Glossary of Insurance Related Terms

Death benefit

The amount of money paid or due to be paid when a person insured under a life insurance policy dies. This amount does not include adjustments for outstanding policy loans, dividends, paid-up additions, or late premium payments.

Death claim

A request for payment under the terms of a life insurance policy.

Death Rate

The number of deaths in a group of people, usually expressed as deaths per thousand. It can be the rate for the total population, called the crude mortality rate, or it can be refined by factors such as age groupings or causes of deaths. (LI)

Debit

(1) The amount of premium charged or debited to an agent to be collected. (2) The book of business represented by such premiums. (3) The territory where most of the insureds are located. (4) The total number of individual or home service insureds assigned to a given agent for collection of weekly or monthly premiums and for servicing, commonly referred to as "people in my debit." (LI)

Debit Agent

An agent who works on the debit system. (LI)

Debit Life Insurance

One of the major classes of insurance. It is generally sold in amounts of less than $1,000 by agents who service insureds on debits. The premiums are collected weekly or monthly at the address of the insured. (LI)

Debit System

The system of collecting insurance premiums weekly or monthly by an agent. (LI)

Decreasing Term

A form of Life Insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term. (LI)

Decreasing term insurance

A type of term life insurance in which the amount of coverage decreases during the term of coverage.

Deductible

A flat amount of covered medical expenses that an insured must incur before the insurer will make any benefit payments under a medical expense policy.

Deferred Annuity

Annuity payments that will begin at some future date.

Deferred Compensation

Arrangements by which compensation to employees for past or current services is postponed until some future date.

Deferred Premium

The unpaid and yet undue premiums on Life Insurance, paid on other than an annual premium basis. (LI)

Deferred premiums

Premiums that are due after an insurer’s Annual Statement date but before the next policy anniversary.

Deferred Vesting

That form of vesting under which rights to vested benefits are acquired by a participant commencing upon a fulfillment of specified requirements, usually, reaching a certain age or number of years of service or membership. The attainment of a benefit right by a participant, attributable to employer contributions, that is not contingent upon a participant's continuation in specified employment.

Deficiency Reserve

A supplemental reserve that Life insurers are required to show in their balance sheet if the gross premium charged on a class of insureds is less than the net level premium reserve or modified reserve. (LI)

Delay Clause

A contract provision permitting the insurer to defer granting a loan on the sole security of the policy for any other purpose than that of paying premiums on the policy for a stated interval of time, usually six months. (LI)

Delayed Payment Clause

In Life Insurance, a clause deferring payment to the beneficiary for a specified period after the death of the insured with proceeds to be paid to contingent beneficiaries or the estate if the primary beneficiary does not survive the delay. It is used as one method of handling common-disaster situations, such as the death of the insured and the death of the primary beneficiary occurring in the same accident. The clause usually states that the beneficiary has to survive the death of the insured by a certain period of time in order to collect. (LI)

Delivered Business

Contracts issued by an insurer and delivered to an insured but not yet paid for. Coverage written on an applicant who has been examined and who has signed the application but has paid no premium. (LI,H). Insurance for which the application has been signed, the medical examination completed, and the settlement for the premium tendered. (LI,H). Insurance on which an application has been taken out but which is not yet delivered and/or the first premium settled. (LI).

Delivery

The actual placing of a Life Insurance policy in the hands of an insured. (LI)

Demutualization

The process of converting a mutual insurance company to a stock insurance company.

Dependent Coverage

Insurance coverage on the head of a family which is extended to his or her dependents, including only the lawful spouse and unmarried children who are not yet employed on a full-time basis. "Children" may be step, foster, and adopted, as well as natural. Certain age restrictions on children usually apply. (LI,H)

Dependent life insurance

Group life insurance made available to group members, usually on an optional and contributory basis, to cover the spouse, children, or other dependents of the group member. It is usually sold in small amounts which are intended to pay funeral expenses.

Deposit Administration (DA)

A group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased for each covered person in the group when he retires. (LI)

Deposit term insurance

A type of level term insurance that requires a substantially larger premium payment in the first year than the amount of level annual premiums payable in subsequent years.

Direct Beneficiary

The named beneficiary, to whom death proceeds will be paid directly upon the insured's death.

Direct insurer

In a reinsurance transaction, the insurer that purchases reinsurance to cover all or part of those risks that it does not wish to retain in full. Also called the direct insurer, direct writer, or direct-writing company.

Disability

Inability to work due to an injury or sickness.

Disability benefits

Benefits that are payable periodically while an insured continues to be disabled. “Being disabled” is generally defined in terms of inability to work.

Disability buy-out insurance

Insurance that provides cash funds to a business or professional partnership so that the business interests of a totally disabled partner or stockholder may be purchased if the disability is long-term or permanent.

Disability income benefit

A supplementary life insurance policy benefit that provides a monthly income benefit to a policyowner-insured who becomes totally disabled.

Disability income insurance

A type of health insurance designed to compensate insured people for a portion of the income they lose because of a disabling injury or illness. Generally, benefits for disability income insurance are provided for the disabled person in the form of monthly payments. Sometimes called loss of time insurance.

Disability Insurance (DI)

A form of insurance coverage that provides a portion of income lost as the result of a total or partial disability caused by either an accident or an illness.

Disability Overhead Expense (DOE)

A reimbursement plan designed to cover business expenses during the total or partial disability of a professional or business person.

Disability Pension

A pension paid to a disabled worker prior to the time of normal retirement. (LI)

Dividend

(1) A refund of excess premium paid to the owner of an individual participating life insurance policy. Such a dividend is paid out of an insurer’s divisible surplus. Also called a policy dividend or a policyowner dividend. (2) The portion of a group insurance premium that is returned to a group policyholder whose claims experience is better than had been expected when the premium was calculated. Also called experience rating refund, experience refund, and retroactive rate reduction. (3) A periodic payment paid by a business to a stockholder. A dividend paid in cash is called a cash dividend. A dividend paid in the form of additional shares of stock is called a stock dividend.

Dividend accumulations

Amounts that result when a policyowner decides to leave policy dividends on deposit with an insurer.

Dividend Additions

An option whereby the insured can leave dividends with the insurer, and each dividend is used to buy a single premium life insurance policy for whatever amount it will purchase. Also called Paid-Up Additions. (LI)

Dividend options

Several alternatives that participating policyowners can choose from to indicate the manner in which they want to receive their share of the insurance company’s divisible surplus.

Domestic Insurer

An insurance company is a domestic company in the state in which it is incorporated.

Double Indemnity

A policy provision usually associated with death, which doubles payment of a designated benefit when certain kinds of accidents occur.

Double Protection

A form of Life Insurance combining Whole Life and an equivalent amount of Term, with the Term expiring at a stated future date, usually at 65 years of age. For example, an individual may purchase $50,000 worth of Life Insurance protection, $25,000 of it being Term Insurance and the other $25,000 Whole Life. The provision would state that the $25,000 of Term Insurance ceases when the insured reaches age 65. (LI)