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
Arrangement in which an unused deduction (credit carryover) to a profit sharing plan can be added to an employer's future contribution on a tax deductible basis. It occurs when the ...
Contract guaranteeing that a person licensed by a city, county, or state agency will perform activities for which the bond was granted, according to the regulations governing the license. ...
in life insurance, receipt by a company of an insurance application accompanied by the first premium. in property and casualty insurance, a company's receipt of an application. ...
Coverage if an insured can not collect on property damage or destruction losses from the hired transporter. For example, a truck transporting furniture of the insured is involved in an ...
Reinsurance clause that stipulates that the reinsurer will be subject to the same fate as the ceding company. ...
Form of insurance whereby the buyer (reinsurer) assumes the entire obligation of the cedent company, effected through the transfer of the policies from the cedent to the books of the ...
Same as term Expected Loss: probability of loss upon which a basic premium rate is calculated. ...
Pricing of the insurance product below the necessary premium rate to reflect the costs of expected losses. The thesis of this pricing strategy is to obtain large sums of money to invest and ...
Peril that occurs when personal property of two or more people is mixed to such an extent that any one owner can no longer identify his or her property. ...
Have a question or comment?
We're here to help.