Rate:The pricing factor upon which the insurance buyer's
premium is based.
Rated Policy:Sometimes called an "extra risk"
policy, an insurance policy issued at a higher-than-standard
premium rate to cover the extra risk where, for example, an
insured has impaired health or a hazardous occupation.
Ratemaking:The statistical process by which insurers
determine risks and pricing for the basic classes of insurance.
Rating Territory:A geographical grouping in which
like hazards tend to equalize and permit the establishment
of an equitable rate for the territory.
Reasonable and Customary Charge:A charge for health
care, which is consistent with the going rate or charge in
a certain geographical area for identical or similar services.
Rebating:Giving any valuable consideration, usually
all or part of the commission, to the prospect or insured
as an inducement to buy or renew. Rebating is prohibited by
law.
Reduced Paid-up Insurance:A form of insurance available
as a nonforfeiture option. It provides for continuation of
the original insurance plan, but for a reduced amount.
Regulation:Supervision of business practices by a
governmental entity.
Rehabilitation:(1) Restoration of a totally disabled
person to a meaningful occupation, (2) a provision in some
long- term disability policies that provides for continuation
of benefits or other financial assistance while a totally
disabled insured is retraining or attempting to resume productive
employment.
Reimbursement:The payment of the expenses actually
incurred as a result of an accident or sickness, but not to
exceed any amount specified in the policy.
Reinstatement:The resumption of coverage under a policy
which has lapsed.
Reinsurance:Assumption by one insurance company of
all or part of a risk undertaken by another insurance company.
Reinsurance:The acceptance by one or more insurers,
called reinsurers, of a portion of the risk underwritten by
another insurer who has contracted for the entire coverage.
Reinsurance :The purchase of insurance by an insurance
company from another insurance company (reinsurer) to provide
it protection against large losses on cases it has already
insured.
Reinsurance Facility:An alternative mechanism to service
those insureds that cannot obtain insurance in the voluntary
market. Premiums and losses for the business that is ceded
to the facility are pooled and all insurers share according
to their proportion of the voluntary market.
Renewal:Continuance of coverage under a policy beyond
its original term by the insurer's acceptance of the premium
for a new policy term.
Renter's Policy:A package type of insurance that includes
coverage similar to a homeowners policy to cover the personal
property of a renter or tenant in a building.
Replacement:The substitution of health insurance coverage
from one policy contract to another.
Replacement Cost:The cost to repair or replace property
at construction costs prevailing at time of loss; the cost
to repair or rebuild property without considering depreciation.
(See Actual Cash Value)
Replacement ratio:The percentage of income before
retirement that is required to be replaced to maintain the
same standard of living after retirement.
Representation:Statements made by an applicant in
the application, which he represents as being substantially
true to the best of his knowledge and belief, but which are
not warranted as exact in every detail.
Rescission:Termination of an insurance contract by
the insurer on the grounds of material misstatement on the
application for insurance. The action of rescission must take
place within the contestable period or Time Limit on Certain
Defenses but takes effect as of the date of issue of the policy,
thus voiding the contract from its inception.
Reservation of Rights:An arrangement whereby an insurer
defends a case without commitment to provide coverage in the
event that the facts disclosed during the trial reveal that
the occurrence is not covered.
Reserve:(1) An amount representing liabilities kept
by an insurer to provide for future commitments under policies
outstanding. (2) An amount allocated for a special purpose.
Note that a reserve is usually a liability and not an extra
fund.
Residual Disability:A period of partial disability
that immediately follows a period of total disability. Benefits
for residual disability are paid on a pro-rata basis, depending
on the percentage of earnings loss.
Residual Disability Benefits:A provision in an insurance
policy that provides benefits in proportion to a reduction
of earnings as a result of disability, as opposed to the inability
to work full-time.
Residual Market:(1) A system through which insurance
is made available to buyers that represent unusually high
risks. (2)A source of insurance available to applicants who
are unable to obtain insurance through ordinary methods in
the voluntary market. (See AIP, JUA, Facility)
Retention:(1) The net amount of risk retained by an
insurance company for its own account or that of specified
others, and not reinsured. (2) The amount of the risk kept
for oneself, as opposed to the amount it insures (or reinsures)
with another.
Retrocession:The process by which a reinsurer obtains
reinsurance from another company.
Retrospective Date:The first date for which claims
will be paid under a claims-made policy of liability insurance.
Retrospective Rating:Rating procedure which allows
adjustment of an insured's final rate on the basis of the
insured's own loss experience.
Revocable Trust:A trust that can be terminated or
revoked by its creator.
Rider:(1) A document which amends the policy or certificate.
It may increase or decrease benefits, waive the condition
of coverage or in any other way amend the original contract.
(2) A special policy provision or group of provisions that
may be added to a policy to expand or limit the benefits otherwise
payable. (3) A document that modifies the policy. It may increase
or decrease benefits, waive a condition or coverage, or in
any other way amend the original contract.
Right of Survivorship:At the death of one co-owner
of property, that person's interest in the property automatically
passes to the surviving joint tenant or tenants.
Risk:The chance of loss. Also used to refer to the
insured or to property covered by a policy. (2) Any chance
of loss. (3) A term used to refer to a person or the peril
insured.
Risk Classification:The process by which a company
decides how its premium rates for life insurance should differ
according to the risk characteristics of individuals insured
(e.g., age, occupation, sex, state of health) and then applies
the resulting rules to individual applications. (See:Underwriting)
Risk control:any conscious action (or decision not
to act) intended to reduce the frequency, severity, or unpredictability
of accidental losses.
Risk Retention Group:An alternative form of insurance
in which members of a similar profession or business band
together to self insure their risks.
Robbery:The taking of property from a person by force
or threat of violence.
Rollover:Transfer of IRA or other qualified pension
funds from one financial institution (trustee) to another.
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