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 Insurance
Definitions
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- Immediate Annuity: An annuity
providing for payment to begin immediately.
- Immediate Participation Guarantee Plan:
(IPG) Type of pension plan in which all pension
contributions are deposited in an unallocated
fund and used directly to pay benefits to
retirees.
- Imputed Negligence: Case in which
responsibility for damage can be transferred
from the negligent party to another person, such
as an employer.
- Incontestability: Life policies
provide that, except for non-payment of premiums
and certain other circumstances, the policy
shall be incontestable after the policy has been
in force for two years during the lifetime of
the insured.
- Incontestable Clause: An optional
clause which may be used in noncancelable or
guaranteed renewable health insurance contracts
providing that the insurer may not contest the
validity of the contract after it has been in
force for two (sometimes three) years.
- Incurred Claims: Incurred claims
equal the claims paid during the policy year
plus the claim reserves as of the end of the
policy year, minus the corresponding reserves as
of the beginning of the policy year. The
difference between the year end and beginning of
the year claim reserves is called the increase
in reserves and may be added directly to the
paid claims to produce the incurred claims.
- Incurred-but-not-reported (IBNR) reserves:
Liability account on an insurer's balance sheet
reflecting claims that are expected based upon
statistical projections but which have not yet
been reported to the insurer.
- Indemnification: Compensation to the
victim of a loss, in whole or in part, by
payment, repair, or replacement.
- Indemnity: Legal principle that
specifies an insured should not collect more
than the actual cash value of a loss but should
be restored to approximately the same financial
position as existed before the loss.
- Indemnity Insurance: Traditional
insurance that pays for specific covered
services.
- Independent Adjuster: Claims adjuster
who offers his or her services to insurance
companies and is compensated by a fee.
- Independent Agent: An independent
business person who usually represents two or
more insurance companies in a sales and service
capacity and who is paid on a commission basis.
- Independent Agency System: Type of
property and liability insurance marketing
system, sometimes called the American agency
system, in which the agent is an independent
businessperson representing several companies.
The agency owns the expirations or renewal
rights to the business, and the agent is
compensated by commissions that vary by line of
insurance.
- Indeterminate Premium Whole Life
Insurance: Nonparticipating whole life
policy that permits the insurer to adjust
premiums based on anticipated future experience.
Initial premiums are guaranteed for a certain
period. After the initial guaranteed period
expires, the insurer can increase premiums up to
some maximum limit.
- Individual Contract: A contract of
health insurance made with an individual called
the policy holder or the insured, which normally
covers such individual and, in certain
instances, members of his family.
- Individual Deductible: Amount that an
insured and each person of his or her family
covered by the policy must pay before the group
or individual medical insurance policy begins to
pay for medical expenses.
- Individual Insurance: Policies which
provide protection to the policyholder and/or
his/her family. Sometimes called Personal
Insurance as distinct from group and blanket
insurance.
- Individual Policy Pension Trust: A
type of pension plan, frequently used for small
groups, administered by trustees who are
authorized to purchase individual level premium
policies or annuity contracts for each member of
the plan. The polices usually provide both life
insurance and retirement benefits.
- Individual Retirement Account (IRA):
An account to which an individual can make
annual contributions of 100% of earnings up to
$2,000 ($2,250 for a one-income married couple).
These contributions are tax deductible for most
workers.
- Industrial Life Insurance: Life
insurance issued in small amounts, usually less
than $1,000, with premiums payable on a weekly
or monthly basis. The premiums are generally
collected at the home by an agent of the
company. Sometimes referred to as debit
insurance.
- Industrial Life Insurance: A class of
life insurance that is usually issued
with protection amount of less than $1,000 and
premiums usually payable weekly or at most,
monthly.
- Inflation-Guard Endorsement:
Endorsement added at the insured's request to a
homeowners policy to increase periodically the
face amount of insurance of the dwelling and
other policy coverage's by a specified
percentage.
- Inheritance tax: A tax on the right
of an heir to receive property at the death of
another.
- Initial Past Service Liability: The
actuarial value (single sum) of the past service
benefits as of the effective date of the
establishment of the plan, or at the date of the
latest liberalization. The maximum annual past
service contribution allowable for tax deduction
is the amount necessary to amortize past service
liabilities and other supplementary pension or
annuity credits over 10 years. Funding of the
past service liability over a period of 30 years
(40 in some cases) is required by the Internal
Revenue Service under ERISA.
- Initial Reserve: In life insurance,
the reserve at the beginning of any policy year.
- Injury Independent of All Other Means:
An injury resulting from an accident, provided
that the accident was not caused by an illness.
- Inland Marine Insurance: A broad form
of insurance, generally covering articles in
transit as well as bridges, tunnels and other
means of transportation and communication.
Besides goods in transit (generally excepting
trans-ocean), it includes numerous "floater"
policies, such as those covering personal
effects, personal property, jewelry, furs, fine
arts, and other items.
- Inspection Report: A report (usually
written) of an investigation of an applicant,
conducted by an independent agency that
specializes in insurance investigations. The
report covers such matters as occupation,
financial status, health history, and moral
problems.
- Insolvent: Having insufficient
financial resources (assets) to meet financial
obligations (liabilities).
- Insurability: Acceptability to the
company of an applicant for insurance.
- Insurable Risk: The conditions that
make a risk insurable are (a) the peril insured
against must produce a definite loss not under
the control of the insured, (b) there must be a
large number of homogeneous exposures subject to
the same perils, (c) the loss must be calculable
and the cost of insuring it must be economically
feasible, (d) the peril must be unlikely to
affect all insured's simultaneously, and (e) the
loss produced by a risk must be definite and
have a potential to be financially serious.
- Insurance: A system under which
individuals, businesses, and other organizations
or entities, in exchange for payment of a sum of
money (a premium), are guaranteed compensation
for losses resulting from certain perils under
specified conditions.
- Insurance: Protection by written
contract against the financial hazards (in whole
or in part) of the happenings of specified
fortuitous events.
- Insurance Company: An organization
chartered to operate as an insurer.
- Insurance Company: Any corporation
primarily engaged in the business of furnishing
insurance protection to the public.
- Insurance Commissioner: The top
insurance regulatory official in a state.
- Insurance Exchange: Term used to
describe a facility that exists in a few states
to provide a market for reinsurance and for the
insurance of large and unusual domestic and
foreign risks that are difficult to insure in
the normal markets. Examples are the New York
Insurance Exchange, the Insurance Exchange of
the Americas, and the Illinois Insurance
Exchange.
- Insurance Examiner: The
representative of a state insurance department
assigned to participate in the official audit
and examination of the affairs of an insurance
company.
- Insurance Guaranty Funds: State Funds
that provide for the payment of unpaid claims of
insolvent insurers.
- Insurance Services Offices (ISO):
Major rating organization in property and
liability insurance that drafts policy forms for
personal and commercial lines of insurance and
provides rate data on loss costs for property
and liability insurance lines.
- Insured: A person or organization
covered by an insurance policy, including the
"named insured" and any other parties for whom
protection is provided under the policy terms.
- Insured or Insured Life: The person
on whose life the policy is issued.
- Insurer: The party to the insurance
contract who promises to pay losses or benefits.
Also, any corporation engaged primarily in the
business of furnishing insurance to the public.
- Insuring Agreement: That part of an
insurance contract that states the promises of
the insurer.
- Insuring Clause: The clause which
sets forth the type of loss being covered by the
policy and the parties to the insurance
contract.
- Integration: A coordination of
pension, disability or other benefit with the
other sources of income, such as Social Security
benefit, through a specific formula designed to
ensure reasonable income replacement.. Qualified
plans must integrate so that total benefits are
non-discriminatory between rank and file
employees and owners, officers or highly
compensated employees.
- Inter vivos Trust: A trust created
while the creator of the trust is living. Also
known as a living trust.
- Interest: Money paid for the use of
money.
- Interest-Adjusted Method: Method of
determining cost to an insured of a life
insurance policy that considers the time cost of
money by applying an interest factor to each
element of cost. See Also Net payment
cost index; surrender cost index.
- Interest Option: Life insurance
settlement option in which the principal is
retained by the insurer and interest is paid
periodically.
- Intestate: Without a will.
- Investment Income: The income
generated by a company's portfolio of
investments (such as in bonds, stocks, or other
financial ventures).
- Investment Income: The portion of a
company's income which is derived from its
investments, including interest and dividends on
stocks and bonds.
- Investment Only Contract: Type of
funding instrument that uses only the investment
services of an insurer.
- Irrevocable Beneficiary: Beneficiary
designation allowing no change to be made in the
beneficiary of an insurance policy without the
beneficiary's consent.
- Irrevocable Trust: A trust in which
the creator does not reserve the right to
reacquire the trust property.
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