Accident Sickness Definitions

 

This information is not to be considered policy language or legal advice and is not a substitute for competent insurance and legal assistance from a licensed insurance agent or attorney respectively. The information contained is general in nature, and is designed to provide guidance in the understanding of terms used, both in this web site, and by the insurance industry as a whole. Each company may interpret definitions slightly different, and these do not reflect the opinions of any one company.

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

We have compiled a list of common terms you may come across when reading about different types of Insurance

 

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Accident: shall mean a single sudden, unforeseen and unexpected event, which occurs at an identifiable time and place and which causes unexpected Bodily Injury at the time it occurs.

 

Accident Medical Coverage: Coverage for medical expenses (doctor bills, ambulance, hospital, and medication bills) incurred as a result of an injury while participating in an insured activity. This is typically written on an excess basis over any other collectible medical insurance the injured person might have available to them. The coverage responds only to injuries sustained while that person is participating in your activities.

 

Accidental Death and Dismemberment (AD&D): AD&D provides coverage for death or dismemberment resulting directly from accidental causes. Provides benefits in the event of loss of life, limbs, or eyesight as the result of an accident.

 

Application: A questionnaire which is filled out from the prospective insured (applicant)  seeking a coverage quotation from an insurance company. The questionnaire contains information required by the insuring company to evaluate the risk, underwrite the exposure, and rate the hazards and coverage's being requested.

 

Applications are typically completed by the insured party, but the party's representative (agent or broker) may also complete the form on the party's behalf. There may be multiple applications, depending on the scope of the coverage being requested. Most applications, particularly in Personal Insurance, are actually attached to and made a part of the insured's policy.  

 

Association Coverage: Group insurance issued to an association rather than to the employees of a business or members of a union.

 

Automatic Increase Rider: An optional benefit which provides automatic increases each year, despite changes in health, income or occupation.

 

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Benefit Period: The longest period of time for which benefits are payable for continuous disability.

 

Beneficiary-Person: Named by the participant in an insurance policy or pension plan to receive any benefits provided by the plan if the participant dies.

A person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit there under.

 

Bind Order: The oral or written acceptance of a quotation of insurance by the insured party.

 

Binder: A written document reflecting immediate insurance protection, valid for a specified period of time. Designed to provide temporary coverage until the actual policy can be issued. The binder provides a summary of coverage to be provided by the policy, along with pertinent information such as limits and coverage's.

 

Bodily Injury: Shall mean a specific physical injury caused by an Accident. An injury is a Bodily Injury only if it is the direct consequence of an Accident and is not the accumulation of a series of accidents or traumas and if it is not directly or indirectly caused by, contributed to by and/or aggravated by any physical impairment, defect, degenerative process or infirmity existing prior to the inception of this Policy. A physical impairment, defect, degenerative process or infirmity exists prior to the inception of this Policy if it has been diagnosed by a health care practitioner prior to the date of inception of this Policy or in the event that it has not been so diagnosed then, in the opinion of a health care practitioner the Insured could reasonably have been expected to be aware of its existence on the date of inception of this Policy.

 

Business Overhead Expenses: The usual expenses required to maintain an office or run a business.

 

Buy-Sell Agreement: An agreement made by the owners of a business to purchase the share of a disabled or deceased owner. The value of each owner’s share of the business and the exact terms of the buying and selling process are established before death or the onset of a disability.

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C

Capital Sum Benefit: The benefit that will be provided when the insured suffers complete loss of a hand or foot, severed through or above the wrist or ankle, or loss of the entire sight in one eye, and survives it for 30 days.

 

Cancellation: The discontinuation of the insurance policy before its normal expiration date.

 

Carrier: The insurance company or the one who agrees to pay for covered losses.

 

Conditions: Provisions of the insurance policy which state the rights and duties of the insured and insurer.

 

Coverage - The scope of the protection provided under a contract of insurance; any of several risks covered by the policy.

 

Conditional Receipt: A receipt given for premium payment accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of prepayment or the date on which the last of the underwriting requirements, such as medical examination, has been fulfilled.

 

Consumer Price Index: The Consumer Price Index for All Urban Consumers as published by the Federal Department of Labor. That index shows the rate of change in the cost of living in the United States.

 

Cost of Living Rider: An optional benefit which provides for increases in the disability benefit during periods of disability.

 

Cross-Purchase Arrangement: An arrangement between two or more business owners that in the event of an owner’s death or disability, the remaining owner or owners will purchase the business interest of the deceased or disabled owner.

 

Cumulative Benefit: In an overhead expense policy, the monthly benefit times the number of months the insured has been disabled after the elimination period.

 

Current Expenses: An insured’s expenses in each month while residually disabled.

 

Current Income: All income which an insured received on a cash basis in each month while residually disabled.

 

 

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D

Disability: An individual’s physical or mental inability to perform the major duties of his or her occupation because of sickness or injury.

 

Disability Insurance: A form of health insurance which provides periodic payments when the insured is unable to work as a result of sickness or injury.

 

Declarations - That part of the policy describing the named insured, address, effective date, term of the policy, applicable coverage's, the amount of insurance and the premium.

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E

Endorsement - An additional piece of paper, which was not part of the original insurance contract, that cites certain terms, conditions, or changes, and which becomes a part of the insurance contract.

 

Earned Income: Gross salary, wages, commissions, fees, etc., derived from active employment. This does not include investment income, rents, or amounts received from annuities or insurance policies.

 

Elimination Period: The consecutive number of days for which no benefits are payable at the start of a claim. An insured must be disabled all of those days.

 

Exclusions: Certain conditions and causes which are not covered by the policy. These are listed in the policy.

 

Expenses:  The regular business expenses which an insured may deduct from gross earned income for federal tax purposes.

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F

FRAUDULENT CLAIMS: The making by the Insured of any fraudulent claims shall render this Policy null and void as from the inception date, and all claims hereunder shall be forfeited

 

G  No Entriestop

 

H

Health Insurance - There are two major types: Disability income insurance pays for loss of income due to disability; medical expense insurance pays for hospital, doctor and other medical expenses. Both of these generally pay for losses arising from sickness or accidents. Some policies, referred to as "accident policies," do not cover sickness.

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I  

Income: Gross earned income, less business expenses, but before any other deductions. Income includes salaries, wages, fees, commissions, bonuses, business profits or other payments for personal services. It does not include unearned income from savings, investments, or real property.

 

Indexing: A provision which increases the insured’s pre-disability earnings every year according to a given formula, so residual disability benefits will not lose purchasing power because of inflation.

 

Injury: Accidental bodily injury that occurs while a policy is in force.

 

Installments: A series of payments at regular intervals over a period of time.

 

Increase in risk: If the Insured shall engage in any occupation or activity in which a greater risk of Accidental Bodily Injury or Sickness or Disease may be incurred than from the Occupation stated in the Schedule, without the Insurer first being given notice in writing and the Insured obtaining the Insurer's permission in writing, and paying any additional premium as the Insurer may require as a condition of giving such permission, then no claim shall be payable in respect of any Accidental Bodily Injury or Sickness or Disease arising out of or in the course of such new occupation or activity.

 

Insured - A person covered by an insurance policy.

 

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No current entries

 

K

Key Employee: An owner or a highly skilled employee whose efforts are directly responsible for some measure of profitability to the firm.

 

Kidnap and Ransom Insurance - Written for financial institutions and other corporations, this insurance covers named employees for individual or aggregate amounts paid as ransom, with deductibles requiring the insured to participate in approximately 10% of any loss.

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Lapsed Policy - An insurance policy which has passed its expiration date without renewal or continuation of the coverage provided by the policy.

 

Loss - An occurrence that is the basis for submission and/or payment of a claim. Losses can be covered, limited or excluded from coverage, depending on the terms of the policy.

 

Loss of Income: The difference between an insured’s prior income and current income.

 

Loss Payee: The individual or entity named to receive all benefits.

 

Lump Sum: A single payment of benefits, with no further payments due.

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M  

Manifest" "Manifestation" shall mean the date when a Sickness or Disease is reasonably capable of diagnosis by a health care practitioner.

 

Monthly Indemnity: The amount the insurer will pay for each month of total disability.

 

N  No current entries

 

O

Occupation: An insured’s regular occupation or profession at the time of becoming disabled.

 

Optional Benefit: An additional benefit offered by the insurance company to certain occupational classes which may be included in a policy at the applicant’s request, for an additional premium.

 

Overinsured: Receiving a larger income through benefits while disabled than income earned while working.

 

Owner: As named in the policy schedule page, the owner’s rights include, but are not limited to, the right to renew the policy and to request any change in benefits.

 

Own Occupation (Own Occ): A definition of disability which states that as long as the insured is unable to perform the duties of his or her regular occupation (or occupations, if more than one) at the time of disability, the insured will be considered eligible to receive the full benefit under the policy.top

 

P  

Partial Disability: An insured’s physical inability to perform some, but not all, of the duties of his or her regular occupation due to sickness or injury.

 

Participation Limit: The total amount of coverage which will be allowed by a company from all carriers.

 

Partial Disability - An impairment that prevents the insured from performing one or more, but not all, important duties of his/her job.

 

"Participate", "Participation" or "Participating" shall mean that the Insured is on the active roster of the professional sports team for which the Insured is contractually obligated to play, as indicated in the Schedule, and/or is dressed, and/or is available and/or is physically able to practice or play for such team.

 

Permanent Total Disablement" shall mean that the Insured has suffered Total Disablement for a continuous period of twelve (12) months and that as a result of the Accidental Bodily Injury or Sickness or Disease giving rise to the Total Disablement, the Insured has no likely hope of improvement, sufficient to  Participate ever again in his Occupation

 

Policyholder - The one who owns the insurance policy. Their name is the one that appears on the Declarations under the title of Named Insured or Policyholder.

 

Pre-Existing Condition - A physical condition that existed prior to the issuance of the insurance policy.

 

Premium - The amount of money charged the policyholder for the insurance policy.

 

Physician: A legally qualified physician other than the insured, who is not a loss payee or owner under the policy.

 

Policy: All material which constitutes the contract of insurance.

 

Policy Term: The effective period of the policy, usually the period for which premiums are paid.

 

Pre-Disability Earnings: The earnings level of the insured prior to the onset of disability.

 

Pre-Existing Condition: An injury, illness, or physical condition which existed prior to the issue of the disability policy.

 

Presumptive Disability: The presumption that the insured is totally disabled, even if still at work, if sickness or injury results in the total and complete loss of sight in both eyes, hearing in both ears, power of speech, or use of any two limbs. The elimination period is waived from the date of the loss and total disability benefits are payable while such loss continues until the end of the benefit period.

 

Prior Income: The insured’s average monthly income for the tax year with the highest earnings in the three years just prior to the date on which he or she became disabled.

 

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No current entries

 

R

Recovery Disability Rider: A rider which provides reduced benefits when an insured returns to work following a compensable period of total disability.

 

Recurrent Periods of Disability: In some policies, recurrent periods of disability from the same cause or causes will be considered one continuous period of disability unless each period is separated by a recovery of six months or more.

 

Rehabilitation Benefit: A benefit paid to help meet some of the costs an insured may incur by enrolling in a rehabilitation program for the purpose of returning to his or her occupation.

 

Residual Disability: In better policies, a disability that causes an insured’s income to fall more than 20% below its pre-disability level. Some companies include a loss of time requirement or the inability to perform some duties of the insured’s regular occupation.

 

Refund of Benefits: In the event that the Insurer pays a claim under this Policy and the Insured subsequently recovers sufficiently to resume the Occupation stated in the Schedule, the Insured agrees to immediately refund all monies paid to him hereunder by the Insurer

 

Rate: A charge per unit in determining insurance premiums.

 

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Sickness or Disease: Shall mean physical illness or malady. Sickness or Disease shall not include osteoarthritis, arthritis or any other degenerative process of the joints, bones, tendons or ligaments.

 

Subrogation: A principle of law incorporated in insurance policies that enables the insurance company, after paying a loss to its insured, to recover the amount of the loss from another who is legally liable for it.

 

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Total Disability: Disability that prevents a person from performing (a) any of his/her occupational duties, or (b) any duties for which he/she is reasonably qualified. Definitions vary within policies.

 

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U  

Underwriter:  An employee of an insurance company who is a selector of risks. The underwriter is expected to select business that will produce an average risk of loss no greater than anticipated for the class of business.

 

Underwriting: The process of selecting risks and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process includes rejection of risks.

 

W

Waiting Period: See “Elimination Period.”

 

Waiver of Elimination Period: In some policies, the elimination period will be waived if an insured becomes disabled within five years after the end of a period of disability which lasted longer than six months and for which benefits were paid.

 

Worker’s Compensation: Benefits paid to a worker to compensate for losses caused by a work-related injury or illness.