()

TriTech Services Insurance Tax

  • Tax Glossary



    TriTech Services, Inc. - Tax Glossary
     
           

     

    Paid-Up Additional Insurance:

    An option that allows the policyholder to use policy dividends and/or additional premiums to buy additional insurance on the same plan as the basic policy and at a face amount determined by the insured's attained age.

    Back to top

    Partial disability benefit:

    A benefit sometimes found in disability income policies providing payment of reduced monthly income if the insured cannot work full time or is unable to earn a specified percentage of predisability earnings due to a disability.

    Back to top

    Participating policy:

    A life insurance policy under which the company distributes to policyholders the part of its surplus that its board of directors determines is not needed at the end of the business year. Such a distribution reduces the premium that the policyholder had paid. See policy dividend and nonparticipating policy.

    Back to top

    Participation Rate:

    In equity-indexed annuities, a participation rate determines how much of the gain in the index will be credited to the annuity. For example, the insurance company may set the participation rate at 80%, which means the annuity would only be credited with 80% of the gain experienced by the index.

    Back to top

    Pensions:

    Programs to provide employees with retirement income after they meet minimum age and service requirements. Life insurers hold some of these funds. Over the last 25 years, the responsibility of funding these retirement accounts has shifted from the employers (who offered defined benefit plans promising a specific retirement income) to employees (who now have defined contribution plans that are financed by their own contributions and not always matched by employers).

    Back to top

    Peril:

    The cause of a possible loss.

    Back to top

    Permanent life insurance:

    Generally, insurance that can stay in force for the life of the insured and accrues cash value, such as whole life or endowment. May also be referred to as ordinary life insurance.

    Back to top

    Personal Injury Protection:

    Pays basic expenses for an insured and his or her family in states with no-fault auto insurance. No-fault laws generally require drivers to carry both liability insurance and personal injury protection coverage to pay for basic needs of the insured, such as medical expenses, in the event of an accident.

    Back to top

    Personal Lines:

    Insurance for individuals and families, such as private-passenger auto and homeowners insurance.

    Back to top

    Point-of-Service Plan:

    Health insurance policy that allows the employee to choose between in-network and out-of-network care each time medical treatment is needed.

    Back to top

    Policy dividend:

    A refund of part of the premium on a participating life insurance policy, reflecting the difference between the premium charged and actual experience.

    Back to top

    Policy illustration:

    A depiction of how a life insurance policy will work, showing premiums, death benefits, cash values, and information about other factors that may affect policy costs.

    Back to top

    Policy loan:

    The amount a policyholder can borrow at a specified rate of interest from the issuing company, using the insurance policy's value as collateral. If the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus accumulated interest, from the amount payable to beneficiaries.

    Back to top

    Policy or Sales Illustration:

    Material used by an agent and insurer to show how a policy may perform under a variety of conditions and over a number of years.

    Back to top

    Policy reserves:

    The funds that a life insurance company holds specifically for fulfilling its policy obligations. Reserves are required by law to be calculated so that, together with future premium payments and anticipated interest earnings, they enable the company to pay all future claims.

    Back to top

    Policy:

    The written contract effecting insurance, or the certificate thereof, by whatever name called, and including all clause, riders, endorsements, and papers attached thereto and made a part thereof.

    Back to top

    Policyholder Dividend Ratio:

    The ratio of dividends to policyholders related to net premiums earned.

    Back to top

    Policyholder Surplus:

    The sum of paid in capital, paid in and contributed surplus, and net earned surplus, including voluntary contingency reserves. It also is the difference between total admitted assets and total liabilities.

    Back to top

    Policyholder/Policy owner:

    The owner of an insurance policy, who may be the insured, a relative of the insured such as a spouse, or a nonnatural person such as a partnership or corporation.

    Back to top

    Pre-Existing Condition:

    A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.

    Back to top

    Preferred Auto:

    Auto coverage for drivers who have never had an accident and operates vehicles according to law. Drivers are not a risk for any insurance company that writes auto insurance, and no insurance company would be afraid to take them on as risk.

    Back to top

    Preferred Provider Organization:

    Network of medical providers who charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

    Back to top

    Preferred risk:

    A person considered less of a risk than the standard risk.

    Back to top

    Premium Balances:

    Premiums and agents' balances in course of collection; premiums, agents' balances and installments booked but deferred and not yet due; bills receivable, taken for premiums and accrued retrospective premiums.

    Back to top

    Premium Earned:

    The amount of the premium that as been paid for in advance that has been "earned" by virtue of the fact that time has passed without claim. A three-year policy that has been paid in advance and is one year old would have only partly earned the premium.

    Back to top

    Premium loan:

    A policy loan for paying premiums.

    Back to top

    Premium to Surplus Ratio:

    This ratio is designed to measure the ability of the insurer to absorb above-average losses and the insurer's financial strength. The ratio is computed by dividing net premiums written by surplus. An insurance company's surplus is the amount by which assets exceed liabilities. The ratio is computed by dividing net premiums written by surplus. For example, a company with $2 in net premiums written for every $1 of surplus has a 2-to-1 premium to surplus ratio. The lower the ratio, the greater the company's financial strength. State regulators have established a premium-to-surplus ratio of no higher than 3-to-1 as a guideline.

    Back to top

    Premium Unearned:

    That part of the premium applicable to the unexpired part of the policy period.

    Back to top

    Premium:

    The price of insurance protection for a specified risk for a specified period of time. Or the payment, or one of the periodic payments, that a policyholder makes to own an insurance policy or annuity.

    Back to top

    Pretax Operating Income:

    Pretax operating earnings before any capital gains generated from underwriting, investment and other miscellaneous operating sources.

    Back to top

    Pretax Return on Revenue:

    A measure of a company's operating profitability and is calculated by dividing pretax operating earnings by net premiums earned.

    Back to top

    Principal:

    The amount paid into an annuity contract, separate from the earnings that are credited to it; may also be referred to as purchase payments or contributions.

    Back to top

    Private-Passenger Auto Insurance Policyholder Risk Profile:

    This refers to the risk profile of auto insurance policyholders and can be divided into three categories - standard, nonstandard and preferred. In the eyes of an insurance company, it is the type of business (or the quality of driver) that the company has chosen to taken on.

    Back to top

    Profit:

    A measure of the competence and ability of management to provide viable insurance products at competitive prices and maintain a financially strong company for both policyholders and stockholders.

    Back to top

    Proportional reinsurance:

    A form of reinsurance in which the amount ceded is defined at the point the risk is transferred, not at the point of claim. The amount of risk may vary with time by formula.

    Back to top

    Protected Cell Company (PCC):

    A PCC is a single legal entity that operates segregated accounts, or cells, each of which is legally protected from the liabilities of the company's other accounts. An individual client's account is insulated from the gains and losses of other accounts, such that the PCC sponsor and each client are protected against liquidation activities by creditors in the event of insolvency of another client.

    Back to top

     

     

  View Services Brochure


Sign up for our newsletter

Keep up-to-date with the latest news and updates by subscribing to our newsletter.

Newsletter