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 wrap up of this blog’s glossary of insurance terms, ranging from the letter S to Z:

Screening. Physical examination and health history taken by an insurer before the applicant is given the policy applied for.

Settlement option. One of the several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have a life insurance policy paid.

Short-term disability income insurance. The provision to pay benefits to a covered disabled person as long as he/she remains disabled from their occupation up to a specified period not exceeding two years.

Skilled Nursing Care. Daily nursing and rehabilitative care that can be performed only by or under the supervision of, skilled medical personnel.

Stock life insurance company. A life insurance company owned and controlled by stockholders who share in the surplus earnings. The company issues, in general, nonparticipating life insurance.

Stop-loss Provision. A provision under which an insured pays a certain amount of coinsurance after which the insurance company pays 100 percent of the remaining covered expenses.

Surgical schedule. A list of maximum amounts payable under an insurance policy for specific types of surgery.

Subrogation. The legal process by which an insurance company seeks to recover a claim it has paid from another company or person who is legally liable for it.

Term life insurance. Insurance protection that pays death benefits to survivors but no cash value buildup.

Term rider. Term insurance that is added to a whole life policy at the time of purchase or later.

Title insurance. Insurance the seller or buyer buys to protect the lender, buyer, or both from the risk that a claim against the property is not discovered at the time of the title search.

Total disability. The insured is unable to perform the duties of any occupation for which she or he is suited through experience, education, or training.

Umbrella liability policy. A special liability insurance policy that provides further payment for liability claims after the liability coverage from other policies is used.

Underwriting. Classifying applicants for insurance according to their degrees of insurability so that the appropriate premium rates may be charged.
Uninsured motorist insurance. Insurance to protect one’s own bodily injury losses if ever hit by an uninsured motorist or a hit and run driver.

Universal life insurance. A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rates that may change from time to time.

Variable life insurance. This is a life insurance contract under which a portion of the premium is invested in mutual funds. The value of the accumulated funds varies on a daily basis based on the performance of the mutual funds. The policy has level death benefits.

Viatical settlement. A transaction in which a life insurance policyholder who is terminally ill sells his or her rights to the policy in exchange for immediate payment of a portion of the death benefits.

Waiver of premium clause. A policy provision that continues the policy without premium payment while the subscriber is ill or disabled.

Whole life insurance. A cash value life insurance policy that provides level protection for a level premium as long as premiums are paid and includes a savings feature.

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