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
Dividend in a participating policy paid after the death of an insured, representing dividends earned between the last dividend date and the insured's death. ...
Insured plan under which the insurance company agrees to provide the insured with a series of benefits on a benefits-paid basis plus administrative services on a stipulated-fee basis. This ...
Same as term Deductible: amount of loss that insured pays in a claim; includes the following types: Absolute dollar amount. Amount the insured must pay before the company will pay, up to ...
Single policy under which individuals in a natural group (such as employees of a business firm) and their dependents are covered. ...
Transfer of the cash value of the policy from the policyowner to the policyowner's creditor as security for a loan. ...
Insurance written for a period of time greater than one year. ...
Means, in pension plans, by which a projection is made of benefits credited to each employee's account at retirement age. Costs are then allocated on a level basis over a specified future ...
Insurance that combines features of flexible premium life insurance and universal life insurance into one policy in the following manner: Premiums after the required minimum initial premium ...
Coverage under a homeowners insurance policy in the event that a credit card is fraudulently used or altered. Fraud includes theft and the unauthorized use of a credit card. ...
Have a question or comment?
We're here to help.