Insurance Glossary

Insurance Glossary


Accelerated benefits: Benefits available in some life insurance policies before death, usually triggered by long-term, catastrophic or terminal illness. They are also known as living benefits.

The accumulation period is when a person pays money into an annuity contract and builds up a fund to provide a deferred annuity.

Actuary: A mathematician working for a health insurance company is responsible for determining what premiums the company needs to charge mainly based on claims paid versus amounts of compensation generated. Their job is to ensure a block of business is priced to be profitable.

Adjustable life insurance: A type of insurance that allows the policyholder to change the insurance plan, raise or lower the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.

I am admitting privileges: The right granted to a doctor to admit patients to a particular hospital.

Adverse selection: Under a health insurance plan, if only the sick people who need to take advantage of the covered benefits join the program, the high number of resulting claims could cause the costs paid by the intent to soar and threaten it with financial collapse, a phenomenon known as “adverse selection.”

Advocacy: Any activity is to help a person or group get something the person or group needs or wants.

Agent: Licensed salespersons representing one or more health insurance companies and presenting their products to consumers.

Allocated benefits: Maximum amount for specific services as itemized in an insurance contract.

Ambulatory care: Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery, and rehabilitation.

Annuities are contracts sold by life insurance companies (the seller must be a licensed insurance entity in your state). In their simplest form, you pay a sum of money (either a lump sum or a series of payments), and the insurance company makes periodic payments to you, beginning on the date in your contract and continuing for the rest of your life. The earnings on your annuity payments are not taxable during the accumulation phase of your agreement; the annuity payments are taxable as income when you receive them. You may place your costs in professionally managed funds, similar to mutual funds, and control how these payments are invested during the life of your contract. Unlike mutual funds, variable annuities have insurance provisions and guarantees to preserve the value of the principal you pay into the annuity. They also generally carry higher fees than mutual funds. Annuities may entail extensive taxation and estate issues, and annuity buyers should be aware of such problems.

Application: A statement of information made by someone applying for life insurance. The information gathered helps the life insurance company assess whether the risk presented by the applicant is acceptable to underwriters.

Association: A group. Often, associations can offer individual health insurance plans specially designed for their members.


Beneficiary: The person or financial instrument (for example, a trust fund) named in the policy as the recipient of insurance money in the event of the policyholder’s death.

Benefit: Amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.

Blanket medical expense: A provision that entitles the insured person to collect up to a maximum for all hospital and medical expenses without limitations on specific medical expenses.

Bond insurance: Insurance issued by a private insurance company for an entire issue or specific maturities that guarantee to pay principal and interest when due. This will provide a triple-A credit rating and, thus, a lower borrowing cost for the issuer.

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. Other companies sell generic versions of many popular drugs at lower costs when patents run out. Check your insurance plan to see if coverage differs between name-brand and generic twins.

Broker: Licensed insurance salesperson who obtains quotes and plans from multiple sources for clients.

Business insurance: A policy that provides coverage to a business. It is often purchased to indemnify a company for the loss of services if a key employee (such as a partner) becomes disabled.

Business life insurance: Life insurance purchased by a business enterprise on the life of a firm member. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner or by a corporation to reimburse it for loss caused by the end of a key employee. (Also known as critical person insurance.)


Capitation: Capitation represents a set dollar limit that you or your employer pay to a health maintenance organization (HMO), regardless of how much you use (or don’t use) the services offered by the health maintenance provider.

Carrier: The insurance company or HMO offering a health plan.

Case Management: Case management is a system embraced by employers and insurance companies to ensure that individuals receive appropriate, reasonable health care services.

Certificate of Insurance: The printed description of the benefits and coverage provisions forming the contract between the carrier and the customer. Discloses what is covered, what is not, and dollar limits.

Claim: A request by an individual (or their provider) to an individual’s insurance company for the insurance company to pay for services obtained from a health care professional.

Co-insurance refers to money that an individual must pay for services after a deductible has been paid. In some health care plans, co-insurance is called “co-payment.” A percentage often specifies co-insurance. For example, the employee pays 20 percent toward the charges for a service, and the employer or insurance company pays 80 percent.

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 HMOs require a $10 “co-payment” for each office visit, regardless of the type or level of services provided during the visit. Percentages do not usually specify co-payments.

COBRA: Federal legislation 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 employer-sponsored coverage is otherwise terminated. For more information, visit the Department of Labor.

Comprehensive medical expense insurance: Insurance provides coverage in one policy for primary hospital and significant medical expenses.

Conventional health plan: Plan that provides all benefits and issues certificates containing the insurance company’s guarantees.

Convertible term insurance: Term insurance offers the policyholder the option of exchanging it for a permanent insurance plan without evidence of insurability.

Coordination of benefits (COB): Integrating benefits payable under more than one health insurance plan so that the insured person benefits from all sources do not exceed 100 percent of allowable medical expenses or eliminate incentives to contain costs.

Contributory plan: Group plan under which the insured shares the plan’s cost with the policyholder.

Credit life insurance: Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase, or other obligation in case of death.

Credit for Prior Coverage: This may or may not apply when you switch employers or insurance plans. A pre-existing condition waiting period met while you were under an employer’s (qualifying) coverage can be honored by your new project if any interruption in the range between the two plans meets state guidelines.


Deductible: The amount an individual must pay for health care expenses before insurance (or a self-insured company) covers the costs. Often, insurance plans are based on yearly deductible amounts.

Deferred annuity: Annuity payments that will begin at some future date.

Delinquency: Failure to comply with the terms and conditions of a mortgage, usually by not making payments on time. A delinquency rate is a sum of delinquencies at a point in time divided by the total of outstanding mortgages at that time.

Denial Of Claim: An insurance company or carrier refuses to honor a request by an individual (or their provider) to pay for healthcare services obtained from a healthcare professional.

Dependent Worker: A worker in a family in which someone else has a more significant personal income.

Dependents: Spouse and unmarried children (whether natural, adopted, or step) of an insured.

Deposit term insurance: A form of term insurance, not involving a “deposit,” in which the first-year premium is more significant than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases, the partial endowment can be applied toward purchasing a new term policy or, perhaps, a whole life policy.

Disability benefit: A feature added to some life insurance policies providing for waiver of premium, and sometimes payment of monthly income, if the policyholder becomes totally and permanently disabled.

Disability income insurance: Insurance that provides periodic payments when an insured person cannot work due to illness or injury.


Effective date: Your insurance is, and you are not covered until the policy’s effective date.

Eligibility date: When a member of an insured group applies for insurance.

Eligible employees: Employees who meet the eligibility requirements for insurance outlined in a group policy.

Eligibility period: Time following the eligibility date (usually 31 days) during which a group member may apply for insurance without evidence of insurability.

Employee Assistance Programs (EAPs): Mental health counseling services that insurance companies or employers sometimes offer. Typically, individuals or employers do not have to pay directly for services provided through an employee assistance program.

Employer-Sponsored Health Insurance: Of Americans who have health coverage, nearly 60 percent secure that coverage through an employer-sponsored plan, often called group health insurance. Millions take advantage of the coverage for reasons as obvious as employer responsibility for a significant portion of the health care expenses. Group health plans are also guaranteed issues, meaning that a carrier must cover all applicants whose employment qualifies them for coverage. In addition, employer-sponsored plans typically can include a range of plan options from HMO, and PPO plans to additional coverage such as dental, life, and short- and long-term disability.

E&O: Errors and omissions insurance. Errors and omissions coverage (E&O) pays your defense costs if you’re sued for negligence in providing a product or service to a client. It can also cover (at least partially, depending on your policy) your costs if you’re found liable and have to pay damages.

Exclusions: Medical services not covered by an individual’s insurance policy.

Experience: Relationship is usually expressed as a percentage or ratio of claims to premiums for a stated period.

Explanation of Benefits: The insurance company’s written answer to a claim showing what they paid and what the client must pay. They were sometimes accompanied by a benefits check.

Extended-term insurance: A form of insurance available as a non-forfeiture option, providing the original amount of insurance for a limited period.


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: Contrary to popular belief, there is often no grace period for insurance premiums, such as auto insurance. So, if your payment has not been received and cashed by your insurer, you are likely not insured.

Group annuity: A pension plan providing grants at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.

Group Health Insurance: Coverage through an employer or other entity that covers all individuals in the group.

Group life insurance: Life insurance usually does not require medical examinations on a group of people under a master policy. It is typically issued to an employer for the benefit of employees or members of an association, for example, a professional membership group. The individual members of the group hold certificates as evidence of their insurance.


Health Care Decision Counseling: Services, sometimes provided by insurance companies or employers, help individuals weigh the benefits, risks, and costs of medical tests and treatments. Unlike case management, healthcare decision counseling is non-judgmental. The goal of healthcare 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 Cooperatives have been proposed in the Senate as an alternative to a proposed government plan or public option. The cooperatives, which would be structured as non-profits owned by their members, could offer a network of healthcare providers or contract out for medical services. The concept championed by some Democrats would provide “seed money” for the cooperatives, which customer premiums would sustain.

Health Maintenance Organizations (HMOs): Health Maintenance Organizations represent “pre-paid” or “capitated” insurance plans in which individuals or their employers pay a fixed monthly fee for services instead of a separate charge for each visit or service. The monthly payments remain the same, regardless of the types or levels of services provided. Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs, vary in design. Depending on the type of the HMO, services may be provided in a central facility or a physician’s office (as with IPAs.)

HIPAA: A Federal law passed in 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. The full name is “The Health Insurance Portability and Accountability Act of 1996.”

Hospice: Care provided to terminally ill patients and their families that emphasizes emotional needs and coping with pain and death rather than cure.

Hospital indemnity insurance: Health insurance that provides a stipulated daily, weekly, or monthly payment to an insured person during hospital confinement without regard to the actual confinement expense.


Immediate annuity: An annuity that begins its payment stream to the policyholder after a single premium is paid.

In-network: Providers or health care facilities that 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 a lower cost to the insurance companies with which they have contracts.

Indemnity Health Plan: Indemnity health insurance plans are also called “fee-for-service.” These are the types of projects that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a predetermined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other portion. 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 healthcare professionals.

Independent Practice Associations: IPAs are similar to HMOs, except that individuals receive care in a physician’s office rather than in an HMO facility.

Individual Health Insurance: Health insurance coverage on an individual, not group, basis. The premium is usually higher for an individual health insurance plan than for a group policy, but you may not qualify for a group plan. Read recent news articles about personal health insurance.

Individual retirement account (IRA): An account set up by an individual that, in some cases, allows contributions to be deducted from income and permits earnings on contributions to accumulate tax-deferred until retirement, regardless of whether the contributions are deductible. Under the 1986 tax law, only those who do not participate in a pension plan at work or who do participate and meet specific income guidelines can make tax-deductible contributions to an IRA. All others can make contributions to an IRA on a non-deductible basis.

Insurable risk: The conditions that make a risk insurable are (1) the peril insured against must produce a substantial loss not under the control of the insured, (2) there must be a large number of homogeneous exposures subject to the same perils, (3) the loss must be calculable and the cost of insuring it must be economically feasible, (4) the peril must be unlikely to affect all insured’s simultaneously, and (5) the loss produced by a risk must be definite and have a potential to be financially severe.


Lapsed Policy: A policy terminated at the end of the grace period because of non-payment of premiums.

Level premium insurance: Insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same year and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up a reserve to cover the higher price in the last years.

Liability insurance: Liability involves the cause of damage to someone’s property and the bodily injury someone incurs as a result of the negligence of another party. Liability insurance provides coverage for either individuals or businesses.

Life annuity: A contract that provides an income for life.

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 number of benefits paid out for a particular covered expense, as disclosed on the Certificate of Insurance.

Limited payment life insurance: Whole life insurance on which premiums are payable for a specified number of years or until death if death occurs before the end of the specified period.

Long-Term Care Policy: Insurance policies that cover specified services for a specified period. 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 employers to describe an individual’s stay in a hospital or inpatient facility.


MSA: Medical savings account (MSA) is set up as a tax-deferred trust or savings understanding, similar to an IRA, in which you set aside money for your routine, out-of-pocket health care expenses and to build up savings for your future medical costs.

Primary medical expense insurance: Insurance that provides benefits for most medical expenses up to a high maximum benefit. Such contracts often contain internal limits and usually are subject to deductibles and co-insurance.

Managed Care: A medical delivery system that attempts to manage the quality and cost of individuals’ medical services. 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 disease prevention.

Maximum Dollar Limit: The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific period. Maximum dollar limits vary greatly. They may be based on or specified in terms of types of illnesses or types of services. Sometimes they are defined in terms of lifetime, sometimes for a year.

Medicaid: Simply put, Medicaid is health insurance for the poor. It was created in 1965 as a joint federal/state public assistance program for those too poor to afford health care. Since the individual states administer the program under federal guidelines, the benefits offered and eligibility requirements vary widely. About 36 million people around the U.S., including children, the elderly, the blind, and the disabled, are currently covered by Medicaid. Usually, Medicaid recipients pay no part of the costs for covered medical expenses, although a co-payment is sometimes required.

Medicare is a federal insurance program primarily serving those over 65 years old and younger, disabled people, and dialysis patients. It currently covers about 37 million Americans. Medicare is divided into Part A, which covers inpatient hospital services, nursing home care, home health care, and hospice care, and Part B, which helps pay the cost of doctors’ services, outpatient hospital services, medical equipment and supplies, and other health services and supplies. Recipients pay some part of the costs through deductibles. Since Medicare doesn’t cover all expenses, recipients often supplement their coverage through separate Medigap policies.

Medicare supplement insurance: Also known as Medigap, this health coverage pays for services not covered under the government’s basic Medicare plan. Some Medigap policies sold before January 1, 2006, may include prescription drug coverage, but new Medigap policies could not be dealt with drug coverage after that date. This time frame coincides with the introduction of the Medicare Part D benefit.

Medigap Insurance Policies: Medigap insurance is offered by private insurance companies, not the government, and it is not the same as Medicare or Medicaid. These policies are designed to cover some costs that Medicare does not cover.

Modified life insurance: A type of whole life policy with a relatively low premium in the first several years but that increases in later years.

Multiple Employer Trust (MET): A trust consisting of numerous small employers in the same industry, formed to purchase group health insurance or establish a self-funded plan at a lower cost than would be available to each of the employers individually.


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 healthcare services. Insured individuals typically pay less for using a network provider.

Noncontributory plan: Group insurance plan under which the employer does not require employees to share in its cost.

Non-participating policy: A life insurance policy in which the company does not distribute any part of its surplus to policyholders. Note that premiums for non-participating policies are usually lower than comparable participating policies. Note that some non-participating policies have both a maximum and a lower premium. The current premium reflects an anticipated experience more favorable than the company is willing to guarantee. It may be changed from time to time for the entire block of business to which the policy belongs.

Nonrenewal clause: Provision in a policy that states the circumstances under which an insurer may elect not to renew someone’s policy.


Open-ended HMOs: HMOs allow enrolled individuals to use out-of-plan providers and still receive partial or complete coverage and payment for the professional’s services under a traditional indemnity plan.

Ordinary life insurance: Life insurance is usually issued in amounts of $1,000 or more, with premiums payable on an annual, semi-annual, quarterly, or monthly basis.

Out-of-Plan (Out-of-Network): This phrase usually refers to physicians, hospitals, or other health care providers who are considered nonparticipants in an insurance plan (usually an HMO or PPO). 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 partly by an individual’s insurance company.

Out-Of-Pocket Maximum: A predetermined limited amount of money that an individual must pay out of their savings before an insurance company or (self-insured employer) 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 performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe healthcare facilities where procedures are performed.

Partial disability: A disability that prevents a person from performing one or more functions of their regular job.

PEO: Professional employee organization (PEO) that small businesses may join to gain access to more affordable health insurance premiums

Permanent life insurance: A phrase used to cover any form of life insurance except term; generally, insurance that accrues cash value, such as whole life or endowment.

PIP: Personal injury protection (PIP), coverage to pay basic expenses for an insured and their family in states with no-fault auto insurance.

Plan Administration: Supervising the details and routine activities of installing and running a health plan, such as answering questions, enrolling individuals, billing and collecting premiums, and similar duties.

Policyholder: The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership, or a corporation.

Policy loan: Under an insurance policy, the amount that the policyholder can borrow at a specified interest rate from the issuing company, which uses the policy’s value as collateral for the loan. If the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the amount payable.

Policy term: The period for which an insurance policy provides coverage.

POS: POS (Point of Service) plans are more flexible than HMOs, but they require you to select a Primary Care Physician (PCP). Depending on your insurance company’s rules, you may choose to visit a doctor outside the network and still receive coverage, but the amount covered will be substantially less than if you went to a physician within your network. These plans tend to offer more preventive care and well-being services, such as smoking cessation workshops and health club discounts. It would be best if you chose a PCP. While you may choose to see a physician outside the network, if you don’t receive permission from your PCP, you’re likely to submit the bills yourself and receive only a nominal reimbursement, if any.

PPO: Preferred provider organization. PPOs give policyholders a financial incentive of reasonable co-payments(also called co-pays)  to stay within the group’s network of practitioners. You may go to any specialist without permission as long as the doctor participates in the network. If you see an out-of-network doctor, you may have to pay the entire bill yourself, then submit it for reimbursement. You may have to pay a deductible if you choose to go outside the network or pay the difference between what network doctors vs. out-of-network doctors charge.

Pre-Admission Certification: Also called precertification review or pre-admission review. Approval by a case manager or insurance company representative (usually a nurse) for a person to be admitted to a hospital or inpatient facility is granted before the admittance. Pre-admission certification often must be obtained by the individual. Sometimes, however, physicians will contact the appropriate individual. Pre-admission certification ensures that individuals are not exposed to inappropriate healthcare services (medically unnecessary).

Pre-Admission Review: A review of an individual’s health care status or condition before admission to an inpatient health care facility, such as a hospital. Case managers often conduct pre-admission checks or insurance company representatives (usually nurses) in cooperation with the individual, their physician or health care provider, and hospitals.

Pre-existing Conditions: A medical condition excluded from coverage by an insurance company because the state was believed to exist before the individual obtained a policy from the insurance company.

Preadmission Testing: Medical tests completed for an individual before being admitted to a hospital or inpatient health care facility.

Precertification: A utilization management program that requires the insured or the health care provider to notify the insurer before a hospitalization or surgical procedure. The notification allows the insurer to authorize payment and recommend alternate courses of action.

Preferred Provider Organizations (PPOs): You or your employer receive discounted rates if you use doctors from a pre-selected group. You must pay more for medical care if you use a physician outside the PPO plan.

Premium: The payment, or one of the regular periodic payments, that a policyholder makes to own an insurance policy.

Primary Care Provider (PCP): A health care professional (usually a physician) responsible for monitoring an individual’s overall health care needs. Typically, a PCP serves as a “quarterback” for an individual’s medical care, referring the individual to more specialized physicians for specialist care.

Private Health Insurance: Private health insurance – insurance plans marketed by the private health insurance industry – currently dominates the U.S. healthcare landscape, with approximately two-thirds of the non-elderly population covered by private health insurance. Coverage includes policies obtained through employer-sponsored insurance, with roughly 62 percent of non-elderly Americans receiving insurance provided as a benefit of employment. Another 5 percent of the non-elderly group bought coverage outside the workplace on the individual health insurance market.

Property-casualty: Property insurance covers damage to or loss of the policyholder’s property. Death covers the policyholder’s legal liability for damages and injuries caused to others.

Provider: Provider is a term for health professionals providing health care services. Sometimes, the term refers only to physicians, and the term often refers to other healthcare professionals such as hospitals, nurse practitioners, chiropractors, physical therapists, and others offering specialized healthcare services.


Qualified annuity: An annuity sold as part of a tax-qualified Keogh or company pension plan.


Rated Policy: Sometimes called an “extra-risk” policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.

Reasonable and Customary Fees: The average fee charged by a particular type of health care practitioner within a geographic area. Medical plans often use the term as the amount of money they will approve for a specific test or procedure. If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if a person questions their physician about the fee, the provider will reduce the charge to the amount the insurance company has defined as reasonable and customary.

Reinsurance: Acceptance by one insurer (the reinsurer) of all or part of the risk or loss underwritten by another insurer (the ceding insurer).

Renewal: Continuance of coverage beyond original terms signified by acceptance of a premium payment for a new time.

Rescission: is a controversial insurance industry practice that has come under fire as an unfair tactic used to deny coverage to policyholders. If you’ve been a victim of rescission, your insurance company received a claim from you. Then – after reviewing your application and medical history for undisclosed conditions or inconsistencies, you canceled your policy when you needed it most.

Rider: A modification made to a Certificate of Insurance regarding the clauses and provisions of a policy (usually adding or excluding coverage).

Risk: The chance of loss, the degree of probability, 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. For example, an individual increases their risk of cancer if they smoke cigarettes.


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 severe medical diagnosis.

Second Surgical Opinion: These are now standard benefits in many health insurance plans. It is an opinion a second physician provides when one physician recommends surgery to an individual.

Self-insurance: A program financed entirely by the employer for insuring employees instead of purchasing coverage from a commercial carrier.

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 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 Health Insurance: Temporary coverage for an individual for a short period, usually from 30 days to six months.

Single-premium whole life insurance: A whole life policy that protects for the duration of the insured’s life in exchange for the payment of the total premium in one lump sum at the time of application.

Small Employer Group: Generally means groups with 1 to 99 employees. The definition may vary between states.

Standard risk: According to an insurer’s underwriting standards, a person can purchase insurance without paying an extra premium or special restrictions.

State Mandated Benefits: When a state passes laws requiring that health insurance plans include specific benefits.

Stop-loss: The number of claims filed for eligible expenses, at which point you’ve paid 100 percent 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 got the maximum out-of-pocket amount of co-insurance.

Straight life annuity: An annuity whose periodic payments stop when the annuitant dies.

Student Health Insurance: In recent years, many colleges have begun requiring proof of health insurance for students. Coverage options include insurance through family policies and coverage through school-sponsored student health plans, now offered by more than 80 percent of public four-year colleges. Students may also seek coverage through an employer’s plan if they’re employed full-time, or they can purchase their own individual health insurance plan from a licensed health insurance provider. And depending on the state in which a student resides, the student may also be eligible for coverage by a state-sponsored risk pool, a program that provides coverage for individuals denied insurance by private insurers because of their health condition.


Term insurance: A plan of insurance that covers the insured for only a certain period (term), not their entire life. The policy pays death benefits only if the insured dies during the tour.

Title insurance: Title insurance protects against the financial losses associated with having the title on your home challenged, including court costs and property loss. Most title insurers will investigate public records for a one-time fee to ensure that your property is free of title defects. This coverage can benefit the homeowner or the mortgage company, so you should know which kind you’re paying for.

Third-party administration (TPA): An outside person or firm (not a party to a contract) that maintains all records of persons covered under an insurance plan. The TPA also may pay claims using the draft book system.

Travel accident policies: In some states, limited contracts cover accidents that occur only while an insured person travels on business for an employer, away from the usual place of business, and on named conveyances.

Triple-Option: Insurance plans that offer three options from which an individual may choose. Usually, the three options are traditional indemnity, an HMO, and a PPO.


Underwriter: The company assumes responsibility for the risk, issues insurance policies, and receives premiums.

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.


Waiting Period: