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Glossary of Insurance Terms
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- Package Policy: A combination of
two or more individual polices or coverages
into a single policy. A homeowners policy, for
example, is a package combining property,
liability and theft coverages for the
homeowner.
- Paid-up Insurance: (1) Insurance on
which all required premiums have been paid.
(2)The reduced paid-up insurance available as
a non-forfeiture
option.
- Paramedical Examination: Physical
examination of an applicant by a trained
person other than a physician.
- Partial Disability: The result of
an illness or injury which prevents an insured
from performing one or more of the functions
of his/her regular job. See also disability.
- Partial Disability Benefits: 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 and/or is prevented from
performing one or more important daily duties
pertaining to his occupation.
- Participating Insurance: Life
insurance under which an insurance company
agrees to distribute to policyholders the part
of its surplus which its Board of Directors
determines is not needed at the end of the
business year. Such a distribution serves to
reduce the premium the policyholder had paid.
(See also: Policy dividend; nonparticipating
policy)
- Pension Benefit Guaranty Corporation (PBGC):
The Federal body responsible for
administering a retirement insurance programs,
under ERISA.
- Pension Benefits: A series of
payments to be provided to past employees in
accordance with the rules of pension plan of a
company or other organization.
- Pension Plan: A plan established
and maintained by an employer, group of
employers, union or any combination, primarily
to provide for the payment of definitely
determinable benefits to participants after
retirement.
- Percentage Participation: A
provision in a health insurance contract that
the insurer and insured will share covered
losses in agreed proportions. Also see
Coinsurance.
- Performance Bond: Bond issued by a
surety or insurance company to guarantee
performance under or in conjunction with a
contract.
- Peril: The cause of a possible
loss, such as fire, windstorm, theft,
explosion, or riot, covered in an insurance
policy.
- Permanent Life Insurance: A phrase
used to cover any form of life insurance
except term; generally accrues cash value,
such as whole life or endowment.
- Persistency: A term used to refer
to the length of time insurance remains
continuously in force.
- Personal Articles Floater: A form
of coverage designed to meet the needs for
insurance on moveable property. The coverage
usually protects against all physical loss,
subject to specific exclusions and conditions.
Examples of property that can be covered
include jewelry, furs, silverware, fine arts.
- Personal Injury Protection (PIP):
First-party no-fault coverage in an automobile
insurance policy in which an insurer pays,
within the specified limits, the wage loss,
medical, hospital and funeral expenses of the
insured.
- Personal Injury Liability Insurance:
Coverage designed to protect against false
arrest, detention or imprisonment, or
malicious prosecution; libel, slander,
defamation, or violation of right of privacy;
and wrongful entry, eviction, or other
invasion of right of private occupancy.
- Personal Lines: Those types of
insurance, such as auto or home insurance, for
individuals or families rather than for
businesses or organizations.
- Personal representative: A person
appointed through the will of a deceased or by
a court to settle the estate of one who dies.
- Physical Damage: Damage to or loss
of the auto resulting from collision, fire,
theft or other perils.
- Physician's Expense Insurance:
Coverage which provides benefits toward the
cost of such services as doctor's fees for non-surgical
care in the hospital, at home or in a
physician's office, and X-rays or laboratory
tests performed outside the hospital. (Also
called Regular Medical Expense Insurance.)
- Plan Administrator: The person or
persons controlling the money or property
contributed to a pension, health or other
plan, usually designated in the plan
agreement.
- Plate Glass Insurance: Coverage
designed to provide special protection, except
for the perils of war, nuclear reaction, and
fire. (Fire is covered under the building
policy.) This coverage is for full replacement
cost and covers the expense of repairing
frames, installing temporary plates, or
boarding up openings of plate glass windows.
- Point-of-Service Plans: Often known
as open-ended HMOs or PPOs, these plans permit
insureds to choose providers outside the plan
yet are designed to encourage the use of
network providers.
- Policy: The legal document issued
by an insurance company to a policyholder,
which outlines the conditions and terms of the
insurance; also called the policy contract or
the contract.
- Policy Dividend: A refund of part
of the premium on a participating life
insurance policy reflecting the difference
between the premium charged and actual
experience.
- Policy Loan: A loan made by a life
insurance company from its general funds to a
policyholder on the security of the cash value
of a policy.
- Policy Reserves: The measure of the
funds that a life insurance company holds
specifically for fulfillment of its policy
obligations. Reserves are required by law to
be so calculated that, together with future
premium payments and anticipated interest
earnings, they will enable the company to pay
all future claims. Compare Reserves.
- Policy Term: That period for which
an insurance policy provides coverage.
- Policyholder: A person who pays a
premium to an insurance company in exchange
for the insurance protection provided by a
policy of insurance.
- Policyholders' Surplus: Sum left
after liabilities are deducted from assets.
Sums such as paid-in capital and special
voluntary reserves are included in this term.
This surplus is an additional financial
protection to policyholders in the event a
company suffers unexpected or catastrophic
losses.
- Pollution Legal Liability Insurance:
Coverage designed to protect for (1) all sums
the insured is legally obligated to pay as a
result of emission, discharge, release, or
escape of any contaminants, irritants, or
pollutants into or on land, the atmosphere, or
any water course or body of water, provided
this results in environmental damage; (2) to
reimburse reasonable and necessary cleanup
costs incurred in the discharge of a legal
obligation validly imposed through
governmental action, provided such expense is
incurred because of environmental damage, and
(3) for defense of any claim or suit that is
the subject of this insurance.
- Pollution Liability: Exposure to
lawsuits for injury or cleanup costs that
result from pollution damage.
- Pool: An organization of insurers
or re-insurers
through which particular types of risk are
underwritten and premiums, losses and expenses
are shared in agreed-upon amounts.
- Portability: The right to transfer
pension rights and credits when a worker
changes jobs.
- Preadmission Certification: Process
in which a health care professional evaluates
an attending physician's request for a
patient's admission to a hospital by using
established medical criteria.
- Preexisting Condition: A physical
and/or mental condition of an insured which
first manifested itself prior to the issuance
of his/her policy or which existed prior to
issuance and for which treatment was received.
- Preferred Provider Organization (PPO):
An arrangement whereby a third-party payer
contracts with a group of medical care
providers who furnish services at lower than
usual fees in return for prompt payment and a
certain volume of patients.
- Premium: The sum paid by a
policyholder to keep an insurance policy in
force.
- Premium finance: Payment terms that
allow the insured to pay part of the premium
when coverage takes effect and pay the rest
during the policy period.
- Premium Loan: A loan, sometimes
made by a third party, made for the purpose of
paying premiums to the insurer.
- Premium Tax: A tax, imposed by each
state, on the premium income of insurers doing
business in the state.
- Prepaid Group Practice Plan: A plan
under which specified health services are
rendered by participating physicians to an
enrolled group of persons, with a fixed
periodic payment in advance made by or on
behalf of each person or family. If a health
insurance carrier is involved, a contract to
pay in advance for the full range of health
services to which the insured is entitled
under the terms of the health insurance
contract. Such a plan is one form of Health
Maintenance Organization (HMO).
- Primary Insurance: Insurance that
pays compensation for a loss ahead of any
other insurance coverages the policyholder may
have.
- Principal Sum: The amount payable,
under life and health insurance policies, in
one sum in the event of accidental death and
in, some cases, accidental dismemberment. When
a contract provides benefits for both
accidental death and accidental dismemberment,
each dismemberment benefit is an amount equal
to the principal sum or some fraction thereof.
- Probate: The court-supervised
process of validating or establishing a
distribution for assets of a deceased
including the payment of outstanding
obligations.
- Probate estate: That portion of the
assets and liabilities whose distribution is
supervised by the courts in the probate
process.
- Probationary Period: A period from
the policy date to a specified time, usually
15 to 30 days, during which no sickness
coverage is effective. It is designed to
eliminate a sickness actually contracted
before the policy went into effect.
- Product Liability: Legal liability
incurred by a manufacturer, merchant, or
distributor because of injury or damage
resulting from the use of its product.
- Product Liability Insurance:
Coverage designed to provide protection
against financial loss arising out of the
legal liability incurred by a manufacturer,
merchant, or distributor because of injury or
damage resulting from the use of a covered
product.
- Professional Review Organization (PRO):
An organization in which practicing physicians
assume responsibility for reviewing the
propriety and quality of health care services
provided under Medicare and Medicaid.
- Property Management Errors and
Omissions Insurance: Coverage designed to
pay on behalf of the insured all sums he/she
becomes legally obligated to pay by reason of
any act, error, or omission rising out of
services rendered or that were failed to
render. Such services include arranging for
property maintenance, renting or leasing,
construction, alteration, land development,
etc. Coverage also provides for defense of any
claim or suit that is the subject of this
insurance.
- Proof of Loss: Documentary evidence
required by an insurer to prove a valid claim
exists. It usually consists of a claim form
completed by the insured, and for health
insurance claims by the insured's attending
physician. For medical expense insurance
itemized bills must also be included.
- Property Damage Coverage: An
agreement by an insurance carrier to protect
an insured against legal liability for damage
by an insured automobile to the property of
another.
- Property Insurance: Insurance
providing financial protection against the
loss of, or damage to, real and personal
property caused by such perils as fire, theft,
windstorm, hail, explosion, riot, aircraft,
motor vehicles, vandalism, malicious mischief,
riot and civil commotion, and smoke. Available
on Special and All-risk forms, depending on
the property being insured.
- Prospective Payment: An advancement
of payment for health care charges that are
likely to occur.
- Prototype Plan: A standardized life
insurance plan, approved and qualified as to
its concept by the Internal Revenue Service,
which is made available by companies, banks
and mutual funds for employers' use.
- Provision: A clause, sentence or
paragraph of an insurance contract that
describes or explains a feature, benefit,
condition, requirement, etc. of the insurance
protection afforded by the contract.
- Proximate Cause: (1) The principal
cause of loss or damage; (2) An unbroken chain
of events between an event and damage.
- Punitive Damages: A court-awarded
amount that exceeds the economic losses and
general damages of a defendant and is intended
solely to punish the plaintiff.
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