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Benefits available in some life insurance policies before death, usually triggered
by long-term, catastrophic or terminal illness. Also known as living benefits.
An event that is unforeseen, unexpected, and unintended.
Physical injury sustained as the result of an accident.
Pays for the cost of reconstructing accounts receivable records that have
Contract between an insurer (or its subsidiary) and a group employer, eligible
group, trustee, or other party, in which the insurer provides certain administrative
services. These services may include actuarial support, plan design, claims
processing, data recovery and analysis, benefits communications, financial
advice, medical care conversions, data preparation for governmental reports,
and stop-loss coverage.
When people with a very high probability of loss purchase insurance to a greater
extent that people with average or below average probabilities of loss. Underwriters’
major goal is to avoid adverse selection.
Ages below and above which an insurance company will not accept applications
or renew policies.
The maximum amount that may be collected for any disability, or period of
disability, under an insurance policy.
Maximum amount for specific services as itemized in an insurance contract.
Health services that are more cost-effective than inpatient, acute-care hospitals,
such as skilled and intermediary nursing facilities, hospice programs, and
Medical services provided on an outpatient (non-hospitalized) basis. Services
may include diagnosis, treatment, surgery, and rehabilitation.
Document changing the provisions of an insurance contract signed jointly by
the insurer and the policyholder.
Signifies the legal acceptance of forms by a state when policy information
Signifies the insurer’s acceptance of risks as set forth in an application
for insurance (as originally made or modified by the insurer); or
Signifies the acceptance of a request from an applicant or policyholder for
new insurance, reinstatement of a terminated policy, a policy loan, or other
A group formed from members of a trade or professional association for insurance
under one master health insurance contract.
Insures against loss resulting from damage to an auto owned by the insured;
also provides coverage if the car is stolen.
Amount payable by the insurance company to a claimant, assignee, or beneficiary
when the insured suffers a loss.
A receipt given for the payment which accompanies an application for insurance.
If the policy is approved, the payment “binds” the company to make
the policy effective from date of receipt.
Contract for health insurance that coves a class of persons. It is used for
groups such as athletic teams and for employee travel.
A provision that entitles the insured person to collect up to a maximum for
all hospital and medical expenses, without limitations on specific types of
Amount that must be paid by the insured before benefits will be paid by the
System of determining reimbursement fees based on the medical diagnosis of
Physical or mental condition that prevents a person from performing one or
more occupational duties temporarily (short-term), long-term, or totally (total
Insurance that provides periodic payments when an insured person is unable
to work as a result of illness or injury.
Accidental loss of limb or sight.
Personal income less personal tax and nontax payments; the income available
to people for spending and saving.
Payment of twice the policy normal benefit for specific kinds of losses under
Coverage under two or more policies for the same potential loss.
Portion of a premium for which protection has already been provided by the
Date when insurance coverage begins.
Employees who meet the eligibility requirements for insurance set forth in
a group policy.
Date when a member of an insured group applies for insurance.
Time following the eligibility date (usually 31 days) during which a member
of a group may apply for insurance without evidence of insurability.
Days at the beginning of a period of disability when no benefits are paid.
Document signed by an eligible person indicating a desire to participate in
a group insurance plan. The document or card authorizes an employer to deduct
contributions from an employee’s pay. If life and accidental death and dismemberment
coverage are involved, the card usually includes the beneficiary’s name and
A statement or proof of physical condition and/or other factual information
affecting a person’s eligibility for insurance. In group insurance, evidence
of insurability is required only in specific situations: when a person fails
to enroll during the open enrollment period; when a person applies for reinstatement
after having previously withdrawn from the plan when receiving an overall
maximum benefit; or when a person applies for excess amounts of group life
or disability insurance.
Conditions or circumstances, listed in the policy, for which the insurer will
not provide benefits.
Form of managed care in which participants are reimbursed only for care received
from affiliated providers.
Relationship, usually expressed as a percent or ratio, of claims to premiums
for a stated period.
Process of determining the premium rate for a group based wholly or partially
on that risk’s experience.
Amount returned by an insurer to a group policyholder when the financial experience
of a particular group (or class to which the group belongs) has been more
favorable than anticipated.
A type of group insurance schedule under which everyone is insured for the
same benefits regardless of salary, position, or other circumstances.
Insurance contracts issued to members of a specific group (such as employees
of a common employer or members of an association) under a group-like arrangement
in which the employer or the association collects and remits premiums.
Contract under which an insured has the right, commonly up to a certain age,
to continue the policy by the timely payment of premiums. Under renewable
contracts, the insurer reserves the right to change premium rates by policy
Coverage that provides benefits as a result of sickness or injury. Policies
include insurance for losses from accident, medical expense, disability, or
accidental death and dismemberment.
Organization that provides a wide range of comprehensive health care services
for a specified group for a fixed periodic prepayment.
Care provided to terminally ill patients and their families that emphasizes
emotional needs and coping with pain and death rather than cure.
Health insurance that provides a stipulated daily, weekly, or monthly payment
to an insured person during hospital confinement, without regard to the actual
Claims paid during the policy year plus the claim reserves as of the end of
the policy year, minus the corresponding reserves as of the beginning of the
policy year. The difference between the year end and beginning of the year
claim reserves is called the increase in reserves and may be added directly
to the paid claims to produce the incurred claims.
Benefits of a predetermined amount paid for a loss.
A policy that provides protection to a policyholder and/or his or her family;
sometimes called personal insurance as distinct from group and blanket insurance.
An injury resulting from an accident that was not caused by an illness.
The conditions that make a risk insurable are (1) the peril insured against
must produce a definite loss not under the control of the insured, (2) there
must be a large number of homogeneous exposures subject to the same perils,
(3) the loss must be calculable and the cost of insuring it must be economically
feasible, (4) the peril must be unlikely to affect all insureds simultaneously,
and (5) the loss produced by a risk must be definite and have a potential
to be financially serious.
Risk management plan that, for a price, offers the insured an opportunity
to share the costs of possible financial loss through an insurer.
Stipulation in an insurance policy that states the type of loss the policy
covers and lists the parties to the contract.
The combining of two or more benefit plans to prevent duplication of payments.
Insurance designed to protect a business against the loss of income resulting
from the disability or death of an employee in a significant position.
Termination of coverage because of nonpayment within a specified time period.
The minimum reserve, as calculated under the state insurance code, which a
company must keep to meet future claims and obligations.
A provision making benefits payable for an insured’s lifetime as long as the
insured person is totally disabled.
Policy that covers only specified accidents or sicknesses.
A continuum of maintenance, custodial, and health services for the chronically
ill or disabled. Such services may be provided on an inpatient (rehabilitation
facility, nursing home, mental hospital) or outpatient basis, or at home.
Plan that helps replace income lost through inability to work because of disability
caused by an accident or illness.
Insurance that provides benefits for most types of medical expenses up to
a high maximum benefit. Such contracts often contain internal limits and usually
are subject to deductibles and co-insurance.
Systems that integrate the financing and delivery of appropriate health care
services by means of arrangements with selected providers to furnish a comprehensive
set of health-care services to members; explicit criteria for the selection
of health-care providers; formal programs for ongoing quality assurance and
utilization review; and significant financial incentives for members to use
providers and procedures associated with the plan.
Premium for a group developed from the insurer’s standard rate tables; it
is the cost usually quoted in an insurer’s underwriting manual.
Private insurance that can be purchased to supplement Medicare.
The fewest number of employees permitted under a state law to constitute a
group for insurance purposes; the purpose of establishing minimums is to maintain
a distinction between individual and group insurance.
The employer self-funds a fixed percentage (e.g. 90 percent) of the estimated
monthly claims, and the insurer covers the remainder. This self-funded approach
avoids payment of a premium tax required in most states.
Expenses connected with hospital insurance; hospital charges other than room
and board such as x-rays, drugs, laboratory fees, and other charges.
Frequency and severity of sicknesses and accidents in a well-defined class
or classes of persons.
A trust established by a sponsor that brings together a number of small, unrelated
employers for the purpose of providing group medical coverage on an insured
or self-funded basis.
A policy that can be maintained through timely payment of the premiums until
the policyholder is at least age 50 or, in the case of a policy issued after
age 44, for at least five years from the date of issue. The insurer may not
unilaterally change any provision of the in-force policy, including premium
Group insurance plan under which the employer does not require employees to
share in its cost.
Any injury that may require medical care but does not result in the loss of
working time or income.
Policy that covers only non-job-related accidents or sicknesses not covered
under any workers’ compensation law.
Policy that does not provide for payment of a dividend.
Corporations organized under special state laws to provide medical benefits
on a not-for-profit basis (for example, Blue Cross Blue Shield and Dental
Factors inherent in the insured person’s occupation that expose him or her
to greater-than-normal physical danger.
Contract that grants the insurer the right to terminate a policy on any anniversary,
or, in some cases, on a premium date.
Insurance for Businesses owners to help offset continuing business expenses
if the owner is disabled.
A disability that prevents a person from performing one or more functions
of his or her regular job.
Policy under which the policyholder is eligible to receive dividends.
Coverage that provides benefits toward the cost of doctor’s fees – for surgical
care in the hospital, at home, or in a physician’s office, and for x-rays
or laboratory tests performed outside of a hospital. (Also called Regular
Medical Expense Insurance).
Plan that offers a full range of health services through a combination of
HMO and PPO features. Members can choose to either use the defined managed
care program (with 100 percent coverage) or go out-of-plan for services (with
80 percent coverage).
The period for which an insurance policy provides coverage.
A utilization management program that requires the insured or the health care
provider to notify the insurer prior to a hospitalization or surgical procedure.
The notification allows the insurer to authorize payment, as well as to recommend
alternate courses of action.
Any physical and/or mental condition or conditions that exist prior to the
effective date of health insurance coverage.
Plan through which a sponsoring group negotiates price discounts with providers
in exchange for patients. The sponsor may be an insurer, employer, or third-party
A plan under which specified health services are rendered by participating
physicians to an enrolled group of persons, with a fixed periodic payment
made in advance by (or on behalf of) each person or family. If a health insurance
carrier is involved, a contract to pay in advance for the full range of health
services to which the insured is entitled under the terms of the health insurance
contract. An HMO is an example of a prepaid group practice plan.
Amount payable in a lump sum in the event of accidental death and, in some
cases, accidental dismemberment.
An outside person or firm (not a party to a contract) that maintains all records
of persons covered under an insurance plan. The TPA also may pay claims using
the draft book system.
A specified number of days in which a notice of claim or proof of a loss must
A disability that prevents a person from performing all occupational duties.
The exact definition varies among policies.
Limited contracts covering accidents that occur only while an insured person
is traveling on business for an employer, away from the usual place of business,
and on named conveyances.
Benefits with a maximum amount but without specific limits on the extent of
benefit for each service rendered.
(1) A company that receives the premiums and accepts responsibility for the
fulfillment of the policy contract
(2) The company employee who decides whether or not the company should assume
a particular risk
(3) The agent who sells the policy
That portion of a premium already received by the insurer for which protection
has not yet been provided.
High-risk persons who do not have health care coverage through private insurance
and who fall outside the parameters of risks of standard health underwriting
The time a person must wait from the date of acceptance into an eligible class
(or from application) to the date the insurance becomes effective. While similar
to elimination periods, waiting periods are often paid retroactively.
An agreement, attached to the policy and accepted by the insured, to eliminate
a specified preexisting physical condition or specified hazard.
Liability insurance requiring certain employers to pay benefits and furnish
medical care to employees for on-the-job injuries, and to pay benefits to
dependents of employees killed by occupational accidents.
The entire amount in premiums due in a year for all policies issued by an