DEATH BENEFIT* - (1) For a life insurance contract, the amount of money paid by an insurer to a beneficiary when a person insured under the life insurance policy dies. (2) For an annuity contract, the amount of money paid to a beneficiary if the contract owner dies before the annuity payments begin.
DECLARATION - Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums and supplemental information. Referred to as the
DECLINED RISK CLASS* - In insurance underwriting, the group of proposed insureds whose impairments or anticipated extra mortality are so great that an insurer cannot provide insurance coverage to them at an affordable cost. Also known as uninsurable class. Contrast with preferred risk class, standard risk class and substandard risk class.
DECREASING TERM LIFE INSURANCE* - Term life insurance that provides a death benefit that decreases in amount over the policy term. Contrast with increasing term life insurance.
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.
DEFERRED ANNUITY - An annuity contract, also referred to as an investment annuity, that is purchased either with a single tax-deferred premium or with periodic tax-deferred premiums over time. Payments begin at a predetermined point in time, such as retirement. Money contributed to such an annuity is intended primarily to grow tax-deferred for future use.
DEFINED BENEFIT PLAN - A retirement plan under which pension benefits are fixed in advance by a formula based generally on years of service to the company multiplied by a specific percentage of wages, usually average earnings over that period or highest average earnings over the final years with the company.
DEFINED CONTRIBUTION PLAN - An employee benefit plan under which the employer sets up benefit accounts and contributions are made to it by the employer and by the employee. The employer usually matches the employee‘s contribution up to a stated limit.
DEMAND DEPOSIT - Customer assets that are held in a checking account. Funds can be readily withdrawn by check,
DEMUTUALIZATION - The conversion of insurance companies from mutual companies owned by their policyholders into publicly traded stock companies.
DEPOSITORY INSTITUTION - Financial institutions that obtain their funds mainly through deposits from the public. They include commercial banks, savings and loan associations, savings banks and credit unions.
DEREGULATION - In insurance, reducing regulatory control over insurance rates and forms. Commercial insurance for businesses of a certain size has been deregulated in many states.
DERIVATIVES - Contracts that derive their value from an underlying financial asset, such as publicly traded securities and foreign currencies. Often used as a hedge against changes in value.
DIFFERENCE IN CONDITIONS - Policy designed to fill in gaps in a business‘s commercial property insurance coverage. There is no standard policy. Policies are specifically tailored to the policyholder‘s needs.
DIMINUTION OF VALUE - The idea that a vehicle loses value after it has been damaged in an accident and repaired.
DIRECT PREMIUMS - Property/casualty premiums collected by the insurer from policyholders, before reinsurance premiums are deducted. Insurers share some direct premiums and the risk involved with their reinsurers.
DIRECT SALES/ DIRECT RESPONSE - Method of selling insurance directly to the insured through an insurance company‘s own employees, through the mail, by telephone or via the Internet. This is in lieu of using captive or exclusive agents.
DIRECT WRITERS - Insurance companies that sell directly to the public using exclusive agents or their own employees, through the mail, by telephone or via the Internet. Large insurers, whether predominately direct writers or agency companies, are increasingly using many different channels to sell insurance. In reinsurance, denotes reinsurers that deal directly with the insurance companies they reinsure without using a broker.
DIRECTORS AND OFFICERS LIABILITY INSURANCE/D&O - Directors and officers liability insurance (D&O) covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in suits against the company. There are a variety of D&O coverages. Corporate reimbursement coverage indemnifies directors and officers of the organization. Side-A coverage provides D&O coverage for personal liability when directors and officers are not indemnified by the firm. Entity coverage, for claims made specifically against the company, is also available. D&O policies may be broadened to include coverage for employment practices liability.
DISABILITY INCOME INSURANCE* - A type of health insurance designed to compensate an insured person for a portion of the income lost because of a disabling injury or illness. Benefit payments are made either weekly or monthly for a specified period during the continuance of an insured‘s disability. (See income protection insurance )
DIVIDEND - Money returned to policyholders from an insurance company‘s earnings. Considered a partial premium refund rather than a taxable distribution, reflecting the difference between the premium charged and actual losses. Many life insurance policies and some property/casualty policies pay dividends to their owners. Life insurance policies that pay dividends are called participating policies.
DIVIDEND ACCUMULATIONS OPTION* - See Accumulation at interest option.
DOMESTIC INSURANCE COMPANY - Term used by a state to refer to any company incorporated there.
DREAD DISEASE COVERAGE* - See Specified disease coverage
The dollar amount that a plan member must pay for health care services each year before the insurer begins to reimburse for health care services. Beginning in 2014, deductibles for small group insurance plans will be limited to $2,000 for individual policies and $4,000 for family policies.
The coordination of care for the entire disease treatment process, including preventive care, patient education and outpatient care in addition to inpatient and acute care. The process is intended to reduce costs and improve the quality of life for an individual with a chronic condition.
A gap in prescription drug coverage under Medicare Part D, where beneficiaries pay 100% of their prescription drug costs after their total drug costs exceed an initial coverage limit until they qualify for a second tier of coverage. Under the standard Part D benefit, Medicare covers 75% of drug costs below the initial coverage limit ($2,830 in 2010), and 95% of spending within the second tier level ($6,440 in 2010). The \donut hole\ specifically refers to the range between these two levels. Health care reform also provides a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010, increases discounts in subsequent years and completely closes the donut hole by 2020.
A term used to describe an individual who is eligible for Medicare and for some Medicaid benefits.