Our glossary of insurance terms with definitions that are easy to understand are here to help you navigate the world of insurance. That way, when it comes time to look at a policy, you’ll be prepared.
An agent, sometimes known as an insurance agent, is a person who works for an insurance company or carrier and sells insurance products.
This is another term for "insured" or "policyholder," and it refers to someone that has an insurance policy.
An unforeseen and unintended event.
This is the amount of time that the insured must accumulate before benefits are provided. (This is comparable to a regular Elimination Period). For example, before benefit payments begin, the insured must be handicapped for 90 days during a seven-month period.
To be considered an active, full-time employee and therefore be eligible for either private or employer disability insurance coverage, a person must work for the employer on a regular basis during the company's business. A set number of hours of regular work is usually required.
The monthly premiums you pay for disability insurance might be age-banded or level (staying the same). If yours is age-banded, the amount you pay each month rises as you become older to reflect your greater risk of disease. Premiums are typically lower in the beginning than in level insurance, where premiums always remain the same, but might eventually become more expensive. If you have a specific health condition or career, you may be recommended to pay premiums based on your age.
An any-occupation policy provides coverage if the insured is unable to work in a position that is a good fit for their education, experience, and age. An any-occupation policy would not pay benefits if the insured could still work, even if the job paid less.
The insurance company requests information from the applicant on this form, and the insurance underwriters decide whether or not to issue the policy. When the policy is issued, it becomes a part of the contract.
A doctor’s or medical facility’s report on your treatment. APSs are frequently requested by insurance companies throughout the underwriting process to verify your health status or to learn more about a medical concern. At Asteya, we don’t request these!
If you’re disabled for at least 5 - 6 years, your total monthly disability benefit will automatically rise each year (the increase varies among insurance companies). Additionally, the cost of the premium policy will go up each year because more coverage is being added.
A beneficiary is someone who’s been named to receive a payout, such as a life insurance benefit.
The proportion of Covered Expenses in excess of the Deductible amount that the Plan pays is referred to as the Benefit Percentage. It is the basis for calculating any Out-of-Pocket Expenses that exceed the yearly Deductible and must be paid by the Employee.
A benefit period is the length of time a benefit is paid.
This is an alternate name for the insurance company that issues your coverage.
Any request for reimbursement within the scope of an insurance policy is referred to as a claim. For example, if your roof is damaged by hail and you have home insurance, you would file a claim and if approved, receive a payment.
Any individual or business claiming payment from an insurer, or insurance company, is referred to as a claimant.
An insurance policy's coverage, or coverages, are the specific protections or advantages it provides. These can be located on your declarations page and are stated in your policy or contract.
Depending on the time you spent without receiving benefits after the elimination period, the amount that was supposed to be given during that time will be multiplied to your monthly benefits.
All cash income received by someone insured in a given month while partially disabled.
An insurance application includes a premium payment receipt. After payments or completion of the underwriting process, coverage begins.
This page is a summary of the most important aspects of your insurance coverage. It will include information about the policyholder, such as their name, address, and policy number, as well as coverages, limits, premiums, deductibles, and coverage dates.
A deductible is the amount of money that you, the insured, must pay before the insurance company assumes responsibility. For example, if your auto insurance policy has a $500 deductible and you’re in an accident that causes $5000 in damages, you’ll pay $500, and the policy will pay the remaining $4500 (or up to the limit of the policy).
Most important part of a disability contract. Total or complete disability is used to determine eligibility for benefits.
Because of illness or injury, an individual’s physical or mental inability to perform the major obligations of his or her employment.
The insurance company electronically deposits the claim money into your bank account using this mode of payment. While many claim adjusters can write checks on the spot, there are a few circumstances in which this isn’t possible. You might be able to have money deposited straight by EFT if the claims process is done through a mobile app rather than an in-person inspection. EFT can also refer to a technique of paying premiums electronically, which is sometimes done through automatic deductions.
An exclusion is a defined scenario or event that’s not covered by an insurance policy in some cases. Exclusions are one way for an insurance company to better define what a policy covers, but they can also be used by policyholders to tailor their coverage. Exclusion, for example, can be used by a policyholder to remove coverages from a policy that don’t apply to their scenario.
Wages, commissions, fees, and other compensations earned from active employment. Investment income, rents, and payments earned from pensions or insurance policies are not included.
The amount of time the insured must wait before the start of the benefit payout period.
In many cases, your work contract will contain employer sick pay (sometimes known as ‘company’ or ‘occupational’ sick pay). The conditions can vary but many businesses will pay you sick pay for up to a week if you’re sick. However, beyond that, you’ll need to be certified off work by a doctor.
Providers of health insurance require proof of excellent health to obtain various types of coverage. When it comes to health insurance, most insurers use a basic questionnaire to assess a client's overall health before issuing a coverage. An EOI is an application process through which you provide information on the condition of your health or your dependent's health in order to be considered for certain types of insurance coverage. EOI is required for any life and/or disability insurance elections.
There are several conditions and causes that the policy doesn’t cover and the policy includes a list of these. Disabilities resulting from war, participation in a riot, conviction of a felony, or self-inflicted injury, for example, are often excluded from coverage.
Group disability insurance is disability coverage offered by employers, usually at little or no cost to you. If an illness or injury keeps you from working, group disability pays out a benefit to replace some of your lost income. However, if you leave the company, you’ll lose your coverage as these policies are tied to your employment.
A premium is the cost of being covered by an insurance policy on a monthly basis. If you have guaranteed premiums, this indicates that your premiums will stay the same (or go up at a certain rate) throughout the duration of your policy.
The person(s) (or, in some cases, the organization or entity) for whom an insurance policy provides coverage. If you have a life insurance policy, for example, you are considered the insured in that contract.
A corporation or organization that provides insurance policies to the insured is known as an insurer. As with the term “carrier,” this is another term for an insurance company.
A bodily injury that occurs while the coverage is in effect.
You can buy an individual disability policy to either supplement a group plan or provide coverage if a group plan isn’t available. These policies usually have higher premiums, but offer better benefits because applicants are individually underwritten.
A life insurance policy provides a tax-free one-time payment if you pass away and it’s intended to provide financial security to the people you leave behind (your beneficiaries). Term life insurance and whole-of-life insurance are examples of different types of life insurance.
This sort of policy is designed to last for 5 or 10 years, if not all the way through to your retirement if necessary and replaces about 40% to 60% of your income if you’re unable to work due to illness or injury. It allows you to continue paying bills and meeting your financial goals and obligations.
This is a legal obligation or responsibility that one party bears for harming, injuring, or losing another party. For example, if you rear-end another car and the driver and passengers are hurt, you could be held accountable for the property and people that were damaged. In this instance, your car insurance's "liability coverage" could potentially pay for the damages up to the policy limit.
In any given claim, a limit refers to the highest amount of protection the insurance company will agree to pay for a specific plan. This number is agreed upon before the insurance policy is issued and is listed on the policy declaration page. Your car insurance coverage, for example, may have a per-accident maximum of $60,000. This indicates that the insurance company will pay up to that amount, after which the policyholder will be responsible for any expenses that exceed that amount.
Your monthly payment will be fixed. Level premiums are initially more expensive than age-banded premiums, but unlike age-branded premiums, premium levels will not change over time.
A lifetime disability benefit is a benefit that’s paid to the insured for the rest of his or her life if he or she becomes totally and permanently incapacitated before a certain age.
Many disability insurance policies limit coverage or even exclude it for specific conditions. It’s important to have a careful examination of the policy language, the facts of your case, and the applicable law to determine the application and impact a limitation can have on your disability claim.
The maximum amount of time that benefits will be paid under the plan if the employee is continually disabled.
The maximum monthly amount a disabled individual can receive.
An insured person may be able to get compensation from a lot of different places while they are injured. If you receive Social Security, workers’ compensation, or other disability benefits, the long-term disability plan’s benefits will be cut back.
As long as the insured is unable to do the tasks of his or her normal occupation(s) at the time of disability, the insured is considered qualified to receive disability benefits.
Due to sickness or injury, an insured’s physical inability to execute some, but not all, of the obligations of his or her usual occupation.
The amount of qualifying income that a disability insurance policyholder was earning before an injury.
Most plans exclude or decrease disability benefits for any illnesses or injuries that an individual received medical care for or advice on prior to becoming covered under the plan.
This is another term you might hear or see on the declarations page that refers to the person or entity covered by an insurance policy, like “insured.”
The policy jacket, when referring to an insurance policy, is a document that contains all the policy’s details. It includes things like terms, conditions, coverages, hazards, and exclusions.
This is the total amount of money paid to an insurance company by the insured in exchange for coverage. The premium can be paid in a variety of methods, including monthly installments or single upfront payment, depending on the policy. The premium amount is influenced by a number of criteria and will vary depending on the type of insurance, the individual or entity, deductibles, restrictions, and other considerations.
When you're looking for a new insurance policy, you'll get a quote from an insurance agent or a carrier, which is an estimate of the premium you'll pay. This estimate is based on the information you provide, like salary and zip code.
The possibility of a loss is referred to as risk. For example, the likelihood of a home being damaged, a car being wrecked, or a piece of property being stolen. The level of risk can impact how, or if, coverage is supplied, and it’s used to calculate coverage costs or premiums.
When an insured returns to work after receiving compensation for total incapacity, there is a rider that gives decreased benefits.
Recurrent periods of disability from the same cause or causes are considered one continuous term of disability under some policies unless each period is separated by a six-month recovery period.
A premium is the cost of being covered by an insurance policy on a monthly basis. If your premiums are reviewable, they will be reassessed at regular intervals over the life of your policy.
As the name indicates, this type of insurance is intended to cover you for a short period of time (usually 3-6 months and less than 2 years) following an illness or injury that keeps you out of work. It’ll continue to pay you monthly payments until you return to work, or your coverage expires.
Social Security Disability Insurance is a federal insurance program funded by payroll taxes administered by the United States government. It is handled by the Social Security Administration and is intended to offer monthly benefits to persons who have a medically determinable disability that limits their ability to work. However, it’s far more difficult to qualify for, and the payouts are typically lower than disability coverage purchased separately or provided via work.
‘Sum assured’ is the technical way of referring to the amount of cover you have in place through your disability insurance policy. It’s also the amount of money that the insurer would pay out each month if you were unable to work for medical reasons.
When you buy a disability insurance policy, the ‘term’ is how long you’ll be insured for – e.g. 10, 20 or 30 years. During the application, you choose what you want the term length to be.
Underwriting is the process through which an insurance company assesses risk and decides whether to cover it. It also helps in the calculation of rates depending on the framework identified in an application.
A waiver of premium rider is an optional insurance policy clause that waives insurance premium payments if the policyholder becomes critically ill or physically impaired. To buy a waiver of premium rider, you may need to meet certain age and health requirements.
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