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Glossary of Terms
(Click on the alphabet letter to view terms beginning with that letter.)
Activities of Daily Living (ADLs)
These are Bathing, Dressing, Eating, Transferring, Continence, and toileting. Many public programs determine eligibility for services according to a person's need for help with ADLs. Many long-term care insurance policies use the inability to do a certain number of ADLs (such as 2 of 6) as criteria for paying benefits. Basic actions that independently functioning individuals perform on a daily basis: Bathing- includes grooming activities such as shaving, and brushing teeth and hair. Dressing- choosing appropriate garments and being able to dress and undress, having no trouble with buttons, zippers or other fasteners. Eating- being able to feed oneself.
Transferring- being able to walk, or, if not ambulatory, being able to transfer oneself from bed to wheelchair and back. Continence- being able to control one’s bowels and bladder, or manage one’s incontinence independently.
Toileting- being able to use the toilet.
1. A person who receives the benefits of an annuity or pension. 2. The person upon whom a life-insurance contract is based.
*Investopedia Says: 1. In other words, the annuitant is the beneficiary of an annuity or pension. 2. An annuitant can be the contract holder or someone else to whom the title was designated. Proceeds of the contract are given to the beneficiary upon the annuitant's death in order to protect the beneficiary from a loss of income.
An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is in the annuitization phase.
A person or entity named in a will or financial contract as the inheritor of property when the property owner dies.
*Investopedia Says: A beneficiary can be a spouse, child, charity, or any entity or person to whom the property owner would like to leave his or her possessions and assets.
Benefit Triggers (Triggers)
Insurance companies use benefit triggers as criteria to determine when you are eligible to receive benefits. The most common benefit triggers for long-term care insurance are: 1. Needing help with two or more Activities of Daily Living 2. Having a Cognitive Impairment such as Alzheimer's Disease
A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such as doctor visits and prescriptions drugs at the time the service is rendered, with the insurer paying the remaining costs. However, unlike coinsurance, where the insured is required to pay a certain percentage of the covered costs, co-pay plans require the insured to pay a specified dollar amount.
The percent of covered health care costs that a member pays.
Credit Life Insurance
A life insurance policy designed to pay off a borrower's debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value. *Investopedia Says: Credit life insurance can protect a person's dependents. It may also be required by some lenders; therefore, it is important to read the fine print of any loan agreement to determine whether credit life insurance is required.
The amount on a life-insurance policy or pension that is payable to the beneficiary when the annuitant passes away. Also known as "survivor benefit".
*Investopedia Says: A death benefit may be a percentage of the annuitant's pension. For example, a beneficiary might be entitled to 65% of the annuitant's monthly pension. Alternatively, the benefit may be a large lump-sum payment from a life-insurance policy. The size and structure of the payment is determined by the type of policy the annuitant held at the time of death.
The amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs.
An “accumulation” annuity product under which payments are made by the annuitant (either through a single premium or a series of periodic payments) and left to accumulate on a tax-deferred basis over a period of years. It usually begins paying an income to the annuitant at retirement.
Policies providing only dental treatment benefits such as routine dental examinations, preventive dental work, and dental procedures needed to treat tooth decay and diseases of the teeth and jaw.
A type of health insurance coverage, it provides for the payment of regular, periodic income should the insured become disabled from illness or injury, and as a result can no longer work during that time period. Also referred to as disability-income insurance.
The length of time between when an injury or illness begins and receiving benefit payments from an insurer. Also known as the "waiting" or "qualifying" period, policyholders must in the interim pay for these services and can be thought of as a deductible.
An embedded deductible means the individual deductible is embedded in the family deductible. This gives you and your family the opportunity to have medical bills covered prior to the family deductible being met.
Process by which Medicaid recovers an amount of money from the estate of a person who received Medicaid. The amount Medicaid recovers cannot be greater than the amount it contributed to the person's medical care.
Fixed annuities are an investment vehicle offered by insurance companies that guarantee a stream of fixed payments over the life of the annuity. The insurer, not the insured, takes the investment risk. Fixed annuities are sometimes called a fixed dollar annuity.
An annuity contract that is purchased with a single lump-sum payment and in exchange, pays a guaranteed income that starts almost immediately. An immediate payment annuity is especially suitable for retirees who are concerned about outliving their savings. However, one disadvantage is that an immediate payment annuity is irreversible once it has been purchased. This may pose a problem should the annuitant need a large sum to deal with an emergency.
An indexed annuity is a contract issued and guaranteed1 by an insurance company. You invest an amount of money (premium) in return for protection against down markets, the potential for some investment growth, which is linked to an index (e.g., the S&P 500® Index), and in some cases a guaranteed level of lifetime income through optional riders.
A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured.
*Investopedia Says: The goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as daycare, mortgage payments and college? It is prudent to re-evaluate your life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.
Long Term Care Insurance (LTC)
Coverage that provides nursing-home care, home-health care, personal or adult day care usually for individuals above the age of 65 or with a chronic or disabling condition that needs constant supervision. LTC insurance offers more flexibility and options than many public assistance programs.
*Investopedia Says: Long-term care is usually very expensive, which is why most people need insurance. For example, on average, nursing facilities providing skilled care charge $150 to $300 per day, or over $80,000 a year or more. Even custodial home care at three visits per week can cost over $9,000 a year. Most LTC insurance policies will cover only a specific dollar amount for each day you spend in a nursing facility or for each home-care visit. Thus, when considering an LTC insurance policy, read the policies carefully and compare the benefits to determine which policy will best meet your own needs.
Major Medical Health Plan
Individual major medical insurance is an option for individuals and families who do not have access to a health plan through an employer or public program. Individual major medical plans offer comprehensive health insurance coverage and may be purchased from a health insurance carrier, agent or broker.
A joint federal and state program that helps low-income individuals or families pay for the costs associated with long-term medical and custodial care, provided they qualify. Although largely funded by the federal government, Medicaid is run by the state where coverage may vary.
*Investopedia Says: In many states, nursing home stays for non-skilled, custodial care is all that is covered, meaning staying at home and receiving medical care is not always an option. In addition, Medicaid may not be accepted by all nursing homes nor will it cover recreational activities or any other forms of non-medical care. However, it does cover the entire cost for your stay in a facility as long as you need the care.
Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). The different parts of Medicare help cover specific services:
Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance)
Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Medicare Part C (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.
Medicare Part D (prescription drug coverage)
Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
When you have a non-embedded deductible plan, your family must meet the entire deductible before any of you receive plan benefits.
The most a member will pay each year toward allowed health care costs. Once the out-of-pocket maximum is reached, the health plan pays 100 percent until the end of the calendar or benefit year.
Term Life Insurance
A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage terminate. This type of insurance policy contrasts with permanent life insurance, whose duration extends until the policy owner reaches 100 years of age (i.e. death).
*Investopedia Says: These type of policies provide a stated benefit upon death of the policy owner, provided that the death occurs within a specific time period. However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation.
Universal Life Insurance
A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder's circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.
*Investopedia Says: Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums. Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly.
Whole Life Insurance Policy
A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.
*Investopedia Says: As the most basic form of cash-value life insurance, whole life insurance is a way to accumulate wealth as regular premiums pay insurance costs and contribute to equity growth in a savings account where dividends or interest is allowed to build-up tax-deferred.
Investment information about life insurance on Answers.com. Investopedia Copyright © 2000 by Investopedia Inc.. Published by Investopedia Inc..
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