LOMA Glossary

The LOMA Glossary of Insurance and Financial Services Terms

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HDHP. See high deductible health plan.

health insurance. Insurance that provides protection against the risk of financial loss resulting from illness, injury, or disability.

Health Insurance Portability and Accountability Act (HIPAA). In the United States, federal legislation that sets forth requirements that employer-sponsored group insurance plans, insurers, and managed care organizations must meet in providing individual and group health insurance.

health maintenance organization (HMO). In the United States, a health care financing and delivery system that provides comprehensive health care services to plan members, often referred to as subscribers, in a particular geographic area.

heaped commission schedule. For life insurance sales, a commission schedule that features a relatively high first-year commission and lower renewal commissions.

hedging. A risk management strategy that involves balancing one risk with a complementary risk that will ideally offset the original risk.

HELOC. See home equity line of credit.

high deductible health plan (HDHP). A medical expense insurance plan that has a high deductible (usually at least $1,000 or more) and typically costs less than traditional health insurance. Also known as a catastrophic health insurance plan.

high water mark method. For equity-indexed annuities, an index-crediting mechanism that involves comparing, at specified points during the contract term—usually anniversary dates, the value of the index at the beginning of the contract term to the highest value of the index.

high-yield junk bond. A bond issued by corporations that are prone to default risk but pay relatively high interest rates.

HIPAA. See Health Insurance Portability and Accountability Act.

HMO. See health maintenance organization.

holding company. A company that owns a controlling interest in one or more other companies. See also subsidiary.

home equity installment loan. A second mortgage installment loan in which the borrower receives a loan in an amount equal to a specified percentage of the borrower’s equity and then repays this loan with fixed or variable periodic payments of principal and interest over a fixed period.

home equity line of credit (HELOC). A second mortgage noninstallment loan giving the borrower a line of credit in an amount equal to a specified percentage of the borrower’s equity.

home equity loan. A second mortgage installment loan in which the borrower receives a loan in an amount equal to a specified percentage of the borrower’s equity and then repays this loan with fixed or variable periodic payments of principal and interest over a fixed period.

home office. An insurance company’s headquarters, where most of the functional areas—such as underwriting, claim administration, customer service, actuarial, marketing, accounting, legal/compliance, and human resources—are located. Contrast with field office.

home service agent. A commissioned life insurance sales agent who sells specified products, typically low face amount cash value life insurance with low monthly premiums. The agent provides policyowner service in an assigned geographic territory. Also known as a debit agent.

home service distribution system. A method of selling and servicing insurance policies through commissioned producers, known as home service agents, who sell a range of products and provide specified policyowner services, including the collection of renewal premiums, within a specified geographic area.

home service life insurance. Life insurance that is paid for by weekly or monthly premiums which are often collected by an agent of the insurer. Also known as industrial life insurance or debit life insurance.

home-office-to-home-office arrangement. A distribution agreement under which an insurance company that does not offer a particular product or product line enters into an agreement with another insurance company to distribute specific products or product lines issued by that company.

homeowners insurance. A type of personal property insurance that provides property and liability insurance to protect an insured from financial losses resulting from damage to the insured’s home and/or its contents or resulting from being held liable for the losses of others suffered while on the insured’s property.

hospice benefit. A health insurance policy benefit that provides for the payment of medical or nonmedical treatments for terminally ill insureds either at the insured’s home or at a designated medical facility, known as a hospice.

hospital expenses. Medical expenses that include charges for specific inpatient and outpatient hospital services, such as room and board, medications, laboratory services, and other fees associated with a hospital stay.

HR 10 plan. See Keogh plan.

hurdle rate. The minimum percentage rate of return on capital that an investor must earn to cover its cost of capital. Also called required rate of return.

hybrid annuity. An annuity product that has a mixture of fixed and variable annuity design elements. Equity indexed annuities and market value adjusted annuities are examples of hybrid annuities.

hyperinflation. An out-of-control inflationary spiral. See also inflation.

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