Keogh Plan
A type of tax-favored retirement plan for self-employed people.
Lapsed Policy
A policy terminated at the end of the grace period because of non-payment
of premiums.
Legal Reserve Life Insurance Company
A life insurance company operating under state insurance laws specifying
the
minimum basis for the reserves the company must maintain on its policies.
Level Premium Insurance
Insurance for which the cost is distributed evenly over the premium payment
period. The premium remains the same from year to year and is more than the
actual cost of protection in the earlier years of the policy and less than
the
actual cost in the later years. The excess paid in the early years builds
up a
reserve to cover the higher cost in the later years.
Life Annuity
A contract that provides an income for life.
Life Expectancy
The average number of years of life remaining for a group of people of a
given age according to a particular mortality table.
Life Insurance in Force
The sum of the face amounts, plus dividend additions, of life insurance policies
outstanding at a given time. Additional amounts payable under accidental
death or other special provisions are not included.
Limited Payment Life Insurance
Whole life insurance on which premiums are payable for a specified number
of years or until death, if death occurs before the end of the specified
period.
Living Benefits
Another name for accelerated death benefits.
Load
Any sales fees or charges paid in purchasing an annuity contract.
Master Policy
A policy that is issued to an employer or trustee, establishing a group insurance
plan for designated members of an eligible group.
Modified Life Insurance
A type of whole life policy with a premium that is relatively low in the
first
several years but that increases in later years.
Mortality Table
A statistical table showing the death rate (probability of death) at each
age.
Mutual Life Insurance Company
A life insurance company owned by policyholders who share in the
company's surplus earnings.
Non-Forfeiture Option
One of the choices available if the policyholder discontinues payments
on a policy with a cash value. This may be taken in cash as extended
term insurance or as reduced paid-up insurance.
Non-Forfeiture Values
The value of the policy if canceled, either in cash or in another form of
insurance. Also available to the policyholder if required premium
payments are not paid.
Non-Medical Limit
The maximum face value of a policy that a given company will issue
without the applicant taking a medical examination.
Non-Participating Insurance
Insurance on which no dividends are paid.
Non-Participating Policy
A life insurance policy in which the company does not distribute to policyholders
any part of its surplus. Note that premiums for non-participating policies
are usually lower than for comparable participating policies. Note also that
some non-participating policies have both a maximum premium and a current
lower premium. The current premium reflects anticipated experience that is
more favorable than the company is willing to guarantee, and it may be changed
from time to time for the entire block of business to which the policy belongs.
Ordinary Life Insurance
Life insurance usually issued in amounts of $1,000 or more with premiums
payable on an annual, semi-annual, quarterly or monthly basis.
Paid-Up Insurance
Insurance on which all required premiums have been paid.
Participating Insurance
Insurance on which the policyholder is entitled to share in the surplus earnings
of the company through policy dividends that reflect the difference between
the premium charged and the cost to the company of providing the insurance.
Payout Period
The period during which you receive the income from your annuity contract.
Permanent Life Insurance
A phrase used to cover any form of life insurance except term; generally
insurance that
accrues cash value, such as whole life or endowment.
Policy
The printed document issued to the policyholder by the company stating the
terms of the insurance contract.
Policy Loan
Under an insurance policy, the amount that can be borrowed at a specified
rate of interest from the issuing company by the policyholder, who uses the
value of the policy as collateral for the loan. In the event the policyholder
dies with the debt partially or fully unpaid, the insurance company deducts
the amount borrowed, plus any accumulated interest, from the amount payable.
Policy Reserves
The measure of the funds that a life insurance company holds specifically
for fulfillment of its policy obligations. Reserves are required by law to
be calculated so that, together with future premium payments and anticipated
interest earnings, they will enable the company to pay all future claims.
Policyholder
The person who owns a life insurance policy. This is usually the insured
person, but it may also be a relative of the insured, a partnership or a
corporation.
Premium
The payment, or one of the regular periodic payments, that a policyholder
makes to own an insurance policy.
Premium Loan
A policy loan made for the purpose of paying premiums.
Principal
The amount you pay into your annuity contract as distinguished from the interest
that is
credited to it.
Qualified Annuity
An annuity that is sold as part of a tax-qualified Keogh plan or company
pension plan.
Rated Policy
Sometimes called an "extra-risk" policy, an insurance policy issued at a
higher-than-standard premium rate to cover the extra risk where, for example,
an insured has impaired health or a hazardous occupation.
Reduced Paid-Up Insurance
A form of insurance available as a non-forfeiture option. It provides for
continuation of the original insurance plan but for a reduced amount.
Reinstatement
The restoration of a lapsed policy to full force and effect. The company
requires evidence of insurability and payment of past due premiums plus interest.
Renewable Term Insurance
Term insurance providing the right to renew at the end of the term for another
term or terms, without evidence of insurability. The premium rates increase
at each renewal as the age of the insured increases.
Reserve
The amount required to be carried as a liability in the financial statement
of an insurer to
provide for future commitments under policies outstanding.
Rider
An amendment to an insurance policy that modifies the policy by expanding
or restricting its benefits or excluding certain conditions from coverage.
Risk Classification
The process by which a company decides how its premium rates for life insurance
should differ according to the risk characteristics of individuals insured
(for example, age, occupation, sex, state of health) and then applies the
resulting rules to individual applications. (See underwriting.)
Second-To-Die Life Insurance
A form of insurance, traditionally used as an estate planning tool, that
pays a death benefit only upon the death of the insured who survives the
longest. Its main purpose is to pay estate taxes upon the death of the second
insured. Because it is based on joint life expectancy, its premium is less
than the total premiums for individual policies on the same lives. This type
of insurance is available in many forms, including policies with interest-rate
features and flexible premiums.
Separate Account
An asset account established by a life insurance company separate from other
funds, used primarily for pension plans and variable life products. This
arrangement permits wider latitude in the choice of investments, particularly
in equities.
Settlement Options
One of several ways, other than immediate payment in a lump sum, in which
the insured or beneficiary may choose to have policy proceeds paid.
Single-Premium Whole Life Insurance
A whole life policy that provides protection for the duration of the insured's
life in exchange for the payment of the total premium in one lump sum at
the time of application.
Stock Life Insurance Company
A life insurance company owned by stockholders who share in the company's
surplus earnings.
Straight Life Annuity
An annuity whose periodic payments stop when the annuitant dies.
Straight Life Insurance
Whole life insurance on which premiums are payable for life.
Supplementary Contract
An agreement between a life insurance company and a policyholder or beneficiary
by which the company retains the cash sum payable under an insurance policy
and makes payments in accordance with the settlement option chosen.
Survivorship Insurance
Another name for second-to-die insurance.
Term Insurance
A plan of insurance that covers the insured for only a certain period of
time (term), not for his or her entire life. The policy pays death benefits
only if the insured dies during the term.
Term Rider
Term insurance that is added to a whole life policy at the time of purchase
or that may be added in the future.
Underwriting
The process of classifying applicants for insurance by identifying such
characteristics as age, sex, health, occupation and hobbies. People with
similar characteristics are grouped together and are charged a premium based
on the group's level of risk. The process includes rejection of unacceptable
risks.
Universal Life Insurance
A flexible premium life insurance policy under which the policyholder may
change the death benefit from time to time (with satisfactory evidence of
insurability for increases) and vary the amount or timing of premium payments.
Premiums (less expense charges) are credited to a policy account from which
mortality charges are deducted and to which interest is credited at varying
rates.
Variable Annuity
An annuity contract under which the monthly payments will vary because they
are linked to the values of investments, such as common stocks. This contrasts
with the fixed dollar annuity, which guarantees a fixed amount monthly.
Variable Life Insurance
Life insurance under which the benefits relate to the value of assets behind
the contract at the time the benefit is paid. The assets fluctuate according
to the investment experience of funds managed by the life insurance company.
Premium payments may be fixed as to timing and amount (scheduled premium
variable life) or subject to change by the policyholder (flexible premium
variable life). Because variable life policies have investment features,
life insurance agents selling these policies must be registered representatives
of a broker-dealer licensed by the National Association of Securities Dealers
and registered with the Securities and Exchange Commission.
Waiver of Premium
A provision that sets certain conditions under which an insurance policy
will be kept in full force by the company without the payment of premiums.
It is used most frequently for those policyholders who become totally and
permanently disabled but may be available in certain other cases.
Whole Life Insurance
A plan of insurance for life, with premiums payable for a person's entire
life. |
