Insurance Glossary

A-SHARE VARIABLE ANNUITY

A form of variable annuity contract where the contract holder pays sales charges up front rather than paying a surrender charge later.

ACCELERATED DEATH BENEFITS

A benefit attached to a life insurance policy that allows the policyholder to receive a cash advance against the death benefit if diagnosed with a terminal illness. These funds are often used for medical treatment and living expenses.

ACCIDENT AND HEALTH INSURANCE

Insurance coverage that provides benefits for accidental injury, accidental death, and related health expenses, including preventive care, medical treatment, and catastrophic services, subject to policy limits.

ACTUAL CASH VALUE

A method of insurance valuation that pays the replacement cost of damaged property minus depreciation.

ACTUARY

A professional who analyzes statistical data to evaluate insurance risks, set premium rates, determine reserves, and assess financial risks for insurance companies.

ADDITIONAL LIVING EXPENSES

Coverage in homeowners insurance that pays for extra living costs when a home becomes temporarily uninhabitable due to a covered loss.

ADJUSTER

An individual employed by an insurance company to investigate claims, evaluate losses, and negotiate settlements. Adjusters may be company-employed, independent contractors, or public adjusters representing policyholders.

ADMITTED ASSETS

Assets approved by state insurance regulators to be included on an insurer’s balance sheet when determining financial solvency. These assets are typically liquid or easily valued.

ADMITTED COMPANY

An insurance company that is licensed and authorized to operate within a specific state and is subject to that state’s insurance regulations.

ADVERSE SELECTION

A situation where individuals with higher-than-average risk are more likely to purchase insurance, leading insurers to adjust premiums or restrict coverage to manage risk.

AGENCY COMPANIES

Insurance companies that distribute and sell their products through independent insurance agents.

AGENT

A licensed professional who sells insurance policies. Agents may be independent, representing multiple insurers, or captive, representing a single insurance company.

ALIEN INSURANCE COMPANY

An insurance company incorporated under the laws of a foreign country, distinct from a foreign insurer operating in another U.S. state.

ALLIED LINES

Property insurance coverages typically purchased with fire insurance, including protection against wind, water damage, and vandalism.

ALTERNATIVE DISPUTE RESOLUTION (ADR)

Methods used to resolve disputes outside of court, such as arbitration or mediation, often resulting in faster and less costly outcomes.

ALTERNATIVE MARKETS

Risk financing methods such as captive insurers and risk retention groups that allow businesses to self-insure or pool risk.

ANNUAL ANNUITY CONTRACT FEE

A recurring fee charged to cover administrative costs associated with maintaining an annuity contract.

ANNUAL STATEMENT

A financial report filed annually by insurers with state regulators, detailing financial performance and solvency.

ANNUITANT

The individual who receives income payments from an annuity contract.

ANNUITIZATION

The process of converting an annuity’s accumulated value into a series of income payments.

ANNUITY

A financial product issued by an insurance company that provides periodic income payments, either immediately or at a future date, for a specified time or for life.

ANNUITY ACCUMULATION PHASE

The period during which contributions are made to a deferred annuity and assets grow tax-deferred.

ANNUITY BENEFICIARY

The individual designated to receive benefits if the annuity owner or annuitant dies before all payments are made.

ANNUITY CONTRACT

A legal agreement outlining the terms, benefits, fees, and obligations between the annuity owner and the issuing insurance company.

ANNUITY CONTRACT OWNER

The person or entity that purchases the annuity and controls the contract terms and beneficiary designations.

ANNUITY DEATH BENEFITS

A provision ensuring beneficiaries receive the annuity’s value if the owner dies before annuitization.

ANNUITY ISSUER

The insurance company responsible for issuing and administering the annuity contract.

ANNUITY PROSPECTUS

A legal disclosure document providing detailed information about variable annuity contracts, required to be given to prospective buyers.

ANTITRUST LAWS

Laws designed to prevent unfair competition, price fixing, and market manipulation. Insurance is primarily regulated at the state level with limited federal exemptions.

APPRAISAL

An evaluation conducted to determine the value of property or the amount of a covered loss.

ARBITRATION

A dispute resolution process where parties agree to accept the decision of a neutral third party.

ARSON

The intentional act of setting fire to property, typically excluded from insurance coverage.

ASSETS

Property owned by an insurance company, including investments and real estate, evaluated conservatively to ensure claims-paying ability.

ASSIGNED RISK PLANS

State-sponsored programs that provide auto insurance to drivers who cannot obtain coverage in the standard market.

AUTO INSURANCE POLICY

A contract providing coverage such as liability, medical payments, collision, comprehensive, and uninsured motorist protection, depending on selected options.

AUTO INSURANCE PREMIUM

The amount paid for auto insurance coverage, determined by factors such as driving history, vehicle type, location, and coverage limits.

AVIATION INSURANCE

Insurance coverage for aircraft, including property damage and liability for passenger injury or third-party losses.