Accidental Death Benefit:A benefit from a life insurance policy that is paid when an insured's death is the direct result of an accident and has occurred within a certain period of time following the accident.
Admitting Privileges:The right granted to a doctor to admit patients to a particular hospital.
Advocacy:Any activity done to help a person or group to get something the person or group needs or wants.
Age at Issue:The insured's age at the time coverage takes effect. Life insurance plans typically define issue age as either the age at the insured's last birthday or nearest birthday.
Agent:An authorized representative of a life insurance company who solicits and services insurance contracts. Also known as an Associate.
Annuitant:The individual whose lifetime is used to calculate the pay period of a life annuity.
Annuity:A contract issued by a life insurance company where guaranteed or variable periodic payments begin at a specified time.
Beneficiary:The individuals or entities designated to receive the death benefits from a life insurance policy or annuity contract.
Benefit:Amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.
Brand-name drug:Prescription drugs marketed with a specific brand name by the company that manufactures it, usually the company which develops and patents it. When patents run out, generic versions of many popular drugs are marketed at lower cost by other companies. Check your insurance plan to see if coverage differs between name-brand and their generic twins.
Broker:An insurance sales representative who, on behalf of his or her clients, solicits life insurance quotes and generally sells various kinds of insurance for several companies.
Broker-Dealer:A business entity licensed and registered with the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD). A broker-dealer has the legal right to offer securities products to the public. An agent selling variable life insurance, variable annuity products and other securities, such as mutual funds, must be registered with a broker-dealer.
Carrier:The insurance company offering a health plan.
Cash and Savings:Total you have in cash, checking accounts, savings accounts or other accounts that can be used to help cover expenses.
Cash Surrender Value:The amount available to a policy owner when a life insurance policy is terminated for a reason other than the insured's death.
Certificate of Insurance:The printed description of the benefits and coverage provisions forming the contract between the carrier and the customer. Discloses what it covered, what is not, and dollar limits.
Children's Education Expenses:Monthly expenses for your children's education expenses. If your children have not yet entered college, and have no other educational expenses, leave this amount at zero and enter an amount in the college fund entry fields in the total expenses at death section.
Claim:A request by an individual (or his or her provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional.
Co-Insurance:Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called "co-payment." Co-insurance is often specified by a percentage. For example, the individual pays 20% toward the charges for a service and the carrier pays 80%.
Contestable Clause (or Incontestable Clause):A provision in a life insurance policy that states the time (called the contestable period) during which a policy may be contested or voided by the insurer based on misrepresentations contained in the application or medical examination. By law, the maximum contestable period is two years.
Contract (Policy):The basic written agreement between the insurer and the policy owner or contract owner (sometimes referred to as "contract holder").
Conversion:A policy provision that states that the policy may be exchanged for another life insurance policy under certain circumstances, typically without further underwriting requirements. For instance, term life insurance can be converted to whole life or, in some cases, another form of permanent life insurance.
Co-Payment:Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, some carriers require a $10 "co-payment" for each office visit, regardless of the type or level of services provided during the visit. Co-payments are not usually specified by percentages.
COBRA:Federal legislation that lets you, if you work for an insured employer group of 20 or more employees, continue to purchase health insurance for up to 18 months if you lose your job or your coverage is otherwise terminated. For more information, visit the Department of Labor.
College Fund for Children:Amounts you wish to provide your surviving children to cover future college expenses.
Credit for Prior Coverage:This is something that may or may not apply when you switch employers or insurance plans. A pre-existing condition waiting period met under while you were under an employer's (qualifying) coverage can be honored by your new plan, if any interruption in the coverage between the two plans meets state guidelines.
Current Life Insurance Coverage:Total amount of life insurance coverage you currently have for yourself.
Date of Issue:The effective date of the policy or contract as issued by the insurer.
Death Benefit:The amount paid to the beneficiary upon the death of the insured regardless of cause.
Debt Repayment:Credit card debt, auto loans, home equity loans, mortgages or other debt that you wish to repay. Providing the ability to repay these loans if you were to die can significantly help your family meet their monthly living expenses.
Deductible:The amount an individual must pay for health care expenses before insurance covers the costs. Often, insurance plans are based on yearly deductible amounts.
Denial Of Claim:Refusal by an insurance company to honor a request by an individual to pay for health care services obtained from a health care professional.
Deferred Annuity:An annuity in which periodic benefit payments do not begin until after a specified number of years or the annuitant reaches a specific age.
Dependents:Spouse and/or unmarried children (whether natural, adopted or step) of an insured.
Effective Date:The date your insurance is to actually begin. You are not covered until the policies effective date.
Estate or Inheritance Taxes on Assets:Taxes that are required to be paid on your assets at death.
Exclusions:Medical services that are not covered by an individual's insurance policy.
Explanation of Benefits:The insurance company's written explanation of a claim, showing what they paid and what the individual must pay. Sometimes accompanied by a benefits check.
Evidence of Insurability:Proof of a person's physical condition, occupation or other factors. This is used by a life insurance company to determine the acceptability of the applicant for life insurance.
Face Amount:The amount stated on the life insurance policy that will be paid in the event of the death of the insured or at the policy's maturity, whichever occurs first. This does not include additional amounts which may be payable under accidental death or other special provisions or amounts acquired through the application of policy dividends, if any.
Fixed Amount Periodic Payment:Payments made in a specified amount that will completely exhaust a principal sum over a specified time period.
Fixed Annuity:An annuity that guarantees a minimum rate of interest during any accumulation period and provides a guaranteed periodic payment at annuitization.
Flexible Premium Deferred Annuity:An annuity that allows additional payments after the initial funding with annuitization beginning after a specified number of years.
Free-Look Provision:A provision in a life insurance policy or annuity contract that gives the policy owner or contract owner a stated amount of time to review a new policy or contract after issuance and receipt. The policy or contract can be returned and voided within this time frame for a refund of all premiums paid; for life insurance policies, cancellation of coverage is effective from date of issue.
Funeral Costs:All costs required to cover the cost of the funeral.
Generic Drug:A "twin" to a "brand name drug" once the brand name company's patent has run out and other drug companies are allowed to sell a duplicate of the original. Generic drugs are cheaper, and most prescription and health plans reward clients for choosing generics.
Grace Period:The time period following a monthly anniversary during which a life insurance policy will continue in force when the net cash surrender value is not sufficient to cover the monthly expense charge currently due.
Group Insurance:Coverage through an employer or other entity that covers all individuals in the group.
Health Care Decision Counseling:Services, sometimes provided by insurance companies or employers, that help individuals weigh the benefits, risks and costs of medical tests and treatments. Unlike case management, health care decision counseling is non-judgmental. The goal of health care decision counseling is to help individuals make more informed choices about their health and medical care needs, and to help them make decisions that are right for the individual's unique set of circumstances.
Health Maintenance Organizations (HMOs): Health Maintenance Organizations represent "pre-paid" or "capitated" insurance plans in which individuals pay a fixed monthly fee for services, instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided, Services are provided by physicians who are employed by, or under contract with, the HMO.
HIPAA:A Federal law passed in 1996 (full name is "The Health Insurance Portability and Accountability Act of 1996.") that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care.
Home Equity:Total amount of equity in your home that you are willing to use toward your living expenses. Only include the home equity that you consider available to use toward your living expenses. For example, the equity you would make available by selling your home and moving into a smaller one.
Immediate Annuity:An annuity that begins payments within 12 months of the purchase date. An immediate annuity usually makes a payment at the end of each period of payment. The interval may be monthly, quarterly, semi-annually or annually.
In-network:Providers or health care facilities which are part of a health plan's network of providers with which it has negotiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts.
Income Tax:This is your income tax rate. Changing this rate only affects your interest income from your investments. All other income and expenses should be entered on an after tax basis.
Indemnity Health Plan:Indemnity health insurance plans are also called "fee-for-service." These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose their health care professionals.
Individual Health Insurance:Health insurance coverage on an individual, not group, basis. The premium is usually lower for an individual health insurance plan than for a group policy.
Individual Retirement Annuity (IRA):An annuity, available as a retirement account, for someone who is employed. IRAs receive favorable tax status under Section 408 of the Internal Revenue Code. IRAs are sometimes referred to as Individual Retirement Accounts.
Inflation Rate:What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2009. The CPI for 2009 was -1.0%, as reported by the Minneapolis Federal Reserve. Your total expenses are increased by this rate for each year you require income. The income you would receive from your life insurance policy is used to cover any shortfalls between your expected income from all sources and your expenses.
Insured:The person whose life is covered by a life insurance policy.
Interest Rate (Current):The current rate of interest credited to the life insurance policy or annuity contract.
Interest Rate (Loan):The current rate at which interest is charged for a life insurance policy loan.
Investments:Total value of all investments that you are willing to use toward your living expenses.
Irrevocable Beneficiary:A beneficiary designation that cannot be changed without the beneficiary's consent.
Issue Age:The insured's age at the time life insurance coverage takes effect. Insurance plans typically define issue age as either the age at the insured's last birthday or nearest birthday.
Joint Annuity (Joint Life Annuity):An annuity payable to two or more annuitants until one of the two annuitants dies. The joint annuity may provide for continuation of payment or a reduced payment during the life of the surviving annuitant.
Lapse:The termination of an insurance policy due to nonpayment of premiums or, in the case of variable life and universal life insurance policies, the depletion of cash value below the amount needed to keep the policy in force. Under certain circumstances, coverage might continue under a settlement option.
Life Annuity:An annuity that pays a fixed income during the annuitant's lifetime. Payments cease at the annuitant's death, even if the annuity has not yet returned an amount equal to the premiums paid.
Lifetime Income with Period Certain:Income paid for the life of the annuitant, guaranteeing payment for a certain number of years if the annuitant does not survive. In the event the annuitant dies within the certain period, the beneficiary receives benefits for the remainder of the designated period.
Lifetime Maximum Benefit (or Maximum Lifetime Benefit):the maximum amount a health plan will pay in benefits to an insured individual during that individual's lifetime.
Limitations: a limit on the amount of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance.
Living Expenses with Children at Home:Total monthly expenses while your children are living at home. This should include all monthly expenses except child care.
Living Expenses with Children Gone:Total monthly expenses after your children have left home. This should include all monthly expenses.
Loan:A sum granted by a life insurance company to the owner of a life insurance policy, secured by the policy's cash surrender value.
Loan (Outstanding):The total amount of policy loans, including both principal and interest accrued.
Long-Term Care Policy:Insurance policies that cover specified services for a specified period of time. Long-term care policies (and their prices) vary significantly. Covered services often include nursing care, home health care services, and custodial care.
Long-term Disability Insurance:Pays an insured a percentage of their monthly earnings if they become disabled.
LOS:LOS refers to the length of stay. It is a term used by insurance companies, case managers and/or employers to describe the amount of time an individual stays in a hospital or in-patient facility.
Managed Care:A medical delivery system that attempts to manage the quality and cost of medical services that individuals receive. Most managed care systems offer HMOs and PPOs that individuals are encouraged to use for their health care services. Some managed care plans attempt to improve health quality, by emphasizing prevention of disease.
Maturity Date:For life insurance policies, the maturity date is the end of the contract term.
Maximum Dollar Limit:The maximum amount of money that an insurance company will pay for claims within a specific time period.
Medigap Insurance Policies:Medigap insurance is offered by private insurance companies, not the government. It is not the same as Medicare or Medicaid. These policies are designed to pay for some of the costs that Medicare does not cover.
Monthly Anniversary:The same day as the policy date for each succeeding month.
Net Cash Surrender Value:The cash surrender value less any outstanding loans and/or surrender charges.
Network:A group of doctors, hospitals and other health care providers contracted to provide services to insurance companies customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.
Out-of-Network:This phrase usually refers to physicians, hospitals or other health care providers who are considered nonparticipants in an insurance plan. Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual's insurance company.
Out-Of-Pocket Maximum:A predetermined limited amount of money that an individual must pay out of their own pocket, before an insurance company will pay 100 percent for an individual's health care expenses.
Outpatient:An individual (patient) who receives health care services (such as surgery) on an outpatient basis, meaning they do not stay overnight in a hospital or inpatient facility. Many insurance companies have identified a list of tests and procedures (including surgery) that will not be covered (paid for) unless they are performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe health care facilities where procedures are performed.
Period-Certain Annuity:An annuity with a predetermined guaranteed number of payments, at equal intervals made over a specified period. The payments are payable whether or not the annuitant dies prior to the end of the stipulated period.
Planned Periodic Payment:The premium designated at the time of application as the planned amount to be paid at specific intervals until the maturity date.
Policy Anniversary:An anniversary of the policy issue date.
(Policy) Contract:The basic written agreement between the insurer and the policy owner or contract owner. The policy or contract, together with the application and all endorsements and attached papers, constitutes the entire contract of insurance. A policy is usually life insurance; a contract is usually an annuity.
Policy Date:The date on which coverage becomes effective, as shown on the policy date page.
Policy Owner/Contract Owner (Owner):An individual or entity that owns an insurance policy or annuity contract. The policy owner/contract owner may be the insured or the beneficiary. The policy owner pays the premium and is typically the only individual or entity who is permitted to make changes to a policy or contract, such as to change the beneficiary, withdraw cash values, or make loans on the policy. He or she may, or may not, also be the insured on the policy. Such rights may be limited in the event the policy has a collateral assignment.
Pre-existing Conditions:A medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.
Preferred Provider Organizations (PPOs): You receive discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care.
Premium:Payments to the insurance company to purchase a life insurance policy and to keep it in force.
Primary Care Provider (PCP):A health care professional (usually a physician) who is responsible for monitoring an individual's overall health care needs.
Probate Costs:Probate costs cover a state's legal fees for disbursing the assets of the deceased. You may incur significant probate costs, depending on your state of residence, even if you have a will.
Provider:Provider is a term used for health professionals who provide health care services. Sometimes, the term refers only to physicians. Often, however, the term also refers to other health care professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized health care services.
Reasonable and Customary Fees:The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure.
Retraining and Education for Spouse:Monthly expenses expected to cover any cost of education or retraining for your spouse to re-enter the workforce.
Return on Investments (ROI):The annual rate of return for your investments. The actual rate of return is largely dependent on the type of investments you select. The actual rate of return is largely dependent on the type of investments you select. For example, from December 1999 to December 2009, the average annual compounded rate of return for the S&P 500 was -0.6%, including reinvestment of dividends. From January 1970 to December 2009, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
Rider:A written agreement attached to a life insurance policy or annuity contract that limits or expands the policy's or contract's terms or coverage. Riders may increase the premium you pay to the insurance company.
Risk:The chance of loss, the degree of probability of loss or the amount of possible loss to the insuring company. For an individual, risk represents such probabilities as the likelihood of surgical complications, medications' side effects, exposure to infection, or the chance of suffering a medical problem because of a lifestyle or other choice.
Savings Balance:The amount of funds available to your family after your expenses at death have been covered. This includes any current life insurance.
Second Opinion:It is a medical opinion provided by a second physician or medical expert, when one physician provides a diagnosis or recommends surgery to an individual. Individuals are encouraged to obtain second opinions whenever a physician recommends surgery or presents an individual with a serious medical diagnosis.
Short-Term Disability:An injury or illness that keeps a person from working for a short time. The definition of short-term disability (and the time period over which coverage extends) differs among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual's full or partial wages during a time of injury or illness (that is not work-related) that would prohibit the individual from working.
Short-Term Medical:Temporary coverage for an individual for a short period of time, usually from 30 days to six months.
Social Security Survivor Benefits:Depending on your work history, your family may qualify for Social Security benefits. Typically, Social Security benefits for the widow/widower cease when the youngest child turns 16. The child's benefit generally continues to age 18. Once the children are gone, Social Security benefits are generally not available until the widow/widower turns age 60.
Spouse Income from Work:Income expected from your spouse after your death. If your spouse needs education or retraining, make sure that the starting year for this income provides adequate time to complete.
State Mandated Benefits:When a state passes laws requiring that health insurance plans include specific benefits.
Stop-loss:The dollar amount of claims filed for eligible expenses at which point you've paid 100% of your out-of-pocket and the insurance begins to pay at 100%. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.
Surrender:The policy owner's right to terminate policy coverage in exchange for the policy's cash surrender value or other equivalent nonforfeiture values.
Surrender Charge:As provided in the provisions of a life insurance policy or annuity contract, surrender charges are charges an insurance company may deduct if the owner surrenders a life insurance policy or annuity contract for the cash or accumulation value. Companies may also deduct this charge if the owner borrows money on his or her life insurance policy, if the policy lapses for nonpayment, or if the policy owner elects to decrease the face amount of the policy.
Term Insurance:A plan of insurance that covers the insured for a specified period of time (term) and not for his or her entire life. The policy pays a death benefit only if the insured dies during the term and if the policy has not lapsed for nonpayment of the premiums due.
Underwriter:The company that assumes responsibility for the risk, issues insurance policies and receives premiums.
Uninsured Medical Costs:Any medical costs that are not covered by your medical insurance. Make sure to include any deductibles.
Universal Life:A flexible-premium, current-assumption, adjustable death benefit policy. Similar to traditional life insurance policies, universal life pays a death benefit and accumulates cash value; however, unlike traditional life insurance policies, a universal life insurance policy allows the policy owner to adjust the death benefit and to vary the amount and/or frequency of premium payments.
Usual, Customary and Reasonable (UCR) or Covered Expenses:An amount customarily charged for or covered for similar services and supplies which are medically necessary, recommended by a doctor, or required for treatment.
Variable Life Insurance:A life insurance policy that provides flexible premiums and death benefits, as well as the opportunity to build cash value in separate investment options. The cash surrender value is not guaranteed, but will fluctuate with the market value of the separate account investment portfolio. The policy owner bears the risk of poor fund performance.
Waiting Period:A period of time when you are not covered by insurance for a particular problem.
Whole Life Insurance:A life insurance policy that covers the insured for life, with level premiums payable for his or her entire lifetime.
Years for Insurance Income to Last:Number of years your spouse will need to use your insurance proceeds to provide for living expenses and income.
