Business Glossary

combination of whole life and level term that provides income to a beneficiary for a selected period of time (e.g., 20 years) if an insured dies during that period. At the end of the income-paying period the beneficiary also receives the entire face amount of the policy. If an insured dies after the end of the selected period, the beneficiary receives only the face value of the policy. The remainder of the benefits are the same as under the family income policy.

provides the same coverage as a comprehensive personal liability insurance policy, plus coverage to exposures that are peculiar to farms, such as farm business operations, farm employees engaged in farm business activities, and liability arising out of selling farm products.

replacement for the earlier Family Automobile Policy (FAP) with these nine basic coverages:

1. Coverage A-Liability. (a) The company pays damages for which an insured becomes legally obligated because negligent acts or omissions resulted in bodily injury and/or property damage to a third party; (b) the company defends the insured against liability suits for damages caused to the third party, paying various expenses in this connection; and (c) vehicles covered include the insured's own cars, a newly acquired car, and a temporary substitute car.
2. Coverage B-Medical Payments. The company pays medical expenses for bodily injury incurred by the insured (including spouse and relatives) and any other person while they occupy the insured car.
3. Coverage C-Uninsured Motorist Coverage. The company pays damages that the insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle.
4. Coverage D-Comprehensive. The company pays for loss to the insured's car for all damages, in excess of a deductible amount, except due to collision.
5. Coverage E-Collision. The company pays for loss to the insured's car for all damages in excess of a deductible amount caused by collision.
6. Coverage F-Car Rental Expense (optional). The company pays for car rental up to a daily dollar limit, when the insured's car cannot run due to a loss incurred.
7. Coverage G-Death, Dismemberment, and Loss of Sight (optional). The company pays the insured or beneficiary for death or loss caused by an accident to the insured.
8. Coverage H-Total Disability (optional). The company pays the insured a monthly disability income benefit because of bodily injury in an accident while occupying or being struck by a motor vehicle.
9. Coverage I-Loss of Earnings (optional). The company pays the insured a percentage of his or her loss of monthly earnings because of bodily injury as the result of an accident while occupying or being struck by a motor vehicle.

contract providing whole life insurance on the father and term insurance on the mother and all children, including newborns after reaching a stated age, usually 15 days. Children, upon reaching the age of majority, have the right to convert their insurance to a permanent policy up to the amount of term coverage without having to show evidence of insurability (take a physical examination). The premium is the same regardless of the number of children covered.

coverage of a single life, in contrast to group life insurance, which covers many lives.

personal and family loss by death, disability, sickness, old age, accident, and unemployment. All of these exposures are insurable, and coverages can be purchased under a variety of policies. In life insurance these include adjustable life, current assumption, endowment, family income policies, family maintenance policies, family policy, limited payment life , term life, universal life, and variable life. In annuities, both fixed and variable types are available; in health insurance, medical expense and disability income coverages are available. In pensions, there are defined benefit and defined contribution pension plan. The various Social Security benefits also provide considerable protection against personal and family exposures.

coverage as Part II-homeowners policy on an all risk basis for personal acts and omissions by the insured and residents of the insured's household. Included are sports activities, pet activities, and miscellaneous events such as someone tripping in an insured's cemetery plot.

in popular usage, any insurance plan that covers medical expenses or health care services, including HMOs, insured plans, preferred provider organizations, etc. In insurance, protection against loss by sickness or bodily injury, in which sense it is synonymous with accident and health, accident and sickness, accident, or disability income insurance.

package policy that combines (1) coverage against the insured's property being destroyed or damaged by various perils, and (2) coverage for liability exposure of the insured.

Homeowners policies cover both individuals as well as property. In addition to the insured, those covered include his or her spouse, their relatives, and any others under 21 who are residents of the insured's household.

series of equal periodic payments or receipts. Examples of an annuity are semiannual interest receipts from a bond investment and cash dividends from a preferred stock. There are two types of an annuity: (1) Ordinary annuity, where payments or receipts occur at the end of the period; (2) Annuity due, where payments or receipts are made at the beginning of the period.

insurance policy that pays benefits to a policyholder when that person becomes incapable of performing one or more occupational duties, either temporarily or on a long-term basis, or totally. The policy is designed to replace a portion of the income lost because of the insured's disability. Payments begin after a specified period, called the elimination period, of several weeks or months.

Some policies remain in force until the person is able to return to work, or to return to a similar occupation, or is eligible to receive benefits from another program such as Social Security disability. Disability insurance payments are normally tax-free to beneficiaries as long as they paid the policy premiums. Many employers offer disability income insurance to their employees, though people are able to buy coverage on an individual basis as well.

coverage on an all risks basis for loss due to theft or mysterious disappearance of personal property; damage to premises and property within resulting from theft; and vandalism and malicious mischief to the interior of the premises as well as to other property of an insured that is away from the insured's premises. Sublimits are in effect on specialty property that is particularly susceptible to theft, such as money, securities, paintings, coins, and jewelry. This insurance is most often found in Part I Coverage C of the homeowners insurance policy and is expressed as a percentage of the home's structure.

attachment of decreasing term life insurance to an ordinary life policy to provide monthly income to a beneficiary if death occurs during a specified period. If the insured dies after the specified period, only the face value is paid to the beneficiary since the decreasing term insurance has expired.

contract combining whole life and decreasing term insurance. A monthly income is paid to a beneficiary if an insured dies during a specific period. At the end of that period, the full face amount of the policy is also paid to the beneficiary. It is designed to provide income for a household while the children are still young. If an insured dies after the specified period, only the face amount of the policy is paid. For example, the face value of a family income policy is $100,000 and the specified period is 20 years. If the insured dies 10 years into the specified period, the beneficiary receives a monthly income of 1% of the face amount ($1000) for the remaining 10 years. At the end of the 10 years, the beneficiary also receives $100,000. If the insured dies after the 20-year specified period, the beneficiary receives $100,000, which is the face amount.