Disability Insurance Glossary of Terms
Accumulation Period: A period of consecutive months that begins on the first day of disability and during which the elimination period must be satisfied
Association Coverage: Group insurance issued to an association rather than to the employees of a business or members of a union.
Attending Physician Statement (APS): A report, completed by the proposed insured's (or, in a claim situation, the insured's) physician, which documents current and prior health history. Used in the evaluation process of approving an application or claim for benefit.
Automatic Increase Rider: An optional benefit which provides automatic increases each year at either a stated percentage, despite changes in health, income or occupation.
Benefit Period: The period of time for which benefits are payable for continuous disability. Typical benefit periods are 2 year, 5 year, to age 65 or 67.
Business Overhead Expenses: A policy that reimburses a business owner for the day-to-day expenses of the business in the event of a disability. This type of policy usually has a one or two year benefit period.
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.
Consumer Price Index: The Consumer Price Index for All Urban Consumers as published by the Federal Department of Labor. That index shows the rate of change in the cost of living (inflation) in the United States.
Conversion Privilege: The right given to an insured to convert their current group policy without evidence of medical insurability, usually to an individual policy, upon termination of coverage.
Cost of Living Adjustment Rider: An optional benefit which provides for increases in the disability benefit every 12 months (usually) of disability. The amount of increase is based on a percentage or inflation.
Cumulative Benefit: In an overhead expense policy, the monthly benefit times the number of months the insured has been disabled after the elimination period.
Earned Income: Gross salary, wages, commissions, fees, etc., derived from active employment.
Elimination Period (AKA Waiting Period): The consecutive number of days for which no benefits are payable at the start of a claim. An insured must be disabled before benefits are
payable. Typical elimination periods are 30, 60, 90, 180 or 365 days.
Exclusions: Certain conditions and causes which are not covered by the policy. These are listed in the policy many are standard others are certain pre-existing medical conditions.
Future Increase Option: An optional benefit in a disability income policy that allows the insured future increases to the policy monthly benefit at specified dates (typically on insured's policy anniversary), without medical evidence of insurability. The increase is based on financial documentation.
Graded Premium: A premium structure where premiums start out low and gradually increase each year based on schedule in the policy.
Group Insurance: A policy covering the employees of a business or members of a union or association.
Guaranteed Renewable: A type of insurance that cannot be cancelled or altered by the insurance company as long as the insured continues to pay premiums on time. However, the premium may be increased for classes of insured.
Level Premium: A premium which remains the same through the insured's age 65 or the full benefit period.
Loss of Income: The difference between an insured's prior income and current income.
Loss Payee: The individual or entity named to receive all benefits.
Monthly Indemnity: The amount the insurer will pay for each month of total disability.
Non-Cancelable: A policy which cannot be cancelled or altered by the insurance company as long as the insured continues to pay premiums on time, and whose premium will not increase up through the insured's age 65 or full benefit period.
Occupation: An insured's regular occupation or profession at the time of disability.
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: If the insured, due to sickness or injury cannot perform the material and substantial duties of insured’s own occupation in the reasonable and customary way.
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. Some policies based only on loss of income. Others it is based loss of and loss of time and duties.
Participation Limit: The total amount of coverage which will be allowed by a company from all carriers and types (group and association) based on your income.
Policy: The contract of insurance.
Pre-existing Condition: An injury, illness, or physical condition which 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 loss of sight in both eyes, hearing in both ears, 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. Some policies require disability to permanent others do not.
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.
Recovery Disability Rider: A rider which provides reduced benefits when and insured returns to work following a compensable period of disability if the insured is still losing income after returning to work.
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.
Residual Disability (called Partial Disability in CA): In better policies, a disability that causes an insured's income to fall more than 20% below its pre-disability level. Some companies include a loss of time requirement or the inability to perform some duties of the insured's regular occupation.
Social Insurance Substitute Rider: A rider which pays an additional benefit if the insured is disabled under the policy and not receiving social insurance benefits. Requires the insured to apply for the social insurance, such as state disability or social security, and get declined.
State Disability Insurance: Laws enacted in California, Hawaii, New Jersey, New York and Rhode Island which provide the payment of benefits for the non-job-related sickness or injury. Pays for a maximum benefit of usually 18 months.
Total Disability: The physical or mental inability to perform the material duties of the insured’s occupation because of sickness or injury.
Waiting Period: The number of days for which no benefits are payable at the start of a claim. An insured must be disabled all of those days before benefits are payable. Typical elimination periods are 30, 60, 90, or 180 days. In some policies days do not need to be consecutive but within a specific period of time.
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 waives the policy premium after the insured has been disabled for 90 days, or the elimination period, if shorter. In addition, premiums paid during those 90 days are refunded.
Worker's Compensation: Benefits paid to a worker to compensate for losses caused by a work-related injury or illness.
Association Coverage: Group insurance issued to an association rather than to the employees of a business or members of a union.
Attending Physician Statement (APS): A report, completed by the proposed insured's (or, in a claim situation, the insured's) physician, which documents current and prior health history. Used in the evaluation process of approving an application or claim for benefit.
Automatic Increase Rider: An optional benefit which provides automatic increases each year at either a stated percentage, despite changes in health, income or occupation.
Benefit Period: The period of time for which benefits are payable for continuous disability. Typical benefit periods are 2 year, 5 year, to age 65 or 67.
Business Overhead Expenses: A policy that reimburses a business owner for the day-to-day expenses of the business in the event of a disability. This type of policy usually has a one or two year benefit period.
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.
Consumer Price Index: The Consumer Price Index for All Urban Consumers as published by the Federal Department of Labor. That index shows the rate of change in the cost of living (inflation) in the United States.
Conversion Privilege: The right given to an insured to convert their current group policy without evidence of medical insurability, usually to an individual policy, upon termination of coverage.
Cost of Living Adjustment Rider: An optional benefit which provides for increases in the disability benefit every 12 months (usually) of disability. The amount of increase is based on a percentage or inflation.
Cumulative Benefit: In an overhead expense policy, the monthly benefit times the number of months the insured has been disabled after the elimination period.
Earned Income: Gross salary, wages, commissions, fees, etc., derived from active employment.
Elimination Period (AKA Waiting Period): The consecutive number of days for which no benefits are payable at the start of a claim. An insured must be disabled before benefits are
payable. Typical elimination periods are 30, 60, 90, 180 or 365 days.
Exclusions: Certain conditions and causes which are not covered by the policy. These are listed in the policy many are standard others are certain pre-existing medical conditions.
Future Increase Option: An optional benefit in a disability income policy that allows the insured future increases to the policy monthly benefit at specified dates (typically on insured's policy anniversary), without medical evidence of insurability. The increase is based on financial documentation.
Graded Premium: A premium structure where premiums start out low and gradually increase each year based on schedule in the policy.
Group Insurance: A policy covering the employees of a business or members of a union or association.
Guaranteed Renewable: A type of insurance that cannot be cancelled or altered by the insurance company as long as the insured continues to pay premiums on time. However, the premium may be increased for classes of insured.
Level Premium: A premium which remains the same through the insured's age 65 or the full benefit period.
Loss of Income: The difference between an insured's prior income and current income.
Loss Payee: The individual or entity named to receive all benefits.
Monthly Indemnity: The amount the insurer will pay for each month of total disability.
Non-Cancelable: A policy which cannot be cancelled or altered by the insurance company as long as the insured continues to pay premiums on time, and whose premium will not increase up through the insured's age 65 or full benefit period.
Occupation: An insured's regular occupation or profession at the time of disability.
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: If the insured, due to sickness or injury cannot perform the material and substantial duties of insured’s own occupation in the reasonable and customary way.
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. Some policies based only on loss of income. Others it is based loss of and loss of time and duties.
Participation Limit: The total amount of coverage which will be allowed by a company from all carriers and types (group and association) based on your income.
Policy: The contract of insurance.
Pre-existing Condition: An injury, illness, or physical condition which 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 loss of sight in both eyes, hearing in both ears, 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. Some policies require disability to permanent others do not.
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.
Recovery Disability Rider: A rider which provides reduced benefits when and insured returns to work following a compensable period of disability if the insured is still losing income after returning to work.
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.
Residual Disability (called Partial Disability in CA): In better policies, a disability that causes an insured's income to fall more than 20% below its pre-disability level. Some companies include a loss of time requirement or the inability to perform some duties of the insured's regular occupation.
Social Insurance Substitute Rider: A rider which pays an additional benefit if the insured is disabled under the policy and not receiving social insurance benefits. Requires the insured to apply for the social insurance, such as state disability or social security, and get declined.
State Disability Insurance: Laws enacted in California, Hawaii, New Jersey, New York and Rhode Island which provide the payment of benefits for the non-job-related sickness or injury. Pays for a maximum benefit of usually 18 months.
Total Disability: The physical or mental inability to perform the material duties of the insured’s occupation because of sickness or injury.
Waiting Period: The number of days for which no benefits are payable at the start of a claim. An insured must be disabled all of those days before benefits are payable. Typical elimination periods are 30, 60, 90, or 180 days. In some policies days do not need to be consecutive but within a specific period of time.
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 waives the policy premium after the insured has been disabled for 90 days, or the elimination period, if shorter. In addition, premiums paid during those 90 days are refunded.
Worker's Compensation: Benefits paid to a worker to compensate for losses caused by a work-related injury or illness.