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Lost in the terminology insurance companies use? Our quick-reference insurance glossary provides easy-to-understand definitions and examples of the terms insurance professionals use.

Waiting Period

Waiting Period, when applied to a health insurance policy, refers to the time that an insured person must wait before the insurance company starts paying for the benefits. The waiting period is usually counted from the date of policy issue to the date when benefits become payable. It may also refer to the time after an accident or diagnosis of sickness where the insured person has to shoulder the medical expenses or produce the necessary income before the insurance payments start to kick in. This is usually counted in days.

Waiting periods vary from one policy to another, and may even vary within the different benefits offered by one policy.

The waiting period is also called the probationary or elimination period. It serves as a form of deductible.

Waiver

A Waiver refers to a signed document releasing or surrendering a privilege or right.

From the part of the insurance company, it may be a document signed by the policyowner stating that it has been offered certain coverage but he opted to turn it down. For instance, an employer offers the employee health insurance as part of the employee benefit package. However, if the spouse's employee benefit program provides a better offer, the employee may sign a waiver refusing the health coverage.

For the part of the insured person, the insurance company may offer a waiver, such as a waiver of premium - that waives the need for the insured person to pay a premium if the insured person becomes totally disabled.

Waiver of Premium for Disability (WP) Benefit

Waiver of Premium for Disability Benefit refers to a rider that is added to the standard life insurance coverage where the insurance company waives the requirement for an insured person to pay premiums if the insured person becomes totally disabled and losses the ability to earn an income. The policy continues to provide coverage to the insured person and remains in effect until the stated maturity or termination date of the contract, or until the insured person ceases to be totally disabled and has the means to earn an income.

This benefit is subject to the policy's definition of disability. An extra premium is often tacked on for this additional coverage.

It is important to note that with total disability, the insured person may have to wait for six month (without income) before he is allowed to stop making premium payments to the policy.

War Risk

War Risk refers to a special type of coverage providing protection for damages due to acts of war. This includes coverage for land-based property, as well as cargo in overseas ships or airplanes.

This is insurance that also pays for damage to the ship or airplane. In addition, the risks covered include cargo being confiscated or damage because of invasion, hijacking or acts of rebellion and insurrection. There are also some policies that pay for damages caused by weapons of mass destructions. The coverage may also exclude coverage of cargo while the cargo is awaiting shipment, whether it is inside a ship, an airplane, a wharf or airport after it has arrived in the port for 15 days.

Water-Damage Insurance Coverage

Water-Damage Insurance Coverage provides protection for losses caused by accidental water damage. The damage must be sudden, such as caused by the bursting of water pipes inside the house or the sudden influx of water through foundations and basement walls. This also protects against the accidental and sudden overflow of septic tanks, ditches and other sewer connections.

This insurance does not protect against damage because of acts of negligence and improper maintenance. Thus, the insurance will not pay for damage caused by dripping air conditioners. Also, this insurance does not cover against damage caused by flood. Protection for losses against floods is specifically covered by a flood insurance policy.

Weather Derivative

A Weather Derivative is a security or financial instrument that uses weather as a hedge. These are commonly used by businesses that are energy-related and also by those whose sales are considerably affected by the weather. For instance, theme parks can use weather derivatives to protect against rainy weekends that occur during the summer (the peak season for theme parks). Farmers may also use derivatives to protect against frost or draught that will cause poor harvests.

This is one way that an individual or organization can manage and reduce the risk that is connected with unexpected or unfavorable weather conditions. Unlike other derivatives, the price of the weather derivative and its underlying asset (snow, temperature or rain) may not correspond with price.

Weather Insurance

Weather Insurance provides protection against financial losses due to the interruption of business due to unfavorable weather conditions. For example, a wedding had to be called off due to extremely bad weather. This may cause financial loss as the bride or groom may have to pay cancellation fees for the caterer or the rentals for tables and chairs. Another example would be a major outdoor concert experiencing financial loss because of continuous rains on the day of the concert.

Weather insurance is usually issued on a per-day basis and covers single events, where there is financial loss or loss of income. It also usually involves a deductible amount.

Whole Life Insurance

Whole Life Insurance is life insurance that provides life insurance coverage, as well as a cash value. This provides coverage for the insured's entire life, thus the name, "whole life".

The insurance company will pay the beneficiaries a death benefit in case of the insured person's death within the duration of the policy.

The cash value provides a savings component and commonly provides a guaranteed rate of interest. This is taken from the part of the insurance premiums that are invested by the insurance company. However, the rate of return provided may not be as attractive as those given by alternative savings vehicles.

The cash value is tax-deferred for as long as it stays with the company. Taxes are only levied when the insured person withdraws from the cash value.

Workers Compensation

Workers Compensation provides for the employee's income benefits and medical expenses. These include the treatment of the insured employee, including physician's fees, surgical fees, physical rehabilitation and medical care. This is a government-sponsored benefits program. The state also regulates the benefit payment amounts and limits.

Workers compensation is provided if the employee signs a waiver promising that he will not file a lawsuit against the employer for liabilities.

Workers compensation covers for medical expenses (surgeries, medical care and physical rehabilitation) and income benefits for the employee. This is in exchange for the employee's waiver saying that he will not sue the employer for liabilities.

Workers compensation only provides benefits for loss of income and expenses due to a work-related illness or accident. It does not pay the employee for emotional or non-economic damages, such as the pain and despair the injured employee experiences.

Wrap-Up Insurance

Wrap-Up Insurance provides protection against loss for a group of businesses or companies that are involved in one big project.

For instance, a wrap-up insurance is bought for a major construction project that involves the contractor, the owner of the building being constructed, sub-contractors working on different aspects of the building and other related parties. The wrap-up insurance provides protection in case all or any of the parties concerned are faced with a lawsuit related to the project.

The insurance company will pay only for losses that are incurred during the life of the project. Wrap-up insurance may either be bought or controlled by the building owner or by the contractor.

Write

To "write" refers to the act of evaluating a risk, putting a premium for assuming that risk, and for ultimately issuing an insurance policy. In other words, it is an underwriting activity.

When an insurance policy receives an application, it investigates to check whether the risk is something that it wants to take on. If so, it then determines the rating of the risk (whether it is a standard or rated policy), as well as the amount of premiums charged. The professionals tasked by insurance companies to write policies are called underwriters. They determine whether the policy to be issued is profitable or not.

Written Premiums

Written Premiums refer to premiums that are to be paid to the insurance company for the duration or life of the insurance policy. This means, the total amount of premiums that a policyowner has to pay for his policy.

Written premiums can either be recorded as gross written premiums or net written premiums. The total premiums paid and due (gross written premiums) provide a good indication of the size of the insurance company. Net premiums written refer to the premiums once the reinsurance premiums and other related costs are deducted. The reinsurance company receives a portion of the premiums depending on the portion of risk it is willing to take on.

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