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.
Residence Insurance: Insurance for a residence.
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.
