Glossary of Insurance Terms

Buying insurance should not have to be frustrating, yet we at Suffolk Insurance recognize that not everybody will understand all of the terminology involved in crafting a good coverage plan. We include this glossary of the more common terms used in insurance.

Actual Cash Value - Insurance policy where the actual cash value of damaged property (minus depreciation) is paid

Actuary - An actuary is an insurance professional who evaluates the reserves and statistics of insurance firms and determines various financial decisions like rates and rating methods

Annuity - Life insurance product that pays income benefits over a specified period of time. In a deferred annuity, assets are tax deferred over time before they are converted to payments, whereas an immediate annuity pays out usually within a year of purchase.

Blanket Insurance - Covers more than one type of property at one location, or one type of property at several locations. Blanket insurance is usually recommended for owners of several businesses.

Broker - Person who mediates between an insurance company and the customer, researching and recommending coverage plans to the customer. Brokers work on commission and deal mainly with commercial insurance.

Captive Agent - An insurance agent who represents one insurance company. Captive agents are not permitted to submit business elsewhere unless his home agency permits it.

Independent Agent - A self-employed insurance agent who represents several companies and is paid on commission.

Insurance - A system where the risks of many individuals and businesses are collected and transferred to a company or large group in return for a premium, with monies to be paid out in the event of a loss.

Policy - A written agreement for insurance between the policy holder and the corresponding insurance company detailing coverage.