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Glossary of Insurance Terms
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- Damage to Property of Others:
Coverage for an insured who damages another's
property. Payment is made despite the lack of
legal liability. Coverage is included in
Section II of the homeowners policy.
- Death Benefit: A payment made to a
designated beneficiary upon the death of the
employee annuitant.
- Debenture: A bond that is backed
only by the general credit of the issuing
corporation. No specific property is pledged
as security behind the loan.
- Debit Insurance: See Industrial
Life Insurance.
- Debris Removal Clause: This clause
extends insurance coverage to include the cost
of debris removal resulting from damage caused
by a covered loss up to a specified limit of
loss. The clause is an additional property
insurance coverage.
- Declarations: Statements in an
insurance contract that provide information
about the property or life to be insured and
used for underwriting and rating purposes and
identification of the property or life to be
insured.
- Declination: The insurer's refusal
to insure an individual after evaluation of
the application for insurance and any other
pertinent factors.
- Deductible: An amount which a
policyholder agrees to pay, per claim or per
accident, toward the total amount of an
insured loss.
- Deferred Annuity: An annuity
providing for the income payments to begin at
some specified future date.
- Deferred Compensation: Arrangements
by which compensation to employees for past or
current services is postponed until some
future date.
- Deferred Group Annuity: A type of
group annuity providing for the purchase each
year of a paid-up deferred annuity for each
member of the group, the total amount received
by the member at retirement being the sum of
these deferred annuities.
- Defined Benefit Plan: A pension
plan stating either (1) the benefits to be
received by employees after retirement or (2)
the method of determining such benefits. The
employer's contributions under such a plan are
actuarially determined.
- Defined Contribution Plan: A plan
under which the contribution rate is fixed and
benefits to be received by employees after
retirement depend to some extent upon the
contributions and their earnings.
- Dental Insurance: Individual or
group plan that helps pay costs of normal
dental care as well as damage to teeth from an
accident.
- Dependency Period: Period of time
following the readjustment period during which
the surviving spouse's children are under
eighteen and therefore dependent of the
parent.
- Dependent Benefits: Social Security
benefits available to the spouse or children
of a Social Security beneficiary.
- Deposit Administration Group Annuity:
A type of group annuity providing for the
accumulation of contributions in an undivided
fund out of which annuities are purchased as
the individual members of the group retire.
- Deposit Premium: The money paid by
a prospective policy holder when an
application is made for an insurance policy.
It is usually equal, at least, to the first
month's estimate premium and is applied toward
the actual premium when billed.
- Deposit Term Insurance: A form of
term insurance, not really involving a
"deposit," in which the first-year premium is
larger than subsequent premiums. Typically, a
partial endowment is paid at the end of the
term period. In many cases the partial
endowment can be applied toward the purchase
of a new term policy, or, perhaps, a whole
life policy.
- Depreciation: A decrease in the
value of property over a period of time due to
wear and tear or obsolescence. Depreciation is
used to determine the actual cash value of
property at time of loss.
- Diagnosis-Related Groups (DRGs):
System that reimburses health care providers
fixed amounts for all care given in connection
with standard diagnostic categories.
- Difference in Conditions Insurance (DIC):
All-risks policy that covers other perils
not insured by basic property insurance
contracts, supplemental to and excluding the
coverage provided by underlying contracts. DIC
insurance provides coverage designed to close
specific gaps in standard insurance policies
and is usually available only for larger
industrial or commercial risks. It allows
coverage to be customized to extend to such
exposures as water damage, flood, collapse,
earthquake, landslide, etc., according to the
insured's needs. DIC coverage may be provided
by means of a separate insurance policy or it
may be added by endorsement to the basic
policy.
- Direct Loss: Financial loss that
results directly from an insured peril.
- Direct Placement: Sale of an entire
issue of bonds or stock by the issuer to one
or a few large institutional customers such as
an insurance company without trying to market
the issue publicly.
- Direct Premiums Written: Property
and casualty insurance premiums written (less
return premiums), without any allowance for
premiums for assumed or ceded reinsurance.
- Direct Response System: A marketing
method where insurance is sold without the
services of an agent. Potential customers are
solicited by advertising in the mail,
newspapers, magazines, television, radio, and
other media.
- Direct Writer: The industry term
for a company which uses its own sales
employees to write its policies. Sometimes
refers to companies which contract with
exclusive agents.
- Directors' and Officers' Liability:
The exposure of corporate managers to claims
from shareholders, government agencies, and
employees, and others alleging mismanagement.
- Disability: a physical or a mental
impairment that substantially limits one or
more major life activities of an individual.
It may be partial or total. (See Partial
Disability; Total Disability.)
- Disability Benefit: Periodic
payments, usually monthly, payable to
participants under some retirement plans, if
such participants are eligible for the
benefits and become totally and permanently
disabled prior to the normal retirement date.
- Disability Benefit: A feature added
to some life insurance policies providing for
waiver of premium, and sometimes payment of
monthly income, if the policy holder becomes
totally and permanently disabled.
- Disability Income Insurance: A form
of health insurance that provides periodic
payments to replace income when an insured
person is unable to work as a result of
illness, injury, or disease.
- Disability Insured: Status of an
individual who is insured for disability
benefits under the Old-Age, Survivors, and
Disability Insurance (OASDI) program. The
covered person must be fully insured and have
at least twenty quarters of coverage out of
the last forty, ending with the quarter in
which the disability occurs. Fewer quarters
are required for persons under age thirty.
- Disappearing Deductible: Deductible
in an insurance contract that provides for a
decreasing deductible amount as the size of
the loss increases, so that small claims are
not paid but large losses are paid in full.
- Dismemberment: Loss of body members
(limbs), or use thereof, or loss of sight due
to injury.
- Dismemberment Insurance: A form of
health insurance that provides payment in case
of loss by bodily injury of one or more body
members (such as hands or feet) or the sight
of one or both eyes.
- Disposable Personal Income:
Personal income less personal tax and basic
nontax payments. It is the income available to
people for discretionary spending and saving.
- Dividend: (1) A return of part of
the premium on participating insurance to
reflect he difference between the premium
charged and the combination of actual
mortality, expense and investment experience.
Such premiums are calculated to provide some
margin over the anticipated cost of the
insurance protection. (2) In capital stock
companies, a share of the profits distributed
to stockholders.
- Dividend Addition: An amount of
paid-up insurance purchased with a policy
dividend and added to the face amount of the
policy.
- Dollar Threshold: In no-fault auto
insurance states with the dollar threshold, it
prevents individuals from suing in tort to
recover for pain and suffering unless their
medical expenses exceed a certain dollar
amount.
- Domestic Insurer: An insurance
company is a domestic company in the state in
which it is incorporated. See also Foreign
Insurer, Alien Insurer.
- Donor: The person making a gift.
- Double Indemnity: A policy
provision usually associated with death, which
doubles payment of a designated benefit when
certain kinds of accidents occur.
- Dramshop Law: Law that imputes
negligence to the owner of a business that
sells liquor in the case that an intoxicated
customer causes injury or property damage to
another person. Usually excluded from general
liability policies.
- Dread Disease Insurance: Insurance
providing an unallocated benefit, subject to a
maximum amount, for expenses incurred in
connection with the treatment of specified
diseases, such as cancer, poliomyelitis,
encephalitis and spinal meningitis.
- Driver Education Credit: Student
discount or reduction in premium amount for
which young drivers become eligible on
completion of a driver education course.
- Duplication of Benefits:
Overlapping or identical coverage of the same
insured under two or more health plans,
usually the result of contracts of different
insurance companies, service organizations, or
pre-payment plans; also known as multiple
coverage.
- Dwelling Property 1: Property
insurance policy that insures the dwelling at
actual cash value, other structures, personal
property, fair rental value, and certain other
coverages. Covers a limited number of perils.
- Dwelling Property 2: Property
insurance policy that insures the dwelling and
other structures at replacement cost. It adds
additional coverages and has a greater list of
covered perils than the Dwelling Property 1
policy.
- Dwelling Property 3: Property
insurance policy that covers the dwelling and
other structures against direct physical loss
from any peril except for those perils
otherwise excluded. However, personal property
is covered on a named-perils basis.
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