Glossary of Insurance Terms
Buying insurance should not have to be frustrating, yet we at Suffolk Insurance recognize that not everybody will understand all of the terminology involved in crafting a good coverage plan. We include this glossary of the more common terms used in insurance.
Actual Cash Value - Insurance policy where the actual cash value of damaged property (minus depreciation) is paid
Actuary - An actuary is an insurance professional who evaluates the reserves and statistics of insurance firms and determines various financial decisions like rates and rating methods
Annuity - Life insurance product that pays income benefits over a specified period of time. In a deferred annuity, assets are tax deferred over time before they are converted to payments, whereas an immediate annuity pays out usually within a year of purchase.
Blanket Insurance - Covers more than one type of property at one location, or one type of property at several locations. Blanket insurance is usually recommended for owners of several businesses.
Broker - Person who mediates between an insurance company and the customer, researching and recommending coverage plans to the customer. Brokers work on commission and deal mainly with commercial insurance.
Captive Agent - An insurance agent who represents one insurance company. Captive agents are not permitted to submit business elsewhere unless his home agency permits it.
Independent Agent - A self-employed insurance agent who represents several companies and is paid on commission.
Insurance - A system where the risks of many individuals and businesses are collected and transferred to a company or large group in return for a premium, with monies to be paid out in the event of a loss.
Policy - A written agreement for insurance between the policy holder and the corresponding insurance company detailing coverage.