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Glossary of Insurance Terms
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- Early Retirement: Retirement of a
participant prior to the normal retirement
date, usually with a reduced amount of
annuity. Early retirement is generally allowed
at any time during a period of 5 to 10 years
preceding the normal retirement date.
- Earned Income: Employment income
derived from salary, wages, commissions, or
fees.
- Earned Premium: The portion of a
premium which is the property of an insurance
company, based on the expired portion of the
policy period. For example, an insurance
company is considered to have earned 75
percent of an annual premium after a period of
nine months of an annual policy has elapsed.
- Earnings Test (retirement test):
Determination of the amount of Social Security
benefits payable to a beneficiary after
adjusting for earnings.
- Economic Loss: The estimated total
cost, both insured and uninsured, of mishaps
(such as motor vehicle accidents, work
accidents, and fires); includes such factors
as property damage, funeral expenses, wage
loss, insurance administration costs, and
medical, hospital and legal costs.
- Economic Policy: Special type of
participating whole life insurance in which
the dividends are used to buy term insurance
or paid-up additions equal to the difference
between the face amount of the policy and some
guaranteed amount.
- Effective Date: The date on which
the insurance under a policy begins.
- Elements of a Negligent Act: Four
elements an injured person must show to prove
negligence: existence of a legal duty to use
reasonable care, failure to perform that duty,
damages or injury to the claimant, and
proximate cause relationship between the
negligent act and the infliction of damages.
- Eligibility Date: The date on which
an individual member of a specified group
becomes eligible to apply for insurance under
an (group life or health) insurance plan.
- Eligibility Period: A specified
length of time, such as one month, following
the eligibility date during which an
individual member of a particular group will
remain eligible to apply for insurance under a
group life or health insurance policy without
evidence of insurability.
- Eligibility Requirements: For
retirement plans, (1) The conditions which an
employee must satisfy to participate in a
retirement plan, for instance completion of 1
to 3 years of service with the employer, the
attainment of a specified age, such as 25, or
(2) Conditions which an employee must satisfy
to obtain a retirement benefit, such as the
completion of 15 years of service and the
attainment of age 65.
- Eligible Employees: Those members
of a group who have met the eligibility
requirements under a group life or health
insurance plan.
- Elimination Period: A period of
time between the period of disability and the
start of disability income insurance benefits,
during which no benefits are payable. The
elimination period may be as short as a few
days or as long as one year or more.
- Embezzlement: Fraudulent use or
taking of another's property or money which
has been entrusted to one's care.
- Employee Benefit Plan Insurance:
Coverage designed to protect the employer
against claims by employees or former
employees resulting from negligent acts or
omissions in the administration of the
insured's employee benefits programs. Coverage
is intended to extend to the administration of
these plans, including counseling employees,
interpreting employee benefits programs,
handling records, enrolling, terminating or
canceling employees in specified plans on a
timely basis, etc
- Employee Benefit Programs: Programs
designed to benefit employees, arranged by the
employer, which are not paid for primarily or
directly by the employee, including for
instance group life insurance and group
accident and/or health insurance; profit
sharing plans; employee stock subscription
plans; workers' compensation; unemployment
insurance; social security benefits;
disability benefits, etc..
- Employee Dishonesty Insurance:
Coverage designed to protect an employer from
financial loss due to the fraudulent
activities of one or more employees. The
coverage includes protection for loss of
money, securities, and other property of the
insured. Some scheduled policies are still
available, but the majority are written on a
blanket basis. This provides coverage for all
employees, subject to the policy definitions.
The limit of liability is "per loss" and is
applied on an occurrence basis. All acts
involving the same employee or group of
employees is considered one occurrence.
- Employee Dishonesty Coverage Form:
Commercial crime insurance form drafted by the
Insurance Services Office that covers the loss
of money, securities, and other covered
property because of any dishonest act of a
covered employee or employees.
- Employee Retirement Income Security Act
(ERISA): Legislation passed in 1974
applying to most private pension and welfare
plans that requires certain minimum standards
to protect participating employees.
- Employment Practices Liability
Insurance: Coverage designed to protect
the corporation, directors & officers and
employees for claims resulting from wrongful
termination, discrimination, sexual
harassment, wrongful discipline and failure to
employ or promote.
- Employment Stock Ownership Plan (ESOP):
A defined contribution pension plan which
is designed to invest primarily in securities
of the employer, such as common stock and
debentures.
- Endorsements: An additional piece
of paper, not a part of the original contract,
which cites certain terms and which, when
attached to the original contract, becomes a
legal part of that contract.
- Endowment: Life insurance payable
to the policyholder if living, on the maturity
date stated in the policy, or to a beneficiary
if the insured dies prior to that date.
- Enrolled Actuary: A person who
performs actuarial service for a plan and who
is enrolled with the Federal Joint Board for
the Enrollment of Actuaries.
- Enrollment Card: A document signed
by an employee as notice of his/her desire to
participate in the benefits of a group
insurance plan.
- Entire Contract Clause: Provision
in life insurance policies stating that the
policy and attached application constitute the
entire contract between the parties.
- Entity Purchase Agreement: The
terms for the business to buy back a
deceased's share of the business's ownership.
- Environmental Damage: The injurious
presence in or on land, the atmosphere, or any
water course or body of water of solid,
liquid, gaseous, or thermal contaminants,
irritants, or pollutants.
- Environmental Impairment Liability
Insurance: Coverage designed to cover
losses and liabilities arising from damage to
property by pollution.
- Equities: Investments in the form
of ownership of property, usually common
stocks, as distinguished from fixed income
bearing securities, such as bonds or
mortgages.
- Equity in the Unearned Premium Reserve:
Amount by which an unearned premium reserve is
overstated because it is established on the
basis of gross premium rather than net
premium.
- ERISA: See Employee
Retirement Income Security Act.
- Errors and Omissions Insurance:
Coverage designed to protect an insured
against loss due to a claim of some negligent
act, error, or omission by the insured.
- Estate: The assets and liabilities
of a person left at death.
- Estate Planning: The process of
developing a plan to transfer property from
one generation to the next, or within a
generation (eg., from husband to wife).
- Estoppel: Legal doctrine that
prevents a person from denying the truth of a
previous representation of fact, especially
when such representation has been relied on by
the one to whom the statement was made.
- Evidence of Insurability: Any
statement of proof of a person's physical
condition and/or other factual information
affecting his/her acceptance for insurance.
- Excess and Surplus Insurance: (1)
Coverage designed to protect against losses
above a certain amount, with losses below that
amount usually covered by a regular policy.
(2) Insurance for a risk for which coverage is
unavailable in the normal market. Such risks
are frequently unusual, e.g., damage to a
musician's hands or the multiple perils of a
convention. (See also Umbrella liability and
Surplus lines.)
- Exclusions: Specific conditions or
circumstances listed in the policy for which
the policy will not provide benefit payments.
- Exclusive Agent: An agent who is
employed by one and only one insurance company
and who solicits business exclusively for that
company.
- Exclusive Remedy Doctrine: Doctrine
in workers compensation insurance which states
that workers compensation benefits should be
the exclusive or sole source of recovery for
workers who have a job-related accident or
disease. The doctrine has been eroded by legal
decisions.
- Exclusion or Exception: Specified
conditions or circumstances, listed in the
policy, for which the policy will not provide
benefits.
- Exclusion ratio: The portion of an
annuity payment, considered by tax law to be a
return of your initial investment, that is not
subject to income tax when received.
- Exclusive Provider Organization (EPO):
People who belong to an EPO must receive their
care from affiliated providers; services
rendered by unaffiliated providers are not
reimbursed. See also,
Health Maintenance Organization.
- Expense Loading: See
Loading.
- Expense Ratio: The ratio of a
company's operating expenses including
acquisition costs to premiums written or
earned.
- Experience: A term used to describe
the relationship, usually expressed as a
percent or ratio, of premium to claims for a
plan, coverage, or benefits for a stated time
period.
- Experience Modification Factor:
Used in workers compensation rating to reflect
the degree to which a particular employer has
experience that is better or worse that
expected for that industry. Weighted by
employer's credibility factor.
- Experience Rating: The process of
determining the premium rate for a group risk,
wholly or partially on the basis of that
group's experience.
- Experience Refund: A provision in
most group policies for the return of premium
to the policyholder because of lower than
anticipated claims.
- Explosion: A violent expansion,
with force and noise, generally due to rapid
chemical change; term covered under various
property/casualty insurance policies.
- Exposure Unit: Unit of measurement
used in insurance pricing.
- Extended Coverage Insurance:
Protection for the insured against property
damage caused by windstorm, hail, smoke,
explosion, riot, riot attending a strike,
civil commotion, vehicle and aircraft. This is
provided in conjunction with the fire
insurance policy and the various package
policies.
- Extended Non-owned
Coverage: Endorsement that can be added to
an automobile liability insurance policy that
covers the insured while driving any non-owned
automobile on a regular basis.
- Extended Reporting Period: An
additional period of time after policy
expiration during which valid claims will be
paid under a claims-made policy of liability
insurance
- Extended Reporting Period Endorsement:
Added to a claims-made policy of liability
insurance to provide an additional period of
time during which valid claims will be paid
- Extended Term Insurance: A form of
insurance available as a non-forfeiture
option. It provides the original amount of
insurance for a limited period of time.
- Extended Unemployment Insurance
Benefits: Additional cash benefits paid by
federal-state unemployment insurance programs
to workers who are involuntarily unemployed
and who have exhausted their regular weekly
cash benefits during periods oh high
unemployment.
- Extra Expense Insurance: Type of
business income insurance that covers the
extra expenses incurred to continue operations
after a loss has occurred.
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