Click on a term to see its definition: G

Lost in the terminology insurance companies use? Our quick-reference insurance glossary provides easy-to-understand definitions and examples of the terms insurance professionals use.

Gap Insurance

Gap Insurance is an option in automobile insurance that covers what the customer owes the leasing or financing company and the actual cash value of the car at the time it was damaged or stolen. Gap insurance is mainly used when someone would rather lease or rent a car than to buy it.

The coverage provides protection to the renter when the rented vehicle suffers a loss even before the lease contract has expired or before the terms of the lease are fulfilled.

Some conditions must be in place for gap insurance coverage - the lessee will pay any applicable deductibles (as according to the lease contract), the lessee must be up-to-date in the payment of the rent (otherwise the coverage is null and void) and that there is a possibility that the lessee will keep on paying the rent until such time that the gap insurance is paid to the renter or until such time that the terms found in the lease contract are fulfilled.

General Account

A General Account refers to the combined or undivided investments and assets that the insurance company has available in order for it to be able to pay the benefits and claims of their policyholders. This is especially true for holders of whole life insurance, fixed rate annuities and other guaranteed insurance or annuity product.

You see, the claims and benefits payments that the insurance company needs to provide its customers are generally not backed up by the other assets and investments of the insurance company. That is why it is important for it to have a general account that will secure their ability to pay for their policy obligations.

This ability is one of the ways an insurance company can be evaluated as to its stability and soundness as a company.

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles or GAAP is an accounting term that refers to the set of standard guidelines that financial accounting will follow no matter where the jurisdiction or location. These are internationally accepted standards used when doing accounting for the company. It involves conventions and rules as to how transactions are to be recorded or summarizes, and how financial statements are prepared.

GAAP is set to ensure that accounting is reported objectively and without inconsistency and bias. This is what the auditor will check for when reviewing the accounting of a company.

GAAP involves the principles of non-compensation (where full details of the expenses and income are listed and nothing is used to compensate for another account), regularity (where rules are followed), sincerity (good faith should be practiced) and consistency (the same procedures and methods should be applied throughout). GAAP also adheres to the principle of the permanence of methods, as well as the principle of full disclosure, prudence and continuity.

Generic Auto Parts

Generic auto parts are parts that are manufactured by a company other than the one that originally manufactured the car. The cost for these parts, since they do not come from the original company, is generally lower than its identical counterpart that is produced by the original manufacturer.

The use of generic auto arts is highly encouraged by insurance companies, as this is one way to lower repair costs, and ultimately, premiums.

There is a debate on the use of generic auto parts but insurance companies argue that this will prevent the car manufacturing industry (or the original manufacturers) to have a monopoly over the replacement parts.

Glass Insurance

Glass Insurance refers to the protection that will pay for the replacement of glass in the event that it is broken. It covers glass broken due to acts of vandalism, accidents or certain covered natural events.

This can be bought to cover for structural glass, windows, windshields and mirrors. Glass insurance can be used to cover glass in buildings and automobiles. This can be particularly true for the expensive kind of glass such as UV-resistant glass, as well as plate glass and double paned glass.

Glass insurance can be bought with or without a deductible. This kind of insurance is added to the original policy as a rider. Glass insurance only covers certain events and may not provide coverage due to damage brought by riots, fires and war.

Grace Period

The Grace Period, in insurance parlance, refers to the period provided the insurance or annuity to the policyowner or annuitant to pay for their insurance premium or annuity payments even after the due date has passed.

When a policyowner fails to pay the insurance premiums on time, the grace period kicks in and if the policyowner pays during the grace period, there will be no penalty or additional charge that has to be paid. During the grace period, the coverage would still be in effect as long as the premium payments are paid within that grace period.

The length of the grace period depends on the kind of policy. Some grace periods are as short as 24 hours or may go for as long as a month.

Graded Premium Policy

A Graded Premium Policy is the kind of policy that provides for three or more premium increases throughout the life of the policy, until the specified level premiums are reached.

A Graded Premium Policy provides the policyowner who want an amount of coverage that they could not really afford to pay the premiums for at the moment. What happens is that they pay a low rate of premium at the start of the policy, then that premium increases gradually for a specified period (like three to ten years) and then the premiums remain level for the rest of the life of the policy.

This is also sometimes called a graduated premium life insurance.

The advantage of this kind of policy is that it starts with a low premium, but offers a level death benefit. This kind of policy may also offer a dividend. However, with this policy, cash values tend to grow slowly, especially on the early parts of the policy.

Graduated Driver Licenses

Graduated Driver Licenses are licenses issued to young or new drivers to give them the opportunity to improve their driving skills.

This is a process which starts from the driver getting a learner's permit, then a provisional license and then, when he is able to prove his skills, he finally gets the standard driver's license. This kind of system works to decrease the risk factors involved when inexperienced drivers are on the road.

The graduated license has certain requirements. This may involve the use of the seat belt, how many passengers are allowed to be in the car, as well as the ages of the passengers. It may also restrict nighttime driving as well as the use of cell phones during driving.

The regulations governing graduated driver licenses will differ from state to state. There are also other countries that have some form of graduated driver licenses system.

Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act (which is also called the Financial Services Modernization Act) refers to the law that raised the prohibition regarding the combination of investment banking, insurance activities and commercial banking activities. These prohibitions are based on the Glass-Steagall Act and the Bank Holding Company Act of 1956. Currently, the Gramm-Leach-Bliley Act enables banks, securities firms and insurance companies to have controlling interest in each other and to use the other entities' services.

This allows companies to consolidate and offer a combination of financial services (insurance, securities, banking) all under one "roof". An example of this would be an insurance company merging with a commercial bank holding to result in a conglomerate that offer clients a variety of services provided under a house of different brands.

Gross Annuity Cost

The Gross Annuity Cost refers to the cost of the annuity - the monetary amount that is equal to the present value of all of the annuity's income payments, with a special consideration and provision for expense loading.

This is different from the net annuity cost, since the gross annuity cost is calculated on a gross basis, meaning all expense loadings such as commissions, administration costs, and fund administration fees are included in the costing.

Annuity costs are based on a variety of factors - the amount the annuitant is willing to pay for as premiums, the amount of income payments the annuity issuer will pay the annuitant for the duration of his life, as well as the costs of paying and administering the annuity over the years.

Group Insurance

Group Insurance refers to one policy that covers a group of individuals that are grouped together because they have something in common.

Group Insurance is commonly provided to employees of a company, or for the members of an association. There are also some policies that provide coverage for the insured persons' dependents.

A master policy is issued to the company (the employer) or the association. Group insurance is characterized by cover that is applied to each member under the policy in exactly the same manner, with no exceptions - regardless of prior conditions.

Group insurance may provide life or health coverage or both. This may be handled either by a department in the company or association, or can be outsourced to another company.

Guarantee Period

The Guarantee Period is the time that an annuity will pay for regular annuity income, regardless of whether the annuitant survives the period or not.

Annuities usually provide a guarantee period. Once the annuity reaches its maturity, or when the time comes for the annuity to make regular income payments, it guarantees a time when payments will come. If the annuitant is still alive within that period, he will be the one accepting the payment. If the annuitant has died before or during this period, it will be his beneficiaries or the estate who will receive the annuity payments.

Depending on the annuity, the guarantee period may be from 5 to 10 years.

Guaranteed Death Benefit

The Guaranteed Death Benefit is the payment the beneficiaries stand to receive upon the death of the insured person or the annuitant.

This amount is guaranteed, this may sometimes be the minimum amount, especially when dividends and other benefits come into place.

For annuities, the guaranteed death benefit is an amount that is equivalent to the investments made by the annuitant. This may also refer to the contract value of the annuity at it latest anniversary statement. This is a protection provided to the annuitant. By knowing that the beneficiaries will receive an amount equal to or greater than the investments he made, even when the investment market is not doing well.

Guaranteed Income Contract (GIC)

The Guaranteed Income Contract is an option that can be provided in an employer-sponsored retirement, profit-sharing or pension plan.

The Guaranteed Income Contract is between the employer (the plan owner) and the insurance company. It guarantees a specified rate of return within the duration of the contract. The insurance company is obligated to pay this interest rate, regardless of whether there is a market downturn. If the financial and investment markets do well, the insurance company may also add to this rate of return - but this portion of the rate of return is not guaranteed

This kind of option provides a very safe investment, but a lower rate of rate, by virtue that it is guaranteed. When the term of the guaranteed investment contract ends, it remains renewable, but the guaranteed interest rates may be changed, based on the current interest rates.

Guaranteed Insurability (GI) Benefit

A Guaranteed Insurability (GI) Benefit is a supplement that can be added to the life insurance policy that provides the insured person with guaranteed insurability. That means that terms of the policy or additional life insurance (of the same type) can be bought without the need for the insured person to prove that he is still insurable.

The insured person does not have to go through the physical exams. There are some conditions, though. The additional cover may be bought on the policy anniversaries specified (where one can add policy coverage for every five years of the life of the policy), upon the birth of a child, or at stated times in the policy. There is also a specified maximum age at which this option is terminated.

For families, it is recommended that this option be taken to provide for the need for additional insurance as the family grows in number.

Guaranteed Living Benefits

The Guaranteed Living Benefits are benefits usually provided by variable annuities. In some cases, it provides the annuitant with a guaranteed amount of annuity payments. This amount is the minimum level that the annuitant stands to gain whether the investments of the annuity does well or not.

If you are thinking of getting a variable annuity and would like some level of protection with regards to the principal, the future annuity incomes and the access to the funds (in case you want to make a withdrawal), taking the option of some form of guaranteed living benefit will help put your mind at ease.

Other forms of the guaranteed living benefit include a lifetime income benefit (where the annuity will provide a guaranteed income during your lifetime), a guaranteed minimum income benefit (where the annuity guarantees to pay a specified minimum amount during the annuity payments) or a guaranteed lifetime withdrawal benefit (where a certain amount can be withdrawn during your life). Other guaranteed living benefits include a guaranteed minimum accumulation benefit and a guaranteed minimum withdrawal benefit.

Guaranteed Renewable Policy

Guaranteed Renewable Policy refers to a policy where, as long as the premiums are paid on time, the insured person does not need to show proof of insurability until he reaches a certain age.

The insurance company is obligated to renew the policy (usually a health policy), as specified in the contract. It cannot cancel the policy, regardless of the losses that policy is incurring or whether there are adverse changes in the situation of the insured that makes him a less attractive risk to insure.

The insurance company cannot make changes to the terms and provisions in the individual health policy. When it does need to make changes on the premium rates, it has to do so for all the insured persons who fall in that same class.

The insured person has the option to renew the insurance, until he reaches a specified age (such as his 70th year).

Guaranteed Replacement Cost Coverage

A Guaranteed Replacement Cost Coverage is an option to add in a property insurance policy. It provides payment for the full cost of repairing or replacing whatever damage the insured property incurs. The insurance company is obligated to give the full and current cost of the destroyed or damaged property, even when the cost is already beyond the stated policy limit.

Using this kind of coverage, there is no deductions for depreciation when the cost of replacement is being computed. This protects the insured from the possibility that the cost of rebuilding a home or replacing some of its parts will be more expensive now than in the past, due to inflation, as well as the changes in labor costs. During times of calamity, or when an event damages a lot of houses or property in a certain area, contractor's cost and materials costs are bound to increase.

Guaranty Fund

The Guaranty Fund is a fund that ensures that claimants will still be paid even when an insurance company becomes insolvent.

The state requires the establishment of the guarantee fund and all licensed insurance companies that operate in that state are required to make contributions to that fund (based on a specified percentage of their sales).

The guidelines that are used for the guaranty fund may vary from state to state. The fund may pay for claims but will require deductibles. The fund may also pay for the unearned portion of the premium. Guaranty funds may also pay for workers compensation, and they usually do not have deductions or limits of these.

Gun Liability

Gun liability refers to the concept that holds the manufacturers and dealers of guns liable for injuries or deaths caused by the gun.

This is applicable in some states and lawsuits have been made based on this legal concept. It allows victims to sue for damages as a result of the gun having been discharged.

Even when the one who pulls the trigger has the final responsibility, liability for the death or damage does not end there. Not only is the shooter liable, there are also other who are liable - the manufacturers, the importer of the gun, the dealers and even the owner of the gun as well.

There are also some legal aspects of the concept of gun liability. For example, in some interpretations, it may make the gun owner liable if someone is hurt by the gun after that same gun has been stolen.

In any case, the gun liability concept strives to make those who sell and own guns to be extra careful about using and safeguarding the gun.

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