ABC's of Insurance

A

ACTUAL CASH VALUE – A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation.

ACTUARY – An insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance firms’ reserves, determines rate and rating methods, and determines other business and financial risks.

ADDITIONAL LIVING EXPENSES – Extra charges covered by homeowners policies over and above the policyholder’s customary living expenses. They kick in when the insured requires temporary shelter due to damage by a covered peril that makes the home temporarily uninhabitable.

ADJUSTER– An individual employed by a property/casualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters; who negotiate with insurers on behalf of policyholders, and receive a portion of a claims settlement. Independent adjusters are independent contractors who adjust claims for different insurance companies.

AGENCY COMPANIES- Companies that market and sell products via independent agents.

ALTERNATIVE DISPUTE RESOLUTION / ADR– Alternative to going to court to settle disputes. Methods include arbitration, where disputing parties agree to be bound to the decision of an independent third party, and mediation, where a third party tries to arrange a settlement between the two sides.

ANNUAL STATEMENT -Summary of an insurer’s or reinsurer’s financial operations for a particular year, including a balance sheet. It is filed with the state insurance department of each jurisdiction in which the company is licensed to conduct business.

ANTITRUST LAWS– Laws that prohibit companies from working as a group to set prices, restrict supplies or stop competition in the marketplace. The insurance industry is subject to state antitrust laws but has a limited exemption from federal antitrust laws. This exemption, set out in the McCarran-Ferguson Act, permits insurers to jointly develop common insurance forms and share loss data to help them price policies.

APPRAISAL– A survey to determine a property’s insurable value, or the amount of a loss.

ARBITRATION– Procedure in which an insurance company and the insured or a vendor agree to settle a claim dispute by accepting a binding or non-binding decision made by a third party.

ARSON -The deliberate setting of a fire.

ASSETS – The property owned, in this case by an insurance company, including stocks, bonds, and real estate investments. State laws require a conservative valuation of assets so they do not allow insurance companies to list some assets whose values are uncertain, such as furniture, fixtures, debit balances, and accounts receivable that are more than 90 days past due.

ASSIGNED RISK PLANS – Facilities through which drivers can obtain auto insurance if they are unable to buy it in the regular or voluntary market. These are the most well-known type of residual auto insurance market, which exist in every state. In an assigned risk plan, all insurers selling auto insurance in the state are assigned these drivers to insure, based on the amount of insurance they sell in the regular market

AUTO POLICY – There are basically six different types of coverages. Some may be required by law. Others are optional. They are:

1. Bodily injury liability, for injuries the policyholder causes to someone else.
2. Medical payments or Personal Injury Protection (PIP) for treatment of injuries to the driver and passengers of the policyholder’s car.
3. Property damage liability, for damage the policyholder causes to someone else’s property.
4. Collision, for damage to the policyholder’s car from a collision.
5. Comprehensive, for damage to the policyholder’s car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft.
6. Uninsured motorists coverage, for costs resulting from an accident involving a hit-and-run driver or a driver who does not have insurance.

B

BALANCE SHEET – Provides a snapshot of a company’s financial condition at one point in time. It shows assets, including investments and reinsurance, and liabilities, such as loss reserves to pay claims in the future, as of a certain date. It also states a company’s equity, known as policyholder surplus. Changes in that surplus are one indicator of an insurer’s financial standing.

BINDER – Temporary authorization of coverage issued prior to the actual insurance policy.

BLANKET COVERAGE – Insurance coverage for more than one item of property at a single location, or two or more items of property in different locations.

BODILY INJURY LIABILITY COVERAGE – Portion of an auto insurance policy that covers injuries the policyholder causes to someone else.

BOOK OF BUSINESS -Total amount of insurance on an insurer’s books at a particular point in time.

BROKER -An intermediary between a customer and an insurance company. Brokers typically search the market for coverage appropriate to their clients. They work on commission and usually sell commercial, not personal, insurance.

BURGLARY AND THEFT INSURANCE – Insurance for the loss of property due to burglary, robbery or larceny. It is provided in a standard homeowners policy and in a business multiple peril policy.

C

CAPACITY – The supply of insurance available to meet demand. Capacity depends on the industry’s financial ability to accept risk. Reduced capacity leads to higher premiums, but higher premiums eventually attract more capacity to the market.

CAPITAL MARKETS -The markets in which equities and debt are traded.

CAPTIVE AGENT – A person who represents only one insurance company and is restricted by agreement from submitting business to any other company, unless it is first rejected by the agent’s captive company.

CAPTIVES – Insurers that are created and wholly-owned by one or more non-insurers, to provide owners with coverage. A form of self-insurance.

CATASTROPHE – Term used for statistical recording purposes to refer to a single incident or a series of closely related incidents causing severe insured property losses totaling more than a given amount.

CATASTROPHE DEDUCTIBLE – A percentage or dollar amount that a homeowner must pay before the insurance policy kicks in when a major natural disaster occurs. These large deductibles limit an insurer’s potential losses in such cases, allowing it to insure more property. A property insurer may not be able to buy reinsurance to protect its own bottom line unless it keeps its potential maximum losses under a certain level.

CHARTERED PROPERTY/CASUALTY UNDERWRITER / CPCU – A professional designation given by the American Institute for Property and Liability Underwriters. National examinations and three years of work experience are required.

COLLISION COVERAGE – Portion of an auto insurance policy that covers the damage to the policyholder’s car from a collision.

COMBINED RATIO – Percentage of each premium dollar a property/casualty insurer spends on claims and expenses. When the ratio is over 100, the insurer has an underwriting loss.

COMMERCIAL LINES -Products designed for and bought by businesses. Among the major coverages are boiler and machinery, business interruption, commercial auto, comprehensive general liability, directors and officers liability, fire and allied lines, inland marine, medical malpractice liability, product liability, professional liability, surety and fidelity, and workers compensation. Most of these commercial coverages can be purchased separately except business interruption which must be added to a fire insurance (property) policy. (See Commercial multiple peril)

COMMISSION – Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer, and the marketing methods.

COMPLAINT RATIO – A measure used by some state insurance departments to track consumer complaints against insurance companies. Generally, it is written as the number of complaints upheld against an insurance company, as a percentage of premiums written. In some states, complaints from medical providers over the promptness of payments may also be included.

COMPREHENSIVE COVERAGE – Portion of an auto insurance policy that covers damage to the policyholder’s car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft.

CONTINGENT LIABILITY – Liability of individuals, corporations, or partnerships for accidents caused by people other than employees for whose acts or omissions the corporations or partnerships are responsible.

COVERAGE – Synonym for insurance.

CREDIT SCORE – The number produced by an analysis of an individual’s credit history. Studies have shown that credit history provides an indicator of the likelihood of an auto insurance loss. Some companies use insurance scores as an insurance underwriting and rating tool.

D

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.

DEMUTUALIZATION – The conversion of insurance companies from mutual companies owned by their policyholders into publicly-traded stock companies.

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.

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.

DOMESTIC INSURANCE COMPANY – Term used by a state to refer to any company incorporated there.

E

ECONOMIC LOSS – Total financial loss resulting from the death or disability of a wage earner, or from the destruction of property. Includes the loss of earnings, medical expenses, funeral expenses, the cost of restoring or replacing property, and legal expenses. It does not include noneconomic losses, such as pain caused by an injury.

ELECTRONIC COMMERCE / E-COMMERCE – The sale of products such as insurance over the Internet.

ENDORSEMENT – A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Sometimes called a rider.

ESCROW ACCOUNT – Funds that a lender collects to pay monthly premiums in mortgage and homeowners insurance, and sometimes to pay property taxes.

EXCESS & SURPLUS LINES – Property/casualty coverage that isn’t available from insurers licensed by the state (called admitted insurers) and must be purchased from a non-admitted carrier.

EXCLUSION – A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.

EXCLUSIVE AGENT – A captive agent, or a person who represents only one insurance company and is restricted by agreement from submitting business to any other company unless it is first rejected by the agent’s company.

EXPENSE RATIO – Percentage of each premium dollar that goes to insurers’ expenses including overhead, marketing, and commissions.

EXPERIENCE – Record of losses.

EXPOSURE – Possibility of loss.

EXTENDED COVERAGE – An endorsement added to an insurance policy, or clause within a policy, that provides additional coverage for risks other than those in a basic policy.

F

FAIR ACCESS TO INSURANCE REQUIREMENTS PLANS / FAIR PLANS – Insurance pools that sell property insurance to people who can’t buy it in the voluntary market because of high risk over which they may have no control. FAIR Plans, which exist in 28 states and the District of Columbia, insure fire, vandalism, riot, and windstorm losses, and some sell homeowners insurance which includes liability. Plans vary by state, but all require property insurers licensed in a state to participate in the pool and share in the profits and losses.

FEDERAL INSURANCE ADMINISTRATION / FIA – Federal agency in charge of administering the National Flood Insurance Program. It does not regulate the insurance industry.

FEDERAL RESERVE BOARD – Seven-member board that supervises the banking system by issuing regulations controlling bank holding companies and federal laws over the banking industry. It also controls and oversees the U.S. monetary system and credit supply.

FILE-AND— USE STATES – States where insurers must file rate changes with their regulators, but don’t have to wait for approval to put them into effect.

FINANCIAL RESPONSIBILITY LAW – A state law requiring that all automobile drivers show proof that they can pay damages up to a minimum amount if involved in an auto accident. Varies from state to state but can be met by carrying a minimum amount of auto liability insurance.

FIRE INSURANCE – Coverage protecting property against losses caused by a fire or lightning that is usually included in homeowners or commercial multiple peril policies.

FIRST-PARTY COVERAGE – Coverage for the policyholder’s own property or person. In no-fault auto insurance it pays for the cost of injuries. In no-fault states with the broadest coverage, the personal injury protection (PIP) part of the policy pays for medical care, lost income, funeral expenses and, where the injured person is not able to provide services such as child care, for substitute services.

FLOOD INSURANCE – Coverage for flood damage is available from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents. Flood coverage is excluded under homeowners policies and many commercial property policies. However, flood damage is covered under the comprehensive portion of an auto insurance policy.

FOREIGN INSURANCE COMPANY – Name given to an insurance company based in one state by the other states in which it does business.

FRAUD – Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance company managers, employees, agents, and brokers for financial gain.

FREQUENCY – Number of times a loss occurs. One of the criteria used in calculating premium rates.

G

GENERIC AUTO PARTS – Auto crash parts produced by firms that are not associated with car manufacturers. Insurers consider these parts, when certified, at least as good as those that come from the original equipment manufacturer (OEM). They are often cheaper than the identical part produced by the OEM.

GLASS INSURANCE – Coverage for glass breakage caused by all risks; fire and war are sometimes excluded. Insurance can be bought for windows, structural glass, leaded glass, and mirrors. Available with or without a deductible.

GRADUATED DRIVER LICENSES – Licenses for younger drivers that allow them to improve their skills. Regulations vary by state, but often restrict night time driving. Young drivers receive a learner’s permit, followed by a provisional license, before they can receive a standard drivers license.

H

HACKER INSURANCE – A coverage that protects businesses engaged in electronic commerce from losses caused by hackers.

HO– USE YEAR – Equal to 365 days of insured coverage for a single dwelling. It is the standard measurement for homeowners insurance.

I

INDEMNIFY – Provide financial compensation for losses.

INDEPENDENT AGENT – Agent who is self-employed, is paid on commission, and represents several insurance companies.

INFLATION GUARD CLA– USE – A provision added to a homeowners insurance policy that automatically adjusts the coverage limit on the dwelling each time the policy is renewed to reflect current construction costs.

INLAND MARINE INSURANCE – A broad type of coverage developed for shipments that do not involve ocean transport. Covers all forms of land and air transit. Floaters are included in this category.

INSOLVENCY – Insurer’s inability to pay debts. Insurance insolvency standards and the regulatory actions taken vary from state to state, but the last resort in the case of insolvency is liquidation.

INSURABLE RISK – Risks for which it is relatively easy to get insurance and that meet certain criteria. These include being definable, accidental in nature, and part of a group of similar risks large enough to make losses predictable. The insurance company also must be able to come up with a reasonable price for the insurance.

INSURANCE – A system to make large financial losses more affordable by transferring the risk from individuals to large groups, or pools, in return for a premium.

INSURANCE POOL – A group of insurance companies that pool assets, enabling them to provide an amount of insurance substantially more than can be provided by individual companies to ensure large risks such as nuclear power stations. Pools may be formed voluntarily or mandated by the state to cover risks that can’t obtain coverage in the voluntary market such as coastal properties subject to hurricanes.

INSURANCE REGULATORY INFORMATION SYSTEM / IRIS – Uses financial ratios to measure insurers’ financial strength. Developed by the National Association of Insurance Commissioners. Each individual state insurance department chooses how to use IRIS.

INSURANCE-TO-VALUE – Insurance written in an amount approximating the value of the insured property.

INTERNET INSURER – An insurer that sells exclusively via the Internet.

INTERNET LIABILITY INSURANCE – Coverage designed to protect businesses from liabilities that arise from the conducting of business over the Internet, including copyright infringement, defamation, and violation of privacy.

J

JOINT UNDERWRITING ASSOCIATION / JUA – Insurers which join together to provide coverage for a particular type of risk or size of exposure, when there are difficulties in obtaining coverage in the regular market, and which share in the profits and losses associated with the program. JUAs may be set up to provide auto and homeowners insurance and various commercial coverages, such as medical malpractice.

L

LAW OF LARGE NUMBERS – The theory of probability on which the business of insurance is based. Simply put, this mathematical premise says that the larger the group of units insured, such as sport-utility vehicles, the more accurate the predictions of loss will be.

LIABILITY INSURANCE – Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.

LIMITS – Maximum amount of insurance that can be paid for a covered loss.

LINE – Type or kind of insurance, such as personal lines.

LLOYD’S OF LONDON – A marketplace where underwriting syndicates, or mini-insurers, gather to sell insurance policies and reinsurance. Originally, Lloyd’s was a London coffee house in the 1600s patronized by shipowners who insured each other’s hulls and cargoes.

LLOYDS – Corporation formed to market services of a group of underwriters. Does not issue insurance policies or provide insurance protection. Insurance is written by individual underwriters, with each assuming a part of every risk. Has no connection to Lloyd’s of London, and is found primarily in Texas.

LOSS – A reduction in the quality or value of a property, or a legal liability.

LOSS RATIO – Percentage of each premium dollar an insurer spends on claims.

LOSS RESERVES – The company’s best estimate of what it will pay for claims, which is periodically readjusted. They represent a liability on the insurer’s balance sheet.

M

MANUAL – A book published by an insurance or bonding company or a rating association or bureau that gives rates, classifications, and underwriting rules.

MCCARRAN-FERGUSON – Federal law signed in 1945 in which Congress declared that states would continue to regulate the insurance business. Grants insurers a limited exemption from federal antitrust legislation.

MEDICAL PAYMENTS INSURANCE – A coverage in which the insurer agrees to reimburse the insured and others up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident. Payments are without regard to fault.

MEDICAL UTILIZATION REVIEW – The practice used by insurance companies to review claims for medical treatment.

MULTIPLE PERIL POLICY – A package policy, such as a homeowners or auto insurance policy, that provides coverage against several different perils. It also refers to the combination of property and liability coverage in one policy. In the early days of insurance, coverages for property damage and liability were purchased separately.

MUTUAL INSURANCE COMPANY – A company owned by its policyholders that returns part of its profits to the policyholders as dividends. The insurer uses the rest as a surplus cushion in case of large and unexpected losses.

N

NAMED PERIL – Peril specifically mentioned as covered in an insurance policy.

NATIONAL FLOOD INSURANCE PROGRAM – Federal government-sponsored program under which flood insurance is sold to homeowners and businesses.

NO-FAULT MEDICAL – A type of accident coverage in homeowners policies.

NOTICE OF LOSS – A written notice required by insurance companies immediately after an accident or other loss. Part of the standard provisions defining a policyholder’s responsibilities after a loss.

O

ORDINANCE OF LAW COVERAGE – Endorsement to a property policy, including homeowners, that pays for the extra expense of rebuilding to comply with ordinances or laws that did not exist when the building was originally built.

ORDINARY LIFE INSURANCE – A life insurance policy that remains in force for the policyholder’s lifetime. It contrasts with term insurance, which only lasts for a specified number of years but is renewable.

P

PACKAGE POLICY – A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril insurance.

PERIL – A specific risk covered by an insurance policy, such as a fire, windstorm, flood, or theft.

PERSONAL ARTICLES FLOATER – A policy or an addition to a policy used to cover personal valuables, like jewelry or furs.

PERSONAL INJURY PROTECTION COVERAGE / PIP – Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder’s car.

PERSONAL LINES – Property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies.

POLICY – A written contract for insurance between an insurance company and policyholder stating details of coverage.

PREMISES – The particular location of the property or a portion of it as designated in an insurance policy.

PREMIUM – The price of an insurance policy, typically charged annually or semiannually.

PROPERTY / CASUALTY INSURANCE – Covers damage to or loss of a policyholder’s property and a policyholder’s legal liability for damages caused to other people or their property.

R

RATE – The cost of a unit of insurance, usually per $1,000. Rates are based on historical loss experience for similar risks and may be regulated by state insurance offices.

RATING AGENCIES – Six major credit agencies determine insurers’ financial strength and viability to meet claims obligations. They are A.M. Best Co.; Duff & Phelps Inc.; Fitch, Inc.; Moody’s Investors Services; Standard & Poor’s Corp.; and Weiss Ratings, Inc. Factors considered include company earnings, capital adequacy, operating leverage, liquidity, investment performance, reinsurance programs, and management ability, integrity and experience. A high financial rating is not the same as a high consumer satisfaction rating.

REINSURANCE – Insurance bought by insurers. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer’s capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid.

REPLACEMENT COST – Insurance that pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.

RESERVES – A company’s best estimate of what it will pay for claims.

RESIDUAL MARKET – Facilities that exist to provide coverage for those who cannot get it in the regular market. Insurers generally must participate in these pools. For this reason it is also known as the shared market.

RETENTION – The amount of risk retained by an insurance company that is not reinsured.

RIDER – An attachment to an insurance policy that alters the policy’s coverage or terms.

RISK – The chance of loss or the person or entity that is insured.

RISK MANAGEMENT – Management of the varied risks to which a business firm or association might be subject. It includes analyzing all exposures to gauge the likelihood of loss and choosing options to minimize loss. These options typically include reducing and eliminating the risk with safety measures, buying insurance, and self-insurance.

S

SALVAGE – Damaged property an insurer takes over after paying a claim to reduce its loss. Insurers receive salvage rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims on cargoes lost at sea now have the right to recover sunken treasures. Salvage charges are the costs associated with recovering that property.

SCHEDULE – A list of individual items or groups of items that are covered under one policy.

SECURITIES AND EXCHANGE COMMISSION / SEC – The organization that oversees publicly-held insurance companies. Those companies make periodic financial disclosures to the SEC, including an annual financial statement (or 10K), and a quarterly financial statement (or 10-Q). Companies must also disclose any material events and other information about their stock.

SEVERITY – Size of a loss. One of the criteria used in calculating premiums rates.

SOLVENCY – Insurance companies’ ability to pay the claims of policyholders. Regulations to promote solvency include minimum capital and surplus requirements, statutory accounting conventions, limits to insurance company investment and corporate activities, financial ratio tests, and financial data disclosure.

STOCK INSURANCE COMPANY – An insurance company owned by its stockholders who share in profits through earnings distributions and increases in stock value.

STRUCTURED SETTLEMENT – Legal agreement to pay a designated person, usually someone who has been injured, a specified sum of money in periodic payments, usually for his or her lifetime, instead of in a single lump sum payment.

SUBROGATION – The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

T

TERM INSURANCE – Protection against premature death that comes in a form of life insurance. It pays a benefit only when an insured dies within a specified period, and a designated beneficiary receives the death benefit. If the insured lives beyond the specified period, the beneficiary receives nothing.

THIRD-PARTY ADMINISTRATOR – Outside group that performs clerical functions for an insurance company.

THIRD-PARTY COVERAGE – Liability coverage purchased by the policyholder as a protection against possible lawsuits filed by a third party. The insured and the insurer are the first and second parties to the insurance contract.

TITLE INSURANCE – Insurance that indemnifies the owner of real estate in the event that his or her clear ownership of property is challenged by the discovery of faults in the title.

TORT – A wrongful act, resulting in injury or damage on which a civil action may be based.

TORT LAW – The body of law governing negligence, intentional interference, and other wrongful acts for which civil action can be brought, except for breach of contract, which is covered by contract law.

TORT REFORM – Refers to legislation designed to reduce liability costs through limits on various kinds of damages and through modification of liability rules.

TOTAL LOSS – The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

U

UMBRELLA POLICY – Coverage for losses above the limit of an underlying policy. It applies to losses over a large dollar amount, but terms of coverage are sometimes broader than those of underlying policies.

UNDERWRITING – Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

UNDERWRITING INCOME – The insurer’s profit on the insurance sale after all expenses and losses have been paid. When premiums aren’t sufficient to cover claims and expenses, the result is an underwriting loss. Underwriting losses are typically offset by investment income.

UNINSURED MOTORISTS COVERAGE – Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.

UNIVERSAL LIFE INSURANCE – A flexible premium policy that combines protection against premature death with a savings account that typically earns a money market rate of interest. Premiums can be changed during the life of the policy within limits and the policy will lapse if there isn’t enough money to cover mortality and administrative costs.

V

VANDALISM – The malicious and often random destruction or spoilage of another person’s property.

VARIABLE LIFE INSURANCE – A policy that combines protection against premature death with a savings account that can be invested in stocks, bonds, and money market mutual funds at the policyholder’s discretion.

VOID – A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.

W

WAIVER – The surrender of a right or privilege which is known to exist.

WHOLE LIFE INSURANCE – The oldest kind of cash value life insurance that combines protection against premature death with a savings account. Premiums are fixed and guaranteed and remain level throughout the policy’s lifetime.

WORKERS COMPENSATION – Insurance that pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work.

WRITE – To insure, underwrite, or accept an application for insurance.