Insurance Terms Glossary – STU

Schedule: A list of specified amounts payable for, usually, surgical procedures, dismemberment treatments, ancillary expenses, or the like in Health policies.

Settlement Option: A method of receiving life-insurance proceeds other than in a lump sum.

Single-Premium Annuity: An Annuity purchased with one lump-sum payment.

Single-Premium Policy: A policy on which the entire premium. is paid in one payment.

Solicitor: A person who finds insurance prospects for a producer.

Standard Risk: A person entitled to life-insurance protection without extra rating or special restrictions.

Stated Amount: Relating to an agreement to pay a specified amount of money to or on behalf of the insured upon the occurrence of a defused loss. For example, the principal sum on an AD&D policy.

Stock Insurance Company: An incorporated insurance company with capital divided into shares and owned by the shareholders.

Substandard Risk (Rated Risk): A risk not acceptable at standard rates.

Suicide Clause: States that if the insured commits suicide within a specified period of time, the policy will be voided. Paid premiums are usually refunded. The time limit is generally two years, but only one year in Colorado.

Term Insurance: Life insurance that normally does not have cash accumulation and is issued to remain in force for a specified period of time, following which it is subject to renewal or termination.

Time Limit on Certain Defenses: A Uniform Provision on Health Insurance policies specifying that after a given number of years (usually two) no statements (except fraudulent misstatements) made in the application shall be used to deny a claim or void the policy and that no claim shall be denied or reduced on the ground that a disease or physical condition not excluded at time of issue existed prior to effective date.

Total Disability: A degree of disability from injury or sickness that prevents the insured from performing duties for remuneration or profit. The definition in any given case depends on the wording in a covering policy.

Unauthorized Company: An insurer not permitted to sell insurance within a state, except for Surplus Lines or Reinsurance.

Underwriter: 1) A person trained in evaluating risks and determining the rates and coverages that will be used for them. 2) A producer, especially a life-insurance producer, who might qualify as a “Field Underwriter.” In theory, the producer is supposed to do some underwriting before submitting the case to the home office underwriter; in effect, to make a decision on the basis of known facts on whether or not the risk is sound and to report all facts known to him or her that might affect the risk.

Underwriting: The process of evaluating a risk for the purpose of issuing insurance coverage on it.

Unearned Premium: That portion of an advance premium payment that has not yet been used for coverage written. Thus, in the case of an annual premium, at the end of the first month of the premium period, 11 months of the premium would still be “unearned.”

Uniform Simultaneous Death Act: A uniform law adopted by most states providing that if the Primary Beneficiary and the insured die in the same accident and there is no proof that the beneficiary outlived the insured, the proceeds are paid as if the Primary Beneficiary died first.

Variable Annuity: An Annuity contract in which the amount of the periodic benefits varies, usually in relation to security market values, a cost-of-living index, or some other variable factor in contrast to a Fixed or Guaranteed Return Annuity.

Safe Burglary Policy: A Crime insurance policy that is designed to cover burglary of property from a safe or the felonious removal of the entire safe from the premises.

Salvage: Property taken over by an insurance company to reduce its loss. The company may dispose of salvage property as it wishes, but on request and proper reimbursement, may return it to the insured.

Short Rate: A percentage penalty charged on insurance, canceled by the insured, before the end of the policy period. Return premium is calculated on a Short-Rate basis, meaning the insurance company keeps a portion of the unearned premium to cover expenses.

Stated-Value Policy: Insurance contract written to insure item of property for a specific amount of insurance. Used in insuring hard-to-value items, such as fine arts.

Stock Insurance Company: An incorporated insurance company with capital divided into shares and owned by the shareholders. Profits are shared by the stockholders. Policyholders are NOT entitled to share in company profits.

Subrogation: The transfer to the insurance company of the insured’s right to collect for damages. After paying a claim, the company stands in the place of the insured in suing the negligent party, thus preventing the insured from collecting twice.

Surety: The party (often the insurance company) that agrees to be responsible for loss which may result if the principal does not keep his promise.

Surety Bond: A bond that guarantees that someone will perform faithfully whatever he or she agrees to do or that someone will make an agreed upon payment to another party. Note that in a Surety Bond, there are three parties: the Principal, who has agreed to perform the obligation; the obligee, for whose benefit the Bond is written, and the Surety, the insurer that provides the bond in consideration for the premium paid.

Theft: Any act of stealing. Theft includes larceny, burglary, and robbery.

Time-Element Coverage: Provides protection for Indirect Loss that occurs when, following a Direct property loss, there is a time lapse before the property can be used again. IncludesBusiness Income, Contingent Business Income, and Extra Expense.

Trip Transit Policy: An Inland Marine transportation policy, similar to the Annual Transit policy, but designed to cover a specific shipment.

Underinsured Motorist Coverage (UIM): Coverage on an Auto policy that stacks coverage for an insured onto inadequate coverage of an individual who negligently caused injury to that insured.

Umbrella Liability Policy: Provides broad coverage for an insured’s liability over and above liability covered by underlying contracts or retention limits.

Underwriting: The process of evaluating a risk for the purpose of issuing insurance coverage on it.

Uninsured Motorist Coverage (UM): Automobile Coverage designed to provide Bodily Injury protection for the insured should she be involved in an accident in which the driver at fault has no insurance to cover the loss.

Unoccupancy: The absence of person, return expected. Property coverage on a building is sometimes restricted when there are long periods of vacancy, but not unoccupancy.