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Glossary of Insurance Terms
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- Named Perils: Coverage in a
property policy that provides protection
against loss from only the perils specifically
listed in the policy (rather than protection
from physical loss). Examples of named perils
are fire, windstorm, theft, smoke, etc. See
also Basic Form, Special Risk Insurance.
- National Association of Insurance
Commissioners (NAIC): The association of
insurance commissioners of various states
formed to promote national uniformity in the
regulation of insurance.
- Negligence: Failure to use the care
that a reasonable and prudent person would
have used under the same or similar
circumstances.
- Net Premium: (1) The portion of the
premium rate which is designed to cover
benefits of the policy, but not expenses,
contingencies, or profit. (2)The portion of
the premium remitted to the home office by an
agent after deduction of the agent's
commission. (3) Net written premium.
- Net Present Value: The value today
of an asset to be received in the future,
either as a single payment or a series of
payments (such as an annuity). The value is
considered to be different if received at a
later date because of the time value of money.
- Net Written Premiums: Premium
income retained by insurance companies,
directly or through reinsurance, after
payments made for reinsurance.
- No-Fault Automobile Insurance: A
form of insurance by which a person's
financial losses resulting from an automobile
accident are paid by his or her own insurer
regardless of who was at fault.
- Non-admitted Insurance Company: An
insurance company not licensed to do business
in a particular state; such a company may sell
excess and surplus insurance in the state if
admitted insurers decline to write a risk.
- Non-cancelable:
A clause stating that the insured has the
right to continue a policy in force by the
timely payments of premiums set forth in the
contract for some extended period of time
specified, during which period the insurer has
no right to make unilaterally any change in
any provision of the contract while the
contract is in force.
- Non-confining
Sickness: A sickness that disables the
insured person but does not confine him to his
home or a hospital.
- Noncontributory: A term applied to
employee benefit plans under which the
employer bears the full cost of the benefits
for the employees. Generally, under
noncontributory policies one hundred percent
of the eligible employees must be insured.
- Non-disabling
Injury: An injury which may require
medical care, but does not result in loss of
working time or income.
- Non-disabling
Injury Benefit: A benefit in some
disability income policies providing payment
for medical expense due to injury when medical
care is necessary but the insured is not
totally disabled.
- Non-forfeiture
Option: One of the choices available in
many life insurance policies if the
policyholder discontinues premium payments on
a policy with a cash value. This, if any, may
be taken in cash, as extended term insurance
or as reduced paid-up insurance.
- Non-medical
Limit: The maximum face value of a policy
that a given company will issue without the
applicant taking a medical examination.
- Non-occupational
Policy: Contract which insures a person
against off-the-job accident or sickness. It
does not cover disability resulting from
injury or sickness covered by Workers'
Compensation. Group accident and sickness
policies are frequently non-occupational.
- Non-occupational
Policy: One that provides off-the-job
coverage only; it does not cover loss
resulting from accidents or sickness arising
out of or in the course of employment or
covered under any workers' compensation law.
- Nonparticipating Insurance: Plan of
insurance under which the policy-holder is not
entitled to share in the dividend distribution
of the company.
- Nonparticipating Policy: A life
insurance policy, generally issued only by
mutual insurance companies, in which the
company does not distribute to policyholders
any part of its surplus. Premiums for
nonparticipating polices are usually initially
lower than for comparable participating
polices, but premiums can be varied. The
current premium reflects anticipated
experience that is more favorable than the
company is willing to guarantee, and it may be
changed from time to time. (See also:
Participating policy)
- Nonprofit Insurers: Persons
organized under special state laws to provide
hospital, medical, or dental insurance on a
nonprofit basis. The laws exempt them from
certain types of taxes.
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