LTC/DI Glossary of Terms

To help you in your review of LTC insurance policies, a helpful list of commonly used terms is provided below.Click on a letter to locate a term in that section, or scroll through the list.
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 Activities of Daily Living (ADLs)

The basic activities and functions performed on a daily basis that are usually done without assistance. The six ADLs are:

  1. Eating
  2. Dressing
  3. Bathing
  4. Toileting
  5. Transferring
  6. Continence

Accumulation Period

The pre-determined amount of time that must pass before the benefits are to go into effect for the claimant.


Person professionally trained in the specifics of pensions, insurance and related areas. Determines how much money must be contributed to an insurance or pension fund in order to be sufficient for the future.


A formal recognition by an impartial and independent organization, which confirms that a particular insurance company is upholding the standards of the industry.

Additional Insured

An insured person specifically stated in an insurance policy.

Adjustable Life Insurance

A type of insurance that allows the holder to change the terms of the insurance, raise or lower the face value of the policy, increase or decrease the premiums and/or the time period of the policy.

Adult Day Care

A daily program made up of social and health-related services provided daily outside the home in a group setting to support weak, elderly, or other adults with impairment.

Advantage List

List of health service providers that agree to give particular insurance company policyholders a preset discount.

Age Limits

Stated minimum and maximum ages below and above that the insurance company will not accept policy applications.


A licensed insurance company representative who sells, negotiates insurance policies, and provides service to the policyholders.

Alien Insurer

An insurance company located in another country.

Allocated Benefits

Benefits that have a stated maximum amount payable for specific services itemized in the contract.

Alternate Care Facility

A facility that provides continuous care and related support to inpatients in one set location and meets the following guidelines:

  1. Provides a 24 hour-a-day care and service that supports the needs of individuals that are unable to perform Activities of Daily Living (ADL’s) or Cognitive Impairment
  2. Has a certified and experienced person on staff at all times to provide that care
  3. Is licensed by the appropriate agency to enable them to provide this care
  4. Has written and formal arrangements for a nurse or medical doctor to provide medical care in the case of an emergency
  5. Has the correct methods and procedures for handling and administering drugs and other medicines

Alzheimer’s Care Center

A treatment center that specializes in providing care for those with Alzheimer’s Disease with more of the care geared towards supervision of the patient in a safe and controlled environment.

Alzheimer’s Disease

A degenerative disease of the brain which attacks nerve cells in the cortex of the brain thereby impairing a person’s abilities to think and function.


A formal written document signed by both the insurance company and the policyholder, which changes the terms of the insurance policy.


A signed statement of facts filled out by the person applying for the insurance policy, which is then used by the insurance company to decide whether or not to issue a policy. The application then becomes part of the policy.


Determination of the person’s level of physical ability or mental capability, and the type and extent of services available and needed.


The legal transfer of one person’s insurance policy to another person.

Assisted Living Facility

A facility which provides 24 hour around the clock care to resident patients in need of assistance with any number of the Activities of Daily Living (ADLs).

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Baby Boomer

A person born between the years of 1945 and 1964.

Bad Faith

A charge against the insurance company that they have not acted in a way that is consistent to the way a reasonable policyholder would have expected.


The person designated or provided for by an insurance policy’s terms to receive any benefits provided by the policy or plan upon the death of the insured.

Benefit Period

The amount of time an insurance company will make payments to the individual to pay for care, etc., after the deductible has been satisfied.

Benefit Triggers

Specific situations that start payment of benefits.


Money paid by the insurance company to the claimant.

Benefit Limits

An amount that represents the daily benefit times the maximum number of days you can receive for all benefits combined under the policy.

Benefit Options

Each carrier’s insurance type generally has a set list of available benefits. Each benefit comes with a price.


A written or oral contract that temporarily places an insurance policy in effect when it is not possible to issue a new policy or endorse the existing policy immediately. The binder must meet all the terms of the policy issued.

Binding Receipt

A receipt given for a premium payment with the application for the insurance. If the policy is approved, this receipt binds the company to make the policy effective from the date of the receipt.

Board and Care Homes

Provides seniors with a room, meals, and assistance with ADL’s and some supervision for their safety. These homes are generally not certified by Medicaid, but are licensed and approved by the State.

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Done either by the insurer or insured, this discontinues the policy before its normal expiration date.


The individual who cares for someone with a disability or illness. The primary caregiver is usually a spouse, child or other relative.

Care Coordinator

An individual employed by the insurance company to handle all matters, financial and otherwise, regarding the welfare of the claimant for cost effective purposes. This includes, but is not limited to, selecting physicians, specialists, care centers, hospitals, etc. as well as coordinating time periods of care.

Care Line

An informational service that provides information on where to go for care.

Care Manager

A trained professional who is able to work with you and your family and your doctors to assess your situation and determine the appropriate Plan of Care. They will also help with finding the available care resources.

Care Plan

This is a written plan formulated by a health care professional after an assessment has been done on the individual with a chronic illness or disability. The plan provides a detailed outline of the person’s needs and what health services are required to meet those needs.

Case Coordinator Nurse

This is your contact person to discuss claims and benefits.


To transfer all or part of the written risk to an insurer or to a reinsurer.

Certificate of Insurance

A statement given to the policyholder stating the insurance benefits and terms.

Chronically Ill

A condition that is verified by a physician that renders the individual unable to perform at least two of the Activities of Daily Living (ADL’s) for at least 90 days which requires the individual to have Substantial Supervision to protect themselves from threats to health and safety.


A submitted request to the insurance company by the claimant to receive payment and/or reimbursement for expenses incurred due to disability, illness, etc. which are covered under said policy.

Claims Adjuster

This is the person who settles the claim, either an agent, company adjuster, independent adjuster, adjustment bureau, or public adjuster.

Cognitive Impairment

Loss of rational comprehensive thought processes due to a degenerative disease or disorder.


A part of the premium that is paid to the policyholder’s agent or broker for their services in the insurance policy process.


A state officer who handles the state’s insurance laws and regulations.

Congregate Housing Facilities

Similar to a dormitory setting, individuals have their own private rooms, but often share meals. Care is generally minor supervision to provide safety with emergency medical assistance always available.

Contract of Adhesion

A contract written by one party and signed or denied by another with no chance of change to the terms stated within the contract.

Compulsory Insurance

Any form of insurance that is required under the law.


Intentionally withholding information on an insurance application to hide facts from the insurance company.


An attempt made by the insurance company to prevent the lapse of a policy.


Acceptance by the insurance company of the payment for premium and the statement made by the prospective policyholder in the application.

Contingent Beneficiary

The person who will receive the benefits of a policy or plan if the main beneficiary dies while the insured is living.


A binding agreement between two or more parties stating specific terms and agreements. A contract of insurance is a written document known as a policy.

Contract Holder

The person, group, or entity, for which the contract is issued.

Contract Law

The part of civil law that interprets written contracts between parties and resolves any disagreements.


The amount of protection provided under the contract of insurance.

Covered Nursing Care Facility (Confined) Benefits

Policies that provided benefits for all levels of care will pay for benefits in a nursing home that is licensed in the state in which the claim is being made.

Custodial Care

Non-medical care in which the patient receives help with their ADL’s. Providers of this care do not need to be professionally trained nurses or therapists.

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Daily Benefit Period

The length of time which your daily benefits cover.

Daily Benefit Rate

The rate predetermined by your policy provider to cover your daily benefits.


The refusal of an insurer to issue a policy based on the review of the application for insurance and other relevant factors.


An out-of-pocket amount of money that the insured must pay before the insurance company assumes financial responsibility for the claimant’s expenses.


When shares of the company’s stock are sold individually rather than as part of a large portfolio consisting of several individual stocks, i.e. mutual fund.

Deposit Premium

This is the initial premium paid by the prospective policyholder when the insurance application is filled out. This is generally equal to the first month’s premium and is applied towards the first month’s actual premium.

Discount Rate

This rate is used to calculate the value of dollars paid or received in future years to current dollars. For example, a dollar today may only be worth 50 cents ten years from now.

Doctrine of Reasonable Expectations

A legal document that states policies must be written in such a way that a reasonable person who is not trained in the law may interpret them.

Domestic Insurer

An insurance company that operates in the state in which they are incorporated.

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Effective Date

The date on which the insurance policy begins.

Eldercare Locator

A national hotline service that refers people to local services if you or someone you know needs long term care. The number is 1-800-677-1116.

Elimination Days

A period of time between the initial need for care and the beginning of the payments from the insurance company.

Elimination Period

The number of days that you have to pay benefits before your coverage begins to pay for benefits.

Evidence of Insurability

Statements or proof of a person’s physical condition affecting the acceptance for insurance.

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Fair Premium

The premium level that is just high enough to cover an insurer’s expected costs and give insurance company owners a just return on their invested capital.

Favorable Tax Treatment

Benefits are received free from tax. Also, your premium and long-term care expenses may be deductible from your Federal Income Taxes, within reason. Please contact your tax advisor for more information.

Financial Counseling Programs

Help seniors with managing their finances, bills, and completing Medicaid, Medicare or insurance forms.

Financial Soundness

Related to stability, it is important to compare the financial ratings and assets of insurance carriers.

Foreign Insurer

When the insurer is not located in the state in which they are incorporated.

Free-Look Period

Once you buy a policy, most states allow you up to 30 days to return your policy. Make sure to get written proof of this option when you receive your policy.

Full Nonforfeiture Benefit

Upon death of the policyholder, or the second to die in a joint policy, the benefit returns all premiums paid to the beneficiary.

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Decided when a patient should be referred to a specialist or when particular tests should be given.

Geriatrics Manager

A person who assesses the needs of elderly people in terms of what services they need, often arranges for these services and keeps in touch with the person. The geriatrics manager is often hired by the person’s immediate family to keep them informed of the person’s status when they cannot be there themselves.

Gross Premium

The premium paid by the policyholder.

Guaranteed Rate Policy

Written agreement stating premium rate will not increase over time.

Guaranteed Renewable

Once your policy is issued, your coverage will never be cancelled so long as your premiums are paid.

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High Risk Individuals

People who have a pre-existing health condition that have a greater than average probability of future medical expense.

HIPAA (The Health Insurance Portability and Accountability Act of 1996)

This act became a law on January 1, 1997. The act states the requirements that a long term care policy must follow in order that the premiums paid may be deducted as medical expenses and benefits not paid be considered as taxable income.

Home Care Providers

A person who provides home health care or hospice services and who meets the following criteria:

  1. Under the Medicare Program, has an agreement to be a provider of home health care services
  2. Is licensed by their state as a home health care agency or hospice if licensing is required in the state in which they are practicing
  3. Is a licensed therapist, a registered nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.) providing services under the guidelines of their license

Home Care Services

Household services done by someone else because you are unable to do them yourself. These include nursing services, personal hygiene, house chores, errands, and preparation of meals, laundry and small house maintenance.

Home Delivered Meals

“Meals on Wheels,” provide meals to those who cannot cook for themselves.

Home Health Aid

Licensed individual that performs daily care for those in need of assistance in their homes. Generally these people provide help with basic daily activities such as bathing, eating, and dressing.

Homemaker Service

Generally in combination with a Home Health Aide, this person will cook, clean, run errands, etc.

Hospice Care Services

Outpatient services provided by a licensed hospice provider to help ease the pain of terminally ill patients in their last stages of their terminal disease. They also provide support to the primary caregiver and the family.

House Claims Department

Department that processes and reviews all claims.

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Immediate Family

The person’s spouse, children, parents, siblings, grandchildren or in-laws.

Incurred Services

Received services from providers.


Compensation to the claimant for disability or illness suffered – security against loss.

Independent Agent

A business person that represents two or more insurance companies in sales and service and who is paid on a commission basis.

Independent Caregiver

A person who provides home health care services or hospice care who:

  1. Is licensed to provide the care they are giving and are working independently from a home health care agency. They must be licensed in the state they are working in.
  2. Is chosen by you and has been qualified under the Independent Caregiver Certification Benefit
  3. Is not a member of your immediate family living with you

Informal Caregiver

Usually a spouse or relative, an informal caregiver is an unpaid individual who takes on the responsibility of providing care for the individual in question.

Inflation Rate

The rate which the cost of long-term care is expected to increase in the future. Generally this rate is 1-2% higher than the overall U.S inflation rate.

Inflation Protection with the Automatic Increase Benefit Rider AIB

A rider that helps you to keep up with the potential cost of your care due to inflation. The rider increases your maximum daily benefit either on a simple or compound basis, depending on the rider you choose.

Instrumental Activities of Daily Living (IADLs)

Determines the physical and mental impairment while performing activities such as shopping, telephone use, housekeeping, laundry, taking medications, and managing finances.


A system of exchange under contract where payments over a period of time (premiums) entitle individuals compensation by an organization (insurance company) in the event of loss due to pre-specified conditions.

Insurance Carrier

Insurance provider.

Insurance Commissioner

The top insurance regulation official in the state.

Insurance Policy

A legal contract issued by the insurance company to secure coverage for claimant.

Insurance Premium

The pre-specified amount an individual pays to guarantee coverage for a policy.


A person covered under an insurance policy, including any persons named as receiving protection under the policy.


The insurance company that agrees to pay losses of benefits. Also, the insurer can be any company whose primary business is selling insurance to the public.

Insuring Agreement

The part of the insurance policy that specifies the promises of the insurer.

Insuring Clause

A statement that specifies the type of loss covered by the policy and the parties involved in the insurance contract.

Intermediate Nursing Care

This care is provided to those who do not need care on a 24-hour basis. A skilled care person on a non-continuous basis provides the nursing care.

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The ending of the insurance policy due to the non-payment of a premium.

Lapsed Policy

A policy which has discontinued due to the non-payment of premiums.

Level Premium

A premium that remains the same throughout the life of the policy.

Licensed Health Care Provider

A doctor, or health care professional, who certifies every 12 months that you are continuously ill and in need of support.

Life Expectancy

The average number of years of life remaining for a group of persons given age according to a particular mortality table.

Living Will

A written document which states the wishes of an individual in advance, concerning the use of life saving devices and procedures in the event that the person is terminally ill or has suffered an injury and is no longer competent.

Long Term Care

Care given in the form of medical and support services to persons who have lost some or all of their capacity to function due to an illness or disability. These services are generally provided away from the primary health care facility and are of a long time frame.

Long Term Care Insurance

The insurance which pays for a succession of caregiving services for the elderly or chronically ill. This care may be provided in a facility (nursing home, mental hospital, etc.) or in the individual’s home with a nurse or aide.

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Maintenance or Personal Care Services

Any personal service where the main reason to assist those in need of care resulting from a chronic illness or disability.

Married Couples Discount

A plan that offers a reduced rate to those couples that apply for coverage and are approved.

Maximum Lifetime Benefit

The total amount your carrier will pay you in your lifetime for all benefits provided under your policy.


Public assistance funded through the state to individuals unable to pay for healthcare. Medicaid can be accessed only when all prior assets and funds are depleted.

Medical Help System

A communication system set up in your home that is used to contact medical personnel in the case of an emergency.


A Government program, administered by the Social Security Administration, which provides financial assistance to individuals over the age of 65 for hospital and medical expenses. Medicare does not cover long-term care expenses.


Private health insurance that is used to pay costs not covered by Medicare, such as deductibles and co-insurance.

Mode of Premium Payment

The schedule of the payment of premiums; monthly, quarterly, semi-annually, or annually.

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National Association of Insurance Commissioners (NAIC)

A national organization made up of state officials who are in charge of regulating insurance. They have considerable influence and strive to promote national uniformity in insurance regulations.

Named Insured

The first person in whose name the insurance policy is issued.

Non-forfeiture Benefit

If a policyholder chooses to cancel their coverage, this benefit returns part of what the policyholder has paid in premiums.

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Payment of Claim

Timely payment, generally monthly, after services have been given to the patient and the filed claim is proven valid.


The cause of a loss, insured against in a policy.

Plan of Care

A program of care and/or treatment that is set up with your licensed physician and approved in writing before the start of care.


A written legal contract of insurance, issued by the insurance company to the policyholder, which outlines the terms of the insurance.

Policy Holder

Individual that has a written and signed agreement with their insurance provider.

Policy Language

Clarity of policy explanation.

Policy Lapse

Length of time since the policy has been active.

Policy Term

The length of time the insurance policy provides coverage.

Pre-existing Conditions

A health problem diagnosed prior to the effective date of coverage by the insurance policy, many times resulting in cancellation of policy or drastically increased premiums.


The annual payment from the individual to the insurance company to keep the policy active.

Premium Rates

Rates that determine amount of the premium. It is important to research the history of rate increases for each perspective carrier.

Premium Stability

The amount of risk involved in maintaining current premium rate. The lower the chance of the rate fluctuating, the lower the risk and the higher the premium stability.

Premium Taxes

A state controlled tax that is placed on premiums charged by insurance agencies operating within a state, generally these taxes are two to three percent of the total premium.

Proof of Loss

Documents, such as bills, that show the breakdown of money spent on services provided.

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A proposed estimation, of the needs of the assessed individual, to determine an appropriate policy.

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The pricing factor in which the insurance company bases their insurance buyer’s premium.

Rated Policy

Also known as an “Extra-Risk” policy, this policy is issued at a higher than stated premium rate due to extra risk in the policyholder, such as impaired health or a dangerous occupation.


The process by which insurance companies determine the risks and the pricing for the classes of insurance.


Payment back to the claimant for expenses incurred out of pocket which are inherently covered by the policy.


The continuance of the coverage of a policy that is beyond the original length of time set in the original policy based on the acceptance of the new policy’s premium.

Respite Care

Care provided through a long-term care facility to temporarily relieve the informal caregiver’s burden of responsibility.

Return of Premium

A specific amount of cash that is returned to the policyholder once the insurance company receives notice that the policyholder wishes to terminate the policy or that the policyholder has died.


Written contract agreement between insurer and insured which changes the policy or certificate.


The chance of loss.

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Sample Premium Cost

A schedule of benefit coverage that is given to each covered person under the policy that states the premium amounts, the payment mode, and a summary of benefits and limitations.


The process of growing old.

Senior Centers

Provide an assortment of social and recreational services. Many provide programs offering low cost or free meals.

Senior Citizen Policies

Insurance policies for those over the age of 65. In many cases these policies are in combination with coverage provided by the government under the Medicare Program.

Senior Transportation Services

Help seniors with their shopping, medical appointments and other appointments.

Severe Cognitive Impairment

A loss or breakdown of the mental capability that is similar to Alzheimer’s Disease and similar forms of dementia. It is measured by clinical evidence and standard tests that provide valid information regarding the patient’s impairment which includes (1) memory both short-term and long-term, (2) orientation to people, places, or time, and (3) deductive or abstract reasoning.

Skilled Nursing Care

This is the highest level of care provided by a Registered Nurse (R.N.) or a Licensed Practical Nurse (L.P.N.) 24 hours a day. It is prescribed by a physician for the most severely impaired person who cannot perform their own personal needs.

Spousal Discount

Set discount if policyholder is married.

Stability of Carrier

Strength of the insurance carrier based on their profitability and market share.

Substantial Supervision

This is continuous supervision that is provided to those who have Severe Cognitive Impairment, which threatens their health and safety.

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Tax Qualified (TQ) Policies

Beginning January 1, 1997, long-term policies meeting certain requirements qualify for favorable tax treatment. Buyers of these plans may deduct the premiums if they itemize their deductions on their Federal Tax return. Premiums are treated as medical or health insurance expenses and must be equal to more then 7.5% of adjusted gross income. Also, benefits received from a Tax Qualified Plan (TQ Plan) are not taxable up to $175.00 a day.

Temporary Insurance

This type of insurance is provided to policyholders during the time which their insurance coverage is applied for, and during the approval process. This insurance has a specific time period of effectiveness, generally about 60 days.

“The Lion’s Share of the Business”

In relation to market share, how much of the industry the company generates and controls. Companies that have a large market share are established and stable, with confidence in their future. Low market share companies are much less stable and often provide incentives such as low rates to attract more customers.

Transition Expense

Expense incurred during the time you are waiting for Home Health Care.

Transition Expense Allowance

Set amount of funds paid during the waiting period, which may be used for in home equipment.

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Underwriting Process

Steps through which an insurance application is reviewed by a licensed insurance counselor to become approved for insurance.

Unique Features

Benefits, options and advantages that are particular to an insurance carrier.

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Validity of Claim

Judgment passed on a claim from the house claims department, which verifies that the claim is accurate and truthful.

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Waiting Period

Period of time lost while waiting for Home Health Care.


An agreement attached to the policy that exempts from coverage specific disabilities and injuries that normally would be covered under the policy.

Waiver of Premium

A clause included in various policies, which allocates premium payments due during a period of continuous ongoing disability.

Written Premiums

The total amount of premiums due in a year for all policies issued by an insurance company.

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