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Glossary
Table of Contents
Member of the Better Business Bureau
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 | Early Retirement: Retirement of a
participant prior to the normal retirement date, usually with a reduced
amount of annuity. Early retirement is generally allowed at any time during
a period of 5 to 10 years preceding the normal retirement date.
| Earned Income: Employment income derived from
salary, wages, commissions, or fees.
| Earned Premium: The part of the total
property/casualty policy premium which applies to the portion of the policy
period which has already expired.
| Earned Premium: The portion of a premium
which is the property of an insurance company, based on the expired portion
of the policy period. E.g., a $300 premium for a one-year policy beginning
July 1 would amount to an earned premium of $150 the following January 1.
| Earned Premium: That portion of a policy's
premium payment for which the protection of the policy has already been
given. For example, an insurance company is considered to have earned 75
percent of an annual premium after a period of nine months of an annual term
has elapsed.
| Earnings Test (retirement test):
Determination of the amount of Social Security benefits payable to a
beneficiary after adjusting for earnings. The amount of earnings allowed
before his or her benefits is indexed annually; benefits are reduced by $1
for every $3 of earnings (beginning in 1990) above the earnings test
threshold.
| Economic Loss: The estimated total cost, both
insured and uninsured, of mishaps (such as motor vehicle accidents, work
accidents, and fires); includes such factors as property damage, funeral
expenses, wage loss, insurance administration costs, and medical, hospital
and legal costs.
| Economic Policy: Special type of
participating whole life insurance in which the dividends are used to buy
term insurance or paid-up additions equal to the difference between the face
amount of the policy and some guaranteed amount.
| Effective Date: The date on which the
insurance under a policy begins.
| Efficient level of risk: the amount of risk remaining after an individual
or business pursues activities such as loss control, loss financing, and
internal risk reduction, to the point where marginal benefit equals marginal
cost
| Elements of a Negligent Act:
Four elements an injured person must show to prove negligence: existence of
a legal duty to use reasonable care, failure to perform that duty, damages
or injury to the claimant, and proximate cause relationship between the
negligent act and the infliction of damages.
| Eligibility Date: The date on which an
individual member of a specified group becomes eligible to apply for
insurance under the (group life or health) insurance plan.
| Eligibility Period: A specified length of
time, frequently 31 days, following the eligibility date during which an
individual member of a particular group will remain eligible to apply for
insurance under a group life or health insurance policy without evidence of
insurability.
| Eligibility Requirements: This term
refers to (1) the conditions which an employee must satisfy to participate
in a retirement plan, one such condition begin the completion from 1 to 3
years of service with the employer, another the attainment of a specified
age, such as 25, or (2) conditions which an employee must satisfy to obtain
a retirement benefit, such as the completion of 15 years of service and the
attainment of age 65.
| Eligible Employees: Those members of a
group who have met the eligibility requirements under a group life or health
insurance plan.
| Elimination Period: A period of time
between the period of disability and the start of disability income
insurance benefits, during which no benefits are payable. (See Waiting
Period.)
| Elimination Period: A specified number of
days at the beginning of each period of disability during which no
disability income benefits are paid. The elimination period may be as short
as a few days or as long as one year or more.
| Embezzlement: Fraudulent use or taking of
another's property or money which has been entrusted to one's care.
| Employee Dishonesty Coverage
Form: Commercial crime insurance form drafted by the Insurance Services
Office that covers the loss of money, securities, and other covered property
because of any dishonest act of a covered employee or employees.
| Employee
Retirement Income Security Act (ERISA): Legislation passed in 1974
applying to most private pension and welfare plans that requires certain
minimum standards to protect participating employees.
| Employers
contingent liability insurance: protects the employer for
injuries sustained by an employee in the course of employment where he is
otherwise not eligible for coverage under a Workers Compensation Act in a
jurisdiction where the injury took place.
| Employment Stock
Ownership Plan (ESOP): A defined contribution pension plan which is
designed to invest primarily in employer securities.
| Endorsements: An additional piece of paper, not
a part of the original contract, which cites certain terms and which, when
attached to the original contract, becomes a legal part of that contract.
| Endorsement: An amendment of the policy usually
by means of a rubber stamp or rider.
| Endowment: Life insurance payable to the
policyholder if living, on the maturity date stated in the policy, or to a
beneficiary if the insured dies prior to that date.
| Enrolled Actuary: A person who performs
actuarial service for a plan and who is enrolled with the Federal Joint
Board for the Enrollment of Actuaries.
| Enrollment Card: A document signed by an
employee as notice of his/her desire to participate in the benefits of a
group insurance plan.
| Entire Contract Clause: Provision in
life insurance policies stating that the life insurance policy and attached
application constitute the entire contract between the parties. Entity
Purchase Agreement: specifies the terms for the business to buy back a
deceased's share of the business's ownership.
| Environmental
Impairment Liability Insurance: A form of insurance designed to cover
losses and liabilities arising from damage to property by pollution.
| Equities: Investments in the form of ownership of
property, usually common stocks, as distinguished from fixed income bearing
securities, such as bonds or mortgages.
| Equity in the Unearned
Premium Reserve: Amount by which an unearned premium reserve is
overstated because it is established on the basis of gross primium rather
than net premium.
| ERISA: See Employee Retirement Income Security
Act.
| Errors and Omissions Insurance:
Liability insurance policy that provides protection against loss incurred by
a client because of some negligent act, error, or omission by the insured.
| Estate: The assets and liabilities of a person left
at death.
| Estate Planning: Developing a plan to
transfer all of your property from one generation to the next or within a
generation .
| Estoppel: Legal doctrine that prevents a person
from denyng the truth of a previous representation of fact, especially when
such representation has been relied on by the one to whom the statement was
made. Employee Stock Ownership Plan:
| Errors and Omissions Insurance:
A form of insurance that indemnifies the insured for any loss sustained
because of an error or oversight on his or her part.
| Evidence of Insurability: Any
statement of proof of a person's physical condition and/or other factual
information affecting his/her acceptance for insurance.
| Excess and Surplus Insurance:
(1) Insurance to cover losses above a certain amount, with losses below that
amount usually covered by a regular policy. (2) Insurance to cover an
unusual or one-time risk, e.g., damage to a musician's hands or the multiple
perils of a convention, for which coverage is unavailable in the normal
market. (See also "Umbrella liability" and "surplus
lines.")
| Exclusions: Specific conditions or circumstances
listed in the policy for which the policy will not provide benefit payments.
| Exclusive Agent: An agent who is employed by
one and only one insurance company and who solicits business exclusively for
that company.
| Exclusive Remedy Doctrine:
Doctrine in workers compensation insurance which states that workers
compensation benefits should be the exclusive or sole source of recovery for
workers who have a job-related accident or disease; doctrine has been eroded
by legal decisions.
| Exclusion or Exception: Specified
conditions or circumstances, listed in the policy, for which the policy will
not provide benefits.
| Exclusion ratio: The portion of an annuity
payment, considered by the tax law to be a return of your initial
investment, that is not subject to income tax when received.
| Exclusive Provider
Organization (EPO): People who belong to an EPO must receive their care
from affiliated providers; services rendered by unaffiliated providers are
not reimbursed.
| Expected claim cost: the
expected value of the loss distribution for a particular group of insurance
contracts
| Expected value: The sum of
losses divided by the number of exposures; the average.
| Expense
Loading: See Loading.
| Expense Ratio: The ratio of a company's
operating expenses to premiums.
| Experience: A term used to describe the
relationship, usually expressed as a percent or ratio, of premium to claims
for a plan, coverage, or benefits for a stated time period.
| Experience Modification Factor:
Used in workers compensation rating to reflect the degree to which a
particular employer has experience that is better or worse that expected for
that industry. Weighted by employer's credibility
factor.
| Experience Rating: The process of
determining the premium rate for a group risk, wholly or partially on the
basis of that group's experience.
| Experience Refund: A provision in most
group policies for the return of premium to the policyholder because of
lower than anticipated claims.
| Exposure Unit: Unit of measurement used in
insurance pricing.
| Extended Coverage Insurance:
Protection for the insured against property damage caused by windstorm,
hail, smoke, explosion, riot, riot attending a strike, civil commotion,
vehicle and aircraft. This is provided in conjunction with the fire
insurance policy and the various "package" policies.
| Extended Nonowned Coverage:
Endorsement that can be added to an automobile liability insurance policy
that covers the insured while driving any nonowned automobile on a regular
basis.
| Extended Reporting Period: An
additional period of time after policy expiration during which valid claims
will be paid under a claims-made policy of liability insurance
| Extended Reporting Period
Endorsement: Added to a claims-made policy of liability insurance to
provide additional period of time during which valid claims will be paid
| Extended Term Insurance: A form of
insurance available as a nonforfeiture option. It provides the original
amount of insurance for a limited period of time.
| Extended Unemployment
Insurance Benefits: Additional cash benefits paid by federal-state
unemployment insurance programs to workers who are involuntarily unemployed
and who have exhausted their regular weekly cash benefits during periods oh
high unemployent.
| Extortion: Surrender of property away from the
premises as a result of a threat to do bodily harm to the named insured,
relative, or invitee who is being held captive.
| Extra Expense Insurance: Type of
business income insurance that covers the extra expenses incurred to
continue operations after a loss has occurred. |
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