Canadian Life and Health Insurance Facts, 2014 Edition

Issue link:

Contents of this Issue


Page 31 of 39

30 A Accident and sickness insurance. A type of insurance that makes a payment if you have an illness, are injured or die from an accident. It includes disability income insurance and accidental death and dismemberment insurance. Accidental death insurance. A type of insurance that makes a payment if you die from an accident. You can buy accidental death insurance on its own or add it to a life insurance policy. If you add it to a life insurance policy and die from an accident, your insurance company pays both the life insurance amount and the accidental death insurance amount. When the amount of the accidental death insurance is equal to the amount of the life insurance, the amount payable is double the original amount of the life insurance policy, and is known as "double indemnity". Accidental death and dismemberment insurance. A type of insurance that makes a payment if you die from an accident or lose full or partial use of a limb, hearing or eyesight. You can buy this type of insurance on its own or add it to a life insurance policy. Actuary. A person professionally trained in calculating the risks and costs of insurance. Adjustable policy. A type of insurance policy that allows the insurance company to make changes to the policy under certain conditions. Changes can include the amount of insurance, the premiums charged and the cash value. Details of how the insurance company can make changes are listed in the policy. Administrative Services Only (ASO) Plan. A type of group plan where the benefits are not insured. The plan sponsor (usually an employer) hires an outside firm (often a life and health insurance company) to administer their plan. The plan sponsor is responsible for providing the funds to pay claims. Advisor. A person who is licensed by a provincial or territorial regulator to sell life insurance, accident and sickness insurance, group insurance and segregated funds. Also called an agent or a broker. Agent. See "Advisor". Annuitant. Typically, the person who receives payments from an annuity. It can also refer to the policyholder and to the person on whose life the payments are based. Annuity. A contract that pays you income at regular intervals, typically monthly, in exchange for an upfront payment. The income can start right away, or at some set date in the future. Annuities are often used to provide retirement income. The different types of annuities include: • a life annuity, which makes payments for as long as you live. A joint life annuity could make payments for as long as either you or your spouse lives. • an annuity certain, which makes payments for a specified number of years or to a specified age, regardless of whether you are alive throughout that period, • some combination of both. Application. An application is a formal request for insurance coverage. It provides information about you and the type and amount of insurance you want. The information you give the insurance company helps them decide if you meet their requirements and qualify for the insurance. In some cases, you have to answer a series of health questions. You may also have to undergo basic medical tests as part of your application. Automatic premium loan. A feature in a permanent life insurance policy that allows the insurance company to pay for overdue premiums by taking a loan against the policy (as long as it has a cash value). Paying for overdue premiums in this way prevents your policy from being cancelled (or lapsing). (See "Non-forfeiture options".) B Beneficiary. The person you name to receive the payment from your insurance policy. In the case of life insurance, if you don't name a beneficiary, the payment goes to your estate. Benefit. The payment an insurance company makes when they approve an insurance claim. Broker. See "Advisor". C Cash value. The cash amount that builds up in a permanent life insurance policy. You can take a loan against the cash value of your policy. If you cancel your policy, you get the cash value. Whole life, variable life and universal life are types of life insurance that have cash value. (See "Cash surrender value".) Cash surrender value. The amount your insurance company pays you when you cancel a permanent life insurance policy that has built up a cash value. The insurance company deducts any policy loans or overdue premiums from the cash surrender value before paying you. (See "Cash value".) Certificate of insurance. A document that sets out the key features of the insurance under a group insurance plan. It lists things like the type and amount of coverage, categories of dependents, deductibles and coinsurance, limits and exclusions, and instructions for making a claim. Or, a contract given to those who have insurance through a "fraternal society". Claim. A formal request to an insurance company for payment of a benefit. Claimant. The person who makes a claim. Coinsurance. An arrangement in a health or dental insurance plan where you and the insurance company share the cost of the items covered. You usually pay a set percentage (e.g., 20% paid by you and 80% paid by the plan). Contestability. Contestability is the legal right of the insurance company to question (or 'contest') your insurance coverage. If the company finds that you gave incomplete or incorrect information when applying for the insurance, they will look at what impact the missing information would have had on their decision to insure you. If their decision would have been different, they may cancel your coverage and deny any claims. Most policies have a two-year contestability period. After that, the company cannot contest your coverage except in the case of fraud (a deliberate misstatement of fact). An example of fraud is a smoker who states in their application that they're a non-smoker, to get a reduced premium. Contingent beneficiary. If you choose to name more than one person to receive a benefit, you can name some to be primary and others to be secondary (also called contingent). Primary beneficiaries are first in line to receive benefits. Secondary beneficiaries only receive a benefit if no primary beneficiaries are alive when the benefit is paid. Conversion right. A right that a policyholder has to exchange their policy for another one, without giving proof of good health. A common example is term insurance that can be exchanged for a permanent insurance policy. Another example is a group Glossary of Insurance Terms

Articles in this issue

view archives of CLHIA-ACCAP - Canadian Life and Health Insurance Facts, 2014 Edition