Interest Rate Floor
Definition of "Interest rate floor"
Lower limit on the maximum possible interest rate an insurance company will pay. If the market interest rates are below that lower limit, the insurance company pays the lower limit rate. In this way, the insurance company can hedge its interest rate exposure (risk that interest rates will rise or fall at some stipulated time), reflected by changes in the value of its assets on the balance sheets.
Popular Insurance Terms
Theory, named after the British economist John Maynard Keynes, that deals with current consumption at the expense of saving. This theory has important implications for life insurance ...
Failure to exercise proper care. Many property insurance policies exclude losses that result from negligence. Neglect is also the basis for many liability suits. If an injury can be ...
Addition to reflect exposures with a greater probability of loss than standard exposures. For example, insuring a munitions factory obviously requires a premium greater than that required ...
Unincorporated association with each insured insuring the other insureds within the association. (Thus, each participant in this pool is both an insurer and an insured.) An attorney-in-fact ...
Amount established by an insurance company, but not required by state law, for any of a number of reasons, such as a reserve for payment of future dividends. A voluntary reserve is likely ...
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Standardized set of business laws that has been adopted by most states. The Uniform Commercial Code governs a wide range of transactions including borrowing, contracts, and many other ...
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