Insurance Glossary
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A Glossary of Insurance Terms and Definitions Ė Covering All The Bases

The insurance industry can be very intimidating.† If you donít know the jargon, you may end up having a claim refused because you didnít understand what the policy stated.† You bought your insurance policy so you could have peace of mind.† Now you can get some added peace of mind from this glossary of insurance terms and definitions.† Follow it carefully.

  • Accidental Death and Dismemberment Insurance (AD&D)
    AD&D insurance pays a specified amount for accidental death, or for the loss of sight or limbs as the result of an accident.

  • Active Status
    Employees who are actively working on a regular, full-time basis are known as having active status.

  • Actuary
    An actuary assists an insurer in calculating health insurance premium rates based on the information gathered about trends in health and health care.

  • Adjuster
    An adjuster is a representative of the insurer who seeks to determine the extent of the firm's liability for loss when a claim is submitted.

  • Agent
    An agent, or broker, represents one or more insurance companies in selling insurance.

  • Allowable expense
    An allowable expense is an expense specified by an insurance plan to be eligible for payment either in part or whole.

  • Amendment
    An amendment to an insurance policy changes the benefits, coverage, terms, or conditions.

  • Ancillary products
    Ancillary products are additional lines of coverage, such as X-rays or private rooms, found in a medical plan and may be purchased in addition to the plan.

  • Beneficiary
    The beneficiary is the person named by the insured to whom the proceeds of a life or health insurance policy are payable.

  • Case Management
    Case management refers to a cost control method that directs the insured to the most appropriate duration and type of service. †It can also refer to the monitoring of such outcomes.

  • Certificate holder
    The certificate holder is the insured person under a group plan.

  • Claim
    A claim is a formal request to the insurance company for reimbursement for a loss, as set out in the plan.

  • Co-insurance
    If the insured is required to pay any portion of the covered expenses, this is known as co-insurance.

  • Continuation of coverage
    Some plans may allow the insured to continue specified group coverage on a self-paying basis after they no longer meet eligibility requirements under the group.† This is known as continuation of coverage.

  • Conversion
    A plan may allow a covered person to convert from group coverage to an individual policy after continuation is exhausted or if no other option exists.† This is known as conversion.

  • Coordination of Benefits (COB)
    COB is a system which ensures that benefits arenít paid by other policies or plans.† The Coordination of Benefits may also ensure that coverage will be provided in a specific sequence when more than one policy or plan covers the claim.

  • Covered expense
    Covered expenses are those eligible for medical care or supplies that will be paid by the insurance company.

  • Current Procedural Terminology (CPT)
    CPT is a set of five-digit codes, used for billing purposes, that identify medical services rendered.

  • Deductible
    The deductible is the amount the insured pays each calendar year before benefits are paid.

  • Dependent
    The insuredís dependents are the lawful spouse and unmarried children under a certain age who are eligible for coverage.

  • Effective date
    The date on which coverage under an insurance policy begins is called the effective date.

  • Eligible expense
    An eligible expense is one set out by the terms of the policy to cover the insuredís costs, and must be medically necessary.

  • Eligibility date
    An employee becomes qualified to enroll for coverage on the eligibility date.

  • Enrollment period
    The enrollment period is the time during which members may enroll in a group plan.

  • Exclusions
    Exclusions are specified conditions that are not eligible for reimbursement under a policy or plan.

  • Explanation of Benefits (EOB)
    The EOB explains what parts of a claim are covered expenses and whether the claim was paid by the plan.

  • Experience rating
    Experience rating is a method used to determine premium rates, based on the claims activity over a period of time for a particular group. †Itís usually expressed as a percent or ratio.

  • Fully-insured plan
    In a fully-insured plan, an insurance company becomes directly liable to employees for eligible expenses in exchange for payment of premiums.

  • Late enrollee
    A late enrollee is an employee or eligible dependent who enrolls for coverage more than 31 days after their original eligibility date. †They must provide medical history or evidence of insurability.

  • Maximum allowable charge
    The maximum amount eligible for payment under a policy for a particular medical expense is the maximum allowable charge.

  • Pending claim
    When a claim has been reported, itís considered a pending claim until final coverage determination has been made.

  • Plan year
    The plan year is the calendar, policy, or fiscal year for which a plan's records are kept.

  • Pre-existing condition
    A pre-existing condition is a medical condition for which any medical advice, diagnosis, care, or treatment was recommended or received prior to the insuredís enrollment.

  • Pre-existing condition limitation
    An exclusion of coverage is made for a pre-existing condition for a specified period of time.

  • Premium
    The premium is the cost for coverage during a specified period of time.

  • Rider
    A rider is a provision that changes, adds, or excludes various coverage's, terms or conditions in the policy.

  • Self-funding
    In a self-funding health benefit plan, the employer sponsors a plan typically funded by contributions from the employer and employees.

  • Short-term disability insurance (weekly income)
    Short-term disability insurance helps provide income when the insured is unable to work due to a disability.

  • Subrogation
    Subrogation allows an insurance company to pursue a third party for claims paid that are the responsibility of that third party.

  • Third-party administrator (TPA)
    A TPA may collect premiums, process claims, or provide administrative services for a benefit plan.

  • Underwriting
    Underwriting is the process that assesses and classifies the potential degree of risk an applicant represents.

  • Utilization review
    The monitoring of the necessity and efficiency of health-care services and procedures is called the utilization review.

  • Vision benefits
    Plans that include vision benefits have coverage for eye exams and discounts on eyeglasses.

  • Waiting period
    The waiting period is the time an employee must wait before insurance is effective or benefits are considered eligible.

That was a brief glossary of insurance terms and definitions.† It was intended to give you enough knowledge to buy your insurance with confidence.† It didnít get too technical.† The purpose was to inform you Ė not to give you information overload.† This is the basic knowledge thatíll guide you through your purchase.

About The Author

Gareth Marples is a successful freelance writer providing valuable tips and advice for consumers regarding auto insurance quotes, caring for your health, wellness & fitness and even vitamins, supplements & organic herbs. His numerous articles offer moneysaving tips and valuable insight on typically confusing topics.

This "Glossary of Insurance Terms & Definitions" reprinted with permission.

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