Insurance Gobbledygook Made Simple
Plain english explanations of insurance terms used by agents, companies and lawyers and found in your insurance policies.
CCancellationa termination of a policy before its normal expiration date.Capitation to providersa system where an HMO pays a doctor or hospital a flat monthly fee for the care of each health plan member, whether or not any services are delivered.Cash valuethe money that accumulates in your life insurance policy while the policy is in force that the insured can borrow.Certificatethe evidence of coverage received by persons insured under group life policy.Chronic conditionprolonged conditions or illness, such as asthma, diabetes, etc.Churninga fraudulent practice by insurance agents to repeatedly persuade their customers to replace existing policies with new ones. The agent may be tempted to churn because commissions are higher in the first year of the policy (makes more money for himself) or because the agent represents a different insurance company.Claima request for reimbursement for damages on an insured loss. Your claims to your company are “first-party claims.” Claims made by one person against another person’s company are known as “third-party claims.”Closed practicea primary care physician that is not accepting new patients.CLUE reportshort for Comprehensive Loss Underwriting Exchange which keeps insurance claims history.Co-insuranceis the share of the covered charges, usually a percentage, that the insured and plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if the insured has bills amounting to $400 and the plan has a $100 deductible amount, the insured is responsible for paying the first $100 and the insurer will begin paying after that. But because of the coinsurance, the company will pay only a percentage of the covered expenses and the insured must pay the remaining percentage. Between the two of them, they will pay 100%. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the insurer will pay $240 (80% of $300) and the insured will pay $60 (20% of $300).Co-Payare fixed dollar payments that the insured must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, the insured may have to pay $10 for each pharmacy prescription filled.COBRAa Federal law that gives the right to workers to continue group health care coverage for a specified period for themselves if the worker loses coverage because of reduced work hours or loses the job.Collision coverageoptional insurance that pays for physical damage caused when your own car hits another car or object, regardless of who is at fault. Collision coverage may carry a deductible -- a stated amount that you must first pay out of your own pocket.Comparative faulta method of attributing fault to each driver where both contributed to the cause of the accident.Comprehensive physical damage coveragepays for damage to your auto caused by fire, theft, vandalism, flood, falling objects, or hail. This coverage may also carry a deductible.Conditionally renewablean insurance policy that the company will renew with each premium payment, as long as you meet certain conditions.Conditions part of an insurance policy that states your obligations and those of your insurance company.Conversion privilegesgroup plans generally have a conversion privilege that allows an employee to covert to an individual health insurance plan upon termination of employment. Alternatively, coverage under a COBRA plan may be available.Convertible term insuranceA term life policy that gives the policyowner the option of exchanging the term life insurance policy for another plan of insurance without providing evidence of insurability (e.g., a current medical report and exam and underwriting). Typically, term life insurance can not be continued at older ages (often 70 to 75) and thus without a provision authorizing the right of conversion, people who are older and ill or have significant negative risk factors can not continue their insurance unless they can convert to a whole life or other type of policy form.Coordination of benefits (COB)When the insured is covered under more than one plan (for example under a group plan at work, and as a family member on a spouse’s plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.Cost of insurancesee “mortality charge”Cost-of-living rider permits you to purchase increasing term insurance coverage, coinciding with an estimated rise in the cost of living.Covered dependentstraditionally, under group health insurance plans dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.Covered services and suppliesUsually, the insured will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.