Sa-Dhan Newsletter Volume 1 Issue 4

Micro-Insurance

22. Premium flexibility: The policy holder's right to

etary value of a life insurance policy as security

for a loan. In the event of default, the creditor

vary the amount of premium paid each month

would receive proceeds or values to the extent

towards life policy.*

of his interest. *

23. Premium: the amount of money or consider-

13. Coverage: the guarantee against specific losses

ation, which is paid by an insured person or

policyholder (or on his behalf) to an insurer or

provided under the terms of an insurance

third party for insurance coverage under an

policy.**

insurance policy. The premium is generally paid

14. Evidence of insurability: Any statement or proof

in periodic amounts. It is related to the actuarial

of a person's physical condition, occupation,

value of the benefits provided by the policy, plus

etc. affecting acceptance of the applicant for

a loading to cover administrative costs, profit,

insurance.*

etc.**

15. Exclusions: specific hazards, perils or condi-

24. Renewable term: Insurance that may be re-

tions listed in an insurance or medical care

newed for another term without evidence of

coverage policy for which the policy will not

insurability.*

provide benefit payments.**

25. Risk charge: the fraction of a premium, which

16. Insurable risk: a risk which has the following

goes to generate or replenish surpluses, which

attributes: it is one of a large homogenous group

a carrier must develop to protect against the

of similar risks; the loss produced by the risk

possibility of excessive losses under its policies.

is definable and quantifiable; the occurrence of

Profits, if any, on the sale of insurance are also

loss in individual cases is accidental or fortu-

taken from the surpluses developed using risk

itous; the potential loss is large enough to cause

charges. The risk charge is sometimes referred

hardship; the cost of insuring is economically

to as the retention or retention rate. **

feasible; the chance of loss is calculable; and it

26. Risk selection: The method an underwriter uses

is sufficiently unlikely that loss will occur in

to choose applicants that the insurance com-

many individual cases at the same time.

pany will accept.  The underwriter must deter-

17. Insured: The party who is being insured. In life

mine whether risks are standard, substandard or

insurance, it is the person because of whose

preferred and set the premium rates accordingly.

death the insurance company would pay out a

*

death benefit to a designated-beneficiary.'*

27. Standard risk: Person who according to a

18. Insurer: Party that provides insurance coverage,

company's underwriting standards is entitled to

typically through a contract of insurance.*

insurance protection without extra rating or

special restrictions. *

19. Intermediary: a public or private agency or

organization selected by providers of health care

28. Substandard risk: Person who is considered an

which enters into an agreement with the finan-

under average or impaired insurance risk be-

cier (usually a government agency), to pay claims

cause of physical conditions family or personal

and perform other functions for financier with

history of disease, occupation, residence in

respect to such providers.

unhealthy climate or dangerous habits. *

20. Lapse: Termination of a policy upon the policy

29. Underwriter: Company receiving premiums, and

owner's failure to pay the premium within the

accepting responsibility for fulfilling the policy

grace period.*

contract. Also, company employee who decides

whether the company should assume a particu-

21. Preferred risk: A risk whose physical condition,

lar risk or not. *

occupation, mode of living and other character-

istics indicate a prospect for longevity superior

Source: The Smart Investor: Glossary: Business Stan-

to that of the average longevity of unimpaired

dard 24.9.01 p15

lives of the same age.*

***************

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