Accident
Something that occurs without warning or intention.
Accident Bodily Injury
An injury to the body that happens in an accident.
Accident Disability
Pertains to a total or partial disability caused from an accidental injury.
Accidental Death & Dismemberment (AD&D) Benefit
This optional benefits gives a fixed lump sum in the event of an accidental death, or for a certain specified actual loss. It can also pertain to the loss of use of a limb or vision.
Accumulation Period
The window of time where the waiting period would need to be filled if they are not in consecutive days. The longer an elimination period, the longer this period will be.
Actively-at-Work Provision
An eligibility provision for group benefit coverage whereby an employee is not eligible for coverage if absent from work because of sickness or injury on the otherwise effective date of his or her coverage.
Activities of Daily Living (ADLs)
When you are unable to perform ADLs such as eating, bathing, and dressing, it can trigger long-term care.
Actual Age
Your age on the day the of the application completion.
Adverse Selection
A common tendency among those who most likely will have claims to also be the same to seek insurance.
Age Nearest Birthday
Your age as you approach your nearest birthday.
Agent
The representative from the insurance company licensed by the state who provides services to you as the policyholder.
Aggregate Indemnity
Under an insurance policy, it is the maximum amount that may be collected for a disability of period of disability.
AIB (Automatic Increase Benefit)
This optional benefit allows a policyholder to increase their disability coverage and do so without evidence of insurability.
Americans with Disabilities Act (ADA)
This federal law was enacted to make it possible for disabled persons to participate in everyday life. It makes it unlawful to discriminate on the basis of disability against a qualified individual with respect to any terms, conditions, or privileges of employment.
Annual Renewable Term (ART) Policy
A renewable annual policy where the premium may increase on the same basis, sometimes called Annual Renewable Disability Insurance (ARDI).
Association Group
It is a group created from members of a professional or trade association for insurance in one insurance contract.
Association Group Disability Coverage
This is a blending of group and individual coverage. The AMA has created plans like these to add value. They typically guarantee renewable plans with membership fees to keep up association coverage. These premiums are age based and can increase on an unscheduled basis.
Attending Physician Statement (APS)
This report is written by the doctor of the insured that documents the past and present health history to be used by the insurance company to review the application for insurance or determine benefit eligibility if a claim is made.
Automatic Increase Benefit
With this policy provision, it increases the policy benefit on an annual basis without evidence of medical or financial insurability. It helps benefit levels maintain with the increasing costs of living.
Beneficiary
The person or entity whose name is recorded to receive benefits or proceeds from an insurance policy. Primary beneficiaries like a spouse are first entitled to proceeds; secondary beneficiaries like children are entitled if the primary is no longer alive when the insured dies; and tertiary beneficiaries like a grandchild will receive proceeds if both the primary and secondary beneficiaries are no longer alive at the time the insured dies.
Benefit Period
This is the time for a disability benefit to be paid if disabled, usually to age 65. Some plans still issue benefits for lifetime, paying as long as you are alive and disabled.
Benefit Percentage
This is the percentage of the amount payable to the insured, based on a percentage of the insured’s income before the disability. The proceeds will be limited to a maximum overall amount.
Benefit Schedule
This is the listing of the insured’s choice of benefit period, monthly benefit amount, elimination period, and maximum benefit payable in the disability policy, which will include any optional benefits you may add.
Binding Receipt
It is a receipt given for the premium payment made with an application you put in for insurance. Should the policy be approved, the payment binds the insurance company to make it effective from date of receipt.
Broker
This is a person licensed by the state who works with several insurance companies and represents the consumer instead of the insurance company.
Business Buyout
This policy is designed to give funds to effect of buyout for a disabled owner’s share of business, dictated by provisions in a specified buyout agreement.
Business Overhead Expense Insurance (BOE)
It pays the overhead of a medical practice if disabled so the physician doesn’t need to use disability or personal savings to pay bills. These plans tend to have shorter periods of benefits such as 12 to 24 months. It is tax-deductible as a business expense.
Buy-Sell Policy
With this policy, it pays either a lump sum or installments to the insured’s corporation or business partner in order to buy out the business interest for the disabled owner.
Cancelable Policy
This is an individual disability policy where the insurer holds the right to increase the premium or cancel that policy with usually one renewal at a time.
Capital Sum
This lump sum amount is paid in addition to monthly disability benefit for presumptive loss.
Carry-Over Account
This will be used in policies for business overhead expense. It accumulates unused benefits so they carry over and the insurer can use them later.
Cash or Accrual Method
For collecting benefits for partial disability under residual provision, the insured needs to show proof of loss of income at 15 to 20%. The insured can then choose to either get cash or accrual, however the same method must be used at all times for the disability.
Cash Value Rider
If the policy contains this, it builds cash value. It typically reaches 100% at 65 and may be limited by what state you reside in.
Claim Examiner
The person who evaluates a claim to decide if it should be paid.
Claim Reserve
This specific reserve is established when the claim occurs or soon following which anticipates the amount for future claim payments.
Commencement Date
This is the first day a disability is covered, immediately following the waiting period completion.
Concurrent Disability
This is a policy provision that generally provides benefits will not be paid for both injury and sickness during a disability period. Any disability period that results from one or more causes is usually considered a single disability period.
Conditional Receipt
It describes the immediate activation of physician disability coverage in exchange for a premium if medical and underwriting requirements are met. If you become disabled during this time before the policy is approved, the benefit would be paid if the definition of disability is met as long as health prior to the claim would have been approved for the policy.
Continuous Disability
This occurs when recurring periods of disability come from the same cause and are separated by less than 12 months for recovery.
Conversion Privilege
It allows employees who are leaving a job to keep some or all of the coverage without having to submit evidence of insurability. This is done at your own expense. It allows anyone with a business overhead expense to convert to individual disability should their needs change.
COLA (Cost Of Living Adjustment) Rider
An add-on to a disability plan that would increase your monthly benefit by the CPI not to exceed 3% or 6% compounded or simple interest per year during a claim. It would only be triggered during a claim so it is wise to keep benefits up to date through annual reviews. Its intent is to prevent inflation from deteriorating your benefit.
Covered Expenses
This list shows you the expenses covered and reimbursed during your period of disability.
Cross Purchase Agreement
It is used when there are two business owners so that both owners can be beneficiaries of a buy-sell policy.
Disability
Portion of disability contract that states the definition of the circumstances for which the insured is considered to then be disabled and benefits payable.
Disability-Based Policy
This long-term care policy with a pier diem basis of payment will provide benefits even if no care is being received as long as the insured meets the policy’s benefit trigger.
Disability Benefits
The weekly or monthly disability payment amounts that are paid in the event of a disability.
Disability Case Management
The list of procedures and functions that ensure a disabled policyholder is able to return to work as soon as possible.
Disability Income
Benefits received monthly by the insured to assist with replacing lost earnings during the period of disability.
Disability Insurance
A type of health insurance that pays the insured monthly benefits to replace lost earnings from illness or an accident.
Effective Date
This is the date your policy starts.
Eligibility Period
It is the time following the date of eligibility when a member of a group may apply for insurance without evidence.
Elimination Period (Waiting Period)
This is the time a physician would need to be disabled before they can enter a claim. The longer it is, the lower the premium since it is a deductible.
Employment Benefit Programs
An array of benefits that an employer may make available for employees including medical, retirement, and disability benefits.
Entire Contract Clause
This provision for group insurance states that the policyholder’s application is attached to the policy and any individual applications make up the entire contract.
Entity Plan
It’s a buy-out plan where a separate entity is paid disability benefits under a buy-sell agreement.
Evidence of Insurability
Proof of physical condition or other information that would affect eligibility for insurance.
Exclusion
An exclusion details what risks the insurance company won’t cover, resulting in no benefits paid. Most (but not all) exclude disabilities caused by war, mental and nervous disorders, and pre-existing conditions.
Financial Underwriting
This method evaluates earnings and other financial data to determine the appropriate monthly benefit.
Functional Capacity Evaluation
The examination performed to determine the degree of a specific disability.
Future Increase Option or Future Purchase Option Rider
Allows a physician to increase their policy by the stated monthly maximum amount purchased without needed a new examination on the anniversary date of the policy. This rider is important for newer physicians that want to protect a higher income since health status could change in the future which would make them ineligible without it.
Grace Period
Refers to the 31 days that follow the due date of a premium. If the premium is not paid by the end of the grace period, the coverage will be terminated.
Group Disability
Coverage that covers a group, usually it is inexpensive initially because the premiums and definitions can change yearly. Most are not transferrable to a new practice or occupation.
Guaranteed Standard Issue (GSI)
With larger medical groups, some companies will issue individual disability insurance without having to place a physician through medical or financial underwriting. The insurance company will consider an offer to avoid adverse selection, which is an undiversified group of risk removing normal risk profiles.
Guarantee of Insurability
This policy option allows the insured to increase monthly benefits on specified dates with only a review of financial insurability needed.
Guaranteed Renewable
Prevents insurance company from changing definitions or cancelling. They reserve the right to change premiums for a given class of insured physicians.
Income Replacement Plans
Protects an insured physician against the loss of income due to a disability.
Incontestable Clause
This is a policy clause where the insurer may not contest the validity of the contract after it has been active for two or three years.
Indemnity
Amount of disability benefits weekly or monthly.
Individual Disability Insurance
Plan that protects a physician’s income from injury or illness. Fully underwritten to prove health and income to be acceptable for the insurance company. Once activated, most are guaranteed to never change for the life of the policy.
Indexing
Increases the insured’s pre-disability earnings level each year after the first year of disability.
Individual Insurance
Provides protection to you as a policyholder, often called personal insurance.
Inspection Report
Third-party investigation that could be requested in the underwriting or claims process for verification of income, occupation, or personal activities.
Insurable Income
Part of a person’s gross income that is insurable for disability income purposes.
Insuring Clause
A clause in the contract that outlines the terms.
Integrated Disability Management
Program that manages all employer’s disability claims, whether they are covered under short-term plans, long-term plans, or worker’s compensation.
Injury
Any accidental bodily injured you sustain after the policy effective date and while it is active.
Issue Limit
Amount of monthly benefit an insurance company would be willing to put on a physician with a specified income. Each company sets their own limit for a given medical specialty as well as income.
Key Person Policy
Policy that is designed to provide benefits to a business for the loss of a key employee due to disability.
Legal Reserve
Minimum amount reserved that a company must keep to meet any future claims and obligations.
Lifetime Disability Benefit
Provision for making benefits payable for the insured’s lifetime as long as they are totally disabled.
Long-Term Disability Income Insurance (LTD)
Policy for a group that provides disability benefits, usually for more than a year on up to retirement age.
Loss of Income Insurance
Same as disability income insurance where loss of income is required before benefits are doled out.
Loss Ratio
Claims divided by premium which may refer to cash or incurred loss.
Maximum Benefit Period (Benefit Duration)
The longest length of time benefits are payable as long as the employee continues to be disabled.
Maximum Monthly Benefit
The most you can receive monthly from your benefits.
Medical Examination
A medical exam as well as report are usually part of the application process to obtain disability insurance. This information becomes part of the contract and is joined with the policy.
Medical History
An account of your own medical history found on the application for insurance or in your medical examination.
Medical Underwriting
It’s a way of evaluating health and medical history for an applicant to determine if a policy will be issued and the appropriate rates and exclusions if approved.
Mental and Nervous Condition
Disabilities caused by or related to mental or nervous disorders are often limited in coverage by long-term disability policies. Contracts will include a definition of these disorders and you as the insured must meet that definition to gain benefits.
Minimum Monthly Benefit
Usually, a minimum amount is paid for a monthly benefit after reductions are taken out for other income benefits.
Minimum Residual Benefit
With residual disability provisions in place, the minimal residual benefit typically means that in the first 6 months of disability, the insured must be paid a minimum of 50% of the total disability benefit.
Modified Own Occupation
Where a benefit would be paid out if the physician is unable to perform the main duties of their occupation and isn’t working in another occupation by choice. If you should work in another occupation by your own choice, then the new occupation income would offset your disability benefit through a predetermined formula.
Morbidity
Length of time and frequency that a group or class of individuals are disabled or may expect to be disabled.
Mortality
A probability of individuals in a group or class may be expected to pass on.
Monthly Benefit
Amount of money paid to a physician that has satisfied the definition of disability for the insurance company.
National Association of Insurance Commissioners (NAIC)
An association for insurance commissioners active in all 50 states.
Net Earned Income
This is the gross earned income minus the amount of unearned income and business expenses.
Net Worth
Used in financial underwriting to arrive at an appropriate benefit amount. It includes non-business related assets of the insured.
NON-CAN (Non-Cancelable)
Prevents the insurance company from changing the definitions or premium for the length of the benefits period.
Noncontributory Plan
This employee benefit plan is when the employer pays for the full cost of coverage.
Non-Disabling Injury
Injury that requires medical care but does not result in loss of working time or loss of income.
Non-Medical Limits
An amount above which a disability insurer will require a full medical examination.
Notice of Claim
This form is required by the insurance company and is specified in policy provisions to notify insurer of potential claims.
Occupation Class
Underwriting category that the insurance company places the insured in based on specific job duties.
Optional Benefit
These benefits are add-ons in the form of riders that can provide additional coverage to a basic policy.
Optional Renewable Policy
This disability policy grants the insurer the right to end a policy on any anniversary or sometimes, a premium date.
Outline of Coverage
Summarizes the benefits provided to you.
Overhead Expense Insurance
Insurance that helps offset continuing business expenses when the owner is disabled, for business owners.
Overhead Maximum
This indicated the maximum benefit payout, calculated by multiplying the monthly benefit by the number of months in a benefit period.
Overinsurance
When the total amount of disability insurance available to a person from all sources exceeds the insurer’s limits.
Own Occupation
If a physician can’t work in their occupation due to illness or injury, then they would receive a monthly benefit even if they were working in another occupation. It requires no offset from monthly disability benefits from earnings while performing a new occupation.
Paramedical
Medical examination for insurance usually conducted by a nurse or technician that records medical history, blood pressure, and urinalysis. May also conduct a blood profile though it does not include a physical examination.
Partial Disability (Residual)
What triggers a claim if you are not totally disabled but rather, partially disabled. Every contract should have a rider for partial disability since most claims enter into this type of claim.
Participation Limit
This is the amount an insurance company will participate in for overall disability income protection. This limit is set for each carrier and is broken down by medical specialty. It looks at total coverage from group, association, and individual coverage and is designed to prevent a physician from having more benefits than they earn in income.
Pension Completion Riders
This optional benefit assures the continuation of contributions to the insured’s pension plan during disability.
Permanent Disability
The kind of disability where the insured is not expected to return to work.
Physical Impairment
Physical conditions or abnormalities that could result in a substandard underwriting decision.
Portability
This refers to the ability to continue with your benefits after termination of employment.
Pre-Disability Earnings
A pattern and amount of earned income that a disabled policyholder receives prior to their disability.
Pre-existing Condition
Condition that affects the probability of a claim being paid that an insurance company is unwilling to cover as it was in place before the insurance policy was made.
Premium
This is the payment you make periodically to keep your insurance policy effective.
Premium Mode
The frequency of premium payments set by the insured. You will usually have an option for annual, semi-annual, quarterly, or monthly.
Presumptive Disability
If these conditions are met even if you can work in some capacity, you would be presumed disabled. Loss of limbs, sight, or speech are a few examples though may differ for each insurance company.
Recovery Benefits
Benefit an insurance company would pay you if you’re recovering from total or partial disability. It can come in lump sums or temporary richer payment of residual disability benefit. This rider is important to understand as it can differ between different insurance carriers.
Recurrent Disability
Physical or mental conditions that reoccur and cause disabilities.
Recurring Claim Provision
This provision specifies a length o time during which the recurrence of a condition is considered to be a continuation of a previous period of disability.
Regular occupation
The occupation you’re performing at the time you make the claim.
Rehabilitation
Process where you as the disabled are able to return to gainful employment again.
Rehabilitation Benefit
Insurance companies may provide special rehabilitation benefits to help you with a better way of life during and after your disability. It helps you get back to work faster and causes less grief in your financial frontiers.
Reinsurance
When your insurance company insures all or part of a specific insurance policy with another insurance company.
Relation to Earnings Clause
This clause can adjust the benefits payable based upon the ratio of total benefits for which you are eligible in relation to your income at the time you become disabled.
Replacement Ratio
Compares your disability benefits to your income.
Resident Disability Coverage
For physicians in residency, they are eligible to get a preset amount of disability coverage regardless of income. They only must prove health insurability to an insurance company to obtain coverage. It is portable so when fellowship or residency is complete, the coverage is in place at the new practice.
Residual Disability
When you are not totally disabled but you have lost some time or duties plus loss of income, around 20%. You do not have to be totally disabled during the elimination period to qualify. This rider is available on quality disability insurance plans and should be considered since you may never be totally disabled but perhaps only residually disabled.
Retirement Protection Plus (RPP)
This is a disability insurance program designed to help protect your retirement plan contributions. You must be totally disabled and not gainfully employed to apply for it. RPP is designed to help you keep a healthy retirement strategy by replacing contributions made to a defined contribution plan during your disability. Once you are eligible for benefits, a monthly benefit insuring up to 100% of your retirement contributions plus any employer-matching will be paid into a trust established by you.
Return of Premium
This optional benefit for individual policies returns all or a portion of your premium depending on your claim experience.
Return to Work Benefit
This benefit may be optional on some policies. It provides additional or temporary benefits as incentive for you to return to work following your disability claim.
Risk Classification
Underwriting process that determines how to consider the applicant from different perspectives including occupation, income, health, and avocation.
Rider
This is an additional agreement that expands or limits the policy conditions, benefits, or coverage.
Salary Continuation Plan (Section 105 Plan)
This disability insurance includes certain federal regulation requirements to qualify for favorable tax treatment.
Schedule Page
In the contract, it details your policy’s benefits, extra benefits, and premium.
Short-Term Disability Insurance
For group disability insurance that provides benefits for loss from injury or accident and usually no longer than one year in duration.
Sickness
Diseases or illnesses that first begin after the policy issue date.
Simplified Issue
Coverage for group insurance that is issued with satisfactory responses to questions on abbreviated application forms.
Smoker Rating
Applicants that use tobacco and tobacco products are subject to a higher rate. If you do not smoke, you will be given a lower rate. If you smoked in the past but have quit more than a year prior, you will be considered a nonsmoker in most cases. Routine screenings can detect nicotine, something required by most insurance companies.
Social Security Substitute Rider
If you’re totally disabled but cannot perform any occupation, social security has a disability benefit. This is the hardest to qualify for. You can reduce the premium for your disability coverage if you add this rider since it would offset the benefit from the insurance company if social security benefits will pay. If you didn’t qualify for it but met the definition for the insurance company claim, it wouldn’t be offset. It is dependent on past income and will show this on the annual social security statement.
Social Security Offset Provision
For group long-term disability policies, it allows the insurance benefits to be reduced by the paid or expected social security benefits payable to you when you are disabled.
Split Dollar Plan
This plan splits the premium payment between the employer and employee so that part of the disability insurance monthly benefit is taxable while part is nontaxable.
Specialty Coverage
If a physician has limited their practice to a single specialty, that will be deemed to be their occupation. It tends to be rare and unusual in disability contracts.
State (Compulsory) Disability Plan
This plan is for short-term income replacement which may be required by some states to cover eligible people employed in that state.
Step-Rate Plan
This plan is for young professionals that pay a lower premium during the first few years of policy ownership as their careers begin. It allows them to get the full protection they need before they start earning a decent salary.
Stock-Redemption Plan
A way of funding a disability buy-out plan.
Student Loan Protection Rider
A rider that can help give you peace of mind early on in your career when your yearly earnings do not exceed your student loan balance.
Substandard Insurance
Issued with an additional premium or special restriction for those who do not qualify for insurance at the standard rates or issue.
Supplementary Health Statement
Additional statement that requests specific health or medical questions to be completed and signed by the applicant.
Supplementary Monthly Benefit
Added monthly benefit payable under certain and specific circumstances such as if you were in the hospital.
Survivor Benefit
This benefit is payable to a named survivor, typically the spouse, upon the death of the disabled insured.
Third-Party Administrator (TPA)
Person or organization hired to provide particular administrative services to employee benefit plans.
Time Limit on Certain Defenses
This clause in the disability policy limits your right after a period of time to deny claim payments based on previous medical history.
Total Disability
When you as a physician are unable to perform all material and substantial duties of your policy’s definition of total disability. This would result in claiming full monthly benefits.
Transplant Surgery Benefit
This benefit is payable if you undergo a transplant for part of your body to another person and suffer a disability as a result.
Trial Application
The application that is completed on a preliminary basis to see if you are insurable or not.
Underwriter
The underwriter could refer to a company employee who decides whether or not the company should take on a particular risk; a company that receives premiums and accepts responsibility for fulfillment of the policy contract; or the agent who sells the policy.
Underwriting
This is the process where an insurer determines whether or not as well as the basis for which they will accept an application for insurance.
Unearned Premium
A portion of a premium already received by the insurer for protection that has not yet been provided.
Uniform Provision Law
Set of laws that are approved by various states that standardize certain policy language relating to the contractual benefits, premiums, and claim procedures.
Waiver of Elimination Period
With certain circumstances, the elimination period would not need to be met to enter into a claim. This is usually after a physician has entered into a claim scenario and later re-entered due to like causes.
Waiver of Premium
When a physician is being paid a benefit for being disabled either partially or totally, the insurance company will waive the disability premium.
Wage Continuation Plan
Same as Salary Continuation.
Waiting Period
The time you must wait from date of acceptance into an eligible class or from the date of application to the date your insurance becomes effective. Elimination periods are often used to describe a waiting period though the meanings are different.
War Exclusion
Policy provision that excludes payment of benefits for a disability that results from an act or accident of war.
White-Collar Occupations
Meaning non-manual occupations such as office or clerical jobs.
Workers Compensation
This governmental plan provides disability benefits when the covered person is totally disabled from an accident or sickness that occurred on the job.
