A
Accident and sickness insurance - A type of insurance that makes a payment if you have an illness, are injured or die from an accident. It includes disability income insurance and accidental death and dismemberment insurance.
Accidental death and dismemberment insurance - A type of insurance that makes a payment if you die from an accident or lose full or partial use of a limb, hearing or eyesight. You can buy this type of insurance on its own or add it to a life insurance policy.
Accidental death insurance - A type of insurance that makes a payment if you die from an accident. You can buy accidental death insurance on its own or add it to a life insurance policy. If you add it to a life insurance policy and die from an accident, your insurance company pays both the life insurance amount and the accidental death insurance amount. When the amount of the accidental death insurance is equal to the amount of the life insurance, the amount payable is double the original amount of the life insurance policy, and is known as "double indemnity".
Actuary - A person professionally trained in calculating the risks and costs of insurance.
Adjustable policy - A type of insurance policy that allows the insurance company to make changes to the policy under certain conditions. Changes can include the amount of insurance, the premiums charged and the cash value. Details of how the insurance company can make changes are listed in the policy.
Administrative services only (ASO) plan - A type of group plan where the benefits are not insured. The plan sponsor (usually an employer) hires an outside firm (often a life and health insurance company) to administer their plan. The plan sponsor is responsible for providing the funds to pay claims.
Advisor/Agent (Broker) - A person who is licensed by a provincial or territorial regulator to sell life insurance, accident and sickness insurance, group insurance and annuities, including segregated funds. Also called an agent or a broker.
Application - An application is a formal request for insurance coverage. It provides information about you and the type and amount of insurance you want. The information you give the insurance company helps them decide if you meet their requirements and qualify for the insurance. In some cases, you have to answer a series of health questions. You may also have to undergo basic medical tests as part of your application.
Attending physician's statement (APS) - When you apply for insurance coverage or submit a claim, the insurance company may ask you to submit a form called an Attending Physician's Statement (APS) completed and signed by your doctor. The APS will give the insurance company the
information they need to start your application or claim. In some
circumstances, the insurance company may have forms specific to your medical
condition.
B
Beneficiary The person you name to receive the payment
from your insurance policy. In the case of life insurance, if you don't name a
beneficiary, the payment goes to your estate.
Benefit The payment an insurance company makes when
they approve an insurance claim.
C
Cash surrender value (CSV) The amount
your insurance company pays you when you cancel a permanent life insurance
policy that has built up a cash value. The insurance company deducts any policy
loans or overdue premiums from the cash surrender value before paying you.
Cash Value The cash amount that builds up in a permanent
life insurance policy. You can take a loan against the cash value of your
policy. If you cancel your policy, you get the cash value. Whole life, variable
life and universal life are types of life insurance that have cash value. (See
Cash surrender value.)
Claim A formal request to an insurance company for
payment of a benefit.
Claimant The person who makes a claim.
Contestability Contestability is the legal right of the
insurance company to question (or 'contest') your insurance coverage. If the
company finds that you gave incomplete or incorrect information when applying
for the insurance, they will look at what impact the missing information would
have had on their decision to insure you. If their decision would have been
different, they may cancel your coverage and deny any claims. Most policies
have a two-year contestability period. After that, the company cannot contest
your coverage except in the case of fraud (a deliberate misstatement of fact).
An example of fraud is a smoker who states in their application that they're a
non-smoker, to get a reduced premium.
Contingent beneficiary If you
choose to name more than one person to receive a benefit, you can name some to
be primary and others to be secondary (also called contingent). Primary
beneficiaries are first in line to receive benefits. Secondary beneficiaries
receive a benefit if the primary beneficiary for that specific share has
already died when the benefit becomes payable.
Contract An insurance contract is the legal agreement
with your insurance company that sets out the terms of your coverage. The
contract usually includes your application, the policy, and any changes made
later to the policy.
Critical illness insurance A type of
insurance that pays you a lump sum if you are diagnosed with a life altering
illness such as cancer, heart attack, stroke, Multiple Sclerosis or Parkinson's
Disease. The exact illnesses covered are listed in your policy. You can buy
this type of insurance on its own or may be able to add it to a life insurance
policy or group plan.
D
Disability income insurance A type of
insurance that makes regular payments (usually monthly) to replace income if
you become disabled and unable to work. It's usually provided as part of a
group plan, but you can also buy it on its own.
E
Eligibility period The length of time you must
be a member of a group before qualifying for coverage under the group plan. For
example, an organization whose health and dental plan has a 90-day eligibility
period would require 90 days of qualified employment before coverage could
begin.
Elimination period In disability insurance,
you have to be continuously disabled for a certain amount of time before making
a claim. This amount of time is the elimination period (sometimes referred to
as a "waiting period"). You won't receive benefits for the elimination
period.
Evidence of insurability The
information an insurance company uses to decide whether or not to insure you.
It's often called "proof of good health". The information may include
medical, lifestyle, smoking and other personal information.
Exclusions Things that are not covered by an insurance
policy. They can include:
certain medical conditions you had before you applied for the
insurance
high-risk activities such as sky-diving You can sometimes buy extra
insurance to pay for risks that wouldn't otherwise be covered.
Exempt policy A life insurance policy where the savings
growth doesn't exceed limits set under income tax law. In an exempt policy, the
savings growth isn't subject to annual taxation.
Extended term insurance An option
in a permanent life insurance policy that allows you to extend the period
you're covered without having to pay additional premiums. It uses the cash
value in your policy but your insurance coverage stays the same. How long the
policy continues depends on how much cash value is available. (See
Non-forfeiture options.)
F
Face amount/Sum Insured Also
called the "sum insured", the face amount is the amount stated on
your policy that your insurance company guarantees to pay when the insured
person dies.
Financial needs analysis When you
buy insurance, an advisor may help you decide how much insurance you need by
completing a financial needs analysis. This looks at your current financial and
personal situation and goals.
G
Grace period A period in which an insurance policy is
effective even though the premium is past due.
Group insurance/Master Policy A type of
insurance that provides coverage for a group of people (for example employees
or members of an association) under one contract called a group plan or group
policy.
Group policyholder An organization (for
example an employer or association) that enters into a group insurance contract
with an insurance company.
Guaranteed death benefit The
minimum amount an insurance company pays to the beneficiary when the insured
person dies.
Guaranteed insurability benefit An option
in a life insurance policy. It gives you the right to buy additional insurance
coverage at set future ages without having to give proof of good health. It's
also called "Guaranteed Insurability Option" (GIO). (See Evidence of
insurability.)
Guaranteed maturity benefit The amount
that your insurance company guarantees to pay you on the policy maturity date.
This benefit is most common with segregated fund contracts.
Guaranteed renewable policies A feature
of an individual insurance policy where the insurance company guarantees to
renew the insurance at the end of a certain period, regardless of any changes
in your health. Premiums may increase at renewal times.
H
Health care spending account An
arrangement in a group plan where the plan member gets a number of credits in
an account. The member can use the credits to pay for health and dental
expenses not covered elsewhere in their plan.
Health insurance A type of insurance that
covers medical expenses (such as drugs, dental expenses, vision expenses, and
paramedical expenses) or loss of income if you're sick or injured.
Hospital expense insurance A feature
of extended health care insurance that covers hospital expenses not covered by
your provincial health plan during your stay in hospital.
I
Insurer An insurance company that issues policies and
promises to pay benefits.
Irrevocable beneficiary A type of
beneficiary designation where you need written permission from the beneficiary
before changing the beneficiary or making certain changes to your policy.
K
Key person insurance A type of insurance on the
life of a key employee in a business. It's designed to provide cash to hire and
train a replacement and replace lost revenues and profits, if the key employee
dies.
L
Lapsed policy An insurance policy that has ended because
you stopped paying premiums and there was not enough money in the policy (cash
value) to keep the payments up to date.
Level premium life insurance A type of
life insurance where the premium you pay stays the same through the life of the
policy.
Level premium term plan The
premiums set on a level premium rate remain the same over the insurance
coverage period. Level premium plans may be for a limited period or lifetime.
For example, the premium schedule for a typical level premium critical illness
insurance policy may hold the premiums “level” up to age 75 or for the
insured's lifetime.
Life insurance A type of insurance that pays out when the
insured person dies.
Life insured The person whose life is insured.
N
Non-participating Insurance A policy
that does not participate in the insurance company's distribution of earnings
or dividends.
P
Paid-up insurance Life insurance on which all
the required premiums have been paid and coverage continues.
Partial disability benefit A
disability benefit that pays a monthly amount that's less than a total
disability benefit. In this situation, the insured person can't work fulltime
or is prevented from performing one or more important daily duties of their
occupation, but isn't considered totally disabled under the policy.
Participating insurance A type of
insurance policy that pays the policyholder a share of the insurance company's
earnings, or dividends. (See Policyholder dividend.)
Pension plan A savings plan intended to provide you with a
monthly income in retirement. It can include a workplace plan, government plan
or your own individual plan. For workplace plans, depending on the specific
plan, you and your employer may contribute to it.
Permanent life insurance A type of
life insurance that provides coverage for the lifetime of the person insured
provided the required premiums are paid. Permanent life insurance usually has a
cash value. Whole Life, Term to 100 and Universal Life are examples of this
type of insurance.
Plan member or participant The person
insured under a group insurance, group benefit, group pension, or group savings
plan (for example, an employee, union member or association member).
Plan sponsor The holder of a group insurance, group
benefit, group pension, or group savings plan. It can be any organization that
provides group benefits to its members, for example an employer, union or
association.
Policy (Contract) The legal agreement between
you and your insurance company that sets out the terms of your insurance
coverage.
Policy loan A loan made by a life insurance company to a
policyholder based on the policy's cash value. A policy loan reduces the cash
value and the insurance company usually charges interest.
Policy reserves The pool of funds that an
insurance company keeps specifically to meet its policy obligations. The law
requires insurance companies to keep sufficient reserves to pay all future
claims.
Policyholder/Insured The person who owns an
insurance policy. Also called the policyowner.
Policyholder dividend If you
have a participating policy, you may receive dividends from the insurance
company's earnings.
R
Rated policy An insurance policy where the insured person
does not meet the company's standard insurance requirements (for example,
because of a risky occupation). The policy has higher risks and higher
premiums.
Reduced paid-up insurance A form of
paid-up life insurance available as a non-forfeiture option. The policy
continues, but for a reduced amount.
Reinstating a policy You may apply to restart
your insurance coverage if it ended because you did not pay your premiums. This
process is called reinstating your policy. To do so you must apply within two
years of the date your policy ended and you will have to give the insurance
company proof of your good health and pay all overdue premiums plus interest.
Reinsurance An agreement between insurance companies to
share insurance risk. One company transfers some of its insurance risk to
another company, known as the reinsurer. Reinsurance is one way your insurance
company manages its risks.
Renewable term insurance A type of
term life insurance that can be renewed at the end of the term, either
automatically or at the policyholder's option, without evidence of
insurability. The amount you pay for the new term is usually higher.
Replacement The act of replacing an existing insurance
policy with another policy. Since this means that the first policy is
cancelled, the insurance company usually requires a written statement showing
you are aware of the consequences of replacing the policy.
Rescission right The policyholder's right to
cancel a policy within a set period of time and get a refund of any premiums
paid. This "free look" period allows you to review the policy and
ensure it meets your needs.
Revocable beneficiary A type of
beneficiary designation. You can change a revocable beneficiary at any time.
Rider A change or addition to an insurance policy
that either expands or limits the coverage and benefits.
Risk The likelihood that an insured event will
happen while the policy is in place. For example, in life and health insurance,
risk is typically the likelihood that the person insured will die, be injured
or get sick.
T
Term life insurance A type of life insurance
that provides coverage for a set period of time. The period (or term) of the
coverage can be either a fixed number of years (e.g., 10 years) or to a set age
(e.g., age 65). If the insured person dies within the term, the insurance
company pays the benefit to the beneficiary.
U
Underwriting The process an insurance company goes through
to decide whether or not to insure someone.
Universal life insurance A type of
permanent life insurance with flexible premium payments. It consists of two
parts: life insurance and an investment account. You pay money into the
investment account. The insurer takes out enough money to pay for the insurance
coverage and administrative costs. The rest of the money stays in the account
to earn interest.
W
Waiver of premium A feature of some insurance
policies that allows you to stop paying the premiums if you become disabled.
Whole life insurance A type of permanent life
insurance that provides coverage for your lifetime. It has fixed premiums,
builds up a cash value, and has features that help keep your coverage in place
if you can't pay the premiums.