Security First Benefits

Employee and executive benefit plans for life insurance, disability insurance, major medical insurance, dental insurance, vision insurance, and retirement planning and financial investments.

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Financial and Insurance-related Terms

12b-1 Fees: Fees paid by a mutual fund under a plan adopted under SEC rule 12b-1. Can include both distribution fees and service fees.
401(k) Plan: A type of retirement savings plan in which employees choose to have part of their pay contributed by the employer to a retirement account, rather than having it paid to them. Contributions are made with pretax dollars; both contributions and investment earnings are tax deferred until the funds are withdrawn from the account. Employers may choose to match a portion of each employee's contribution.
Accelerated Death Benefit: A death benefit paid to the policyholder before death under clearly defined health-related circumstances.
Accidental Death and Dismemberment (AD&D): Coverage, built into a disability policy or available as an optional benefit, which pays scheduled amounts in the event of accidental death or dismemberment.
Accidental Death Benefit: A benefit in addition to the face amount of a life insurance policy, payable if the insured dies as the result of an accident. Sometimes referred to as "double indemnity."
Actuary: A person professionally trained in the technical aspects of insurance and related fields, especially in the mathematics of insurance, such as the calculation of premiums, reserves and other values.
AD&D: See Accidental Death and Dismemberment.
Adjustable Life Insurance: A type of insurance that allows the policyholder to change the plan of insurance, raise or lower the premium or face amount of the policy, and lengthen or shorten the protection period. It usually combines the elements of whole life and term insurance.
Age-weighted Plan: A type of retirement plan that allows employers to make annual contributions based on an employee's age and compensation. Older employees, who have fewer years to accumulate funds for retirement, receive proportionately larger amounts than younger employees.
Agent: A sales and service representative of an insurance company. Life insurance agents may also be called life underwriters or field underwriters.
AIB: See Automatic Increase Benefit
Annual Cost: The annual dollar amount paid for approved benefits.
Annual Maximum Amount: The annual dollar amount a plan pays for approved benefits.
Annually Renewable Disability Income: Cost for this form of disability income policy increases each year, but can initially be as much as 40% lower than fixed cost policies.
Annuitant: The person during whose life an annuity is payable, usually the person to receive the annuity.
Annuity: A contract that provides income at regular intervals for a specified period of time, such as for a number of years or for life.
Annuity Certain: A contract that provides an income for a specified number of years, regardless of life or death.
Annuity Consideration: The payment, or one of the regular periodic payments, an annuitant makes for an annuity.
Application: The application is part of the policy/certificate to which is attached, and is therefore part of the legal contract between the life insurance company and the insured(s). The application is subject to all the terms and conditions of the policy/certificate not inconsistent with it.
APL: See Automatic Premium Loan
APS: See Attending Physician Statement
Asset: Something that has monetary value and is owned by a company or individual. It includes tangibles like cash, equipment, inventory and real estate, as well as intangibles like goodwill.
Asset Valuation Reserve: A reserve that life insurers are required to set aside to limit the impact of valuation and credit-related losses on unassigned surplus. The invested assets that have a risk of loss, including bonds, common stocks, mortgage loans, and real estate.
Assignment: The legal transfer of one person's interest in an insurance policy to another person.
Attending Physician Statement (APS): A report, completed by a prospective insured's (or, in a claim situation, the insured's) physician, documenting current and prior health history. An APS helps the insurance company in the evaluation process of approving an application (or a claim).
Automatic Increase Benefit (AIB): A built-in policy feature or optional benefit that increases annually an insured's monthly benefit without evidence of either medical or financial insurability.
Automatic Premium Loan (APL): A policy loan that is paid from the policy's cash value in order to make a premium payment that has not been made by the end of the grace period.
Beneficiary: The person named in the policy to receive the insurance proceeds at the death of the insured.
Benefit Period: The period of time, after satisfaction of the elimination period, during which disability income benefits can be paid. This is usually decided by the applicant and depending on the policy, can be from one year to age 65, 67, or life.
Bond: A long-term debt instrument, issued by a government, business, or financial institution, in which the borrower promises to repay the money to the bondholder at a certain time in the future, and, in the meantime, to pay interest to the bondholder at either a specified or floating rate.
Broker: A sales and service representative who handles insurance for clients, generally selling insurance of various kinds and/or of several companies.
Business Life Insurance: Often called key-person insurance, it is life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee. See also Key-person Policy.
Business Overhead Expense: Coverage which helps keep a business operating when a business owner is disabled. Provides short-term benefits to cover fixed operating expenses during total or partial disability.
Buy-sell (or Buy-out): Disability policy which provides funds for the purchase of a disabled partner's share of a business.
Cafeteria Plan: An employee benefit arrangement allowed by Internal Revenue Code Section 125 where employees are allowed to pay for certain employee benefits on a pretax rather than an after-tax basis. Disability income insurance is one of those benefits.
Capital Adequacy: Having enough surplus to pay all policyholder claims and other financial obligations, even during economic downturns.
Capital Gains Distribution: Payments of profits earned from selling securities in a fund's portfolio. Capital gain distributions are usually paid once a year.
Carrier: The insurance company that underwrites the policy, not the insurance agency that sells the policy directly to the insured.
Cash Surrender Value: The amount of money the policy owner will receive if the policy owner cancels the coverage and surrenders the policy to the company.
CDSC: See Contingent Deferred Sales Charge
Certificate: Term used in Missouri for Policy.
Certified Financial Planner (CFP): Introduced in 1972, the CFP designation has become a widely recognized financial advising credential among consumers. It is awarded to those individuals who have met its rigorous educational standards and agreed to the CFP Board Code of Ethics and Professional Responsibility. The LUTC program at The American College is offering moderator-led study groups to prepare NAIFA members to sit for the CFP examination.
Change: A modification of an in force policy.
Chartered Financial Consultant (ChFC): A designation offered by The American College (formerly known as the American College of Life Underwriters). The eight program courses help to teach the individual about planning in the tax, insurance, business, retirement and investment fields. To receive the designation, the candidate must pass 10 examinations on a number of financial and planning topics, some of which are waived if the candidate also holds a CLU designation. The ChFC designation demonstrates a candidate's ability to understand and apply personal financial planning concepts.
Chartered Life Underwriter (CLU): A designation offered by The American College (formerly known as the American College of Life Underwriters). To receive the designation, the candidate must pass 10 examinations on a number of financial and planning topics including: life insurance, pensions, taxation, finance, economics and business, and estate planning; and satisfy character and experience requirements. The designation is oriented toward life insurance and its uses. Rigid ethical and experience requirements also must be met.
Claim: A formal request (bill) submitted to your carrier for the payment of benefits under the terms of an insurance policy.
CMM: See Comprehensive Major Medical.
CMO: See Collateralized Mortgage Obligation.
Co-insurance: The percentage of costs you pay for a covered service (i.e. 10%, 20%, 30%).
COBRA: See Consolidated Omnibus Budget Reconciliation Act.
Collateralized Mortgage Obligation (CMO): A security backed by a portfolio of mortgages or mortgage securities held under an indenture. The issuer's obligation to make interest and principal payments is secured by the underlying portfolio.
Commingling of Funds: The placing of another's money in any type of an account controlled by the agent. This is strictly prohibited. All transactions involving the transfer of funds should be handled accurately and promptly.
Comparability Plan: A type of retirement plan that allows employers to divide employees into groups, each receiving a different annual employer contribution rate.
Comprehensive Major Medical: You are required to submit a claim form for service reimbursement (after you pay the deductible or copay amount).
Conditionally Renewable Disability Income: With this type of policy, the insurance company agrees to renew the policy, provided the insured meets certain criteria, such as full time employment.; Consolidated Omnibus Budget Reconciliation Act of 1985; COBRA allows an employee and/or family member to continue their group health plan enrollment when coverage is mandatorily lost. Examples of mandatory loss of coverage include separation from employment, marriage of a dependent, a dependent attaining age 23, divorce or legal separation. Coverage can continue at a cost of 102 percent of the premium for a period of 18 months for an employee and a period of 36 months for a dependent.
Contingent Deferred Sales Charge (CDSC): A fee that may be charged when a shareholder redeems mutual fund shares or when a policy holder surrenders a variable life or variable annuity contract (also called "back-end load").
Convertible Term Insurance: Term insurance which can be exchanged, at the option of the policyholder and without evidence of insurability, for another plan of insurance.
Coordination of Benefits: Your insurance policy coverage combined with that of another person's coverage (usually a spouse).
Copay: The amount you pay for a benefit (i.e. prescriptions/office visits - $10, $15, $30).
Cost of Living Rider: A benefit that can be added to a disability policy that increases the monthly benefit annually during a claim.
Coverage: The scope of protection provided by an insurance policy.
Covered Participant: A person who is covered by a pension plan and has fulfilled the eligibility requirements in the plan. A person for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
Credit Life Insurance: Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase, or other obligation, in case of death.
Declination: The rejection by a life insurance company of an application for life insurance, usually for reasons of the health or occupation of the applicant.
Deductible: The amount you pay first before your insurance company pays for your services.
Deferred Annuity: An annuity providing for the income payments to begin at some future date.
Defined Benefit Plan: A traditional pension plan that provides employees with a predetermined amount of retirement income, typically expressed as a percentage of preretirement earnings.
Dental Maintenance Organization: A network where you choose one participating dentist.
Dependent: A spouse; unmarried children who are at least 15 days old and have not yet reached their 22nd birthday, including step-children, and legally adopted children who are legally dependent on the applicant; and grandchildren who are in the legal custody of their grandparents. Coverage of newborn and adopted children is automatic and continues for 31 days, provided at least one adult family member is insured on the existing policy/certificate.
Deposit Term Insurance: A form of term insurance, not really involving a "deposit," in which the first-year premium is larger than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases, the partial endowment can be applied toward the purchase of a new term policy or, perhaps, a whole life policy.
Disability: See definitions for Total, Partial and Recurrent Disability.
Disability Benefit: A feature added to some life insurance policies providing for waiver of premium, and sometimes payment of monthly income, if the policyholder becomes totally and permanently disabled.
Disability Income Insurance: A policy which pays a monthly benefit to an insured in the event of an accident or sickness to help replace lost earnings.
Distribution: Refers to the availability of products and services of the insurance carrier.
Distribution Fee: An annual asset-based sales charge that is used to pay for sales-related expenses.
Dividend: In a stock corporation, a share of net profits distributed to a class of shareholders; in a mutual life insurance company, a return of part of the premium on participating insurance to reflect the difference between the premium charged and the combination of actual mortality, expense, and investment experience. Such premiums are calculated to provide some margin over the anticipated cost of the insurance protection.
Dividend Addition: An amount of paid-up insurance purchased with a policy dividend and added to the face amount of the policy.
Divisible Surplus: The amount of surplus that is available for distribution to participating policyholders as dividends.
DMO: See also Dental Maintenance Organization
Effective Date: The date on which the insurance carrier's policy is in force.
Exclusion Rider: An addition to a policy/certificate that excludes a medical condition, vocation, avocation, or a combination of one or more conditions from coverage.
Elimination or Waiting Period: The policy deductible, or the amount of time (usually a number of days) the insured elects to wait before disability benefits are paid. Typically, the longer an individual can wait before receiving funds from the insurance company, the lower the price of the policy.
Employee Benefit Package: A set of benefits offered on behalf of an employer to its employees. An employee benefit package may include, among other benefits, group life and health insurance, disability insurance, and qualified retirement plans.
Endorsement: An additional piece of paper, not a part of the original contract, that cites certain terms and, when attached to the original contract, becomes a legal part of the contract. Additions to life insurance contracts are accomplished through riders, which are similar to endorsements.
Endowment: Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date.
EOB: See Explanation of Benefits
Exclusions: The section of the policy that outlines circumstances under which benefits will not be paid.
Expense Ratio: The ratio of a company's operating expenses to premiums.
Explanation of Benefits: Information you receive explaining how your claim was processed
Face Amount: The amount stated on the face of the policy that will be paid in case of death or, under some policies, at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.
Family Policy: A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Field Underwriter: Another term for agent.
Field Underwriting: Process by which an agent conducts his or her own evaluation of the insurability of a prospect through the completion of an insurance application.
Financial Underwriting: Process by which an agent evaluates all elements of a prospect's compensation to determine the amount of monthly benefit for which the prospect qualifies.
Flexible Premium Policy or Annuity: A life insurance policy or annuity under which the policyholder or contract holder may vary the amounts or timing of premium payments.
Flexible Premium Variable Life: A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance.
Fraternal Life Insurance: Life insurance provided by fraternal orders or societies to their members.
Full-time Student: Dependents between the ages of 19 and 22 years old who are enrolled at an accredited college, university, or secondary trade school; enrolled for a minimum of 12 credit hours; and be dependent upon the primary insured for at least 50% of their financial support.
General Account Assets: Assets of an insurance company that back its insurance, annuity, and pension products and that provide the funds to meet policy obligations as they become due.
Grace Period: A period (usually 30 or 31 days) following the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.
Group Annuity: A pension plan providing annuities at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.
Group Health Insurance: A type of insurance providing a broad range of benefits that cover costs for medical care. Under group health insurance plans, coverage is provided for groups of individuals under a master contract.
Group Life Insurance: Life insurance, usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example, a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Group LTD: Disability income insurance issued as a master policy to an employer to provide an income for employees should they suffer a long term disability.
Guarantee of Insurability: An optional disability income policy benefit that enables an insured to make increases to the policy on specified dates with evidence of financial insurability only required (no evidence of medical insurability is required).
Guaranteed Renewable: This policy provision guarantees that the insurance company will renew an insured's policy provided the insured pays the policy premiums on time. The insurance company can increase premiums with prior notification, but policy provisions can never be changed.
Health Maintenance Organization: A network where you choose one participating doctor.
HIPAA: See Health Insurance Portability and Accountability Act
Health Insurance Portability and Accountability Act (HIPAA): Also known as Kassebaum-Kennedy, after the two senators who spearheaded the bill. HIPAA is a federal law designed to allow the portability of health insurance between jobs. Generally, HIPAA restricts the use of pre-existing condition exclusions, creates special enrollment periods and prohibits discrimination based on health-status related conditions in enrollment and premiums. HIPAA also creates an obligation for most group health plans or their insurers to provide certificates of creditable coverage to individuals who ceased to be covered by a group health plan.
HMO: See Health Maintenance Organization.
Holding Company: A company whose primary business and purpose is to hold a controlling interest in the securities of other companies.
Immediate Annuity: An annuity providing for payments to begin immediately.
In-network: A group (network) of doctors, laboratories, or hospitals that "participate" with network carriers, and agree to accept the payment offered by the insurance carrier.
Income Distributions: Payments to shareholders resulting from interest or dividend income earned by a fund's portfolio.
Individual Policy Pension Trust: A type of pension plan frequently used for small groups, administered by trustees who are authorized to buy individual level premium policies or annuity contracts for each member of the plan. The policies usually provide both life insurance and retirement benefits.
Individual Retirement Account (IRA): An account to which an individual can make annual contributions of 100% of earnings up to $2,000 ($2,250 for a one-income married couple). These contributions are tax deductible for workers who are not covered by an employer-sponsored pension plan regardless of income, or if they are covered, whose taxable income does not exceed certain levels.
Industrial Life Insurance: Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis. The premiums are generally collected at the home by an agent of the company. Sometimes referred to as debit insurance.
Insurability: Acceptability of an applicant to the company providing insurance.
Insured or Insured Life: The person on whose life the policy is issued; the person covered by the policy.
IRA: See Individual Retirement Account.
Key applicant: The applicant in whose name the policy will be issued.
Key-person Policy: An insurance policy that reimburses a business for financial loss during a key employee's disability until recovery or a suitable replacement can be found. See also Business Life Insurance.
Lapsed Policy: A policy terminated for nonpayment of premiums. The term is sometimes limited to a termination occurring before the policy has a cash or other surrender value.
Level Premium Life Insurance: Life insurance for which the cost is distributed evenly over the period in which premiums are paid. The premium remains the same from year to year. It is higher than the actual cost of protection during the earlier years of the policy and lower than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The excess paid in the early years, together with interest that is earned, builds up a reserve that helps meet the cost in later years.
Liabilities: An insurance company's liabilities consist of its immediate or contingent policy obligations and unpaid claims.
Life Annuity: A contract that provides an income for life.
Life Expectancy: The average number of years of life remaining for a group of persons 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 that are payable under accidental death or other special provisions are not included.
Life Underwriter Training Council Fellow (LUTCF): The LUTCF designation is conferred only upon those individuals who can meet or exceed the exacting qualification standards determined by two of the leading insurance organizations in the United States: The American College and the National Association of Insurance and Financial Advisors. To satisfy the educational requirements for the LUTCF credential, students must successfully complete five courses.
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.
Liquidity: The ease with which an investment can be sold quickly at a reasonable price and converted into cash.
List bill: List bills are individual health policies/certificates being billed on one billing notice to an employer. All individual policies/certificates have a common billing date. There must be a minimum of three applicants to accept a list bill.
Long-term: Former term for permanent application and coverage.
Loss of Earnings: Under this category, disability is measured by the income earned by the individual before becoming disabled. By relating the income earned by the individual before becoming disabled to the income earned after the disability, the company determines the amount of benefits to be paid. Most policies require a reduction of at least 20% to qualify for benefits. Each month, the level of benefits is recalculated based upon actual loss of income. The amount of benefits paid is determined by the specific policy's definition of total disability.
Loss Ratio: The percentage that losses bear to premiums for a given period.
Lump Sum Payment: In a disability buy-sell policy, benefits are usually payable all at once, in one lump sum, on the date that the buy-sell takes effect.
Mail Order Drugs: Prescription drugs are received through the mail.
Maintenance Drugs: Prescription drugs that must be taken regularly (i.e. insulin, high blood pressure).
Master Policy: Policy issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.
Maturity Date: The date on which principal will be repaid to the bondholder.
Medical Records: Written records from various health care providers regarding such issues as health complaints, symptoms, conditions, diagnoses, treatments, and recommendations.
Medical Underwriting: The process of reviewing a potential insured's individual medical history to determine approval of the prospect's disability income application.
Mezzanine: Refers to a kind of financing that is a hybrid of a bank loan and equity investment. It often involves the sale of unsecured long-term debt plus warrants to buy equity in the company, generally in five to seven years.
Minimum and Maximum Monthly Benefit: The amount of benefits for which the applicant qualifies. This depends on earned and unearned income, and is limited to both a fixed amount and a percentage of income.
Misrepresentation: To knowingly give a false or misleading information, usually with an intent to deceive or be unfair during the underwriting process.
Money Purchase Plan: A type of pension plan that permits annual employer contributions expressed as a percentage of each employee's compensation. Once a contribution percentage is established, it remains constant until the plan is amended.
Mortality Rate: The frequency with which death occurs among a defined group of people.
Mortality Table: A statistical table showing the death rate at each age, usually expressed as so many per thousand.
Mortgage Related Securities: Securities, such as GNMA or FNMA certificates, that make frequent principal and interest payments, usually monthly, and whose principal can be prepaid at any time because the underlying mortgage loans may be prepaid at any time.
Mutual Fund: A pool of stocks, bonds, or other securities managed by a professional investment company. Investors purchase shares of interest in the pool.
Mutual Life Company: An insurance company owned by its policyholders, rather than by a separate group of stockholders. Usually the company's name has the word "mutual" in it.
Net Asset Value: Usually obtained by dividing the value of a mutual fund's holdings by the number of shares of stock outstanding.
Non-cancelable: The renewal feature of a disability income policy under which the insurance company cannot change any policy provisions or increase premiums after the policy has been issued as long as the insured pays policy premiums on time.
Nonparticipating Policy: A life insurance policy in which the company does not distribute to policyholders any part of its surplus. Premiums for nonparticipating policies are usually lower than for comparable participating policies, but dividends may reduce the net premiums for participating policies.
Occupation Class: The category assigned to an insured by the insurance company based on the individual's job duties that dictates the policy premium and contractual grouping that would apply to the insured.
Open-ended Management Company: A mutual fund that allows investors to buy or redeem fund shares directly from the company on any given day.
Ordinary Life Insurance: Generally, whole life insurance.
Out-of-network: Doctors, laboratories, or hospitals that do not "participate" with some insurance carriers.
Own Occupation: A term defining the most liberal interpretation of total disability where only one test is applied to determine the insured's eligibility for total disability benefits: the ability to perform the duties of one's own occupation.
Paid-up Insurance: Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option.
Paramedical examination: These examinations consist of medical information, height, weight, blood pressure, blood profile, and urine specimen.
Partial Disability: Built into some disability policies, available as a rider with others, this provision pays a portion of the total disability benefit to insureds unable to perform one or more of their occupational duties because of disability.
Participating Policy: A whole life insurance policy under which the company agrees to distribute to policyholders the part of its surplus which its board of directors determines is not needed at the end of the business year. Such a distribution serves to reduce the premium paid by the policyholder. (See also: dividend; nonparticipating policy)
PCP: See Primary Care Physician.
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.
Permanent Application: Permanent applications are used to apply for a policy/certificate that will be kept in place for at least one year. Also known as a long-term application. Permanent applications cannot be used as a reinstatement application.
Persistency: A term used to refer to the probability of insurance remaining in force.
PHI: See Protected Health Information.
Point of Service.: A HMO with a self-referral option that allows you to go out of network.
Policy: A contract of insurance. See also Certificate.
Policy Holder or Policy Owner: The person who owns a life insurance policy and has power to exercise control over the policy. This is usually the insured person, but it may also be a relative of the insured, a partnership, or a corporation.
Policy Loan: The right to borrow against a policy's cash value at a stated interest rate.
Policy Reserves: The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. By law, reserves are required to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
POP: See Public Offering Price
POS: See Point of Service.
PPO: See Preferred Provider Organization.
Preferred Provider Organization: A network plan that gives economic incentives to the individual purchaser of a health-care contract to patronize certain physicians, laboratories, and hospitals that agree to supervision and reduced fees. See also HMO.
Preferred Risk: A person with a lower risk of loss than the average. A preferred risk will usually pay lower rates.
Premium: In insurance, the payment made on a policy to keep the policy in force.
Prescreen Application: Agents can use prescreen forms to quickly receive an underwriting assessment of risk based on minimal medical information. A prescreen form can be completed entirely by an agent and does not require the applicant's signature. Also known as a prospect form.
Primary Care Physician: A network doctor that you choose "participates" in a network plan.
Profit Sharing Plan: A type of retirement plan that permits annual employer contributions allocated as a percentage of each employee's compensation. Company contributions are discretionary.
Provider: The doctor, laboratory, or hospital (i.e. "participating" providers in HMO, POS, or PPO plans).
Proposal: An estimated policy rate provided by the agent based on the client's demographics. It should be submitted with the application. A proposal does not take into consideration health history. See also Quote.
Protected Health Information: Under HIPAA, PHI means individually identifiable health information. Identifiable refers not only to data that is explicitly linked to a particular individual (that's identified information). It also includes health information with data items which reasonably could be expected to allow individual identification. the definition of PHI excludes individually identifiable health information in education records covered by the Family Educational Right and Privacy Act. It also excludes employment records held by a covered entity in its role as employer
Public Offering Price (POP): The price of one share of a mutual fund, including its initial sales charge if there is one.
Qualification Period A term used in conjunction with residual disability benefits which refers to the number of days at the start of a disability that the insured must be totally disabled before becoming eligible for residual benefits.
Quote: An offer of coverage based on an underwriting assessment of risk as determined by information provided by the applicant and/or requested by the underwriter (e.g., medical records, paramedical exam, etc.). See also Proposal.
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.
Record Date: The date on which mutual fund investors must own a fund's shares to be eligible to receive specific income or capital gains distributions.
Recurrent Disability: Term used to describe situations where a disability occurs, the insured recovers for a short period of time, then experiences a recurrence of the same or a related disability. Insureds with recurrent disabilities do not have to wait until their elimination period is over before they receive benefits.
Reimbursement: The amount returned to you, after a claim form has been submitted for payment.
Reinstatement: Reinstatement applications are used for any application policy/certificate that has lapsed more than 31 days, but less than 12 months where the applicant wishes to apply for the same product, deductible, coinsurance, and options as the original policy/certificate
Rejected: A policy is rejected when it cannot be processed due to errors on the application or information missing from the application. See also Declined.
Renewable Term Insurance: Term life insurance that can be renewed at the end of the term at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.
Replacement Policy: Replacing health insurance is defined as any transaction in which a new accident and health insurance is to be purchased; and it is known to the agent, broker, or insurer at the time of the application that, as part of the transaction, existing accident and health insurance has been or is to be lapsed or the benefits substantially reduced.
Reserve: The amount representing an insurance company's actual or potential liabilities, set aside to cover these obligations.
Residual Disability Benefit: Built into some policies, available as an option with others, this benefit pays the insured a portion of the total disability benefit after a return to work based on the percentage of income lost due to the disability.
Return on Investment: A measure of the net income earned on a portfolio's assets.
Rewrite: Rewriting health insurance is defined as any transaction in which a current policy/certificate holder wants to apply for a new plan of insurance or change benefits, and can qualify within the risk selection requirements.
Rider: An amendment to a policy, expanding or limiting the benefits otherwise payable.
Risk: The chance that a loss will occur.
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 (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications.
Risk Selection Criteria: Lists of common medical conditions, occupations, and avocations with their associated underwriting actions.
Savings Bank Life Insurance: Life insurance sold by mutual savings banks in Massachusetts, New York, and Connecticut to people who work or reside within those states.
Schedule Page: A schedule page includes the plan of insurance, the deductible, the co-pay, and any applicable options that are selected.
Separate Account: An asset account maintained separately from the General Account. Separate account assets only back the products of a specific group of policyholders and cannot be used to meet the obligations of the General Account. Funds are often placed in a single asset type, like common stocks, and the policy values rise or fall depending on the returns of the separate account investments.
Service Fee: Payments by a fund for service to investors and/or maintenance of shareholder accounts by the distributor or financial representative.
Settlement Options: The several ways, other than immediate payment in cash, by which a policyholder or beneficiary may choose to have policy benefits paid.
Short-term: Short-term applications are an interim health insurance plan for individuals transitioning from one permanent health plan to another. Short-term applications are used to apply for coverage of less than one year and are not renewable.
Signature: The handwritten, legal name of the applicant(s) or agent as they appear on the application/survey. See also Signature date.
Signature Date: The date the signature is written on the application or accompanying forms/surveys. See also Signature.
Short Term Disability: Usually associated with group insurance, this type of insurance pays a monthly benefit for total disability after a brief waiting period for a short period of time (typically up to three, six, nine or 12 months).
Single Premium Life: Permanent policies purchased with a single, one-time premium.
Social Security Offset: A policy provision or optional benefit that coordinates with benefits received through Social Security disability (and typically other government programs) to avoid either underinsurance or overinsurance.
Step Rate: A method of premium payment offering a low initial premium that increases after a set number of years to a higher level premium.
Stock Life Insurance Company: A life insurance company owned by stockholders who elect a board to direct the company's management. Stock companies, in general, issue nonparticipating insurance, but may also issue-participating insurance, and operate for profit.
Straight Life Insurance: Whole life insurance on which premiums are payable for life.
Subsidiary: A company owned or controlled by another company.
Surplus: The buildup of earnings that result from a life insurance company's profitable operation. The amount by which assets exceed liabilities.
Survivorship Life: A type of life insurance issued on the life of two insureds. The death benefit is paid upon the death of the longest surviving insured. The policy is based on joint life expectancy, which generally results in a lower premium than total premiums for individual policies on the same lives.
Target Benefit Plan: A type of pension plan in which annual employer contributions are calculated to provide a "target" amount of retirement income expressed as a percentage of each employee's preretirement compensation.
Term Insurance: Life insurance payable to a beneficiary only when an insured dies during a specified period.
Total Disability: Under our standard definition, we consider insureds totally disabled if they are unable to perform the important duties of their regular occupation because of injury or sickness, aren't working in another gainful occupation and are under a physician's care.
Total Return: The change in value of an investment in a fund investment over a specific time period, assuming all earnings are reinvested in additional shares of the fund. Expressed as a percentage.
Traditional: You can usually choose any doctor, laboratory, or hospital for service.
Traditional Life: Commonly refers to a class of life insurance policies that pay dividends to or share in the proceeds of dividends with policyholders.
Underwriting: The process of determining and classifying the degree of risk that a proposed insured represents. The ultimate goal of underwriting is to fairly and accurately place each insured into a broad risk category with appropriate morbidity and mortality/claims expectations.
Universal Life Insurance: A type of whole life policy that allows the customer flexibility in choosing and changing terms of the policy.
Unrealized Gain: The market value of an unsold asset, compared with the value reported in the financial statements.
Vanishing Premiums: The use of dividend payments to shorten a policy's premium paying period. Also known as premium offset.
Variable Annuity: An annuity contract in which the amount of each periodic income payment may fluctuate. The fluctuation may be related to securities market values.
Variable Life Insurance: Life insurance similar to whole life insurance, except that the cash value and, in some cases, the death benefits are not fixed but depend on the investment performance of a separate account. The aim is to keep benefits in line with inflation, and the policy owner can choose among investment classes such as stock, bond, and money market funds.
Voluntary: You agree to pay for the insurance coverage offered through your employer.
Waiver of Premium: A provision that under certain conditions an insurance policy will be kept in full force by the company without further payment of premiums. It is used most often in the event of total and permanent disability.
When Issued: Funds may sometimes purchase securities for their portfolios on a "when issued" basis. This means that the fund will enter into an agreement to buy a security before it has been issued.
Whole Life Insurance: A type of cash value life insurance that remains in force during the insured's lifetime, so long as premiums are paid as stated in the policy.
Withdrawn Application: An application withdrawn prior to the effective date. The request to withdraw must be in writing by the agent or applicant.
Workers Compensation: A system administered at the state level that provides benefits to workers who are hurt or contract an illness on the job.
Yield: The rate at which a fund earns income, expressed as a percentage. Yield calculations are standardized among mutual funds, based on a formula developed by the Securities and Exchange Commission.
Zero-coupon Securities: These securities are issued at a significant discount from face value and pay interest only at maturity, rather than at intervals during the life of the security.