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58 terms

Insurance and lead glossary for agencies

Clear, sourced definitions of the terms that appear in our calculators, your leads and the rules around them — written so you can share them with prospects.

A

Account rounding
Account rounding is the practice of writing additional lines of coverage for an existing client, for example adding life, umbrella or disability to a household that already has home and auto with the agency. Rounded accounts tend to be more profitable and are less likely to leave, because the relationship covers more of the client's needs.
Activities of daily living
Activities of daily living (ADLs) are basic self-care tasks used to trigger long-term care benefits: bathing, dressing, eating, toileting, continence and transferring in and out of a bed or chair. Needing substantial help with a set number of them, or having a severe cognitive impairment, is what usually starts a long-term care claim.
Annuitization
Annuitization is the irreversible step of converting an annuity's accumulated value into a series of guaranteed income payments, for a set period, for life, or for joint lives. Once a contract is annuitized, the owner generally gives up access to the lump sum in exchange for the payment stream.

B

Benchmark silver plan
The benchmark silver plan is the second-lowest-cost silver plan available to a household in its area on the Health Insurance Marketplace. The premium tax credit is calculated as the difference between that plan's premium and the amount the household is expected to contribute based on income, whichever plan the household actually buys.
Benefit period
The benefit period is the maximum length of time a disability or long-term care policy will keep paying once a claim is approved, for example two years, five years or to a stated age such as 65. Longer benefit periods cost more but protect against the disabilities and care episodes that cause the largest losses.
Business interruption insurance
Business interruption insurance, also called business income coverage, replaces lost net income and pays continuing expenses such as payroll and rent while a business is closed or slowed by a covered physical loss. It is usually part of a commercial property or business owner's policy and is subject to a waiting period and a time or dollar limit.
Buy-sell agreement
A buy-sell agreement is a contract among business owners that sets what happens to an owner's share if they die, become disabled, retire or leave. It fixes who may buy the interest and how the price is set. Life and disability insurance are commonly used to fund the purchase so the cash is available when the event happens.

C

Cancel For Any Reason
Cancel For Any Reason (CFAR) is an optional travel insurance upgrade that reimburses part of a trip's prepaid, nonrefundable costs if the traveler cancels for a reason the base policy does not cover. It costs extra, must usually be bought soon after the first trip payment, and often requires cancelling a set number of days before departure.
Captive agent
A captive agent sells insurance for a single carrier or carrier group, often under that company's brand, and generally may not place business with competing insurers. Captive agents may be employees or contractors, and the carrier typically supplies products, rating tools and some marketing, along with rules on what agents may publish.
Carrier appointment
A carrier appointment is an insurer's formal authorization for a licensed producer to sell and service its products, usually filed with the state insurance department. A producer generally needs both a license for the line of authority and an appointment with the specific carrier before submitting business for that carrier in that state.
Cash surrender value
Cash surrender value is the amount a policyowner receives if they cancel a permanent life insurance policy or an annuity before it matures. It equals the accumulated cash or account value minus any surrender charges and outstanding loans, and it is usually lower than the headline cash value in early years.
Coinsurance
In health insurance, coinsurance is the percentage of a covered bill the enrollee pays after meeting the deductible, such as 20%, with the plan paying the rest until the out-of-pocket maximum is reached. In property insurance the same word refers to a different clause that penalizes carrying too little coverage.
Coverage gap
A coverage gap is the difference between what a household would need if a loss happened and the protection it already has in place. In life insurance it is the dollar shortfall after subtracting savings and existing policies from the total need; in other lines it is any risk left uninsured or underinsured.
Critical illness insurance
Critical illness insurance pays a lump sum if the insured is diagnosed with a covered condition, such as certain cancers, a heart attack or a stroke. The money can be spent on anything, from deductibles to lost income, which makes it a supplement to health and disability coverage rather than a substitute for either.

D

Decreasing term
Decreasing term life insurance is a term policy whose death benefit shrinks over the policy period, usually on a schedule designed to track a declining loan balance such as a mortgage. Premiums typically stay level. It is cheaper than level term with the same starting face amount but leaves less coverage in later years.
DIME method
The DIME method is a quick life insurance needs formula that adds four items: Debts, Income replacement for a set number of years, the Mortgage balance and Education costs for children. Existing coverage and savings are then subtracted to show how much new death benefit a family may need.
Dwelling coverage
Dwelling coverage, often Coverage A on a homeowners policy, pays to repair or rebuild the house itself and attached structures after a covered loss. The limit should reflect the cost to rebuild at current local labor and material prices, which is a different figure from the home's market value or its purchase price.

E

Elimination period
The elimination period is the waiting time between the start of a disability or care need and the first day benefits are payable. Disability policies commonly use periods such as 30, 90 or 180 days, and long-term care policies use a similar wait. A longer elimination period lowers the premium but requires more savings to bridge the gap.
Experience modification factor
The experience modification factor, or mod, adjusts a business's workers' compensation premium up or down by comparing its actual claims history with the expected losses for similar businesses in its classifications. A mod of 1.00 is average; below 1.00 earns a credit and above 1.00 adds a debit.

F

Federal poverty level
The federal poverty level (FPL) is an income measure, based on the poverty guidelines published each year by the US Department of Health and Human Services, that varies by household size. Health programs use percentages of it to set eligibility for Medicaid, the Children's Health Insurance Program and Marketplace premium tax credits.
Final expense insurance
Final expense insurance is a small whole life policy, typically with a modest face amount, designed to pay for a funeral, burial or cremation and the bills left at death. It is marketed mainly to older adults and is often issued with simplified underwriting based on a short health questionnaire rather than a medical exam.
Fixed annuity
A fixed annuity is a contract with an insurance company that credits a guaranteed interest rate for a set period, grows tax-deferred, and can later be turned into income. The insurer bears the investment risk. Fixed annuities are insurance products, sold under an insurance license and subject to state suitability or best-interest rules.

G

Graded death benefit
A graded death benefit limits what a life policy pays if the insured dies of natural causes during the first policy years, often returning premiums plus interest or a partial benefit instead of the full face amount. Accidental deaths are usually paid in full from day one. It is common on guaranteed or simplified-issue final expense plans.

H

Health savings account
A health savings account (HSA) is a tax-advantaged account for medical costs that is available only to people covered by a qualifying high-deductible health plan. Contributions can be tax-deductible, growth is untaxed, and withdrawals for qualified medical expenses are tax-free. Unused money rolls over every year and stays with the owner.
High-deductible health plan
A high-deductible health plan (HDHP) is health coverage that meets IRS minimum-deductible and maximum out-of-pocket thresholds, which makes the enrollee eligible to open and fund a health savings account. HDHPs usually carry lower premiums than traditional plans in exchange for paying more before coverage begins.
HO-6
HO-6 is the standard homeowners policy form for condominium and co-op unit owners. It covers the owner's personal property, the interior of the unit that the association's master policy does not, improvements and betterments, personal liability, and loss of use. Loss assessment coverage is often included or available.
Human life value
Human life value (HLV) is the present value of the income a person is expected to earn for their family over the rest of their working life, after removing what they would have spent on themselves. It answers the question of what a breadwinner is economically worth to the people who depend on them.

I

Income replacement
Income replacement is the share of a person's earnings that insurance is meant to restore if they die or can no longer work. In life insurance it is usually expressed as a number of years of income; in disability insurance it is a percentage of monthly pay, since benefits rarely replace every dollar.
Independent agent
An independent agent, or independent agency, is appointed with multiple insurance carriers and can place each client with whichever company best fits their needs and price. The agency usually owns its book of business, meaning the client relationships and renewal rights stay with the agency rather than a carrier.
Insurance-to-value
Insurance-to-value (ITV) is the ratio between a property's coverage limit and its full replacement cost. Many property policies require coverage of at least a stated percentage of replacement cost, commonly 80%, to settle partial losses on a full replacement cost basis; carrying less can reduce what a claim pays.
IRMAA
IRMAA, the income-related monthly adjustment amount, is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose income exceeds set thresholds. The Social Security Administration determines it from modified adjusted gross income on the tax return filed two years earlier, using brackets that are updated each year.

K

Key person insurance
Key person insurance is life or disability coverage a business buys on an owner or employee whose loss would seriously hurt revenue or operations. The business owns the policy, pays the premium and is the beneficiary, using the proceeds to recruit a replacement, cover lost profits or reassure lenders and customers.

L

Loss assessment
Loss assessment coverage pays a unit owner's share of a special assessment charged by a condominium or homeowners association after a covered loss to common property, or a liability claim against the association that exceeds the master policy. Base limits are often modest and can usually be increased by endorsement.

M

Medicare Advantage
Medicare Advantage (Part C) is an alternative to Original Medicare in which a private insurer approved by Medicare provides Part A and Part B benefits, usually through a network, often with drug coverage and extra benefits included. Plans must cap in-network out-of-pocket costs each year, and enrollees still pay their Part B premium.
Medigap
Medigap, or Medicare Supplement insurance, is a private policy that helps pay costs Original Medicare leaves behind, such as deductibles and coinsurance. Plans are standardized by letter, so a given plan letter offers the same benefits from every insurer in most states, and only price and service differ.
Modified adjusted gross income
Modified adjusted gross income (MAGI) is adjusted gross income from a tax return with certain items added back, such as tax-exempt interest and some foreign income. Marketplace subsidies and Medicare's income-related surcharges both rely on a version of MAGI, though the exact add-backs differ between the two programs.
Mortgage protection insurance
Mortgage protection insurance is life coverage sold to homeowners to pay off or keep paying the mortgage if the borrower dies, and some versions add disability or critical illness riders. Agent-sold policies usually pay the family, not the lender, which distinguishes them from lender-placed mortgage life products.

N

NFIP
The NFIP, or National Flood Insurance Program, is the federal program run by FEMA that makes flood insurance available in participating communities. Standard homeowners policies exclude flood, so NFIP policies, or private flood policies, fill that gap. NFIP policies generally have a 30-day waiting period before coverage starts.

O

Out-of-pocket maximum
The out-of-pocket maximum is the most an enrollee pays for covered in-network care in a plan year through deductibles, copays and coinsurance. After it is reached, the plan pays 100% of covered services for the rest of the year. Premiums do not count toward it, and out-of-network care may not either.
Own-occupation
Own-occupation is a definition of disability under which the insured is considered disabled if they cannot perform the material duties of their own specific occupation, even if they could work in another field. It is broader and more expensive than an any-occupation definition, and is valued most by physicians, dentists and other specialists.

P

Pre-qualified lead
A pre-qualified lead is a prospect who has supplied enough information about their situation, such as income, debts, coverage in force or expected costs, for a producer to judge fit and need before the first call. It is not an underwriting approval; it means the conversation can start with specifics rather than discovery.
Premium tax credit
The premium tax credit is a federal subsidy that lowers the monthly cost of a health plan bought through the Health Insurance Marketplace. Its size depends on household income relative to the federal poverty level and on the cost of the local benchmark silver plan. It can be paid in advance to the insurer and is reconciled at tax time.
Prior express written consent
Prior express written consent is the standard the Telephone Consumer Protection Act regulations require before a business places telemarketing calls or texts using an autodialer or an artificial or prerecorded voice. It must be a signed written agreement, which can be electronic, that clearly authorizes the seller to contact the person at a specific number.
Producer license
A producer license is a state-issued license that allows a person or agency to sell, solicit or negotiate insurance in that state for specific lines of authority, such as life, accident and health, property or casualty. Selling in another state requires a nonresident license there, and selling variable products also requires securities registration.

R

Replacement cost vs actual cash value
Replacement cost pays what it takes to repair or replace damaged property with new property of like kind and quality. Actual cash value pays replacement cost minus depreciation, so an older roof or ten-year-old furniture returns much less. The settlement basis can matter as much to a claim payment as the limit itself.

S

Scope of appointment
A scope of appointment (SOA) is a record, required by CMS, in which a Medicare beneficiary agrees in advance which types of products will be discussed at a personal marketing appointment, such as Medicare Advantage or Part D. Agents may not discuss product types outside the documented scope without a new agreement.
Single premium immediate annuity
A single premium immediate annuity (SPIA) converts one lump-sum payment into a stream of income that starts within about a year. Payments can last for a fixed period or for life, and life-contingent versions transfer longevity risk to the insurer in exchange for giving up access to the principal.
Split liability limits
Split liability limits express auto liability coverage as three numbers, such as 100/300/100: the most paid for bodily injury to one person, for all bodily injury in one accident, and for property damage, in thousands of dollars. They contrast with a combined single limit that applies one amount to the whole accident.
Surrender charge
A surrender charge is a fee an insurer deducts when an annuity or permanent life policy is cashed in, or more than the free-withdrawal amount is taken, during the early years of the contract. It is usually a percentage that declines each year until it disappears at the end of the surrender period.

T

Term life insurance
Term life insurance pays a death benefit if the insured dies within a fixed period, such as 10, 20 or 30 years, and builds no cash value. Because it covers only a defined window, it generally costs far less per dollar of coverage than permanent life insurance, which makes it the usual fit for large income-replacement needs.
TPMO disclaimer
The TPMO disclaimer is a statement CMS requires third-party marketing organizations, including many agencies and brokers, to use when marketing Medicare Advantage and Part D plans. It tells beneficiaries that the organization does not offer every plan in the area and how many organizations and plans it represents, and points them to other sources of information.

U

Umbrella policy
A personal umbrella policy provides extra liability coverage above the limits of underlying home, auto and watercraft policies, usually in million-dollar increments. It may also cover some claims the underlying policies exclude. Carriers require minimum underlying liability limits before they will write the umbrella.
Uninsured motorist coverage
Uninsured motorist (UM) coverage pays for the policyholder's injuries, and in some states property damage, when an at-fault driver has no insurance or is a hit-and-run driver. Underinsured motorist (UIM) coverage applies when the at-fault driver's limits are too low. Availability, required offers and rejection rules differ by state.
UTM parameters
UTM parameters are tags added to the end of a link, such as utm_source, utm_medium and utm_campaign, that tell analytics and lead systems where a visitor came from. They let an agency attribute each lead to a specific ad, email, post or partner instead of guessing which marketing worked.

V

Variable annuity
A variable annuity is an annuity whose value rises and falls with the performance of investment sub-accounts the owner chooses. It is both an insurance contract and a security, so selling one requires a securities registration as well as a life insurance license. Fees for mortality, administration, funds and riders reduce returns.

W

Webhook
A webhook is an automated message one system sends to another the moment an event happens, usually as an HTTPS request carrying JSON data. In lead handling, a webhook delivers each new submission to a CRM, automation tool or custom endpoint immediately, with no manual export or email parsing.
Whole life insurance
Whole life insurance is permanent coverage that lasts for the insured's entire life as long as premiums are paid. It combines a guaranteed death benefit with a cash value that grows on a guaranteed schedule, and participating policies may also pay dividends, which are never guaranteed.

X

X-date
An X-date is the expiration or renewal date of a prospect's current policy with another agency or carrier. P&C agencies track X-dates so they can contact the prospect shortly before renewal, when a switch is practical and the prospect is most open to a review.

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