Insurance Information
Immediate Annuity
An annuity that commences benefit payments immediately after a specified interval (one month or one year). This type of annuity is nearly always purchased with a single premium.

Imputed Negligence
Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.

Incurred Claims
Incurred claims equal the claims paid during the policy year plus the claim 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 claims.

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 as existed before the loss.

Independent Adjuster
Claims adjuster who offers his or her services to insurance companies and is compensated by a fee.

Independent Agent
An independent contractor who sells insurance usually on behalf of more than one insurance company under the independent agency system. Independent agents operate their own business, own the records of the policies sold through them, and are compensated by commissions or fee.

Indirect Loss
Property loss from a peril that is not the immediate cause of loss; an indirect loss (e.g. a business interruption loss, extra expense, lost rent, etc.) arising out of an insured's inability to use property damaged by another peril.

Inheritance tax
A tax based on an estate's value at the time of the owner's death. A federal unified tax is assessed on the combined value of the estate and qualifying gifts so that estate taxes cannot be avoided by gifts in anticipation of death.

Insolvent
Having insufficient financial resources (assets) to meet financial obligations (liabilities).

Inspection
In property and casualty insurance, the insurer retains the right to make inspections and surveys relating to the insurability of the risk and the premiums charged. The insurer also reserves the right for inspection of property for which a loss arises and claim presented.

Installments
When a policy is placed on a payment plan, multiple equal installments due in the future are created.

Insurability
The risk-associated qualities of a person or entity that meet an insurer's underwriting standards and therefore make the insurer willing to offer coverage at a standard premium.

Insurable Interest
The person who stands to lose financially in the event of a loss. For example, loss to an automobile, home, or contents.

Insurable Risk
A risk that meets the following criteria:
1. The insured loss must have a definite time and place;
2. The insured event must be accidental;
3. The insured must have an insurable interest in the subject of coverage;
4. The insured risks must belong to a sufficiently large group of homogeneous exposure units to make losses predictable;
5. The risk must not be subject to a catastrophic loss where a large number of exposure units can be damaged or destroyed in a single event;
6. The coverage must be provided at a reasonable cost;
7. The chance of loss must be calculable.

Insurance
A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions.

Insurance Adjuster
An insurance company employee who is responsible for settling or adjusting claims.

Insurance Commissioner
The senior official in a state's department of insurance or other insurance regulatory agency.

Insurance Company
An organization chartered to operate as an insurer.

Insurance Examiner
The insurance department representative assigned to audit the books or the market conduct of an insurance company.

Insurance Exchange
An insurance marketplace or organization patterned after Lloyd's of London, formed during the 1980s in New York City, Miami, Florida, and Chicago, Illinois. Exchanges were formed to write large or unique risks, generally on a surplus lines basis, and to write reinsurance business. Both the New York and Florida exchanges have suspended operations.

Insurance Guaranty Funds
Plans established and administered individually at the state level which assess solvent insurers in order to settle the unpaid claims of a insolvent company and to return unearned premiums to its policyholders. Insurers each pay a proportional share of the losses based on their premium volume in the state. Frequently funds are set up in such a way as to have immediate access to assets of the insolvent insurer (rather than waiting until liquidation proceedings are completed). In many states, funds are given priority before general creditors to obtain assets of insolvent insurers. In some states, solvent insurers are permitted tax offsets against money paid into guarantee funds.

Insurance Services Offices
Members: Rating bureaus, actuarial associations and other insurance research groups. Objectives: Provides statistical and actuarial information, policy forms and related services to insurers. Functions as an insurance advisory organization and statistical agent. Publishes rate manuals, plans, policy forms and endorsements and other materials.

Insured
The person whose insurable interest is protected under an insurance policy; the one to whom or at whose direction an insurer reimburses losses, pays benefits, or provides services. The term is generally preferred to policyholder.

Insured Loss Ratio
The ratio that a reinsurer's percentage of losses incurred bears to premiums earned.

Insured Vehicle
A vehicle which is covered by an insurance policy or any vehicle which meets the definition of a covered auto according to the language of the insurance policy.

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.

Insuring Agreement
That part of an insurance contract that states the promises of the insurer.

Insuring Clause
The clause which sets forth the type of loss being covered by the policy and the parties to the insurance contract.

Interest
The price for the use of money, expressed as a percentage of the amount borrowed; the charge paid by a borrower to a lender

Inter vivos Trust
An ordinary trust established by a person while living to manage and distribute assets to other living persons. (Inter vivos is Latin for "between the living.")

Intestate
Dying without having made a legal will; a person who has died without leaving a will

Investment Income
An insurance company's earnings from its investment portfolio, including interest, dividends, capital gains, and rent.

Insurance Information (cont'd)
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
Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option.

Paramedical Examination
Physical examination of an applicant by a trained person other than a physician.

Partial Disability
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
Insurance issued by an insurance company providing participation in dividend distribution.

Participating Policy
A life insurance policy under which the 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 the plan termination insurance program under ERISA.

Pension Benefits
A series of payments to be provided in accordance with the plan of benefits.

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.

Peril
The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.

Permanent Life Insurance
A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.

Persistency
The degree to which policies stay in force through the continued payment of renewal premiums.

Personal Articles Floater
A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, fine arts.

Personal Injury Protection (PIP)
First-party no-fault coverage in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.

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 nonsurgical 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 the plan, usually designated in the plan agreement.

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 the company to the 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.

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 also included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses. In effect, it is the financial base that permits a company to sell insurance.

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.

Policy Term
That period for which an insurance policy provides coverage.

Pollution Liability
Exposure to lawsuits for injury or cleanup costs that result from pollution damage

Pool
An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.

Portability
The transfer of 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.

Preexisting Condition
A physical condition that existed before the effective date of coverage.

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.

Preferred Stock
Evidence of ownership which entitles the owners to receive dividends from the corporation before the common stockholders and which usually also provides a prior claim to corporate assets if the corporation is dissolved.

Premium
The sum paid by a policyholder to keep an insurance policy in force.

Premium finance
allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.

Premium Loan
A policy loan made for the purpose of paying premiums.

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 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
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.

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 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.

Proration
The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.

Prospective Payment
An advancement of payment for health care charges that are likely to occur.

Prototype Plan
A standardized plan, approved and qualified as to its concept by the Internal Revenue Service, which is made available by life insurance companies, banks and mutual funds for employers' use.

Provision
A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.

Proximate Cause
The dominating cause of loss or damage; an unbroken chain of events between the occurrence 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.