Age Nearest birthday. The date on which a person's age, for insurance purposes, changes. In most Life Insurance contracts this is the date midway between the insured's natural birth dates. On the date of age change, a person's age may change to that of the last birth date, the nearer birth date, or the next birth date, depending upon the way in which the rating structure has been established by the actuarial.

Assignment. The transfer of the ownership rights of a Life Insurance policy from one person to another. The term also refers to the document that effects the transfer.

Age Last Birthday . The age an insured has reached on a given date.

Automatic Premium Loan (APL). A provision in a Life policy authorizing the insurer to use the loan value to pay any premiums still due at the end of the grace period.

Backdating. A procedure for making the effective date of a policy earlier than the application date.Backdating is often used to make the age at issue lower than it actually was in order to get a lower premium. Limit is six months the time to which policies can be backdated.

Beneficiary. A person who may become eligible to receive or is receiving benefits under an insurance policy other than a participant. See also Irrevocable Beneficiary, Revocable Beneficiary, Primary Beneficiary, Secondary Beneficiary, and Contingent Beneficiary.
Business Insurance. Policies written for business purposes, such as key employee, sole proprietorship, partnership, and corporation.

Buy-Sell Agreement. An agreement among part-owners of a business which says that under stated conditions, i.e., disability or death, the person withdrawing from the business or his heirs are legally obligated to sell their interest to the remaining part-owners, and the remaining part-owners are legally obligated to buy at a price fixed in the agreement;

Career Profile. Career Profile is a recruiting process designed by LIMRA to help the applicant, the hiring manager, do a needs-based analysis to determine whether the agent career fits with what the applicant is looking for or needs in a career.

Cash Surrender Value (CSV). The amount of cash value an insured who surrenders in a permanent life insurance. Such surrender will termine all insurance benefits. See Non-Forfeiture Table.

Chartered Life Underwriter (CLU). A designation granted by the American College of Life Underwriters upon successful completion of a series of examinations.

Cleanup Fund. A commonly used term to designate policies whose express purpose is to pay final expenses of death.

Collateral Assignment. Assignment of a Life Insurance policy or its value as security for a loan. In the event of default, the creditor would receive proceeds or values only to the extent of his interest.
Commissioners' Standard Ordinary (CSO). A mortality table approved by the NAIC in 1958 as a standard for evaluation and for computation of nonforfeiture values for Ordinary Life policies. The CSO 1941 tables superseded the long-used American Experience Table, compiled in 1868, and the American Men Table, published in 1918 but never as widely used as the American Experience Table. The CSO 1958 superseded the CSO 1941 and is now required as a minimum basis for use by all companies.

Contestable Clause. A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested.

Contingent Beneficiary. A person(s) named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.

Contributory. A general term used to describe a plan of employee coverage in which the employee pays at least part of the premium.

Conversion Privilege. This is the right of an individual to convert a Group Health or Life policy to an individual policy should the individual cease to be a member of the group. Usually this can be done without a physical examination.

Convertible. A policy that may be changed to another form by contractual provision and without evidence of insurability. Most Term policies are convertible into permanent insurance.

Group Credit Life Insurance (CGLI). A group life insurance contract whereby a creditor is protected in the event of death of the insured prior to the indebtedness being paid in full.

Death Benefit. The amount stated in a policy contract as payable upon the death of the person whose life is being insured.

Decreasing Term. A form of Life Insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term.

Deposit Administration (DA). A group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased for each covered person in the group when he retires.

Dividend Accumulation. One of the options in a Life Insurance policy which allows the policyholder to leave any premium dividends with the insurer to accumulate at compound interest.

Dividend Paid-Up Additions. An option whereby the insured can leave dividends with the insurer, and each dividend is used to buy a single premium life insurance policy for whatever amount it will purchase.

Dividend Option. Alternative ways in which insureds under participating Life Insurance policies may elect to receive their policyholder dividends. (LI)

Double Indemnity. Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances. For example, a Life Insurance contract may provide for twice the basic benefit if death is due to accident. Accident policies may provide double indemnity coverage for death due to an elevator accident. Same as ADB

Educational Fund. One of the uses of Life Insurance. It is designed to provide money for a child's education should the breadwinner of the family die.

Eligibility Requirements. Requirements imposed for eligibility for coverage, usually in a group insurance or pension plan.

Emergency Fund. One of the uses of Life Insurance which provides money for the emergency expenses of a deceased's family prior to the final settlement of the estate.

Endowment Insurance. A form of Life Insurance where the face amount is payable to the insured at the end of the contract period or to a beneficiary if the insured dies before that. An example would be an insured purchasing an endowment payable at age 65: If he reaches that age, the proceeds would be payable to him. If he dies prior to that age, the proceeds would be payable to the designated beneficiary as a Life Insurance benefit.

Entire Contract Provision. A provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions and endorsements.
Evidence of Insurability. The statement of information needed for the underwriting of an insurance policy.

Extended Term Insurance (ETI). A provision in most policies which provides the option of continuing the existing amount of insurance as Term Insurance for as long a period of time as the contract's cash value will purchase. This is one of the nonforfeiture options available to the insured in case a premium is not paid within the grace period. See also Nonforfeiture Values.

FLMI. Fellow of the Life Management Institute. See Life Office Management Association.

Fellow, Life Management Institute (FLMI). See Life Office Management Association.

First Year Commission (FYC). Total commission earned by an agent

First Year Premium (FYP). Total premium collected by an agent

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Fully Paid Policy. A limited payment Life Insurance contract on which all required payments have been made. For instance, 1st Cash Saver policy would be fully paid after the insured has paid premiums for 10 years.

Grace Period. A prescribed period, usually 30 to 31 days from the premium due date, during which an insurance contract is in force and the premium may be paid.

Group Insurance Certificate. The document provided to each member of a group plan. It shows the benefits provided under the group contract issued to the employer or other insured.

Group Insurance Contract. A contract of insurance made with an employer or other entity that covers a group of persons identified by reference to their relationship to the entity buying the contract. The group contractual arrangement is generally used to cover employees of a common employer, members of a trade association or trusteeship, members of a welfare or employee benefit association, members of a labor union, or members of a professional or other association not formed only for the purpose of obtaining insurance.

Group Life Insurance. Life Insurance provided for members of a group. It is most often issued to a group of employees but may be issued to any group provided it is not formed for the purpose of buying insurance. The cost is lower than for individual policies because administrative expenses per life are decreased, there are certain tax advantages, and measures taken against adverse selection are effective. See also Franchise Insurance, True Group, and the first definition of Master Policy.
Home Office Life Underwriters Association of the Philippines (HOLUAP). An organization offering a course of study for home office Life Underwriters.

Incontestable Clause. A clause in a policy providing that after a policy has been in effect for a given length of time (two years), the insurer shall not be able to contest the statements contained in the application. A Health Insurance provision also states that after that time no claim shall be denied or reduced on the grounds that a condition not excluded by name at the time of issue existed prior to the effective date. In Life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.

Individual Life Insurance. That type of Life Insurance which covers in one contract usually only one insured.

Interest. In the calculation of premium, it is the rate of return on the company's investment of premium peso over the lifetime of the policy. Insurance company investment experience will affect life insurance cost.

International Quality Award (IQA). Award given to agents that exceed not only individual company standards, but also predetermined international staandards set by LIMRA.

Irrevocable Beneficiary. A beneficiary that cannot be changed without his consent.

Lapse Ratio. The ratio of the number of Life Insurance contracts lapsed within a given period to the number in force at the beginning of that period.

Legal Reserve Life Insurance Company. A Life insurer that maintains the reserves required by the Insurance Commission

Lien. A clause attached for issuing coverage on substandard risks under which a standard premium is paid but less than the full face amount of the policy is payable if death occurs within a certain period of years.

Life Expectancy. The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.

Life Insurance (Generic). A contractual system of risk sharing under which contributions are accumulated and redistributed to meet the economic consequences of the uncertain duration of life.

Life Insurance (Narrow). An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured, or under other circumstances specified in the contract, such as total disability.

Life Insurance Marketing and Research Association (LIMRA). An organization that, through research, seeks solutions to the problems of administering the agency costs of a Life insurer.

Life Office Management Association (LOMA). An organization serving a large proportion of the Life Insurance business by providing educational programs relating to administrative and technical procedures within the industry. It confers the designation of Fellow, Life Management Institute (FLMI) upon those who complete a prescribed course of study.
Life Underwriter. Usually, a Life Insurance agent. It can be more narrowly defined as a risk appraiser. See Risk Appraiser.

Life Underwriting Training Council (LUTC). An organization that prepares and administers training programs for Life Insurance agents.

Limited Pay Life. A Life Insurance contract providing protection for the whole of life with premiums paid for an indicated number of years. Example: 1st Cash Saver

Loan Value. A term which refers to the amount of money an insured can borrow using the cash value of his Life Insurance policy as security.

Lump Sum. A method of settlement whereby the beneficiary receives the entire proceeds of a policy at once rather than in installments.

Mature. In insurance, a policy matures when its face amount becomes payable. This could occur upon the death of the insured, or in some forms of insurance such as endowments, as of a specified date.

Maturity Date. The date at which the face amount of a Life Insurance policy becomes payable by reason of either death or endowment.

Maturity Value. The amount payable to a living insured at the end of an endowment period or to the owner of a Whole Life policy if he lives past a certain age.

Medical Impairment Bureau (MIB). A data pool service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past.

Million Dollar Round Table (MDRT). An elite international association of Life Insurance agents who qualify by selling 1 million worth or more of Life Insurance coverage. The policies must meet certain qualification standards, and applicants must be members of the Life Underwriters Association of the Philippines (LUAP)

Mortality Rate. The number of deaths in a group of people, usually expressed as deaths per thousand. It can be the rate for the total population, called the crude mortality rate, or it can be refined by factors such as age groupings or causes of deaths. Same as Death Rate.

Mortality Table. A table showing the incidence of death at specified ages. It shows the number of persons in each age group that die, expressed in terms of deaths per thousand, and based on the deaths in a population of a million persons.

Mortgage Redemption Insurance (MRI). A policy covering a mortgagor from which the benefits are intended (1) to pay off the balance due on a mortgage upon the death of the insured, or (2) to meet the payments on a mortgage as they fall due in the case of his death or disability. Also called Mortgage Redemption Insurance.

Noncontributory. A plan or program of insurance, usually group, for which the employer pays the entire premium and the employee contributes no part of the premium.

Nonforfeiture Values. Those values in a Life Insurance policy that by law the policy owner cannot forfeit even if he ceases to pay the premiums. These benefits are the cash surrender value, the loan value, the paid-up insurance value, and the extended term insurance value. The policy owner may choose one of these nonforfeiture options, but even if he fails to do so, the one specified in the contract for such a case automatically goes into effect. (LI)

Nonmedical (Non-Med). A contract of Life Insurance underwritten on the basis of an insured's statement of his health with no medical examination required. (LI,H)

Occupational Hazard. A condition in an occupation that increases the peril of accident, sickness, or death.

Ordinary Life Policy. A Whole Life policy for which premiums are paid continuously as long as the insured lives. Same as Straight Life Policy. See also Whole Life Insurance.
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Ownership. All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insureds. Ownership may be assigned or transferred by written request of the current owner.

Paid-Up Insurance. Insurance on which all premiums are paid but which has not yet matured by either death or endowment. An example would be a Limited Payment Life policy for which the premium-paying period is over.

Permanent Life Insurance. A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as endowments and Whole or Ordinary Life policies.

Persistency. The staying quality of insurance policies, i.e., the renewal quality. High persistency means that a high percentage of policies stay in force to the end of the period coverage, while low persistency means that a high percentage of policies lapse for nonpayment of premiums.

Policy Fee. A flat, per policy charge that does not change with the size of the policy

Policy Loan. A loan made by an insurer to a policy owner of a part or all of the cash value of the policy assigned as security for the loan.

Policy Proceeds. The amount actually paid on a life insurance policy at death or when the insured receives payment at surrender or maturity. It includes any dividends left on deposit and the value of any additional insurance purchased with dividends; and it excludes any loans not repaid, plus unpaid interest on those loans.

Policy Reserve. A reserve which exists because of the concept that each policy has a pro rata share of the total reserve established for all policies.

Postdated Check. A premium-paying arrangement under which the policy owner gives the insured a series of checks, each dated ahead of the date on which premiums fall due for a year or more. The insurer then presents each check on its date.

Primary Beneficiary. The beneficiary named as first to receive proceeds or benefits from a policy when they become due.

Proceeds. The amount payable by a policy, usually in reference to the face amount of a Life Insurance policy, payable at the death of the insured. (LI)

Pure Endowment. An endowment payable if the designated person is alive at the end of the endowment period but not payable if the person is not alive at that time.

Rated. Coverages issued at a higher rate than standard because of impairment of the insured.

Reduced Paid-Up Insurance. A form of insurance available as a nonforfeiture option. It provides that the cash value of the policy be used as a single premium to purchase paid-up insurance in whatever amount the cash value will provide, which will be less than the original face amount in most cases. See also Nonforfeiture values.

Register. A record of all policies charged to a debit account.

Renewable Term. Term Insurance that may be renewed for another term without evidence of insurability.

Renewal. The automatic reestablishment of in-force status effected by the payment of another premium.

Revocable Beneficiary. The beneficiary in a Life Insurance policy in which the owner reserves the right to revoke or change the beneficiary.

Salary Savings Insurance (SSI). Insurance issued to an individual employee whose employer agrees to deduct the premiums from the employees’ payroll account

Settlement Options. The various methods for the payment of the proceeds or values of a Life Insurance policy that may be selected in lieu of a lump sum. (LI)

Single Premium Policy. A Life Insurance policy paid for in one single premium in advance rather than in annual premiums over a period of time. (LI)

Society of Actuaries (SOA). An association of actuaries organized in 1948 as the successor to the Actuarial Society of America and the American Institute of Actuaries. It grants the designation Associate of the Society of Actuaries upon completion of five examinations and Fellow of the Society of Actuaries upon the completion of five additional examinations.

Spendthrift Clause. A clause in most Life Insurance policies which prevents the creditors of a beneficiary from claiming any of the benefits payable to him before he actually receives the money. The purpose of this clause is to keep those to whom he is in debt from taking legal action to require the insurer to pay the proceeds directly to them.

Standard Provisions. Provisions prescribed by state law that must appear in all policies issued in that jurisdiction.

Standard Risk. A risk that is on a par with those on which the rate has been based in the areas of health, physical condition, and morals. An average risk, not subject to rate loadings or restrictions because of poor health.

Substandard Risk. Premium which is higher that standard risk.

Term Insurance. The type of Life Insurance policy that provides protection only for a specified period of time. A common policy period would be one year, five years, 10 years, or until the insured reaches age 65 or 70. It does not build up any of the nonforfeiture values associated with Whole Life policies. Contrast with Whole Life Insurance.

Valuation. Calculation of the policy reserve in Life Insurance.

Waiver of Premium. A provision of a Life Insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled.
Whole Life Insurance. Insurance which may be kept in force for a person's whole life and which pays a benefit upon his death, whenever that may be. All Whole Life policies build up nonforfeiture values, but they are paid for in 3 different ways. Under a Straight or Ordinary Life policy, premiums are paid for as long as the insured lives. A single premium policy is paid for at one time in one premium. Between these two types there are many limited-payment plans, under which the insured pays premiums for a certain period or until reaching a certain age. Contrast with Term Insurance.

Yearly (or Annual) Renewable Term (YRT). Term Life Insurance that may be renewed annually without evidence of insurability until some stated age.