A – Glossary of Terms


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Abandonment Clause:
A clause often contained in a property insurance policy stating that the insured cannot abandon damaged property and then file a claim with an insurer.

Absolute Liability: 
The liability for damages even though fault / negligence cannot be proven.

Any sudden event which is unintended.

Accident Insurance: 
Insurance coverage against loss by accidental bodily injury.

Accidental Bodily Injury: 
Injury to a person from the result of an accident.

Accidental Death Benefit: 
An additional paid death benefit in addition to the face amount value of a life insurance policy. Accounts Receivable Coverage Form: An inland marine coverage form that insures against loss the insured suffers when not able to collect account receivables from customers.

Accumulation Period: 
A specific time period that the insured must establish before benefits begin or are paid out.

Activities of Daily Living: 
Activities that are considered an everyday part of normal life. Some of these are: dressing, bathing, toileting, transferring (example: moving from and into a chair), and eating. These activities are used to measure the degree of impairment and can effect the eligibility for certain types of insurance benefits.

Actual Cash Value (ACV): 
The cost to replace an item or property at the time of loss, less any allowance for depreciation.

Actuarial Cost Method: 
A method used for determining contributions to be made under a retirement plan. Usually applied to the level of benefits when the contributions are fixed.

A professional in the insurance business, usually working for the insurance company, that can estimate how a certain sum of money can be contributed to a pension plan, insurance, or other related area to fund that plan for years to come.

Additional Insured: 
An individual or entity that is not included as an insured under the insurance policy of another, but may be added to provide a certain degree of insurance protection.

Adhesion (Contract of): 
Parties are of unequal bargaining power, and one party (the insured) cannot negotiate any terms, having to accept the offer of the other party.

Adjustable Life Insurance: 
A type of life insurance that allows the owner of a policy to change the plan of insurance, raise or lower the face amount, increase or decrease the premium, and lengthen or shorten the protection period.

Adjusted Gross Estate: 
Approximate net worth of a deceased, known as the beginning point for the computation of estate taxes.

A person who investigates and settles losses for an insurance company, or may be hired independently to resolve any issues (leverage) between the insurance company adjuster and the insured.

The investigation process of settling claims by an insurance company.

Administrative Services Only (AS0) Plan: 
An arrangement under which an insurance company or an independent agent will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group. This is very popular with larger corporations.

Advance Funding: 
Pension funding method in which an employer sets aside funds prior to the employee’s retirement.

Age Limits: 
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew a policy. Read your policy.

An insurance company representative licensed by the state who solicits, markets, negotiates, binds, and administers contracts of insurance while providing a valuable service to a policyholder for the insurer.

Aggregate Deductible: 
The most a law firm would pay for all claims reported during the policy year.

Aggregate Indemnity: 
A maximum dollar amount that can be collected for any disability or period of disability under an insurance policy .

Alien Insurer: 
An insurance company domiciled in another country.

Allocated Benefits: 
Benefits for which the maximum amount payable for specific services is itemized in your insurance contract.

All-Risk Policies: 
Coverage through an insurance contract that promises to cover all losses except those losses specifically excluded in your policy.

Alternate Delivery Systems: 
This system of care is designed to provide needed services in a cost-effective manner. This provides an insured with health services other than an in-patient, acute-care hospital, or other type of facility.Some examples include: skilled and intermediary nursing facilities, hospice programs, and home health care.

Ambulatory Care: 
These are medical services that are provided as an outpatient (nonhospitalized). Services could include diagnosis, treatment, and rehabilitation.

A formal document revising the provisions of an insurance policy. Usually, signed jointly by an insurance company officer and the policy owner or his authorized representative.

Annual Statement: 
An annual report of an insurance company to a state insurance department, showing financial data relating to the operation of the insurance company.

The person that will receive annuity benefits for a period of time.

Considered to be the opposite of life insurance where a death benefit is paid, an annuity provides a benefit while the insured is alive. This is a contract that provides an income for a specified period of time.

Annuity Certain: 
A contract that provides an income for a specified number of years, regardless whether living or deceased.

Annuity Consideration: 
A payment, or one of the regular periodic payments, an annuitant makes for their annuity.

A signed statement of facts made by a person applying for insurance. The application is used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.

The willful and malicious act of burning, or attempt to burn, any structure or property, usually with with criminal or fraudulent intent.

Any funds, goods , property, rights of actions, securities, or resources of any kind owned by an insurance company.

A legal transfer of one person’s interest in an insurance policy to another person.

Association Captive: 
A type of captive insurer owned by the members of a sponsoring organization or group, such as a trade association.

Association Group: 
A group formed from members of a trade or a professional association for group insurance under one master health insurance contract.

Association Group Plan: 
A health insurance plan designed for the members of a professional association or trade association. A members may be protected under a group health insurance policy or by individual franchise policy through this plan.

The many conditions and rules underlying the calculation of a pension benefit.

Attractive Nuisance: 
Condition that can attract and injure children. The occupants of land on which such a condition exists are liable for injuries to children. In Florida, pool owners are required to fence the area around the pool.

Automatic Premium Loan: 
The cash borrowed from a life insurance policy’s cash value (to pay an overdue premium).

Automobile Liability Insurance: 
Protection for an insured against financial loss because of legal liability act that has car related injuries to others or damage to their property.

Automobile Physical Damage Insurance: 
Coverage to pay for damage to, or loss, of an insured automobile resulting from covered perils.

Automobile Shared Market: 
A program in which all automobile insurers in each state make coverage available to car owners who are unable to obtain auto insurance in the voluntary market.

Aviation Insurance: 
Aircraft insurance including coverage of aircraft or their contents. The owner’s liability, and accident insurance on the passengers can be covered


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