Browse through our glossary of industry specific terms and phrases to learn more about insurance. These terms are also defined throughout our site, all you have to do is hover over the blue text.
- Accelerated Death Benefit
A feature of a life insurance policy that permits you to use some of the death benefit prior to death.
- Activities of Daily Living (ADLs)
Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting and transferring. Many policies use the inability to do a certain number of ADLs (such as two of six) to determine when policy pays benefits.
- Adult Day Care
Care provided during the day at a community-based center for adults who need assistance or supervision during the day, including help with personal care, but who do not need round-the-clock care.
- Alzheimer's Disease
A progressive, degenerative form of dementia that causes severe intellectual deterioration.
- Assisted Living Facility
A residential living arrangement that provides individualized personal care and health services for people who require assistance with activities of daily living. The types and sizes of facilities vary; they can range from a small home to a large apartment-style complex. They also vary in the levels of care and services that can be provided. Assisted living facilities offer a way to keep a relatively independent lifestyle for people who don't need the level of care provided in a nursing home.
Washing oneself by sponge bath, in either a tub or shower. This activity includes the task of getting into or out of the tub or shower.
- Bed Reservation Benefit
Benefit paid to a nursing home or assisted living when insured is temporarily absent during a stay and the facility charges to reserve accomodations. Many current products will offer this benefit for any reason. This includes, but not limited to, a hospital stay, or spendingholidays or other time with family. Oftimes there is a lifetime or annual maximum for this benefit.
- Benefit Period
The benefit period is the minimum amount of time the policy will pay benefits for qualified care. It may be a time limit (i.e. 3 years) or a dollar limit (i.e. total benefit pool). For example: if there is a $6,000 monthly benefit for 36 months the benefit pool would be $216,000. If $3,000 is claimed each month, then the policy will last 72 months. A policy should provide a minimum benefit length of 3 years.
- Benefit Pool
Maximum total benefit= (# of years) x (365 days) x (daily benefit amount) or (# of month) x (monthly benefit)
- Benefit Triggers
Describes the criteria and methods used by insurance copanies to deterine when you are eligible to receive benefits.
- Benefit Type
Benefits may be paid on a daily basis or on a monthly basis, up to 30 times the daily benefit
Monetary sum paid or payble to a recipient for which the insurance company has received the premiums.
- Care Management Services
A service in which a professional, typically a nurse or social worker, may arrange, monitor or coordinate long-term care services (also referred to as care coordination services).
Synonyms: Care Coordination Services
- Cash Method
A cash plan pays the monthly benefit, regardless of the actual expenses incurred, at the beginning of the month in which the insured qualifies for benefits. Receipts are not required.
Some insurance plans include an option for a percentage of the monthly benefit amount in the place of any other benefit for which you qualify under the policy. The cash benefit is a fixed indemnity benefit that is paid in advance, at the start of the month.
- Cash Surrender Value
The amount of money you may be entitled to receive from the insurance company when you terminate a life insurance or annuity policy. The amount of cash value will be determined as stated in the policy.
- Chronic Illness
An illness with one or more of the following characteristics: permanency, residual disability, requires rehabilitation training, or requires a long period of supervision, observation or care.
- Chronically Ill
A term used in a tax-qualified long-term care contract to describe a person who needs long-term care either because of an inability to do everyday activities of daily living (ADLs) without help or because of a severe cognitive impairment.
- Cognitive Impairment
A deficiency in a person's short or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness.
- Community-Based Services
Services designed to help older people stay independent and in their own homes.
The ability to maintain control of bowel and bladder function; or when unable to maintain control of these functions, the ability to perofrm associated personal hygience (including caring for catheter or colostomy bag).
- Contingent Nonforfeiture
Automatically included in currently sold policies. Provides reduced paid-up benefits equal to the total of all the premiums paid if premiums are increased by a certain percentage based on age at policy issue. May be elected within 120 days of lapse after due date of the premium increase.
- Continuing Care Retirement Communities
A retirement complex that offers a broad range of services and levels of care.
- Continuous Payment Option
A premium payment option that requires you to pay premiums until you trigger your benefits. Premiums are usually paid on a monthly, quarterly, semi-annual or annual basis. The policy is not cancelable except when premium aren't paid; however, the insurance company can increase premiums on a entire class of policies.
Synonyms: lfietime pay
- Custodial Care
Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.
Synonyms: Personal Care
- Daily Benefit
The maximum amount in a given day that the policy will pay for qualified long term care expenses.
This amount is used to calculate the maximum benefit amount (benefit pool) of the policy.
Deterioration of intellectual faculties due to a disorder of the brain.
- Disability Method
Method of paying benefits that only requires you to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit.
Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.
- Elimination Period
A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin to make payments. Sometimes also called a "waiting period."
- Expense-Incurred Method
Method of paying benefits where the insurance company must decide if you are eligible for benefits and if your claim is for eligible services. Your policy or certificate will pay benefits only when you receive eligible services. Once you have incurred an expense for an eligible service, benefits are paid either to you or your provider. The coverage will pay for the lesser of the expense you incurred or the dollar limit of your policy. Most policies bought today pay benefits using the expense-incurred method.
- Extended Term Benefits
Full benefits for a reduced time period, applicable for use during a certain period of time. If not used in a set number of years after the lapse, then you lose it. Once the period has expired, the contract terminates.
- Facility Benefit Period
Usually stated in years or days. This is the limit of how much the Long-Term Care policy can pay over your lifetime in facility benefits. This could be described as the policy limit, benefit mulitplier or maximum lifetime benefit.
- Facility Daily Benefit
The maximum amount of money your Long-Term Care insurance policy will pay for daily qualified care (skilled nursing or assisted living facilities).
- Facility Elimination Period
The number of days or dates if service for which the insured is responsible for costs of care before policy benefits begin. Some policies will have a separate elimination period for home care.
Synonyms: Elimination period
- Guaranteed Renewable
When a policy cannot be cancelled by an insurance company and must be renewed when it expires unless benefits have been exhausted. The company cannot change the coverage or refuse to renew the coverage for other than nonpayment of premiums (including health conditions and/or marital or employment status). In a guaranteed renewable policy, the insurance company may increase premiums, but only on an entire class of policies, not just on your policy.
- Hands-on Assistance
Physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activities of daily living.
- Health Insurance Portability and Accountability Act
Federal health insurance legislation passed in 1996 that allows, under specified conditions, long-term care insurance policies to be qualified for certain tax benefits.
- Home Care Benefit Period
Usually is pooled or combined with facility benefit period. For example, care may be received at home or in a facility until the benefit is exhausted.
- Home Care Daily Benefit
Daily benefit for home care. This may be stated as a percentage.
- Home for the Aged
A general term for a facility that cares for elderly people. It is often not covered under a long-term care policy.
- Home Health Care
Services for nursing care or occupational, physical, respiratory or speech therapy. Also included are medical, social worker, home health aide, and homemaker services.
- Homemaker Services
Household services done by someone other than yourself because you’re unable to do them.
- Hospice Care
Continuous care provided at home or in a facility with a home-like setting for a terminally ill person. A terminally ill person has a life expectancy of six months or less.
- Indemnity Method
Method of paying benefits where the benefit is a set dollar amount and is not based on the specific service received or on the expenses incurred. The insurance company only needs to decide if you are eligible for benefits. Once the company determines you are eligible and you are receiving eligible long-term care services, the insurance company will pay that setamount directly to you up to the limit of the policy.
- Inflation Factor
The inflation factor increases the daily benefit or monthly benefit and the maximum benefit amount annually to help policy keep up with expected increases in the cost of qualified long term care services. Options vary by insurance company and product. These include: fixed rates from 1% to 5% compound, consumer price index, 5% simple, guaranteed purchase option and others that limit the number of years the selected method will inflate.
Synonyms: inflation protection
Termination of a policy when a renewal premium is not paid.
- Limited Payment Option
A premium payment option in which the person pays premiums for a set time period. After the last premium payment, neither the company nor the person can cancel the policy. These plans are more expensive than continuous payment policies; however, their guaranteed fixed payment and no-cancel features make them attractive to some people.
- Long Term Care Insurance
A policy that pays for qualified long-term care expenses.
Long Term Care Insurance
- Marital Discount
An available premium discount if both spouses purchase coverage. Some policies offer a lower discount if one spouse purchases coverage.
A joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.
The federal program providing hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons. Benefits for nursing home and home health services are limited.
- Medicare Advantage Plans
A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.
Synonyms: Medicare Advantage
- Medicare Supplement Insurance
Synonyms: Medigap Insurance Coverage Medicare Supplement Insurance
- Modal Factor
The insured's choice to pay for premiums on an annual, semi-annual, quarterly, or monthly basis.
- Monthly Benefit
The maximum benefit amount a policy will pay for qualified long term care services.
The monthly benefit is used to calculate the maximum benefit amount (benefit pool) for the policy.
Synonyms: Benefit amount
- National Association of Insurance Commissioners
Membership organization of state insurance commissioners. One of its goals is to promote uniformity of state regulation and legislation related to insurance.
- Noncancelable Policies
Insurance contracts that cannot be cancelled by the insurance company and the rates cannot be changed by the insurance company.
Optional rider that returns at least part of the paid premiums to you if you cancel the policy or let it lapse.
- Nursing Home
A licensed facility that provides general nursing care to those who are chronically ill or unable to take care of daily living needs. May also be referred to as a Long-Term Care Facility.
Synonyms: Long-Term Care Facility
- Paid-up Policy
When you prematurely stop paying your premiums, your insurance policy is deemed to be paid-in-full. You do not pay any more premiums, but the benefits you receive under this policy will be determined based on the amount of premiums you have already paid, not on the level of benefits that you originally purchased.
- Partnership Qualified Policy
A type of policy that allows you to protect (keep) some of your assets if you apply for Medicaid after using your policy's benefits. Not all states have these policies, some have reciprocal provisions. Some insurance companies have partnership qualified policies in some states, but not others.
Synonyms: Partnership Long Term Care Insurance Partnership-qualified Long Term Care State Partnership Benefits
- Payment Option
How your policy is paid. For example "10 Years"- your policy is paid up after 10 years, "Paid up at 65"- your policy is paid up at age 65, "Reduced pay at 65"-your premium is reduced fifty percent at age 65.
- Permanent Life Insurance
Permanent life insurance provides lifelong protection, and the ability to accumulate cash value on a tax-deferred basis. Unlike term life insurance, a permanent life insurance policy will remain in force for as long as you continue to pay your premiums.
- Personal Care
Care to help indiviudals meet personal needs such as bathing, dressing and eating. Someone wihtout professional training may provide care.
Synonyms: Custodial Care
- Personal Care Home
A general term for a facilty that cares for elderly people. Itis often not covered under a long-term care insurance policy.
- Pre-existing Conditions
Illnesses or disability for which you were treated or advised within a time period before applying for a life or health insurance policy.
- Qualified Long-Term Care
Assistance with activities of daily living or coginitive impairment in the home, adult day care, assisted living, nursing home, respite and hospice care.
- Reduced Paid-up Benefits
A nonforfeiture option that reduces your daily benefit but retains the full benefit period on your policy until death. For example, you buy a policy for three years of coverage with a $150 daily benefit. Then if you let the policy lapse, the daily benefit will be reduced to $100. The exact amount of the reduction depends upon how much premium you have paid on the policy. The benefit period on your policy continues to be three years. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use reduced paid-up benefits at any time after you lapse (until death).
- Reimbursement Method
Reimbursement method or cost incurred reimburses actual expenses of qualified long term care expenses documented by receipts up to the stated daily or monthly benefit amount.
Synonyms: cost incurred
When the insurance company voids (cancels) a policy.
- Residual death benefit
Residual death benefit is small death benefit paid to beneficiaries of some combination life with long term care insurance policies even if the death benefit is fully paid in qualified long term care expenses.
- Respite Care
Care provided by a third party that relieves family caregivers for a few hours to several days and gives them an occasional break from daily caregiving responsibilities.
- Rest Home
A general term for a facility that cares for elderly people. It is often not covered under a long-term care policy.
- Restoration of Benefit
Some policies include or provide an option to add a restoration of benefits rider. If benefits are received from the policy, and then recover and no longer eligible for benefits for a period of time, typically 180 days, your maximum benefit pool will be restored to the amoun tthat would have applied if no benefits had been paid, provided your policy is still in force. Currently sold insurance policies limit the number of times policies can restore. Some older policies do not have any limits.
- Return of Premium
Return of premium to the policyholder, if the insured dies while the policy is in force.
Examples of options available, vary by carrier, are as follows:
- Return of premium at death - refund of premium, minus all long term care benefits paid, if insured dies while policy is in force.
- Return of premium if death occurs before age 65 - Refund of premiums, minus all benefits paid, if insured dies while the policy is in force but prior to the policy anniversary date coinciding with or next following the insured's 65th birthday.
- Three time the maximum monthly benefit return of premium at death - Refund of premiums, minus all benefit paid, if insured dies's while policy is in force, but not more than three times the maximum monthly benefit. For purposes of this rider, the monthly benefit amount is the lesser of the initial monthly benefit, or the most recent maximum monthly benefit, excluding the whole amount of inflation protection increases. The policy must remain in force for a 10 year qualification period.
Addition to an insurance policy that changes the provisions of the policy for an additional premium.
- Shared Care
Shared care feature in a policy allows partners to access benefits under each other's policy, contracts vary. Upon death of one spouse/partner, remaining unused portion of the deceased benefit pool would revert to the surviving spouse/partner depending upon the insurance company.
A partner is defined as those who are legally married, domestic or civil union partners, or adults in a serious, committed personal relationship intended to be lifelong who have shared a common residence for the most recent three years, are not married to or domestic or civil partner of anyone else, and are not related in any way that would bar marriage.
Synonyms: Shared Care Rider
- Short Term Care
Short Term Care (STC) offers a facility (nursing home or assisted living) benefit and may have some hospital coverage and home health care for up to 365 days. Short Term Care will help people for temporary stays in a nursing home, assisted living or hospital. This can be for skilled care and custodial care. Prior hospitalization is not required for short term care.
- Shortened Benefit Period
A nonforfeiture option that reduces the benefit period but retains the full daily maximums applicable until death. The period of time for which benefits arepaid will be shorter. For example, you buy a policy for three years of coverage with a $150 daily benefit, but if you let the policy lapse, the benefit period isreduced to one year, with full daily benefits paid. The exact amount of the reduction depends upon how much premium you have paid on the policy.Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use shortened benefits at any time after you letthe premium lapse (until death).
- Skilled Care
Daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. This care is usually needed 24hours a day, must be ordered by a physician, and must follow a plan of care. Individuals usually get skilled care in a nursing home but may also receive itin other places.
- Spend Down
A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements.
- Stand-Alone Long Term Care Insurance Policy
Stand-along long term care insurance policy, also known as traditional long term care insurance, provides benefits to pay for qualified long term care services when policy is in force. Premiums are typically paid until the benefits are paid for long term care. There are also 10 year payment and paid to 65 options.
Synonyms: Traditional long term care insurance
- Stand-by Assistance
Caregiver stays close to the individual to watch over the individual and to provide physical assistance if necessary.
- State Health Insurance Program
Federally funded program to train volunteers to provide counseling on the insurance needs of senior citizens.
- Substantial Assistance
Hands-on or stand-by help required to do ADLs.
- Substantial Supervision
The presence of a person directing and watching over another who has a cognitive impairment.
A Survivorship Rider can be added to policies at inception when two partners have policies with the same insurance company. Premiums are waived when one partner dies after both policies are active for at least 10 years. Some carriers require both policies to be claim-free during that time.
Synonyms: Survivorship rider
- Tax Qualified
This policy qualifies under the Health Insurance Portability and Accountability Act of 1996.
- Tax-Qualified Long-Term Care Insurance Policy
A policy that conforms to certain standards in federal law and offers certain federal tax advantages.
- Term Life Insurance
Covers a person for a period of one or more years. It pays a death benefit only if you die during that term. It generally does not build a cash value.
- Third Party Notice
A benefit that lets you name someone whom the insurance company would notify if your coverage is about to end because the premium hasn’t beenpaid. This can be a relative, friend or professional such as a lawyer or accountant.
Getting to and from the toilet, getting on and off the toilet and performing associated personal hygiene.
- Traditional Long Term Care Insurance
Traditional long term care insurance is a pay as you go policy. Premiums are generally paid annually, semi-annually, quarterly or monthly. There is one carrier that offers a 10-pay or single-pay. Benefits are selected when policy is applied for. These includes daily or monthly benefit, elimination period, inflation, benefit period. Additional riders are available such as shared care, joint waiver of premium, survivorship, calendar day elimination peirod. Plan designs are flexible to meet the individual preferences of each insured. There is no cash value, nor any return to beneficiaries unless a return of premium rider is purchased. Policies are guaranteed renewable, premium can increase after approval by the Insurance Administration of the state where policy was issued. Policies may be partnership qualified, providing asset protection for Medicaid eligibility. This varies by carrier and state.
Moving into and out of a bed, chair or wheelchair.
Term used by insurance companies to describe when to pay benefits.
Synonyms: Benefit Triggers
The process of examining, accepting or rejecting insurance risks, and classifying those selected, to charge the proper premium for each.
- Universal Life Insurance
Universal life insurance is a type of flexible life insurance offering the low-cost protection of term life insurance as well as a savings element (life whole life insurance), which is invested to provide a cash value buildup. Flexibility by varying premium payments and adjustment of death benefit.
- Waiver of Premium
A provision in an insurance policy that relieves the insured of paying the premiums while receiving benefits.
- Whole Life Insurance
Policies that build cash value and cover a person for as long as he or she lives if premiums continue to be paid.