Insurance Definitions

F Return To Alpha Index     Face Amount: The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends. Facultative Reinsurance: A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance. FAIR Plan: A facility, operating under a government-insurance industry cooperative program, to make fire insurance and other forms of property insurance readily available to persons who have difficulty obtaining such coverage. Fair Rental Value: Amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable. Family Policy: A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued. Farm Mutual: Local mutual insurance company that insures farm property in a limited geographical area primarily through assessable policies. Farm owner's-Ranch owner's Policy: A package policy for a farm or a ranch, providing property and liability coverage's against personal and business losses. Fee-for-service: Traditional health coverage in which you or your insurer pays doctors and hospitals for each visit or service provided. Federal Crime Insurance: Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists. Federal Crop Insurance: Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake. Federal Flood Insurance: Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures. Fidelity Bond: A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees. Fiduciary: A person who holds something in trust for another. Financial Responsibility Law: A state law which may require motorists to furnish evidence, either before or after involvement in an auto accident (depending on the individual state's law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more. Fire: A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage. Fire Insurance: Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Fire Legal Liability: Liability of a firm or person for fire damage caused by negligence of and damage to property of others. First Party Coverage: An insurance coverage under which the policyholder collects compensation for losses from the insured's own insurer rather than from the insurance company of the person who caused the accident. Fixed Annuity: Annuity whose periodic payment is a guarantined fixed amount. Fixed Period Option: Life insurance settlement option in which the policy proceeds are paid out in fixed amounts. Flexible Premium Policy or Annuity: A life accident policy or annuity under which the policyholder or contract holder may vary the amounts or timing of premium payments. Flexible Premium Variable Life Insurance: A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance. Floaters: Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location. Flood Insurance: Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government. Foreign Insurer: An insurer is a foreign company in any state other than the one in which it is incorporated. Forgery or Alteration Coverage Form: Commercial crime insurance form by the Insurance Services Office that covers loss resulting from the forgery or alteration of checks, drafts, bills of exchange, promissory notes, and similar instruments. Formulary: A list of medications plans will pay for without prior approval. Fortuitous Loss: Unforeseen and unexpected loss that occurs as a result of chance. 401(k) Plan: A salary reduction plan that allows employees to contribute a portion of their salaries on a tax-deferred basis. Fraternal Insurance: A cooperative type of insurance provided by social organizations for their members. Fronting Company: A domestic insurance company that provides claims or administrative services to a captive. Funded Retirement Plan: A plan under which funds are set aside in advance to provide expected benefits. Funding Agency: A financial institution or individual that provides for the accumulation or administration of the pension contributions that will be used to pay pension benefits. Funding Instrument: An insurance contract or trust agreement that states the terms under which the funding agency will accumulate, administer, and disburse the pension funds. Future Increase Option: A provision found in some policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured's physical condition.

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