Adverse Financial Selection
Process in which the policy-holder surrenders the policy when:
- cash proceeds can be invested elsewhere at a higher return than that being earned on the cash value within the policy;
- economic recession or depression exists and the cash is required to meet other financial obligations. If the policy-holder exercises the CASH SURRENDER VALUE option during these economic circumstances, the company may have to sell assets at a "fire sale" and will have fewer funds to invest at advantageous rates of return.
Popular Insurance Terms
Inquiry conducted by a committee of the legislature of the State of New York in 1905 that looked at abuses of life insurance companies operating in the state. This study led to stricter ...
Guarantee by a reinsurance company that payment for losses incurred by a third party will be made even though that third party has no contractual arrangement with the reinsurance company. ...
Actuarial procedure used to determine the cost of protection of a cash value life insurance policy on an annual basis. This cost of protection is developed by the following steps: Cash ...
Cooperative organization among insurers that rates and prepares new policy forms according to guidelines and regulations of the state insurance department. Loss experience, collected ...
Same as term Master policy: single contract coverage on a group basis issued to an employer. Group members receive certificates as evidence of membership summarizing benefits provided. ...
Coverage for property damage caused by untimely discharge from an automatic sprinkler system. This coverage, available through an endorsement to the Standard Fire Policy, typically excludes ...
Type of proportional reinsurance under which the ceding company (primary insurer) cedes a portion of the face amount of the life insurance policy it has underwritten to its reinsurer. The ...
Workers' premiums in a contributory employee benefit plan. ...
Coverage protecting future profits to be earned from a manufacturer's inventory. A manufacturer may lose all or part of an inventory of finished goods due to a peril such as fire and still ...
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