illness perils
A classification used by health insurance underwriters
to evaluate the type and degree of peril represented
by a particular occupation. Illness perils include exposure to
dust, poisons, and extreme temperatures. See also accident perils.
immediate annuity
An annuity under which income
payments begin one period after the annuity is purchased.
immediate participation guarantee (IPG)
contract
Similar to a deposit administration contract except
that an IPG contract does not fully protect the plan sponsor against
investment loss, nor does the IPG contract guarantee minimum
investment returns. See also deposit administration contract.
impairment
Any aspect of the health, occupation,
activities, or life-style of a proposed insured that could increase
his or her expected mortality or morbidity.
impairment rider
An attachment to a
health insurance policy that excludes or limits coverage for a
specific health impairment. Also called an exclusion rider or
impairment waiver.
implied authority
The authority that a principal
intends an agent to have and that arises incidentally from an
express grant of authority. See agent and principal. Compare to
apparent authority and express authority.
incentive coinsurance provisions
Provisions included in
some dental policies that promote regular dental care by specifying
that insurers will pay a higher percentage of dental expenses if the
insured receives regular dental examinations.
incident of ownership
Any policy right including the
right to (1) change the beneficiary, (2) cancel or surrender the
policy, (3) assign the policy, (4) obtain a policy loan, or (5) use
the policy as collateral for a loan.
income protection insurance policy
A type of disability
income policy which specifies that an insured is disabled if that
person suffers an income loss caused by a disability.
income replacement ratio
The percentage of
preretirement income that a retiree would need to receive after
retirement in order to have a postretirement standard of living
equivalent to his or her preretirement standard of living. This
ratio is generally less than 100 percent, because some of an
individual's expenses (i.e., taxes, commuting costs, clothing
expenditures, savings needs) decrease after retirement. Also known
as the replacement ratio.
incontestable clause
Life insurance policy clause that
provides a time limit (usually two years) on the insurer's right to
dispute a policy's validity based on material misstatements made in
the application. See also contestable period.
increasing term insurance
A type of term insurance in
which the death benefit of the policy increases during the term of
coverage. The death benefit may increase at stated intervals by some
specified amount or percentage, or it may increase according to
increases in the cost of living.
independent life brokers
Licensed brokers who operate
independently and specialize in selling particular types of products
or in meeting the business coverage or estate planning needs of
certain target markets.
independent marketing organization (IMO)
A non-company
affiliated organization that contracts with an insurance company to
perform distribution and other marketing functions for one or more
of the company's products or product lines.
independent property/casualty (P/C)
brokers
Independent, multiple-line agents or agencies that
are primarily engaged in the distribution of property/casualty
products and that make up what is commonly known in the
property/casualty insurance industry as the independent agency
system or the American Agency System.
indeterminate premium life insurance
A
type of nonparticipating whole life insurance that specifies both a
maximum potential premium rate and a lower premium rate. The lower
rate is paid by the policyowner for a specified period (from 1 to 10
years) immediately after the policy is purchased. Later, the premium
rate may fluctuate according to the investment earnings of the
insurance company, but the premium rate will never be larger than
the maximum premium rate. Also called flexible premium life
insurance, nonguaranteed premium life insurance, and variable
premium life insurance.
indexation
In pension planning, the adjustment of
postretirement benefits to compensate for the effects of inflation.
Benefits are generally indexed to increase in accordance with an
increase in the level of a price index such as the Consumer Price
Index (CPI). See also cost-of-living adjustment (COLA).
indexed life insurance
A whole life plan of insurance
that provides for the death benefit of the policy and, consequently,
the premium rate to increase automatically every year in accordance
with any increase in the Consumer Price Index (CPI).
individual account plan
A pension plan funded according
to a defined contribution formula. Each participant's benefits are
based on the amount contained in that individual's account. See
defined contribution formula and defined contribution pension plan.
individual employer groups
A group insurance market
segment composed of single employers providing coverage for
employees through a policy--the master contract--issued to the
employer.
individual fraud
A type of medical insurance fraud
committed by individuals on their medical expense claims in order to
obtain benefits in excess of their medical expenses. Contrast with
provider fraud.
individual funding methods
Pension plan funding methods
in which the amount of contributions necessary to fund a plan is
determined by first separately calculating the contributions for
each of the plan's participants and then adding these amounts to
arrive at the total required contribution for the plan. Contrast
with aggregate funding methods.
individual insurance
Insurance that is
issued to an individual person, as contrasted with group insurance.
Also called ordinary insurance. See also ordinary life insurance.
individual practice association (IPA)
A
means of organizing a health maintenance organization (HMO) in which
the participating physicians maintain their own separate offices.
Such physicians usually treat both private patients and HMO members.
See also group practice model (GPM).
individual retirement account (IRA)
In
the United States, a tax-sheltered savings plan that allows some
citizens to make pre-tax contributions to an approved account. The
contributions and investment earnings are taxable as income only
when paid out. Investors can establish IRAs through a number of
financial institutions, including insurance companies. See also
Keogh Act and simplified employee pension (SEP).
industrial insurance
A form of life insurance which
today accounts for a small percentage of the business sold through
the home service distribution system but a considerable percentage
of the insurance in force. It is characterized by (a) death benefits
of $2,000 or less, (b) a weekly, biweekly, or monthly premium
payment schedule, (c) the collection of premiums at the
policyowner's residence by an agent, and (d) minimum underwriting
requirements. See also home service distribution system.
in-house brokerage agency
A department established by
an exclusive-agent company and staffed by company-employed brokerage
sales people whose primary function is to solicit distribution
agreements with other companies offering products that the
exclusive-agent company itself does not manufacture. The company's
agents can then broker business with those companies through the
in-house brokerage agency.
initial premium
The first premium payable for an
insurance contract.
initial reserve
The reserve on a policy at the
beginning of any given policy year. The initial reserve includes the
net annual premium then due.
insolvency clause
In the United States, a clause
contained in most reinsurance contracts and required by most states
which specifies that, if the ceding company becomes insolvent, the
reinsurer must pay the ceding company or its liquidator all
reinsurance which comes payable, without reduction, even if the
ceding company or its liquidator has failed to pay all or a portion
of any claim.
inspection receipt
A receipt given to the applicant
when the applicant receives a policy for inspection. This inspection
receipt states that the insurance is not in effect and that there
has been no delivery of the policy in the legal sense.
inspection report
A report made by a consumer reporting
agency concerning a proposed insured's lifestyle, occupation, and
economic standing. An inspection report is considered an
investigative consumer report, as defined by the Fair Credit
Reporting Act. See also investigative consumer report.
installation
The term used to include all the
activities from the time a prospect decides to purchase a group
insurance policy to the time the master contract and its individual
certificates are issued.
I: Part
Two
