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A contract of insurance that may be terminated by the insurance company or insured at any time. Virtually every form of insurance is cancelable (unless state law prohibits such action) except Life insurance and those Health policies designated as Guaranteed Renewable or Non-cancelable and Guaranteed Renewable.


Termination of contract of insurance in force mid-term (rather than at the renewal date) by voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.

Capital Sum

The maximum amount payable in one sum in event of Accidental Dismemberment. On an AD&D policy, the Principal sum is the amount payable for Accidental Death. The Capital Sum is generally 50% of the Principal Sum.

Cash Dividend Option

A dividend option under which the policyholder receives the dividends in cash. Not subject to tax. Mutual insurers issue “participating” policies, which might pay dividends, but they are not guaranteed.

Cash Surrender Value

The accumulated, guaranteed cash value in a Whole Life or Endowment policy at any given point in time. Most contracts do not develop a cash value until after the 3rd year. On Whole Life, the cash value will equal the face amount of the policy at age 100. Synonymous with Cash Value.

Casualty Insurance

A type of insurance that is primarily concerned with losses caused by injury to persons and legal liability imposed upon the insured for such injury or damage to property of others.


A statement evidencing that a policy has been written and stating the coverage in general. On Group insurance, the employer receives the master policy and the employees receive Certificates of Insurance.


A demand for payment under the insurance policy.


The grouping of persons for the purpose of determining an underwriting or rating group into which a particular risk must be placed. For example, on Whole Life, the “standard” rate for the average person at age 30 might be $10 per $1,000 of face amount. If the insured is “sub-standard,” the rate will be higher. A Preferred risk receives a discount from the standard rate.


In Property insurance, a clause under which the insured is required to carry a certain percentage of the replacement cost of the property in order to have replacement cost coverage and partial losses paid in full. Coinsurance on personal lines policies is 80%. The coinsurance clause is also called the 80% clause.