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 Insurance
Definitions
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- Rate: The pricing factor upon which
the insurance buyer's premium is based.
- Rated Policy: Sometimes called an
"extra-risk" policy, an insurance policy issued
at a higher-than-standard premium rate to cover
the extra risk where, for example, an insured
has impaired health or a hazardous occupation.
- Ratemaking: The statistical process
by which insurers determine risks and pricing
for the basic classes of insurance.
- Rating Territory: A geographical
grouping in which like hazards tend to equalize
and permit the establishment of an equitable
rate for the territory.
- Reasonable and Customary Charge: A
charge for health care, which is consistent with
the going rate or charge in a certain
geographical area for identical or similar
services.
- Rebating: Giving any valuable
consideration, usually all or part of the
commission, to the prospect or insured as an
inducement to buy or renew. Rebating is
prohibited by law.
- Recurring Claim Provision: A
provision in some health insurance policies
which specifies a length of time during which
the recurrence of a condition is considered to
be a continuation of a previous period of
disability or hospital confinement.
- Recurring Clause: A provision in some
health insurance policies, which specifies a
period of time during which the recurrence of a
condition is considered a continuation of a
prior period of disability or hospital
confinement.
- Reduced Paid-up Insurance: A form of
insurance available as a nonforfeiture option.
It provides for continuation of the original
insurance plan, but for a reduced amount.
- Regulation: Supervision of business
practices by a governmental entity.
- Rehabilitation: (1) Restoration of a
totally disabled person to a meaningful
occupation, (2) a provision in some long- term
disability policies that provides for
continuation of benefits or other financial
assistance while a totally disabled insured is
retraining or attempting to resume productive
employment.
- Reimbursement: The payment of the
expenses actually incurred as a result of an
accident or sickness, but not to exceed any
amount specified in the policy.
- Reinstatement: The resumption of
coverage under a policy which has lapsed.
- Reinsurance: Assumption by one
insurance company of all or part of a risk
undertaken by another insurance company.
- Reinsurance: The acceptance by one or
more insurers, called reinsurers, of a portion
of the risk underwritten by another insurer who
has contracted for the entire coverage.
- Reinsurance : The purchase of
insurance by an insurance company from another
insurance company (reinsurer) to provide it
protection against large losses on cases it has
already insured.
- Reinsurance Facility: An alternative
mechanism to service those insureds that cannot
obtain insurance in the voluntary market.
Premiums and losses for the business that is
ceded to the facility are pooled and all
insurers share according to their proportion of
the voluntary market.
- Renewable Term Insurance: Term
insurance which can be renewed at the end of the
term, at the option of the policyholder and
without evidence of insurability, for a limited
number of successive terms. The rates increase
at each renewal as the age of the insured
increases.
- Renewal: Continuance of coverage
under a policy beyond its original term by the
insurer's acceptance of the premium for a new
policy term.
- Renter's Policy: A package type of
insurance that includes coverage similar to a
homeowners policy to cover the personal property
of a renter or tenant in a building.
- Replacement: The substitution of
health insurance coverage from one policy
contract to another.
- Replacement Cost: The cost to repair
or replace property at construction costs
prevailing at time of loss; the cost to repair
or rebuild property without considering
depreciation. (See Actual Cash Value)
- Replacement ratio: The percentage of
income before retirement that is required to be
replaced to maintain the same standard of living
after retirement.
- Representation: Statements made by an
applicant in the application, which he
represents as being substantially true to the
best of his knowledge and belief, but which are
not warranted as exact in every detail.
- Rescission: Termination of an
insurance contract by the insurer on the grounds
of material misstatement on the application for
insurance. The action of rescission must take
place within the contestable period or Time
Limit on Certain Defenses but takes effect as of
the date of issue of the policy, thus voiding
the contract from its inception.
- Reserve: The reserve, for an annuity,
is the amount of money required to guarantee the
payment of annuity benefits at future dates.
- Reserve: The amount required to be
carried as a liability in the financial
statement of an insurer, to provide for future
commitments under policies outstanding.
- Reserve: (1) An amount representing
liabilities kept by an insurer to cover claims
and other obligations to policyholders. (2) An
amount allocated for a special purpose. Note
that a reserve is usually a liability and not an
extra fund.
- Reserve: A sum set aside by an
insurance company as a liability to fulfill
future obligations.
- Residual Disability: A period of
partial disability that immediately follows a
period of total disability. Benefits for
residual disability are paid on a pro-rata
basis, depending on the percentage of earnings
loss.
- Residual Disability Benefits: A
provision in an insurance policy that provides
benefits in proportion to a reduction of
earnings as a result of disability, as opposed
to the inability to work full-time.
- Residual Market: A system through
which insurance is made available to buyers that
represent unusually high risks.
- Residual Market: A source of
insurance available to applicants who are unable
to obtain insurance through ordinary methods in
the voluntary market. (See AIP, JUA, Facility)
- Retention: The net amount of risk
retained by an insurance company for its own
account or that of specified others, and not
reinsured.
- Retention: The amount of the risk
kept for oneself, as opposed to the amount it
insures (or reinsures) with another.
- Retrocession: The process by which a
reinsurer obtains reinsurance from another
company.
- Retrospective Date: The first date
for which claims will be paid under a
claims-made policy of liability insurance.
- Retrospective Rating: Rating
procedure which allows adjustment of an
insured's final rate on the basis of the
insured's own loss experience.
- Revocable Trust: A trust that can be
terminated or revoked by its creator.
- Rider: A document which amends the
policy or certificate. It may increase or
decrease benefits, waive the condition of
coverage or in any other way amend the original
contract.
- Rider: A special policy provision or
group of provisions that may be added to a
policy to expand or limit the benefits otherwise
payable.
- Rider: A document that modifies the
policy. It may increase or decrease benefits,
waive a condition or coverage, or in any other
way amend the original contract.
- Right of Survivorship:At the death of
one co-owner of property, that person's interest
in the property automatically passes to the
surviving joint tenant or tenants.
- Risk: The chance of loss. Also used
to refer to the insured or to property covered
by a policy.
- Risk: Any chance of loss.
- Risk: A term used to refer to a
person or the peril insured.
- Risk Classification: The process by
which a company decides how its premium rates
for life insurance should differ according to
the risk characteristics of individuals insured
(e.g., age, occupation, sex, state of health)
and then applies the resulting rules to
individual applications. (See: Underwriting)
- Risk control: Any conscious action
(or decision not to act) intended to reduce the
frequency, severity, or unpredictability of
accidental losses.
- Risk Retention Group: An alternative
form of insurance in which members of a similar
profession or business band together to self
insure their risks.
- Robbery: The taking of property from
a person by force or threat of violence.
- Rollover: Transfer of IRA or other
qualified pension funds from one financial
institution (trustee) to another.
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