Glossary of Insurance Terms

Insurance policies are some of the most important purchases that you will make in your life. The most effective way to ensure that you get the most value for you money is to study the industry and compare products. Here?? a list of common insurance terms that you??l come across frequently as you comparison shop. Be sure to familiarize yourself with them:

• Actual Cash Value - The replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual cash value cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.
• Aggregate - A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually one year. Aggregate limits are commonly included in liability policies. While not often used in property insurance, aggregates are sometimes included with respect to certain catastrophic exposures, e.g., earthquake and flood.
• Attained Age ??The insured's age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured's then attained age. Upon conversion, the premium usually rises substantially to reflect the insured's age and diminished life expectancy.
• Benefit Period - In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a calendar year consist of the days beginning on Jan. 1 and ending on Dec. 31 of each year.
• Binder - A legal agreement that serves to effect insurance coverage for a specified period of time until the actual insurance policy can be issued. A binder can be issued by either an insurance agent or company and must contain the name of the insured, the name of the insurance company, the type of insurance coverage, the covered perils, and the limits of the insurance.
• Claim - A demand made by the insured, or the insured's beneficiary, for payment of the benefits as provided by the policy.
• Coverage - The scope of protection provided under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits are listed.
• Convertible -Term life insurance coverage that can be converted into permanent insurance regardless of an insured's physical condition and without a medical examination. The individual cannot be denied coverage or charged an additional premium for any health problems.
• Copayment - A predetermined, flat fee an individual pays for health-care services, in addition to what insurance covers. For example, some HMOs require a $10 copayment for each office visit, regardless of the type or level of services provided during the visit.
• Death Benefit - The limit of insurance or the amount of benefit that will be paid in the event of the death of a covered person.
• Deductible - Amount of loss that the insured pays before the insurance kicks in.