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
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Modification in premiums, reserves, and other values to reflect actual loss experience and expenses and expected benefits to be paid. ...
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Standards set by the various state regulatory authorities that determine how financial statements must be prepared for regulators. The states are responsible for making certain that ...
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