We hope that our extensive glossary of common (and some not-so-common)
insurance terms and phrases proves helpful to you! Simply start
below by choosing the first letter of the word or phrase you want to
learn more about.
A - B - C - D - E - F - G - H - I - J - K - L - M
N - O - P - Q - R - S - T - U - V - W
DECLARATION - Part of a property or liability
insurance policy that states the name and address of policyholder,
property insured, its location and description, the policy period,
premiums, and supplemental information. Referred to as the “dec
page.”
DEDUCTIBLE - The amount of loss paid by the policyholder.
Either a specified dollar amount, a percentage of the claim amount, or a specified
amount of time that must elapse before benefits are paid. The bigger the deductible,
the lower the premium charged for the same coverage.
DEFERRED ANNUITY - An annuity contract that is purchased
either with a single tax-deferred premium or with periodic tax-deferred premiums
over time. Payments begin at a predetermined point in time, such as retirement.
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For more commonly used annuity terms and their definitions click
here.
DEFINED BENEFIT PLAN - A retirement plan under
which pension benefits are fixed in advance by a formula based generally on
years of service to the company multiplied by a specific percentage of wages,
usually average earnings over that period or highest average earnings over
the final years with the company.
DEFINED CONTRIBUTION PLAN - An employee benefit
plan under which the employer sets up benefit accounts and contributions are
made to it by the employer and by the employee. The employer usually matches
the employee's contribution up to a stated limit.
DEMAND DEPOSIT - Customer assets that are held
in a checking account. Funds can be readily withdrawn by check, “on
demand.”
DEMUTUALIZATION - The conversion of insurance
companies from mutual companies owned by their policyholders into publicly-traded
stock companies.
DEPOSITORY INSTITUTION - Financial institution
that obtains its funds mainly through deposits from the public. Includes commercial
banks, savings and loan associations, savings banks, and credit unions.
DEREGULATION - In insurance, reducing regulatory
control over insurance rates and forms. Commercial insurance for businesses
of a certain size has been deregulated in many states.
DERIVATIVES - Contracts that derive their value
from an underlying financial asset, such as publicly-traded securities and
foreign currencies. Often used as a hedge against changes in value.
DIMINUTION OF VALUE - The idea that a vehicle
loses value after it has been damaged in an accident and repaired.
DIRECT PREMIUMS - Property/casualty premiums collected
by the insurer from policyholders, before reinsurance premiums are deducted.
Insurers share some direct premiums and the risk involved with their reinsurers.
DIRECT SALES/ DIRECT RESPONSE - Method of selling
insurance directly to the insured through an insurance company’s own
employees, through the mail, or via the Internet. This is in lieu of using
captive or exclusive agents.
DIRECT WRITERS - Insurance companies that sell
directly to the public using exclusive agents or their own employees, through
the mail, or via Internet. Large insurers, whether predominately direct writers
or agency companies, are increasingly using many different channels to sell
insurance. In reinsurance, denotes reinsurers that deal directly with the insurance
companies they reinsure without using a broker.
DIRECTORS AND OFFICERS LIABILITY INSURANCE/D&O -
Covers directors and officers of a company for negligent acts or omissions,
and for misleading statements that result in suits against the company, often
by shareholders. Directors and officers insurance policies usually contain
two coverages: personal coverage for individual directors and officers who
are not indemnified by the corporation for their legal expenses or judgments
against them – some corporations
are not required by their corporate or state charters to provide indemnification;
and corporate reimbursement coverage for indemnifying directors and officers.
Entity coverage for claims made specifically against the company may also
be available.
DIVIDENDS - Money returned to policyholders
from an insurance company’s earnings. Considered a partial premium
refund rather than a taxable distribution, reflecting the difference between
the premium charged and actual losses. Many life insurance policies and some
property/casualty policies pay dividends to their owners. Life insurance
policies that pay dividends are called participating policies.
DOMESTIC INSURANCE COMPANY - Term used by a state
to refer to any company incorporated there. |
