Glossary

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OAS Act. See Old Age Security Act.

OASDHI Act. See Old Age, Survivors, Disability and Health Insurance Act.

OCC. See Office of the Comptroller of the Currency.

occupational rating classes. Established by insurance companies for use in underwriting disability income coverage, these classes categorize occupations according to the relative degree of risk. See also underwriting.

Office of the Comptroller of the Currency (OCC). In the United States, a bureau of the federal Department of the Treasury that is responsible for regulating national banks.

Office of the Superintendent of Financial Institutions (OSFI). In Canada, a federal regulatory agency responsible for supervising all federally chartered, licensed, or registered banks, as well as insurance, trust, loan, and investment companies.

Office of the Superintendent of Insurance. In Canada, an administrative agency established by each province to enforce the province's insurance laws and regulations.

Office of Thrift Supervision (OTS). In the United States, a bureau of the federal Department of the Treasury that is responsible for supervising all savings institutions that are insured by the Federal Deposit Insurance Corporation.

offset. In the United States, a federal tax provision that allows an insurer to use the benefits paid under one type of health insurance coverage to reduce the benefits paid under another type of coverage. The purpose of the offset is to ensure that a disabled person does not receive an excessive total amount of benefits and to encourage the disabled person to return to work.

Old Age Security (OAS) Act. A Canadian federal law that provides a monthly pension to all persons who are age 65 and older and meet specified residency requirements.

Old Age, Survivors, Disability and Health Insurance (OASDHI) Act. A U.S. federal law that protects covered individuals from loss of income resulting from retirement, death, or disability. More commonly known as Social Security. See also Social Security.

on-site regulatory examination. A tool that insurance regulators use to monitor the solvency or market conduct of insurers.

open agency. In the home service insurance distribution system, a sales territory that does not have an assigned agent because of agent promotion, transfer, or termination; usually serviced by a staff manager.

open contract. A contract that identifies the documents that constitute the contract between the parties, but the enumerated documents need not all be attached to the contract. Contrast with closed contract.

open-end credit transaction. A financial transaction in which credit is extended under an agreement in which (1) the creditor reasonably expects repeated transactions; (2) the creditor imposes a periodic finance charge on an outstanding unpaid balance; and (3) the amount of credit that may be extended to the debtor during the term of the agreement up to any limit set by the creditor generally is made available to the extent that any outstanding balance is repaid.

open-ended HMO. A health maintenance organization (HMO) that provides medical expense benefits to participants who use a health care provider who is not a member of the HMO's network. However, the HMO uses financial incentives to encourage participants to use network providers. Also known as point of service (POS) plan.

open enrollment period. In contributory group insurance plans, a short time span during which eligible people who did not choose to join the group insurance plan at the first opportunity are permitted to join by presenting only an application and without providing evidence of insurability. See also eligibility period.

open group valuation. An assessment of the value of a pension plan that takes into account the benefits of the current group of participants and hypothetical participants who may enter the plan during some limited future period. Also known as dynamic valuation. Contrast with closed group valuation.

open panel HMO. A type of health maintenance organization (HMO) that allows any physician or health care provider who meets the HMO's specific standards to contract with the HMO to provide services to HMO members. Contrast with closed panel HMO.

operating activities. Transactions that involve a company's major lines of business and that directly determine the company's net income.

operating budget. See short-term budget.

operating efficiency ratios. See activity ratios.

operating expenses. The costs that a company incurs in conducting its normal business operations.For insurers, costs other than expenses for contractual benefits. See also expense.

operational budget. A budget that includes part or all of a company's core business operations.

operational planning. The company process of determining how to accomplish specified tasks with available resources, given a company's strategic plan.

opportunity cost. For planning purposes, the benefit that is forfeited or given up in choosing one decision alternative over another.

option 1 plan. See option A plan.

option 2 plan. See option B plan.

optional insured rider. See second insured rider.

optional modes of settlement. See settlement options.

optionally renewable policy. An individual health insurance policy that gives the insurer the right to refuse to renew the policy on specified dates, to add coverage limitations, and to increase the premium rate if it does so for a class of policies. See also cancellable policy, conditionally renewable policy, and noncancellable and guaranteed renewable policy.

option A plan. A universal life insurance policy that provides a level death benefit amount, which is always equal to the policy's face amount. Also known as option 1 plan.

option B plan. A universal life insurance policy that provides a death benefit amount that, at any given time, is equal to the policy's face amount plus the amount of the policy's cash value. Also known as option 2 plan.

options. In finance, limited-time contracts that give the owner the right to either buy or sell a specified asset for a stated price. See also payout options and settlement options.

order to commence and carry on insurance business. In Canada, a document, issued by the applicable insurance regulatory body, that authorizes an insurance company to begin insuring risks.

ordinary agency distribution system. An agency-building distribution system that uses full-time career agents and agent-brokers to sell and deliver insurance and annuity products. See also agency-building distribution system.

ordinary annuity. A series of periodic payments for which the payment occurs at the end of each payment period. Also known as annuity immediate and annuity in arrears. Contrast with annuity due.

ordinary life insurance policy. See continuous-premium whole life policy.

original age conversion. The conversion of a term life insurance policy to a permanent plan of insurance at a premium rate that is based on the insured's age when the original term policy was purchased. Contrast with attained age conversion.

orphan policy. An insurance policy for which the original agent is no longer available to provide customer service. The original agent who sold the policy may have died, retired, or changed jobs.

OSFI. See Office of the Superintendent of Financial Institutions.

OTC market. See over-the-counter market.

OTS. See Office of Thrift Supervision.

outline of coverage. A brief description of the coverage provided by an individual health insurance policy.

out-of-pocket costs. For a health insurance plan, costs or portions of costs that an insured is required to pay that are not reimbursed by the health insurance plan.

outside director. A member of a business organization's board of directors who does not hold another position with the organization and does not own a controlling interest in the organization. Contrast with inside director.

outstanding premiums. See premiums outstanding.

overhead cost. See indirect cost.

overhead expenses. See indirect cost.

overinsurance. An amount of applied-for insurance that is excessive in relation to the potential loss for which coverage is being purchased.

overinsurance provision. An individual health insurance policy provision that defines the insurer's liability to pay policy benefits for covered losses that are insured by more than one policy. The provision is designed to ensure that a covered person will not profit from a sickness or injury. See also coordination of benefits (COB) provision.

overriding commission. An insurance sales commission that is based on the amount of sales produced by the agents in a field office. Also known as override.

over-the-counter (OTC) market. A way of trading securities in which dealers at different locations who have an inventory of securities stand ready to buy and sell securities through a telecommunications network that brings the buyers and sellers together.

owners' equity. See capital.

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