III IC-27 key terms

The amount a policyholder pays an insurer, usually monthly or annually, in exchange for the coverage promised in the contract.

The portion of premium calculated from mortality and interest assumptions alone, excluding any allowance for the insurer's expenses or profit.

The total amount charged to the policyholder, combining the net premium with loadings for expenses, commissions, taxes, and profit margin.

The expense and contingency component added to a net premium so that the insurer can cover operating costs, commissions, and a margin for risk.

The probability that a person of a given age will die within a stated period, typically one year, used to price life insurance and annuities.

A statistical table showing death rates by age and sex, providing the expected number of deaths per thousand lives at each age.

The frequency with which illness or disability occurs in a population, used to price health and disability income products.

The average number of additional years a person of a given age is expected to live, based on current mortality assumptions.

A liability the insurer records for promises owed to existing policyholders, representing the present value of future benefits less future premiums.

The amount that accumulates inside a permanent policy and belongs to the policyholder if the contract is surrendered or borrowed against.

A fee deducted when a policyholder cancels a cash value policy early, intended to recover acquisition costs the insurer has not yet amortized.

Money borrowed from an insurer using the cash value of a permanent policy as collateral, with interest accruing against the policy.

The termination of coverage because required premiums were not paid and the policy had insufficient cash value to keep it in force.

A set number of days after a premium due date during which coverage remains in force even though payment has not yet been received.

The restoration of a lapsed policy, usually requiring evidence of insurability and payment of overdue premiums with interest.

Choices available to a policyholder who stops paying premiums on a permanent policy, such as reduced paid-up insurance, extended term, or cash surrender.

Coverage that remains in force with no further premiums due, either because the policy is fully funded or a nonforfeiture option was elected.

A contract in which an insurer accepts funds and promises periodic payments, either for a fixed term or for the annuitant's lifetime.

The person or entity named in a policy to receive the death benefit when the insured dies.

The sum an insurer pays to the beneficiary upon the death of the insured, as specified in the policy contract.

The stated principal amount of coverage a policy provides, before adjustments such as riders, loans, or accumulated dividends.

The process of assessing an applicant's risk factors, such as health and occupation, to decide whether to insure and at what rate.

A limited time, commonly two years, during which an insurer may challenge a claim for material misrepresentation on the application.

The excess of an insurer's assets over its liabilities, serving as the financial cushion that protects policyholders against unexpected losses.

The condition in which an insurer holds sufficient assets to meet all obligations to policyholders and creditors as they fall due.

A regulatory framework that sets minimum capital requirements according to the amount and type of risk an insurer assumes.

The ability of an insurer to convert assets into cash quickly to pay claims and expenses without incurring significant losses.

The practice of aligning the timing and amounts of investment cash flows with expected benefit payments so that obligations can be met.

Operating expenses divided by premium income, showing how much of each premium dollar is consumed by the cost of running the insurer.

The sum of the loss ratio and expense ratio, indicating whether an insurer's underwriting operations are profitable below one hundred percent.

Earnings an insurer receives from bonds, equities, and other assets held to back reserves and surplus.

A segregated investment pool whose performance is passed directly to variable product owners rather than shared across the insurer's general account.

Coverage that replaces a portion of earned income when the insured cannot work because of sickness or injury.

A professional who uses mathematics and statistical models to price products, set reserves, and evaluate the financial risk an insurer bears.

A return of surplus paid to owners of participating policies, reflecting favorable mortality, expense, or investment results.