Terms to Know
Getting familiar with these terms will make your benefits review a breeze.
Beneficiary
Recipient of the proceeds of a life insurance policy if the insured dies while the policy is in effect.
Cash Value
Pertaining to life insurance policies, this is the amount of money policyowners would receive as a refund if they cancel their coverage and return the policy to the insurer.
Coinsurance
Specified percentage of all eligible medical expenses, those greater than the deductible but less than the stop-loss amount, that an insured must pay.
Coordination of Benefits
Reducing benefits by any amounts provided through other insurance plans.
Deductible
Specified flat amount that an insured must normally pay before the insurer will pay any policy benefits.
Elimination Period
Specified amount of time, beginning with the onset of a disability, during which benefits are not payable.
Face Amount
With a life insurance policy, the sum of benefits paid at the insured’s death or at maturity.
Group Insurance
Insurance sold to groups of individuals with a master contract/policy.
Individual Insurance
Insurance sold to individuals with an individual policy.
Paid-up Life Insurance
Policy under which all premiums have already been paid so there are no further premium payments due.
Renewable
Usually refers to the fact that an insured can renew an insurance policy without having to take a physical examination.
Stop-Loss Provision
Provision in a policy that specifies the amount of out-of-pocket expenses the policyholder must pay before the policy covers 100 percent of the eligible medical expenses.
Voluntary Benefits
Benefits that are offered by an employer but paid for by employees, if they choose to purchase the benefits.
Waiver of Premium
Insureds can continue coverage without paying a premium if they are disabled under the definition of disability used in the policy.
Benefit
What the insurance company pays to an insured according to the policy.
Certificates of Insurance
Evidence of insurance provided to an individual covered under a master contract or policy.
Conversion
Converting coverage under a group policy to coverage under an individual policy. Also, the conversion of coverage under a term life insurance policy to coverage under a cash value policy.
Co-pay
A co-pay is a fixed dollar amount that an insured is expected to pay the medical provider at the time of service.
Disability
Short-term disability has a shorter, if any, elimination period, as well as a shorter duration of coverage.
Long-term disability has a longer elimination period and usually provides benefits for a longer period of time, often at a reduced amount. Short- and long-term disability definitions will vary by policy and state.
Long-term disability has a longer elimination period and usually provides benefits for a longer period of time, often at a reduced amount. Short- and long-term disability definitions will vary by policy and state.
Enrollment Period
Time period during which employees can enroll for coverage without providing evidence of insurability.
Flexible Benefits Plan
Special benefits plans set up under Section 125 of the Internal Revenue Code to allow employees to pay the cost for certain qualified benefits with pretax dollars.
Indemnity Benefits
A predetermined flat benefit amount stated in the policy.
Out-of-Pocket Expenses
Costs not covered by a medical plan, such as deductibles and coinsurance amounts. You pay for them out of your own pocket.
Portability
In insurance terms, the capability to take insurance protection, purchased as a member of a group, with you when you leave the group, usually at no change in premium.
Rider
A special policy provision or group of provisions added to a policy to expand or limit the benefits.
Surrender
Liquidation of all funds in a life insurance contract.
Waiting Period
Specified period of time that an employee has to be on the job without illness or injury before he or she becomes eligible for coverage.