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Glossary
Table of Contents
Member of the Better Business Bureau
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 | Salvage: Recovery made by an insurance company by
the sale of property which has been taken over from the insured as a part of
loss settlement.
| Self- Administered (Trusteed
or Directly Invested) Plan: A plan funded through a fiduciary, generally
a bank, but sometimes a group of individuals, which directly invests the
accumulated funds. Retirement payments are made from the fund as they fall
due.
| Self-Administration: The procedure where
an employer maintains all records regarding the employees covered under a
group insurance plan.
| Self-Insured Retention: A form of
risk financing through which a firm assumes all or a part of its own losses.
| Senior Citizen Policies: Contracts
insuring persons 65 years of age or more. In most cases, these policies
supplement the coverage afforded by the government under the Medicare
program.
| Separate Account: A fund held by a life insurance company which is
separate and apart from its general assets and is generally used for
investment of pension assets in common stocks.
| Separate Account: An asset account
established by a life insurance company separate from other funds, used
primarily for pension plans and variable life products. This arrangement
permits wider latitude in the choice of investments, particularly in
equities.
| Service-Type Plans: Plans that provide
their benefits in the form of services rendered rather than cash (for
example, Blue Cross and Blue Shield).
| Settlement Options: The several ways,
other than immediate payment in cash, which a policyholder or beneficiary
may choose to have policy benefits paid.
| Severability
of interest: a potential liabilitybetween different entities
named on a single insurance policy
| Short-Term Disability
Income Insurance: The provision to pay benefits to a covered disabled
person as long as he/she remains disabled up to a specified period not
exceeding two years.
| Sickness Insurance: A form of health
insurance providing benefits for loss resulting from illness or disease.
| Skip person: a beneficiary who is at least two
generations younger than the person making the transfer.
| Social Security Freeze: A long- term
disability policy provision which establishes that the offset from benefits
paid by Social Security will not be changed regardless of subsequent changes
in the Social Security law.
| Social Security Option: An option
under which the employee may elect that monthly payments of an annuity
before a specified age (62 or 65) be increased, and that payments thereafter
be decreased to produce, as nearly as practical, a level total annual
annuity to the employee, including Social Security benefits when they become
due.
| Soft Market: That part of the insurance sales
cycle in which competition is at a maximum as insurance companies use their
excess capacity to sell more policies at lower prices (see "Hard
market").
| Sovereign Immunity
| Special Damages: Compensation awarded for
actual economic losses, such as medical expenses and lost wages. (See
general damages)
| Special Risk Insurance: Coverage for
risks or hazards of a special or unusual nature.
| Split Funding: The use of two or more funding
agencies for the same pension plan. An arrangement whereby a portion of the
contributions to the pension plan are paid to a life insurance company and
the remainder of the contributions invested through a corporate trustee,
primarily in equities.
| Spouse's Benefit: Payments to the surviving
spouse of a deceased employee, usually in the form of a series of payments
upon meeting certain requirements and usually terminating with the
survivor's remarriage or death.
| Standard Insurance: Insurance written on
the basis of regular morbidity underwriting assumption used by an insurance
company and issued at normal rates.
| Standard Markets: insurance companies for which the vast majority of
people qualify
| Standard Provision: Those contract
provisions generally required by state statutes until superseded by the
uniform policy provision.
| Standard Provisions: A set of policy
provisions prescribed by former laws setting forth certain rights and
obligations of both the insured and the company under an individual policy
of health insurance. These were originally introduced in 1912 and have now
been replaced by the Uniform Provisions.
| Standard Risk: A person who, according to a
company's underwriting standards, is entitled to purchase insurance
protection without extra rating or special restrictions.
| State Disability Plan: A plan for
accident and sickness, or disability insurance required by state legislation
of those employers doing business in that particular state.
| State Fund: A fund set up by a state government
to provide a specific line or lines of insurance. Some state permit private
insurers to compete with the state fund.
| State Insurance Department: A
department of a state government whose duty is to regulate the business of
insurance and give the public information on insurance.
| State-of-the-Art Defense: An
argument used in product liability cases that the technology needed to avoid
the loss in a particular case did not exist at the time of the product's
manufacture
| Statutory Accounting: Special
accounting practices for insurance companies required by state law and
designed to provide greater protection for the public against potential
insolvency of these essential institutions.
| Statutory Accounting
Principles (SAP): Principles required by statute which must be followed
by an insurance company when submitting its financial statements to the
various state insurance departments. Such principles differ from the
Generally Accepted Accounting Principles (GAAP).
| Statutory Surplus: the amount left
after a company's liabilities are subtracted from assets when both those
values are computed using Statutory
Accounting Principles (SAP)
| Statutory Underwriting
Profit or Loss: Premiums earned less losses and expenses.
| Step-Rate Premium: A rating structure in
which the premiums increase periodically at pre-determined times such as
policy years or attained ages.
| Step-up in basis:An increase in the tax
basis of property to the value claimed in the taxable estate of a decedent.
| Stock Company: A company organized and owned
by stockholders, as distinguished from the mutual form of company which is
owned by its policyholders.
| Stock Exchange: An organization that provides
a facility for buyers and sellers of listed securities to come together to
make grades in those securities.
| Stockholder (or shareholder): A
person who owns shares of stock in a corporation.
| Stock Insurance Company: A company
in which the legal ownership and control is vested in the stockholders.
| Stock Life Insurance Company: A
life insurance company owned by stockholders who elect a board to direct the
company's management. Stock companies, in general, issue nonparticipating
insurance, but may also issue participating insurance. Stock
Redemption Plan: an entity purchase form of buy-sell agreement within a
corporation that involves the corporation buying back shares from a
departing owner.
| Straight Life Insurance: Whole life
insurance on which premiums are payable for life.
| Strict Liability: Liability for damages
even though fault or negligence cannot be proven.
| Subrogation: Process by which one insurance
company seeks reimbursement from another company or person for a claim it
has already paid.
| Substandard (Impaired Risk): A
risk that cannot meet the normal health requirements of a standard health
insurance policy. Protection is provided in consideration of a waiver, a
special policy form, or a higher premium charge. Substandard risks may
include those persons who engage in certain sports and persons who are rated
because of poor habits or morals.
| Substandard Insurance: Insurance
issued with an extra premium or special restriction to those persons who do
not qualify for insurance at standard rates.
| Substandard Risk: An individual, who,
because of health history or physical limitations, does not measure up to
the qualification of a standard risk.
| Supplementary Contract: An agreement
between a life insurance company and a policyholder or beneficiary by which
the company retains the cash sum payable under an insurance policy and makes
payments in accordance with the settlement option chosen.
| Surety Bond: An agreement providing for monetary
compensation in the event of a failure to perform specified acts within a
stated period. The surety company, for example, becomes responsible for
fulfillment of a contract if the contractor defaults.
| Surgical Expense Insurance: Health
insurance policies, which provide benefits toward the physician's or
surgeon's operating fees. Benefits may consist of scheduled amounts for each
surgical procedure.
| Surgical Schedule: A list of cash allowances attached to the policy, which
are payable for various types of surgery, with a maximum amount based upon
the severity of the operation.
| Surgical Schedule: A list of maximum
amounts payable by the policy for various types of surgery, with the amount
based on the severity of the operation.
| Surplus: The amount by which the value of an
insurer's assets exceeds its liabilities, i.e., the net worth of an
insurance company.
| Surplus Lines: (1) A risk or a part of a risk
for which there is no normal insurance market available. (2) Insurance
written by non-admitted insurance companies. |
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