A-Z Insurance Jargon
No Insurance resource would be complete without a comprehensive list of terms and their meanings.
We’ve compiled a list to better help you understand what it all means.
ATTENDING PHYSICIAN STATEMENT (APS) – A medical report by a physician, hospital or facility who has treated and/or is currently treating the person who is applying for insurance.
AUTOMATIC INCREASE BENEFIT – A policy benefit that provides an automatic increase in the total monthly benefit. The primary purpose of this rider is to help the coverage increase alongside the increase of inflation over time.
BENEFIT PERIOD – The period of time in which the policy will pay benefits. Most policies offer a 2-year, 5-year, or coverage up to ages 65 or older. Most people are interested in being covered up to normal retirement age.
CONDITIONALLY RENEWABLE – A condition of the insurance policy in which the insurance company cannot cancel the policy until the policy renewal date.
COST OF LIVING RIDER (COLA) – A rider that provides an increase in benefits due to the increases in the cost of living. This increase is usually linked to changes in the Consumer Price Index.
DISABILITY INCOME – An insurance product that helps provide supplementary income in the event of an illness or injury that prevents the individual from performing his/her occupation. Benefits are usually paid on a monthly basis to help maintain a standard of living and continue to pay their regular expenses.
ELIMINATION PERIOD – The period of time in which the individual has to pay out of pocket for expenses before the insurance policy begins to offer coverage. Can also be thought of as a sort of insurance deductible.
EXCLUSIONS – Health conditions, avocations, hobbies, occupations, or other risks that are specifically excluded from coverage
FINANCIAL UNDERWRITING – The assessment of the individual’s financial history, including income, to determine whether the insurance policy is best fit for their individual circumstances.
GUARANTEED INSURABILITY – Allows the purchase of additional coverage at specified intervals in the future without proof of good health.
GUARANTEED RENEWABLE – As long as premiums are paid as scheduled, the company cannot cancel coverage. However, the company can increase premium rates based on a class basis (ie. All males, age 45) and only upon the approval from the state.
INSPECTION REPORT (IR) – A report that validates the applicant’s history such as additional medical history, financial background, credit checks, criminal records, and other public available information.
MEDICAL UNDERWRITING – The process in which insurance companies review the applicant’s application to determine if the person’s health history will allow them to offer coverage.
MINIMUM RESIDUAL BENEFIT – This benefit allows the policy to continue to pay no less than 50% of the total disability benefit upon which the individual has returned to work on less than a full time basis.
NET WORTH – A concept in which an individual or business is measured by taking the total assets minus all total liabilities and debts.
NONCANCELABLE – A provision in the policy that specifies that as long as premiums are paid as scheduled, the insurance company cannot raise rates or cancel the coverage.
OCCUPATION CLASS – A category the insurance company places the individual in based on his/her own individual job duties and occupation.
OUTLINE OF COVERAGE – A simplified summary of all features and benefits of the policy.
OWN OCCUPATION – A benefit option in the policy that allows the individual to continue to receive income benefits as long as he/she cannot fulfill the regular job duties of his/her occupation prior to the disability. This is the strictest of definitions. In comparison to the opposite extreme, the Social Security Administration, for disability purposes, requires the individual “unable to engage in any substantial gainful activity… for a continuous period of at least 12 months”.
PARTIAL DISABILITY – This benefit pays a specified percentage of the total disability benefit if the individual is not able to fulfill all of their job duties due to an illness or injury.
PHYSICIAN CARE REQUIREMENT – Most insurance companies require that an individual who is receiving benefits due to a disability be under the regular care of a physician. Sometimes this condition can be waived, in cases where the disability may show no future improvement.
POLICY SCHEDULE PAGE – This page of the policy details all of the specifics of the policy data such as insured’s name, policy number, monthly benefit, elimination period, and premium.
PREDISABILITY EARNINGS – A provision of the policy that is used to calculate how much the individual made prior to the disabling event. This is defined as the average monthly earnings for the last 12 months prior to the disabling event.
PREEXISTING CONDITION – Any condition, illness, or injury that occurred prior to coverage.
PREMIUM MODE – The method of premium payment. Policies can usually be paid on a monthly, quarterly, semi-annual, or annual basis.
PRESUMPTIVE TOTAL DISABILITY – A provision of the policy that waives the normal disability eligibility requirements in the case of certain types of disabilities, such as loss of sight, hearing, speech, or the use of two limps.
RATING – A decision by the insurance company to offer coverage but with an additional surcharge due to some level of increased risk. Typically associated with an adverse medical history.
RENEWABILITY – The conditions in which the insurance company allows for the policy to be renewed year after year.
RESIDUAL DISABILITY BENEFIT – A provision of the policy that pays the individual a portion of the total benefit upon returning to work less than full time. This allows the individual to return to work but still allows them to receive income from the policy to help make up for any loss of wages.
RETURN OF PREMIUM – This optional benefit allows for the refund of premiums paid throughout the life of the policy at a certain specified future date.
SHORT-TERM DISABILITY – Usually associated with group benefits from an employer. Typically only provides benefits of one year or less.
SOCIAL SECURITY – A Federal program that offers benefits to all working Americans in the form of disability, retirement, and survivorship benefits. The Social Security Administration, for disability purposes, requires the individual “unable to engage in any substantial gainful activity… for a continuous period of at least 12 months”.
SOCIAL SECURITY OFFSET RIDER – An optional rider that coordinates benefits from the policy with benefits received through Social Security disability or other public programs. This is used to avoid the individual receiving more income from the policy than could have been earned while working otherwise.
TOTAL DISABILITY – The definition in the policy that specifies the eligibility requirements that an individual has to meet in order to qualify for the full monthly benefits. Usually, the inability to perform the normal job duties, due to illness or injury, of the individual’s occupation is the major requirement.
WAIVER OF PREMIUM – A provision of the policy that allows the required premiums to be waived while the individual is receiving benefits from the policy.
WORKERS COMPENSATION – A benefit the individual may receive if they are injured or contract an illness while on the job. Benefits vary by state.