Dictionary of Insurance Terms -R-

-R-

• 
  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.
• 
  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.