We believe that the better educated you are on insurance, the better you’ll be able to make good decisions about insurance. That’s why we’ve created this resource section. It’s here to educate you on insurance and provide you with the resources you will need to select the right plan for you and to get the most out of the plans you purchase. If there’s anything you need or if you have any questions, please feel free to contact us.
Accidental Death and Dismemberment (AD&D) Rider: A supplement to many life insurance policies that provides an additional cash benefit to the insured or his/her beneficiaries if an accident causes either the death of the insured or causes the insured to lose any two limbs or the sight in both eyes.
Adjuster: A person who investigates and settles losses for an insurance carrier.
Agent: In insurance, the person authorized to represent the insurer in negotiating, servicing, or effecting insurance policies.
Annual Out-of-Pocket Maximum: A dollar amount designated by the policy that puts a cap on the amount of money the insured must pay out of his or her own pocket for covered expenses over the course of a calendar year.
Annuity: A contract that provides for a series of periodic payments to be made or received at regular intervals.
Applicant: The party applying for an insurance policy.
Application: A printed form developed by an insurer that includes questions about the prospective insured and the desired insurance coverage and limits.
Assigned Risk: A risk insured through a pool of insurers and assigned to a specific insurer. These risks are generally considered undesirable by underwriters, but due to state law or otherwise, they must be insured.
Auto Comprehensive Physical Damage Coverage: Optional auto insurance that pays for damage to your auto caused by things other than a collision or rolling the car over, such as fire, theft, vandalism, flood or hail. Frequently required if you have a car loan.
Automatic Premium Loan: A provision in some life insurance policies that authorizes a policy loan using the cash value accumulated by the insurance policy to pay for past due premiums at the end of the grace period. This prevents a lapse of coverage.
Beneficiary: Any person, persons, or other entity designated to receive the policy benefits upon the death of the policyholder.
Binder: A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.
Binding Receipt: A premium receipt acknowledging temporary insurance coverage immediately until the insurance company rejects the application or approves it and issues a policy.
Broker: A marketing specialist who represents insurance organizations and who deals with either agents or companies in arranging for the coverage required by the customer.
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.
Calendar Year Deductible: The amount of health care expenses that the insured person must pay before receiving insurance payments for covered eligible expenses.
Cancellation: The discontinuance of an insurance policy before its normal expiration date, by either the insured or the company.
Case Management: A utilization management technique that addresses the medical necessity of care as well as alternative treatments or solutions, especially when the patient is likely to require very expensive treatment.
Cash Value (cash surrender value): The cash amount payable to a life insurance policyowner in the event of termination or cancellation of the policy before its maturity or the insured event.
Certificate of Insurance: A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.
Claim: A person’s request for payment from an insurer for a loss covered by the insurance policy.
COBRA (Consolidated Omnibus Budget Reconciliation Act): COBRA requires organizations with 20 or more employees to offer the continuation of group health benefits (Medical, Dental, Vision, and Medical Reimbursement Account) to employees (and covered dependents) upon experiencing a “Qualifying Event.” Employers are required to provide initial COBRA notification to covered employees and dependents. A letter is sent detailing an individual’s rights upon experiencing a “qualifying event” and an explanation of the conversion privilege. Legislation defines the following six situations as “Qualifying Events” that require COBRA continuation:
Coinsurance Provision: A specified percentage of the cost of treatment the insured is required to pay for all covered medical expenses remaining after the policy’s deductible has been met.
Commission: The amount of money, usually a percentage of the premiums paid to an insurance agent for selling an insurance policy.
Conditions: The part of your insurance policy that states the obligations of the person insured and those of the insurance company.
Contingent Beneficiary: In a life insurance policy, the person designated to receive the policy benefits if the primary beneficiary dies before the insured.
Contract: A legally enforceable agreement between two or more parties.
Conversion Privilege: The right to convert or change insurance coverage from an individual term insurance policy to an individual whole life insurance policy.
Convertible Term Life Insurance: A type of term life insurance that offers the policyowner the option to exchange the term policy for a form of permanent insurance.
Copay: The fee you pay for certain medical services or for each prescription. For example, you may pay $20 for an office visit or $10 to fill a prescription and the health plan covers the balance of the charges.
Creditable Coverage: The pre-existing condition exclusion is reduced one month for every month that a person had coverage in a previous qualifying plan as long as the gap in coverage between the previous plan and the new plan is 63 days or less.
Declination: The insurer’s refusal to insure an individual after careful evaluation of the application for insurance and any other pertinent factors.
Deductibles: The portion of the loss that the policyholder agrees to pay out of pocket, before the insurance company pays the amount they are obligated to cover. For example, if the covered claim is $1000 and your deductible is $250, you pay $250 and the insurance company will pay $750. Deductibles help to keep insurance rates reasonable. Raising the amount of the deductible can help lower the cost of insurance.
Dependent: A person for whom the insured has some legal obligation to. For most plans, it is the insured’s spouse and/or children. Some plans also allow non-traditional spousal relationships (significant other, life-partner, etc.) to be considered a dependent with some additional certifying paperwork.
Depreciation: Reduction in the value of property due to age and use.
Double Indemnity: A provision in a life insurance policy, subject to specified conditions and exclusions, under the terms of which double the face amount of the policy is payable if the death of the insured is the result of an accident. In general, the conditions are that the insured’s death occurs prior to a specified age and results from bodily injury effected solely through external, violent and accidental means independently and exclusively of all other cause, within 60 or 90 days after such injury.
Emergency Room Visit: A visit to a hospital for treatment of an accidental injury or for emergency medical care.
Endorsement: Attachment or addendum to an insurance policy; an endorsement changes the contract’s original terms.
Exclusions and Limitations: Conditions, situations and services not covered by the health plan.
Extended Term Life Insurance: A nonforfeiture benefit under which the net cash value of the policy is used to purchase term insurance for the amount of coverage available under the original policy.
Face Amount: The amount stated in the life insurance policy as the death benefit.
Grace Period: The specified length of time, after a Life or Health Insurance premium payment is due in which the insured may make the payment and keep the policy in force. (Usually 30 days.)
Group Health Insurance: An insurance plan designed for a group, such as employees of a single employer. Insurance is provided to them under a single policy.
Guaranteed Renewable Policy: A health insurance policy that the insurer is required to renew – as long as premiums are paid – at least until the insured attains the age limit specified in the policy, or the policy is cancelled by the insured. The insurer may increase the premium rate for any class of guaranteed renewable policies.
Guaranty Association: Established by each state to support insurers and protect consumers in the case of insurer insolvency, guaranty associations are funded by insurers through assessments.
HIPPA – Health Insurance Portability and Accountability Act of 1996: Under this federal law (known as HIPAA), group health plans cannot deny coverage based solely on an individual’s health status. This law also gives employees who change or lose their jobs better access to health coverage, guarantees renewability and availability to certain employees and limits exclusions for pre-existing conditions. For example, under this law, group health plans must credit any employee the amount of time that they spent on any health plan prior to the new plan, which is known as “prior credible coverage.” A pre-existing condition will be covered without a waiting period when an employee joins a new group plan if the employee has been insured for the previous 12 months with credible health insurance, with no lapse in coverage of 63 days or more. This means that if an employee has been insured for 12 months or more, the employee will be able to go from one job to another and his or her pre-existing coverage will remain intact — without additional waiting periods. However, if an employee has a pre-existing condition and was not covered previously for 12 months before joining a new plan, the longest the employee will have to wait for their pre-existing coverage to be covered is 12 months.
HMO (Health Maintenance Organization): A health care financing and delivery system that provides comprehensive health care for subscribing members in a particular geographic area using managed care techniques. Most HMOs require that you only utilize physicians within their network, often going so far as to require you to choose a primary care physician who directs most courses of your treatment.
Indemnification: Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indemnity: Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Incontestable Clause: A life insurance policy wording that provides a time limit (e.g. two years) on the insurer’s right to dispute a policy’s validity based on material misstatements in the application.
Insurable Interest: Any interest a person has in property that is the subject of insurance, so that damage to this property would cause the insured a financial loss.
Insurance Company: An organization that has been chartered by a governmental entity to transact the business of insurance.
Insured: A person or organization covered by an insurance policy, including the “named insured” and any other parties for whom protection is provided under the policy terms.
Insurer: The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.
Irrevocable Beneficiary: A named beneficiary whose rights to life insurance policy proceeds cannot be canceled or changed by the policyowner unless the beneficiary consents.
Key Employee: 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. Also called key executive insurance.
Lapse: Termination of a policy due to nonpayment of premiums.
Liability: A legal obligation to compensate a person harmed by one’s acts or omissions.
Liability Coverage: Insurance that provides compensation for a harm or wrong to a third party for which an insured is legally obligated to pay.
Life Insurance: Insurance that pays a specified sum of money to designated beneficiaries if the insured person dies during the policy term.
Loss: The happening of the event for which insurance pays.
Medical Payments Coverage: Medical and funeral expense coverage for bodily injuries sustained from or while occupying an insured vehicle, regardless of the insured’s negligence.
Negligence: Failure to use a generally acceptable level of care and caution.
Network: A group of doctors, hospitals and other health-care providers contracting with a health policy, usually to provide care at special rates and to handle paperwork with the health plan.
Non-Formulary Drugs: Non-formulary drugs often require a higher copayment. Non-formulary drugs are those that have not yet been reviewed or have been denied formulary status, typically because they offer no extra benefit over the drugs already on a plan’s formulary list.
Out-of-Network: Health care services received outside the HMO, POS or PPO network.
Out-of-Pocket Expense: Any medical care costs not covered by insurance, which must be paid by the insured.
Paid-up Policy: An in-force life insurance policy for which no further premium payments are required.
Peril: The cause of loss or damage.
Permanent Insurance: A general term for ordinary life and whole life insurance policies that remain in effect as long as their premiums are paid.
Policy: The written forms that make up the insurance contract between an insured and insurer. A policy includes the terms and conditions of the coverage, the perils insured or excluded, etc.
Policy Declarations: The part of the insurance contract that lists basic underwriting information, including the insured’s name, address and description of insured locations as well as policy limits.
Policy Limits: The maximum amount an insured may collect or for which an insured is protected, under the terms of the policy.
Policy Loan: A loan from a life insurer to the owner of a policy that has a cash value.
Policyholder: The person who buys insurance.
Policy owner: An individual with an ownership interest in an insurance policy.
Policy Period: The amount of time an insurance contract or policy lasts.
PPO (Preferred Provider Organization): An organization where providers are under contract to an insurance company or health plan to provide care at a discounted or negotiated rate. Typically, you can see any doctor in the PPO network without requiring special approval, and you usually do not need to choose a primary care physician. Most PPOs will also allow you to seek care outside of the PPO network; however, the benefits are usually reduced and the insured has a greater out-of-pocket expense.
Preferred Risk: A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age.
Premium: The price for insurance coverage as described in the insurance policy for a specific period of time.
Primary Beneficiary: The person designated as the first to receive the proceeds of a life insurance policy upon the death of the insured.
Primary Care Physician (PCP): A general or family practitioner who serves as the insured’s personal physician and first contact with a managed care system. The PCP will usually direct the course of your treatment and/or refer you to other doctors and/or specialists in the network.
Probationary Period: The length of time that a new group member must wait before becoming eligible to enroll in a group insurance plan.
Proof of Loss: A sworn statement that usually must be furnished by the insured to an insurer before any loss under a policy may be paid.
Protection Amount: The face amount of a life insurance policy, or amount of money that will be paid to a beneficiary upon the death of an insured. This amount will be reduced by the amount of any outstanding policy loan.
Rate: The pricing factor upon which the insurance buyer’s premium is based.
Rated Policy: Sometimes called an “extra-risk” policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured is a smoker.
Reimbursement: The payment of an amount of money by an insurance policy for a covered loss.
Reinstatement: The process by which a life insurance company puts back in force a policy that has lapsed or has been canceled for nonpayment of premium.
Renewable Term Life Insurance: A renewable life policy permits the owner of the policy to automatically renew the policy beyond its original term by acceptance of a premium for a new policy term without evidence of insurability.
Revocable Beneficiary: A life insurance policy whose designation as beneficiary can be revoked or changed by the policy owner at any time prior to the insured’s death.
Riders: An addition to an insurance policy that becomes a part of the contract.
Risk: The possibility or chance of loss or injury.
Settlement: An agreement between a claimant or beneficiary to an insurance policy and the insurance company regarding the amount and method of a claim or benefit payment.
Standard Risk: A person who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
Standard Risk Rate: The risk category that is composed of proposed insureds who have a likelihood of loss that is not significantly greater than average.
Substandard Risk: A risk that cannot meet the normal requirements of an auto insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who are rated because of poor driving habits.
Stop-Loss Provision: A major medical policy provision under which the insurer will pay 100% of the insured’s eligible medical expenses after the insured has incurred a specified amount of out-of-pocket expenses in deductible and coinsurance payments.
Term Insurance: Life insurance under which the benefit is payable only if the insured dies during a specified period. If the insured survives beyond that period, coverage ceases. This type of policy does not build up any cash or nonforfeiture values.
Theft Limit (or Inside Policy Limits): The highest amount an insurance company will pay on certain items of personal property.
Underwriter: (a) A company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; (b) the company employee who decides whether or not the company should assume a particular risk; (c) the agent who sells the policy.
Underwriting: The process of reviewing applications for coverage. Applications that are accepted are then classified by the underwriter according to the type and degree of risk.
Uninsurable Risk: One not acceptable for insurance due to excessive risk.
Universal Life: Flexible premium, two-part contract containing renewable term insurance and a cash value account that generally earns interest at a higher rate than a traditional policy. The interest rate varies. Premiums are deposited in the cash value accounts after the company deducts its fee and a monthly cost for the term coverage.
Urgent Care: Urgent care is appropriate when a medical urgency arises which necessitates immediate care, but has not reached the level of extreme emergency. Most managed care plans require you to seek urgent care at a participating urgent care facility or hospital.
Usual, Customary and Reasonable Fee: The maximum dollar amount of a covered expense that is considered eligible for reimbursement under a major medical policy.
Waiver: An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
This inventory can help you take stock of your life and determine if there are any recent or upcoming life events or life stage changes that require you to reevaluate your current insurance protection. Whether you complete this form and return it to us, or simply use it as a self-evaluation tool, we think you’ll find it helpful in focusing your attention on potential needs you have that may otherwise be overlooked.
Any of the following life events could mean a change in your financial needs.
Let us know which of these events you’ve experienced in the past year.
What is your current life stage?
What are your financial planning objectives? Check all that apply.
When is it time to update my coverage?
Insurance is about protecting what’s important to you, both personal and business, against the unexpected. Anytime you have significant events or changes in your life, it’s time to think about reviewing and updating your coverage. Here are some examples:
For more details, print or download a copy of our Life Stages and Events Checklist. Fax, email or mail a completed checklist to us, and we’ll be happy to help to you evaluate your insurance and financial needs.
Do I need a life insurance policy?
Almost everyone can benefit from life insurance. It is the best way to provide financial assistance to your survivors. Life insurance serves several purposes.
How much life insurance do I need?
Since the goal generally is to provide for loved ones over a period of time, a common rule is that each provider in the household should have at least ten times their annual salary or annual contribution value. Any outstanding mortgage balance or other large debts should also be considered in your calculation; however, this amount should be in addition to the amount purchased to provide income protection.
How often should I review my life insurance needs?
As your life changes, your needs do, too. A common recommendation is that you should review life insurance protection at least every five years or sooner if a major life event such as marriage, divorce, a new child, home purchase, new job, starting a business or retirement.
Why have I been hearing so much about long-term care insurance?
People are discovering that long-term care insurance can help pay for extended care without exhausting personal finances. As the general population gets older, long-term care (including nursing home and in-home care) has become a costly necessity for many families. Without long-term care insurance, families can find their homes, savings, and other assets in jeopardy as they struggle to pay the costs. By planning and considering options to help pay for care, these situations can be avoided.
Talking with your loved ones openly and honestly, before a medical crisis happens, gives everyone a shared understanding about what matters most to you at the end of life.
Why talking matters
Sharing your wishes for end-of-life care can bring you closer to the people you love. It’s critically important. And, no matter how difficult, you can do it.
Consider the facts:
How to start?
You don’t have to ask and/or answer all the questions at once. One resource is theconversationproject.org where you can find any number of guides to help you with this conversation, including The Starter Kit.
Or, you can simply begin with small steps, introducing the conversation to your loved ones over time to ensure that you understand their wishes and they in turn understand your wishes.