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DAC. See Deferred Acquisition Costs.

DAC Tax. A form of federal alternative minimum tax imposed upon life insurers.

Daily Report. A copy of an insurance policy used as the insurer's record of issuance.

DB. See Defined Benefit Plan.

DC. See Defined Contribution Plan.

Death Benefit. See Face Amount.

Debit Insurance. See Industrial Life Insurance.

Declarations. The portion of an insurance policy that sets forth pertinent information regarding the insured and the coverage provided.

Declination. The rejection of an application for insurance.

Decreasing Term Insurance. A form of term life insurance in which benefits are reduced over the term of the policy.

Deductible. The up-front amount of a loss for which the insured is responsible before benefits are paid; also known as a self-insured retention. The insurer's liability begins when or if the deductible is exhausted.

Deductible Clause. A provision in an insurance policy setting forth the amount of liability being retained by an insured and the sharing of losses once the deductible is exhausted.

Defendant. The party against whom a legal action has been brought.

Deferred Acquisition Costs (DAC). Commissions and other selling expenses that vary with, and are directly related to, the production of business by an insurer. These acquisition costs are deferred and amortized to achieve a matching of revenues and expenses when reported in financial statements prepared in accordance with generally accepted accounting principles.

Deferred Annuity. An annuity that can be paid either with a single premium or with a series of installments and includes a schedule of periodic income benefit payments to commence after an accumulation period (more than one year). Because the inside build-up on life insurance products is tax-deferred, deferred annuities have become a very popular vehicle for retirement savings and tax planning. Deferred annuities can either be sold on a single-premium (SPDA) or flexible-premium (FPDA) basis.

Defined Benefit (DB) Plan. A retirement pension plan that provides a specified level of benefits upon an employee's retirement, with the employer being responsible for funding the plan. Benefits usually are expressed as a function of an employee's years of service and average salary over the last few years of employment. Plan participants have no responsibility for the investment strategy, which is borne by the sponsor, who has sole discretion over the investment of plan assets. If asset values decline, it is the obligation of the sponsor to make additional contributions to the plan.

Defined Contribution (DC) Plan. A retirement pension plan that allows an employee to make annual contributions to the plan, based on a percentage of compensation, with some of it usually (but not always) matched by the plan sponsor. Contributions and earnings thereon are tax-deferred. There is no guarantee as to the eventual level of benefits to be provided by this plan. The participant selects the desired investment options, which may be changed at regular intervals. The plan sponsor periodically reports to the participant on the amount that is in his or her account. The level of benefits ultimately payable out of plan assets is variable, and depends on the investment performance of the participant's selected asset mix.

Demutualization. The process of converting a mutual company into a stock company.

Department of Health and Human Services. The federal department that is responsible for health-related programs and issues. Its Health Care Financing Administration (HCFA) agency administers the Medicare and Medicaid programs.

Deposit Administration Plan. A type of defined benefit plan that sets up a single fund for all eligible employees, into which deposits are accumulated and money is withdrawn at employees' retirement to purchase an annuity for the employee.

Deposit Term Insurance. A form of term life insurance in which the first year's premium is greater than those in successive years. See Term Life Insurance.

Deposits. Payments received by an insurer not included as revenue but included as a policyholder account balance.

Development. The change in loss estimates between reports.

Deviation. A change from the standard form or published rates of an insurer.

Diagnosis-Related Groups (DRG). A reimbursement system used by Medicare and other insurers to classify illnesses according to diagnosis and treatment. It clusters patients into 468 categories on the basis of their illnesses, diseases and medical problems. All Medicare inpatient hospital operating costs are determined in advance and paid on a per-case basis, according to fixed amount or weight established for each DRG.

Difference in Conditions (DIC) Insurance. An "all-risks" property insurance policy that covers risks not covered by a basic property policy. It is a separate, supplementary policy designed to fill gaps in coverage.

Dingell, John. A member of the U.S. House of Representatives (D-Mich.) and former chairman of the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce. He is the principal author of Failed Promises (1990), the Federal Insurance Solvency Act of 1992 and Wishful Thinking (1994), a sequel to Failed Promises. He also is the leading proponent of an increased federal regulatory role over the insurance industry.

Direct Billing. A system in which the insurer, not the independent agent, sends invoices directly to the policyholder.

Direct Response Marketing. A form of marketing insurance products through the media, Internet and the mail.

Direct Writer. An insurer whose products are sold directly to the public by a sales force consisting of employees or exclusive agents of the insurer; it also refers to a reinsurer that provides reinsurance directly to primary companies without using a reinsurance broker.

Direct Premiums Written (DPW). Premiums written by an insurer before any ceding.

Directors' and Officers' Liability Insurance (D&O Insurance). A form of insurance that indemnifies directors and officers for their wrongful acts.

Disability. Physical or mental condition resulting from illness, injury or disease.

Disability Income Insurance. A form of health insurance that provides payments to a disabled insured to replace lost income during periods of disability.

Disability Premium Waiver. See Waiver of Premium Provision.

Discharge Planning. A component of utilization management, wherein medical personnel of the health plan work with the attending physician and hospital staff to assess alternatives to hospitalization, evaluate appropriate settings for care and arrange for the discharge of a patient, including planning for subsequent care at home or in a skilled nursing facility. The goal is to determine when patients are ready to go home and to provide a more comfortable, cost-efficient setting for continued treatment.

Discounting of Reserves. The process of setting the present value of a full value reserve, calculated at a selected interest rate.

Discovery Period. The period of time in which claims must be reported under the terms of an insurance policy.

Disease Management Programs. Programs aimed at preventing or identifying disease earlier, thus improving quality of care and reducing its costs. These programs emphasize preventive medicine for common diseases, such as asthma and diabetes, certain effects of which may be prevented. Databases are used to help flag patients who need prescription refills or monitoring, or to notify physicians when their patients need special disease-related preventive care (e.g., eye exams for diabetics).

Disproportionate Share Hospital. A hospital designated by a state as disproportionately serving Medicaid beneficiaries and other indigent patients. Medicaid allows states to make special payments to disproportionate share hospitals, and they are eligible for federal matching funds.

Dividend. An amount payable by an insurer from earnings to policyholders by mutual, reciprocal and stock insurers, and to stockholders by stock insurers.

Dividend Options. The various methods available to an insured electing to receive dividends under a life insurance policy.

Dividend Scales. The actuarial formulae used by life insurers to determine amounts payable as dividends on participating policies based on a variety of experience factors, including investment results, mortality, lapse rates, expenses, premium taxes, policy loan interest and utilization rates.

Domestic Insurer. An insurer transacting business in the jurisdiction in which it is domiciled.

Double Indemnity. A benefit available as an endorsement to certain life insurance policies. It provides that twice the face amount of the policy shall be payable if death is accidental; also known as accidental death benefit.

Downstream Holding Company. A stock subsidiary of a mutual insurer, which is itself not an insurance company, but which may own insurance companies. Frequently, mutual insurers raise capital by the sale of shares in a downstream holding company.

DPW. See Direct Premiums Written.

DRG. See Diagnosis-Related Groups.

Drop Down. An insurance policy that covers a loss either because an underlying policy's limits are exhausted or because an underlying insurer is unable, by reason of insolvency or otherwise, to provide coverage.

Dual Regulation. The prospect of divided and possibly conflicting regulation of insurers cited by opponents of federal regulation as a reason for maintaining the current state-based regulatory system.

Duty to Defend. Under the terms of an insurance policy, an insurer has a "duty to defend" its insured in a court action, even in those instances where a suit may be groundless or false.