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
Medical malpractice that is the legal responsibility of a person or organization not in the medical profession or business. It is usually covered under a professional liability insurance ...
request by an insured for indemnification by an insurance company for loss incurred from an insured peril. ...
Individual retirement account (IRA) established to receive distribution of assets from a qualified pension or retirement plan. For example, if employees resign from their jobs and receive a ...
Maintenance of Social Security benefits at current dollar or percentage levels. Social Security benefits are indexed to the Consumer Price Index and rise in tandem with the Index. A benefit ...
Qualified pension or other employee benefit where responsibility rests with an employer rather than an insurer. A trust fund plan, where assets are deposited with and invested by a trustee, ...
In property insurance, a stipulated agreement between the insurance company and the insured that the amount of insurance coverage under the policy is sufficient to be in compliance with the ...
Inland marine policy addition that provides coverage to owners of sheep, and to warehouseowners who store wool as well as wool in transit. ...
Amount of the insurance company's liabilities for claims that have not been settled. If this reserve increases significantly in relation to the company's surplus, the risk is greater for ...
Life insurance contract that pays its owner dividends, which can be: taken as cash; applied to reduce a premium; applied to purchase an increment of paid-up insurance; left on deposit ...
Have a question or comment?
We're here to help.