Accidental death benefit. A benefit in a
life insurance policy providing for the payment of an additional
amount equal to the face amount of the policy in case of death
by accident.
Accidental death and dismemberment insurance. A form of
health insurance that provides payment in the event of death or
loss of one or more bodily members (such as hands or feet) or
the sight of one or both eyes as a result of an accident.
Actuarial liabilities. The estimated funds needed, together
with future premiums and investment income, to pay future benefits
and expenses under insurance and annuity contracts, with an allowance
provided for adverse experience in future assumptions.
Actuary. A person professionally trained in the mathematical
and technical aspects of insurance and related fields, particularly
in the calculation of premiums, actuarial liabilities and other
values.
Administrative Services Only (ASO) Plan. An arrangement
under which an insurance carrier or an independent organization
will, for a fee, administer a health benefit plan and settle claims
but not guarantee payments because the plan is uninsured.
Agent. A sales and service representative of an insurance
company. In a life insurance company, an agent is also often called
a life underwriter.
Annual return. The yearly report of an insurer to insurance
regulators, showing assets and liabilities, receipts and disbursements,
and other financial data.
Annuitant. A person during whose life an annuity income
is payable, usually the person receiving the income.
Annuity. A contract that provides income payments at regular
(typically monthly) intervals, usually for a specified period
or for the lifetime of the annuitant. Income payments may begin
right away or be postponed to some future date.
Annuity consideration. The payment, or one of the regular
periodic payments, made to purchase an annuity. Same as a premium
for life insurance.
Application. A statement of information made by a person
applying for insurance. It identifies the plan and the amount
applied for, the life insured and the beneficiary, and provides
other data useful in evaluating the risk.
Association group plans. Insurance plans designed for members
of a professional association or trade association. Members may
be protected under a group policy or by individual franchise policies.
Cash value. Also called "cash surrender
value". The amount available in cash upon voluntary termination
of a policy by its owner before it becomes payable by death or
maturity.
Casualty insurance. Lines of insurance, such as automobile,
liability, aviation, bonding and theft.
Certificate of insurance. A document delivered to an individual
that summarizes the benefits and principal provisions of the group
contract under which the person is insured.
Claim. A demand to the insurer by the insured person for
the payment of benefits under a policy.
Coinsurance. A provision in a health insurance contract
by which the insurer and insured share, in a specific ratio, the
covered expenses under a policy. For example, the insurer may
reimburse the insured for 80 per cent of covered expenses, the
insured paying the remaining 20 per cent of such expenses.
Covered expenses. Specified hospital, medical and miscellaneous
health care expenses that will be considered in the calculation
of benefits due under a health insurance policy.
Creditors' disability insurance. Insurance issued in conjunction
with indebtedness that provides for the payment of loan installments
while the borrower is disabled.
Deductible. The amount of covered expenses
that must be incurred and paid by the insured before benefits
become payable by the insurer.
Deferred annuity. An annuity providing for income payments
to begin at some future date.
Defined benefit pension plan. A plan where benefits are
predetermined by a formula and employer contributions depend on
the cost of the benefit minus the employee's contributions, if
any.
Defined contribution pension plan. A plan where contributions
by employees and the employer are fixed and the benefits depend
on the contributions and their earnings.
Disability. A physical or mental condition that makes an
insured person incapable of performing one or more duties of his
or her occupation.
Disability benefit. A benefit added to some life insurance
policies providing for waiver of premium and sometimes payment
of a monthly income, if the insured becomes totally and permanently
disabled.
Disability income insurance. A form of health insurance
that provides periodic payments when the insured is unable to
work as a result of illness or injury.
Endowment insurance. Life insurance payable
to the policyholder, if living at the end of a specified period,
called the maturity date, or to a beneficiary if the life insured
dies prior to that date.
Extended health care insurance. A form of health insurance
that provides, in one policy, protection for hospital and medical
expenses not covered by government programs and usually other
health care expenses, such as prescribed drugs, medical appliances,
ambulance, private duty nursing, etc.. The policy may contain
a deductible amount, coinsurance and high maximum benefits. Also
called "major medical expense insurance".
Extended term insurance. A form of paid-up life insurance
available as a non-forfeiture option. It provides continued protection
for the full face amount (less any policy loan outstanding), but
only for a limited period of time.
Face amount. The amount stated on the face
of the policy that will be paid on the death of the life insured
or at the maturity of the policy. It does not include additional
amounts payable under accidental death or other special provisions,
or acquired through the application of policyholder dividends.
Also called the "sum insured".
Federally registered company. An insurance company registered
with the AOffice of the Superintendent of Financial Institutions
(OSFI)@ in Ottawa and subject to federal legislation regulating
such insurance companies.
Flexible premium policy or annuity. A life insurance policy
or annuity under which the policyholder or contract holder may
vary the amount or timing of premium payments.
Fraternal life insurance. Life insurance provided by fraternal
orders or societies to their members.
Grace period. The period (usually 30 or 31
days) following the premium due date, during which an overdue
premium for a life insurance policy may be paid without penalty.
The policy remains in force throughout this period.
Group annuity. A contract providing annuities at retirement
to a group of people in a pension plan. Usually, it is issued
to an employer for the benefit of employees. The individual members
of the group hold certificates as evidence of their annuities.
Group insurance. Insurance issued, usually without medical
examination, on 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 insurance.
Guaranteed renewable policies. A health insurance contract
provision in which the insurance company must renew the policy,
but premiums may be raised by class. This means that the increase
applies to all policyholders in a particular group, rather than
to one individual policyholder.
Health insurance. Insurance providing for
the payment of benefits as a result of sickness or injury. Includes
various types of insurance, such as accident insurance, disability
income replacement insurance, medical expense insurance, and accidental
death and dismemberment insurance. Often includes government hospital-medical
plans.
Hospital expense insurance. Insurance that provides specific
benefits for hospital room and board and prescribed hospital services
during hospital confinement that are not covered by government
hospital plans.
Individual insurance. Insurance purchased
on an individual basis, covering only one person or, in some cases,
members of his or her family as well.
Insured. See "Policyholder".
Insurer. The party to the insurance contract who promises
to pay losses or benefits. Also, any corporation licensed to furnish
insurance to the public.
Integration. Coordination of the disability income insurance
benefit with other disability income benefits, such as Canada
and Quebec Pension Plans.
Lapsed policy. A policy terminated because
of non-payment of premiums. This phrase sometimes is limited to
a termination occurring before the policy has a cash or other
non-forfeiture value.
Level premium life insurance. Life insurance for which
the premium remains the same from year to year. The premium is
more than the actual cost of protection during the earlier years
of a policy and less than the actual cost in later years. The
excess paid in the early years builds up a reserve. When invested,
this reserve amount earns a return that helps keep the amount
of the level premium down.
Life insurance. Insurance providing for the payment of
benefits upon the death, whether by accident or otherwise, of
the life insured.
Life insured. The person on whose death or disability the
insurance proceeds will become payable.
Limited payment life insurance. Permanent life insurance
that pays a benefit on the death of the life insured whenever
that occurs, and for which premiums are payable for a specified
number of years, or until the death of the life insured if this
occurs before the end of the specified period.
Limited policy. A health insurance policy that covers only
specified accidents or sicknesses.
Major medical expense insurance. See "Extended
health care insurance".
Maturity date. See "Endowment insurance".
Mutual insurance company. An insurance company without
shareholders. Management is directed by a board elected in most
cases by holders of participating policies.
New money policy. A life insurance policy
where the premiums are revised periodically to reflect current
and expected interest rates.
Non-cancellable policy. A health insurance contract provision
where the insurance company can neither cancel coverage nor vary
the premium rate specified in the contract. Policies specify,
at the time of purchase, the length of time the coverage is non-cancellable
and guaranteed renewable.
Non-contributory pension plan. A pension plan where the
entire cost of the plan is borne by the employer and no employee
contributions are required.
Non-forfeiture options. The choices available in a life
insurance policy to a policyholder if he or she discontinues premium
payments on a policy that has accumulated a cash value. The choices
are usually to take the cash value in cash, to apply the cash
value to purchase "reduced paid-up insurance" or "extended
term insurance", or to use the cash value as security for
a loan against the policy to pay the premium or premiums due ("automatic
premium loan").
Non-participating insurance. Insurance on which policyholders
do not share in any surplus earnings distributed by the company.
No "policyholder dividends" are payable. The premium
is based on an estimate of future costs and investment earnings
very close to what the company believes most likely will occur,
with a slight margin added for contingencies and profit.
Non-profit insurers. Bodies organized under provincial
laws to provide hospital, medical or dental insurance on a co-operative
basis. They are exempt from certain types of taxes.
Office of the Superintendent of Financial Institutions
(OSFI). The federal agency responsible for regulating and
supervising banks, insurance, trust, loan and investment companies,
federally-regulated pension plans, and co-operative credit associations
that are licensed or registered by the federal government.
Paid-up insurance. Life insurance on which
all the required premiums have been paid.
Partial disability benefit. A benefit sometimes found in
disability income policies providing for the payment of reduced
monthly income in the event the insured cannot work full-time
or is prevented from performing one or more important daily duties
pertaining to his or her occupation.
Participating insurance. Insurance on which policyholders
share in the surplus earnings attributed to that business. "Policyholder
dividends" are payable. The premium is based on an estimate
of future earnings at a somewhat lower level and costs at a somewhat
higher level than the company believes most likely will occur.
Policy. The legal document issued by the insurer to the
policyholder that outlines the conditions and terms of the insurance.
Also called the contract.
Policy loan. A loan made by a life insurance company to
a policyholder on the security of the cash value of a policy.
Policy reserves. See "Actuarial liabilities".
Policyholder. The person who owns an insurance policy.
Also called the "insured". In life insurance, the policyholder
is usually the "life insured" but not always.
Policyholder dividend. A yearly return to the policyholder
of surplus earnings based on the company's experienced and anticipated
costs. Policyholder dividends are not guaranteed but depend on
mortality and morbidity experience, investment earnings, expenses
and other factors. They may be increased or decreased at the discretion
of the company.
Premium. The payment, or one of the periodic payments,
a policyholder is required to make for an insurance policy.
Rated policy. Sometimes called an extra-risk
policy, this is an insurance policy issued at a higher than standard
premium rate.
Reduced paid-up insurance. A form of paid-up life insurance
available as a non-forfeiture option. It provides insurance payable
at the same time and in the same manner as the original policy,
but for a reduced amount.
Reinsure. To transfer the risk of potential loss from one
insurer to another insurer.
Segregated fund. A pool of investments that
is held and managed separately (i.e., segregated) from other similar
pools or funds and the general funds of the life insurance company.
The benefits of contracts issued through a segregated fund are
based on the market value of the investments in the fund.
Settlement options. The several ways, other than immediate
payment in cash, that the policyholder or beneficiary may choose
to have life insurance policy benefits paid.
Standard or statutory provisions. A set of policy provisions
prescribed by provincial laws setting forth certain rights and
obligations of both the insured and the company under an individual
policy of insurance.
Stock insurance company. An insurance company with share
capital. Management is directed by a board elected partly by the
shareholders and partly by the participating policyholders, if
any. The shareholders share in any company profits.
Straight life insurance. Permanent life insurance payable
on the death of the life insured whenever that occurs. Premiums
are payable until the death of the life insured.
Substandard (impaired) risk. A risk that cannot meet the normal
health requirements of a standard insurance policy. Protection
is provided in consideration of a waiver, a special policy form,
or a higher premium charge.
Sum insured. See "Face amount".
Surrendered policy. A policy terminated because of non-payment
of premiums, for which there is a cash value or other non-forfeiture
value available.
Term life insurance. Temporary life insurance
payable on the death of the life insured, provided that death
occurs within a specified period of time.
Term to 100. Also called "permaterm" life insurance.
A permanent life insurance policy where normal cash value and
paid-up benefits are reduced, restricted or eliminated when the
policy is terminated prior to death.
Underwriting. The process by which an insurer
determines whether or not, and on what basis, it will accept an
application for insurance.
Uninsured plan. An arrangement whereby an employer undertakes
to provide health benefits to employees outside of an insurance
contract. The plan may be administered by the employer or by an
insurance company or other organization. See "Administrative
Services Only (ASO) Plan".
Universal life. A life insurance policy where premiums
(less expense charges) are credited to an investment account from
which periodic charges for life insurance coverage are deducted
and to which income is credited. Usually, the policyholder can
vary the amount and timing of premium payments and change the
amount of insurance.
Variable contract. A life insurance or annuity
contract under which benefits are not fixed but vary with the
market value of a specified group of assets in which the premiums
have been invested.
