Insurance Planning Definitions Flashcards
(374 cards)
1
Q
ACCIDENTAL DEATH BENEFIT
A
An optional provision that provides an additional payment for loss of life due to an accident that was the direct cause of death.
2
Q
ACCUMULATED DIVIDENDS
A
Dividends left with the insurer to accumulate at interest. These dividends are generally income tax free but the interest is taxable as earned.
3
Q
ACTUARIAL ASSUMPTIONS
A
An insurer
4
Q
ADDITIONAL PROVISIONS
A
Each life insurance contract contains ‘insuring’ and ‘benefit’ provisions as well as ‘uniform’ provisions that define and limit coverage.
5
Q
ADMITTED ASSETS
A
In regulating insurers
6
Q
ADHESION
A
There is no true bargaining or ‘meeting of the minds’ in a life insurance contract.
7
Q
ADVANCED LIFE UNDERWRITER
A
This term refers to the agent marketing products and services where a sophisticated knowledge of law and high degree of creativity is required.
8
Q
ADJUSTABLE DEATH BENEFIT
A
Certain life insurance products allow the policyowner to increase or decrease the face amount (within limits and often only with evidence of insurability).
9
Q
ADVANCE PREMIUM
A
Any premiums paid before their due date.
10
Q
ADJUSTABLE LIFE INSURANCE
A
Many of the features of term and whole life are contained in this flexible type of coverage.
11
Q
ADVERSE SELECTION
A
The tendency of people who are less than standard insurance risks to seek or continue insurance to a greater extent than other individuals.
12
Q
AG 38 RESERVE
A
This is the reserve value used for a UL policy with a no lapse secondary guarantee.
13
Q
ADJUSTABLE PREMIUM
A
Term applicable to policies where the company has the contractual right to modify or change premium payments under certain specified conditions.
14
Q
AGE
A
The age in years of an applicant
15
Q
AGE AT ISSUE
A
The age of an insured at the time coverage goes into effect.
16
Q
ADJUSTED GROSS ESTATE
A
The adjusted gross estate is the gross estate less debts
17
Q
AGE LIMITS
A
Minimum or maximum age limits for the insuring of new applicants or for the renewal of policies.
18
Q
ADJUSTED TAXABLE GIFTS
A
Sum of taxable portion of post-1976 gifts other than those for any reason included in a deceased’s gross estate.
19
Q
ADMINISTRATOR
A
The person or persons appointed by the probate (also called Surrogates’ or Orphans’) court to settle the estate of a person who died without a valid will.
20
Q
AGENCY
A
The legal relationship empowering one party to act on behalf of another in dealing with third parties.
21
Q
NET AMOUNT AT RISK
A
The difference between the face value of a policy and its accrued cash value at a given time.
22
Q
Annual Premium
A
The premium amount required on an annual basis under the contractual requirements of a policy to keep a traditional level premium whole life or term policy in force.
23
Q
Agent
A
A person who solicits insurance or aids in the placing of risks
24
Q
Annuity
A
A systematic liquidation of principal and interest over a specified period
25
Annuity
Cash Refund
26
Agent of Record
Typically
27
Annuity Certain
An annuity that pays a specified amount for a definite and specified period of time
28
Aggregate Mortality Table
A mortality table where the mortality rates at any age are based on all insurance in force at that age
29
Annuity Certain
Life
30
Annuity
Deferred
31
Aleatory Contract
Where a contract between two parties depends upon an uncertain event and where one party may pay a very small amount and receive a very large amount upon the occurrence or nonoccurrence of the specified event.
32
Annuity Due
An annuity under which payments will be made at the beginning
33
Annuity
Flexible Premium
34
Annuity
Installment Deferred
35
Annuity
Installment Refund
36
Alternate Valuation Date
Typically
37
Amount at Risk
The pure insurance element of a life insurance policy.
38
Annuity
Joint and Survivor
39
Annuity
Joint Life
40
Annuity
Life
41
Annuity
Private
42
Automatic Premium Loan Provision
An option that will allow the insurer to automatically borrow money from a policy's cash value to pay any premium in default at the end of the grace period.
43
Annuity
Refund
44
Annuity
Single-Premium Deferred
45
Aviation Exclusion
A contract provision that excludes from coverage deaths due to airline accidents unless the insured was a passenger on a regularly scheduled commercial airline.
46
Annuity
Temporary
47
Annuity
Variable
48
Anti-Rebate Laws
State laws that prohibit an agent or company from giving part of the premium
49
Back-End Load
A charge against policy values for business expenses of the insurer in issuing the contract
50
Applicant
The person(s) or party(ies) applying for and signing the written application for a contract of life insurance.
51
Application
A written form provided by an insurer typically completed by the insurer's agent and its medical examiner based on information on the physical condition
52
Banding
Refers to the recovery of ongoing administrative and handling costs
53
Assign
To transfer a right or risk.
54
Assignee
The person or party who receives a transferred right or risk when a life insurance policy is assigned.
55
Assignment
The shift of rights and benefits of a life insurance contract from a policyowner to an assignee.
56
Assumed Interest Rate
The rate of interest used by an insurance company to calculate its reserves.
57
Beneficiary
The recipient of life insurance proceeds at the death of the insured.
58
Attained Age
The age an insured has reached on a specific date
59
ATTAINED AGE
The age an insured has reached on a specific date
60
BINDING RECEIPT
The receipt for payment of the first premium that assures the applicant that if they die before receiving the policy
61
CAPITAL NEEDS ANALYSIS
An appraisal of needs system that assesses a client's financial needs through the economic value and income-producing capabilities of current and future assets.
62
BROKER
A broker legally represents the customer rather than the insurer and may purchase policies on behalf of their clients from almost any insurer.
63
BROKERAGE AGENCY
A life insurance general agency servicing business of agents other than full-time (career) agents of the company represented by the agency.
64
CAPITAL STOCK INSURANCE COMPANY
An insurance company owned by its stockholders
65
BROKER-AGENT
A business entity licensed and registered with the SEC with the legal right to offer securities products to the public.
66
CAPITAL UTILIZATION METHOD
A life insurance needs computation method based on the assumption that both the earnings and principal will be used up over the period during which the income will be needed.
67
CAPTIVE INSURANCE COMPANY
A licensed insurance company created for the express purpose of writing property and casualty insurance for a specific business or group of businesses.
68
BUSINESS INSURANCE
Coverage concerned primarily with protecting an insured's business against economic loss incurred at the death or disability of key executives and/or other key employees.
69
CASH ACCUMULATION POLICY
A contract that builds significant cash value or equity
70
BUY-SELL AGREEMENT
An agreement in which either the business or the surviving owners will purchase the shares owned by a deceased or retiring shareholder at a previously agreed value or formula.
71
CASH REFUND ANNUITY
An annuity that pays a lump-sum cash benefit to a beneficiary if the annuitant dies before recovering premiums paid.
72
CAPITAL CONSERVATION METHOD
A method for determining insurance needs that assumes only income will be used to protect capital
73
CASH SURRENDER VALUE
The amount available to the policyowner when a life insurance policy is surrendered
74
CAPITALIZATION OF POLICY LOANS
The process of increasing the policy loan to pay unpaid loan interest.
75
CHANGE OF BENEFICIARY PROVISION
A provision that gives a policyowner the right to change the beneficiary at any time unless an irrevocable beneficiary designation has been made.
76
COMMISSIONS
GRADED
77
CLASSIFIED RISK
The classification of insureds as 'standard' risks
78
COMMISSIONS
LEVEL
79
CLAUSE
A specific provision of a life insurance contract dealing with a particular subject in that policy.
80
COLLATERAL ASSIGNEE
The person or party to whom a collateral assignment is made.
81
COMMUTATION RIGHTS
The right of the beneficiary to receive the value of the remaining stream of future payments in one lump sum.
82
COMMUTE
To compute and pay the lump-sum actuarial equivalent to a series of future payments due under a life insurance contract.
83
COLLATERAL ASSIGNMENT
When a life insurance contract is transferred as security for a debt
84
COMMUTED VALUE
The present actuarial value of a series of installments payable at fixed future dates
85
COMPOUND INTEREST
Interest earned on interest.
86
CONCEALMENT
Intentional failure of the insured to disclose a material fact to the insurance company at the time application is made.
87
COLLATERAL ASSIGNMENT PLAN
A collateral assignment plan is a variation in a split dollar life insurance arrangement in which the insured initially applies for and owns the policy and names the beneficiary but collaterally assigns the policy to the payor of the bulk of the premiums as security for that party's outlays.
88
COLLATERAL LOAN
A loan guaranteed by the pledge of the life insurance contract as collateral.
89
CONDITIONAL ASSIGNMENT
An assignment made solely for the purpose of securing a debt. A conditional assignment is typically automatically terminated when the obligation is repaid.
90
COMMISSION
The percentage of the premium paid to an insurance agent or broker by the insurer as compensation.
91
COMMISSIONER
Also called superintendent in some states
92
COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE (CSO)
A standard mortality table approved by the National Association of.
93
CONDITIONAL PREMIUM RECEIPT
This is the receipt given to a policy applicant if all or part of the premium is paid at the time of application. This receipt does not provide absolute interim insurance until the company acts on the application.
94
CONVERSION
ATTAINED AGE
95
CONSIDERATION
Consideration is an essential element of a binding contract. In a life insurance contract
96
CONVERSION
ORIGINAL AGE
97
CONVERTIBLE
A provision giving the policyowner the right to exchange the policy for another without evidence of insurability.
98
CONTESTABLE CLAUSE
The provision in the insurance contract that states the time (called the contestable period) the insurer has to contest and the grounds under which the policy may be contested or voided by the insurer.
99
CONTINGENT BENEFICIARY
A contingent beneficiary is one who will receive death proceeds if the principal beneficiary predeceases the insured.
100
CONVERTIBLE TERM INSURANCE
A term contract that may be converted to a permanent form of insurance without a medical examination
101
COST OF INSURANCE
In the case of a split dollar arrangement or life insurance in a qualified plan
102
CONTRACT OF INSURANCE
A legally binding agreement in which an insurer agrees to pay a death benefit upon the death of the insured in return for the consideration of the policyowner's payment of an initial premium and the policy application.
103
COST OF LIVING ADJUSTMENT (COLA)
A rider available with some policies that provides for automatic
104
CREDIT LIFE INSURANCE
A policy issued on the life of a borrower with the creditor named as beneficiary to cover the repayment of a loan in the event the borrower dies before the loan has been repaid.
105
CONTRACT RATES
Life insurance settlement option rates are listed in the policy. The insurer may allow the purchase to be made at current rates if those are more favorable to the policyowner.
106
CROSS PURCHASE
A buy-sell arrangement that provides that in the event of one owner's death
107
CONVERSION
One type of life insurance contract can be exchanged for a different type assuming the contract is 'convertible.'
108
CRUMMEY POWER
A provision in a trust that gives a beneficiary a limited period of time to demand all or a portion of a gift be made to the trust for the purpose of converting what would otherwise be a future interest gift into a present interest gift.
109
DECLARED INTEREST RATE
In a universal life policy
110
DECREASING TERM INSURANCE
If the face value of term insurance decreases over time in scheduled increments until the policy expires
111
DEFAULT
If a policyowner fails to make a premium payment by a policy's final due date or by the end of its grace period
112
CURRENT-ASSUMPTION POLICY
Current-assumption policies reflect the insurer's current interest
113
interest-sensitive
Although inaccurate
114
current-assumption
A broader concept implying direct sensitivity not only to current interest rates but also to mortality and expense experience.
115
deferred annuity
A series of payments that are not begun until the lapse of a specified period of time or until the annuitant reaches a specific age.
116
current interest rate
This is the interest rate credited to current-assumption and universal life products (versus the fixed rate of traditional life insurance policies).
117
current value
The fair market value of a security or other property at the present time.
118
delivery of policy
Delivery is
119
date of maturity
The date upon which a life insurance policy endows if the insured is still living.
120
dependency period
In computing life insurance needs
121
date of policy
The date appearing on the front page of an insurance policy indicating when the policy went into effect.
122
death benefit
The amount stated in the policy as payable upon the death of the insured.
123
death claim
When the insured dies
124
disability premium waiver insurance
An important option or rider in a life insurance policy that provides that if an insured becomes totally disabled for six months or longer
125
deficiency reserve
For policies with secondary guarantees
126
dividend
When a policy participates in the favorable investment
127
dividend additions
Participating policies provide that their dividends may be used as single premiums to purchase paid-up insurance at the insured's attained age as additions to the amount of insurance specified on the face of the contract.
128
emergency fund
When calculating the amount of life insurance needed
129
dividend class
All policyowners are grouped into categories in which members who bought the same type of contract at the same age are classed.
130
endorsement
A written modification to an insurance policy
131
dividend deposits
Cash dividends and interest arising from the policy left on deposit with the company under the terms of the dividend option.
132
endow
A life insurance policy is said to endow when its cash value equals the face amount.
133
dividend
extra
134
endowment
A life insurance contract that provides for the payment of the face amount at the end of a fixed period
135
evidence of insurability
A statement or proof of a person's physical condition
136
dividend options
The different ways in which the insured
137
divisible surplus
The amount of the company's surplus earnings available for distribution among the policyowners in the form of dividends.
138
exceptions provision
An insurance policy provision that limits the insurance company's liability by excluding coverage for certain losses.
139
excess initial expenses
An insurer's first-year expenses that exceed first-year expense loading.
140
double indemnity
A clause in a life insurance contract providing for a double benefit if death occurs under certain circumstances.
141
earned premium
The amount of premium that would compensate the insurance company for its loss experience
142
economic benefit
The economic benefit is
143
excess interest
The positive difference between the rate of interest an insurer guarantees to pay on proceeds left under settlement options and the higher interest actually paid.
144
exclusion clause
A policy provision that excludes certain risks from coverage
145
face amount
The amount payable in the event of death
146
exclusion ratio
A fraction used to determine the amount of annual annuity income exempt from federal income tax.
147
FAIR MARKET VALUE (FMV)
The price at which the property would change hands between a willing buyer and a willing seller
148
EXECUTOR
A person appointed in a person's will to carry out the terms of the will.
149
FAMILY INCOME POLICY
A life insurance policy that combines whole life and decreasing term to provide income protection against the premature death of the family breadwinner. If the insured dies within a specified period
150
EXPENSE CHARGE
In variable universal life
151
FAMILY INCOME RIDER
Similar to a family income policy except that the decreasing term coverage is written as a rider to a whole life policy rather than as combination of both coverages.
152
EXPENSE LOADING
The amount added to the premium during the rate-making process to cover the expenses of maintaining the business
153
EXPERIENCE
The loss record of a type of insurance written. This record is used in adjusting premium rates and predicting future losses.
154
EXPERIENCE MODIFICATION
The adjustment of premiums as a result of the application of experience rating; usually expressed as a percentage.
155
FAMILY MAINTENANCE POLICY
A life insurance policy combining level term and whole life to provide income protection against the premature death of the family breadwinner. If the insured dies within a specified period (say
156
FAMILY POLICY
A policy that combines whole life and convertible term to provide insurance on each family member.
157
EXTENDED TERM OPTION
A nonforfeiture option that provides that the net cash surrender value of a policy may be used as a net single premium at the attained age of the insured to purchase term insurance at the face amount of the original policy for as long a period as possible.
158
FAMILY RIDER
An optional policy supplement attached to the insurance policy issued to the head of a family and insuring other members of the family
159
EXTRA DIVIDEND
A dividend that is paid in addition to regular
160
EXTRA PREMIUM
The amount charged in addition to the regular premium to cover an extra hazard
161
EXTRA PROTECTION BENEFIT
An insurance policy provision that provides an extra amount of insurance payable if death occurs during the term of the provision.
162
FIFTH DIVIDEND OPTION
If selected
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FINAL EXPENSES
Costs incurred during a last illness
164
FRONT-END LOAD
A contract is front-end loaded when certain of the insurer's expenses are deducted from the gross premium before the remaining net premium goes into the cash value account.
165
FIRST-YEAR PREMIUM
Insurance premiums that are due during the first policy year
166
FULL DISCLOSURE
The requirement that prospective purchasers of variable universal life and universal life products be fully informed of the charges and costs and provided with all important information about their policies.
167
FIXED-AMOUNT SETTLEMENT OPTION
A life insurance policy beneficiary can request that proceeds be paid in regular installments of a fixed dollar amount.
168
FULLY INSURED PLAN
Pension plans that are funded entirely through individual insurance contracts issued on the lives of participants.
169
FIXED ANNUITY
An annuity that provides fixed payments during the annuity period.
170
GENERAL ACCOUNT
Traditionally
171
FIXED-PERIOD SETTLEMENT OPTION
A life insurance settlement option in which the number of payments is set by the payee
172
FLEXIBLE PREMIUM ANNUITY
An annuity that allows the owner of the contract to vary premium payments (within limits) from year to year.
173
GRACE PERIOD
Most life insurance contracts provide that premiums may be paid at any time within a period of generally 30 or 31 days following the premium due date
174
FRATERNAL INSURANCE
Life or health insurance protection provided by fraternal benefit societies.
175
GRADED DEATH BENEFITS
A life insurance policy provision that provides for death benefits that
176
FRAUD
An act of deceit; misrepresentation of a material fact made knowingly
177
FREE-LOOK PROVISION
A provision in life insurance policies that gives the policyowner a stated amount of time (usually ten days) to review a new policy.
178
GRADED PREMIUM LIFE INSURANCE
A form of modified life insurance that starts with relatively low premiums that increase slowly each year.
179
GROSS PREMIUM
This is the premium paid by the policyowner. More technically
180
IMMEDIATE ANNUITY
An annuity contract that pays the annuity at the end of each period of payment. The interval may be monthly
181
GROUP LIFE INSURANCE
A form of life insurance covering a group of persons generally having some common interest or activity
182
INCIDENTS OF OWNERSHIP
The right to exercise any of the privileges in the insurance policy (e.g.
183
INCONTESTABLE CLAUSE
See: contestable clause.
184
GUARANTEED CASH VALUE
The guaranteed amount available to the insured on surrender of a policy according to a table of guaranteed values scaled to the number of years in which the policy is in force.
185
INCREASING TERM INSURANCE
Term life insurance coverage that increases in face value each year (or certain period) from the date of policy issue to the date of expiration.
186
GUARANTEED COST
This is another term for non-participating (non par) insurance. Guaranteed cost can also be defined as the maximum costs that can be deducted from cash value under the terms of the policy in universal or variable universal life contracts.
187
GUARANTEED INSURABILITY RIDER
A rider
188
INDEXED UNIVERSAL LIFE INSURANCE
These policies have all the typical features of regular universal life policies except that
189
GUARANTEED INTEREST RATE
The minimum annual rate of interest used in calculating policy reserves from year to year
190
GUARANTEED PURCHASE OPTION
See: guaranteed insurability rider.
191
INDETERMINATE PREMIUM
Refers to policies where the actual premium charged may be lower than the guaranteed premium stated in the policy.
192
HUMAN LIFE VALUE
One method of determining how much insurance a person should own is to measure his or her 'human life' value
193
INDIVIDUAL LIFE INSURANCE
Life insurance contract that covers only one insured
194
INITIAL DEATH BENEFIT
In flexible feature life insurance policies
195
INTENTIONALLY DEFECTIVE GRANTOR TRUST
A trust drafted with an intentional flaw that runs 'afoul' of the rules contained in sections 671 through 679 of the internal revenue code.
196
INITIAL PREMIUM
The first premium
197
INITIAL RESERVE
The reserve amount determined at the beginning of the policy year. It equals the preceding year's ending reserve
198
INTEREST-ADJUSTED COST METHOD
A method of comparing costs of similar policies by using an index that takes into account the time value of money due at different times through interest adjustments.
199
INSTALLMENT DEFERRED ANNUITY
An annuity in which the annuitant pays into the annuity fund over a period of time
200
INTEREST FACTOR
One of three factors taken into consideration by an insurance company when calculating premium rates.
201
INSTALLMENT REFUND ANNUITY
A life annuity that will continue to make payments to a stipulated beneficiary after the death of the annuitant until the total payments equal the consideration paid to the insurer.
202
INTEREST-ONLY OPTION
A settlement option under which all or part of the proceeds of a policy are left with the insurance company for a definite period at a guaranteed minimum rate of interest.
203
INSTALLMENT SETTLEMENT
A series of periodic payments of proceeds instead of payment in a lump-sum.
204
INTEREST-SENSITIVE WHOLE LIFE
A traditional whole life policy with fixed premiums and traditional nonforfeiture values where interest is credited directly to the cash value at current rates.
205
INSURABILITY
The term insurability encompasses all conditions pertaining to an individual that affect his or her health
206
INSURABLE INTEREST
A person who has a reasonable expectation of benefiting from the continuance of another person's life or of suffering a loss at his or her death.
207
INTERIM TERM INSURANCE
Term life insurance issued to an applicant during the period between submission of the application and the time the insurance company either issues a permanent insurance policy or rejects the application.
208
INSURANCE RESERVES
The present value of future claims minus the present value of future premiums. Reserves are balance sheet accounts set up by insurers to reflect actual and potential liabilities under outstanding insurance contracts.
209
INTERPOLATED TERMINAL RESERVE
A reserve fund that an insurance company uses to cover its liability in a particular policy. It is used in determining the value of certain life insurance policies for gift tax purposes.
210
INSURED
The individual or group covered by the contract of insurance.
211
INVESTMENT ACCOUNT
A separately managed cash value investment fund into which variable life and variable universal life insurance policyowners allocate the premiums and cash value.
212
JOINT LIFE ANNUITY
A life annuity payable to two or more annuitants that continues payments until one of the two annuitants dies.
213
INVESTMENT PORTFOLIO
A list detailing the securities owned by a person
214
JUVENILE INSURANCE
Life insurance policies written on the lives of minors within specified age limits
215
INVESTMENT YEAR METHOD OF DIVIDEND CALCULATION
Any dividend calculation method that recognizes differences in earned interest rates depending upon the year in which the investment is made.
216
KEY EMPLOYEE INSURANCE
Provides cash to absorb the financial loss caused by the death or disability of a vital individual in a business.
217
ISSUE
A term applying to the insurer's approving and forwarding new policies to the agent for delivery to applicants.
218
LAPSE
Termination of an insurance policy because of nonpayment of premiums or
219
ISSUE LIMIT
The maximum amount of coverage a company is willing to extend on a given risk.
220
LAST TO DIE INSURANCE
A life insurance contract on two or more persons that pays proceeds only upon the death of the last insured.
221
JOINT AND SURVIVOR ANNUITY
A life annuity payable over the lives of two or more annuitants that continues to make payments until the death of the last surviving annuitant.
222
LEVEL PREMIUM
A life insurance premium that remains fixed through the life of a policy.
223
JOINT AND X-PERCENT SURVIVOR ANNUITY
An annuity that pays an income to two individuals
224
LEVEL TERM INSURANCE
Term life coverage on which the face value remains the same from the date the policy is issued to the date the policy expires.
225
JOINT AND SURVIVORSHIP OPTION
A contract option that permits policy proceeds to be paid out as a joint and survivor annuity.
226
LIFE ANNUITY
An annuity contract that pays only until the annuitant dies.
227
JOINT CONTROL
A life insurance policy provision that states that a person
228
LIFE EXPECTANCY
The average remaining term of life for a number of persons of a given age
229
JOINT INSURANCE
A life insurance contract covering two or more lives that pays death proceeds.
230
LIFE INCOME OPTION
One of the settlement options under which the proceeds of a life insurance or annuity policy may be applied to buy an annuity payable to the beneficiary for life.
231
MEDICAL INFORMATION BUREAU (MIB)
An entity that collects and stores medical data on life and health insurance applicants
232
LIFE INCOME WITH PERIOD CERTAIN OPTION
A life insurance proceeds settlement option that will pay at least a minimum specified number of periodic installments in a guaranteed amount whether the named beneficiary lives or dies.
233
MINIMUM PREMIUM
The smallest amount of premium the insurer requires to be paid in the first year of a universal life contract.
234
LIFE PAID-UP AT AGE ( )
A form of limited payment life insurance that provides protection for the whole of life
235
MINOR BENEFICIARY
A beneficiary who is under the state's legal age of majority and not considered competent to make certain financial transactions on his or her own.
236
LIFE SETTLEMENTS
The sale
237
MISREPRESENTATION
A false statement as to a past or present material fact made in an application for insurance intended to induce an insurance company to issue a policy it would not otherwise issue.
238
LIMITED-PAYMENT (LIMITED-PAY) POLICY
A life insurance policy that provides for payment of the premium for a period of years less than the period of protection provided under the contract.
239
LOADING CHARGE
The additional charge for overhead costs added to the net premium
240
MISSTATEMENT OF AGE
Giving the wrong age for oneself in an application for insurance or for a beneficiary who is to receive benefits on a basis involving a life contingency.
241
MODE OF PAYMENT
The frequency with which premiums are paid (e.g.
242
LOAN
Money loaned at interest by the insurance company to a policyowner on the security of the cash value of his or her policy.
243
LOAN VALUE
A specified amount that can be borrowed from the insurance company by the policyowner
244
MODIFIED LIFE
Whole life insurance with reduced premiums payable during the first few years (usually three to five) that are only slightly higher than the rate for term insurance.
245
LUMP SUM
Payment of the entire proceeds of a life insurance policy at one time.
246
MORAL RISK
Moral condition as reviewed by a study of habits
247
MATURE
The time when a policy becomes payable.
248
MORTALITY FACTOR
One of the basic factors needed to calculate basic premium rates.
249
NET LEVEL PREMIUM
The pure annualized level mortality cost of a life insurance policy from age of entry to maturity date.
250
MORTALITY RISK
The risk of death carried by a life insurance company and sometimes called the pure insurance risk.
251
NET PREMIUM
This term has several meanings
252
MORTALITY TABLE
A table of the mortality experience of groups of individuals categorized by age and sex that is used to estimate how long a male or female of a given age is expected to live.
253
NEW MONEY INTEREST RATE
See: investment year method of dividend calculation.
254
NONASSIGNABLE CONTRACT OR POLICY
A policy that the owner cannot legally assign to a third party.
255
MULTIPLE LIFE POLICY
A life insurance policy taken out on the lives of three to five persons
256
NONCONVERTIBLE TERM INSURANCE
A term policy that may not be converted to a permanent policy.
257
NONFORFEITURE VALUES
Those values or benefits in a life insurance policy that by law the policyowner does not forfeit
258
MUTUAL COMPANY
A life insurance company that has no capital stock or stockholders.
259
NONMEDICAL INSURANCE
Life insurance issued on a regular basis without requiring the applicant to submit to a medical examination.
260
NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)
An association of state insurance commissioners attempting to solve insurance regulatory problems
261
NONPARTICIPATING LIFE INSURANCE
So called 'non-par' life insurance does not pay policy dividends.
262
NET COST
A term ordinarily referring to the actual cost of insurance to a policyowner in a mutual company after the policy dividends are deducted from the premiums deposited.
263
NONRENEWABLE CONTRACT
An agreement or policy written for a specific period and purpose and that does not contain an option to be renewed for successive terms.
264
NONTRANSFERABLE
A contract in which the benefits or any of its value cannot be sold
265
OFFER AND ACCEPTANCE
An offer is made by the life insurance policy applicant when he or she signs the application
266
PARTICIPATING INSURANCE
An insurance policy
267
PAYOR
The person who pays the premiums on a policy.
268
OPTIONAL BENEFIT
An additional benefit offered by the company
269
OPTIONAL PAID-UP INSURANCE
One of the guaranteed nonforfeiture options in a policy where the cash value of the policy is used to buy a single premium paid-up insurance at the attained age.
270
OVERRIDE
An override is the commission paid to a general agent or manager in addition to the commission paid the agent or broker who sells the policy.
271
PERC VALUE
PERC
272
OWNERSHIP PROVISION
A provision stating who the owner is when the owner is someone other than the insured.
273
PERMANENT INSURANCE
Any form of life insurance in which the insured has the guaranteed right to keep the policy in force as long as he or she pays the premium.
274
PAID-UP ADDITIONS
A dividend option that allows the policyowner to use policy dividends to purchase paid-up additional insurance on a net single premium basis at the insured's attained age.
275
PAID-UP POLICY
A policy on which the policyowner has completed payments
276
PERSISTENCY
A measure of the number of policies sold that 'stay on the books
277
PARTIAL WITHDRAWALS (SURRENDERS)
The policyowner's right in universal and variable universal life insurance policies to receive a portion of the cash value.
278
PLEDGE
The placing of policy cash values as collateral for a loan.
279
POLICY
The basic written contract between the insurer and the policyowner
280
PORTFOLIO METHOD OF DIVIDEND CALCULATION
The method whereby dividends are calculated based on the average interest rate earned on total portfolio of investments.
281
POLICY ANNIVERSARY
The anniversary of the date of issue of a policy
282
PREFERRED RISK
A person whose characteristics indicate an above-average life expectancy and qualifies for a more favorable premium rate.
283
POLICY CHANGE PROVISION
A provision stating that the policyowner has the right to change coverage from a term policy to a permanent policy without providing evidence of insurability.
284
POLICY DATE
The date on which coverage becomes effective
285
PREFERRED RISK POLICIES
Policies warranting a lower premium charge based on underwriting criteria indicating better-than-average mortality risk.
286
POLICY FEE
A small annual charge to the policyowner
287
POLICYHOLDER
The person or organization having rightful possession of a policy
288
PRELIMINARY TERM INSURANCE
Term insurance attached to a newly issued permanent life insurance policy extending term coverage for a preliminary period of one to 11 months.
289
POLICY LOAN
A loan to the policyowner by the insurer with the cash value of the policy assigned as the only security for the loan.
290
PREMIUM
The periodic payment required to keep a specific insurance policy in force.
291
POLICY MATURITY DATE
The date at which a policy matures if the insured is still alive at that age.
292
PREMIUM LOAN
Payment of the premium by taking a loan against the cash value of a policy.
293
POLICYOWNER
The person who has ownership rights in an insurance policy and who may or may not be the insured.
294
POLICY PERIOD
The length of time during which the policy contract provides protection.
295
PREMIUM MODE
The frequency with which premium payments are made
296
PREMIUM PAYMENT PERIOD
The number of years during which premiums are payable.
297
POLICY PROCEEDS
The amount payable in a single sum to the beneficiary or policyowner under a policy at death
298
PREMIUM REFUND
A life insurance provision or rider that is a form of increasing term insurance
299
PREMIUM RETURN
A return of premium that may occur as a result of cancellation
300
Rebating
Generally
301
PRIMARY BENEFICIARY
The beneficiary specifically designated by the insured as the first in priority to receive policy proceeds.
302
REDUCED PAID-UP OPTION
A nonforfeiture option that permits the insured to have the cash surrender value of his or her policy used to purchase a paid-up policy for
303
PRIVATE ANNUITY
Annuity issued by an individual or organization other than an insurer or other company regularly engaged in annuity sales.
304
RE-ENTRY TERM
Renewable term insurance that will charge lower new-issue term premiums if the insured periodically provides suitable evidence of insurability.
305
PROCEEDS
The net amount of money payable by the insurance company at the death of an insured or at the maturity of a policy.
306
REFUND ANNUITY
An annuity that will make payments after the death of the annuitant to a designated beneficiary
307
PROHIBITED PROVISIONS
Life insurance policy provisions that are not allowed in the contract under state law
308
PROTECTION
A term synonymous with the term 'coverage' that denotes the amount of insurance provided by the policy.
309
REINSTATEMENT PROVISION
A policy provision defining a policyowner's right to reinstate a lapsed policy within a reasonable time after lapse
310
RENEWABLE AND CONVERTIBLE TERM
Term life insurance offering the policyowner both the option to renew the coverage at the end of the term period and the option (within the term period) to convert it to a permanent form of insurance.
311
PURE ENDOWMENT
A theoretical contract that provides for payment only if a specific person survives to a certain date and not in event of that person's prior death.
312
RATABLE CHARGE METHOD
A method of accounting for policy cash values
313
RENEWAL
Continuance of coverage under an insurance policy beyond its original term.
314
RATED
A rated policy is one issued on a substandard risk with higher than standard premiums.
315
RENEWAL COMMISSION
The commission paid or credited to an agent after the first policy year for premiums received by the company on business written by the agent.
316
RATING
The premium classification given to a person who applies for life insurance. The term is usually used when an applicant is designated as a substandard risk.
317
RENEWAL PREMIUM
Any premium due after the first policy year.
318
REPORTABLE ECONOMIC BENEFIT COST (REB)
The term cost of life insurance death benefit protection that is provided to a participant in a split dollar arrangement or a qualified plan.
319
SCHEDULED PREMIUM
The selected premium by the policyowner in variable universal life and universal life policies.
320
REPRESENTATIONS
Statements made by an applicant on the application that the applicant attests are substantially true to the best of his or her knowledge and belief
321
REQUIRED PROVISIONS
Certain provisions must be included under state law in an insurance policy.
322
RESERVE
The funds held by the company for all policies which
323
RESERVE BASIS
The mortality and interest rate assumptions used in the computation of premiums and necessary reserves.
324
SECONDARY GUARANTEE UNIVERSAL LIFE
Insurers include secondary guarantees in some universal life policies to produce a policy with a guaranteed death benefit for a specified period of time
325
RETIREMENT INCOME POLICY
A type of limited-pay life insurance contract designed to build cash values with the principal objective of funding a desired level of guaranteed monthly income for life
326
SECTION 79 PLAN
Merely a group-term life insurance plan but so called because of the favorable taxation under Internal Revenue Code section 79.
327
RETROACTIVE CONVERSION
Conversion of a term life insurance policy to a permanent policy with premiums determined as if the permanent policy were issued at the insured's original issue age rather than at the insured's attained age at the time of conversion.
328
RETURN OF PREMIUM RIDER
A type of increasing term rider that will pay an amount equal to the sum of all premiums paid to date if the insured dies within a specified term
329
SECTION 162 PLAN
A plan that involves the purchase of a life insurance policy on the life of one or more employer-chosen employees.
330
RIDER
An attachment to a life insurance policy that modifies the policy by expanding or restricting benefits or excluding certain conditions of coverage.
331
SECTION 419(E) MEDICAL BENEFIT PLAN
A post-retirement medical benefits plan that businesses can establish to cover retiree medical expenses.
332
RISK FACTOR
One of the three principal factors entering gross premium calculations.
333
SELECT MORTALITY TABLE
A mortality table showing better-than-average mortality rates in the initial years after issue as a result of the insurer's ability to screen out bad risks through its underwriting process.
334
STATUTORY RESERVE
This is the reserve value reported in an insurance company's statutory financial statement filed with the state insurance department. The primary difference between this and the tax reserve is the interest rate used.
335
SEPARATE ACCOUNT
An investment account that is segregated from the general investment portfolio of the insurer. Required by law for assets backing variable products.
336
STOCK COMPANY
A company that is owned and controlled by stockholders rather than policyowners.
337
SETTLEMENT
A term that is synonymous with the payment of a claim. It implies that both the policyowner and the insurance company are satisfied with the amount and the method of payment.
338
SUBSTANDARD INSURANCE
Life insurance issued at premium rates higher than standard
339
SETTLEMENT DIVIDEND
A special or extra dividend payable at the time of termination of a policy by death
340
SETTLEMENT OPTIONS
The various methods by which policy proceeds may be paid to the beneficiary.
341
SUBSTANDARD RISK
A person whose mortality risk is greater than average for his or her age.
342
SINGLE-PREMIUM DEFERRED ANNUITY
Annuity purchased with one premium
343
SINGLE-PREMIUM POLICY
A policy that is paid-up with one premium.
344
SUICIDE PROVISION
Life insurance policies include a provision that if the insured commits suicide within a specified period
345
SPENDTHRIFT PROVISION
A policy provision to shelter policy proceeds
346
SUPPLEMENTAL TERM INSURANCE
A supplemental agreement or rider available in some policies
347
SPLIT-DOLLAR INSURANCE
An arrangement between two parties (often employer and employee) where there is a sharing or splitting of premiums
348
STANDARD POLICY
A policy issued with standard provisions and at standard rates; not rated or with special restrictions.
349
SURPLUS ACCOUNT
The difference between a company's assets and liabilities.
350
STANDARD RISK
A person who meets the insurer's underwriting criteria for standard policies.
351
SURRENDER
The policyowner's return of a policy to the insurance company in exchange for the policy's cash surrender value or other equivalent nonforfeiture values.
352
TERM INSURANCE RIDER
A form providing term life insurance that is attached to a permanent life insurance policy
353
SURRENDER CHARGE
In a variable universal life or universal life policy
354
TERM OF POLICY
The period for which a policy is in force.
355
SURRENDERED POLICY
A life insurance policy that has been returned to the insurance company and terminated
356
TERM TO AGE
A form of long-term life insurance continuing to the designated age of the policyowner.
357
TARGET PREMIUM
The annual premium for a universal life policy that will maintain the plan of insurance if the actual interest
358
THIRD PARTY OWNERSHIP
An arrangement in which the life insurance policy is owned by an entity other than the insured or the beneficiary.
359
TAX RESERVE
This is the reserve value used in the determination of an insurance company's federal income tax.
360
TRADITIONAL NET COST COMPARISON METHOD
A method of determining policy cost over a stipulated period by adding a policy's premiums and subtracting dividends and the cash value at the end of the stipulated period.
361
TEMPORARY LEVEL EXTRA PREMIUMS
A type of rating most frequently used with physical impairments where the risk is considered to be a temporary nature.
362
TEMPORARY ANNUITY
A life annuity that terminates at the earlier of the end of a stipulated period or the death of the annuitant.
363
TRADITIONAL PRODUCT
A life insurance product with fixed premiums
364
TERM CONTRACT OR POLICY
See: term insurance.
365
ULTIMATE MORTALITY TABLE
A mortality table based on average life insurance experience after the period when the benefit of favorable 'selection' attributable to the insurer's underwriting process has worn off.
366
TERMINAL DIVIDEND
Dividends that may be payable upon termination of a policy at death
367
UNBUNDLED FEES
Refers to the legal requirement that variable universal life
368
TERMINATION
Refers to a policy's becoming of no effect. No more premiums are payable on the policy after termination
369
TERM INSURANCE
Life insurance protection that expires after a specified term without any residual value if the insured survives the stated period.
370
UNDERWRITER
Technically
371
UNEARNED PREMIUM
The portion of the premium applicable to the unexpired or unused part of the period for which the premium has been charged.
372
VARIABLE DEATH BENEFIT
A death benefit option in most variable life policies. The death benefit varies based on a formula relating the cash value to the death benefit.
373
UNIFORM POLICY PROVISION
A provision that is required by state statute to be in all insurance contracts of a given type.
374
VARIABLE LIFE INSURANCE
Life insurance that provides a guaranteed minimum death benefit
