Insurance Terms, Explained Clearly
Use this glossary to understand a conversation or prepare questions about a policy. These short definitions explain concepts; the wording, exclusions and conditions in the actual contract determine coverage.
By Navid Lalezari · Author
Reviewed by Navid Lalezari
Last reviewed
In this guide
Benefit period
The period over which disability benefits may be payable for a qualifying claim under the policy. A stated maximum is not a promise that every claim lasts that long; continuing eligibility and other contract conditions still apply.
Read next: Disability Insurance Benefit Periods for Physicians
Sources:[1]
Beneficiary
A person or organization designated to receive a life policy’s death benefit. Review the designation when family circumstances change, and distinguish it from the policy owner and insured person. Payment remains subject to the contract.
Read next: How to Organize a Life Insurance Beneficiary Review
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Cash value
A value that can develop within certain permanent life policies. It is different from the death benefit. Access, surrender charges and effects on coverage depend on the policy; a projected value is not automatically guaranteed.
Read next: Life Insurance Cash Value: Loans, Withdrawals, Taxes, and Repayment
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Conversion
A contractual option that may allow term life coverage to become permanent coverage during a specified period. Eligible products, deadlines and new premiums matter. The option is not a promise that the new policy has the old premium.
Read next: Term Life Conversion: What to Check Before a Deadline
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Elimination period
A waiting period defined by a disability policy before benefits become payable. Ask when counting begins and what days count. It is not a guarantee that a payment arrives on the first day after the period ends.
Read next: Disability Insurance Elimination Periods: Planning for the Wait
Sources:[1]
Future increase option
A rider that may allow eligible additional disability coverage without new medical underwriting. Financial requirements, exercise dates and limits still apply. Check separately how added benefits are priced; preserving an option does not freeze every future premium.
Read next: Future Increase Options for Physician Disability Insurance
Sources:[3]
Own-occupation definition
A disability definition concerned with the duties of your occupation. Versions can differ on working in another occupation and how long the definition applies. Compare the wording and any rider instead of relying on the label alone.
Read next: Own-Occupation Disability Insurance for Physicians
Sources:[2]
Partial or residual disability
Provisions that may pay benefits when a qualifying disability reduces work or earnings without meeting all total-disability requirements. Income-loss thresholds, duties and measurement periods vary. Working fewer hours alone does not establish a payable claim.
Read next: Residual and Partial Disability Benefits for Physicians
Sources:[3]
Premium
The amount charged for insurance under its payment schedule. Compare the covered benefit, duration and policy features alongside the price. Ask which premiums are guaranteed and which could change, including after renewal or a coverage increase.
Read next: What Affects Disability Insurance Cost for Physicians? · Term vs. Whole Life Insurance
Rider
A policy provision that adds or changes coverage or options. A feature offered as a rider in one contract may be included in another. Ask about its cost, conditions and whether it is actually attached to your policy.
Read next: Disability Insurance Riders: What Physicians Should Compare
Sources:[3]
Term life insurance
Life insurance for a defined period. It provides a death benefit for a covered death while the policy is in force and generally does not build cash value. Renewal terms and future premiums require a separate review.
Read next: Term Life Insurance for Physicians
Sources:[4]
Whole life insurance
A type of permanent life insurance designed for lifelong protection when required premiums and policy conditions are met. It can accumulate cash value. Review affordability and distinguish contractual guarantees from any non-guaranteed illustrations.
Read next: Whole Life Insurance for Physicians: Benefits and Tradeoffs
Sources:[5]
Where to go from here
These next steps are educational and have no cost or obligation. They do not start an insurance application or begin coverage.
- Check My Options
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Sources
Drs Choices summarizes and compares these sources on this page. Each entry links to the original if you want to verify the wording yourself.
NAIC: Comparing disability insurance
View original source for “NAIC: Comparing disability insurance” (opens in a new tab)Guardian: Own-occupation definitions
View original source for “Guardian: Own-occupation definitions” (opens in a new tab)Guardian: Disability income insurance riders
View original source for “Guardian: Disability income insurance riders” (opens in a new tab)NAIC: Life insurance consumer guide
View original source for “NAIC: Life insurance consumer guide” (opens in a new tab)Alabama Department of Insurance: Types of life insurance
View original source for “Alabama Department of Insurance: Types of life insurance” (opens in a new tab)