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Insurance Glossary - Understanding Common Terms

Our glossary is divided alphabetically by insurance term in a quick reference guide to assist understanding the language commonly used by insurance companies. Policy documents contain a number of these terms because they typically define the limitations of risk and liability on the insured and any exclusions of coverage.

If you plan to start a new policy or renew your current policy with a different carrier or agency, it is important to review and understand the policy differences behind individual quotes from multiple carriers.  Lower policy premiums may be the result of decreased payout benefits, higher deductibles, or maximum damages allowed.  It is important to identify these unique features in any policy comparison, otherwise a lower price may come at a much higher cost when you have to file a claim for loss or damages in the future.

Select the first letter of the word or term to locate a definition and brief description.  For example, to get help with the terms "Automobile Liability Insurance" or "Premium", select either the letter A or P from the menu bar below: 

Insurance Glossary: Terms that Begin with the Letter 'i'


See Incurred but not Reported.


Visit the Independent Insurance Agents & Brokers of America website.

Immediate Annuity

An annuity providing for payment to begin immediately.

Immediate Participation Guarantee (IPG) Plan

Type of pension plan in which all pension contributions are deposited in an unallocated fund and used directly to pay benefits to retirees.

Imputed Negligence

Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.

Income Interruption Insurance

See Business Interruption Insurance.


A provision in life insurance policies that states that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable during the lifetime of the insured after the policy has been in force for two years .

Incontestable Clause

An optional clause which may be used in noncancelable or guaranteed renewable health insurance contracts providing that the insurer may not contest the validity of the contract after it has been in force for two (sometimes three) years.

Incurred Losses

Expense account in an insurance company's Income Statement reflecting the claims paid during the policy year plus the loss reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred losses.

Incurred-but-not-Reported (IBNR) Reserves

Liability account on an insurer's balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer


Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.


Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position that existed before the loss.

Independent Adjustor

Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.

Independent Agency System

Type of property and liability insurance marketing system, sometimes called the American agency system, in which the agent is an independent business person representing several companies. The agency has legal right to income from the expirations and renewal rights to the business, and the agent is compensated by commissions.

Independent Agent

An independent business person who usually represents two or more insurance companies in a sales and service capacity and who is compensated by commissions.

Indeterminate Premium Whole Life Insurance

Nonparticipating whole life policy that permits the insurer to adjust premiums based on anticipated future experience. Initial premiums are guaranteed for a certain period. After the initial guaranteed period expires, the insurer can increase premiums up to some maximum limit.

Indirect Loss

See Consequential Loss.

Individual Contract

A contract of health insurance made with an individual called the policyholder or the insured, which normally covers the individual and, in certain instances, members of his family.

Individual Deductible

Amount that an insured and each person of his or her family covered by the policy must pay before the group or individual medical insurance policy begins to pay for medical expenses.

Individual Insurance

Policies which provide protection to the policyholder and/or his/her family. Sometimes called Personal Insurance as distinct from group and blanket insurance.

Individual Policy Pension Trust

A type of pension plan, frequently used for small groups, administered by trustees who are authorized to purchase individual level premium policies or annuity contracts for each member of the plan. The polices usually provide both life insurance and retirement benefits.

Individual Retirement Account (IRA)

An account to which an individual can make annual contributions of 100% of earnings up to $2,000 ($2,250 for a one-income married couple). These contributions are tax deductible for most workers, and income earned in the account is deferred until withdrawn.

Industrial Life Insurance

Life insurance issued in small amounts with premiums payable on a weekly or monthly basis. The premiums are generally collected at the insured's home each week by an agent of the company. Sometimes referred to as debit insurance.

Inflation-Guard Endorsement

Endorsement added at the insured's request to a homeowners policy to increase periodically the face amount of insurance of the dwelling and other policy coverages by a specified percentage.

Inheritance Tax

A tax on the estate of a deceased person.

Initial Past Service Liability

The actuarial value (single sum) of the past service benefits as of the effective date of the establishment of a retirement plan, or at the date of the latest adjustment.

Initial Reserve

In life insurance, the reserve at the beginning of any policy year.

Inland Marine Insurance

A form of insurance designed to cover articles in transit as well as bridges, tunnels and other means of transportation and communication. Besides goods in transit (generally excepting ocean cargo), it includes numerous floater policies, such as those covering personal effects, personal property, jewelry, furs, fine arts, and other items.


Having insufficient financial resources (assets) to meet financial obligations (liabilities).

Inspection Report

A report (usually written) of an investigation of an applicant, generally conducted by an independent agency that specializes in insurance investigations. The report covers such matters as occupation, financial status, health history, and moral problems.


Acceptability to the company of an applicant for insurance.

Insurable Risk

The conditions that make a risk insurable are (a) the peril insured against must produce a definite loss not under the control of the insured, (b) there must be a large number of homogeneous exposures subject to the same perils, (c) the loss must be calculable and the cost of insuring it must be economically feasible, (d) the peril must be unlikely to affect all insureds simultaneously, and (e) the loss produced by a risk must be definite and have a potential to be financially serious.


A arrangement under which individuals, businesses, and other organizations or entities, in exchange for payment of a premium, are guaranteed compensation for losses resulting from certain perils under specified conditions.

Insurance Carrier

See Insurance Company.

Insurance Commissioner

The top insurance regulatory official in a state.

Insurance Company

(1) An organization chartered to operate as an insurer. (2) Any corporation primarily engaged in the business of furnishing insurance protection to individuals or organizations.

Insurance Examiner

The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.

Insurance Exchange

Term used to describe a facility that exists in a few states to provide a market for reinsurance and for the insurance of large or unusual domestic and foreign risks that are difficult to insure in the normal markets. Examples are the New York Insurance Exchange, the Insurance Exchange of the Americas, and the Illinois Inurance Exchange.

Insurance Guaranty Funds

State Funds that provide for the payment of unpaid claims of insolvent insurers. Such funds are frequently notional, in that they are commingled as part of a state government's general funds.

Insurance Services Offices (ISO)

Major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.


A person or organization covered by an insurance policy.

Insured Life

The person on whose life the policy is issued.


The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public. See also insurance company.

Insuring Agreement

That part of an insurance contract that states the promises of the insurer.

Insuring Clause

The clause in an insurance contract which sets forth the type of loss being covered by the policy and the parties to the insurance contract.


A coordination of pension, disability or other benefit with the other sources of income, such as Social Security benefit, through a specific formula designed to ensure reasonable income replacement.. Qualified plans must integrate so that total benefits are non-discriminatory between rank and file employees and owners, officers or highly compensated employees.

Inter Vivos Trust

A trust created while the creator of the trust is living. Also known as a living trust.


Money paid for the use of money, generally calculated as a percentage per annum.

Interest Option

Life insurance settlement option in which the principal is retained by the insurer and interest is paid periodically.

Interest-Adjusted Method

Method of determining cost to an insured of a life insurance policy that considers the time cost of money by applying an interest factor to each element of cost.


Without a will.

Investment Income

Line reported in the Income Statement of a company's financial statements that states the income generated by a company's portfolio of investments (such as in bonds, stocks, or other financial ventures).

Investment Only Contract

Type of funding instrument that uses only the investment services of an insurer.

IPG Plan

See Immediate Participation Guarantee Plan.


See Individual Retirement Account.

Irrevocable Beneficiary

Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the beneficiary's consent.

Irrevocable Trust

A trust in which the creator does not reserve the right to reacquire the trust property.


See Insurance Services Office.

Don't see an insurance term listed here?  Ask Customer Service for assistance.