Accelerated Benefit (option) Rider
allow the insured to receive a portion of the death benefit prior's to death if the insured has a terminal illness and is certified by a physician as expected to die w/n 1-2 years
Beneficiary
The person or entity designated in a life insurance policy to receive the death proceeds
Cash Value
the equity or savings elements of whole life insurance polices
Class Designation
A beneficiary group designation, opposed to specifying one or more beneficiaries by name
EX: all of children
Common Disaster Provision
a provision of the Uniform Simultaneous Death Act which ensures a policy owner if both the insured and the primary beneficiary die w/n a short period of time, the death benefits will be paid to the contingent. Also states that the primary beneficiary must
Contingent (secondary) Beneficiary
The beneficiary second in line to receive death benefit proceeds if the primary beneifary dies the insured.
Earned Premium
the amount of premium paid by the policy owner for policy coverage or insurance protection already received.
Expense Factor
AKA the loading charge, is a measure of what it costs an insurance company to operate
Fixed Amount Installment Option
Pays a fixed death benefit in specified installment amount until the principal and interest are exhausted.
Fixed/Level Premium
a concept of averaging what would be the Toal single premium for a policy over periodic payments.
more periodic payment = higher total premium
Fixed Period or Period Certain Option
pays the death benefit proceed in equal installments over a set period of years. The dollar amount of each installment depends upon total number of installments.
Graded Premium
premium funding option characterized by a lower premium in the early years of the contract with premiums increasing annually for an introductory period. After the intro period, the premiums jump to an amount higher than what the initial premium would have
Gross (annual) Premium
Net premium for insurance plus commission, operating and miscellaneous expenses, and dividends.
Interest Factor
calculation for determining the amount of interest an insurance company can expect to earn from investing insurance premiums.
Interest Only Option
death settlement option where the insurance company holds death benefit for a period of time and pays only the interest earned to the named beneficiary. A minimum rate of interest is guaranteed and the interest must be paid at least annually.
Irrevocable Beneficiary
can not be changed bu the policy owner w/o consent of the beneficiary
Joint and Survivor Option
a settlement option which that benefits will be payed on a life-long basis to two or more people. This option includes a period certain and the amount payable us based on the ages of the beneficiaries
Life Income Option
a death benefit settlement option which provides the beneficiary with an income that they cannot outline. Installment payments are guaranteed for as Lon as the recipient lives. The amount of each installment is based on the recipient's life expectancy and
Life Settlement
an agreement in which a policy holder sells or transfer ownership in all or part of a life insurance policy
Lump Sum Option
death settlement option death benefit is paid in a single payment, minus any outstanding policy loan balances and overdue premiums. This option is considered the automatic (or "default") option for most life insurance contract.
Modified Premium
a premium funding option characterized by an initial premium that is lower than it should be during an introductory period of time (normally the first three to five years). After this time, the premium will increase to an amount greater than what the init
Morbidity Rate
demonstrates the incidence and extent of disability that may be expected from a given group of persons.
Mortality Rate
a measure of the number of deaths (in general, or due to a specific cause) in some population, scaled to the size of that population, per unit time.
Net Payment Cost Index
a formula used to determine the true cost of a policy for a policy owner. It uses the same formula as the Surrender Cost Index with the exception that it doesn't assume that the policy will be surrendered at the end of the period. The net payment cost ind
Net (single) Premium
A premium calculation used to calculate an insurer's policy reserves factoring in interest and morality.
Per Capita (by the head)
Evenly distributes benefits amount all named beneficiaries
Per Stirpes (by the bloodline)
Evenly distributes benefits amongst a beneficiary's heirs in the event that a beneficiary dies before the insured.
Premium Mode
The frequency with which a policy premium will be paid
Primary Beneficiary
the 1st beneficiary in line to receive benefit proceeds upon the death of an insured
Policy Proceeds
the amount actually paid as a death, surrender, or maturity benefit. In the case of a death benefit, it includes the face value plus any earned dividends less any outstanding loans and interest. If surrender benefit, the amount includes any cash value les
Reserves
the Monet set aside (required by the state's insurance laws) to pay future claims
Revocable Beneficiary
a beneficiary that the policy owner may change at any time w/o notifying or getting permission from the beneficary
Settlement Options
are optional modes of settlement provided by most life insurance policies. Options include lump-sum cash, interest-only, fixed-period, fixed-amount, and life income
Single Premium Funding
A policy funding option where the policy owner pays a single premium that provides protection for life as a paid-up policy
Spendthrift Clause
clause which prevents creditors from making claims on a trust beneficiary's interest and which also prevents bankruptcy.
Surrender Cost Index
a cost comparison calculation formula where the net cost is averaged over the number of years the policy was in force to arrive at the average cost-per-thousand for a policy that is surrendered for its cash value at the end of that period
Tertiary Beneficiary
The third beneficiary in line to receive death benefit proceeds if the primary and contingent beneficiaries both die before the insured
Unearned Premium
Premium which has been paid by a policy owner for insurance coverage which has yet been provided.
Uniform Simultaneous Death Act
states that if the insured and the primary beneficiary die at approximately the same time for a common accident with no clear evidence as to who died first, the law will assume that the primary died first, this allows the death benefit proceeds to be paid
Viatical Settlement
involves someone w/ terminal illness selling their existing life insurance policy to a third party for a % of the death benefit. In this agreement, the owner of a life insurance policy sell the policy to another person in exchange for a bargained for paym
Viator
the original policy owner
Vatical or Viatee
the new third-party owner