Insurance Glossary
Understand common insurance terms and concepts
Accident Insurance
Insurance that pays a cash benefit if you're injured in an accident, helping cover out-of-pocket medical costs.
Adjuster
A professional who investigates and evaluates insurance claims to determine the amount the insurer should pay.
Beneficiary
The person or entity designated to receive the payout from a life insurance policy when the insured person passes away.
Brand-Name Drug
A prescription drug sold under a trademarked name by a specific manufacturer. Typically costs more than generic equivalents.
Cash Value
The savings component of a whole life or universal life insurance policy that grows over time and can be borrowed against.
Catastrophic Plan
A health insurance plan with very high deductibles and low premiums, designed mainly to protect against worst-case medical scenarios.
Claim
A formal request to an insurance company asking for payment based on the terms of your policy.
Coinsurance
The percentage of medical costs you pay after meeting your deductible. For example, if your plan has 20% coinsurance, you pay 20% and insurance pays 80%.
Copay (Copayment)
A fixed amount you pay for a covered service, like $25 for a doctor's visit, paid at the time of service.
COBRA
A federal law that lets you temporarily keep your employer-sponsored health insurance after losing your job, at your own expense.
Deductible
The amount you pay out of pocket for covered services before your insurance starts paying. For example, a $1,500 deductible means you pay the first $1,500 of covered costs.
Disability Insurance
Insurance that replaces a portion of your income if you become unable to work due to illness or injury.
EPO (Exclusive Provider Organization)
A health plan that only covers care from in-network providers, except in emergencies. No referrals needed.
Essential Health Benefits
Ten categories of services that all ACA-compliant health plans must cover, including preventive care, emergency services, and prescription drugs.
Exclusion
A specific condition or circumstance listed in your policy that is not covered by your insurance.
Explanation of Benefits (EOB)
A statement from your insurance company showing what was billed, what they paid, and what you owe. Not a bill.
FSA (Flexible Spending Account)
A pre-tax account you can use to pay for qualified medical expenses. Funds typically don't roll over year to year.
Formulary
A list of prescription drugs covered by your health insurance plan, often organized into tiers with different cost levels.
Generic Drug
A prescription drug equivalent to a brand-name drug but typically sold at a lower cost after the brand-name patent expires.
Grace Period
The time after a premium is due during which your insurance remains active. If payment isn't received by the end of the period, coverage may be cancelled.
HMO (Health Maintenance Organization)
A health plan that requires you to choose a primary care physician and get referrals to see specialists. Only in-network care is covered except in emergencies.
HSA (Health Savings Account)
A pre-tax savings account paired with a high-deductible health plan, used to pay for qualified medical expenses. Funds roll over year to year.
In-Network
Providers who have contracted with your insurance company to provide services at negotiated rates. You pay less when using in-network providers.
Lapse
When an insurance policy is cancelled because premiums were not paid on time.
Lifetime Limit
The maximum amount an insurance plan will pay over your lifetime. ACA-compliant plans cannot have lifetime limits on essential health benefits.
Long-Term Care Insurance
Insurance that covers the cost of long-term care services like nursing homes, assisted living, and in-home care.
Medicaid
A joint federal and state program that provides health coverage to people with low income, including some adults, children, pregnant women, and people with disabilities.
Medicare
Federal health insurance for people 65 and older, and some younger people with certain disabilities or conditions.
Network
The group of doctors, hospitals, and other providers contracted with your insurance company to provide services at negotiated rates.
Open Enrollment
The annual period when you can enroll in or change health insurance plans. Outside this period, you need a qualifying life event to enroll.
Out-of-Network
Providers who have not contracted with your insurance company. Using them typically costs more or may not be covered at all.
Out-of-Pocket Maximum
The most you'll pay for covered services in a year. After reaching this amount, insurance pays 100% of covered costs.
POS (Point of Service)
A hybrid health plan combining features of HMOs and PPOs. You choose a primary care physician but can see out-of-network providers at higher cost.
Pre-Existing Condition
A health condition you had before your insurance coverage started. ACA-compliant plans cannot deny coverage or charge more for pre-existing conditions.
Premium
The amount you pay for your insurance coverage, usually monthly. This is separate from deductibles, copays, and coinsurance.
Preventive Care
Routine health services like screenings, check-ups, and vaccines designed to prevent illness. ACA-compliant plans cover these at no cost to you.
Primary Care Physician (PCP)
Your main doctor who provides routine care and refers you to specialists. Required by HMO and POS plans.
PPO (Preferred Provider Organization)
A health plan that lets you see any provider, but you pay less for in-network providers. No referrals needed to see specialists.
Referral
A written order from your primary care physician allowing you to see a specialist. Required by HMO and some POS plans.
Rider
An optional add-on to an insurance policy that provides extra coverage for specific situations, usually for an additional cost.
Special Enrollment Period
A time outside open enrollment when you can enroll in health insurance due to a qualifying life event, like losing job-based coverage, moving, or getting married.
Subsidy
Financial assistance from the government that lowers your monthly health insurance premium. Based on your income and household size.
Term Life Insurance
Life insurance that covers you for a specific period, such as 10, 20, or 30 years. Generally the most affordable type of life insurance.
Underwriting
The process an insurer uses to evaluate an applicant's risk and decide whether to offer coverage and at what price.
Waiting Period
A set time after your coverage starts before certain benefits become available. Common in dental and short-term disability insurance.
Whole Life Insurance
Permanent life insurance that covers you for your entire life and builds cash value you can borrow against.
Have a question about your policy or a term not listed here?