Glossary

Rated Policy

Is an insurance policy issued at a higher than standard rate of premium due to concerns over a health impairment or a potentially dangerous occupation, or hobby. Also known as an Extra-Risk Policy.

See Extra Risk.

Is a form of insurance available as a Non-Forfeiture Option providing for continuation of the original insurance plan, the cash value of which can be used to purchase Paid-Up Insurance but at a reduced amount.

Is an excess credit option that enables a client to use excess credit to pay a portion of the required premium rather than purchasing Paid-Up Additions in a whole life policy.

Is the restoration of a lapsed insurance policy. The life insurance company will require evidence of insurability and payment of the past-due premiums including interest.

Is the transference of some or all of an insurance risk to a reinsurer. The company transferring the risk is known as the Ceding Company; the company receiving the risk is known as the Assuming Company or the Reinsurer.

Reinsure

Is to transfer the risk of potential loss, in return for a financial consideration, from one insurer to another insurer or reinsurer.

Reinsurer

Is a company which insures the insurance risks of other insurance or reinsurance companies, which are known as Ceding Companies.

Is Term Insurance that can be renewed at the end of the policy term at the policyholder’s option without having to provide evidence of insurability. This can occur for a limited number of successive terms but rates typically increase at each renewal as the insured ages.

Is a life policy clause that imposes a mandatory level of premium that must be paid and for how long (typically the first five years) to guarantee that a policy will stay in-force.

Is the amount required to be carried as a liability on an insurer’s balance sheet, to provide for future payment of incurred claims and any other commitments under outstanding policies.

See Unilateral Capacity Limit.

Is to contractually transfer insurance risk exposure from one reinsurer to another reinsurer, typically for a financial consideration. See Reinsure.

Is a reinsurer that contractually accepts from another reinsurer a portion of the Ceding Company’s insurance risk exposure. This transaction is known as a retrocession.

Is a benefit that provides the return of all premiums paid over the life of a policy, after the deduction of any claims paid, should the policyholder die while the policy and the ROP Death Benefit Option are still in-force.

Is a form of term life insurance policy that returns all the premiums paid for coverage, should an insured outlive the policy's term.

Is a program that assists individuals with limited activity issues to return to work as soon as possible. Assistance may involve optimizing medical improvement to reduce the effect of the limitations or facilitating job or job-site accommodations such as retraining.

Is an additional adjustment option contained in an insurance policy that expands or restricts a policy’s benefits. It can exclude certain conditions from coverage, as well as introducing new ones. See Accelerated Death Benefit and Accidental Death Benefit.

See Free Look.

Is the process by which a company determines its range of premium rates for life insurance according to the risk characteristics of the individuals insured. Considerations include age, occupation, gender and health status. The resulting rules are applied to individual applications.

Is a method developed by the National Association of Insurance Commissioners (NAIC) to measure the minimum amount of capital that an insurance company requires to support its overall business operations. RBC sets capital requirements that consider the size and degree of risk taken by the insurer. Simply put, it requires an insurance company with a higher amount of risk to hold a higher amount of capital relative to its income.

Is an individual retirement account (IRA) in which earnings on contributions are not taxed at distribution. This is on the condition that the contributions have been in the account for five years, and that the account holder is at least age 59½, or disabled, or deceased.