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
Provision in an all risks inland marine policy that denies coverage for exposure to dampness and extremes of temperature. Some property, like living plants, might be particularly vulnerable ...
Duration of a policy. Property and casualty coverages are usually written for one year, although a personal automobile policy can be for six months. Life insurance can be written on a term ...
Payments made to the insured by the insurance company before the settlement date. For example, a claim is scheduled to be settled on June 1, 2000, but the insurance company pays the ...
Provision of liability policies and the liability sections of package insurance policies, such as the personal automobile policy (pap), that pay medical expenses without regard to fault. ...
Husband's interest in his wife's property upon her death. A husband has an insurable interest in that property and can purchase a property and casualty insurance policy to cover the ...
Smallest acceptable premium for which an insurance company will write a policy. This minimum charge is necessary to cover fixed expenses in placing the policy on the books. ...
Local life insurance office that sells and services ordinary life insurance as well as other forms of life insurance except debt insurance. ...
Ratio of the insurance company's investment in common stocks dividend to its adjusted surplus account. This ratio shows how vulnerable the company's surplus is to the stock market ...
Inverse of the actuarial present value of a life annuity, taking the employee's life expectancy into account, to commence income payments at the normal retirement age of the employee. It is ...
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