Glossary of Insurance Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #
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Benefit Levels: The maximum amount a person is entitled to receive for a particular service or services as spelled out in the contract with a health plan or insurer. (H)
“Bad Faith” Insurance: The most common scenarios for Bad Faith Insurance include the following:
1. Low-balling – unreasonably low offer to compensate for damages.
2. Delay or Denial of a claim without reason.
3. Ambiguous policy wording.
4. Failure to investigate or perform due diligence.
5. Failure to act within a reasonable time.
6. Delay in payment while waiting on a settlement with a third-party insurer.
7. Intentional deception and fraud.
8. Refusing a settlement offer and then losing in court for an amount larger than is provided for in the policy.
Backdating: A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get a lower premium. State laws often limit to six months the time to which policies can be backdated.
Basic Auto Policy: Although still used today to insure substandard risks, two-wheel motorized vehicles, and commercial autos, the Basic Auto Policy has been primarily replaced by the Personal Auto Policy, which combines both physical damage coverage and liability insurance for claims arising out of the ownership or use of a vehicle.
Basic Limits of Liability: The least amount of liability coverage that can be purchased, which is generally equivalent to the minimum amount required by state law. In determining rates, a carrier will use the basic limits to develop the base rates. If an insured person wants higher limits, the carrier applies an increased limits factor to the base rate in calculating the new premium for the increased coverage.
Beneficiary: A person who may become eligible to receive or is receiving benefits under an insurance policy other than a participant.
Benefit Maximum: The time period for which payments for benefits of an insurance policy are available. Benefit Package: A description of what services the insurer or health plan offers to those covered under the terms of a health insurance contract.
Benefit Period: Defines the period during which a Medicare beneficiary is eligible for Part A benefits. A benefit period is 90 days which begins the day the patient is admitted to a hospital and ends when the individual has not been hospitalized for a period of 60 consecutive days.
Binder: A temporary insurance contract that provides proof of coverage until you receive a permanent policy from the company. A binder is subject to the payment of a premium.
Blackout Period: The period of time during which a surviving spouse no longer receives survivors benefits (after the youngest child is no longer eligible) and before he or she is eligible for retirement benefits.
Bodily Injury Liability: Insurance that pays for another person’s bodily injury or death in an automobile accident caused by you. It compensates those people for pain, suffering, and other personal hardships, and will also pay for some economic damages (i.e., lost wages).
Boston Plan: This is a plan under which insurers agree that they will not reject property coverage on residential buildings in a slum area. Instead, they will accept the coverage until there has been an inspection and the owner has had an opportunity to correct any faults. Boston was the first city to originate such a plan, and many other cities have followed, including New York, Oakland, Cleveland, and Buffalo.
Broker: An insurance salesperson who deals with agents and companies to find insurance for consumers.
Burial Policy: A policy to cover funeral and burial costs.
Business Insurance: Policies written for business purposes, such as key employee, sole proprietorship, partnership, and corporation.
Business Interruption Insurance: A time element coverage that pays for loss of earnings when operations are curtailed or suspended because of property loss due to an insured peril. Now referred to as “business income insurance.”
Business Personal Property: Traditionally known as “contents,” this term actually refers to furniture, fixtures, equipment, machinery, merchandise, materials, and all other personal property owned by the insured and used in the insured’s business.
Business: The face amount of life insurance written.
Buy-Sell Agreement: (1) An agreement among part-owners of a business which says that under stated conditions, i.e., disability or death, the person withdrawing from the business or his heirs are legally obligated to sell their interest to the remaining part-owners, and the remaining part-owners are legally obligated to buy at a price fixed in the agreement; (2) a similar agreement between an owner or part-owner of a business and a non-owner, such as a key employee.
