| Disability Glossary
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B C D E F
G K L M N
O P Q R S
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Accidental death and dismemberment
(AD&D):
Coverage, built into a disability policy or available as an optional benefit, which
pays scheduled amounts in the event of accidental death or dismemberment.
Annually renewable disability income:
Cost for this form of disability income policy increases each year, but can initially
be as much as 40% lower than fixed cost policies.
Attending physician statement (APS):
A report, filled out by a prospective insured's (or, in a claim situation, the
insured's) physician documenting current and prior health history. An APS helps the
insurance company in the evaluation process of approving an application (or a claim).
Automatic increase benefit (AIB):
A built-in policy feature or optional benefit that increases annually an insured's
monthly benefit without evidence of either medical or financial insurability.
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Benefit period:
The length of time specified in a policy that disability benefits will be paid to a
disabled insured, e.g., five years, to age 65.
Business overhead expense:
Coverage which helps keep a business operating when a business owner is disabled.
Provides short-term benefits to cover fixed operating expenses during total or partial
disability.
Buy-sell (or buy-out):
Disability policy which provides funds for the purchase of a disabled partner's share
of a business.
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Cafeteria plan:
An employee benefit arrangement allowed by Internal Revenue Code Section 125 where
employees are allowed to pay for certain employee benefits on a pretax rather than an
after-tax basis. Disability income insurance is one of those benefits.
Conditionally renewable disability
income:
With this type of policy, the insurance company agrees to renew the policy provided
the insured meets certain criteria, such as full time employment.
Cost of living rider:
A benefit that can be added to a disability policy that increases the monthly benefit
annually during a claim.
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Disability:
See definitions for Total, Partial and Recurrent disability.
Disability income insurance:
A policy which pays a monthly benefit to an insured in the event of an accident or
sickness to help replace lost earnings.
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Elimination period:
The policy deductible, or the amount of time (usually a number of days) the insured
elects to wait before disability benefits are paid. Typically, the longer an individual
can wait before receiving funds from the insurance company, the lower the price of the
policy.
Exclusions:
The section of the policy that outlines circumstances under which benefits will not be
paid.
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Field underwriting:
Process by which an agent conducts his or her own evaluation of the insurability of a
prospect through the completion of an insurance application.
Financial underwriting:
Process by which an agent evaluates all elements of a prospect's compensation to
determine the amount of monthly benefit for which the prospect qualifies.
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Group LTD:
Disability income insurance issued as a master policy to an employer to provide an
income for employees should they suffer a long term disability.
Guarantee of insurability:
An optional disability income policy benefit that enables an insured to make increases
to the policy on specified dates with evidence of financial insurability only required (no
evidence of medical insurability is required).
Guaranteed renewable:
This policy provision guarantees that the insurance company will renew an insured's
policy provided the insured pays the policy premiums on time. The insurance company can
increase premiums with prior notification, but policy provisions can never be changed.
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Key person policy:
An insurance policy that reimburses a business for financial loss during a key
employee's disability until recovery or a suitable replacement can be found.
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Lump sum payment:
In a disability buy-sell policy, benefits are usually payable all at once, in one lump
sum, on the date that the buy-sell takes effect.
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Medical underwriting:
The process of reviewing a potential insured's individual medical history to determine
approval of the prospect's disability income application.
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Non-cancelable:
The renewal feature of a disability income policy under which the insurance company
cannot change any policy provisions or increase premiums after the policy has been issued
as long as the insured pays policy premiums on time.
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Occupation class:
The category assigned to an insured by the insurance company based on the individual's
job duties that dictates the policy premium and contractual grouping that would apply to
the insured.
Own occupation:
A term defining the most liberal interpretation of total disability where only one
test is applied to determine the insured's eligibility for total disability benefits: the
ability to perform the duties of one's own occupation.
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Partial disability:
Built into some disability policies, available as a rider with others, this provision
pays a portion of the total disability benefit to insureds unable to perform one or more
of their occupational duties because of disability.
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Qualification period:
A term used in conjunction with residual disability benefits which refers to the
number of days at the start of a disability that the insured must be totally disabled
before becoming eligible for residual benefits.
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Recurrent disability:
Term used to describe situations where a disability occurs, the insured recovers for a
short period of time, then experiences a recurrence of the same or a related disability.
Insureds with recurrent disabilities do not have to wait until their elimination period is
over before they receive benefits.
Residual disability benefit:
Built into some policies, available as an option with others, this benefit pays the
insured a portion of the total disability benefit after a return to work based on the
percentage of income lost due to the disability.
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Short term disability:
Usually associated with group insurance, this type of insurance pays a monthly benefit
for total disability after a brief waiting period for a short period of time (typically up
to three, six, nine or 12 months).
Social Security offset:
A policy provision or optional benefit that coordinates with benefits received through
Social Security disability (and typically other government programs) to avoid either
underinsurance or overinsurance.
Step rate:
A method of premium payment offering a low initial premium that increases after a set
number of years to a higher, level premium.
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Total disability:
Under our standard definition, Paul Revere considers insureds totally disabled if they
are unable to perform the important duties of their regular occupation because of injury
or sickness, aren't working in another gainful occupation and are under a physician's
care.
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Underwriting:
The confidential process of evaluating personal, financial and medical data for the
purpose of approving or disapproving an applicant's disability income coverage.
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Waiver of premium:
A policy provision that exempts insureds from making premium payments until they
recover they've been disabled for a specified number of days.
Workers' Compensation:
A system administered at the state level that provides benefits to workers who are
hurt or contract an illness on the job. |
