Insurance Terms

Death Benefit

The amount payable, as stated in a life insurance policy, to the designated beneficiary(ies) upon the death of the insured. The amount paid is the face value, plus any riders, less any outstanding loans.
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Debt Financing

Raising capital by borrowing from banks or other creditors.
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Decedent's Final Return

The income tax return filed for a decedent for income earned in the year death occurred. The deadline to file is April 15th of the year following death.
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Declarations Page

The section of a property and casualty insurance contract containing such information as the name, description, and location of insured property; the name and address of the insured; the period for which the policy is in force; premiums payable; and the amount of coverage.
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Declination

An insurer's refusal to insure an individual after careful evaluation of the application for insurance and any other relevant factors.
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Deductible

The amount that must be paid out of pocket by the insured for covered losses before the insurance company pays a claim.
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Deduction

An expense allowed by the IRS or state tax authority that is used to offset taxable income. Federal deductions include some interest paid, state and local taxes, and charitable contributions.
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Deed of Title

A written document conveying title of property, mostly commonly used when transferring legal title to real estate from one party to another.
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Deferred Annuity

An annuity in which the income payments/withdrawals begin at some future date.
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Defined Benefit Plan

An employer-sponsored retirement plan that promises to pay a specified amount to each employee who retires after a set number of years of service with the company. Generally the employer makes all contributions to such a plan, although employees do contribute to them in some cases. This is also referred to as a Defined Benefit Pension Plan or pension.
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Defined Contribution Plan

An employer-sponsored retirement plan in which the level of contributions is fixed through annual or periodic contributions to accounts set up for each employee. The employer contribution may be a percentage of the employee's salary, or may be related to years of service. Employee contributions are also permitted. The benefit at retirement depends on the return from investments. Common examples of defined contribution plans include 401(k), 403(b), and 457 plans, profit-sharing plans, and employee stock ownership plans (ESOPs).
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Demand Loan

A loan with no set maturity date that can be called for repayment when the lender chooses. Interest on these loans is usually billed at fixed intervals.
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Demutualization

The process of changing the legal structure of an insurance company from a mutual form of ownership to a stock form of ownership.
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Dental Insurance

Individual or group plan that helps pay the costs of normal dental care as well as damage to teeth from an accident.
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Dependent

An individual for whom the taxpayer provides at least 50 percent of the support regardless of where they live. Generally the individual bears a specific relationship to the taxpayer (i.e., child, sibling, parent) and/or resides primarily in taxpayer's household.
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Deposit Premium

The premium deposit paid by a prospective policyholder when an application is made for an insurance policy. It is usually equal to at least the first month's estimated premium and is applied toward the total policy premium when billed.
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Depreciation

The annual deduction allowed to recover the cost of business property with a useful life of more than one year, such as machinery and equipment. The deduction does not apply to stock in trade, inventories, land, or personal assets and is reported as an expense that when subtracted from revenue, reduces the company's taxable income.
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Difference in Conditions Insurance (DIC)

"All-risks" policy that covers other perils not insured by basic property insurance contracts, supplemental to and excluding the coverage provided by underlying contracts.
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Direct Response System

A marketing method where insurance is purchased by customers without the solicitation or advice of an agency (though an agent may be needed to complete the transaction). Potential customers are solicited by advertising in the mail, newspapers, magazines, television, and other media.
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Disability

A physical or mental impairment that substantially limits one or more of an individual's major life activities. Disability may be partial or total.
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Disability Benefit Period

The period during which disability insurance benefits are paid. While this period may vary between policies, benefits paid until age 65 are common for long-term policies and benefits paid for 26 weeks are common for short-term policies.
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Disability Income Rider

Addition to a life insurance policy stating that when an insured becomes disabled for at least six months, premiums are waived. Depending on the rider, the insured may also begin to receive monthly income payments from the policy.
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Disability Insurance

Also known as disability income insurance, this type of policy provides income benefits to the insured if he or she becomes ill or is injured and can no longer work.
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Disappearing Deductible

Deductible in an insurance contract that provides for a decreasing deductible amount as the size of the loss increases, so that small claims are not paid but large losses are paid in full.
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Discharge of Bankruptcy

Refers to a court order which terminates bankruptcy proceedings and frees the debtor of legal responsibility for dischargeable debts and other specified obligations.
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Discount Rate

The rate of interest banks must pay when they borrow funds from the Federal Reserve to meet their reserve requirement.
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Discovery

Refers to the process by which a party to a legal action supplies the other party with certain relevant information and/or documents (as required by law or by a judge) either before or during the legal proceedings.
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Discretionary Income

Amount of a consumer's income remaining after essentials such as food, housing, and utilities and prior commitments have been paid.
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Discretionary Trust

A trust which allows the trustee discretion in making distributions of income or principal to the beneficiary.
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Dismemberment Insurance

A form of health insurance that provides payment when the insured loses one or more limbs, or the sight in one or both eyes. This coverage is usually issued in combination with accidental death insurance.
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Dividend

Distribution of a company's earnings to shareholders, generally on a quarterly basis, paid in cash or additional shares of the company's stock. The dividend amount per share is decided by the company's board of directors. Dividends must be declared as income by the shareholder in the year received.
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Dividend Addition

An amount of paid-up life insurance purchased with a policy dividend and added to the face amount of the policy.
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Dollar Threshold

In certain states with no-fault auto insurance, the dollar threshold prevents individuals from suing to recover for pain and suffering unless their medical expenses exceed a specified dollar amount.
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Domestic Partner Benefits

Employer benefits offered to unmarried partners of employees. Although laws regarding domestic partner benefits apply only to same-sex couples, in practice, many employers offer domestic partner benefits to both same- and opposite-sex couples. Benefits may include health insurance, leave to care for an ill partner, and bereavement leave at a partner's death.
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Domicile

The place an individual resides and that is intended to be the permanent residence. Domicile does not refer to a summer home or a temporary residence. Once a domicile has been established, it will remain so until the individual moves to a different location with the intent of making that location the permanent residence.
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Double Indemnity

Also called an accidental death benefit, a life insurance policy provision that doubles payment of a designated death benefit when death results from certain specified causes (usually certain types of accidents).
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Driver Education Credit

Discount on auto insurance premiums for which young drivers become eligible upon completion of a driver education course.
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Dunning Letters

Written correspondence received from creditors requesting payment of debt and/or threatening legal or other action if payment is not made by a certain date.
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Duplication of Benefits

Overlapping or identical medical insurance coverage under two or more separate health plans.
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Durable Power of Attorney

Legal document which appoints an individual to act on the principal's behalf and remains in effect even if the principal becomes incapacitated.
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Durable Power of Attorney for Health Care

A durable power of attorney for health care. Allows a representative to make medical decisions only for an individual who is seriously ill or incapacitated. Also called a health care proxy.
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Dwelling Policy

An insurance policy for liability covering a building's structure and usually its contents when the building is used as a dwelling. This type of coverage is normally purchased when the building can't be covered under a homeowner's policy (for example, when the individual does not own a home).
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