Glossary of Basic Insurance Terms
Beneficiary
The person designated to receive the insurance proceeds upon the death
of the insured. The beneficiary designation can be made revocable or
irrevocable (see below).
Benefit
The amount of money paid to the insured person or designated beneficiary
when an insurance claim is approved.
Certificate or Memorandum of Insurance
A written document which confirms insurance coverage under a group policy.
Claim
A request for payment under the terms of an insurance policy.
Deductible
A set amount that the insured party pays toward a loss, before the insurance
company pays the remainder of the claim.
Elimination Period
A specified amount of time, beginning with the onset of a disability,
during which benefits are not payable.
Irrevocable Beneficiary
A beneficiary designation which requires that written consent be obtained
from named beneficiaries before adding or removing beneficiaries and
before making changes to the insurance coverage.
Medical Evidence of Insurability
Written information, a completed questionnaire of insurability and/or
a medical examination required when applying for personal insurance
before coverage can be approved.
Medical Underwriting
For life and disability insurance, this is the process of determining
whether an applicant meets medical qualifications for coverage. Applicants
may be evaluated on factors including age, gender, physical condition,
personal health history and family health history, as part of the underwriting
process.
Option
Specialized coverage that the applicant has the choice of adding to
basic coverage for an additional premium.
Plan
An insurance arrangement described in a group insurance policy or a
master agreement under which a group of participants receive a specified
type of coverage.
Policy
A written document that serves as evidence of an insurance contract,
including all details of the insurance coverage, policyholder, the insured,
and the insurer.
Premium
The payment, or one of a series of payments, paid to the insurer to
put an insurance policy in force and keep it in force.
Revocable Beneficiary
A beneficiary designation which allows for the addition or replacement
of beneficiaries at any time without requiring the named beneficiaries’
consent.
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