Accident
An unforeseen and unintended event.
Accumulation Period
A period of consecutive months that begins on the first day of disability and during which the elimination period must be satisfied.
Any occupation
A policy set up on this basis will pay out if incapacity prevents the policyholder from carrying out any occupation which would be considered reasonable given their education and training.
Annualization of Waived Premium
If the policy anniversary falls during the period that premiums are being waived, an entire year’s premium will be waived regardless of the premium payment mode used by the insured.
Application
A form on which the company requests information from the prospective insured (applicant) upon which the home office underwriters decide whether or not to issue the policy. It then becomes part of the contract when the policy is issued.
Association Coverage
Group insurance issued to an association rather than to the employees of a business or members of a union.
Automatic Increase Rider
An optional benefit which provides automatic increases each year, despite changes in health, income or occupation.
Benefit
The amount that will be paid out by a policy. Also called cover or sum assured.
Benefit Period
The longest period of time for which benefits are payable for continuous disability.
Capital Sum Benefit
The benefit that will be provided when the insured suffers complete loss of a hand or foot, severed through or above the wrist or ankle, or loss of the entire sight in one eye, and survives it for 30 days.
Claim
A request for payment of the benefit when incapacity prevents an individual from working.
Conditional Receipt
A receipt given for premium payment accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of prepayment or the date on which the last of the underwriting requirements, such as medical examination, has been fulfilled.
Conversion Privilege
The right given to an insured person to change insurance without evidence of medical insurability, usually to an individual policy, upon termination of coverage under a group contract.
Cost of living Rider
An optional benefit which provides for increases in the disability benefit during periods of disability.
Cumulative Benefit
In an overhead expense policy, the monthly benefit times the number of months the insured has been disabled after the elimination period.
Current Expenses
An insured’s expenses in each month while residually disabled.
Current Income
All income which an insured received on a cash basis in each month while residually disabled.
Cover
The amount that will be paid out by a policy. Also called cover or sum assured.
Deferment period
The time between the start of incapacity and commencement of payment of the benefit. Also called the waiting period.
Disability
An individual’s physical or mental inability to perform the major duties of his or her occupation because of sickness or injury.
Earned Income
Gross salary, wages, commissions, fees, etc., derived from active employment. This does not include investment income, rents, or amounts received from annuities or insurance policies.
Elimination Period
The consecutive number of days for which no benefits are payable at the start of a claim. An insured must be disabled all of those days.
Entity Arrangement
An arrangement between the business entity and the business owners that in the event of an owner’s death or disability, the business entity will purchase the business interest of the diseased or disabled owner.
Exclusions
Certain conditions and causes that are not covered by the policy. These are listed in the policy.
Expenses
The regular business expenses that an insured may deduct from gross earned income for federal tax purposes.
Future Increase Option
An optional benefit that allows the insured to purchase additional coverage up to a stated age, regardless of health, as long as his or her income warrants the increase.
Group Income Protection
An insurance scheme taken out by employers to cover a proportion of salary in the event that an employee is unable to work due to illness or injury. For employers wanting a quote please
Group Insurance
A policy covering the employees of a business or members of a union.
Hazardous pursuits
A hobby or pastime that may mean the insurer taking on additional risk, e.g. mountaineering, scuba diving, motor racing etc.
Incapacity
Inability to work due to illness, injury or disability.
Income Protection
The technical name for a policy that provides insurance against earnings lost due to incapacity
Income
Gross earned income, less business expenses, but before any other deductions. Income includes salaries, wages, fees, commissions, bonuses, business profits or other payments for personal services. It does not include unearned income from savings, investments, or real property.
Indexing
A provision that increases the insured’s pre-disability earnings every year according to a given formula, so residual disability benefits will not lose purchasing power because of inflation.
Indexation
Automatic increases to the benefit and premium each year, either at a set percentage or linked to inflation.
Injury
Accidental bodily injury that occurs while a policy is in force.
Instalments
A series of payments at regular intervals over a period of time.
Key Employee
An owner or a highly skilled employee whose efforts are directly responsible for some measure of profitability to the firm.
Loss of Income
The difference between an insured’s prior income and current income. In better policies, if the loss of income is more than 75% of prior income, the loss is deemed to be 100% for purposes of the Residual Disability Rider.
Loss Payee
The individual or entity named to receive all benefits.
Lump Sum
A single payment of benefits, with no further payments due.
Occupation
An insured’s regular occupation or profession at the time of becoming disabled.
Occupation class
The category into which an insurer places an occupation dependent on the risks involved with that occupation.
Optional Benefit
An additional benefit offered by the insurance company to certain occupational classes that may be included in a policy at the applicant’s request, for an additional premium.
Owner
As named in the policy schedule page, the owner’s rights include, but are not limited to, the right to renew the policy and to request any change in benefits.
Own Occupation (Own Occ)
A definition of disability which states that as long as the insured is unable to perform the duties of his or her regular occupation (or occupations, if more than one) at the time of disability, the insured will be considered eligible to receive the full benefit under the policy.
Partial Disability
An insured’s physical inability to perform some, but not all, of the duties of his or her regular occupation due to sickness or injury.
Physician
A legally qualified physician other than the insured, who is not a loss payee or owner under the policy.
Policy
All material that constitutes the contract of insurance.
Policyholder
An individual taking out insurance.
Policy Term
The effective period of the policy, usually the period for which premiums are paid.
Pre-Disability Earnings
The earnings level of the insured prior to the onset of disability.
Pre-Existing Condition
An injury, illness, or physical condition that existed prior to the issue of the disability policy.
Presumptive Disability
The presumption that the insured is totally disabled, even if still at work, if sickness or injury results in the total and complete loss of sight in both eyes, hearing in both ears, power of speech, or use of any two limbs. The elimination period is waived from the date of the loss and total disability benefits are payable while such loss continues until the end of the benefit period.
Prior Expenses
An insured’s average monthly expenses for the same tax year on which his or her prior income is based for purposes of the residual disability rider.
Prior Income
The insured’s average monthly income for the tax year with the highest earnings in the three years just prior to the date on which he or she became disabled.
Premium
The amount a policyholder pays for the insurance, either monthly or annually.
Provider
The insurance company providing the policy.
Recovery Disability Rider
A rider that provides reduced benefits when an insured returns to work following a compensational period of total disability.
Recurrent Periods of Disability
In some policies, recurrent periods of disability from the same cause or causes will be considered one continuous period of disability unless each period is separated by a recovery of six months or more.
Rehabilitation Benefit
A benefit paid to help meet some of the costs an insured may incur by enrolling in a rehabilitation program for the purpose of returning to his or her occupation.
Sickness
A sickness or disease, including a pregnancy, which is first diagnosed and treated while the policy is in force.
Sum assured
The amount that will be paid out by a policy. Also called cover or sum assured.
Term
The age until which an individual has cover, or in the event of a claim the age until which the benefit will continue to be paid (unless there is an earlier return to work or the policyholder dies).
Total Disability
The physical or mental inability to perform the major duties of one’s occupation because of sickness or injury.
Trigger Date
The date on which the buyout obligation becomes contractually effective under the terms of the buy-sell agreement.
Underwriter
In health and disability insurance, used to designate that official or person in the home office who, collating all the facts about the risk, accepts the risk and assigns the rate, or declines the risk – the home office underwriter.
Underwriting
The process of selecting risks and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process includes rejection of risks.
Waiting period
The time between the start of incapacity and commencement of payment of the benefit. Also called the waiting period.
Waiver of Elimination Period
In some policies, the elimination period will be waived if an insured becomes disabled within five years after the end of a period of disability which lasted longer than six months and for which benefits were paid.
Waiver of Premium
In some policies, a provision which relieves the insured of having to make premium payments after he or she has been disabled for 90 days, or the elimination period, if shorter. In addition, premiums paid during those 90 days are refunded and premiums due during the 90 days after recovery are waived.