Life And Health Insurance Glossary (C)

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Concealable

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A contract of insurance that may be terminated by the insurance company or insured at any time. Virtually every form of insurance is cancelable (unless state law prohibit such action) except life insurance and those health policies designed as guaranteed renewable or non-cancelable and guaranteed renewable.

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Cancellation

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Termination of a contract of Insurance mid-term (rather than at the renewal date) by voluntary act of the insurance company or insured, effected in accordance with the provisions in the contract or by mutual agreement.

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Capital sum

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The maximum amount payable in one sum in event of accidental dismemberment. On an AD&D policy, the principal sum is the amount payable for accidental death. A capital sum is generally 50% of the principal sum.

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Cash dividend option

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A dividend option under which the policyholder receives the dividends in cash. Not subject to tax. Mutual insurerd issue "participating" policies, which might pay dividends, but they are not guaranteed.

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Cash surrender value

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The accumulated, guaranteed cash value in a whole life or endowments policy at any given point in time. Most contract you not develop a cash value until after the third year. On whole life, the cash value equal the face amount of the polls Hexage 100. Synonymous with cash value.

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Certificate

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A statement evidencing that a policy has been written and stating the coverage in general. On group insurance, the employer receives the master policy and the employees relieve certificates of insurance.

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Claim

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A demand for payment under the insurance policy.

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Classification

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The grouping of persons for the purpose of determining an underwriting or rating group into which a particular risk must be placed. For example, on whole life, the "standard" rate for the average person at age 30 might be $10 per $1000 of face amount. If the insured is "sub-standard," the rate will be higher. A preferred to risk receives a discount from the standard rate.

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Coinsurance

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In health insurance, a provision that the insured and insurance company will share covered losses in agreed proportion. In health insurance, coinsurance is often a percentage participation, with the insurer paying 80% and the client paying 20%, up to the maximum "stop loss" amount. Consurance applies after the deductible has been satisfied. The purpose of coinsurance is to keep the insured from over utilizing the coverage, since he/she has to pay part ic every claim. HMOs utilize "co-payment" for office visits, rather than coinsurance.

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Collateral assignment

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Assignment of part of the proceeds of an insurance policy to a bank as collateral to settle the loan balance that may exist at the insured's death.

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Common disaster provision

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The provision in a life contract that provides that the primary beneficiary list outlive the insured by a specified period of time in order to receive the proceeds. If not, then the contingent beneficiary receives the proceeds. The provision is designed to protect the rights of the contingent beneficiary in the event of simultaneous (or nearly simultaneous) death the insured and primary beneficiary. The time limit is usually 10, 15, or 30 days, depending on state law. Also known as the uniform simultaneous death law.

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Comprehensive health insurance

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A form of health insurance that combines the coverage of major medical and basic medical expense contract into one broad contract that provides coverage for almost all types of medical expenses, usually subject to a corridor deductible and to a percentage participation clause (sometimes called coinsurance) applicable to all or some of the covered expenses.

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Concealment

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The deliberate withholding a facts by an applicant for insurance that materially affects an insurance risk or loss.

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Conditional receipt

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In life and health insurance, a conditional receipt provides that if premium accompanies the application, coverage shall be in force from the date of application ( whether the policy has yet been issued or not) provided the insurance company would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information. Remember, there is never any coverage unless the premium has been paid!

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Conditionally renewable

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A contract of health insurance that provides that the insured may renew the contract to a stated date or age, subject to the right of the insurer to decline renewal only under conditions defined in the contract.

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Conditions

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The part of an insurance contract setting out the responsibilities of both the insured and the insurer, such as the requirements regarding Notice of Claim and proof of loss.

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Consideration

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The exchange of value on which a contract is based. In life and health insurance, the consideration is the premium in the statements in the application. Remember, consideration need not be equal. You might pay $1000 in premium, but your policy will pay $100,000 if you die.

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Consideration clause

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A clause in a life policy specifying the premium due for the insurance protection and the frequency of payment (also called mode). The more frequent the mode of payment, the higher the cost, since most ensure charge service fees for budget payments. The cheapest mode is annual.

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Contingent beneficiary

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Person or persons named to receive benefits if the primary beneficiary is not alive when Insured dies. For example, the primary beneficiary might be your spouse and the contingent beneficiary might be your children.

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Contract

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A legal agreement between two parties for consideration, such as Insurance policy. To hold up in court, contracts must contain for required elements: consideration, offer, acceptance and legal purposes (remember the acronym COAL). Parties to the contract must also have legal capacity.

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Contributory group

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Group insurance for which the employees pay part of the premium. If the group is contributory, at least 75% of those eligible must enroll in order to prevent "adverse selection." In non-contributory groups, 100% must enroll.

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Controlled business

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Life-insurance coverage written on the producers own life in the life of such persons as the producer's relatives and business associates. The amount of control business a producer may write is restricted in most states, often to a maximum of 50% in a 12 month period.

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Convertible term insurance

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A term life policy that may be converted anytime to a permanent type of coverage without proof then Insurability. Conversion premiums are based on current age and coverage cannot be increased. Most term is convertible, but not all. Most group insurance (which is usually annual renewable term) is convertible by law during its 31 day grace period.

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Corridor deductible

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A major medical deduction that applies between benefits paid by the basic plan and the start of the major medical benefits.

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Credit insurance

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Insurance on a debtor in favor of a lender, intended to pay off a loan or the balance due thereon if the insured dies or is disabled. Credit life is a type of decreasing term insurance in the face amount of the policy is limited to the amount of the loan. Generally not used as mortgage protection insurance.