Glossary of Terms
We try to keep the insurance planning process as simple and streamlined as possible for our clients. But we do appreciate that sometimes terms will be used that you might not be familiar with. In order to make sure that we don't confuse matters we have compiled this glossary with brief explanations of the more commonly used insurance terms.
Still have questions? We've prepared a list of our most frequently asked questions but please don't hesitate to contact us if you have any further concerns, or if you would like a detailed explanation of any element of our affordable insurance plans or services.
Accidental Death Benefit - An option in a life insurance policy that provides proceeds to insured individuals in the event of death due to an accident.
Actual Cash Value - Insurance coverage that replaces damaged or destroyed property with comparable new property less any depreciation and obsolescence.
Agent - An individual who sells and services insurance policies in one of these two categories: independent agents who represent numerous insurance companies and exclusive, direct, or captive agents who represent only one insurance company.
Annuity - A life insurance product that makes periodic payments for a specific period of time or over the course of the annuitant's lifetime. Read more.
Benefit Period - The number of day that health insurance benefits are paid to a named insured and his dependents.
Binder - Temporary authorization of coverage issued prior to the actual insurance policy.
Broker - An insurance sales representative who searches the marketplace for clients' interests not insurance companies.
Buyer's agent - An insurance agent who represents the buyer's best interest when searching various insurance policies.
Casualty Insurance - Insurance focused on losses caused by injuries to persons and the legal liability imposed upon the insured for such injuries and/or damages to the property of other.
Coinsurance - In property insurance requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder.
Collision Insurance - The portion of an auto insurance policy that covers the damage to the policyholder's car from contact with another inanimate object.
Commercial Lines - Insurance products designed for and bought by businesses, professionals and commercial establishments.
Comprehensive Insurance - The portion of auto insurance that covers non-collision damages to the policyholder's car in the event of physical damage such as fire damage or a cracked windshield (other than collision) or theft of the insured car.
Copayment - A predetermined, flat fee an individual pays for health-care services, in addition to what insurance covers.
Death Benefit - The amount of benefit or the limit of insurance that will be paid in case of death of a covered individual.
Deductible - The amount of loss that the policyholder pays before the insurance coverage takes over payments.
Directors and Officers Liability Coverage - Covers directors and officers of an organization for negligent acts or omissions and for misleading statements that result in suits against the company.
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Employers Liability Insurance - Coverage against common law liability of an employer for accidents to employees, as compared to liability imposed by a workers' compensation law.
Errors and Omissions Insurance - A professional liability policy covering the policyholder for negligent acts and omissions that may harm his or her clients.
Exclusions - A listing of items or conditions that are not covered by the insurance policy.
Exposure - Measure of possibility of a loss.
Floater - A separate insurance policy attached to a homeowners or renters policy that insures movable property such as expensive jewelry, musical instruments, furs and sports equipment.
General Liability Insurance - Insurance coverage designed to protect business owners and operators from numerous liability exposures.
Grace Period - The amount of time after a premium is due and unpaid during which the policy with all riders remains in force.
Guaranteed Renewable - An insurance policy provision which guarantees the policy owner the right to renew coverage at every policy anniversary date. The company cannot cancel coverage except for nonpayment of premiums by the policy owner; however, it can raise rates.
Inflation Protection - A property coverage option that increases the limits of the insurance policy during its term to keep pace with inflation.
Liability Insurance - Insurance that pays and renders service on behalf of the policyholder for a loss coming from bodily injury or property damage caused to another person for which the policyholder is responsible, due to negligence, as imposed by law or assumed by contract.
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Living Benefits - Under certain circumstances, this life insurance policy feature allows the policyholder to receive proceeds before death.
Loss of Use - A provision in homeowners and renters insurance policies that reimburses policyholders for any extra living expenses following a disaster due to having to live elsewhere while their home is being restored.
Mortgage Insurance - A form of decreasing term insurance that covers the life of a person taking out a mortgage with death benefits that provide for payment of the outstanding balance of the loan.
Non-cancellable - An insurance policy with contract terms, including costs that can never be changed as long as the premiums are paid when due.
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Peril - A specific risk or cause of a possible loss.
Personal Injury Protection - Insurance that pays the basic expenses for an insured and his family in those states that have no-fault auto insurance.
Personal Lines - Property and casualty insurance products that are designed for and bought by individuals and families, such as auto and homeowners policies.
Pre-Existing Condition - A limitation on insurance coverage included in many health policies, that states certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.
Preferred Auto Insurance - Automobile coverage for drivers who have never had an accident and operate vehicles according to law.
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Renewal - The automatic re-establishment of in-force insurance status affected by the payment of another premium.
Replacement Cost Coverage - Insurance that pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.
Standard Auto Insurance - Auto insurance for average drivers with relatively few accidents during a lifetime.
Surrender Charge - A fee charged to a policyholder when a life insurance policy or annuity is surrendered for its cash value.
Surrender Period - A set amount of time during which you have to keep the majority of your money in an annuity contract.
Term Life Insurance - A type of life insurance that covers the insured person for a specified time period. A benefit is paid only when the insured dies within the time period which can be one, five, 10 or even 20 years.
Total Loss - Damage to an automobile or other property is so extensive and complete that the cost to repair it exceeds its value.
Underinsured Motorist Coverage - This is the portion of an auto insurance policy that protects a policyholder from underinsured drivers.
Umbrella Policy - Insurance coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance; the terms of coverage are sometimes broader than those of underlying policies.
Uninsured Motorist Coverage - The portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.
Universal Life Insurance - A flexible premium insurance policy, which combines protection against early death with a cash value account that usually, earns a money market rate of interest.
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Waiver of Premium - A provision in some insurance contracts that allows an insurance company to waive premiums collection, while keeping the policy in force if the policyholder becomes unable to work due to an accident or injury.
Whole Life Insurance - Life insurance that is kept in force for a person's entire life, paying a benefit upon the person's death.
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