A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Accidental death and dismemberment policy or rider…. a separate policy of a rider to an existing life insurance policy which pays an additional benefit if you should die as the result of an accident or if you lose, or lose the use of, one or more limbs as outlined in the contract.

Accidental Death Benefit Rider… similar to Accidental death and dismemberment rider in that it provides for an additional sum over and above the basic insurance amount if death is the result of an accident, but it does not provide any indemnity for dismemberment.

Actuarial Liabilities…The estimated funds needed, together with future premiums and investment income, to pay future benefits and expenses under insurance and annuity contracts, with an allowance provided for adverse experience in future assumptions.

Actuary…A person professionally trained in the mathematical and technical aspects of insurance and related fields, particularly the calculation of premiums, actuarial liabilities and other values.

Administrative Service Only (ASO) Plan…An arrangement under which an insurance carrier or an independent organization, for a fee, administers a health benefit plan and settles claims, but does not guarantee payments because the plan is not insured.

Agent/Broker… a representative who is licensed to sell insurance or investment funds.

Annual Return…the yearly report of an insurance company to the regulators, showing assets, liabilities, receipts and disbursements and other financial data.

Annuitant…individual who receives income from an annuity.

Annuity…an investment sold by insurance companies that turn capital into guaranteed income. Annuity capital can be purchased with registered funds (RRSP or Pension Funds), or from non-registered savings. Annuity payments can start immediately or be deferred to some later date.

Annuity consideration…the payment, or one of the regular periodic payments, made to purchase an annuity.

Application…the form you complete to provide the insuring company with the information it needs to assess risk. This application and the information you provided will form part of any eventual contract.

Assignment…the legal transfer of ownership of rights of a life insurance contract. You can transfer all or part of the contract as collateral for a bank loan or a mortgage. The person assigning the rights is the assignor; the person who takes ownership is the assignee.

Bank withdrawals…often referred to as an automatic bank credit, pre-authorized debit, pre-authorized credit, etc. allow a client to authorize their bank to deduct premiums automatically from their account and pay the insurance company.

Beneficiary…the person or people you name to receive the proceeds of an insurance policy when you die. It may also be your estate, but this is not recommended. When children are being considered as beneficiaries, a trustee should be appointed.

Broker…same as an agent, is a licensed insurance representative who is sponsored by a particular life insurance company.

Benefit…the amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a claim under a policy.

Cash surrender value… the amount of money an owner receives when a cash value life insurance policy is cancelled.

Casualty insurance…lines of insurance, such as automobile, liability, aviation bonding and theft.

Certificate holder …an insured person in a group insurance plan.

Claim…a demand to the insurer by the insured person for the payment of benefits under a policy.

Co-insurance…means you pay part. Where you would most commonly see co-insurance would be with medical or dental benefits.

Common disaster clause…defines how insurance proceeds will be paid when an insured and the primary beneficiary die at the same time or within a specified time frame. When there is no proof that either party survived the other, it is presumed that the insured survived the beneficiary with the claim being paid to the secondary beneficiary or to the estate of the insured.

Compound interest…interest earned on interest.

Contestable period… the time during which an insurance company can legally contest or deny the validity of a policy. Usual period is 2 years from the date of issue. Fraudulent statements made on the application with the intent to deceive may be contested throughout the life of the contract. Smoker\nonsmoker questions will be treated as fraud and contested if answered incorrectly.

Conversion privilege or option…the right to exchange of convert term insurance policies to permanent insurance.

Covered expenses…specified hospital, medical and miscellaneous health care expenses that will be considered in the calculation of the benefits due under a health insurance policy.

Creditors' disability insurance…insurance issued in conjunction with indebtedness that provides for the payment of loans while the borrower is disabled.

Deductible…the amount you must pay before the insurance company pays. Deductibles usually apply to medical and dental benefits and are normally based on a calendar year.

Deferred annuity…annuity providing for income payments to begin at some future date.

Defined benefit pension plan…a plan where benefits are predetermined by a formula and employer contributions depend on the cost of the benefit minus the employee's contributions, if any.

Defined contribution pension plan…a plan where contributions by employees and the employer are fixed and the benefits depend on the contributions and their earnings.

Disability benefit…benefit added to some life insurance policies providing for waiver of premiums and sometimes payment of a monthly income, if the insured becomes totally and permanently disabled.

Disability income insurance…a contract that pays set amounts of money for a set period of time when you're sick or injured. See the product section for a more detailed explanation.

Dividends…are surplus funds that an insurance company pays to clients who have participating life insurance policies. These are not guaranteed until declared. Illustrations are assumptions only. Non-participating polices don't share in dividends.

Double indemnity…see "Accidental Death benefit".

Elimination or waiting period… set period of time at the beginning of a disability claim before the policy pays you benefits.

Endowment policy… a policy that matures or endows at a specific time or age. It pays the face amount of the policy to the beneficiary if you die during the endowment period or at the set time or age or to you if still alive after this period.

Extended health care insurance…health insurance that provides, in one policy, protection for hospital and medical expenses not covered by government programs and usually other health care expenses, such as prescribed drugs, medical appliances, ambulance, private duty nursing, etc. Policy may also contain a deductible amount, coinsurance and high maximum benefits. "Also called major medical expense insurance".

Extended Term Insurance…a form of paid-up life insurance available as a non-forfeiture option. It provides continued protection for the full face amount (less any policy loan outstanding), but only for a limited period of time.

Face Amount…amount payable when you die.

Free Examination period or 10-day free look… you have 10 days from delivery of a policy to change your mind and return it to the company for a full refund of the premiums paid.

Federally registered company…an Insurance company registered with the "Office of the Superintendent of Financial Institutions (OSFI)" in Ottawa and subject to federal legislation regulating such insurance companies.

Flexible premium policy or annuity…a life insurance policy or annuity under which the policyholder or contract holder may vary the amount or timing of premium payments.

Fraternal life insurance…life insurance provided by fraternal order or societies to their members.

Fraternal society…a corporate body that is without share capital that has a representative form of government and that was incorporated for fraternal benevolent or religious purposes including the provision of insurance benefits solely to its members or the spouses or children of the members.

Grace Period…normally 31 days after a premium is due. Anytime during this period you can pay the overdue premium without providing any health evidence and put the coverage back in force.

Group annuity…a contract providing annuities at retirement to a group of people in a pension plan. Usually, it is issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.

Group insurance…insurance issued, usually without medical examination, on a group of people under a master contracts. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their insurance.

Guaranteed Renewable…a clause which may be included with a term insurance policy stating that the policy will be automatically renewed during the term of the contract without any reference to state of health. See the Life Insurance and Disability Sections under Products for more detailed descriptions.

Health insurance… pays you specific amount if you're injured or sick. It may include monthly income amount if disabled or cover certain medical expenses.

Hospital expense insurance…insurance that provides specific benefits for hospital room and board and prescribed hospital expenses during hospital stays that are not covered by government medical plans.

Hospital indemnity…a form of health insurance that provides a stipulated daily, weekly or monthly indemnity during hospital confinement.

Insured…see "Policyholder".

Insurer…the insurance company who promises to pay losses or benefits. Also any corporation licensed to sell insurance to the public.

Inspection Report…. an independent report made by an investigative company that provides details on lifestyle, activities, occupation and financial situation. These may be requested when applying for insurance, or while on disability claim.

Integration…coordination of the disability income insurance benefit with other disability income benefits, such as Canada Pension plan benefits.

Joint and last survivor annuity…. an annuity that guarantees payment for the annuitants' lifetime and then for a guaranteed period to the survivor. The longer the guarantee to the survivor, the lower the monthly income.

Joint life insurance…. Insurance that covers two or more lives under one policy and can be designed to pay benefits when either the first person or the last person dies.

Juvenile life insurance… a policy on the life of a child. An adult must own the policy.

Lapse…when the premium is not paid by the due date or within the grace period, the policy terminates, or lapses.

Level premium life insurance…a policy for which the premium remains the same. The premium is more than the actual cost of protection during the earlier years of the policy and less than the actual cost in later years. The excess paid in the early years builds up a reserve. When invested, this reserve amount earns a return that helps keep the amount of the level premium down.

L.I.F…. Life Income Fund…is an annuity that is a choice for retiring pension plan members. L.I.F.'s offer much more flexibility in choosing how your funds will be paid to you. Regulations regarding LIF's payouts are ever changing.

Life Insurance…insurance providing for the payment of benefits upon the death, whether by accident or otherwise, of the life insured.

Life Insured…the person on whose death or disability the insurance proceeds will become payable.

Life Only Annuity…payments received from annuities that are guaranteed for the annuitant's life.

Life Annuity with a guarantee period…payments received from an annuity that are guaranteed for the annuitant's life, or for a chosen minimum period 5, 10, or 15 years. The guarantee assures the annuitant that he/she will receive payments for at least the chosen number of years, even if they die in that time frame. The longer the chosen guarantee period the less the payments you receive will be.

Limited payment life insurance…permanent life insurance that pays a benefit on the death of the life insured whenever that occurs, and for which premiums are payable for a specified number of years, or until the death of the life insured if this occurs before the specified period.

Limited policy…a health insurance policy that covers only specified accidents or sickness.

Loans…apply only to policies with cash values and allow you to borrow money in two ways. First, a straight loan against cash value and second, using the premium loan provisions. Under this provision any unpaid premiums at the end of the grace period will be deducted from the cash value and treated as a loan against the policy.

Major medical expense insurance… see "extended health care insurance".

Material misrepresentation… telling big fibs on the application which had the insurer known, would have caused them to either rate or decline the application originally.

Maturity date…see "Endowment insurance".

Minor…a person who is not legally of age to sign an application and enter into an insurance contract. By the way, the legal age differs from province to province.

Mortality…yep. Just what you think it is. The end. Rest in peace. You're toast
Mortality also means the rate at which people die.

Mutual company… a life insurance company owned by the policyholders rather than by stockholders.

New money policy…a life insurance policy where the premiums are revised periodically to reflect current and expected interest rates.

Non-cancellable policy…relates to some individual disability policies and guarantees that the policy cannot be cancelled or changed by the insurance company. A non-cancelable policy may also have a guaranteed renewable provision.

Non-contributory pension plan…pension plan where the entire cost of the plan is borne by the employer and no employee contributions are required.

Non-forfeiture benefits or options…defines how a policy with cash values will be treated if a premium is not paid when due or during the grace period. There are three options, take the cash, pay the premium by a loan against the cash value, or use the cash to purchase a reduced amount of insurance, but fully paid for, or use for term insurance with the same amount of insurance but a shorter term.

Non-participating insurance…insurance where the policyholders do not share in any surplus earnings distributed by the company. No "policyholder dividends" are payable. The premium is based on an estimate of future costs and investment earnings very close to what the company believes most likely will occur, with a slight margin added for contingencies and profit.

Non-profit insurers…bodies organized under provincial laws to provide hospital, medical or dental insurance on a co-operative basis. They are exempt from certain types of taxes.

Office of the Superintendent of Financial Institutions…the federal agency responsible for regulating and supervising insurance, trust loan and investment companies, federally-regulated pension plans, and co-operative credit associations that are licensed or registered by the federal government.

Paid-up policies… this is when you've paid the piper. You don't have to pay any more premiums.

Partial disability benefits…benefits sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full-time or is prevented from performing one or more important daily duties pertaining to their occupation.

Participating insurance…insurance where the policyholders share in the surplus earnings attributed to that business. "Policyholder dividends" are payable. The premium is based on an estimate of future earnings at a somewhat lower level and costs at a somewhat higher level than the company believes most likely will occur.

Policy…is the contract between you and the insurance company.

Policy loan…a loan made by a life insurance company to a policyholder on the security of the cash value of a policy.

Policy reserves…see "Actuarial liabilities".

Policyholder…the individual who owns an insurance policy, usually the insured, but not always.

Policyholder dividend…yearly return to the policyholder of surplus earnings based on the company's experienced and anticipated costs. Policyholder dividends are not guaranteed but depend on mortality and morbidity experience, investment earnings, expenses and other factors. They may be increased or decreased at the discretion of the company.

Pre-existing condition…an injury or sickness that you knew you had before you got a particular insurance policy. Usually relates to medical insurance.

Premium… what you pay the insurance company to get…and keep…an insurance policy in force.

Provincial company…an insurance company provincially incorporated and operating under provincial license only (i.e. without federal registry).

Rated policy… is a policy issued to someone with a higher insurance risk. A rated policy will have higher premiums or limited/excluded benefits, or both. Ratings can be due to health, occupation, lifestyle or activity risks which are considered not the norm.

Reduced paid-up insurance…form of paid-up life insurance available as a non-forfeiture option. It provides insurance payable at the same time and in the same manner as the original policy, but for a reduced amount.

Registered Savings Plan…an RSP…the name given a policy that qualifies under this section of the Income Tax Act and allows you to accumulate tax-sheltered funds for retirement.

Reinstatement… is the process of putting a lapsed policy back into effect. The company may ask for new or updated medical information.

Reinsurance… where an insurance company shares the risk on a particular policy or group of policies with another or several other companies.

Reserves…see "Actuarial liabilities".

Segregated fund…pool of investments that is held and managed separately (i.e., segregated) from other similar pools or funds and the general funds of the life insurance company. The benefits of contracts issued through a segregated fund are based on the market value of the investments in the fund.

Settlement options…several ways, other than immediate payment in cash, that the policyholder or beneficiary may choose to have life insurance policy benefits paid.

Standard of statutory provisions…set of policy provisions prescribed by provincial laws setting forth certain rights and obligations for both the insured and the company under an individual policy of insurance.

Stock insurance company…an insurance company with share capital. A board elected partly by the shareholders and partly by the participating policyholders, if any directs management. The shareholders share in any company profits.

Straight life insurance…permanent life insurance payable on the death of the life insured whenever that occurs. Premiums are payable until the death of the life insured.

Substandard (impaired) risk…a risk that cannot meet the normal health requirements of a standard insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge.

Suicide clause… a clause found in most policies stating that benefits will not be paid if death is due to suicide within the first two years of any contract.

Sum insured…see "Face amount".

Surrendered policy…a policy terminated because of non-payment of premiums, for which there is a cash value or other non-forfeiture value available.

Term insurance…like a mortgage, term insurance has a specific term and normally a renewal time. The term is usually defined by age - 65, 70, 75 or even 100 and the renewal periods are anywhere from annually to level for the term. The renewal periods are when the cost increases. Most frequently chosen renewal periods 5, 10, 20 years.

Underwriting…the process by which an insurer determines whether or not, and on what basis, it will accept an application for insurance.

Uninsured plan…an arrangement whereby an employer undertakes to provide health benefits to employees outside of an insurance contract. The plan may be administered by the employer or by an insurance company or other organization. See "Administrative services only (ASO) plan".

Universal Life…life insurance policy where premiums (less expense charges) are credited to an investment account from which periodic charges for the life insurance coverage are deducted and to which income is credited. Usually, the policyholder can vary the amount and timing of premium payments and change the amount of insurance.

Variable contract…a life insurance or annuity contract under which benefits are not fixed but vary with the market value.

Waiver of premium…a clause that waives or refunds premiums if you become disabled and unable to work after a specific waiting period. Once a waiver claim has been approved, the premiums paid during the waiting period are often refunded.

War exclusion… provision that says the policy benefits are not payable if you die because of war or acts of war and is included in all insurance contracts.

Whole Life insurance… life insurance that remains in force for all our life as long as premiums are paid. Whole Life insurance may accumulate