Surrender Cost Index
Method of comparing the costs of a set of cash value life insurance policies that takes into account the time value of money. The true costs of alternative cash value policies with the same death benefit depend on a number of factors amount and timing of premiums paid, amount and timing of dividends (in the case of participating policies), time period involved, and the CASH surrender value. In evaluating a particular group of policies, a surrender cost index can be calculated using interest adjusted cost comparison. The index ranks the policies for the same period of time, say the first 20 years of the policy life, by cost per $1000 of face amount, showing the cheapest through the most expensive. In effect, the index illustrates the relative cost of acquiring a dollar's worth of each policy's cash surrender value after 20 years. Contrast with the net payments index, a ranking of policy costs using the traditional net cost method of comparison that ignores the time value of money and thus gives a less accurate picture of relative policy costs.
Popular Insurance Terms
Contributions (under qualified employee benefit plans, such as pensions and health insurance) made by an employer on behalf of employees, deducted as a business expense for tax purposes. ...
Minimum degree of injury or loss for which an injured party can sue, even though covered by no fault automobile insurance. Traditionally, an accident victim had to prove the other driver ...
Cost of the assets listed on the accounting records of the company. These assets include the following: real estate (to include any adjustments for depreciation), transportation equipment ...
Date after which losses may occur and be covered under a claims-made basis liability coverage. ...
Dividends paid historically, currently, and projected. ...
Continuing on an indefinite basis. ...
Annual or other periodic rate of return on investments. Because life insurance companies act as custodians of premiums for many years, until money must be paid out in death benefits or ...
Form of marine insurance that covers mobile equipment of a contractor, including road building machinery, steam shovels, hoists, and derricks used on the job by builders of structures, ...
Aggregate amount of insurance policies that are paid-up (or are being paid) that a life or health insurance company has on its books. The size of a life or health insurance company is often ...
Have a question or comment?
We're here to help.