Mitchell Insurance Agency




















































































Serving the Texas Golden Triangle For over 35 Years
INSURANCE DEFINITIONS - F



Face Amount: The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Facility: A pooling mechanism for insureds not able to obtain insurance in the voluntary market. Insurers write and issue policies but cede premium and losses on those policies to a central pool in which all insurers share.

Facility of Payment: A contractual provision that allows the insurer, under stated conditions, to pay insurance benefits of up to $1,000 to a person or persons other than the insured, the designated beneficiary, or the insured's estate.

Factory Mutual: Mutual insurance company insuring only properties that meet high underwriting standards. Emphasizes loss prevention.

Facultative Reinsurance: A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.

FAIR Plan: A facility, operating under a program of the government and the insurance industry, to make fire insurance and other forms of property insurance readily available to persons and businesses for whom such insurance is not easily available or affordable.

Fair Rental Value: Amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable.

Family Expense Policy: A policy which insures both the policyholder and his/her immediate dependents (usually spouse and children).

Family Income Policy: Special life insurance policy combining decreasing term and whole life insurance that pays a monthly income of $10 for each $1000 of life insurance if the insured dies within the specified period. The monthly income is paid to the end of the period, at which time the face amount of insurance is paid.

Family Policy: A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.

Family Purpose Doctrine: Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car.

Farm Mutual: Local mutual insurance company that insures farm property in a limited geographical area primarily through assessable policies.

Farmowners-Ranchowners Policy: A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.

Federal Crime Insurance: Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.

Federal Crop Insurance: Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake.

Federal Flood Insurance: Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.

Federal Surety Bond: Type of surety bond required by federal agencies that regulates the actions of business firms. It guarantees that the bonded party will comply with federal standards, pay all taxes or duties accrued, or pay any penalty if the bondholder fails to pay.

Federal-servant Doctrine: Common law defense blocking an injured employee from collecting workers compensation benefits if he or she sustained an injury caused in any way by the negligence of a fellow worker.

Fidelity Bond: A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.

Fiduciary: A person who holds something in trust for another.

Fidelity Bond: Bond that protects an employer against dishonest or fraudulent acts of employees, such as embezzlement, fraud, or theft of money.

Final average formula: A pension plan formula that bases retirement benefits on earnings during recent years of employment.

Financial Responsibility Law: A state law under which a person involved in an automobile accident may be required to furnish security up to certain minimum dollar limits.

Financial Responsibility Law: A state law which may require motorists to furnish evidence, either before or after involvement in an auto accident (depending on the individual state's law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.

Fire: A combustion accompanied by a flame or glow, which excapes its normal confines to cause damage.

Fire Insurance: Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.

Fire Legal Liability: Liability of a firm or person for fire damage caused by negligence of and damage to property of others. First party claim: a demand made by a policyholder reporting an insured event directly to his company.

First Party Coverage: An insurance coverage under which the policyholder collects compensation for losses from the insured's own insurer rather than from the insurer of the person who caused the accident.

Fixed Amount Option: Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.

Fixed Annuity: Annuity whose periodic payment is a quaranteed fixed amount.

Fixed Period Option: Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.

Flat Schedule: A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.

Flexible Premium Policy or Annuity: A life accident policy or annuity under which the policyholder or contractholder may vary the amounts or timing of premium payments.

Flexible Premium Variable Life Insurance: A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance.

Flex-rating Law: Type of rating law in which prior approval of the rates is required only if the rates exceed a certain percentage above and below the rates previously filed.

Floaters: Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.

Flood Insurance: Coverage against loss resulting from flood.

Flood Insurance: Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government.

Foreign Insurer: An insurer is a foreign company in any state other than the one in which it is incorporated.

Forfeitures: Amounts contributed on behalf of terminated, non-vested participants. In a pension plan, such amounts must be applied to reducing future employer contributions. In a profit-sharing plan, such amounts may be allocated to the accounts of remaining participants.

Forgery or Alteration Coverage Form: Commercial crime insurance form by the Insurance Services Office that covers loss resulting from the forgery or alteration of checks, drafts, bills of exchange, promissory notes, and similar instrments.

Fortuitous Loss: Unforeseen and unexpected loss that occurs as a result of chance.

401(k) Plan: A salary reduction plan that allows employees to contribute a portion of their salaries on a tax-deferred basis.

Franchise Deductible: Deductible commonly found in marine insurance contracts in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded, the entire loss is paid in full.

Franchise Insurance: A form of insurance in which individual polices are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer.

Franchise Insurance: Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless its simultaneously discontinues or modifies all other policies in the same group.

Fraternal Insurance: A cooperative type of insurance provided by social organizations for their members.

Fraternal Life Insurance: Life insurance provided by fraternal orders or societies to their members.

Fraternal Society: A social organization that provides insurance for its members.

Fronting Company: A domestic insurance company that provides claims or administrative services to a captive.

Fully Insured: Insured status of a covered person under the Old-Age, Survivors, and Disability Insurance (OASDI) program if he or she meets certain criteria: forty quarters of coverage or has one quarter of coverage for each year after 1950 (or after age twenty-one, if later) up to the year of death. disability. Or attainment of age sixty-two.

Funded Retirement Plan: A plan under which funds are set aside in advance to provide expected benefits.

Funding Agency: A financial institution or individual that provides for the accumulation or administration of the pension contributions that will be used to pay pension benefits.

Funding Instrument: An insurance contract or trust agreement that states the terms under which the funding agency will accumulate, administer, and disburse the pension funds.

Future Increase Option: A provision found in some policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured's physical condition.

Future Service Benefits: Benefits accruing for service after the effective date of coverage under the plan.

PLEASE NOTE!... Definitions shown were gathered from a variety of sources. Mitchell Insurance Agency makes no representations for the accuracy of this information.

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Mitchell Insurance Agency