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Glossary of Insurance Terms
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- IBNR: See Incurred but not
Reported.
- Immediate Annuity: An annuity
providing for payment to begin immediately.
- Immediate Participation Guarantee Plan:
(IPG) Type of pension plan in which all
pension contributions are deposited in an
unallocated fund and used directly to pay
benefits to retirees.
- Imputed Negligence: Case in which
responsibility for damage can be transferred
from the negligent party to another person,
such as an employer.
- Incontestability: A provision in
life insurance policies that states that,
except for non-payment of premiums and certain
other circumstances, the policy shall be
incontestable during the lifetime of the
insured after the policy has been in force for
two years .
- Incontestable Clause: An optional
clause which may be used in noncancelable or
guaranteed renewable health insurance
contracts providing that the insurer may not
contest the validity of the contract after it
has been in force for two (sometimes three)
years.
- Incurred Losses: Expense account in
an insurance company's Income Statement
reflecting the claims paid during the policy
year plus the loss reserves as of the end of
the policy year, minus the corresponding
reserves as of the beginning of the policy
year. The difference between the year end and
beginning of the year claim reserves is called
the increase in reserves and may be added
directly to the paid claims to produce the
incurred losses.
- Incurred-but-not-Reported (IBNR)
Reserves: Liability account on an
insurer's balance sheet reflecting claims that
are expected based upon statistical
projections but which have not yet been
reported to the insurer
- Indemnification: Compensation to
the victim of a loss, in whole or in part, by
payment, repair, or replacement.
- Indemnity: Legal principle that
specifies an insured should not collect more
than the actual cash value of a loss but
should be restored to approximately the same
financial position that existed before the
loss.
- Independent Adjustor: Claims
adjustor who offers his or her services to
insurance companies and is compensated by a
fee.
- Independent Agent: An independent
business person who usually represents two or
more insurance companies in a sales and
service capacity and who is compensated by
commissions.
- Independent Agency System: Type of
property and liability insurance marketing
system, sometimes called the American agency
system, in which the agent is an independent
business person representing several
companies. The agency has legal right to
income from the expirations and renewal rights
to the business, and the agent is compensated
by commissions.
- Indeterminate Premium Whole Life
Insurance: Nonparticipating whole life
policy that permits the insurer to adjust
premiums based on anticipated future
experience. Initial premiums are guaranteed
for a certain period. After the initial
guaranteed period expires, the insurer can
increase premiums up to some maximum limit.
- Indirect Loss: See
Consequential Loss.
- Individual Contract: A contract of
health insurance made with an individual
called the policyholder or the insured, which
normally covers the individual and, in certain
instances, members of his family.
- Individual Deductible: Amount that
an insured and each person of his or her
family covered by the policy must pay before
the group or individual medical insurance
policy begins to pay for medical expenses.
- Individual Insurance: Policies
which provide protection to the policyholder
and/or his/her family. Sometimes called
Personal Insurance as distinct from group and
blanket insurance.
- Individual Policy Pension Trust: A
type of pension plan, frequently used for
small groups, administered by trustees who are
authorized to purchase individual level
premium policies or annuity contracts for each
member of the plan. The polices usually
provide both life insurance and retirement
benefits.
- Individual Retirement Account (IRA):
An account to which an individual can make
annual contributions of 100% of earnings up to
$2,000 ($2,250 for a one-income married
couple). These contributions are tax
deductible for most workers, and income earned
in the account is deferred until withdrawn.
- Industrial Life Insurance: Life
insurance issued in small amounts with
premiums payable on a weekly or monthly basis.
The premiums are generally collected at the
insured's home each week by an agent of the
company. Sometimes referred to as debit
insurance.
- Inflation-Guard Endorsement:
Endorsement added at the insured's request to
a homeowners policy to increase periodically
the face amount of insurance of the dwelling
and other policy coverages by a specified
percentage.
- Inheritance tax: A tax on the
estate of a deceased person.
- Initial Past Service Liability: The
actuarial value (single sum) of the past
service benefits as of the effective date of
the establishment of a retirement plan, or at
the date of the latest adjustment.
- Initial Reserve: In life insurance,
the reserve at the beginning of any policy
year.
- Inland Marine Insurance: A form of
insurance designed to cover articles in
transit as well as bridges, tunnels and other
means of transportation and communication.
Besides goods in transit (generally excepting
ocean cargo), it includes numerous floater
policies, such as those covering personal
effects, personal property, jewelry, furs,
fine arts, and other items.
- Inspection Report: A report
(usually written) of an investigation of an
applicant, generally conducted by an
independent agency that specializes in
insurance investigations. The report covers
such matters as occupation, financial status,
health history, and moral problems.
- Insolvent: Having insufficient
financial resources (assets) to meet financial
obligations (liabilities).
- Insurability: Acceptability to the
company of an applicant for insurance.
- Insurable Risk: The conditions that
make a risk insurable are (a) the peril
insured against must produce a definite loss
not under the control of the insured, (b)
there must be a large number of homogeneous
exposures subject to the same perils, (c) the
loss must be calculable and the cost of
insuring it must be economically feasible, (d)
the peril must be unlikely to affect all
insureds simultaneously, and (e) the loss
produced by a risk must be definite and have a
potential to be financially serious.
- Insurance: A arrangement under
which individuals, businesses, and other
organizations or entities, in exchange for
payment of a premium, are guaranteed
compensation for losses resulting from certain
perils under specified conditions.
- Insurance Company: (1) An
organization chartered to operate as an
insurer. (2) Any corporation primarily engaged
in the business of furnishing insurance
protection to individuals or organizations.
- Insurance Commissioner: The top
insurance regulatory official in a state.
- Insurance Examiner: The
representative of a state insurance department
assigned to participate in the official audit
and examination of the affairs of an insurance
company.
- Insurance Guaranty Funds: State
Funds that provide for the payment of unpaid
claims of insolvent insurers. Such funds are
frequently notional, in that they are
commingled as part of a state government's
general funds.
- Insurance Services Offices (ISO):
Major rating organization in property and
liability insurance that drafts policy forms
for personal and commercial lines of insurance
and provides rate data on loss costs for
property and liability insurance lines.
- Insured: A person or organization
covered by an insurance policy.
- Insured Life: The person on whose
life the policy is issued.
- Insurer: The party to the insurance
contract who promises to pay losses or
benefits. Also, any corporation engaged
primarily in the business of furnishing
insurance to the public. See also insurance
company.
- Insuring Agreement: That part of an
insurance contract that states the promises of
the insurer.
- Insuring Clause: The clause in an
insurance contract which sets forth the type
of loss being covered by the policy and the
parties to the insurance contract.
- Integration: A coordination of
pension, disability or other benefit with the
other sources of income, such as Social
Security benefit, through a specific formula
designed to ensure reasonable income
replacement.. Qualified plans must integrate
so that total benefits are non-discriminatory
between rank and file employees and owners,
officers or highly compensated employees.
- Inter vivos Trust: A trust
created while the creator of the trust is
living. Also known as a living trust.
- Interest: Money paid for the use of
money, generally calculated as a percentage
per annum.
- Interest-Adjusted Method: Method of
determining cost to an insured of a life
insurance policy that considers the time cost
of money by applying an interest factor to
each element of cost.
- Interest Option: Life insurance
settlement option in which the principal is
retained by the insurer and interest is paid
periodically.
- Intestate: Without a will.
- Investment Income: Line reported in
the Income Statement of a company's financial
statements that states the income generated by
a company's portfolio of investments (such as
in bonds, stocks, or other financial
ventures).
- Investment Only Contract: Type of
funding instrument that uses only the
investment services of an insurer.
- IPG Plan: See Immediate
Participation Guarantee Plan.
- IRA: See Individual
Retirement Account.
- Irrevocable Beneficiary:
Beneficiary designation allowing no change to
be made in the beneficiary of an insurance
policy without the beneficiary's consent.
- Irrevocable Trust: A trust in which
the creator does not reserve the right to
reacquire the trust property.
- ISO: See Insurance Services
Office.
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