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.
An actuary assists an insurer in calculating health insurance premium rates based on the information gathered about trends in health and health care.
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.
An agent, or broker, represents one or more insurance
companies in selling insurance.
An allowable expense is an expense specified by an insurance
plan to be eligible for payment either in part or whole.
An amendment to an insurance policy changes the benefits, coverage, terms, or conditions.
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.
The beneficiary is the person named by the insured to whom
the proceeds of a life or health insurance policy are payable.
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.
The certificate holder is the insured person under a group
A claim is a formal request to the insurance company for
reimbursement for a loss, as set out in the plan.
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.
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 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.
The deductible is the amount the insured pays each calendar year before benefits are paid.
The insuredís dependents are the lawful spouse and unmarried children under a certain age who are eligible for coverage.
The date on which coverage under an insurance policy begins is called the effective date.
An eligible expense is one set out by the terms of the policy
to cover the insuredís costs, and must be medically necessary.
An employee becomes qualified to enroll for coverage on the
The enrollment period is the time during which members may
enroll in a group plan.
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 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.
In a fully-insured plan, an insurance company becomes
directly liable to employees for eligible expenses in exchange for payment of
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.
When a claim has been reported, itís considered a pending
claim until final coverage determination has been made.
The plan year is the calendar, policy, or fiscal year for
which a plan's records are kept.
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.
The premium is the cost for coverage during a specified
period of time.
A rider is a provision that changes, adds, or excludes various coverage's, terms or conditions in the policy.
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
Short-term disability insurance helps provide income when the insured is unable to work due to a disability.
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 is the process that assesses and classifies the
potential degree of risk an applicant represents.
The monitoring of the necessity and efficiency of health-care
services and procedures is called the utilization review.
Plans that include vision benefits have coverage for eye
exams and discounts on eyeglasses.
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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