Glossary Of Life & Health Insurance Terms

Below is a clear, easy-to-use glossary for common Life & Health Insurance terms. Click here if you prefer a more-detailed glossary that you can use for studying for your Life & Health exam.

Accelerated Death Benefit

A provision allowing the policyholder to receive part of the death benefit early if diagnosed with a terminal or critical illness.

Accidental Death Benefit (ADB)

Extra benefit paid if the insured dies due to an accident.

Accident & Health (A&H)

Insurance covering medical expenses, disability, and related health risks.

Actuary

A professional who uses statistics to calculate insurance premiums and risks.

Beneficiary

The person or entity who receives the policy benefits upon the insured's death.

Broker

A licensed intermediary who represents the client (not the insurer) when placing coverage.

Cash Value

The savings component of a permanent (whole, universal) life policy that builds over time.

Claim

A formal request to the insurer to pay a benefit.


Coinsurance

The percentage of covered medical costs the policyholder must pay after the deductible (e.g., 80/20).

Copayment (Copay)

A fixed dollar amount paid for specific services (e.g., $20 doctor visit).

Convertible Term Insurance

Term insurance that can be changed into permanent insurance without proof of insurability.

Death Benefit

Amount paid to the beneficiary when the insured dies.

Deductible

The amount the policyholder must pay out of pocket before insurance pays.

Disability Income Insurance

Provides income if the insured becomes unable to work due to disability.

Elimination Period

Waiting period before disability or long-term care benefits begin.

Evidence of Insurability

Medical or financial information required for approval of coverage.

Exclusion

A condition or service not covered by the policy.

Free-Look Period

A period (often 10 - 30 days) in which a new policy can be canceled for a full refund.

Family Deductible

Deductible applying to a whole family rather than just individuals.

Grace Period

Time after a premium is due during which coverage continues (usually 30 - 31 days).

Guaranteed Issue

Policy issued regardless of medical conditions.

Guaranteed Renewable

Insurer must renew the policy, but can raise premiums by class.

Health Maintenance Organization (HMO)

Managed care plan requiring use of network providers and referrals.

Health Savings Account (HSA)

Tax-advantaged savings for medical expenses paired with high-deductible plans.

HIPAA

Federal law governing privacy and portability of health information.

Insurable Interest

Financial or emotional interest required to buy insurance on another person.Incontestability Clause

Individual Health Insurance

Coverage purchased directly by a person rather than via group employment.

Lapse

Termination of coverage due to nonpayment of premium.

Living Benefits

Policy features providing benefits while the insured is still alive (e.g., accelerated benefits).

Moral Hazard

Increased likelihood of loss due to the insured's behavior.

Morbidity

The frequency of illness or disability in a population (used to price health insurance).

Mortality

The rate of death in a population (used to price life insurance).

Network Provider

Health care provider contracted with an insurance plan at negotiated rates.

Nonforfeiture Options

Choices for retaining value in a lapsed permanent life policy (e.g., cash surrender, reduced paid-up).

Out-of-Pocket Maximum

The most a policyholder will pay in a year before the insurer pays 100% of covered expenses.

Paid-Up Insurance

Life insurance requiring no further premiums.

Policyowner

The person who owns and controls the policy.

Preexisting Condition

Medical condition existing before coverage began.

Premium

Amount paid to the insurer for coverage.

Primary Beneficiary

Main recipient of the death benefit.

Proceeds

The amount paid upon a claim.

Rider

Optional addition to a policy that modifies coverage (e.g., waiver of premium).

Renewable Term

Term life insurance that can be renewed without a medical exam.

Subrogation

Insurer’s right to seek reimbursement from a third party who caused the loss.

Suicide Clause

Excludes coverage for death by suicide within the first 1 - 2 years.

Term Life Insurance

Life insurance providing coverage for a set period (10, 20, 30 years).

Total Disability

Defined in disability policies; often inability to perform one's own or any occupation.

Underwriter

Person or system evaluating risk for assigning premiums or approving coverage.

Universal Life Insurance

Flexible premium permanent life insurance with adjustable death benefit and cash value.

Variable Life / Variable Universal Life

Permanent life policies with investment subaccounts; cash value varies with market performance.

Waiver of Premium Rider

Insurer waives premium payments if the insured becomes disabled.

Whole Life Insurance

Permanent life insurance with fixed premiums and guaranteed cash value.