Understanding Terms: Glossary

When going about shopping for the right policy or making sure your policy protects you in the ways you need, it is important to understand insurance terms used. In educating yourself about the legal jargon employed by the insurance companies, you can be better prepared to combat an unfair claim payment or prevent your policy from being hijacked by vague language.

Below, courtesy of the University of Illinois, is a glossary of insurance terms, ranging from the letter J to N:

Lapsed policy. A policy terminated for non-payment of premiums. Level premium life insurance. Life insurance for which the premium remains the same from year to year.

Liability coverage. Insurance protection that pays for claims or judgments brought against the insured.

Life expectancy. The average number of years of life remaining for a group of persons of a given age according to a particular mortality table.

Limited payment life insurance. Cash value life insurance on which premiums are paid for a specified number of years but the insurance remains in force for life.

Loan value. The amount which can be borrowed at a specified rate of interest from a cash value life insurance policy. If the policyholder dies with the debt partially or fully unpaid, then the amount borrowed, plus any accrued interest, is deducted from the policy’s face amount.

Long Term Care. A comprehensive range of medical, personal, and social services delivered over time to meet the needs of chronically ill or disabled persons.

Major medical insurance. Health insurance to cover medical expenses over and above that of a basic health insurance policy.

Managed care. Prepaid health plans that provide comprehensive health care to members.

Market value policy. A homeowner’s insurance policy that pays to replace, repair, or rebuild damaged property up to the maximum of the policy, which is set at the property’s market value. Materials used in making the repairs will be similar to, but not the same as, the original materials.

Medicaid. A medical insurance program for low-income individuals that is paid by federal and state funds.

Medical payments. Coverage under a homeowner’s policy that pays for some medical expenses for injuries to others caused by the insured, a family member, or pet.

Medical payments insurance. Insurance coverage under an auto policy to pay for the insured’s medical and funeral expenses after an automobile accident.
Medicare. A federal government health program available to people over 65 and some other citizens meeting specified requirements.

Medigap insurance or Medicare supplement. Medicare supplement insurance, or Medigap (sometimes called MedSup), is private insurance that supplements or fills in many of the gaps in Medicare coverage. While MedSup policies typically cover Medicare’s deductibles and co-insurance amounts, they do not pay benefits for long-term care.

Mortality table. A statistical table showing the death rate at each age, usually expressed as so many per thousand.

Mutual life insurance company. A life insurance company whose board of directors is elected by its policy owners. The company issues, in general, participating policies.

National Association of Insurance Commissioners (NAIC). NAIC is a national organization of the 50 state insurance commissioners for exchanging ideas, information, and coordinating regulatory activities. NAIC has no legal power but exerts a strong influence through its recommendations.

No-fault insurance. Auto insurance that covers certain losses of the insured without considering who is at fault in the accident.

Noncancelable. A policy that guarantees the premium will remain the same and the policy stay in force as long as the premium is paid.

Nonforfeiture table. A cash value life insurance policy table listing the insured’s options to take the policy as extended term insurance, as cash, or as reduced paid-up life insurance.

Nonparticipating policies. Life insurance policies that do not pay dividends.

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