Western Direct Insurance is dedicated to insuring you have all the information you need to make an informed insurance decision. That is why we have provided you with a list of the most common insurance terms to give you the highest level of understanding with your insurance coverage.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A 

Accidental Death Benefit
Provides a benefit in the case of accidental death in addition to base amount of coverage.

Agent
The insurance company representative and adviser who sells insurance policies to consumers.

Anniversary Year
Any 1-year period from the anniversary of when a policy was issued.

Annual Premium
A yearly policy fee payable by a policyholder.

Annuity
A contract that provides income payments at regular intervals, usually for a specified period or for the lifetime of the annuitant.

Annuity Period
The time between each payment under an annuity, usually 1 month or 1 year.

Applicant
The individual or party applying for an insurance policy.

Automatic Waiver of Premium
A benefit that automatically covers the cost of premium payments, usually in case of death or injury.

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B 

Beneficiary
The person designated to receive proceeds of an insurance policy.

Benefit
A payment or option available under the terms of an insurance policy.

Benefit Value
The amount of money payable on a benefit.

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C 

Cash Surrender Value
A benefit that allows a policyholder to cancel the policy and receive an amount of money.

Cash Value
Money that accumulates under some insurance plans that can be borrowed, withdrawn, or used as loan collateral.

Child Insurance Rider
Optional additional life insurance coverage on the life of child or children.

Claim
A request for payment of benefits under the terms of an insurance policy.

Coverage
The extent of benefits provided by an insurance policy.

Co-Insurance Clause
The co-insurance clause is a penalty clause found in insurance policies that require the policy owner to insure their property to minimum levels (70%, 80%, 90% 100%) in order to get full coverage in case of a loss. If the policy owner does not meet these levels, any loss will be covered subject to the percentage of coverage that the insured has taken out.

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D 

Death Benefit
The amount paid on death of an insured.

Deductible
A monetary amount deducted from a benefit paid to a policyholder.

Disability
The inability to work due to injury or sickness.

Dividend
Money made available to policyholders based on an insurance company’s earnings and monetary surplus.

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E 

Effective Date

The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

Endorsement

An amendment added to a written document, particularly an agreement between parties, altering its provisions.

 

Estate

1) In law, one of the various interests in land.

2) The net worth of an individual's worldly goods.

 

Exceptions

Differences listed in a policy which amend the standard declarations so as to provide the required coverage.

 

Exclusion

Risks, perils or properties defined in the policy as not covered.

 

Expiration

The date upon which a policy will end.

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F 

Fraudulent

Dishonest; based on or obtained by fraud.

 

Fire Damage

Damage caused by fire.

 

Fair Market Value

Price at which a buyer and seller, under no compulsion to buy or sell, will trade.

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G 

Grace Period
The period (usually 1 month) following the premium due date, during which an overdue premium for a life insurance policy may be paid without penalty. The policy remains in effect throughout the grace period.

Group Insurance
Insurance issued to a group of people under a master contract. It is usually issued to an employer for the benefit of employees.

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H 

Hostile Fire

A hostile fire is a fire that has escaped its normal habitat – i.e. the flame leaps from the fireplace and sets the couch ablaze. Its normal habitat is the fireplace.

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I 

Individual Insurance
Insurance available to individuals rather than groups.

Insurance Act
In Canada, a general statute that contains most of the insurance law of a common law province, and regulates the conduct of insurers and insurance agents within the province.

Insured
The person whose life or health is covered by a specific policy.

Insurer
The insurance company that comprehension promises to pay a benefit if a specified loss occurs.

Interest Rate
The rate charged or paid for the use of money proportional to the length of time the money was held.

Issue
When an insurance policy (contract) is approved and becomes effective.

Issue Age
The Age of an insured as at the policy issue date, using “age nearest” next birthday formula.

Issue Date
The date that an insurance policy is approved.

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J 

Joint Policy Life
One insurance policy that covers two lives. A Joint-First option pays a benefit when the first life ends. A Joint-Last option pays a benefit when the second life ends.

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K 

Knock for Knock Agreement

An agreement between two insurance companies where each insurer pays the vehicle’s repair costs of its policy-holder regardless of who was responsible for an accident.

An insurer may be able to pursue a recovery from the party responsible for an accident of from his insurer, this is a costly administrative procedure.

The Knock for Knock Agreement simplifies recovery claims among insurers and the cost is seen to balance out over a long period of time.

 

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L 

Lapse
The termination of a policy when needed premiums are not paid and the policy has no cash value.

Life Insurance
Insurance that provides protection against an economic loss caused by death of the person insured.

Life Insured
The person whose life is protected by an individual policy.

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M 

Maturity
The time when a policy or annuity reaches it’s natural end.

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N 

Non-participating Policy
A type of insurance policy or annuity for which the policyholder does not receive dividends.

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O 

Occupancy

Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and/or people in it.

 

Occupiers' Liability

An individual or organization in possession of property (i.e., the occupier) owes a duty of care to those who come onto the premises. The occupier must take reasonable care to protect others from harm that might result from programs on the premises or at the hands of a third party on the premises. For example, an occupier should ensure that the building is safe by shovelling sidewalks in the winter.

 

Optional coverage

In automobile insurance, optional coverage is a commonly used term for insurance that is not required by law, such as coverage for collision or comprehensive claims (e.g., theft).

For home insurance, optional coverage is that which is not normally included in standard home insurance policies, but which can be purchased separately, such as coverage for damage from earthquakes, furnace oil spills and sewer back-up.

 

Owner's, Landlord's And Tenant's Liability

Liability insurance coverage which gives protection because of liability arising out of ownership, use or occupancy; operation or maintenance of buildings or premises.

 

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P 

Paid-Up Additions
A type of insurance policy or annuity in which the owner receives dividends that typically increase the benefit amount.

Participating Policy
A policy offers the potential of sharing in the success of an insurance company through the receipt of dividends.

Policy
A written document that serves as evidence of insurance coverage and contains information about the benefits, coverage, and owner, as well as its associated directives and obligations.

Policy Date
The date that the insurance company assumes responsibilities for the benefits of a policy.

Policy Loan
With some insurance policies, if the policy has a cash value, the policyholder can borrow money from the policy.

Policy Year
Any 1-year period from the anniversary of when a policy was issued.

Pre-Authorized Cheque (PAC)
Approved withdrawals from a policyholder’s bank account, usually monthly.

Pre-existing Health Condition
An injury, a sickness, or a condition that existed before the date that an insurance policy takes effect.

Premium
The annual cost of an insurance policy payable by the policyholder. Any policy fee amount is not included in the premium amount.

Premium Mode
The frequency of premium payments for an insurance policy, usually annually, semi-annually, or monthly.

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Q 

Quote

An estimate of the cost of insurance, based on information supplied to the insurance company.

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R 

Reinstatement
With most policies, the policyholder has the right to reinstate a lapsed policy within a specified period (usually 2 years) by providing satisfactory evidence of insurability and paying all outstanding premiums, plus interest.

Renewal Agreement
Some policies contain a provision that the insurance company agrees to renew the policy for an agreed number of times or to a specific age of the policyholder.

Rider
An optional coverage benefit added to an insurance policy.

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S 

Surrender
To cancel an insurance policy or optional benefits of that policy.

Surrender Charge
The expenses charged when a policyholder surrenders a policy for its cash value.

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T 

Term
The time period during that a policy is in force, or the time it takes for a policy to reach maturity.

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U 

Underwriter
A person that uses evidence to evaluate the insurance risks of applicants and policyholders.

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V 

Vacant Building

A building with no occupants or furnishings.

 

Vehicle identification number (VIN)

This is the number usually found on the dashboard of a vehicle on the driver's side, and is usually listed on the vehicle registration and title. The VIN is a combination of letters and numbers 17 characters in length that can be used to identify the make, model, and year of a car.

 

Void

1) Invalid, not legally binding.

2) An insurance contract that is prohibited by law and thus cannot be held to be a valid contract.

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W 

Waiting Period
The time that must pass before a benefit becomes payable.

Waiver of Premium
A benefit that pays premiums on behalf of the insured.

Whole Life
Insurance that provides coverage until the end of the insured’s life.

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X 

XML

A flexible markup language for structured electronic documents. XML is based on SGML (standard generalized markup language), an international standard for electronic documents. XML is commonly used by data-exchange services (like blog feeds) to send information between otherwise incompatible systems. Many other languages, such as RSS, are based on XML.

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Y 

Yearly Renewable Term

A one-year term life insurance policy. This type of policy gives policy holders a quote for the year the coverage is bought. When you buy the yearly renewable term insurance policy, the premium you are quoted is for you at the given year that you request the quote. At this same time next year you will pay a premium for a person in your same exact situation but one year older. The following year the premium increases again as you will be paying a premium for a person two years older. Premiums increase annually in order to cover increased risk with age. Also referred to as increasing premium term insurance and annual renewal term assurance.

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Z 

Zoning

Municipal or local government laws which dictate how real property can and cannot be used in certain areas. For example, an area zoned or specified as a commercial area cannot be used as residential and vice versa. These laws limit commercial use of land because they want to prevent oil, manufacturing or other type of businesses from building in a neighborhood with families. However, these laws can be modified or suspended if construction of the property will serve to help the community advance economically.

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