Agent - A licensed person or organization authorized to sell insurance
by or on behalf of an insurance company.
Binder - A temporary or preliminary agreement which provides coverage
until a policy can be written or delivered.
Broker - A licensed person or organization paid by you to look for insurance
on your behalf.
Cancellation - The termination of insurance coverage during the policy
period. Flat cancellation is the cancellation of a policy as of its effective
date, without any premium charge.
Claim - Notice to an insurer that under the terms of a policy, a loss
Claimant - The first or third party. That is any person who asserts
right of recovery.
Cost of Insurance (C.O.I.) - This is the insurance company's cost to provide the death benefit, depending on the insured's age and health. C.O.I. is a fixed price per thousand dollars of insurance, e.g., "$3.48 per thousand."
Decline - The company refuses to accept the request for insurance coverage.
Endorsement - Amendment to the policy used to add or delete coverage.
Also referred to as a "rider."
Exclusion - Certain causes and conditions, listed in the policy, which
are not covered.
Face Amount - The dollar amount to be paid to the beneficiary when the
insured dies. It does not include other amounts that may be paid from insurance
purchased with dividends or any policy riders.
Grace Period - A period (usually 31 days) after the premium due date,
during which an overdue premium may be paid without penalty. The policy remains
in force throughout this period.
Guaranteed Insurability - An option that permits the policy holder to
buy additional stated amounts of life insurance at stated times in the future
without evidence of insurability.
Insured - The policyholder :the person(s) protected in case of a loss
Insurer - The insurance company.
Life Insurance - A policy that will pay a specified sum to beneficiaries
upon the death of the insured.
Limit - Maximum amount a policy will pay either overall or under a
Policy - The written contract of insurance. Policy Limit - The maximum
amount a policy will pay, either overall or under a particular coverage.
Premium - The amount of money an insurance company charges for insurance
Quote - An estimate of the cost of insurance, based on information supplied
to the insurance company by the applicant.
Surrender - To terminate or cancel a life insurance policy before the
maturity date. In the case of a cash value policy, the policyholder may exercise
one of the nonforfeiture options at the time of surrender.
Underwriting - The process of selecting applicants for insurance and
classifying them according to their degrees of insurability so that the appropriate
premium rates may be charged. The process includes rejection of unacceptable risks.
Waiting Period - A period of time set forth in a policy which must pass
before some or all coverages begin.