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
Means of funding permitted under the employee retirement income security act of 1974 (ERISA). The administrator of a pension plan can comply with required minimum funding standards by ...
Search, attraction, interview, and employment of insurance agents. This is a primary function of the general agent (GA) or agency manager. ...
Amount in a cash value life insurance policy that a policy owner will receive upon surrender of the policy, minus any outstanding loan and accrued interest. A table in the policy shows the ...
Coverage providing funds for maintenance of a business as closely to normal as possible in the event of a loss of a key person, owner, or partner. ...
Excess funds above the amount required to establish legal reserves for the policies in force. These excess funds are generated as the result of mortality savings, excess interest earned on ...
Same as term Unallocated Funding Instrument: pension funding agreement under which funds paid into a retirement plan are not currently allocated to purchase retirement benefits. The funds ...
Costs associated with the selling of a new insurance policy to a policyholder. The costs include the acquisition commission as a percentage of the first year's premium, underwriting ...
Insurance policy in force only after the insurance company approves the application. Today, most companies use the insurability conditional premium receipt. ...
Nonforfeiture option that uses the cash value of an ordinary life policy as a single premium to purchase term life insurance in the amount of the original policy. The length of the term ...
Have a question or comment?
We're here to help.