Long Term Care [LTC] Insurance Glossary

Activities of Daily Living (ADLs) These include daily life routine activities such as eating bathing, transferring (bed to chair), dressing, toileting and continence. The inability to perform 2 or 3 of these activities is used to determine level and kind of long term care needs.

Adaptive/Assistive Equipment An appliance or gadget, which assists in self-care, work or leisure activities.

Assisted Living Facility Living arrangements for the elderly and/or disabled.

Bed Reservation Benefit Benefit paid to maintain the space in the nursing home facility when the insured must be hospitalized temporarily.

Benefit Period Maximum length of time during which the benefits will be paid as per the long term care insurance inclusions.

Binder A temporary insurance policy that is given as an interim that expires at the end of a specific time period or when the permanent policy is written. A binder is given to an applicant as an interim policy during the time the complete policy paperwork is being completed.

Caregiver A skilled or non-skilled person who provides some type of care for another.

Claim A notification to an insurance company that payment of an amount is due under the terms of the policy.

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Conditional Receipt This is given to policyholders when they pay a premium at time of application. Such receipts legally binds the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.

Contestable Clause A stipulation in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested.

Daily Benefit Amount The amount of insurance paid as part of the long-term care policy for each day.

Evidence of Insurability Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Exclusions These are specific exceptions listed in a policy for which benefits will not be paid.

Expiry The termination of a term life insurance policy at the end of its period of coverage.

Extended Care Facility A facility outside of a hospital that provides skilled nursing care.

Free Look Provision This is required in most states whereby policy buyers have up to 20 days after the date of purchase to examine their new policies at no obligation.

Grace Period This is the period of time after the due date of a premium during which the policy remains in force without penalty.

Insurability All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk exposure profiles.

Insurance This is a formal social way for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.

Insurance Policy This is the printed form, which serves as the contract between an insurer and an insured.

Insured The party who is being insured.

Insurer The party that provides insurance coverage, typically through an insurance contract.

Lapse Termination of a policy upon the policy owner's failure to pay the premium within the grace period.

Life Expectancy The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.

Medical A document completed by a physician or another approved examiner and submitted to an insurer to supply medical evidence of insurability.

Medical Expenses Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses.

Misrepresentation The act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature.

Offer and Acceptance The offer may be made by the applicant signing the application, paying the first premium and, if necessary, submitting to physical examination.

Original Age The age you were when you bought the policy.

Policy Holder This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Premium The periodic payment required to keep an insurance policy in force.

Premium Flexibility The policyholder's right to vary the amount of premium paid each month towards a universal life policy.

Provisions These are statements contained in an insurance policy, which explain the benefits, conditions and other features of the insurance contract.

Reinstatement Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

Replacement A new policy written to take the place of one currently in force.

Representation These are statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail.

Rider An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.

Risk The chance of injury, damage, or loss.

Underwriter This is the company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, a company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.

Uninsurable Risk A person who is not acceptable for insurance due to excessive risk exposures.

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