Insurance glossary
Terms you'll see across policy documents, explained once so you don't have to look them up every time.
Actual Cash Value (ACV)
The value of a covered item at the time of loss — original cost minus depreciation. Most standard auto policie…
Beneficiary
The person or entity named to receive the payout from a life insurance policy or annuity. Keeping this designa…
Cash Value
The savings component that builds inside permanent (whole or universal) life insurance policies, which a polic…
Copay & Coinsurance
A copay is a fixed dollar amount you pay for a covered service. Coinsurance is a percentage of the cost you sh…
Deductible
The amount you pay out of pocket before your insurance starts paying for a covered claim. Higher deductibles g…
Free-Look Period
A window — typically 10 to 30 days depending on the state — after receiving a life insurance policy during whi…
Grace Period
The extra time given after a missed premium due date during which a policy stays in force. The exact duration …
Out-of-Pocket Maximum
The most you will pay in a plan year for covered services through deductibles, copays and coinsurance combined…
PPO vs. HMO
An HMO generally requires a primary care physician and referrals to see specialists, usually at a lower premiu…
Premium
The amount you pay, monthly or annually, to keep a policy active. Missing payments beyond the grace period can…
Replacement Cost Coverage
An optional home insurance coverage that pays to replace damaged property at today's prices, with no deduction…
Rider / Endorsement
An optional add-on that modifies a base policy's coverage, such as a waiver-of-premium rider on life insurance…
SR-22 Filing
A certificate of financial responsibility some states require after certain driving violations. It is not insu…
Waiting Period
The time after a policy starts during which certain claims are not yet payable — common in long-term care, den…