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Glossary of Insurance Terms
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- Scheduled Insurance: An insurance
policy amendment or endorsement that specifies
items covered, in contrast to blanket
coverage, which would cover all items fitting
a given description. Auto insurance is the
principal scheduled insurance purchased by
consumers.
- Self- Administered (Trusteed or
Directly Invested) Plan: A plan funded
through a fiduciary, generally a bank, but
sometimes a group of individuals, which
directly invests the accumulated funds.
Retirement payments are made from the fund as
they fall due.
- Self-Administration: The procedure
where an employer maintains all records
regarding the employees covered under a group
insurance plan.
- Self-Insurance: A form of risk
management through which a firm assumes all or
a part of its own losses.
- Selling Price Insurance: Coverage
which applies to the value of goods which have
been damaged or destroyed by an insured peril.
The purpose is to assure the profit that would
have been incurred through a sale. It defines
the insurable value of merchandise which has
been sold, but not delivered, at the amount at
which it was sold, less any charges not
incurred.
- Senior Citizen Policies: Contracts
insuring persons 65 years of age or more. In
most cases, these policies supplement the
coverage afforded by the government under the
Medicare program.
- Separate Account: An asset account
established by a life insurance company
separate from other funds, used to match
specific assets with corresponding liabilities
such as pension plans and variable life
products. This arrangement permits wider
latitude in the choice of investments,
particularly in equities.
- Service-Type Plans: Plans that
provide their benefits in the form of services
rendered rather than cash (for example, Blue
Cross and Blue Shield).
- Settlement Options: The several
ways, other than immediate payment in cash,
which a policyholder or beneficiary may choose
to have policy benefits paid.
- Short-Term Disability Income Insurance:
Coverage designed to cover a disabled person
as long as he/she remains disabled up to a
specified period not exceeding two years.
- Sickness Insurance: A form of
health insurance providing benefits for loss
resulting from illness or disease.
- Skip person: a beneficiary who is
at least two generations younger than the
person making the transfer.
- Social Security Freeze: A long-term
disability policy provision which establishes
that the subtraction from benefits paid by
Social Security will not be changed regardless
of subsequent changes in the Social Security
law.
- Social Security Option: An option
available in some annuity contracts under
which the employee may elect that monthly
payments of an annuity before a specified age
(62 or 65) be increased, and that payments
thereafter be decreased to produce, as nearly
as practical, level total annual payments,
including Social Security benefits when they
become due.
- Soft Market: That part of the
insurance sales cycle in which competition is
at a maximum as insurance companies use their
excess capacity to sell more policies at lower
prices. See also Hard market.
- Special Damages: Compensation
awarded for actual economic losses, such as
medical expenses and lost wages. (See also
General Damages)
- Special Risk Insurance: Coverage
designed to provide financial protection
against risks or hazards of a special or
unusual nature.
- Split Funding: The use of two or
more funding agencies for the same pension
plan. An arrangement whereby a portion of the
contributions to the pension plan are paid to
a life insurance company and the remainder of
the contributions invested through a corporate
trustee, primarily in equities.
- Spouse's Benefit: Payments to the
surviving spouse of a deceased employee,
usually in the form of a series of payments
upon meeting certain requirements and usually
terminating with the survivor's remarriage or
death.
- Standard Insurance: Life insurance
written on the basis of regular morbidity
underwriting assumptions used by an insurance
company and issued at normal rates.
- Standard Markets: Insurance
companies for which the majority of people or
organizations qualify. See also Domestic
Insurers.
- Standard Provisions: A set of
provisions set forth in laws that prescribed
certain rights and obligations of both the
insured and the company under personal health
insurance policies. These were originally
introduced in 1912 and have now been replaced
by the Uniform Provisions.
- Standard Risk: A person who,
according to a company's underwriting
standards, is entitled to purchase insurance
protection without extra rating or special
restrictions.
- State Disability Plan: A plan for
accident and sickness, or disability insurance
required by state legislation of those
employers doing business in that particular
state.
- State Fund: A fund set up by a
state government to provide a specific line or
lines of insurance.
- State Insurance Department: A
department of a state government whose duty is
to regulate the business of insurance and give
the public information on insurance. See also
Insurance Commissioner.
- State-of-the-Art Defense: An
argument used in product liability cases that
the technology needed to avoid the loss in a
particular case did not exist at the time of
the product's manufacture.
- Statutory Accounting: Special
accounting practices for insurance companies
required by state law, prescribing a greater
level of detail than required by GAAP and
designed to provide greater protection for the
public against potential insolvency of these
essential institutions.
- Statutory Accounting Principles (SAP):
Rules of financial computation and
presentation required by statute which must be
followed by an insurance company when
submitting its financial statements to state
insurance departments. Such principles differ
from Generally Accepted Accounting Principles
(GAAP).
- Statutory Underwriting Profit or Loss:
Premiums earned less losses and expenses,
as calculated under Statutory Accounting
Principles..
- Step-Rate Premium: A rating
structure in which the premiums increase
periodically at pre-determined times such as
policy years or attained ages.
- Step-up in basis: An increase in
the tax basis of property to the value claimed
in the taxable estate of a decedent.
- Stock Company: A company organized
and owned by stockholders, as distinguished
from the mutual form of company which is owned
by its policyholders.
- Stock Exchange: An organization
that provides a facility for buyers and
sellers of listed securities to come together
to make trades in those securities.
- Stockholder: A person who owns
shares of stock in a corporation.
- Stock Insurance Company: A company
in which the legal ownership and control is
vested in the stockholders.
- Stock Life Insurance Company: A
life insurance company owned by stockholders
who elect a board to direct the company's
management. Stock companies, in general, issue
nonparticipating insurance, but may also issue
participating insurance.
- Stock Redemption Plan: an entity
purchase form of buy-sell agreement within a
corporation that involves the corporation
buying back shares from a departing owner.
- Straight Life Insurance: Whole life
insurance on which premiums are payable for
life.
- Strict Liability: Liability for
damages even though fault or negligence cannot
be proven.
- Subrogation: Process by which one
insurance company seeks reimbursement from
another company or person for a claim it has
already paid.
- Substandard (Impaired) Risk: A risk
that cannot meet the normal requirements of a
standard insurance policy. Protection is
provided in consideration of a waiver, a
special policy form, or a higher premium
charge.
- Substandard Insurance: Insurance
issued with an extra premium or special
restriction to those persons who do not
qualify for insurance at standard rates.
- Supplementary Contract: An
agreement between a life insurance company and
a policyholder or beneficiary by which the
company retains the cash sum payable under an
insurance policy and makes payments in
accordance with the settlement option chosen.
- Surety Bond: An agreement providing
for monetary compensation in the event of a
failure to perform specified acts within a
stated period. The surety company, for
example, becomes responsible for fulfillment
of a contract if the contractor defaults.
- Surgical Expense Insurance: Health
insurance, which provide benefits toward the
physician's or surgeon's operating fees.
Benefits may consist of scheduled amounts for
each surgical procedure.
- Surgical Schedule: A list of
maximum amounts payable by the policy for
various types of surgery, with the amount
based on the severity or complexity of the
operation.
- Surplus: The net worth of a
company, equal to the amount by which assets
exceed liabilities.
- Surplus Lines: (1) A risk or a part
of a risk for which there is no standard
insurance market available. (2) Insurance
written by non-admitted insurance companies.
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