This glossary is arranged in alphabetical order. Click on a letter in left column or scroll down to search.
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A basic principle of insurance. The words good faith may have other meanings under the law and legislation, but for insurance policy purposes essentially the Assured and his broker must disclose and truly represent every material circumstance including claims in a fair and reasonable manner to the Underwriter before acceptance of the risk. It is of the utmost importance for you to ensure that the Insurers are, accurately informed of all the circumstances affecting you and the risk(s) you wish them to take and are not misled in relation to those risks and the nature of the financial obligations they are undertaking to you by reason of the acceptance of the insurance with them. A breach of good faith entitles the Underwriter to avoid the contract
A specific period of time after a premium payment is due during which the policy owner may make a payment, and during which, the protection of the policy continues. The grace period usually ends in 30 days.
Group Life Insurance:
Life Insurance provided for members of a group. It is most often issued to a group of employees but may be issued to any group provided it is not formed for the purpose of buying insurance. The cost is lower than for individual policies because administrative expenses per life are decreased, there are certain tax advantages, and measures taken against adverse selection are effective.
This is a very common form of life insurance, which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one-year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates
Some people rely on this kind of insurance as their primary coverage forgetting that group life insurance is a condition of employment with a specific employer. The coverage is not portable and cannot be taken with you if you change jobs. Depending on the size of the group if you have a change in health, you may not qualify for new coverage at the new place of employment.
Bank mortgage insurance is also usually group insurance and you can tell this by virtue of the fact that you only receive a certificate of insurance, not a complete policy. The form that bank mortgage insurance takes is reducing term insurance, matching the declining mortgage balance. The only beneficiary that can be chosen for this kind of insurance is the bank. In both cases, employee benefit plan group insurance and bank mortgage insurance, the coverage is not guaranteed. This means that coverage can be cancelled by the insurance company underwriting that particular plan, if they are experiencing excessive claims.
Guaranteed Insurability (Guaranteed Issue):
Arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability.
A person lawfully invested with the power, and charged with the duty, of taking care of the person and managing the property and rights of another person, who, for defect of age, understanding, or self-control, is considered incapable of administering his own affairs. One who legally has responsibility for the care and management of the person, or the estate, or both, of a child during its minority.
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