Individual Health Insurance Glossary

This page will list and define several common terms used in conjunction with individual health insurance policies. They should help you to better understand the information required on our individual health insurance quote request form.

AGENT

Insurance is sold by two types of agents: independent agents, who are self-employed, represent several insurance companies and are paid on commission, and exclusive or captive agents, who represent only one insurance company and are either salaried or work on commission. Insurance companies that use exclusive or captive agents are called direct writers.

COBRA

Short for Consolidated Omnibus Budget Reconciliation Act. A federal law under which group health plans sponsored by employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs and their dependents. The employee must pay the entire premium. Coverage can be extended up to 18 months. Surviving dependents can receive longer coverage.

COINSURANCE

In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

COPAYMENT

A static out-of-pocket amount charged to the insured for certain services.

DEDUCTIBLE

The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

LIMIT

Maximum amount of insurance that can be paid for a covered loss.

POLICY

A written contract for insurance between an insurance company and policyholder stating details of coverage.

PREFERRED PROVIDER ORGANIZATION (PPO)

Network of medical providers which charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

PREMIUM

The price of an insurance policy. Usually charged monthly.

RIDER

An attachment to an insurance policy that alters the policy’s coverage, terms, or conditions.

WAIVER

The surrender of a right or privilege.

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