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Insurance Group of America

17 Warren Road - Suite 5B
Baltimore, MD 21208
Toll Free: (800) 688-9241
Local: (410) 415-0700
Fax: (410) 415-0800
E-mail: sales@igalife.com





Accelerated benefits: Benefits available in some life insurance policies before death, usually triggered by long-term, catastrophic or terminal illness. Also known as living benefits.

Accidental death benefits: A provision added to a life insurance policy for payment of an additional benefit in case of death that results from an accident. This provision is often called "double indemnity."

Accumulation period: The time during which a person pays money into an annuity contract and builds up a fund to provide a deferred annuity.

Actuary: Someone professionally trained in the technical aspects of insurance and related fields, particularly in the mathematics of insurance (the calculation of premiums, reserves and other values). An actuary uses complex mathematical methods, often with the aid of computers, to analyze past loss data and other statistics and develop systems for determining future premiums.

Adjustable life insurance: A type of insurance that allows the policyholder to change the plan of insurance, raise or lower the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.



Age limits: Ages below and above which an insurance company will not accept applications or renew policies.

Agent: An authorized representative of an insurance company who sells and services insurance contracts. See producer, exclusive agent and independent agent.

Aggregate indemnity: The maximum amount that may be collected for any disability, or period of disability, under an insurance policy.

Allocated benefits: Maximum amount for specific services as itemized in an insurance contract.

Alternate delivery system: Health services that are more cost-effective than inpatient, acute-care hospitals, such as skilled and intermediary nursing facilities, hospice programs, and in-home services.

Ambulatory care: Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery, and rehabilitation.

Amendment: Document changing the provisions of an insurance contract signed jointly by the insurer and the policyholder.

Annuitant: The person entitled to receive annuity payments or who now receives them.

Annuities: Annuities are contracts sold by life insurance companies (the seller must be a licensed insurance entity in your state). In their simplest form, you pay a sum of money (either a lump sum or a series of payments) and the insurance company makes periodic payments to you, beginning on the date in your contract and continuing for the rest of your life. The earnings on your annuity payments are not taxable during the accumulation phase of your agreement; the annuity payments are taxable as income when you receive them permit you to place your payments in professionally managed funds, similar to mutual funds, and to control how these payments are invested during the life of your contract. Unlike mutual funds, variable annuities have insurance provisions and guarantees to preserve the value of the principal you pay into the annuity. They also generally carry higher fees than mutual funds. Annuities may entail extensive taxation and estate issues, and annuity buyers should make sure they’re aware of such issues.

Annuity certain: A contract that provides an income for a specified number of years, regardless of life or death.

Annuity consideration: The payment, or one of the regular periodic payments, an annuitant makes for an annuity.

Application: A statement of information made by someone applying for life insurance. The information gathered helps the life insurance company assess whether the risk presented by the applicant is acceptable to underwriters.

Approval: Signifies the legal acceptance of forms by a state when policy information is filed; Signifies the insurer's acceptance of risks as set forth in an application for insurance (as originally made or modified by the insurer); or Signifies the acceptance of a request from an applicant or policyholder for new insurance, reinstatement of a terminated policy, a policy loan, or other request.

Assignment: The legal transfer of one person's interest in an insurance policy to another person.

Automatic premium loan: A provision in a life insurance policy that any premium not paid by the end of the grace period (usually 31 days) is automatically paid by a policy loan if there is sufficient cash value.

AVR: Asset valuation reserve

Backdating - A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age of the consumer at issue lower than it actually was in order to get lower premium. State laws often limit to six months the time to which policies can be backdated.

Beneficiary - Person to whom the proceeds of a life policy are payable when the insured dies. The various types of beneficiaries are: primary beneficiaries (those first entitled to proceeds); secondary beneficiaries (those entitled to proceeds if no primary beneficiary is living when the insured dies); and tertiary beneficiaries (those entitled to proceeds if no primary or secondary beneficiaries are alive when the insured dies).

Binder - A temporary insurance policy that expires at the end of a specific time period or when the permanent policy is written. A binder is given to an applicant for insurance during the time the complete policy paperwork is being completed.

Buy-Sell Agreement - An agreement in which one party agrees to purchase a second party's financial interest in a business following the second party's death and the second party agrees to direct their estate to sell that interest to the purchasing party.

Cancer insurance: A very narrow form of health insurance that covers the policyholder in the event he or she contracts cancer. Policies often exclude skin cancer. Some policies won't pay for cancer treatments until several years after the policy was purchased. Consumer groups and insurance regulators have said cancer insurance policies are more expensive than they're worth, since the insurance companies pay out a rather small percentage of the premiums they collect.

Cash value: The amount available in cash upon surrender of a policy before it becomes payable upon death or maturity.

Cede: To reinsure the liabilities associated with insurance policies by passing a portion of the risk exposure and the related premium to a reinsurer.

Certificate: A statement issued to individuals insured under a group policy, setting forth the essential provisions relating to their coverage.

Churning: Whole life policies that are replaced by new ones, often at the urging of an agent, who gives the impression that the new policy is cheaper. In many instances, however, the buyer is not told that the cash value account, sometimes used to pay the new premium, must accumulate anew. It's not unusual for whole life policies to have no cash value in their first few policy years.

Claim: Notification to an insurance company that payment of an amount is due under the terms of the policy. A claim is a demand by a person or business who is seeking to recover for a loss. A claim may be made against an individual. A claim may also be made against an insurance company, when an insured asks the insurance company to pay for a loss that may be covered by an insurance policy.

Co-insurance: Arrangement by which the insurer and the insured share, in a specific ratio, payment for losses covered by the policy, after the deductible is met.

COLI: Corporate owned life insurance

Collateral assignment: Designating a creditor as the beneficiary of a life insurance policy as security for a loan.

Combination plans: Life insurance policies that combine features of term and whole life policies.

Consideration clause: Stipulation that states the basis on which an insurer issues an insurance contract.

Contributory plan: Group plan under which the insured shares in the cost of the plan with the policyholder.

Conversion privilege: Right given to an insured person under a group insurance contract to change coverage, without evidence of medical insurability, to an individual policy upon termination of the group coverage. The conditions under which conversion can be made are defined in the master policy.

Convertible term insurance: Term insurance that offers the policyholder the option of exchanging it for a permanent plan of insurance without evidence of insurability.

Cost-of-living rider: An option that permits the policyholder to purchase increasing term insurance coverage. The death proceeds increase by a stated amount each year to coincide with an estimated increase in the cost of living.

Credit life insurance: Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase or other obligation, in case of death.

Death Benefit - The amount of money paid to the beneficiary when the insured person dies.

Declaration Page - The portion of an insurance policy containing the information regarding the risk

Declined - Term used for denial of an application by an insurance company, for an applicant that had a serious health problem and tried to get insurance.

Decreasing Term Insurance - Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

Disability Income Rider - A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury.

Dividend - A return of part of the premium on participating insurance that is based on the insurer's investment, mortality, and expense experience. Dividends are not guaranteed

Double Indemnity - Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.

Effective date: Date when insurance coverage begins.

Eligibility date: Date when a member of an insured group applies for insurance.

Eligibility period: Time following the eligibility date (usually 31 days) during which a member of a group may apply for insurance without evidence of insurability.

Eligible employees: Employees who meet the eligibility requirements for insurance set forth in a group policy.

Elimination period: Days at the beginning of a period of disability when no benefits are paid.

Endowment: Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.

Evidence of insurability: A statement or proof of physical condition and/or other factual information affecting a person's eligibility for insurance. In group insurance, evidence of insurability is required only in specific situations: when a person fails to enroll during the open enrollment period; when a person applies for reinstatement after having previously withdrawn from the plan when receiving an overall maximum benefit; or when a person applies for excess amounts of group life or disability insurance.

Exclusions (exceptions): Conditions or circumstances, listed in the policy, for which the insurer will not provide benefits. proportional basis above the insurer's net retention of risk.

Extended term insurance: A form of insurance available as a non-forfeiture option. It provides the original amount of insurance for a limited period of time.

Face page - The first page of a policy.

Face Amount - The amount of insurance provided by the terms of an insurance contract, usually found on the first page of the policy. In a life insurance policy, the death benefit.

Fiduciary - A person who occupies a position of special trust and confidence (for example, in handling or supervising the affairs or funds of another).

Final Expenses - Expenses incurred at the time of a person's death. These include funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes. Depending on their circumstances, the survivors may also want to pay the outstanding balances of mortgage and loans.

First To Die Insurance - Insurance policy whose death benefit is paid to the surviving insured upon the death of one of the insured's. There is no longer a benefit once the benefit is paid, however, the surviving insured usually has the option of purchasing a policy of the same amount without providing evidence of insurability.

Fixed Benefit - A death benefit, the dollar amount of which does not vary.

Free Look - provision required in most states whereby policy owners have up to 20 days to examine their new policies at no obligation.

Grace period: A period (usually 31 days) following each premium due date, other than the first due date, during which an overdue premium may be paid. All provisions of the policy remain in force throughout this period.

Group annuity: A pension plan providing annuities at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.

Group life insurance: Life insurance that usually does not require medical examinations, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example, a professional membership group. The individual members of the group hold certificates as evidence of their insurance.

Guaranteed insurability: An option that permits the policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

Guaranteed renewable contract: Contract under which an insured has the right, commonly up to a certain age, to continue the policy by the timely payment of premiums. Under renewable contracts, the insurer reserves the right to change premium rates by policy class.

Increasing Term Insurance - Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.

In Force - Insurance on which the premiums are being paid or have been fully paid.

Initial Premium - The first premium that is paid for an insurance policy and that is part of the consideration the policy owner gives for the policy.

Insured Age - Premiums can be charged by: a) Age nearest birthday and b) Actual Age.

Irrevocable Beneficiary - A life insurance policy beneficiary whose designation as beneficiary may not be cancelled by the policy owner unless the beneficiary consents.

Insurable Interest - Requirement of insurance contracts that loss must be sustained by the applicant upon the death of another and it must be sufficient to warrant compensation.

Insurance Policy -The printed form, which serves as the contract between an insurer and an insured.

Insured - The party who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.

Insurer - Party that provides insurance coverage, typically through a contract of insurance.

Increasing Term Insurance - Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.

Irrevocable Beneficiary: - A named beneficiary whose rights to life insurance policy proceeds cannot be canceled or changed by the policy owner unless the beneficiary consents.

Key-person insurance: Insurance designed to protect a business against the loss of income resulting from the disability or death of an employee in a significant position.

Lapse -Termination of a policy upon the policy owner's failure to pay the premium within the grace period.

Lapse Subsidized - This refers to the practice of some life insurance companies to offer policies, which are lower in price because they have assumed a high probability that the policies will be cashed in by their owners for one reason, or another before the death benefit becomes available. It is a bold and risky offer by the insurance company because sometimes the purchasers of these policies simply don't lapse them.

Last To Die Coverage - This means that there are two or more life insured on the same policy but the death benefit is paid out on the last person to die. The cost of this type of coverage is much less than a first to die policy and it is generally used to protect estate value for children where there might be substantial capital gains taxes due upon the death of the last parent. This kind of policy is also valuable when one of two people covered has health problems, which would prohibit obtaining individual coverage.

Level Term Insurance - Term coverage on which the face value and premiums remain unchanged from the date the policy comes into force to the date the policy expires.

Life Insurance - An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured.

Limited Pay Policy - A type of whole life insurance designed to let the policyholder pay higher premiums over a specific period such as 10 or 20 years and then not pay any premiums for the rest of his or her life.

Loan (Policy Loan) - A loan made by a life insurance company from its general funds to a policy owner on the security of the cash value of a policy.

Manual premium rate: Premium for a group developed from the insurer's standard rate tables; it is the cost usually quoted in an insurer's underwriting manual.

Master policy: A policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.

Minimum group: The fewest number of employees permitted under a state law to constitute a group for insurance purposes; the purpose of establishing minimums is to maintain a distinction between individual and group insurance.

Minimum premium plan: The employer self-funds a fixed percentage (e.g. 90 percent) of the estimated monthly claims, and the insurer covers the remainder. This self-funded approach avoids payment of a premium tax required in most states.

Modified life insurance: A type of whole life policy with a premium that is relatively low in the first several years but that increases in later years.

Morbidity: Frequency and severity of sicknesses and accidents in a well-defined class or classes of persons.

Mutual life insurance company: A life insurance company owned by policyholders who share in the company's surplus earnings.

National Association of Insurance Commissioners (NAIC): on the Web at http://www.naic.org. National organization of state officials charged with regulating insurance. It has no official power but wields significant influence. NAIC was formed to provide national uniformity in insurance regulations.

Net Cost - Your total payments for a policy less any cash surrender value in your policy, the profit or loss if you cancelled the policy at a given date.

Non-cancelable policy: A policy that can be maintained through timely payment of the premiums until the policyholder is at least age 50 or, in the case of a policy issued after age 44, for at least five years from the date of issue. The insurer may not unilaterally change any provision of the in-force policy, including premium rates.

Non-contributory plan: Group insurance plan under which the employer does not require employees to share in its cost.

Non-disabling injury: Any injury that may require medical care but does not result in the loss of working time or income.

Non-forfeiture option: One of the choices available if the policyholder discontinues payments on a policy with a cash value. This may be taken in cash as extended term insurance or as reduced paid-up insurance.

Non-forfeiture values: The value of the policy if canceled, either in cash or in another form of insurance. Also available to the policyholder if required premium payments are not paid.

Non-occupational policy: Policy that covers only non-job-related accidents or sicknesses not covered under any workers' compensation law.

Non-participating insurance: Insurance on which no dividends are paid.

Non-participating policy: Policy that does not provide for payment of a dividend.

Non-renewal clause: Provision in a policy that states the circumstances under which an insurer may elect not to renew someone's policy.

Occupational Hazard - A condition in an occupation that increases the peril of accident, sickness, or death. It usually will mean higher premiums.

Offer and Acceptance - The applicant signing the application, paying the first premium and, if necessary, submitting to physical examination may make the offer. Policy issuance, as applied for, constitutes acceptance by the company. Or the company may make the offer when no premium payment is submitted with the application. Premium payment on the offered policy then constitutes acceptance by the applicant.

Original Age - The age you were when you bought the policy.

Other Insured Rider - A term rider covering an eligible family member or business member other than the insured that is attached to the base policy covering the insured.

Outlay - The actual cash payment you make to the insurance company for premium payments each year.

Oownership - Their owners control all rights, benefits and privileges under life insurance policies. Policy owners may or may not be the insured. Ownership may be assigned or transferred by written request of current owner.

Para-Med (Paramedical) Examination - The medical examination of an applicant for Life Insurance.

Para-Med (Paramedical) - A physician, nurse, or para-med appointed by the medical director of a life insurance company to examine applicants.

Paid-up Insurance - Insurance that will remain in force with no need to pay additional premiums.

Participating Policy - A life insurance policy that is eligible for the payment of dividends by the insurer.

Permanent Life Insurance - A term loosely applied to life insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as Whole Life Insurance.

Policy - The printed document issued to the policyholder by the company stating the terms of the insurance contract.

Policy Holder -The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Policy Term - The specified period of coverage provided by a term insurance policy.

Preauthorized Check (PAC) System - An automatic premium payment technique whereby the policy owner authorizes the insurer to generate a check against the policy owner's bank account to pay each renewal premium.

Premium - The periodic payment required to keep and insurance policy in force.

Premium Flexibility - The policyholder's right to vary the amount of premium paid each month towards a universal life policy.

Premium Payment Mode - The frequency at which renewal premiums are payable.

Proceeds - Net amount of money payable by the company at the insured's death or at policy maturity.

provisions - Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.

Qualified annuity: An annuity that is sold as part of a tax-qualified Keogh plan or company pension plan.

Rated - Coverage's issued at a higher rate than standard because of some health condition, or impairment of the insured.

Re-entry Option - An option in a renewable term life policy under which the policy4 owner is guaranteed, at the end of the term, to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.

Re-offered - When a carrier offers insurance to a high risk person, but at a higher premium than initially quoted.

Reinstatement - Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

Renewable Term/Annual Renewable Term - Term insurance that may be renewed for another term without evidence of insurability. Level term usually turns into renewable term with increasing premiums after the level premium period.

Representation - Statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail.

Revocable Beneficiary - The beneficiary in a life insurance policy in which the owner reserves the right to revoke or change the beneficiary. Most policies are written with a revocable beneficiary.

Rider - Strictly speaking, a rider adds something to a policy. However, the term is used loosely to refer to any supplemental agreement attached to and made a part of the policy, whether the policy's conditions are expanded and additional coverages added, or a coverage or condition is waived.

Risk - The chance of injury, damage, or loss.

Second-to-die life insurance: A form of insurance, traditionally used as an estate planning tool, that pays a death benefit only upon the death of the insured who survives the longest. Its main purpose is to pay estate taxes upon the death of the second insured. Because it is based on joint life expectancy, its premium is less than the total premiums for individual policies on the same lives. This type of insurance is available in many forms, including policies with interest-rate features and flexible premiums.

Self-administration: Maintenance of all records and assumption of responsibility, by a group policyholder, for those covered under its insurance plan. Responsibilities include preparing the premium statement for each payment date and submitting it with a check to the insurer. The insurance company, in most instances, has the contractual prerogative to audit the policyholder's records.

Settlement options: One of several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have policy proceeds paid.

Short-term disability income insurance: Insurance that provides benefits only for loss from illness or disease and excludes loss from accident or injury.

Single-premium whole life insurance: A whole life policy that provides protection for the duration of the insured's life in exchange for the payment of the total premium in one lump sum at the time of application.

Standard risk: Person who, according to an insurer's underwriting standards, is entitled to purchase insurance without paying an extra premium or special restrictions.

State (compulsory) disability plan: Plan of short-term income replacement required by some states to cover eligible persons employed within that state.

State insurance department: An administrative agency that licenses insurers to do business in that state and implements state insurance laws and supervises (within the scope of these laws) the activities of insurers operating within the state.

Substandard risk: Persons who cannot meet the health requirements of a standard health insurance policy.

Supplementary contract: An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.

Surcharge: An additional charge, cost, or tax.

Table - Higher than standard risks to the insurance company.

Term Insurance - Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.

Term Period - Term insurance policies are contracts for a fixed period of time. For example, a 20-year term insurance plan provides coverage in the event of death for 20-years. However, many plans have options that allow you to renew or convert your policy to continue coverage beyond the initial term period.

Term of Policy - Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.

Terminal Illness (TI) Benefit - An accelerated death benefit provided by some individual life insurance policies under which the insurer pays a portion of the policy's death benefit to a policy owner-insured who suffers from a terminal illness and has a life expectancy of 12 months or less.

Tertiary Beneficiary - In life insurance, a beneficiary designated as third in line to receive the proceeds or benefits if the primary and secondary beneficiaries do not survive the insured.

Third-Party Owner - A policy owner who is not the prospective insured. The policy owner and the insured may be, and often are the same person. If for example, you apply for and are issued an insurance policy on your life, then you are both the policy owner and the insured and may be known as the policy owner-insured. If, however, your mother applies for and is issued a policy on your life, then she is the policy owner and you are the insured.

Underwriter: The company employee who decides whether or not the company should assume a particular risk.

Underwriting: The underwriting process evaluates the likelihood an insured event will occur, determines its likely cost and develops an appropriate premium for the coverage that is competitive in the marketplace and remunerative to the insurance company writing the policy. Underwriting differences account in part for the substantial differences in insurance premiums for comparable coverage's.

Unearned premium: That portion of a premium already received by the insurer for which protection has not yet been provided.

Unearned premium reserve: A reserve equal to an amount of net premium written but not yet earned.

Universal life insurance: Unlike traditional cash-value policies (known as "whole life"), universal life policy returns were freed from long-term, fixed-rate contracts and replaced with policies whose returns were tied to short-term interest rates and periodically adjusted. In addition, the policyholder can change premiums and death benefits

Variable annuity: An annuity contract under which the monthly payments will vary because they are linked to the values of investments, such as common stocks. This contrasts with the fixed dollar annuity, which guarantees a fixed amount monthly.

Variable life insurance: True investment characteristics were introduced with these policies, requiring that they be registered with the U.S. Securities and Exchange Commission. Policy investments are controlled by the policyholder and may be placed in a broad range of equity, bond and money-market instruments. Unlike universal life, premiums and death benefits are fixed in variable life policies.

Waiting period: The time a person must wait from the date of acceptance into an eligible class (or from application) to the date the insurance becomes effective. While similar to elimination periods, waiting periods are often paid retroactively.

Waiver (exclusion endorsement): An agreement, attached to the policy and accepted by the insured, to eliminate a specified preexisting physical condition or specified hazard.

Waiver of premium: A provision that sets certain conditions under which an insurance policy will be kept in full force by the company without the payment of premiums. It is used most frequently for those policyholders who become totally and permanently disabled but may be available in certain other cases.

Whole life insurance: A plan of insurance for life, with premiums payable for a person's entire life.

Yearly Renewable Term (YRT) Insurance - Term life insurance that gives the policy owner the right to renew the coverage each year, over a specified period of time.

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