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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Safe Driver Plan: A rating system that assigns points for traffic convictions and certain accidents. Similar to a merit-rating plan, each point increases the surcharge percentage to the baseline rates.
Second Surgical Opinion: If surgery is recommended, the insurance company may require, or in some cases the insured may request, a review of the case by a second surgeon. If a second opinion is deemed warranted the insurer would pay a second surgeon to review the case and concur with the first doctor or suggest an alternative treatment.
Secondary Plan: Applies only when you have more than one health insurance plan. The second plan pays only after the primary plan has processed the claim.
Self-Insured Plan: A company which pays health care costs out of their own pocket.
Settlement Option: The several ways the insurance company can pay a policyholder or beneficiary.
Short Rate Cancellation: A policy termination in which the refunded premium is not proportional to the amount of time remaining in the policy period due to the fixed expenses incurred by the company. The insured will generally pay more for each day of coverage than if the policy had remained in force throughout the entire policy period.
Short Rate Cancellation: Cancellation by the insured of an insurance policy for which the returned, unearned premium is diminished by administration costs incurred when the insurance company places the policy on its books.
Single Premium Whole Life: Type of whole life insurance where the policy owner pays one premium.
Specific Disease Policy: A plan that covers expenses only for a specific disease identified in the policy. Also called Dread Disease Policy.
Spell of Illness Provision: Spell of illness usually refers to a period of time during which a patient is being treated for a particular incidence of an illness. Some companies use the terminology “per cause” rather than “spell of illness.” The exact definition can also vary from plan to plan.
Split Limit: Any insurance coverage with separately stated limits for different types of coverage. Example: an automobile liability policy of 100/300/50 provides a maximum of $100,000 bodily injury coverage per person, $300,000 bodily injury coverage per accident, and a property damage limit of $50,000 per accident.
Stacking of Limits: The application of more than one policy limit to the same loss or occurrence. In some jurisdictions, courts have required stacking of limits when multiple policies, or multiple policy periods, cover an occurrence. For example, uninsured motorist bodily injury limits of $100,000/300,000 on two policies owned by the same person may be added together to pay a loss. In this event, the total amount of coverage available for an accident would be $200,000/600,000.
Standard Exception: In Workers Compensation Insurance certain classes of employees are classified separately for rating, rather than being included in the main classification for a risk. Examples would be clerical office employees, outside sales representatives, draftsmen, drivers, chauffeurs, and their helpers.
Standard Premium: Most often used in connection with retrospective rating for Workers Compensation and General Liability Insurance. It is the premium of which the basic premium is a percentage and is developed by applying the regular rates to an insured’s payroll. See also Retrospective Rating and Basic Premium.
Stop-Loss Clause: The clause in the contract between the insurer and the insured that specifies the maximum payment that will be made for particular types of coverages – for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.
Surrender Charges: Fees that are deducted if your life insurance policy is cashed in prematurely.
Surrender: Terminating or canceling a policy before its maturity date and cashing in its cash surrender value.
