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Mode of Premium Payment - The frequency
of premium payments during the policy year. Premium payments can usually
bes made on annual, semiannual, quarterly or monthly modes.
Mortality Table - A statistical table
showing the death rate (probability of death) at each age.
Non-Forfeiture Options - Provision
in the policy which allow policy owner to chooses how the cash value
of the policy will be used if the policy is surrendered or lapses due
to non-payment of premium.
Ownership - All rights, benefits,
and privileges under a policy are controlled by the owner, who is usually
the insured. Ownership may be transferred or assigned to someone else
by written request of the current owner.
Paid-Up Insurance -Insurance on which
it is guaranteed that no further premium need be paid.
Participating Insurance - Insurance
on which the policy owner is entitled to share in the surplus earnings
of the company through dividends which reflect the difference between
the premium charged and the actual earnings and costs of providing coverage.
Policy-The printed document issued
to the policy owner by the company stating the terms of the insurance
contract.
Policy Year - A one-year period starting
on the day and month the policy was issued. The first policy year starts
on the date of issue, and ends on the day before the policy's first
anniversary.
Premium - The payment a policy owner
is required to make for an insurance policy to remain in force.
Rated Policy - A policy issued with
an additional premium to cover the extra risk involved if an insured
has impaired health, a hazardous occupation or hobbies, or is a private
pilot.
Reinstatement - The restoring of a
lapsed or surrendered policy to full force and effect. The company requires
evidence of insurability, and payment of all amounts necessary, including
interest, to put the policy into the condition it would have been in
had the lapse or surrender not occurred. The company is not obligated
to reinstate a policy.
Rider - A provision added to a policy
that provides additional benefits.
Settlement Option - The manner in
which the insured or beneficiary may choose to have the policy proceeds
paid.
Suicide Clause - A policy provision
which reduces or eliminates the amount to be paid if the insured dies
of suicide within the first two policy years.
Standard Risk - The classification
of an applicant for a life insurance policy who fulfills the physical,
occupational, and other requirements on which most of a company's policies
are issued. Someone whose characteristics are more favorable may be
classified as a "Preferred Risk". When the characteristics are less
favorable, the applicant may be characterized as "Rated", or refused
coverage altogether.
Surrender - To voluntarily terminate
or cancel a policy for its cash value or other non forfeiture options.
Underwriting - The process of evaluating
applicants for insurance and classifying them fairly so the appropriate
premium rates may be charged. This may involve a physical examination
of the applicant.
Waiver of Premium - A rider added
to policy that will pay the premiums during the total disability of
the insured.
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