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Absolute assignment: An irrevocable transfer of complete ownership of a life insurance policy from one party to another.
Accident perils
Accidental death and dismemberment (AD&D) Rider: A supplementary benefit rider or endorsement that provides for an amount of money in addition to the basic death benefit of a life insurance policy. This Additional amount is payable only if the insured dies or loses any two limbs or the sight of both eyes as the result of an accident. Some AD&D riders pay one half of the benefit amount if the insured loses one limb or the sight in one eye.
Accidental death benefit (ADB) rider: A supplementary benefit rider or endorsement that provides for an amount of money in addition to the basic death benefit of a life insurance policy. This additional amount is payable only if the insured dies as the result of an accident.
ACCIDENTAL DEATH RESERVE (Table: PLAN_VALUES): Enter the Accidental Death reserve factor per thousand for this age and duration.
Accidental means provision: A life insurance policy accidental death benefit provision which states that an accidental death benefit will be payable if the insured's death was the result, directly and independently of all other causes, of bodily injury caused solely by external, violent, and accidental means.
Accidental result provision: A life insurance policy accidental death benefit provision which states that an accidental death benefit will be payable if the insured's death was the result, directly and independently of all other causes, of accidental bodily injury.
ACCOUNT NUMBER (Table: GENACCTRN): Enter either the general ledger account number or the PSEUDO for the required account. If a PSEUDO code is entered the system will supply the account number defined for this company.
Accrued benefit: In a defined benefit pension plan, the amount of pension benefit which has accumulated in a pension plan on behalf of an Individual plan participant at any particular time.
ACCUM UNITS BID (Table: VALUATION_PRICES): This is the bid price in minor units of currency for accumulation units for this fund.
ACCUM UNITS OFFER (Table: VALUATION_PRICES): This is the offer price in minor units of currency for accumulation units for this fund.
Accumulated cost of insurance: A factor used in the calculation of life insurance reserves. For a given group of insured, the accumulated cost of insurance equals the net single premium that would have to be paid at the end of the term of coverage by the surviving insured to provide death benefits on the insured who died during the term.
Accumulated funding deficiency: In the United States, the amount by which a qualified pension plan fails to meet the minimum funding standards set by law. Plans with an accumulated funding deficiency are subject to a penalty tax and enforcement provisions. Sometimes simply called a funding deficiency.
Accumulated value: An amount of money invested plus the interest earned on that money.
Accumulation at interest option: A life insurance policy dividend option under which policy dividends are left on deposit with the insurer to accumulate at interest. Also called the accumulation option.
Accumulation period: The period during which premiums are payable on a deferred annuity.
Accumulation units: The term used to identify ownership shares in a variable annuity's separate-account fund. When a person pays premiums for a variable annuity, those premiums are credited to the purchaser's account as a certain number of accumulation units. After the accumulation period ends, the accumulation units are used to buy annuity units. See also annuity units.
Acquisition expenses: See policy acquisition costs.
ACQUISITION PREMIUM (Table: PLAN_VALUES): Enter the Acquisition net annual premium per thousand for this age and duration.
Actively-at-work provision: A provision found in many group insurance contracts which specifies that, if an employee is absent from work because of sickness, injury, or certain other specified reasons, on the day the employee's coverage under the contract is due to begin, then coverage will not begin until the day the employee returns to work.
Actuarial assumptions: (1) The mortality, morbidity, interest, expense, and other forecasts used to calculate premium rates and reserves. (2) In pension planning, the assumptions that actuaries make in the areas of investment earnings, mortality, plan expenses, salary levels, and employee turnover. These assumptions affect the amount of the annual contribution that is necessary to adequately fund a defined benefit pension plan.
Actuarial cost method: For a defined benefit pension plan, a method of calculating the annual amount a plan sponsor must contribute to fund a given set of plan benefits for a particular group of participants.
Actuarial department: The department in a life and health insurance company responsible for seeing that the company's operations are conducted on a mathematically sound basis. In conjunction with other departments, it designs and revises a company's life and health insurance products. The actuarial department calculates premium and dividend rates, determines what a company's reserve liabilities should be, and establishes nonforfeiture, surrender, and loan values. It also does the research needed to predict mortality and morbidity rates, to establish guidelines for selecting risks, and to determine the profitability of the company's products.
ACTUARIAL FUNDING (ACCUMULATION UNITS) (Table: PLAN_VALUES): Enter the Actuarial Funding factor for accumulation units.
ACTUARIAL FUNDING (INITIAL UNITS) (Table: PLAN_VALUES): Enter the Actuarial Funding factor for initial units.
Actuarial valuation: A determination by an actuary of the value of a pension plan's assets and its liabilities. The valuation, which is based on statistical probability, is used to determine if the assets are adequate to fund the plan's liabilities. If the value of the assets is not adequate, the plan sponsor must increase its contributions to make up the deficiency; if the assets are more than adequate, the plan sponsor can reduce contributions. Also called plan valuation.
Actuary: A technical expert in life insurance, particularly in mathematics. A person in this job applies the theory of probability to calculate mortality rates, morbidity rates, lapse rates, premium rates, policy reserves, and other values.
ADB PREMIUM (Table: PLAN_VALUES): Enter the Accidental Death Benefit net annual premium per thousand for this age and duration.
ADD PREMIUM (Table: PLAN_VALUES): Enter the Accidental Death and Disability Benefit net annual premium per thousand for this age and duration.
Additional term insurance option: A life insurance policy dividend option under which policy dividends are used as a net single premium to purchase one-year term insurance. Also called the additional insurance option or the fifth dividend option.
ADDRESS (Table: BANK_DETAILS): Bank address - can be several lines.
Adjustable life insurance policy: A life insurance contract designed specifically to allow the policy owner to alter the policy's plan by changing the amount of the coverage or the amount of the premium. The insurer calculates the specific plan of insurance that can be provided based on the requested death benefit and premium. Therefore, an adjustable life insurance policy can use insurance plans that range from a term insurance policy of short duration to a limited-payment whole life insurance policy.
Administrative services only (ASO): An arrangement whereby an organization (usually an employer) hires an outside firm to perform specific administrative services, usually including claim administration, for a group health insurance program. The organization retains financial responsibility for paying claims. See also self-insured group insurance and third-party administrator (TPA).
Admitted reinsurer: In the United States, a reinsurer which is licensed to accept reinsurance in a given jurisdiction. Also called an authorized reinsurer. Contrast to nonadmitted reinsurer.
Advance funding: A procedure in which a pension plan sponsor deposits amounts of money in a fund during the working years of plan participants to guarantee payment of pension benefits to the plan participants when they retire.
Advanced underwriting department: An insurance company home office department responsible for providing technical and sales assistance to agents involved in estate planning and business insurance cases. Also known as the estate planning department.
Adverse selection: See antiselection.
Age Discrimination in Employment Act of 1967 (ADEA): United States legislation that protects employment rights of individuals age 40 and over. ADEA prohibits age-based firings and generally prevents employers from forcing employees to retire at age 65. In relation to pension plans, ADEA prohibits employers from discontinuing contributions or benefit accruals to an individual's pension plan after that person reaches age 65.
Age of majority: The age at which a person has the legal capacity to enter into and be bound by a contract.
Agency: The legal relationship between an agent and a principal. See agency relationship.
Agency agreement: An agreement between a principal and an agent that describes the scope of the agent's actual authority. See agent and principal.
Agency bank: A mutual savings bank that does not sell its own savings bank life insurance policies to the public but, instead, sells such policies as an agent for an issuing bank. An agency bank only accepts applications, collects premiums, and provides service for its policy owners. See also issuing bank and savings bank life insurance (SBLI).
Agency by appointment: An agency relationship that is created when a principal appoints an agent to act on the principal's behalf. See agency relationship. Contrast with agency by ratification.
Agency by ratification: An agency relationship that is created when the principal ratifies a purported agent's unauthorized act. See agency relationship. Contrast with agency by appointment.
Agency relationship: In law, the relationship between two parties by which one party, the agent, is authorized to perform certain acts on behalf of the other party, the principal.
Agency system: A distribution system in which insurance companies use their own commissioned agents to sell and deliver insurance policies. The agency system is the most common system for distributing individual life insurance products and includes the branch office distribution system and the general agency distribution system. Also called the ordinary agency system. See also branch office distribution system, brokerage distribution system, and general agency distribution system.
Agent: A party who is authorized by another party, the principal, to act on the principal's behalf in contractual dealings with third parties. Called a mandatory in Quebec. See also insurance agent.
AGENT (Table: GENACCTRN): This field contains the agent to whom the accounting entry applies. During entry of cash disbursements and journal vouchers, if the account is for agent balances (input pseudo AGBAL) then an agent must be input and a commission entry transaction record will be generated.
AGENT COMMISSION (Table: GENACCTRN): This holds a user-input identifier indicating whether the entered agent details relate to writing, override or consultant commission. This can only be input during journal voucher or cash disbursement entry.
AGENT NUMBER (Table: GRP_POL): These are the agent code(s) that will be paid commission from this policy, held at the PTR / coverage level.
Agent of record: The agent or broker who is recognized by the insurer as the person to whom the commission is to be paid.
AGENT PERCENT SPLIT (Table: GRP_POL): This is the percentage split of commission for the associated writing agent(s), held at the PTR / coverage level.
AGENT REASON (Table: GENACCTRN): This is used when the entry is generated via policy accounting. It is set to the input reason code for the GL account entrey for the agent's details.
Agent's statement: The portion of the insurance application in which the agent reports anything he or she knows or suspects about the proposed insured that is not reported by the applicant or proposed insured.
Agent-brokers: Career agents who place business with companies other than their primary companies. Also known as agents of other companies, surplus brokers, or simply brokers.
Agent-owned reinsurance company (AORC): A captive reinsurance company formed by an insurance company and owned by a group of the company's agents. The company insures all business written by those agents with the captive so that the agents can share in the profits of their own labor.
AGE_LIMITS (Table: UWRREQ_TABLE): Enter in the age limits for the product being underwritten. The age entered should represent the high end of a band (i.e 0-25 would be 25). This age will represent the row headings on the requirement matrix. To complete the high end of the age limits, enter in a large age such as 999.
Aggregate funding methods: Pension plan funding methods in which the amount of contributions necessary to fund a plan is determined in the aggregate for all plan participants, rather than separately for each individual plan participant. Contrast with individual funding methods.
Aggregate mortality table: A mortality table based on the experience of all insured lives, including mortality rates both during and after the select period. The mortality rates of an aggregate mortality table fall between those of the select and the ultimate mortality tables. See also mortality tables, select mortality table, select period, and ultimate mortality table.
Aleatory contract: A contract under which one party provides something of value to another party in exchange for a conditional promise, which is a promise that the other party will perform a stated act if a specified, uncertain event occurs. Insurance contracts are aleatory because the policy owner pays premiums to the insurer, and in return the insurer promises to pay benefits if the event insured against occurs.
Alien corporation: In the United States, a company that is incorporated under the laws of another country. Compare to domestic corporation and foreign corporation.
Alienation of benefits: In pension planning, the assignment of a plan participant's benefits to an individual other than the participant. In the United States, ERISA generally prohibits the alienation of benefits, although exceptions to this rule include the use of a participant's vested benefit as collateral for a loan. The ERISA prohibition on alienation of benefits prevents creditors from attaching an individual's pension benefits.
All-causes deductible: In health insurance, a deductible which need only be satisfied once during a given period of time. If the period of time is a calendar year, as it usually is, then this type of deductible is known as a calendar year deductible. Contrast with per-cause deductible.
Allocated funding: A method of funding a pension plan in which a portion of the total plan funds is allocated to each participant. This type of funding is often achieved through the purchase of annuities or insurance contracts for each participant. Contrast with unallocated funding.
ALLOCATION FACTOR (Table: PLAN_VALUES): This factor is used in conjunction with ALLOCATION.BREAK.PERCENT and ALLOCATION.MONTHLY.SETBACK to determine the amount of gross modal premium to be allocated to units.
AMENDED BY (Table: VALUATION_PRICES): The User who last Amended the details.
AMENDED DATE (Table: VALUATION_PRICES): The date that the details were last amended.
AMENDED TIME (Table: VALUATION_PRICES): The time that the details were Last Amended.
American Council of Life Insurance (ACLI): In the United States, an organization which collects and disseminates data on life insurance markets.
AMOUNT (Table: BANK_TRANSACTIONS_DONE): Bank transaction amount
AMOUNT (Table: GENACCTRN): Journal Voucher Screen -This field contains the amount of the entry to the account a (+) entry is a debit, a (-) entry is a credit.
AMOUNT TYPE (Table: GENACCTRN): This is set for entries generated via policy accounting. It indicated the type of amount that was input: 1 - cash 2 - premium 3 - fund 4 - loan 5 - suspense 6 - specific GL account entry 7 - dividend
ANALYSIS CD 1 (Table: NLACCT): This field contains Analysis Code 1. Each code can be upto 5 characters long.
ANALYSIS CD 2 (Table: NLACCT): This field contains Analysis Code 2. Each code can be upto 5 characters long.
ANALYSIS CD 3 (Table: NLACCT): This field contains Analysis Code 3. Each code can be upto 5 characters long.
ANALYSIS CD 4 (Table: NLACCT): This field contains Analysis Code 4. Each code can be upto 5 characters long.
ANALYSIS CD 5 (Table: NLACCT): This field contains Analysis Code 5. Each code can be upto 5 characters long.
Annual Information Return: In Canada, a report containing financial and other information that pension plans must file annually with the appropriate provincial or federal government.
Annual Report Form 5500: In the United States, a detailed report of membership and financial information pertaining to the operation of a pension plan. This report must be filed annually with the Internal Revenue Service.
Annual Statement: An accounting report that insurers must file each year with the appropriate regulatory agency. This report contains detailed accounting and statistical data that regulators use to evaluate a life and health insurance company's solvency and its compliance with insurance laws.
Annually renewable term (ART) insurance: See yearly renewable term (YRT) insurance.
Annuitant: (1) The person designated to receive annuity payments. (2) The person whose lifetime is used as the measuring period to determine how long benefits are payable under a life annuity.
Annuity: (1) A series of payments made or received at regular intervals. (2) A contract that provides for a series of payments to be made or received at regular intervals. There are many kinds of annuities. For the annuities identified in this glossary, see annuity certain, annuity due, annuity immediate, deferred annuity, deferred life annuity, disabled life annuity, flexible premium annuity, group deferred annuity, immediate annuity, joint and survivor annuity, level premium annuity, life annuity, life annuity with period certain, refund annuity, single premium annuity, single premium deferred annuity (SPDA), straight life annuity, temporary life annuity, temporary life annuity due, variable annuity, whole life annuity, and whole life annuity due.
Annuity certain: An annuity that provides a benefit amount payable for a specified period of time regardless of whether the annuitant lives or dies.
Annuity due: A series of payments in which the payments are made at the beginning of each interval of time.
Annuity immediate: A series of payments in which the payments are made at the end of each interval of time.
Annuity mortality table: A tabulation of probabilities of dying at each age. Used by actuaries to calculate premiums and reserves for annuities in which benefits are paid only if a designated person is alive. Annuity mortality tables usually project lower rates of mortality than do mortality tables that are used for life insurance. See also mortality tables.
Annuity period: The time between each benefit payment made under an annuity contract.
Annuity units: The term used for ownership shares in a variable annuity's separate-account fund after the accumulation period has ended. Annuity units are bought with accumulation units and are used to determine benefit payment amounts. See also accumulation units.
Antiselection: The tendency of people with a greater-than-average likelihood of loss to apply for or continue insurance to a greater extent than do other people. Also called adverse selection or selection against the insurer.
Apparent authority: Authority that is not expressly conferred on an agent but that the principal either intentionally or negligently allows a third party to believe the agent possesses. See agent and principal. Compare to express authority and implied authority.
Applicant: The party applying for an insurance policy.
Application: A form that must be completed by an individual or other party who is seeking insurance coverage. This form provides the insurance company with much of the information it will need to decide whether to accept or reject the risk.
APPLICATION DATE (Table: GRP_POL): The application date for the policy.
Approval type temporary insurance agreement: An agreement issued in conjunction with a conditional premium receipt that provides temporary life insurance coverage as of the date the insurer approves the proposed insured as a standard risk. See also conditional premium receipt and temporary insurance agreements. Compare to insurability type temporary insurance agreement.
AREA CODE (Table: BANK_DETAILS): Area code of the bank.
Assessment method: An early method of funding life insurance under which members of the plan were charged in advance for the amount of money that the administrators estimated would be needed to pay each year's death claims. Also called the pre-death assessment method. See also mutual benefit method.
Asset share: The amount of assets that any block of insurance policies will have accumulated by a given time.
Asset share calculation: A computation that simulates the way in which the assets of a block of policies should grow, depending on various assumptions about future interest rates, mortality, morbidity, expenses, lapses, etc.
Asset-liability matching: The process of investing, purchasing, selling, and otherwise adjusting an insurance company's asset holdings so that cash is available when it is needed to cover the company's liabilities.
Assets: All things of value owned by an individual or organization. Examples of assets include cash, data processing equipment, and investments. Assets are shown on the balance sheet of a life insurance company's Annual Statement as required by law or by insurance department ruling.
Assignee: The party to whom all or certain contractual rights are transferred under an absolute or collateral assignment.
Assignment: (1) The transfer of ownership rights in a life insurance policy or other type of contract from one party to another. (2) The document that causes the transfer of ownership rights to go into effect. See also absolute assignment and collateral assignment.
Assignment of benefits: An authorization directing an insurer to make payment directly to a provider of benefits, such as a physician or dentist, rather than to the insured.
Assignor: The person or party who transfers certain contractual rights under an absolute or collateral assignment.
Association group insurance: Group insurance extended to the members of a trade, professional, or other association.
Assumption reinsurance: A reinsurance agreement by which one company permanently transfers full responsibility for a block of policies to another company. After the cession, the ceding company is no longer a party to the insurance agreement.
Attained age: The current age of the insured. The age of the insured at the time the insured's policy was issued plus the number of years elapsed since the policy was issued.
Attained age conversion: The changing of a life insurance policy from one form of insurance to another (such as from term life insurance to whole life insurance) at a premium rate that is based on the age the insured person has reached at the time the change takes place.
Attending Physician's Statement (APS): A written statement from a physician who has treated, or is currently treating, a proposed insured or an insured for one or more conditions. The statement provides the insurance company with information relevant to underwriting a risk or settling a claim.
Automatic dividend option: For a particular life insurance policy, the dividend option that applies in the event the policy owner does not choose an option. See dividend options.
Automatic nonforfeiture option: For a particular life insurance policy, a specified nonforfeiture benefit that becomes effective automatically when a renewal premium is not paid by the end of the grace period and the policy owner has not elected another nonforfeiture option. See also nonforfeiture options.
Automatic premium loan (APL): A life insurance nonforfeiture option that allows the insurer to pay overdue premiums on a policy by establishing a loan against the policy's cash value. See also nonforfeiture options.
Automatic reinsurance treaty: A reinsurance agreement in which the reinsurer agrees, for a stipulated type of risk, to accept each risk or a portion of each risk submitted by the ceding company, up to a certain limit, provided the ceding company insures up to its usual retention limit. In this agreement, the ceding company assumes full underwriting responsibility for all cases reinsured.
Average indexed monthly earnings: In the United States, the figure on which social security disability, retirement and other benefits are based. The figure is an average of the monthly earnings on which a worker has paid social security tax. The figure is indexed, that is, adjusted to compensate for inflation.
Aviation exclusion: A life insurance contract provision which specifies that the death benefit is not payable if the insured dies as a result of certain aviation activities.