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TriTech Services Insurance Tax

  • Tax Glossary



    TriTech Services, Inc. - Tax Glossary
     
           

     

    Accelerated death benefit:

    Benefit paid, under clearly defined health-related circumstances, to a policyholder prior to his or her death. Accelerated death benefits are also known as living benefits.

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    Acceleration Clause:

    The part of a contract that says when a loan may be declared due and payable.

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    Accidental Death Benefit:

    In a life insurance policy, A provision added in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions as well as time and age limits. Also known as Double indemnity.

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    Accumulation period:

    The time prior to a deferred annuity's payout period when money builds up in the annuity contract.

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    Active Participant:

    Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.

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    Activities of Daily Living:

    The basic activities of daily living, such as bathing, eating, getting dressed, using the toilet, moving from room to room, and transferring from bed to chair.

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    Actual Cash Value:

    Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old sofa will not be replaced at current full value because of a decade of depreciation.

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    Actuary:

    A specialist professionally trained in the technical aspects of insurance and related fields, particularly in the mathematics of insurance such as the calculation of premiums, rates, dividends, reserves, and other statistics. (Americanism - In most other countries the individual is known as "mathematician.")

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    Adjustable life insurance:

    A type of life insurance that allows the policyholder to change the plan of insurance, raise or lower the policy's face amount, increase or decrease the premium, and lengthen or shorten the protection period.

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    Adjustable Life Insurance:

    A type of permanent life insurance that allows the insured, after the initial payment, to pay premiums at various times and in varying amounts, subject to certain minimums and maximums. To increase the death benefit, the insurance company usually requires the policyholder to furnish satisfactory evidence of continued good health. Also known as Universal Life Insurance.

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    Adjustable Rate:

    An interest rate that changes based on changes in a published market-rate index.

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    Adjuster:

    A person, usually employed by a property/casualty insurer, who evaluates losses and seeks to determine the extent of the insurer's liability for loss when a claim is submitted and settles the claim. Independent adjusters are independent contractors who adjust claims for the insurance companies.

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    Admitted Assets:

    Assets permitted by state law to be included in an insurance company's annual statement. These assets are an important factor when regulators measure insurance company solvency. They include mortgages, stocks, bonds and real estate.

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    Agent:

    A representative of an insurance company who is authorized to sell and service insurance contracts. Life insurance agents are also known as life underwriters, producers, or insurers.

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    Aggregate Limit:

    Usually refers to liability insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents might occur.

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    Annual Administrative Fee:

    Charge for expenses associated with administering a group employee benefit plan.

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    Annual Crediting Cap:

    The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper limit, or cap, of 7 percent and the index linked to the annuity gained 7.2 percent, only 7 percent would be credited to the annuity.

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    Annuitant:

    The person whose life expectancy is used to determine the payout of an annuity.

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    Annuitization Options:

    Choices in the way to annuitize. For example, life with a 10-year period certain means payouts will last a lifetime, but should the annuitant die during the first 10 years, the payments will continue to beneficiaries through the 10th year. Selection of such an option reduces the amount of the periodic payment.

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    Annuitization:

    Process by which you convert part or all of the money in a qualified retirement plan or nonqualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant. Once you choose to annuitize, the payment schedule and the amount is generally fixed and can't be altered.

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    Annuitize:

    To convert the value of an annuity contract into a steady stream of income for life.

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    Annuity certain:

    A contract that provides an income for a specified number of years, regardless of life or death.

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    Annuity consideration:

    The payment, or one of regular periodic payments, that a policyholder makes to an annuity.

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    Annuity:

    A financial contract issued by a life insurance company that offers tax-deferred savings and a choice of periodic payout options that continue during the survival of the annuitant(s) or for a specified period to meet an owner's needs in retirement - income for life, income for a certain period of time, or a lump sum.

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    Application:

    A statement of information made by a prospective purchaser that helps the insurer assess the acceptability of risk.

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    Approved or Not Disapproved for Surplus Lines (Reinsurance):

    Indicates the company is approved (or authorized) to write reinsurance (or surplus lines) on risks in this state. A license to write reinsurance might not be required in these states.

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    Asset risk:

    Property owned by an insurance company?including stocks, bonds, and real estate. Assets refer to "all the available properties of every kind or possession of an insurance company that might be used to pay its debts." There are three classifications of assets-invested assets, all other assets, and total admitted assets. Invested assets refer to things such as bonds, stocks, cash and income-producing real estate. All other assets refer to non-income producing possessions such as the building the company occupies, office furniture, and debts owed, usually in the form of deferred and unpaid premiums. Total admitted assets refer to everything a company owns. All other plus invested assets equal total admitted assets. By law, some states don't permit insurance companies to claim certain goods and possessions, such as deferred and unpaid premiums, in the all other assets category, declaring them "non-admissible." Insurance accounting focuses on solvency and the ability to pay claims; therefore, a conservative valuation of assets is required. This prohibits companies from listing assets on their balance sheets when values are uncertain.

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    Asset valuation reserve (AVR):

    A reserve that makes provisions for credit-related losses on fixed-income assets (default component) as well as all types of equity investments (equity component).

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    Assets:

    Property owned by an insurance company-including stocks, bonds, and real estate. Assets refer to "all the available properties of every kind or possession of an insurance company that might be used to pay its debts." There are three classifications of assets-invested assets, all other assets, and total admitted assets. Invested assets refer to things such as bonds, stocks, cash and income-producing real estate. All other assets refer to non-income producing possessions such as the building the company occupies, office furniture, and debts owed, usually in the form of deferred and unpaid premiums. Total admitted assets refer to everything a company owns. All other plus invested assets equal total admitted assets. By law, some states don't permit insurance companies to claim certain goods and possessions, such as deferred and unpaid premiums, in the all other assets category, declaring them "non-admissible." Insurance accounting focuses on solvency and the ability to pay claims; therefore, a conservative valuation of assets is required. This prohibits companies from listing assets on their balance sheets when values are uncertain.

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    Assignment:

    The legal transfer of one person's interest in an insurance policy to another person.

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    Assume:

    To accept the risk of potential loss from another insurer.

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    Assumption reinsurance:

    A reinsurance agreement in which one company permanently transfers full responsibility for a block of policies to another company. After the transfer, the ceding company is no longer a party to the insurance agreement.

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    Attained Age:

    Insured's age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured's then attained age. Upon conversion, the premium usually rises substantially to reflect the insured's age and diminished life expectancy.

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    Authorized Under Federal Products Liability Risk Retention Act (Risk Retention Groups):

    Indicates companies operating under the Federal Products Liability Risk Retention Act of 1981 and the Liability Risk Retention Act of 1986.

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    Automatic premium loan:

    A loan provision in a life insurance policy allowing any premium not paid by the end of the grace period (usually 30 or 31 days) to be paid automatically through a policy loan if cash value is sufficient.

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    Automobile Liability Insurance:

    Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile.

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