Glossary of Insurance Terms

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Paid-Up Insurance: An insurance policy that does not require future premium payments to provide the death benefit of the insured person.

Paramedical Exam/Paramed Exam: A brief physical examination. the insurer typically requires of applicants during the underwriting process. The exam is usually performed by a registered nurse at a time and location convenient to the applicant. The exam usually consists of measurements (e.g. height/weight, blood pressure, and heart rate), body fluid samples (e.g. urine, blood) and a medical history questionnaire. The insurance company pays for the exam.

Partial Day Treatment: A program offered by appropriately licensed psychiatric facilities that includes either a day or evening treatment program for mental health or substance abuse.

Participating Provider: A provider who has contracted with a managed care plan to provide medical services to plan members. The provider may be a hospital or other medical facility, a pharmacy, a physician, or other practitioner who has contractually accepted the terms and conditions as set forth by the plan. This is commonly referred to as a Preferred Provider.

Payment Mode: Most insurance companies allow you to choose from the following payment modes:

  • Annually
  • Semi-annually
  • Quarterly
  • Monthly

Payer: The person making premium payments on a policy. Permanent Life Insurance: The type of life insurance that may provide coverage for the insured's entire lifetime. Permanent life insurance policies may include cash value accounts, policy loans, surrender options/fees, etc. Examples are Whole Life Insurance and Universal Life Insurance. Most term life insurance policies can be converted to permanent life insurance policies.

Physical Therapy: Rehabilitation concerned with the restoration of function and the prevention of disability following surgery, injury, disease or the loss of a body part.

Plan Benefit Maximum: The maximum amount that a health insurance plan will pay toward the cost of services incurred by an individual or family within a specified period of time, usually a calendar year.

Point of Service (POS): A health care plan that permits covered persons to choose providers outside the plan's network yet is designed to encourage the use of providers in the network. A POS plan may have an HMO component and a PPO component. The member chooses where to seek services at the point of service, rather than choosing at the time of enrolment.

Policy: The written document issued by an insurance company to a policy owner. The policy represents the insurance contract between the insurance company and the policy owner.

Policy Anniversary: The anniversary of the date of issue as shown in the policy.

Policy Date: The date the insurance policy becomes effective.

Policy Fee: A charge for policy administration expenses incurred by the insurance company. The policy fee is usually included in the premium.

Policy Loan: A loan from the insurance company to the policy owner secured by the policy's cash value.

Policy Owner: The individual who owns an insurance policy and who has all contractual rights related to the insurance policy. The policy owner may or may not be the same person as the insured, payer or beneficiary.

Pool: A method of distributing insurance risk in which the individual participants share overall risk with the other participants.

Pre-Authorization: The process of obtaining prior approval as to the appropriateness of a service or medication. Prior authorization does not guarantee coverage.

Preventive Care: Comprehensive health care that emphasizes priorities for prevention, early detection, and early treatment of disease or its consequences. Preventive care usually includes routine physical examinations, immunizations, and wellness programs.

Pre-Certification: An administrative procedure whereby a health provider submits a treatment plan to a third party before treatment is initiated. The third party usually reviews the treatment plan, indicating one or more of the following: patient's eligibility, guarantee of eligibility time, covered services, amounts payable, application of appropriate deductibles, co-payment factors and maximums.

Pre-Existing Condition: A physical and/or mental condition of an insured person that existed prior to the issuance of his or her insurance policy or that existed prior to issuance and for which treatment was received.

Preferred Provider Organization (PPO): A type of managed care plan which contracts with independent providers (hospitals, physicians, ancillary providers) for negotiated discounted fees for services provided to covered persons. The covered persons usually have free choice of providers but have a financial incentive (e.g., reduced co-payments, lower deductibles) to use participating providers.

Pre-Authorized Check (PAC): A premium-payment arrangement in which the policy owner authorizes. the insurer to withdraw the premium payments from a bank account. This arrangement is usually required for the monthly payment mode.

Preferred Rating Class: One of the best premium rate classes available on life insurance policies for applicants that are determined by underwriting to be in better than average health.

Preferred Plus Rating Class: The best premium rate class available on life insurance policies for applicants that are determined by underwriting to be in better than average health.

Premium: The amount of money to be paid by the policy owner to the insurance company for the benefits provided under an insurance policy.

Premium Mode: The frequency of premium payments elected by the policy owner. Typical premium modes include monthly, quarterly, semi-annual and annual.

Premium Notice: A notice from an insurance company to a policy owner that a premium will be due on a given date.

Premium Rate: The price per unit of insurance.

Premium Rate Class: The appropriate price category to which an applicant qualifies according to an insurance company's underwriting guidelines. Common rate classes are Preferred Plus, Preferred, Standard Plus, Standard and Substandard.

Premium Receipt: The receipt given a policy owner for the payment of a premium.

Prescription: A written order or refill notice issued by a licensed medical professional for drugs which are only available through a pharmacy.

Prescription Card: Provides coverage for prescription drugs. Benefits vary by insurance plan and may include coverage for generic and brand name prescription drugs.

Primary Beneficiary: The person(s) designated by the policy owner to which the proceeds of a life insurance policy will be paid upon the death of the insured.

Primary Care Physician (PCP): The physician a member must contact before having access to medical care benefits. The PCP provides basic health care services and serves as a manager of the delivery of all other health care for which benefits may be payable in accordance with the utilization review and quality assurance programs of the plan.

Proceeds: The amount payable under the terms of a life insurance policy upon the insured's death or upon the maturity of an endowment.

Proposed Insured: The person named in. a life insurance application as the person whose life is to be covered by the Insurance.

Prosthetic Devices: An artificial substitute for a missing body part used for functional reasons, because a part of the body is permanently damaged, is absent or is malfunctioning.

Provider: An individual or organization that provides health care services. Providers may include but not limited to: physicians, hospitals, physical therapists, medical equipment suppliers, and pharmacists.

Provider Network: The set of providers contracted with a health plan to provide services to the covered person(s).

Provision: A statement or clause, found in an insurance policy, to establish some term of the contract.

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