WAIVER The surrender of a right or privilege. In life insurance, a provision that sets certain conditions, such as disablement, which allow coverage to remain in force without payment of premiums. WAR RISK Special coverage on cargo in overseas ships…

VALUED POLICY A policy under which the insurer pays a specified amount of money to or on behalf of the insured upon the occurrence of a defined loss. The money amount is not related to the extent of the loss….

UMBRELLA POLICY Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than…

TERM CERTAIN ANNUITY An form of annuity that pays out over a fixed period rather than when the annuitant dies. TERM INSURANCE A form of life insurance that covers the insured person for a certain period of time, the “term”…

SALVAGE Damaged property an insurer takes over to reduce its loss after paying a claim. Insurers receive salvage rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims on cargoes lost at sea…

RATE The cost of a unit of insurance, usually per $1,000. Rates are based on historical loss experience for similar risks and may be regulated by state insurance offices. RATE REGULATION The process by which states monitor insurance companies’ rate…

QUALIFIED ANNUITY A form of annuity purchased with pretax dollars as part of a retirement plan that benefits from special tax treatment, such as a 401(k) plan.

PACKAGE POLICY A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril insurance. PAY-AT-THE-PUMP A system proposed in the 1990s in which auto insurance premiums would be paid to state governments…

OCCUPATIONAL DISEASE Abnormal condition or illness caused by factors associated with the workplace. Like occupational injuries, this is covered by workers compensation policies. OCCURRENCE POLICY Insurance that pays claims arising out of incidents that occur during the policy term, even…

NAMED PERIL Peril specifically mentioned as covered in an insurance policy. NATIONAL FLOOD INSURANCE PROGRAM Federal government-sponsored program under which flood insurance is sold to homeowners and businesses. NO-FAULT Auto insurance coverage that pays for each driver’s own injuries, regardless…

MALPRACTICE INSURANCE Professional liability coverage for physicians, lawyers, and other specialists against suits alleging negligence or errors and omissions that have harmed clients. MANAGED CARE Arrangement between an employer or insurer and selected providers to provide comprehensive health care at…

L-SHARE VARIABLE ANNUITIES A form of variable annuity contract usually with short surrender periods and higher mortality and expense risk charges. LADDERING A technique that consists of staggering the maturity dates and the mix of different types of bonds. LAW…

KEY PERSON INSURANCE Insurance on the life or health of a key individual whose services are essential to the continuing success of a business and whose death or disability could cause the firm a substantial financial loss. KIDNAP/RANSOM INSURANCE Coverage…

JOINT AND SURVIVOR ANNUITY An annuity with two annuitants, usually spouses. Payments continue until the death of the longest living of the two. JOINT UNDERWRITING ASSOCIATION / JUA Insurers which join together to provide coverage for a particular type of…

IDENTITY THEFT INSURANCE Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law-enforcement personnel or credit agencies,…

HACKER INSURANCE A coverage that protects businesses engaged in electronic commerce from losses caused by hackers. HARD MARKET A seller’s market in which insurance is expensive and in short supply. HOMEOWNERS INSURANCE POLICY The typical homeowners insurance policy covers the…

GAP INSURANCE An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company. GENERALLY ACCEPTED ACCOUNTING…

FACULTATIVE REINSURANCE A reinsurance policy that provides an insurer with coverage for specific individual risks that are unusual or so large that they aren’t covered in the insurance company’s reinsurance treaties. This can include policies for jumbo jets or oil…

EARLY WARNING SYSTEM A system of measuring insurers’ financial stability set up by insurance industry regulators. An example is the Insurance Regulatory Information System (IRIS), which uses financial ratios to identify insurers in need of regulatory attention. EARNED PREMIUM The…

DECLARATION Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums, and supplemental information. Referred to as the “dec page.” DEDUCTIBLE The amount of…

C-SHARE VARIABLE ANNUITIES A form of variable annuity contract where the contract holder pays no sales up front or surrender charges. Owners can claim full liquidity at any time. CAPACITY The supply of insurance available to meet demand. Capacity depends…

B-SHARE VARIABLE ANNUITY A form of variable annuity contract with no initial sales charge but if the contract is cancelled the holder pays deferred sales charges (usually from 5 to 7 percent the first year, declining to zero after from…

A-SHARE VARIABLE ANNUITY A form of variable annuity contract where the contract holder pays sales charges up front rather than eventually having to pay a surrender charge. ACCELERATED DEATH BENEFITS A benefit that can be attached to a life insurance…