provider Organization
(PPO): A type of managed care plan which contracts with independent
providers (hospitals, physicians, ancillary providers) for negotiated
discounted fees for services provided to covered persons. The covered persons
usually have free choice of providers but have a financial incentive (e.g.,
reduced copayments, lower deductibles) to use participating providers.
Pre-Authorized Check (PAC): A
premium-payment arrangement in which the policy owner authorizes the insurer to
withdraw the premium payments from a bank account. This arrangement is usually
required for the monthly payment mode.
Preferred Rating Class: One of
the best premium rate classes available on life insurance policies for
applicants that are determined by underwriting to be in better than average
health.
Preferred Plus Rating Class: The
best premium rate class available on life insurance policies for applicants
that are determined by underwriting to be in better than average health.
Premium: The amount of money to
be paid by the policy owner to the insurance company for the benefits provided
under an insurance policy.
Premium Mode: The frequency of
premium payments elected by the policy owner. Typical premium modes include
monthly, quarterly, semi-annual and annual.
Premium Notice: A notice from an
insurance company to a policy owner that a premium will be due on a given date.
Premium Rate: The price per unit
of insurance.
Premium Rate Class: The
appropriate price category to which an applicant qualifies according to an
insurance company's underwriting guidelines. Common rate classes are Preferred
Plus, Preferred, Standard Plus, Standard and Substandard.
Premium Receipt: The receipt
given a policy owner for the payment of a premium.
Prescription: A written order or
refill notice issued by a licensed medical professional for drugs which are
only available through a pharmacy.
Prescription Card: Provides
coverage for prescription drugs. Benefits vary by insurance plan and may include
coverage for generic and brand name prescription drugs.
Primary Beneficiary: The
person(s) designated by the policy owner to which the proceeds of a life
insurance policy will be paid upon the death of the insured.
Primary Care Physician (PCP):
The physician a member must contact before having access to medical care
benefits. The PCP provides basic health care services and serves as a manager
of the delivery of all other health care for which benefits may be payable in
accordance with the utilization review and quality assurance programs of the
plan.
Prior Authorization: See Pre
Authorization.
Proceeds: The amount payable
under the terms of a life insurance policy upon the insured's death or upon the
maturity of an endowment.
Proposed Insured: The person
named in a life insurance application as the person whose life is to be covered
by the insurance.
Prosthetic Devices: An
artificial substitute for a missing body part used for functional reasons,
because a part of the body is permanently damaged, is absent or is
malfunctioning.
Provider: An individual or
organization that provides health care services. Providers may include but not
limited to: physicians, hospitals, physical therapists, medical equipment
suppliers, and pharmacists.
Provider Network: The set of
providers contracted with a health plan to provide services to the covered
person(s).
Provision: A statement or
clause, found in an insurance policy, to establish some term of the contract.
Quote: The estimated premium
amount for an applicant based on several factors including type of insurance,
coverage amount, length of coverage, age, gender, health and medical history,
family history, build and approximate rating class. All quotes are preliminary
estimates with final rates determined by insurance company underwriting.
Radiation Therapy: The use of
ionizing radiation in the treatment of disease, usually cancer. These services
are provided by a radiation therapies or a physician qualified in therapeutic
radiology.
Rating Class: The appropriate
price category to which an applicant qualifies according to an insurance
company's underwriting guidelines. Common rate classes are Preferred Plus,
Preferred, Standard Plus, Standard and Substandard.
Rate Banding: The process of
grouping term life insurance death benefit amounts. The rate per thousand
typically changes at certain death benefit levels or band breaks.
Rate Per Thousand: The price per
unit (or $1,000) of death benefit. Term life insurance premiums are calculated
by multiplying the rates per thousand of death benefit, then adding the policy
fee.
Rated Policy: A policy issued at
a substandard rating class based on underwriting guidelines.
Reasonable and Customary Fee:
The average fee charged by a particular type of health care practitioner within
a geographic area.
Rebating: The act of giving
something of value to an applicant by the agent/broker in return for purchasing
a life insurance policy (e.g. sharing commissions). Rebating is illegal in most
states.
Re-Entry: A policy provision
that allows an insured to renew their term life insurance policy at the end of
the term based on their attained age and health status. Evidence of
insurability is required for re-entry.
Referral: A recommendation by a
physician and/or managed care plan for a covered person to be evaluated and/or
treated by a different physician.
Reinstatement: A policy
provision that allows a policy to be restored from a lapsed status. This is
usually allowed during the 31 days following the expiration of an insurance
policy's grace period.
Renewable Term Insurance: Term
life insurance that may be renewed for another term without evidence of
insurability.
Renewal: The process of
continuing a policy by paying the premium due.
Replacement: The act of
terminating a policy with an insurance company and replacing it with a new
insurance policy. An internal replacement involves both policies from the same
company while and external replacement involves two separate policies, each
from a different insurance company. Replacement transactions are highly
regulated for the benefit of consumer protection.
Replacement Form: A required
form that must be completed if the applicant is replacing existing coverage.
The replacement form notifies the existing insurer that the applicant is
replacing their policy with a policy from another company.
Reserve: The amount of money an
insurance company holds which, with future premiums and an assumed rate of
interest, will pay all contractual obligations as they become due. Insurance
company reserves are an important factor used to establish a company's industry
ratings.
Respiratory Therapy: Treatment
to preserve or improve lung function.
Revocable Beneficiary: A type of
beneficiary designation that can be changed without the beneficiary's consent.
Rider: A special provision
attached to a policy that either expands or restricts the benefits of the
policy. Exclusion riders typically exclude certain conditions from coverage..
Risk: The probability of injury,
illness or death associated with an insured.
Risk Classification: The process
by which underwriting determines the risk associated with an applicant and
assigns an appropriate rating class to the policy.
Saving Age: A procedure used to
make the effective date of a policy earlier than the application date. Saving
age is commonly used to make the insurance age of the insured at policy issue
lower than it actually is in an effort to receive a lower premium. Most
policies can be backdated up to six months. Saving age is commonly referred to
as backdating.
Secondary Beneficiary: A
person(s) designated by the policy owner to receive policy proceeds if the
Primary Beneficiary is deceased at the time benefits become payable. This is
often referred to as a contingent beneficiary.
Second-To-Die Life Insurance: A
type of life insurance policy that insures the lives of two people, typically a
husband and wife. The death benefit proceeds are payable upon the second death.
Settlement: The process of
receiving the proceeds from a life insurance policy. Settlement choices usually
include lump sum payments or annuitization.
Service Area: The geographical
area covered by a health plan within which it provides direct service benefits.
Simplified Underwriting: An
underwriting process that applies a less strict analysis of risk factors.
Single Premium Life Insurance: A
life insurance policy that requires only one premium and is guaranteed to
remain paid-up throughout the insured's lifetime.
Skilled Nursing Facility (SNF):
A facility, either free-standing or part of a hospital, with a professionally
trained staff that provides medical treatment, continuous nursing,
rehabilitation, and various other health and social services to patients who
are not in an acute phase of illness, but who require skilled care on an
inpatient basis in lieu of hospital inpatient services.
Specialist: A physician trained
and/or certified to treat a specific body system, such as a cardiologist
(heart), gynecologist (woman's reproductive system), or dermatologist (skin).
Speech Therapy: The study,
examination, and treatment of defects and diseases of the voice, speech, and
spoken and written language, and the use of appropriate devices and treatment.
Split Dollar Plan: An
arrangement in which two parties, usually an employer and employee, jointly
purchase the policy, pay premiums and share in the policy's benefits.
Spousal Discount: A discount for
purchasing life insurance coverage together with a spouse from the same
insurance company. Typically, the second policy fee is waived. Spousal
discounts are more often seen on permanent life insurance policies.
Standard Rating Class: The
premium rate class available on life insurance policies for applicants that are
determined by underwriting to be of average health.
Standard Plus Rating Class: The
premium rate class available on life insurance policies for applicants that are
determined by underwriting to be of slightly better than average health.
Standard Risk: An average risk
as determined by underwriting.
Stock Insurance Company: An
insurance company formed and capitalized through the sale of shares of stock.
Those purchasing the stock are owners and share in the company's earnings
through stock dividends declared by the company.
Stop Loss: The total dollar
amount up to which you share medical costs with the insurance company. For
example, if the stop loss is $5,000 and your share is 20%, you pay $1,000 and
the company pays 100% thereafter up to the lifetime benefit.
Sub-Standard Risk: A below
average risk as determined by underwriting. Insurance policies can be issued to
individuals with sub-standard risk and are referred to as table rated or
modified.
Suicide Clause: A life insurance
policy provision that states if the insured dies by suicide within a certain
period of time from the date of issue (usually two years) the amount payable
would be limited to the total premiums paid minus any policy loans or
outstanding premiums.
Subscriber: The individual who
is responsible for payment of premiums or whose employment is the basis for
eligibility for membership in a group health plan. This is also referred to as
a member or enrollee.
Substance Abuse/Chemical Dependency:
The consumption of alcohol or other chemical agents at dosages that place a
person's social, economic, psychological and physical welfare in potential
hazard, or endangers public health, morals, safety or welfare, or a combination
of these.
Supplemental Accident: Provides
first-dollar coverage for accidental injuries. This benefit is usually not
subject to copayments, deductibles, or coinsurance.
Surrender: The cancellation of a
life insurance policy.
Term Conversion: A policy
provision that allows a term life insurance policy to be converted to a
permanent life policy offered by the company for a specified period of time.
Usually the insured can convert to a permanent policy at the same amount of
coverage without providing evidence of insurability.
Term Life Insurance: A life
insurance product that provides death benefit protection for a specified period
of time. The policy pays benefits only if the insured dies during the term.
Third-Party Owner: A policy
owner who is not the insured.
Tobacco: Examples include, but
are not limited to cigarettes, cigars, chewing tobacco, and snuff. Use of these
products can have an impact on the rating class you receive.
Twisting: The illegal practice
of inducing a policy owner to replace a policy by providing inaccurate,
incomplete or misleading information.
Underwriter: The individual or
team within a life insurance company who is trained to evaluate the
insurability and determine the classification of applicants for insurance
protection.
Underwriting: The process of
evaluating applications for insurance based on an established set of
guidelines. Underwriting determines the risk associated with an applicant and
either assigns the appropriate rating class for the policy or declines to offer
a policy.
Uninsurable Risk: An individual
who is not acceptable for insurance due to excessive risk related to current
health, medical history, occupation, avocations, etc.
Universal Life Insurance: A type
of permanent life insurance that combines term life insurance and an investment
feature into one contract. Universal Life insurance policies generally offer
flexible premium payments.
Utilization Management (UM): A
management tool used by managed care plans involving the systematic process of
reviewing and controlling patients' use of medical services and providers' use
of medical resources in order to optimize efficiency and appropriateness of
care. UM includes an array of techniques, such as second surgical opinion,
preadmission certification, concurrent review, case management, discharge
planning, and retrospective chart review.
Utilization Review: The
assessment of treatment in accordance with guidelines and standards that are
established and accepted by health care professionals using medical necessity
criteria. The assessment occurs before and during the delivery of health care.
Its purpose is to enhance the cost-effectiveness of health care through
reviewing its appropriateness.
Usual, customary and Reasonable
(UCR): Usual Fee: The fee usually charged for a given service by an
individual provider to his or her private patient, that is, his or her own
usual fee. Customary Fee, the range of usual fees charged by providers of
similar training and experience in an area. Reasonable Fee, a fee that meets
the two previous criteria or, in the opinion of the responsible medical or
dental association's review committee, is justifiable considering the special
circumstances of the particular case in question.
Urgent Care: Care for injury,
illness, or another type of condition (usually not life threatening) which
should be treated within 24 hours. This is also referred to as after-hours
care.
Variable Life Insurance: A
variation of permanent life insurance that offers cash values that fluctuate
based on the performance of the underlying mutual funds in the investment
account.
Waiver of Premium Rider (WP): An
optional policy rider that provides for the continuation of life insurance
coverage without further premium payments if the insured becomes totally
disabled.
War Clause: A provision in a
life insurance policy excluding the liability of an insurance company if the
insured's death is the direct result of a war.
Whole Life Insurance: A type of
permanent life insurance which provides a level death benefit upon the
insured's death, or a cash endowment upon policy maturity that is equal to the
death benefit. Whole life insurance policies also accumulate cash values.
Yearly Renewable Term (YRT): A
type of term life insurance policy that provides a level death benefit with
premiums that increase each year with the insured's age. YRT is also referred
to as annually renewable term.