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Insurance Glossary - A

Absolute Liability
Liability for damages even though fault or negligence cannot be proven.

Accident
An event or occurrence which is unforeseen and unintended.

Accident and Health Insurance
A type of coverage that pays benefits, sometimes including reimbursement for loss of income, in case of sickness, accidental death, or accidental injury.

Accident Insurance
A form of health insurance against loss by accidental bodily injury.

Accidental Bodily Injury
Injury to the body as the result of an accident.

Accidental Death Benefit
A benefit in addition to the face amount of a life insurance policy, payable if the insured dies as the result of an accident. Sometimes referred to as "double indemnity."

Accumulation period
1) The time between the first premium payment and the first benefit pay out under a deferred annuity; 2) A specified period of time, such as 90 days, during which the insured person must incur eligible medical expenses at least equal to the deductible amount in order to establish a benefit period under a major medical expense or comprehensive medical expense policy.

Accumulation units
The mechanism used to account for your "deposits" in a variable annuity contract during the premium paying period. The number of units purchased depends upon the current valuation of a unit in dollars.

Acquisition Costs
The cost to a company of securing new business, including the commissions to agents and brokers.

Activities of Daily Living
The activities of daily living which are used to determine degree of impairment and if eligible for some type of insurance benefits, activities normally including mobility, bathing, toiletry, dressing, transferring, and eating.

Actual Cash Value (ACV)
The cost of replacing or restoring property damaged at today's prices, less depreciation.

Actuary
A person trained in mathematics whose job is to apply the theory of probability to the business of insurance to develop insurance rates. This is done largely from past loss experience, through future probable trends are also taken into account.

Additional insured
An assured party specifically named under an insurance policy

Adhesion, Contract of
A contract that is drafted by one party and accepted or rejected by the other, with no opportunity to bargain with respect to its terms.

Adjuster
A person who investigates and settles losses for an insurance company.

Adjusting
The process of investigating and settling losses with or by an insurance company.

Adverse Selection
The tendency of less favorable insurance user to seek or continue insurance to a greater extent than others.

Age Limits
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.

Agent
An insurance company representative licensed by the state who solicits, and produces contracts of insurance for an insurance company.

Alien Insurer
An insurance company domiciled in another country

All-risks Policy
Coverage by an insurance policy that promises to cover all losses except those losses specifically excluded in the policy.

Amendment
A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.

Amortization
Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.

Annuitant
The person during whose life an annuity is payable, usually the person to receive the annuity.

Annuity
A contract that provides an income for a specified period of time, such as a number of years or for life.

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

Application
A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy.

Arbitration
A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss.

Arson
The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.

Assets
All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under generally accepted accounting principles.

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

Attractive Nuisance
Condition that can attract and injure children. Occupants of land on which such a condition exists are liable for injuries to children.

Automatic Premium Loan
Cash borrowed from a life insurance policy's cash value to pay an overdue premium after the grace period for paying the premium has expired.

Automobile Insurance Plan
One of several types of "shared market" mechanisms where persons who are unable to obtain such insurance in the voluntary market are assigned to a particular company, usually at a higher rate than the voluntary market. Formerly this plan was called "Assigned Risk".

Automobile Liability Insurance
Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.

Automobile Physical Damage Insurance
Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils

Aviation Insurance
Aircraft insurance including coverage of aircraft or their contents, the owner's liability, and accident insurance on the passengers.