MyOnlineInsuranceQuotes.com provides the most comprehensive insurance glossary online. Allow our insurance experts to help with all of your insurance needs. Select your type of
insurance to find the answers to your insurance questions:
Accidental death and dismemberment coverage (ADD)
Compensates for specific injuries or death resulting from an accident in your vehicle.
Adjuster
A person who investigates and evaluates on behalf of the insurance company the damages occurring from an accident.
At-fault
You are responsible for an accident.
Agent
The person who sells you the car insurance
Arbitration
A binding determination as to the extent of the damage or property value made by impartial experts
Binder
Temporary car insurance contract that shows proof of coverage pending receipt of a permanent policy from the car insurance company. A binder is subject to the payment of a premium
Bodily injury liability
Car insurance coverage that pays for damages for another person’s bodily injury or death in a vehicle accident caused by you. Insurance compensates the aggrieved party for pain and suffering as well as other resulting personal hardships. Insurance may also pay for partial economic damages (ex. lost income)
Broker
An auto insurance salesman who works with agents and insurance companies to find suitable insurance for customers.
Claim
A demand for compensation for damages for the insured’s loss resulting from a car accident.
Collision coverage
Optional car insurance that compensates for physical damage caused by you when you hit another vehicle or structure, irrespective of who is at fault.
Declarations page
The first or front page of your car insurance policy containing important information about your coverage such as, name of your insurance company, coverage amounts, the policy number, and deductibles.
Deductible
An out-of-pocket expense before the insurance company covers the rest of the claim or accident
Depreciation
Decrease in value of your auto due to age, wear, and tear
Exclusion
An auto insurance policy provision that denies coverage for specific losses, people, or property.
GAP insurance
Compensates for the gap between the actual value of an auto and the amount of the lease due at the time of the accident.
Liability insurance
Compensates other people or property due to your liability
Limits
The ceiling on what the car insurance company will pay for on losses
Medical payments
The car insurance pays for medical and funeral expenses for you and any passengers in your car during the accident. Medical payments are made irrespective of who is at fault.
Negligence
The failure to use acceptable care and caution which in turn results in injury or damage to a third party.
No-fault insurance
A type of car insurance found in some states under which each party files an accident claim with their respective insurance company for losses, such as medical expenses
Personal injury protection (PIP)
Generally known as “no-fault” car insurance. Originally, designed to pay quickly for damages, loss, medical expenses, or economic loss, regardless of fault or negligence to a driver or passenger injured in the vehicle and any pedestrians injured by your vehicle or its operation. PIP covers only personal injuries not vehicle damages.
Premium
Your payment to the car insurance company for coverage
Underinsured motorist coverage (UIM)
Gives coverage for bodily injury caused by an underinsured driver, doesn’t cover car damage.
Uninsured motorist bodily injury coverage (UMBI)
Provides coverage for you and your family members injuries due to a hit-and-run by a motorist or an uninsured driver, provided the other motorist is at fault.
Accelerated Death Benefit
A rider permits you to receive all or a portion of your policy before your death due to specific reasons such as, early benefit payments due to terminal illnesses. Also known as the living benefit.
Accidental death benefit
A rider that pays more (ex. double) in case the insured dies in an accident. Also known as double indemnity.
Administrative expense charge
Expenses for insurance policy administration deducted from your policy.
Amendment
A document that is part of your policy that modifies certain policy benefits.
Application
Your initial paperwork to apply for life insurance.
Assignment
When you reassign benefits and rights of your insurance policy to another person.
Automatic premium loan
If you are unable to make premium payments, the insurance company withdraws the premium payment from your policy’s cash value, but you must have sufficient funds accrued as cash value.
Beneficiary
The designated person(s) or entity that receives your life insurance death benefits after your death.
Life insurance broker
A licensed life insurance salesman who can sell policies from various insurance companies, representing none.
Cash value
The funds that accumulate within your permanent life insurance policy while it is in force.
Convertible term insurance
The ability to convert your term life insurance policy for another type of insurance policy without providing proof of insurability.
Cost-of-living rider
Allows you to buy additional insurance to keep up with the rising cost of living.
Death benefit
The face value of the policy or the amount paid to your beneficiary after your death.
Declination
The non-acceptance of your life insurance application by the life insurance company.
Decreasing term
A term life insurance policy in which your death benefit goes down over time.
Effective date
The official start date of your insurance policy.
Endowment
The payment of the funds from your life insurance cash value at maturity of the policy, if living to you or to the beneficiary upon your death. .
Evidence of insurability
A part of the application that requires information about your health, lifestyle, habits, finances, or employment that has a direct bearing on the acceptability for life insurance.
Face value
The total dollar amount of the life insurance applied for, also known as the death benefit. The actual death benefit may be lower or higher from the face value depending on any outstanding policy loans or owed premiums.
Grace period
A period of usually 30 to 31 days after the premium due date in which you can pay the premium and keep your policy in force.
Guaranteed insurability
Allows you to buy additional coverage at certain times in the future, without proof of insurability.
Incontestable clause
A two year time limit during which the insurance company can deny a claim for suicide or a material misrepresentation on your application.
Insured
The person on who the life insurance policy is issued.
Lapsed policy
A terminated insurance policy due to failure to pay the premium(s).
Level premium insurance
An insurance policy in which the premium payments are the same for the term of the policy. More commonly known as term life.
Loan
To borrow against your built up cash value. Unless the loan is repaid it will be deducted from the death benefit.
Material misrepresentation
Knowingly not informing the insurance company about material facts during the underwriting and initial application process that could have caused the insurance company to rate you or deny insurance coverage, if they had known the material facts.
Mortality charge
Insurance company charges to cover the policy’s share of cost of death claims. Mortality charges are based on mortality tables, also known as cost of insurance.
Mortality table
Statistical tables that show to high degree of accuracy the expected mortality for various working and living conditions.
Paid-up life insurance
Life insurance that requires no further premiums.
Permanent life
Any other life insurance that is not term life.
Policy loan
See loan.
Policyholder
The person or entity that owns the insurance policy. This policyholder doesn’t have to be the insured but in most cases is the insured.
Premium
Money paid to keep the policy in force.
Rated policy
An insurance policy that has a higher premium due to the insured being classified as a greater than-average risk based on varying factors.
Reinstatement
A lapsed insurance policy that is active again.
Renewable term
Allows the policyholder to renew the term life insurance policy at the end of the policy term without providing proof of insurability.
Rider
An option or addition to the generic policy that limits or enhances your insurance benefits.
Settlement option
The various ways that the insurance company can make payment of benefits.
Single premium whole life
Permanent life insurance where a single premium is paid to have coverage for the life of the policy.
Surrender
The termination of the policy before the maturity date and cashing out of built up cash surrender value.
Surrender charges
Insurance company charges for terminating the policy prematurely.
Term life
Life insurance coverage for a specified period of time, may be renewable for a new term or convertible to a different type of policy before the policy expires.
Underwriting
The process of insurability by the life insurance company following the application for insurance.
Universal life
Permanent life insurance that allows you to adjust the premium and death benefit during the life of the policy. Invests in fixed investments.
Variable life Insurance
Permanent life insurance in which the cash value invested in securities is not fixed. The cash value account assets are invested in stocks, mutual funds, bonds, money market funds, stocks, etc.
Waiver of premium
You don’t have to pay the premiums and still can keep the policy in force due to a disability. The parameters of disability vary.
Annual limits
The maximum dollar amounts the insurance plan will pay during any year.
Approved charge
The amount on which your health insurance company bases your payments and your co-payments.
Assignments of benefits
The ability for the doctor or hospital to receive payment directly from your insurer.
Beneficiary
The health benefits recipient of the health policy
Benefit maximum
The maximum the policy compensates for a specific loss or covered service.
Claim
Request for benefit payment from the insured to the insurer.
Closed practice
A doctor who is no longer accepting new patients.
COBRA
Federal law that allows workers to continue group health care coverage for period certain at their own expense; if the worker loses coverage due to reduction of work hours or loss of job.
Conditionally renewable
Permits the continuance of coverage, if the insured continues to meet certain conditions.
Conversion privileges
Group insurance policy that allows the insured to convert coverage to an individual policy at individual rates upon termination of employment.
Co-insurance
Allows you to pay up to a certain percentage of medical expenses, after which insurance covers the cost.
Co-Pay
Fixed dollar amount the insured pays directly to the care provider at the time of services rendered.
Deductible
The amount the insured must pay before the insurer starts paying benefits.
Enrollment period
A time frame in which you can enroll for group insurance coverage.
Employee Retirement Income Security Act (ERISA)
A national federal law regulating employer-sponsored pension and insurance plans for employees.
Evidence of insurability
Your medical health information.
Exclusions
Certain listed exclusions and limitations of conditions or procedures which are not covered under the insurance plan.
Fee for service
A health insurance plan that gives you the flexibility to see any doctor but you have to file the claim or the doctor’s office does.
Free look
The time frames from once you receive your policy during which you can cancel the policy or get a full refund.
Grace period
A period of usually 30 to 31 days after the premium due date in which you can pay the premium and keep your policy in force.
Guaranteed renewable
The insurance company continues to provide coverage as long as you pay the premium.
Health care reimbursement accounts
Health insurance that allows you put into an account pre-tax monies to pay for medical care or costs
Health Insurance Portability & Accountability Act (HIPAA)
A national federal law that guarantees healthcare insurance plan eligibility for people who change jobs to an employer who provides group insurance.
Health Maintenance Organizations (HMO)
Health insurance companies that have a network of health care services such as, doctors, hospitals, laboratories, and so on.
Lifetime maximum
The maximum dollar amount the plan will pay for various types of health medical expenses while the insured is covered under the plan.
Medical Savings Account (MSA)
A special account created to provide health insurance, the account being held in trust for the account holder. The employee or employer can make annual tax-free contributions to the special account which is wrapped around a high deductible health insurance policy.
Out-of-pocket limit
The dollar limit on any covered medical expenses that the insured has to pay during the benefit period.
Preferred Provider Organization (PPO)
It is a network of hospitals, doctors, and medical suppliers who provide health services members (insured) of the health plan at discounted fees.
Actual cash value
The true value of a stolen or damaged article at the time of the loss.
Additional living expense coverage
Insurance pays additional living costs at hotel, motel, etc during repairs of your damaged home.
Adjuster
An individual professionally trained to evaluate damage and settle your claim.
All risk
Comprehensive coverage of losses in the home insurance policy unless stipulated otherwise.
Appraisal
It is the process by which a trained appraiser assess property claim.
Binder
Preliminary coverage until you receive your permanent policy is delivered.
Cancellation
Canceling your home insurance coverage before the policy’s normal expiration date.
Claim
An appeal for compensation of a loss covered under the policy.
Declarations page
Generally, it is the first page of your homeowner policy which includes the insured’s name, address, coverage amount, property description, and the cost.
Deductible
Your out-of-pocket expense per claim.
Depreciation
The decline in the home’s value since its construction due to age or wear and tear.
Exclusions
Specific conditions that are not covered by your insurance policy.
Floater
Added insurance coverage to protect special items such as, jewelry, guns, antiques, furs, and so on.
Guaranteed replacement cost coverage
The comprehensive cost to replace or rebuild your home, even if it exceeds the home’s policy limits.
Inflation guard coverage
Provides an automatic annual increase in your coverage limits as determined by the insurance company’s estimate of rising construction, building material, and labor prices.
Liability coverage
Protect against liability due to injury to another or damage to another’s property for which you or your family are liable.
Limit
The maximum benefit amount paid by your insurance policy in the event of a loss.
Named perils
Individually stated perils stated in your policy.
Non-renewal
The refusal by your home insurance company to renew your policy.
Peril
A specific event such as fire, theft, and windstorm that causes a loss to your home and property.
Premium
Your home insurance policy payment.
Umbrella liability
Home insurance protection against losses exceeding the amount covered by other liability policies.
Activities of daily living (ADLs)
The most basic activities that a person caring for himself must be able to perform on a consistent basis without aid such as, eating, dressing, bathing, toileting, transferring, and continence. Inability to perform one or more of these tasks may make you eligible for long term care (LTC).
Adult day care
A day care facility for adults, provides adults with activities programs and other day care services for individuals with LTC needs.
Assisted living facility (ALF)
A licensed adult residential facility that provides boarding rooms and 24 hour personal care to people with long-term care needs.
Benefit
The payment for benefits made by the insurance company for LTC services covered under the plan.
Benefit period
The length of time the LTC insurance will last if you use daily care at a cost equal to or more than the daily maximum benefit amount. However, if less care is used, than the insurance will last for a longer benefit period.
Benefit trigger
The specific life event that triggers payment for long term care benefits.
Caregiver
A person who aids the individual to accomplish the basic ADLs due to the person’s inability to perform the activities without help.
Continence
It is the ability of the body control urination and/or bowel movements.
Daily maximum benefit
Long term care maximum benefit amount for any single day.
Elimination period
The time period between when you become eligible for benefits and when you start receiving them. Insurance companies usually have elimination periods of 30, 60, or 90 days.
Formal care
Home health care or homemaker services provided through a home care agency, nurse or therapist.
Future purchase option
This rider allows you to protect your benefits against inflation by allowing you to periodically purchase additional coverage without proof of insurability.
Grace period
A period after your premium payment was due in which you can pay you late premium and maintain your coverage.
Guaranteed renewable
A LTC insurance company cannot cancel or fail to renew your coverage due to change in your health or age.
Home care
LTC services offered at home may include, occupational, respiratory physical, or speech therapy; nursing care; homemaker services; and personal care.
Home health aides
LTC service providers who care for older adults or people with disabilities at home.
Homemaker services
Provided to individuals who are unable to perform basic household chores by themselves, such as housekeeping, shopping, etc.
Hospice care
Care provided at home to individuals diagnosed with a terminal illness.
Inflation protection
A rider that allows you increase the benefits of your long term care insurance to keep pace with increasing costs of care.
Informal care
LTC service offered by an unlicensed caregiver whose services are neither approved nor supervised by a home care agency.
Long term care (LTC)
Personal care and related care services offered on a long term basis to individuals who need help with basic activities of daily living or who require management due to severe cognitive impairment.
Long term care insurance
Insurance offered to meet the long term care needs of individuals and helps in defraying costs associated activities of daily living or costs of management due to a severe cognitive impairment.
Nursing home
A state licensed personal and nursing care services facility that offers 24-7 room and board as well.
Toileting
A critical ADL which entails mobility to and from the toilet, getting on and off the toilet, and performing related personal hygiene tasks.
Transferring
An important ADL, involving the ability to move in or out of a bed, wheelchair or chair.
Accumulation phase or Accumulation period
The period when the owner of the annuity makes payments to the deferred annuity which accumulates assets overtime.
Annual contract fee
One of several fees in typical annuities; a fee charged annually by the insurance company for administering the contract.
Annuitant
The individual(s) on whose life annuity payments are made. Generally, the owner and the annuitant are the same individual.
Annuitization
The process of stopping the accumulation phase and beginning the payout or withdrawal phase of an annuity.
Beneficiary
The individual or entity who will receive the death benefit from, either the original annuity investment or the accumulated value, whichever is greater.
Bonus credit or Bonus rate
Some annuities give a bonus for meeting certain investment dollar thresholds, usually as a percentage of the cumulative initial annuity investment.
Death benefit
The beneficiary payment made by the insurance company upon the death of the owner or annuitant.
Deferred variable annuity
A deferred annuity accumulates invested funds until withdrawn sometime in the future. The funds accumulate on a tax deferred basis.
Diversification
Allocating your funds in various assets and asset classes as to reduce inherent investment risks.
Forced annuitization
The automatic payout of an annuity upon the owner reaching a specific age, as outlined in the annuity contract.
Free look period
The trial period that allows you to preview your newly purchased annuity and cancel it if you choose to without fear of penalty. Hence, you can receive a full refund of your investment.
Immediate annuity
An annuity purchased with one lump sum payment, with immediate payments from the annuitized annuity.
Joint and survivor annuity
An annuity that makes payout for the owner’s life, after the owner’s death any surviving spouse will receive payments for their life.
Mortality and expense fee
The M&E fee pays for three critical annuity insurance guarantees:
- The ability to choose a payout option that provides payment for life, meaning payments cannot be outlived as prescribed in the annuity contract.
- A death benefit provided for beneficiaries.
- A promise that annual insurance charges will stay the same.
Surrender charge
The penalty charge the annuitant pays the insurance company for early redemption of an annuity contract before the surrender period expires.
Variable annuity
An annuity in which the underlying investments are stocks, bonds, and money market instruments. Performance of the portfolio is not guaranteed.
Withdrawal
The distribution of funds from an annuity in addition to any regular payments received.
Business Continuation Insurance Plan
Provides for the continuation of the business if the owner or a key person dies.
Business Interruption Insurance
Compensates the business for the cost of rebuilding or repairing of the business in addition to income lost while business is out of commission.
Business Overhead Expense Coverage
Specific business disability coverage that offers benefits that pay for a disabled insured’s portion of business overhead expenses.
Business Owner's Package Policy (BOP)
A business insurance package that bundles liability and property insurance together in one affordable premium. Generally meant for small businesses with 100 or fewer employees.
Commercial General Liability Insurance
The basic business liability insurance policy that covers the four forms of injury--bodily injury or property damage that result in actual loss or physical damage, advertising injury, and personal injury.
Disability Insurance
Provides for a portion of business income should you be unable to continue working due to disability.
Employee Liability Coverage
Usually part of workman’s compensation insurance policy. It protects you should an employee sue you for an injury or sickness incurred while on the job.
Employers Liability Insurance
Protects you against liability in case an employee suffers an accident at the workplace.
Errors and omissions liability coverage
Covers financial advisors, accountants, and other professional consultants against liability in case of an error or omission in their work
Executive Indemnity Insurance
Provides protection for deferred compensation payments in the case of corporate bankruptcy.
General Liability Coverage
Common business insurance to protect against accidents and injuries that occur at the workplace, covers exposure to risk related to its work related products
Group Insurance
Encompasses mainly health, life, and disability coverage to a group of employees, their dependents, and spouses under a single policy issued to their employer
Key Person Insurance life insurance
Insurance policy taken out on a key person in the company with beneficiary being the company. The death benefit can be used to buy out the key person’s shares or ownership interest in the company
Malpractice Insurance
Business insurance bought by doctors and hospitals to cover liability costs in case of being sued for malpractice.
Professional Liability Insurance
Protects professionals such as, doctors and lawyers, from financial losses resulting from being liable for the losses suffered by their clients.
Umbrella coverage
Gives extra protection in coverage or liability not covered in existing insurance policies
Workers' compensation insurance
Active in states, insurance that covers lost wages, medical, and rehabilitation costs for employees injured at work.