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 #
- C -
Cash Refund Annuity: A form of annuity contract which provides that if at the death of the annuitant installments paid to him have not totaled the amount of the premium paid for the annuity, the difference will be paid to a designated beneficiary in a lump sum.
Cancellation: A termination of a policy before its normal expiration date.
Capitation to Providers: A system where an HMO pays a doctor or hospital a flat monthly fee for the care of each health plan member, whether or not any services are delivered.
Cash Surrender Value: The amount of cash due an insured who surrenders Cash Value Life Insurance. Such surrender, with consequent termination of all insurance benefits, is sometimes called “cashing out” or “cashing in” a policy. See also Nonforfeiture Values.
Cash Value: The money which accumulates in your life insurance policy while the policy is in force. An insured can borrow money from this policy based on the accumulations.
Certificate: The evidence of coverage received by persons insured under group life policy.
Cestui Que Vie: The person whose life measures the duration of a trust, gift, estate, or insurance contract. Thus, in Life and Health Insurance it is the person on whose life or health the policy is written, commonly called the insured, policyholder, or policy owner.
Chartered Life Underwriter: A designation granted by the American College of Life Underwriters; given upon successful completion of a series of examinations.
Chronic Condition: Prolonged conditions or illness, such as asthma, diabetes, etc.
Churning: A fraudulent practice by insurance agents who repeatedly persuade their customers to replace existing policies with new ones. The agent may be tempted to churn because commissions are higher in the first year of the policy (makes more money for himself) or because the agent represents a different insurance company.
Claim: A request for reimbursement for damages on an insured loss. Your claims to your company are “first-party claims.” Claims made by one person against another person’s company are known as “third-party claims.”
Classified Insurance: Life or health insurance used when risks do not meet the standards for the regular manual rate.
Cleanup Fund: A commonly used term to designate policies whose express purpose is to pay final expenses of death.
Closed-Practice: A primary care physician that is not accepting new patients.
CLUE-Report: Short for Comprehensive Loss Underwriting Exchange which keeps insurance claims history.
COBRA: A Federal law that gives the right to workers to continue group health care coverage for a specified period for themselves if the worker loses coverage because of reduced work hours or loses the job.
Co-Insurance: Is the share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied.
Collateral Assignment: Assignment of a Life Insurance policy or its value as security for a loan. In the event of default, the creditor would receive proceeds or values only to the extent of his interest. The debit agent’s record book showing the amount collected on each policy, the week of the collection, and the policy period for which the premium has been paid.
Collection Commission: A percentage of premiums collected which is paid to an agent as the commission on his collections of Debit Life Insurance premiums.
Collection Fee: An Industrial Life Insurance agent’s fee allowed as his compensation for making policy premium collections for which he is not being paid a commission.
College Retirement Equities Fund (CREF): A separate organization affiliated with the Teachers Insurance Annuity Association. It introduces and sells a variable annuity to college and university personnel.
Collision Coverage: Optional insurance that pays for physical damage caused when your own car hits another car or object, regardless of who is at fault. Collision coverage may carry a deductible — a stated amount that you must first pay out of your own pocket.
Collision Insurance: This covers loss to the insured person’s own auto caused by its collision with another vehicle or object.
Combination Plan Reinsurance: A form of combined reinsurance which provides that in consideration of a premium, which is a fixed percentage of the ceding company’s subject premium on the business covered, the re-insurer will indemnify the ceding company for the amount of loss of each risk in excess of a specified retention and subject to a specified limit and, after deducting the excess recoveries on each risk, the re-insurer will indemnify the ceding company against a fixed quota share percent of all remaining losses.
Combination Plan: In pensions this is a term applied to the combining of Life Insurance contracts with a fund called a side fund or auxiliary fund. The purpose is to increase the amount of money available for a pension or annuity at some future date.
Combination: A term used to describe an agent, agency or insurer that sells both Industrial Life Insurance and Ordinary Life policies.
Combined Annuity Mortality Table: A mortality table, published in 1928, used to determine group rates on annuities.
Combined Single Limit: Bodily Injury and Property Damage coverage expressed as one single amount of coverage.
Commission: That portion of the premium paid to the agent as compensation for the agent’s services.
Commissioners’ Disability Table: A morbidity table approved by the National Association of Insurance Commissioners in 1964 for use in setting legal minimums for Disability Income Insurance policy reserves.
Commissioners’ Industrial Extended Term Mortality Table, 1961: An industrial mortality table approved by the NAIC for evaluation and computation of Extended Term Insurance in Industrial policies, where additional mortality margins are deemed necessary. This is a companion table to the CSI 1961.
Commissioners’ Standard Industrial Mortality Table, 1961 (CSI 1961): An industrial mortality table approved by the NAIC as a standard for evaluation and for computation of non-forfeiture values for Industrial policies.
Commissioners’ Standard Ordinary: A mortality table approved by the NAIC in 1958 as a standard for evaluation and for computation of non–forfeiture values for Ordinary Life policies. The CSO 1941 tables superseded the long-used American Experience Table, compiled in 1868, and the American Men Table, published in 1918 but never as widely used as the American Experience Table. The CSO 1958 superseded the CSO 1941 and is now required as a minimum basis for use by all companies.
Common Accident: An accident in which two or more persons are injured.
Common Disaster Clause: A clause sometimes added to a Life Insurance policy that provides a means for the insurer to distribute the proceeds of the policy in the event of a common disaster.
Commutation Rights: The right of a beneficiary to receive a lump sum for the unpaid payments remaining under an installment option which was selected for the settlement of the proceeds or values of a Life Insurance policy.
Comparative Fault: A method of attributing fault to each driver where both contributed to the cause of the accident.
Comprehensive Coverage: Covers damage to a vehicle caused by an event other than a collision or overturn. Examples include fire, theft, vandalism, and falling objects.
Comprehensive Physical Damage Coverage: Pays for damage to your auto caused by fire, theft, vandalism, flood, falling objects, or hail. This coverage may also carry a deductible.
Conditional Binding Receipt: This is the more exact terminology for what is often called a binding receipt. It provides that if a premium accompanies an application, the coverage will be in force from the date of application or medical examination, if any, whichever is later, provided the insurer would have issued the coverage on the basis of the facts revealed on the application, medical examination and other usual sources of underwriting information. A Life and Health Insurance policy without a conditional binding receipt is not effective until it is delivered to the insured and the premium is paid.
Conditional Vesting: A form of vesting in a contributory pension plan under which entitlement to a vested benefit is conditional upon non-withdrawal of the participant’s contribution.
Conditionally Renewable: An insurance policy that the company will renew with each premium payment, as long as you meet certain conditions.
Conditions: Part of an insurance policy that states your obligations and those of your insurance company.
Consumer Credit: A trade association for insurers of Credit Insurance in the areas of Life and Health.
Contestable Clause: A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested.
Contingent Beneficiary: A person(s) named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.
Continuous Coverage or Continuous Liability Insurance: Continuous coverage refers to the length of time you have maintained insurance on your vehicle.
Contributory: A general term used to describe a plan of employee coverage in which the employee pays at least part of the premium.
Control Provision: A policy provision found most frequently in juvenile contracts, providing that ownership control is to be exercised for a stated or indefinite duration by a person other than the one whose life is insured.
Conversion Privilege: This is the right of an individual to convert a Group Health or Life policy to an individual policy should the individual cease to be a member of the group. Usually this can be done without a physical examination.
Convertible Term Insurance: A term life policy that gives the policy owner the option of exchanging the term life insurance policy for another plan of insurance without providing evidence of insurability (e.g., a current medical report and exam and underwriting). Typically, term life insurance can not be continued at older ages (often 70 to 75) and thus without a provision authorizing the right of conversion, people who are older and ill or have significant negative risk factors can not continue their insurance unless they can convert to a whole life or other type of policy form.
Convertible: A policy that may be changed to another form by contractual provision and without evidence of insurability. Most Term policies are convertible into permanent insurance.
Coordination of Benefits (COB): When the insured is covered under more than one plan (for example under a group plan at work, and as a family member on a spouse’s plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.
Co-Pay: Are fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.
Corridor: In Universal Life insurance, it is necessary to maintain a certain level of pure insurance protection in excess of the accumulation value in order to qualify as life insurance for income tax purposes. This portion of the pure insurance protection is called a “corridor.”
Cost of Insurance Charge: Another term to describe the charge for the pure insurance protection element of a life insurance contract. It is also known as the Mortality Charge.
Cost of Insurance: The amount a policy owner pays to an insurer, minus what he or she gets back from the insurer. This expression is used when determining the true cost of permanent forms of Life Insurance to a policy owner. It considers the fact that premiums are paid in but also that an actual cash value is being built up, which is the portion that the insured will get back from the insurance.
Cost-of-Living Rider: Designed to adjust policy benefits in relation to the change in the economic climate. The majority of such riders are tied to changes in the Consumer Price Index (CPI). The amount of insurance may be automatically increased, without evidence of insurability, at predetermined periods for a maximum amount.
Coupon Policy: A Life Insurance policy, usually 20-Pay Life or some other limited payment period, with attached coupons that may be cashed in for a specified amount at the time of the payment of each annual premium.
Covered Dependents: Traditionally, under group health insurance plans, dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.
Covered Person: This refers to the individuals (named insured, spouse, resident relatives, etc.) insured under a policy contract.
Covered Services and Supplies: Usually, the insured will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.
Credit Life Insurance: A group life insurance contract whereby a creditor is protected in the event of death of the insured prior to the indebtedness being paid in full.
Cross Purchase: A form of Business Insurance in which each party to a mutual agreement (usually to buy out a disabled or deceased co-owner) insures each of the other parties.
Crude Death (or Mortality) Rate: The ratio of total deaths to total population during any given period. See also Mortality Rate.
Current Disbursement: The funding and disbursement of pension benefits as they become due. Also known as “pay-as-you-go.” In the long run, this is the most costly method of funding pension plans.
Current Future Service: The amount of pension payable for each year of future participation in the pension plan.
Current Service Benefit: The portion of a participant’s pension benefit that relates to his credited service in a contemporary period, usually 12 months.
Customized Equipment/Special Equipment: These are items not included in standard insurance options available for cars. These may include extra electronic equipment, special paint or exterior items, or amenities added to the inside of a van or truck.
