Insurance Glossary

• 401(k) – A plan that allows employees to set aside part of their income – tax-deferred – towards retirement. Some employers will make additional contributions on the employee’s behalf. Early distribution of funds in the plans is subject to penalty taxes.
• Accelerated Benefit – A benefit that pays out a portion of life insurance benefits to an insured that is terminally ill or unable to perform two or more activities of daily living without assistance. The amount paid out at death are reduced by the amount of any accelerated benefits paid.
• Accelerated Death Benefit (Living Benefits) Rider – A supplemental life insurance policy rider in which a policyholder may receive a portion of the policy's death benefit before the policyholder's death (according to certain conditions).
• Accident, Sickness and Unemployment (ASU) - also known as Mortgage Payment Protection Insurance (MPPI) – Untaxed income replacement designed to cover monthly mortgage payments and other regular expenses, in the event of sickness or unemployment. Benefits are typically provided for one year.
• Accidental Death and Dismemberment insurance – Insurance that provides payment when accident results in death or certain bodily losses.
• Activities of Daily Living (ADLs) – A standard used by many policies to determine whether to pay benefits. ADLs are defined as everyday activities that healthy individuals can do without assistance, such as bathing, eating and dressing. A low ADL score may indicate that the policyholder needs benefits to pay for daily assistance.
• Adult Day Care – Care provided for aging adults who need assistance during the day, often provided by senior centers.
• Aging in Place – When an individual lives and receives care at home instead of at a facility such as a nursing home.
• Annuity (Fixed) – An agreement in which a series of payments is made over a specified period of time.
• Assets – Any item that has economic value such as real estate, motor vehicles, business holdings, etc.
• Assisted Living Facility – A residential facility in which residents are assisted with daily activities and have access to health services.
• Balanced Investment Strategy – An approach to portfolio building that aims to provide both income and capital appreciation with minimal risk.
• Bed Hold Benefit – Coverage of the costs incurred in reserving the policyholder’s bed in a facility in the insured’s absence (such as for outside medical care).
• Beneficiary – The entity that receives, or may become eligible to receive, benefits under a will, insurance policy, retirement plan, annuity, trust or other contract.
• Benefit Percentage– The percentage of the insured’s pre-disability income that is paid out as a benefit (subject to benefit maximums).
• Benefit Period – The specified period during which an individual can receive benefits for a qualifying care event.
• Benefit Schedules – Defines how benefits are calculated for employees, including maximum benefit periods, premium amounts, and other variables.
• Business Continuation Insurance – Business Continuation Life Insurance policies are company- or organization-funded and owned policies issued on the life or lives of employees whose demise would have a substantial financial impact on the surviving organization’s ability to function and prosper in its future. Business Continuation Life Insurance policies have a named owner, a named insured and named beneficiaries designations. Effectively, once issued, the policy is guaranteed without a new physical, no matter the health condition of the insured.
• Care Coordinator – Typically a health care professional that works with the policyholder and the insurer to create a plan of care in the event that long-term care is required.
• Caregiver - Primary – The main person (typically a relative) responsible for the care of another person who has been incapacitated in some way.
• Chronically Ill Individual – A person who is certified as being being unable to perform, without assistance, 2 (or more) out of 6 activities of daily living for a period of 90 days or more or requires substantial supervision to protect such from injury or illness that might result from a loss of cognitive ability.
• Continuing Care Retirement Community – A residential facility in which medical and living services are available to residents that require continuous care or supervision.
• Conversion Privilege – An insured person’s right to change to individual coverage if group coverage is terminated.
• Convertible Term Assurance (CTA) – Some level term plans allow you to covert the policy into a different plan.
• Critical Illness Cover (CIC) – Provides benefits in the event of diagnosis of a covered condition during the policy term.
• Custodial Care – Assistance with daily living activities, possibly rendered by someone without professional training.
• Decreasing Term Assurance (DTA) – Similar to mortgage protection, this coverage decreases at a fixed rate, rather than in step with the mortgage.
• Deferred Annuity – Annuity that does not pay out immediately, but at some future date (such as at retirement age).
• Dental indemnity – A dental insurance plan that pays a predetermined amount towards a covered loss.
• Disability income insurance – Insurance that pays benefits in the event that the insured is unable to work due to illness or injury.
• Durable Medical Equipment – Items designed for in-home care, such as beds, crutches, or wheelchairs.
• Elimination Period – The time period between the disability event and the commencement of benefits. (Also called the Qualifying Period)
• Elimination Period – The period of time that the policyholder must pay for services before coverage begins. Also called a waiting period. Longer elimination periods feature lower premiums.
• Employee Assistance Program (EAP) – Programs designed to provide support to employees in matters such as grief counseling and other family support matters.
• Estate – A person’s assets and liabilities.
• Estate Planning – The process of preparing for the administration and disposition of an estate through instruments such as wills, trusts and other methods.
• Executive Benefits – Benefits over and above standard benefits that are designed to reward, motivate and attract key personnel.
• Evidence of Insurability – Proof that a person is medically and financially insurable.
• Exclusions – Situations under which benefits will not be paid, such as excluded conditions or conditions arising from certain causes.
• Family Care Expenses – Benefits that give credit for some expenses incurred in the care of the insured’s family.
• Family Income Benefit (FIB) – This form of income protection pays the benefit out annually rather than in a lump sum (until the term’s end).
• Free Look Provision – A provision that allows the policyholder to inspect their policy and possibly cancel for a refund of premiums, for a set period of time. Long term care policies must feature a “free look” period of at least 30 days.
• Guaranteed and Reviewable Premiums – Guaranteed rates will remain fixed throughout the term of the policy. Reviewable rates can be reviewed and possibly changed by the insurer (typically after five years).
• Guaranteed Renewable Policy – An insurance policy that is guaranteed to be renewable as long as premiums are paid. Individual premiums may not be increased, though the insurer may raise rates on all policies of the type.
• Home Health Aide – A care provider that provides in-home health care under the supervision of a health care professional.
• Hospice Facility – Care provided at a facility designed to offer individuals comfort in the event of terminal illness, as well as support for their families.
• Income Protection (IP) – Coverage that serves as a tax-exempt income replacement in the event that you are unable to work for a covered reason. Coverage typically remains in effect until you return to work or retire, or until the policy expires.
• Increasing Term Assurance (ITA) – Benefits increase every year without the need for an annual physical.
• Informal Care – In-home care that is rendered by family or friends of the patient, whether at the patient’s home or a friend or relative’s. Care may be provided under the supervision of a care coordinator or other
• Immediate Annuity – Allows a person to “purchase” a guaranteed series of payments for a specified time through the payment of a single premium.
• Indexing – The practice of increasing benefits on an annual basis to account for inflation and other increases in cost of living.
• Individual Retirement Account (IRA) – A tax-deferred retirement account that allows individuals to designate earnings on a tax-deferred basis until withdrawals begin at age 59½ or later (penalty taxes may apply for early distributions ). Participation is limited to those who do not take part in a pension plan through their employer and meet certain income criteria.
• Level Term Assurance (LTA) – Life insurance that pays out a fixed lump sum if the insured dies within the specified period (term) of the policy.
• Liability – A legal obligation, debt, claim or potential loss.
• Lifetime Home and Community-Based Care Maximum – The maximum amount that the insurer will pay for covered expenses towards services such as home health care and adult day care.
• Lifetime Maximum Benefit – The maximum benefit amount that the insurer will provide towards any covered expenses for the policyholder during his lifetime. Commonly referred to as a benefit pool, once the benefits are exhausted, coverage ceases.
• Lifetime Therapeutic Devices Maximum – The maximum benefit that the insurer will provide towards durable medical equipment.
• Liquid – Assets that can easily be converted into cash.
• Living Trust – A trust created during the grantor’s lifetime.
• Long-term Care Insurance – Insurance designed to cover medical or personal care outside of a medical facility (such as at the insured’s home or in a nursing home facility).
• Mandatory Rehabilitation – A provision that requires the employee to take part in a rehabilitation program where possible.
• Maximum Benefit Period – The maximum amount of time that the policyholder will be able to collect benefits for a qualified long-term care event, usually specified in years, regardless of the actual length of the event.
• Maximum Benefit Period (Benefit Duration) – The maximum length of time for which benefits are payable for a single disability event.
• Maximum Daily Benefit (MDB) – The maximum benefit that a long-term care policy will pay up to for each day during a claim period. This may be increased through the purchase a benefit increase rider.
• Maximum Monthly Benefit – This is the highest dollar amount a disabled employee can receive on a monthly basis in disability benefits.
• Medicaid - A program, funded by the federal and state governments, which pays for medical care for those who can't afford it.
• Medicaid – A joint federal/state program that helps those with low incomes or very high medical bills to pay for health care.
• Medicare – A federal program offering hospital and health insurance to the elderly (65 or older) and to certain individual who are ill or disabled.
• Medicare – The Federal Health Insurance for the Aged program, provided under the Social Security Act.
• Medicare Supplement Policy (Medigap Policy) – A private insurance plan that helps bridge some of the gaps that exist in Medicare policies.
• Minimum Monthly Benefit – The minimum amount a disabled employee will receive in disability benefits.
• Mortgage Protection Assurance (MPA) – Coverage designed to cover the costs of any outstanding mortgage in the event of death. The amount provided decreases over time as the amount owed on the mortgage decreases.
• Net Worth – An person’s economic worth as calculated by subtracting total liabilities from total assets.
• Non-Forfeiture Benefit – A benefit that allows for reduction of the benefit, extension of the term or shortening of a benefit period as alternatives to forfeiture that results from non-payment of premiums. Typically available after the policy has been successfully paid for a specified period of time.
• Nursing Care Facility – A state-licensed facility that provides skilled, intermediate or custodial nursing care.
• Payroll deduction – Relating to group insurance, the employee's share of premiums deducted from his or her payroll earnings and then paid to the insurance company by the employer.
• Pension – Benefits that are received through an employer after retirement.
• Permanent Life Insurance – Life insurance that provides coverage for the insured person’s lifetime, rather than for a specific term.
• Portability – A provision of voluntary coverages that allows a terminating employee (other than for reason of retirement or disability) to continue coverage at the same or reduced benefit amount to a stipulated age, depending on the coverage.
• Portfolio – A collection of a person’s investments, such as stocks, bonds and mutual funds.
• Pre-Disability Earnings – The employee’s income before the disability event occurred.
• Premium – The amount that the policyholder must pay for each period to keep the policy in force.
• Recurrent Disability – When an employee returns to work following a disability event but becomes disabled again for reasons related to the original disability (within a certain time frame). Under recurrent disability, both disability events are treated as one, and there is no new elimination period.
• Renewable Term Assurance (RTA) – Short term life insurance that can be renewed, typically every 5 to 10 years.
• Respite Care – Care, provided by either professionals or volunteers, aimed at providing informal caregivers a chance to spend time away from providing care.
• Restoration of Benefits – In the event of recovery from a long term care event, the insurer may add benefit dollars back into the insured’s lifetime maximum benefit.
• Riders – Addition to an insurance policy that alter the provisions of the policy.
• Rollover – Moving funds, tax-free, from one qualified retirement plan into another within an approved timeframe (often in the event of changing employers).
• Roth IRA – An IRA that allows taxpayers to set aside money for retirement while allowing the savings to grow tax-free. While contributions are not tax deductible, withdrawals are not subject to federal taxes (subject to certain rules).
• Self-fund – When an employer provides a qualified group health plan, manages the payments to the plan and pays claims from the fund of employer and employee payments.
• Social Security – The disability or retirement programs established under the federal Social Security Act of the Railroad Retirement Act.
• Tax-Deferred – Income that is not taxable until some later date.
• Term Life Insurance – Life insurance that provides coverage for a fixed time period, or term.
• Terminal Illness Benefit (TIB) – Provides early life insurance benefits to those who are diagnosed with a terminal illness with less than 12 months to live. This is often a no-cost feature available with many policies.
• Testamentary Trust – A trust established through a will after the grantor’s death.
• Trust – A method in which one person can own and manage assets for the benefit of a beneficiary.
• Waiting Period – The amount of time an employee must be active with the employer in order to qualify for coverage.
• Waiver of Premium – While disability benefits are being paid, no premium payments are required.
• Waiver of Premium – Covers health care premiums during periods of ill health or unemployment.
• Will – A legally binding instrument that describes how one wishes to dispose of his estate in the event of his death.

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