Types of Insurance Vocabulary List

Insurance

A financial product (called an insurance contract or policy) purchased by many people facing a similar risk to protect against the risk of larger losses.

Policy

A contract between the insurance company and the insured that states the exact terms of the policy including what risks are covered and how much will be paid for any losses

Claim

A formal request to an insurance company asking for a payment when the policyholder has an accident, illness or injury

Policyholder

A person who owns the insurance policy

Emergency savings

Cash set aside that can be used to cover the costs of unexpected expenses

Household production

Doing something in the home without pay that takes raw materials along with a family member's skill, experience, knowledge, and household equipment, to produce a useful product or service

Employee benefits

Employers may offer employee benefits in the form of products or services that add extra value for employees beyond earned wages

Health insurance

Provides money to pay for health care for illness, injury, or, in some cases, preventive care

Long‐term care insurance

Provides payment for extended nursing care due to accidents, illness, or old age

Life insurance

Provides payment to beneficiaries who were named by the insured person

Homeowners insurance

Provides payment to cover liability losses as well as damage and loss of the home structure and its contents

Liability insurance

Provides payment to others if a member of the insured household accidently causes harm to other people or property

Renters insurance

Provides payment to renters to cover the damage and loss of property in a rental unit in addition to liability losses

Disability insurance

Provides payment to replace earnings during times when workers cannot work due to illness or injury

Property insurance

Provides payment to the insured person if his or her property is damaged or destroyed by an accident covered by the insurance policy.

Automobile insurance

Provides payments for both liability and property insurance on a vehicle

Co‐insurance

Requires the insured individual to pay a fixed percentage of the loss after the deductible has been paid

Beneficiary

Someone who receives money if an insured person dies

Dependent

Someone who relies on someone else for income and care

Risk

The chance of loss from an event that cannot be entirely controlled

In‐kind income

The donation of a product or service in place of cash

Premium

The money paid to an insurance company to purchase a policy

Deductible

The out‐of‐pocket money paid by the policyholder before an insurance company will cover the remaining costs attributed to the loss

Coverage

The risks covered and amount of money paid for losses under an insurance policy

Moral hazard

When the act of insuring an event increases the likelihood that the event will happen