Insurance Glossary

These definitions are deliberately brief and are subject to the provisions that can only be exactly expressed in the policies issued to a client.

Additional insured
An entity other than the named insured that is covered under the terms of the contract and shares in the limits of liability available.
Aggregate limit
The maximum amount of coverage for a specific period of time, usually the term of the contract, no matter the number of incidents.
Benefit bank
Any unused portion of the office overhead benefit that can be used by the insured at a later date, in the same period of disability, when actual expenses exceed the benefit limit.
Benefit booster
Option that serves as a cost of living adjustment on disability benefits. If elected, benefits will increase automatically by 3%, or the consumer price index, whichever is lower.
Business owners policy
A single, comprehensive policy offering property and liability coverage. Designed typically for small and medium sized offices.
Certificate of insurance
A form verifying the issuance of a policy and details of coverage in general.
Claims-made policy
Coverage for incidents that happen after the retroactive date, but prior to the expiration of a policy. The claim, however, must be reported while a policy is in force. Claims filed after coverage ends may be covered by purchasing an extended reporting period (ERP or tail).
Declarations page
This portion of the policy that names the insured, policy effective date, premium, and limits of liability.
Disability (any occupation)
The inability to perform the duties of any occupation you are suited for by age, education or training due to a medically determinable physical or mental impairment.
Disability (own occupation)
The inability to perform the substantial duties of your own occupation due to a medically determinable physical or mental impairment.
Disability (social security)
The inability to engage in any substantial work activity (defined as a dollar amount currently stated by law at no more than $500 a month) due to a medically determinable physical or mental impairment expected to last for at least 12 months or result in death.
Employment Practices Liability Insurance
Coverage against legal actions connected to wrongful employment practices, such as discrimination, sexual harassment and termination.
Extended clinical duty
Option for researchers and academians that extends coverage outside the classroom to supervisory or part time clinical work associated with the insured's academic job duties and responsibilities.
Extended reporting period (Tail)
Extension of coverage on a claims-made liability policy after its expiration.
Face amount
The amount of insurance, usually found on the face page, provided by the terms of an insurance contract, i.e. in life insurance it is known as the death benefit.
When more than one practitioner is insured under one policy. Each individual receives separate aggregate limits that are not always available in other programs.
Guaranteed insurability
Disability coverage that allows the purchase of additional protection each year to cover an insured's annual pay raises. Increases of up to 10% of the existing coverage may be purchased each time.
Guaranteed renewability
Term life policy that is renewable to age 75 without further medical evidence of insurability.
Hard market
An unfavorable insurance market for the consumer, exhibiting a rise in premiums and often a decrease in availability.
Independent contractor
A person to whom the named insured provides a 1099 form for income tax purposes.
Inflation safeguard
Coverage designed to prevent inflation from eroding a life policy's purchasing power.
Limit of liability
The maximum amount for which an insurer is liable, as stated in the contract.
Living benefit
Early payment of death benefits, up to $100,000 or 50% of the amount of life insurance policy (whichever is less), if a licensed physician certifies that the insured's life expectancy is 12 months or less.
Occurrence policy
A policy providing liability coverage for incidents occurring during the policy period, regardless of when the claim is filed.
For Lifestyle-65 plan only. Supplemental disability benefits that reduce the benefits to be received, such as social security disability benefits and any other disability benefits received under any state or federal law (but not any individual insurance also owned).
Preexisting condition
Any physical condition for which an insured has received treatment six months prior to the approval date of an insurance policy, any mental condition for which treatment was received in the last year, or any substance addiction that treatment was received for in the last six months.
The cost of insurance coverage for a specified risk and time period.
Pro rata
Distribution of liability among several named insureds sharing a policy on a common risk.
Residual benefits
Disability benefits paid once an insured returns to work after a period of total disability, which has lasted six months or longer. The insured must be earning less than 75% of their pre-disability income. The benefit will equal to the percentage of their lost earnings applied to the disability benefit for the next 12 months.
Soft market
An ideal insurance market for the consumer, exhibiting low prices, adequate availability, and low claims risks.
Successive periods of disability
Periods of disability, from the same or related cause, separated by a six month time period. In the case of Trust Income Protection Plans, benefit payments will begin again immediately without the imposition of a new benefit waiting period.
Supplementary payments
Common provision in liability policies under which the insurer agrees to pay, in addition to the limit of liability: defense costs, premiums on various bonds, interest accruing after judgment and other reasonable expenses.
Survivor benefits
If the insured should die while receiving total disability benefits their survivors would receive a sum equal to three monthly benefit amounts.
Term life insurance
A plan of insurance that covers the insured for only a certain period of time (term), not for their entire life. The policy pays death benefits only if the insured dies during the term. Coverage provides pure death protection without combining the insurance with elements of savings.
Umbrella liability policy
Separate, high limit policy in excess of the limits of the primary coverage and any other liability coverages.
Vicarious liability
Under the law, in certain cases, a person can be liable for another person's acts.
Waiting period
Period of time between the beginning of an insured's disability and the commencement of the period for which benefits are paid.
Waiver of premium
In the event of total disability for consecutive period (6 months for income protection and 9 months for life), premiums due are waived until the next quarterly payment date that follows cessation of disability benefits.
Whole life insurance
A plan of insurance for life, with premiums payable for a person's entire life. This plan includes a forced savings element that provides a cash value for the policy.