| ACCELERATED DEATH
BENEFITS |
Life insurance proceeds which
are paid prior to death under certain conditions, such as terminal
illness of the insured. |
| ACCIDENT |
An unexpected, unforeseen event not under
the control of an insured. |
| ACTUAL CASH VALUE |
An amount equivalent to the replacement
cost of stolen or damaged property at the time of the loss, minus
depreciation. |
| AGENT |
A licensed person or organization
authorized to sell insurance by or on behalf of an insurance company. |
| ALIEN INSURER |
An insurer formed under the laws of a
country other than the United States of America or any state, district,
commonwealth, territory, or possession of the United States of America. |
| ANNUITY |
A life insurance company contract that
provides a series of periodic payments for a specified period or
lifetime. |
| AUTHORIZED INSURER |
An insurer duly authorized, by a
certificate of authority issued by the commissioner, to transact
insurance in this state. |
| AUTOMOBILE INSURANCE |
Coverage on the risks associated with
driving or owning an automobile. |
| AUTOMOBILE INSURANCE -
ELIGIBILITY POINTS |
Points calculated for convictions,
determinations of responsibility for civil infractions, or findings of
responsibility in probate court which are used by an insurer in
determining whether a person is eligible to purchase insurance from the
company. These points are set by law and are not necessarily related to
points on a driver's motor vehicle record. |
| AUTOMOBILE INSURANCE - SUBSTANTIALLY
AT FAULT ACCIDENT |
An accident in which a person's action or
inaction was more than 50% the cause of the accident. |
| CANCELLATION |
The termination of insurance coverage
during the policy period. |
| CASH SURRENDER VALUE |
The amount of money the policyholder is
entitled to receive from the insurance company upon surrendering a life
insurance policy with cash value. This amount is equal to the
accumulated value of the policy minus any outstanding policy loans and
surrender charges. |
| CLAIM |
A formal request for payment of a loss
under an insurance policy. |
| CLAIMANT |
An individual who requests coverage of a
loss under the terms of a insurance policy. |
| COBRA (Consolidated Omnibus Budget
Reconciliation Act) |
A federal law under which group health
plans sponsored by employers with 20 or more employees must
offer continuation of coverage to employees who leave their jobs,
voluntarily or otherwise, and their dependents. |
| COLLISION INSURANCE |
Insurance coverage which pays for damage
to the policyholder's vehicle caused by an accident. |
| COMMERCIAL LIABILITY INSURANCE |
Insurance which provides indemnification
for commercial, industrial, professional, or business liabilities. |
| COMPREHENSIVE INSURANCE |
Coverage in automobile insurance providing
protection in the event of physical damage (other than collision) or
theft of the insured vehicle. |
| CREDIT INSURANCE |
Coverage that pays off an outstanding loan
in the event of the policyholder's death and/or makes loan payments if
the policyholder is disabled. |
| DEATH BENEFIT |
Amount payable, as stated in a life
insurance policy, upon the death of the insured. |
| DEDUCTIBLE |
The amount of the loss which the insured
is responsible to pay before benefits from the insurance company are
payable. Typically, the higher the deductible a policy carries, the
lower the premium will be. |
| DEPRECIATION |
A decrease in value due to age, wear and
tear, etc. |
| DOMESTIC INSURER |
An insurer formed under the laws of this
state. |
| EMPLOYEE RETIREMENT INCOME
SECURITY ACT (ERISA) |
Law that established rules and regulations
to govern private pension plans. Most self-insured health plans are
created under this act. |
| ENDORSEMENT |
Amendment to the policy used to add or
delete coverage or change policy provisions. May sometimes be referred
to as a "rider." |
| EXCLUSION |
Certain causes and conditions, listed in
the policy, which are not covered. |
| FOREIGN INSURER |
An insurer formed under the laws of the
District of Columbia, or some state, commonwealth, territory, or
possession of the United States of America other than the state of
Michigan. |
| HEALTH INSURANCE |
A policy that will pay specific sums for
medical expenses or treatments. Health policies can offer many options
and vary in their approaches to coverage. |
| HEALTH MAINTENANCE ORGANIZATION
(HMO) |
An organization that provides health care
for a monthly payment set in advance. In a traditional HMO, doctors and
other providers are salaried employees and the facilities are owned by
the organization. Other HMOs contract with doctors and hospitals to care
for members at set, negotiated fees. |
| HOMEOWNER INSURANCE |
A package policy providing a combination
of coverages for the risks of owning a home. Coverages include losses to
real and personal property due to fire, burglary, vandalism, and other
perils, as well as personal liability. |
| INSURANCE |
A system to protect persons against the
risks of financial loss by transferring the risks to a large group who
share the financial losses. |
| INSURED |
The policyholder; the individual(s)
covered in the case of a loss or claim. |
| INSURER |
The company offering protection against
the risks of financial loss through the sale of an insurance policy to
an insured. |
| LIFE INSURANCE |
A policy that will pay a specified amount
to beneficiaries upon the death of the policyholder. |
| LONG TERM CARE INSURANCE |
A policy to cover the cost of long-term
custodial care in a nursing facility or at home. |
| LOAN VALUE |
The amount which can be borrowed at a
specified rate of interest from the issuing company by the policyholder,
using the value of the insurance policy as collateral. |
| MEDICAID |
A federal-state program that helps pay for
health care for the needy, blind and disabled and for low-income
families with children. |
| MEDICARE |
A federal health care insurance program
for people age 65 and over, and for the disabled. |
| NO-FAULT AUTO INSURANCE |
A system in which lawsuits are limited and
each person looks to his or her own auto insurance coverage to pay for
injuries resulting from an auto accident regardless of who was at fault
in the accident. |
| PERSONAL INJURY PROTECTION (PIP) |
Coverage under no-fault automobile
insurance which provides benefits for medical costs, loss of income,
death and/or disability, and loss of services incurred as a result of an
automobile accident. |
| PHYSICAL DAMAGE INSURANCE (PD) |
Coverage under an auto insurance policy,
often referred to as "comprehensive" and "collision"
which pays for damage to vehicles. |
| POLICY |
The written contract of insurance between
an insurance company and an insured (policyholder). |
| POLICY LIMIT |
The maximum amount a policy will pay
either in total or under a particular coverage. |
| PRE-EXISTING CONDITIONS |
A physical condition or illness of an
insured person which existed prior to the issuance of an insurance
policy. |
| PREMIUM |
The amount of money an insurance company
charges for insurance coverage. Usually paid periodically, i.e.,
annually, semi-annually, quarterly or monthly. |
| PROPERTY DAMAGE LIABILITY
INSURANCE |
Coverage in the event that the negligent
acts or omissions of an insured result in damage or destruction to
another's property. |
| QUOTE |
An estimate of the cost of insurance,
based on information supplied to the insurance company by the applicant. |
| REINSTATEMENT |
The restoring of a lapsed policy to full
force and effect. |
| REINSURANCE |
A form of insurance that insurance
companies buy for their own protection. |
| REPLACEMENT COST COVERAGE |
Coverage to replace, rebuild or repair
your damaged property to its original condition with materials of the
same kind and quality. |
| RIDER |
Also known as an endorsement, a rider is
an amendment to the policy used to change, add or delete coverage. |
| SURCHARGE |
An extra charge applied by the insurer.
For automobile insurance, a surcharge might be added for accidents or
moving violations. |
| TERM INSURANCE |
Life insurance issued for a stated
temporary period of time. |
| TITLE INSURANCE |
Indemnifies the owner of real estate in
the event clear ownership of property is challenged by discovery of
faults in the title. |
| UNDERWRITING |
The process of selecting applicants for
insurance and classifying them according to their degrees of
insurability to ensure that the appropriate premium is charged. |
| UNIVERSAL LIFE INSURANCE |
A life insurance policy which allows the
policy owner to vary, with limitations, the amount and timing of premium
payments and the death benefit. Cash values are accumulated by crediting
premium payments and interest to a fund from which deductions are made
for expenses and cost of insurance. |
| WAITING PERIOD |
A period of time set forth in a policy
which must pass before some or all coverages begin. |
| WHOLE LIFE INSURANCE |
A life insurance policy (also known as
straight life, ordinary life and traditional permanent insurance) which
has guaranteed premiums and guaranteed death benefits payable to a
beneficiary at the time of the death of the insured, and a minimum
interest rate which will be credited to the funds accumulated in the
policy. |
| WORKERS COMPENSATION INSURANCE |
Coverage purchased by an employer that
pays for medical care and physical rehabilitation of injured workers and
replaces lost wages while they are unable to work. |
