Insurance Glossary for Federal Employees

A 

Accident Insurance: Type of insurance coverage that provides a cash benefit to individuals in an accident.  

Accidental Death Benefits: A benefit that pays the beneficiary a benefit if the insured person dies due to an accident. 

Activities of Daily Living (ADLs): ADLs are basic tasks essential for self-care and independent living. They are often used to assess an individual's functional status and determine eligibility for certain types of insurance benefits, such as long-term care insurance. These activities include Bathing, Dressing, Eating, Transferring, Toileting, and Continence. 

Actual Cash Value: The amount of money an insurance company will pay for a covered loss, which is the replacement cost of the damaged or lost item minus depreciation. Depreciation accounts for the age, wear and tear, and reduced useful life of the item. 

Additional Insured: A person or entity other than the policyholder included in a policy to receive coverage under that policy. 

Annual Maximum: The maximum amount that an insurance plan will pay for covered services in a given year.   

Annuity: A financial product that provides a stream of payments to an individual, typically used as a tool for retirement income. Payments can be made either immediately or at a future date and can be structured to continue for a specific period or for the lifetime of the annuitant. 

Annuitant: A person who receives the payments from an annuity during his or her lifetime. 

Annuity Period: The time span between the benefit payments made under an annuity contract. 

Assisted Living Benefit: Feature of some disability insurance policies that provides additional benefits should your disability cause you to lose 2 or more activities of daily living. In Long Term Care Insurance, it is a provision that covers the costs associated with residing in an assisted living facility.   

B 

Back to Work Incentive: A feature of some disability insurance policies that provides additional benefits or support to encourage insured individuals to return to work after a period of disability. This may include financial incentives, vocational training, or rehabilitation services. 

Benefits: Payments or services provided by the insurance company to the policyholder or beneficiaries under an insurance policy.   

Benefit Amount: Refers to the specific monetary benefit provided by a disability insurance policy in the event of a covered disability.    

Beneficiary: A person or entity designated to receive the benefits from an insurance policy in case of a claim.   

Binder: This is a provisional or interim agreement that offers insurance coverage until a formal policy can be issued or delivered. 

Bodily Injury: Physical injury to a person, including death.  

C 

Cancellation: Termination of an insurance policy by the company or insured before the renewal date. 

Carrier: The insurance company that underwrites and issues the insurance policy. The carrier assumes the risk of the policyholder and is responsible for paying claims in accordance with the terms of the policy. 

Certificates of Coverage: A document issued by an insurance company that outlines the key details and benefits of an insurance policy. 

Claim: A request made by the policyholder to the insurance company for payment of covered losses or benefits. 

Claimant: Any policyholder who submits a claim to an insurance company for coverage.  

Coverage: The scope of protection provided by an insurance policy.   

Co-payment: A fixed amount that an insured person pays for covered services, typically at the time of service.   

Critical Illness Insurance: Type of insurance coverage that provides a lump-sum payment to the insured individual upon diagnosis of a specified critical illness or medical condition, such as cancer, heart attack, stroke, or organ failure.    

D 

Death benefit: Amount of money a beneficiary will receive when a person with a life insurance policy dies. A death benefit is also known as a life insurance payout.  

Deductible: The amount of money an insured person must pay out of pocket before the insurance company provides a benefit   

Depreciation: A decrease in the value of property due to wear, age, or other cause. 

Disability Insurance: Type of insurance replaces your income in the event of a disability that prevents you from working and earning income. 

E 

Effective Date: The date on which an insurance policy becomes effective. 

Elimination Period: The amount of time that must pass after an insured event occurs before the insurance policy begins to pay out benefits. During this period, the policyholder is responsible for covering any expenses. 

Emergency Care: Health care services delivered in a hospital emergency room or a similar facility are intended to assess and stabilize acute and serious medical conditions.

Endorsement: Amendment to the policy used to add or delete coverage. Also referred to as a "rider." 

Exclusion: Specific conditions or circumstances listed in an insurance policy for which coverage will not be provided.   

Expiration Date: The date on which the policy ends. 

Estate Conservation: Also known as estate planning, is the process of arranging and managing one's assets and affairs to ensure that their estate is transferred to desired beneficiaries in an efficient and tax-effective manner upon their death.    

F 

Face Amount: The dollar amount to be paid to the beneficiary when the insured dies. It does not include other amounts that may be paid from insurance purchased with dividends or any policy riders.  

FERS (Federal Employee Retirement System): Retirement plan for federal employees that consists of three main components: a basic pension plan, Social Security benefits, and the Thrift Savings Plan (TSP).    

G 

Gap Insurance: Type of coverage designed to cover the out-of-pocket costs that may arise from inpatient and/or outpatient care under your medical plan. This includes expenses like deductibles, copays, and coinsurance. The insurance extends to various aspects of medical care, including inpatient hospital stays, surgeries, and certain charges incurred while hospitalized. 

Grace Period: Designated time frame following the premium's due date, during which the payment can still be made to keep the policy active without any break. This period ensures that the policy doesn't lapse immediately after the due date. It's important for policyholders to check their individual policies, as the grace period can vary, and some policies might offer different terms or durations for this period. 

H 

Hospital Confinement Policies: Policies that pay a fixed amount each day you are in the hospital. 

Hospital Indemnity Insurance: Provides financial compensation for hospital-related expenses incurred due to illness or injury, offering a predetermined benefit amount for each day spent in the hospital to help offset costs such as room and board, surgical procedures, and other medical services.  

I   

Inpatient Medical Care: Medical and surgical care usually received in a hospital or skilled nursing home environment. 

Insured: The person or organization covered by an insurance policy. 

Insurer: The insurance company. 

L 

Liability Insurance: Insurance coverage that provides coverage for claims resulting from injuries and damage to other people or property. It covers legal costs and payouts for which the insured party would be responsible if found legally liable. 

Life insurance: Financial product that provides a lump sum payment to designated beneficiaries upon the death of the insured individual   

Lifetime Security Benefit: A feature of some disability insurance policies that guarantees ongoing financial support to the insured for the duration of their lifetime if they become permanently disabled. It provides a steady stream of income to ensure financial stability and security.   

Limit: Maximum amount a policy will pay either overall or under a particular coverage. 

Long-Term Care Insurance: Type of insurance policy designed to provide coverage for long-term care services costs. These services may include assistance with daily living activities, skilled nursing care, rehabilitation, and other forms of assistance needed due to chronic illness, disability, or cognitive impairment.    

Long-Term Disability: Provides coverage for disabilities expected to last for an extended period, often beyond one year or even for the rest of the insured's life. It replaces a portion of the insured's income during the disability period, ensuring long-term financial protection.   

Lump Sum Payments: Predetermined amount of money paid to the insured individual upon diagnosis of a covered condition, rather than periodic payments or reimbursement for specific expenses.  

M 

Medically Necessary Care: Health care that results from illness or injury or is otherwise authorized by the health care plan. This term can be defined differently from one health care plan to another. 

O 

Open enrollment period: An annual window when individuals can enroll in or change insurance benefits.   

Out of Pocket Maximum: Highest amount you'll pay during a policy period (typically a year) for your portion of coinsurance for covered health services. After reaching this maximum, your health plan usually covers 100% of your healthcare costs, although you still need to pay your premium. 

Outpatient Services: Medical care provided outside of hospital admissions. These services are often given in clinics, doctors' offices, outpatient hospital departments, home health services, ambulatory surgical centers, hospices, and kidney dialysis centers. 

Own Occupation: Provision in disability insurance policies that defines disability based on the insured individual's ability to perform the duties of their own occupation. If the insured is unable to perform the duties of their specific occupation due to disability, they are considered disabled even if they can work in a different occupation.   

P 

Personal Risk Insurance: Insurance on family dwellings of not more than four units, household goods, farm premises, buildings, machinery, equipment or livestock, private passenger vehicles, and watercraft. 

Policy: A contract between an insurance company and an individual or organization that outlines the terms of coverage.   

Policy Limit: The maximum amount a policy will pay, either overall or under a particular coverage. 

Policyholder: The person or entity that owns an insurance policy.   

Premium: The amount of money an individual or business pays for an insurance policy.   

Pre-existing Condition: A health condition that existed before the start of an insurance policy, which may affect coverage or premiums.  

Property Damage: Physical injury to, destruction of, or loss of use of tangible property. 

Q 

Quote: An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.   

R 

Replacement Cost: The amount of money it would take to replace, repair, or rebuild an insured asset with a new one of similar kind and quality, without deducting for depreciation. This ensures that policyholders can replace their losses with new items of similar kind and quality. 

Replacement Value: The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions. 

Rehabilitative Benefit: A feature of some disability insurance policies that covers the cost of rehabilitative services or treatments aimed at helping the insured recover from a disability and regain the ability to work. It may include physical therapy, occupational therapy, vocational training, or other forms of rehabilitation.   

Rider: An optional provision added to an insurance policy to modify or expand coverage.   

S 

Short-Term Disability: Provides coverage for disabilities that are expected to last for a relatively short period of time, typically up to one year. It replaces a portion of the insured's income during the disability period, providing financial support until the insured can return to work. 

Special Groups Special Retirement: Special retirement provisions available to air traffic controllers, certain law enforcement officers, and firefighters within the federal government. These provisions include enhanced retirement benefits, earlier retirement eligibility, and special calculation methods for pension benefits, designed to recognize the unique risks and challenges faced by individuals in these professions. 

Supplemental Insurance: Additional coverage that policyholders can purchase to complement their primary insurance policies. It helps cover costs not included in standard insurance plans 

T 

Term Life Insurance: A type of life insurance that provides coverage for a specific period, typically with a fixed premium.   

TSP (Thrift Savings Plan): The Thrift Savings Plan is a retirement savings and investment plan for federal employees, including members of the uniformed services. Like a 401(k) private sector plan, TSP allows participants to contribute a portion of their salary to a tax-deferred investment account. Participants can choose from a variety of investment options, such as stock funds, bond funds, and lifecycle funds, to build retirement savings over time.   

U 

Underwriting: The process by which an insurance company evaluates the risk of insuring a person or entity and determines the appropriate premium.   

V 

Vocational Training: Refers to education or training programs designed to help individuals acquire the skills and knowledge needed to pursue a specific occupation or career path. It may include classroom instruction, hands-on training, apprenticeships, or other forms of skill development.   

W 

Waiting period: The window of time before a new employee becomes eligible for insurance coverage under an organization’s healthcare plan.