Overinsurance
Situation in which insurance benefits exceed the actual loss of an insured. Overinsurance can be a problem for the insurer because it may tempt the insured to make a false claim in order to profit financially. Various safeguards are designed to prevent overinsurance. For example, in group health insurance, companies break down benefits paid by the primary carrier and the secondary carrier through coordination of benefits. Still, some types of coverage, particularly disability income insurance, are subject to overinsurance abuse.
Popular Insurance Terms
Trust whereby asset management is provided until a child reaches the age of majority. Upon reaching majority, the child has full use and control over the assets. The grantor of the trust ...
Type of benefit in which an employee obtains shares of stock in the company, the amount normally determined by the employee's level of compensation. ESOP acts as a leverage tool through ...
Property insurance closely associated with fire insurance and usually purchased in conjunction with a Standard Fire Policy. Allied lines include data processing insurance, demolition ...
Policyholder's equity share of the life insurance company's assets. The share is based on the policyholder's contribution to assets (the company's gross premiums minus cost of insurance, ...
Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old living room sofa will not be replaced at ...
Coverage for an employer in the event of dishonesty of any employee. ...
Policy of variable universal life insurance (VUL) under which, if the accumulation of the premiums paid at any point in time (minus policy loans, and withdrawals) equals or exceeds the ...
Combination of the federal estate tax and the federal gift tax. ...
Fund that contains the portion of the premium that has been paid in advance for insurance that has not yet been provided. For example, if a business pays an annual premium of $1000 on ...
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