Glossary of Life Insurance Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

M

Mature.

In insurance, a policy matures when its face amount becomes payable. This could occur upon the death of the insured, or in some forms of insurance such as endowments, as of a specified date. 

 

Maturity Date.

The date at which the face amount of a Life Insurance policy becomes payable by reason of either death or endowment. 

 

Maturity Value.

The amount payable to a living insured at the end of an endowment period or to the owner of a Whole Life policy if he lives past a certain age. 

 

McClintock Table.

An American morality experience table developed in 1896 by McClinton McClintock from the experience of 15 American insurers and influenced by foreign underwriting experience. 

 

Medical Examination.

The examination of an applicant for insurance or a claimant by a physician who acts in the capacity of the insurer's agent. 

 

Medical Examiner.

The physician who examines an applicant or claimant on behalf of the insurer and as an agent of the insurer. 

 

Medical Information Bureau (MIB).

A data pool service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most Life and Health insurers subscribe to this bureau to get more complete underwriting information. 

 

Million Dollar Round Table (MDRT).

An association of Life Insurance agents who qualify by selling $1 million worth or more of Life Insurance coverage. The policies must meet certain qualification standards, and applicants must be members of the National Association of Life Underwriters. 

 

Minimum Deposit Policy.

A Cash Value Life Insurance policy having a first-year loan value that is available to borrow against immediately upon payment of the first-year premium. This is not the case with most Life Insurance policies, the main reason being high first-year expenses. 

 

Misstatement of Age.

(1) Giving the wrong age for oneself on an application for Life and Health Insurance or for a beneficiary who is to receive benefits on a basis involving his life contingency. (2) A provision in most Life and Health policies setting forth the action to be taken if a misstatement of age is discovered after the policy is issued. This is one of the uniform provisions for Individual Health Insurance policies. 

 

Modified.

This term has several meanings, only a few of which will be mentioned here. (1) Under a modified coinsurance provision in Life Reinsurance, the ceding insurer retains and maintains the entire reserve, with the annual increase in reserve being transferred to the ceding insurer by the reinsurer at the end of the year. (2) Under Preliminary Term Insurance, a modified reserving system permits at least part, if not all, of the first year's net premium on a Life Insurance policy to be used to meet first-year acquisition costs and claim expenses and requires that part of the renewal loading be added to the policy reserve accumulation. (3) Any premium that is altered from the regular premium for similar Life policies, such as the premium for a Modified Life policy. 

 

Modified Life Policy.

An Ordinary Life contract under which the premiums are modified so as to be lower than normal for the first three to five years and higher than normal after that. A special case is a level Term policy, under which no part of the premium goes towards savings, that is automatically converted to a Whole Life policy at a designated time. 

 

Monthly Administration Fee.

In Universal Life insurance, an administrative fee is charged each month to cover administrative expenses. 

 

Monthly Debit Ordinary (MDO).

Ordinary Insurance the premiums for which are collected at the door monthly in the same fashion as Industrial policies. 

 

Monthly Debit Ordinary Status Card.

An IBM card showing the status of MDO business in force and lapsed. 

 

Mortality, Experienced.

See Experienced Mortality. 

 

Mortality Rate.

The number of deaths in a group of people, usually expressed as deaths per thousand. It can be the rate for the total population, called the crude mortality rate, or it can be refined by factors such as age groupings or causes of deaths. Same as Death Rate. 

 

Mortality Savings.

The remainder, if any, after subtracting experienced mortality from expected mortality. 

 

Mortality Table.

A table showing the incidence of death at specified ages. It shows the number of persons in each age group that die, expressed in terms of deaths per thousand, and based on the deaths in a population of a million persons. 

 

Mortgage Insurance.

In Life and Health Insurance, a policy covering a mortgagor from which the benefits are intended (1) to pay off the balance due on a mortgage upon the death of the insured, or (2) to meet the payments on a mortgage as they fall due in the case of his death or disability. Also called Mortgage Redemption Insurance. 

 

Mortgage Redemption Insurance.

(1) See Mortgage Insurance. (2) A monthly reducing Term policy used for Mortgage Insurance. 

 

Multiple Indemnity.

A provision that some or all of the benefits under a policy will be increased by a stated multiple, such as 100% or 200%, in the event that a peril occurs in a specified way, e.g., double indemnity on Life Insurance for accidental death. 

 

Multiple Protection Insurance.

A combination of Term and Whole Life Insurance that pays some multiple of the face during the period of the Term policy, becoming a regular Whole Life policy after the Term policy expires. The multiple protection period is thus the period during which both the Term and the Whole Life coverages are in effect. 

N

NALC.

See National Association of Life Companies. 

 

NSLI.

See National Service Life Insurance. 

 

National Association of Life Companies (NALC).

A voluntary association of smaller and newer companies for exchange of information and ideas. 

 

National Association of Life Underwriters (NALU).

An association of Life Insurance agents, the activities of which center on the welfare and education of agents and legislation affecting agents. 

 

National Fraternal Congress of America.

A federation of fraternal benefit societies. 

 

National Service Life Insurance (NSLI).

Life Insurance made available by the federal government for members of the United States armed forces from 1940 to 1951. 

 

Natural Premium.

The pure mortality cost of Life Insurance for one year at any given age. See also Pure Premium. 

 

Net Amount At Risk.

A term which refers to the differences between the face amount of a policy and the reserve or cash value which has been built up under that policy. 

 

Net Increase.

The increase in the total amount of business an insurer has to force over a given period of time. It is figured as the total of new policies issued plus those renewed less policies lapsed and cancelled. 

 

Net Level Premium.

The pure mortality cost of a Life Insurance policy from its inception to its maturity date, divided by the number of years the policy is to be in force. See also Level Premium Insurance. 

 

Net Level Premium Reserve.

The reserve needed by an insurer to cover net level policies which are in their later years. Loosely speaking, the level premium system of paying for a long-term Life or Health policy involves overpayment in the early years and underpayment in the later years. 

 

Net Rate.

(1) See the third definition of Net Premium for the definition applicable to participating Life Insurance policies. (2) In a nonparticipating policy, the rate book rate. 

 

Noncontributory.

A plan or program of insurance, usually group, for which the employer pays the entire premium and the employee contributes no part of the premium. 

 

Nonforfeiture Values.

Those values in a Life Insurance policy that by law the policy owner cannot forfeit even if he ceases to pay the premiums. These benefits are the cash surrender value, the loan value, the paid-up insurance value, and the extended term insurance value. The policy owner may choose one of these nonforfeiture options, but even if he fails to do so, the one specified in the contract for such a case automatically goes into effect. 

 

Nonmedical (Non-Med).

A contract of Life or Health Insurance underwritten on the basis of an insured's statement of his health with no medical examination required. 

 

Numerical Rating.

An underwriting method of determining the extra rate to be charged for a substandard insured. "Standard" is rated 100. Various impairments are assigned various numerical values. The sum of 100 plus the values of the ratings of the impairments indicates the table to use in determining the rate of the policy. 

O

Occupational Hazard.

A condition in an occupation that increases the peril of accident, sickness, or death. (LI,H,WC)

 

Old Line.

A term without a precise meaning but generally applied to nonfraternal insurers operating on a legal reserve basis. The origin of the term is in doubt but it seems to have come into use at the time of the competition between the "new" fraternal insurers and the commercial insurers to indicate the fact that the fraternals were "newcomers." 

 

Open Debit.

A Life and Health Insurance debit (territory) currently without an agent. 

 

Option.

A choice of methods of receiving policy dividends, nonforfeiture values, death benefits, or cash values. 

 

Optional Modes of Settlement.

The different options from which the beneficiary can choose to receive the proceeds from a Life Insurance Policy. 

 

Ordinary Agency.

A Life Insurance agency handling only Ordinary Life. See also Ordinary Life Insurance. 

 

Ordinary Life Policy.

A Whole Life policy for which premiums are paid continuously as long as the insured lives. Same as Straight Life Policy. See also Whole Life Insurance. 

 

Ordinary Register.

The record book in a combination insurer or agency containing data on the ordinary policies in an agent's account. 

 

Ownership.

All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insureds. Ownership may be assigned or transferred by written request of the current owner. 

 

Ownership Provision.

A provision that a policy may be owned by someone other than the insured. 

P

PPO.

See Preferred Provider Organization. 

 

P.S. 58 Charges.

The cost of one-year term insurance used in the calculation of economic benefit for a stockholder under a split dollar plan. 

 

Paid Business.

Insurance for which the application has been signed, the medical examination completed, and the settlement for the premium tendered. 

 

Paid-Up Additions (or "Adds").

See Dividend Additions. 

 

Paid-Up Insurance.

Insurance on which all premiums are paid but which has not yet matured by either death or endowment. An example would be a Limited Payment Life policy for which the premium-paying period is over. 

 

Participant.

An employee or former employee who is eligible to receive benefits from an employee benefit plan or whose beneficiaries may be eligible to receive benefits from the plan. (LI,H,PE)

 

Partnership Insurance.

Life or Health Insurance sold to a partnership, usually for guaranteeing business continuity in case of the death or disability of one of the partners. For instance, two partners might buy Life Insurance on each other so that in the event of one partner's death, the other can use the insurance proceeds to purchase his share of the business from his heirs. 

 

Past Service Benefit.

A term used in Pension or Retirement Insurance policies to refer to credit given an employee for the amount of time the person was employed prior to the effective date of the retirement plan. Example: An insured starts a pension plan on January 1, 1980. It states that all eligible employees will be given credit for their length of service or employment prior to that date. 

 

Pay.

An abbreviation for payment as in "20-Pay Life policy." 

 

Pay-As-You-Go.

See Current Disbursement. 

 

Payor Benefit.

A rider or provision often found in juvenile policies under which premiums are waived if the person paying the premium, usually one of the parents, becomes disabled or dies while the child is still a minor. 

 

Per Capita.

Literally "by heads." Distribution among survivors by persons on a share-and-share-alike basis. The term is often used in beneficiary designations. Contrast with Per Stirpes. 

 

Per Stirpes.

Literally "by branches." Distribution of property between or among two or more beneficiaries with the provision that if one dies before the insured, his heirs shall have his full share distributed among them. Contrast with Per Capita. 

 

Permanent Life Insurance.

A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as endowments and Whole or Ordinary Life policies. 

 

Persistency.

The staying quality of insurance policies, i.e., the renewal quality. High persistency means that a high percentage of policies stay in force to the end of the period coverage, while low persistency means that a high percentage of policies lapse for nonpayment of premiums. 

 

Policy Fee.

(1) A one-time charge added to the first premium to help defray acquisition costs, now illegal in many states. (2) A flat, per policy charge that does not change with the size of the policy and thus serves as a form of quantity discount. Various insurers call it by other names, such as quantity discount factor and quantity adjustment fee. 

 

Policy Loan.

A loan made by an insurer to a policy owner of a part or all of the cash value of the policy assigned as security for the loan. This is one of the usual nonforfeiture values. 

 

Policy Proceeds.

 

The amount actually paid on a life insurance policy at death or when the insured receives payment at surrender or maturity. It includes any dividends left on deposit and the value of any additional insurance purchased with dividends; and it excludes any loans not repaid, plus unpaid interest on those loans. 

 

Policy Reserve.

A reserve which exists because of the concept that each policy has a pro rata share of the total reserve established for all policies. 

 

Postdated Check Plan.

A premium-paying arrangement under which the policy owner gives the insured a series of checks, each dated ahead of the date on which premiums fall due for a year or more. The insurer then presents each check on its date. 

 

Preauthorization Check Plan.

A premium-paying arrangement by which the policy owner authorizes the insurer to draft money from his or her bank account for the payments. This is usually done on a monthly basis. 

 

Preferred Provider Organization (PPO).

An organization of hospitals and physicans who provide, for a set fee, services to insurance company clients. These providers are listed as preferred and the insured may select from any number of hospitals and physicians without being limited as with an HMO. Coverage is 100%, with a minimal copayment for each office visit or hospital stay. Contrast with Health Maintenance Organization. 

 

Preliminary Term.

A reserve system in Life Insurance under which the entire first-year premium is used for clean and acquisition costs. The effect is to reduce the first year's premium, making it more attractive to the prospective buyer. 

 

Premium Load.

A Universal Life term, also called a "front-end load," meaning the percentage of premium deducted from each premium payment to help cover expenses. Some policies provide for a "no load" feature. 

 

Premium Receipt Book.

The policy owner's record of premium paid, usually used for a Weekly Payment or Monthly Debit Ordinary policy. 

 

Premium Refund.

A special provision which allows a beneficiary to collect the face amount of a policy plus all the premiums that have been paid. 

 

Primary Beneficiary.

The beneficiary named as first to receive proceeds or benefits from a policy when they become due. 

 

Principal Sum.

The amount payable in one sum in the event of accidental death or certain accidental dismemberments. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof. Examples would be half the principal sum for loss of one arm, half the principal sum for the loss of one leg, etc. 

 

Proceeds.

The amount payable by a policy, usually in reference to the face amount of a Life Insurance policy, payable at the death of the insured. 

 

Prospective Reserve.

A Life or Health Insurance reserve which it is estimated will be sufficient to pay future claims when probable future premiums, interest, and survivorship benefits are added to it. 

 

Pure Endowment.

An endowment payable if the designated person is alive at the end of the endowment period but not payable if the person is not alive at that time. This type of policy is not often used today. 

 

Pure Mortality Cost.

See Mortality Cost. 

Q

"Q" Schedule.

A schedule of the business expenses of a Life insurer required by the New York State Code to be filed to determine compliance with the state's limitation on total expenses. This limitation has the effect of setting a ceiling on commissions. 

 

Quadruple Indemnity.

A multiple indemnity form similar to double indemnity and triple indemnity. See also Multiple Indemnity. 

 

Quantity Discount.

A premium discount given for the purchase of a policy with a larger face amount. See also Policy Fee. 

R

Rated.

Coverages issued at a higher rate than standard because of impairment of the insured. Usually used as an adjective in such expressions as "rated risk," "rated policy," and "rated up." 

 

Rated Up.

See Rated. 

 

Readjustment Income.

(1) The income needed after the death or disability of a wage earner to allow the family time to adjust to a new, lower standard of spending. (2) The insurance coverage that provides readjustment income. 

 

Recurrent Disability.

Disability resulting from the same or a related cause as a prior disability. 

 

Reduced Paid-Up Insurance.

A form of insurance available as a nonforfeiture option. It provides that the cash value of the policy be used as a single premium to purchase paid-up insurance in whatever amount the cash value will provide, which will be less than the original face amount in most cases. See also Nonforfeiture values. 

 

Register.

A record of all policies charged to a debit account. 

 

Renewable Term.

Term Insurance that may be renewed for another term without evidence of insurability. 

 

Renewal.

The automatic reestablishment of in-force status effected by the payment of another premium. 

 

Retirement Annuity.

A form of annuity contract that is entered into before a selected retirement age with the consideration paid in installments until that age is reached. It is a form of deferred annuity. 

 

Retirement Income Policy.

An adaptation of an endowment at a selected retirement age in which the annuity benefit is a percentage of the face amount of Life Insurance in force prior to retirement age, usually 10%; e.g., for each $1000 of insurance a $10 per month annuity installment is payable. Under this type of policy, the cash value will exceed the face amount in the later policy years, and if death occurs before the selected retirement age, the death benefit would be the face amount or the cash value, whichever is greater. 

 

Retroactive Conversion.

The conversion of a Term Life Insurance policy to a Cash Value form as of the original date of issue of the Term policy, rather than as of the time the conversion is made. In other words, the Cash Value policy will have already attained the age of the former Term policy. 

 

Return of Cash Value.

A provision or rider on a Life Insurance policy that states that if death occurs during a certain period of years (often 20), the policy will pay an amount, in addition to the face amount, that is equal to the cash value of the policy as of the date of death.This is really a form of Increasing Term Insurance and is used as a sales tool. 

 

Return of Premium.

A rider on a Life Insurance policy providing that, in the event of the death of the insured within a specified period of time, the policy will pay, in addition to the face amount, an amount equal to the sum of all premiums paid to date. This is a form of Increasing Term Insurance and is used as a sales tool. 

 

Revocable Beneficiary.

The beneficiary in a Life Insurance policy in which the owner reserves the right to revoke or change the beneficiary. 

 

Risk Appraiser.

An employee of a Life insurer who screens the applications submitted. He may accept an applicant, reject him, or propose an alternative policy or premium. 

 

Risk Premium Insurance.

See Yearly Renewable Term. 

S

SEGLI.

Service Employees Group Life Insurance, which is issued to members of the armed forces while they are in the service. After separation it is convertible to individual policies from certain private insurers. 

 

Salary Savings Insurance (Deductions or Allotment).

Insurance issued to an individual employee whose employer agrees to deduct the premiums from his paychecks and submit them to the insurer. 

 

Sales Representatives.

See Special Agent. 

 

Savings Bank Life Insurance.

Life Insurance sold by mutual savings banks. Allowed only in a few states, such as New York, Connecticut, and Massachusetts. 

 

Schedule "Q."

See "Q" Schedule. 

 

Scheduled Premium Variable Life Insurance.

A whole life policy which features a fixed, level premium and a minimum guaranteed face amount. The performance of the policy is dependent on the separate account. 

 

Secondary Beneficiary.

The second person named to receive benefits upon the death of an insured if the first-named beneficiary is not alive or does not collect all the benefits before his or her own death. See also Contingent Beneficiary. 

 

Self-Funded Plan.

Plan of insurance where an employer, which has fairly predictable claim costs, pays the claims rather than an insurance company. See also Administrative Services Only. 

 

Settlement Options.

The various methods for the payment of the proceeds or values of a Life Insurance policy that may be selected in lieu of a lump sum. 

 

Single Premium Policy.

A Life Insurance policy paid for in one single premium in advance rather than in annual premiums over a period of time. 

 

Society of Actuaries (SA).

An association of actuaries organized in 1948 as the successor to the Actuarial Society of America and the American Institute of Actuaries. It grants the designation Associate of the Society of Actuaries upon completion of five examinations and Fellow of the Society of Actuaries upon the completion of five additional examinations. 

 

Sole Proprietorship Insurance.

Life and Health Insurance that handles the business continuity problems peculiar to a sole proprietorship. Such insurance, for instance, could be used to enable the heirs of the sole proprietor to bring the value of the business back to the level where it was prior to the death of the owner. 

 

Spendthrift Clause.

A clause in most Life Insurance policies which prevents the creditors of a beneficiary from claiming any of the benefits payable to him before he actually receives the money. The purpose of this clause is to keep those to whom he is in debt from taking legal action to require the insurer to pay the proceeds directly to them. 

 

Split Dollar Coverage.

An arrangement under which an employer pays that part of the premium that equals the annual increase in the cash value of a policy, while the employee pays the rest. Under assignment upon the death of the employee, the employer recovers the total of its payments from the proceeds of the policy, with the remainder going to the employee's beneficiary. 

 

Split Dollar Plan.

A method of purchasing life insurance whereby the employer and employee jointly purchase the policy, pay premiums and share in the policy's benefits. 

 

Split Life Insurance.

A combination of Installment Annuity and Term Insurance under which the amount of annuity consideration (premium) paid determines the amount of one-year renewable Term Insurance an annuitant can purchase and place on the life of anyone designated. 

 

Standard Provisions.

(1) Provisions prescribed by state law that must appear in all policies issued in that jurisdiction. (2) Provisions adopted by the NAIC to apply to group Life Insurance as minimum protection. They are required by law in most states. (3) Formerly, a set of prescribed provisions regulating the operating conditions of a Health Insurance policy required by law in most jurisdictions between about 1912 and 1950. They are now superseded by uniform provisions for Individual Accident and Health Insurance policies which contain an NAIC model bill. These have been enacted in virtually all jurisdictions. 

 

Standard Risk.

A risk that is on a par with those on which the rate has been based in the areas of health, physical condition, and morals. An average risk, not subject to rate loadings or restrictions because of poor health. 

 

Statement of Policy Information.

For Universal Life policies, this document is prepared at the end of each year giving complete information on all transactions affecting the policy, such as premium paid, current death benefit, interest credited, loans outstanding, monthly charges, and cash surrender value. 

 

Step-rate Premium.

Premium is increased at times specified in the policy, based on a predetermined attained age, or number of policy years in force. 

 

Straight Life Policy.

See Ordinary Life Policy. 

 

Substandard Risk.

See Impaired Risk. 

 

Supplemental Contract.

A rider usually relating to the method of settlement of the proceeds of a Life Insurance policy. 

 

Surrender.

To give up a Whole Life policy. The insurer pays the insured the cash value which the policy has built up if it is surrendered. 

 

Surrender Value.

See Cash Surrender Value. 

 

Survivorship Annuity.

See Reversionary Annuity. 

 

Survivorship Benefits.

Funds available to pay an annuitant who survives longer than statistically expected from premiums paid by annuitants who died before they had collected amounts equal to their contributions. 

T

TPA.

See Third Party Administrator. 

 

Tax Sheltered Annuity.

An annuity program under which contributions reduce the taxable income of participating employees, and the benefits are not taxable until distributed. 

 

Teachers Insurance and Annuity Association.

An organization selling Life and Health Insurance and annuities to college and university staff members. 

 

Term Insurance.

The type of Life Insurance policy that provides protection only for a specified period of time. A common policy period would be one year, five years, 10 years, or until the insured reaches age 65 or 70. It does not build up any of the nonforfeiture values associated with Whole Life policies. Contrast with Whole Life Insurance. 

 

Termination.

The cessation of premium paying for a Whole Life or Endowment policy before the agreed upon time. This ends the coverage, and the insured receives one of the nonforfeiture values. The cessation of a policy that does not or has not yet developed a cash value is termed a "lapse." 

 

Thaisoi.

An ancient Greek benevolent society which was a step in the evolution of Life and Health Insurance. 

 

Third Party Administrator (TPA).

A firm which provides administrative services for employers and other associations having group insurance policies. The TPA in addition to being the liaison between the employer and the insurer is also involved with certifying eligibility, preparing reports required by the state and processing claims. TPA's are being used more and more with the increase in employer self-funded plans. 

 

Tontine Policy.

A kind of policy that came into use after the Civil War. It was a high premium contract that paid dividends to those participants who were still living at the end of a stated period, at the expense of those who had died or let their policies lapse. It is almost the opposite of insurance and is no longer allowed by law. 

 

Triple Indemnity.

See Multiple Indemnity. 

 

Triple Protection.

A form of Life Insurance that is usually a combination of Whole Life and twice as much Term Insurance. The Term portion applies until a stated date. Such a policy might be used to provide maximum protection to an individual at an earlier age when the need for insurance is greater but the ability to pay is less. 

 

True Group Insurance.

Group insurance issued under a master contract with certificates of insurance that are not policy contracts issued to persons included in the group. This would be in contrast to Franchise or Wholesale "Group" Insurance, under which a covered person is issued an individual policy contract. 

 

Trust Agreement.

(1) A supplemental agreement attached to and made a part of a Life Insurance policy setting forth the manner in which the proceeds are to be paid, in lieu of having them paid in a lump sum or under one of the other installment settlement options in the policy itself. (2) An agreement or instrument under which a corpus (fund/property) is given over to the management of the trustee named in a trust instrument for the benefit of the beneficiaries of the trust. (3) A written agreement between two parties _ the employer and the trustee _ setting forth the provisions of a pension plan. (LI,PE)

U

USGLI.

See United States Government Life Insurance. 

 

Ultimate Mortality Table.

A mortality table based on mortality experience from which the first few policy years after issue (usually five) have been excluded to eliminate the effect of possible adverse selection. 

 

Uniform Premium.

A rating system that is used to calculate premiums for all insureds with no distinctions as to age, sex or occupation. 

 

Uniform Provisions.

A set of provisions required by state law in Life Insurance policies. The actual wording of the provisions can vary, but the intent must be the same as the wording of the uniform provisions. 

 

United States Government Life Insurance (USGLI).

A form of Life Insurance issued to members of the armed forces during World War I until about the end of World War II. 

 

Universal Life.

A combination flexible premium, adjustable life insurance policy. The premium payer may select the amount of premium he or she can pay and the policy benefits are those which the premium will purchase. Or, the premium payer may change the amount of insurance and pay premium accordingly. Many believe this is the only true solution to the "buy term invest the difference" problem. 

 

Unscheduled Premium Payments.

In Universal Life insurance, the policyowner can pay extra premiums in addition to the scheduled premium payment amount. These payments can be made at any time, but are subject to a minimum amount. 

V

Valuation.

Calculation of the policy reserve in Life Insurance. 

 

Values.

Used in Life Insurance terminology as a shortened term for nonforfeiture values. See Nonforfeiture Values. 

 

Variable Contracts.

Contracts such as variable annuities or variable life insurance which contain an element of risk for the investor depending on the performance of the separate account backing the contract. Generally, these contracts are products of insurers but regulated by both state insurance departments and the federal government. 

 

Variable Life Insurance.

A form whose face value varies depending upon the value of the dollar or securities or other equity products at the time payment is due. 

 

Variable Universal Life.

A combination of the features of Variable Life Insurance and Universal Life Insurance under the same contract. Benefits are variable based on the value of equity investments, and premiums and benefits are adjustable at the option of the policyholder. 

 

Vesting.

The attainment of a benefit right by a participant, attributable to employer contributions, that is not contingent upon a participant's continuation in specified employment. See also Contingent Vesting, Deferred Vesting, and Immediate Vesting. 

W

WLRT.

See Women Leaders Round Table. 

 

Waiver of Premium.

A provision of a Life Insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled. 

 

War Clause.

A provision excluding liability of an insurer if a loss is caused by war. 

 

Weekly Premium Insurance.

(1) A policy the premium on which is collected weekly by an agent calling at the door. It is usually sold in small face amounts. (2) A form of Debit or Industrial Life Insurance. See also Industrial Life Insurance. 

 

Whole Life Insurance.

Insurance which may be kept in force for a person's whole life and which pays a benefit upon his death, whenever that may be. All Whole Life policies build up nonforfeiture values, but they are paid for in 3 different ways. Under a Straight or Ordinary Life policy, premiums are paid for as long as the insured lives. A single premium policy is paid for at one time in one premium. Between these two types there are many limited-payment plans, under which the insured pays premiums for a certain period or until reaching a certain age. Contrast with Term Insurance. 

 

Wholesale Group Insurance.

See Franchise Insurance. 

 

Wisconsin Life Fund.

The system of state underwritten and issued Life Insurance established by the state of Wisconsin and providing Life Insurance for citizens who apply. Wisconsin is unique among the 50 states in this respect. 

 

Women Leaders Round Table (WLRT).

An association of women Life Insurance agents who produce the volume of business required by the organization for membership. It is sponsored by the National Association of Life Underwriters. 

 

Written Business.

Insurance on which an application has been taken out but which is not yet delivered and/or the first premium settled. 

X

Y

YRT.

See Yearly Renewable Term. 

 

Yearly (or Annual) Renewable Term (YRT).

(1) Term Life Insurance that may be renewed annually without evidence of insurability until some stated age. (2) A form of Life, and sometimes Health, Reinsurance in which the reinsurer assumes only the mortality risk, which is usually calculated as the face amount of reinsurance minus the terminal reserve. 

 

Years Certain Annuity.

See Annuity Certain. 

Z

Z Table.

A mortality table showing ultimate experience on insured lives computed from the experienced mortality on Life policies issued by major companies from 1925 to 1934. The Z Table was a step in the development of the Commissioners' Standard Ordinary (CSO) Table of Mortality.