cafeteria plan
An employee benefit plan
which gives each employee several choices as to
the types and/or amounts of group benefits. Also
known as a flexible benefit plan.
Canada Pension Plan (CPP)
A plan that primarily
provides retirement income and long-term disability income benefits
to residents of Canadian provinces other than Quebec.
Canadian Council of Insurance Regulators (CCIR)
A
Canadian organization of provincial insurance regulators who meet
regularly to discuss insurance issues and to develop model insurance
legislation that it encourages provincial legislatures to adopt.
Similar to the National Association of Insurance Commissioners in
the United States.
Canadian Institute of Chartered Accountants
(CICA)
Handbook Section 3460 See Section 3460.
Canadian Life and Health Insurance Association
(CLHIA)
An association of most of the life and health
insurance companies in Canada which conducts research on insurance
issues and promotes the best interests of the insurance industry.
The CLHIA is the primary source of information about the life and
health insurance industry in Canada.
Canadian Life and Health Insurance Compensation Corporation
(CompCorp)
In Canada, a federally incorporated, nonprofit
company established by the Canadian Life and Health Insurance
Association (CLHIA) in order to protect consumers against loss of
benefits in the event a life or health insurance company becomes
insolvent.
Canadian method
A method prescribed in Canada for
calculating modified net premiums and reserves.
cancellable policy
An individual health insurance
policy that can be terminated at any time by the insurer. See also
conditionally renewable policy, guaranteed renewable policy,
noncancellable and guaranteed renewable policy, noncancellable
policy, and optionally renewable policy.
capacity
The largest amount of insurance an insurer or
a reinsurer is willing or able to underwrite. The term can refer to
an insurer's capacity on one individual or to the insurer's capacity
for all its business.
capitation
A method of paying medical providers through
a prepaid, flat monthly fee for each covered person. The payment is
independent of the number of services received or the costs incurred
by a provider in furnishing those services.
capitation basis
A compensation plan used in some
health maintenance organizations (HMOs) in which a physician is paid
a flat amount per year per subscriber who has elected to use that
physician. For that amount, the physician must treat the subscriber
as often as necessary during that year. See also fee schedule basis.
captive insurance company
An insurance company, formed
and controlled by a separate company, whose purpose is to provide
insurance to the controlling company. Companies which form captive
insurance companies include all types of companies which extend
credit to customers, including banks and retailers. See also
agent-owned reinsurance company (AORC).
career agent
A full-time commissioned salesperson who
works out of an insurance company's field office, holds an agent
contract with that company, and sends all, or almost all, of his or
her business to that company. A career agent may occasionally broker
business with other companies.
career average (career earnings) benefit formula
A type
of defined benefit formula in which the retirement benefit amount is
derived on the basis of a participant's compensation during the
entire period of participation in the plan. See also defined benefit
formula. Contrast with final average benefit formula.
carry-over provision
A provision found in most medical
expense policies stating that expenses incurred during the last
three months of a benefit period that are used to satisfy the
current benefit period's deductible may be used to satisfy any or
all of the following benefit period's deductible.
case management
A cost-containment
program designed to identify alternate, less costly methods of
treatment for seriously ill patients without sacrificing the quality
of care a patient receives. Also known as catastrophic claim
management, large claim management, or medical case management.
cash-balance pension plan
A type of defined benefit plan in
which each participant has an account which is credited with amounts
reflecting the employer's contributions and amounts reflecting
investment interest. The balance in the account indicates the
participant's accrued benefit. Upon retirement or withdrawal, the
participant may receive the full account balance in a lump sum,
provided that the benefits are fully vested, or may use the account
balance to purchase an annuity.
cash payment option
A life insurance policy dividend
option under which policy dividends are paid to the policyowner in
cash.
cash premium accounting system
A premium accounting
system used for industrial insurance. Under this system, the agent
informs the home office of the amount collected on each policy. The
home office then updates the policy records to reflect these
collections and prepares new route collection records. Contrast with
advance and arrears system.
cash refund option
A form of the life income option
with refund which specifies that any proceeds remaining when the
beneficiary dies will be paid in a lump sum to the contingent payee.
Contrast with the installment refund option.
cash surrender value
In a life insurance policy, the
amount of money, adjusted for factors such as policy loans or late
premiums, that the policyowner will receive if the policyowner
cancels the coverage and surrenders the policy to the insurance
company. Also called the net cash value. Compare to cash value.
cash surrender value option
A life insurance policy
nonforfeiture option which specifies that a policyowner who
discontinues premium payments can elect to surrender the policy and
receive the policy's cash surrender value.
cash value
In a
life insurance policy, the amount of money, before adjustment for
factors such as policy loans or late premiums, that the policyowner
will receive if the policyowner allows the policy to lapse or
cancels the coverage and surrenders the policy to the insurance
company. Cash values are a feature of most types of permanent life
insurance, such as whole life and universal life. Compare to cash
surrender value. Also called inside build-up and policyowner's
equity.
causal relation requirements
Proof required by statute
in Kansas, Missouri, Rhode Island, and Puerto Rico to show that the
facts misrepresented in an application for insurance were related to
the loss insured against.
ceding company
In a reinsurance transaction, the
insurer that purchases reinsurance to cover all or part of those
risks that it does not wish to retain in full. Also called the
direct insurer, direct writer, or direct-writing company.
certain payment
A payment that will definitely be made
under any circumstances, its payment not being contingent upon any
predesignated condition.
certificate of assumption
In assumption reinsurance, a
certificate sent to each policyholder whose policy has been ceded to
give the policyowner (1) notice of the assumption and (2)
information concerning the new insurer.
certificate of authority
(1) A document created by an
insurer detailing the authority granted to an agent or group of
agents to act on behalf of the insurer. (2) In the United States, a
certificate issued by a state's insurance department authorizing an
insurer to issue certain types of insurance within the state.
certificate of indebtedness
A certificate issued by an
insurer to the beneficiary of a life insurance policy that specifies
a guaranteed minimum interest rate and the frequency with which the
insurer will make interest payments under the interest settlement
option.
certificate of insurance
A document given to each
person insured by a group insurance plan. This document shows the
type and amount of coverage to which the group member is entitled
and the beneficiary of the coverage. The certificate may also
contain a summary of the contract terms as they affect individual
group members. See also master contract.
cession
(1) In reinsurance, the act of ceding. (2) In
reinsurance, a parcel or unit of insurance that a company cedes to a
reinsurer.
change of condition provision
An insurance provision
stipulating that, for a policy to become effective, all conditions
described in the application must still be true at the time of
delivery.
change of occupation provision
An individual
health insurance policy provision that grants the insurer the right
to adjust a policy's premium rate or benefits when the insured
changes jobs or careers.
CICA
The CICA, together with the provincial and
territorial institutes of chartered accountants, represents a
membership of 60,000 professional accountants in Canada and Bermuda.
The CICA sets accounting and auditing standards for business,
not-for-profit organizations and government. It issues guidance on
control and governance, publishes professional literature, develops
continuing education programs and represents the CA profession
nationally and internationally.
claim
A request for payment under the terms of an
insurance policy.
claim administration department
The department in a
life and health insurance company responsible for processing claims.
In this department, claim examiners review claims presented by
policyowners or beneficiaries, verify the validity of claims, and
authorize the payment of benefits to the proper person.
claimant
The person or party making a formal request
for payment of benefits due under the terms of an insurance
contract.
claim examiner
An employee of an insurance company
whose responsibilities include investigating claims, approving the
claims that are valid, and denying those that are invalid or
fraudulent.
claim frequency rate
In health insurance calculations,
the claim frequency rate is the expected percentage of insured
people who will file claims and the number of claims they will file
during a given period. The claim frequency rate is used to calculate
average claim costs, which are used to calculate premium rates.
claim investigation
The process of obtaining necessary
claim information in order to decide whether or not to pay a claim.
claim reserve
A claim department's estimate of the
amount of money needed to pay a claim. The estimate is made with the
help of information that the claim department gathers in the course
of handling the claim. This information may involve, for example,
the extent to which the claim is covered by the policy, the effect
of previously paid claims on the amount of coverage available to pay
a current claim, and the effect of any applicable reinsurance
coverage on the claim.
class beneficiary designation
A beneficiary designation
that names several people as a group -- for example, "children of
the insured" -- rather than naming each person individually.
clean-up fund
A lump-sum life insurance death benefit
designed to pay the insured's outstanding debts and final expenses.
CLHIA Guidelines
Recommendations to insurance companies
adopted by the Canadian Life and Health Insurance Association
(CLHIA). Insurers are expected to abide by these guidelines as a
condition of membership in the CLHIA.
closed contract
An insurance contract in which the
terms of the insurance contract and the application constitute the
entire agreement between the policyowner and the insurer. Commercial
insurance companies use closed contracts. See also open contract.
closing
The process of securing a purchase commitment
from a prospect by requesting and obtaining the prospect's agreement
to submit an application for the coverage recommended in a sales
proposal.
COBRA
The Consolidated Omnibus Budget
Reconciliation Act of 1985, commonly known as COBRA, requires group
health plans with 20 or more employees to offer continued health
coverage for you and your dependents for 18 months after you leave
your job. Longer durations of continuance are available under
certain circumstances. If you opt to continue coverage, you must pay
the entire premium, plus a two percent administration charge.
coinsurance
The amount you are
required to pay for medical care in a fee-for-service plan or
preferred provider organization (PPO) after you have met your
deductible. The coinsurance rate is usually expressed as a
percentage of charges. For example, if the insurance company pays 80
percent of the claim, you pay 20 percent.
coinsurance provision
A stipulation found in most
health insurance policies that requires an insured to pay a stated
percentage, in excess of the deductible, of all eligible medical
expenses.
collateral assignment
A transfer of some ownership
rights in a contract from one party to another, generally for a
temporary period. Insurance policies are often assigned as
collateral for a loan, in which case all transferred rights revert
to the assignor when the loan is repaid. See also assignment.
combination company
A life and health insurance company
that sells both industrial and ordinary insurance products.
C: Part
Two
