| Acceleration Clause |
The part of a contract showing when a loan is due and payable |
| Accidental Death Benefit |
A benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident |
| Actuary |
A mathematics specialist who calculates rates, reserves, dividends and other statistics |
| Adjustable Rate |
An interest rate that changes, based on changes in a published market-rate index |
| Admitted Assests |
Assets permitted by state law to be included in an insurance company's Annual Statement, including mortgages, stocks, bonds and real estate |
| Annuitization |
Annuitization Conversion of 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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| Annuity |
An agreement by AAFMAA to make periodic payments that continue during the survival of the annuitant(s) or for a specified period |
| Attained Age |
Insured's age at a particular time |
| Automatic Premium Loan |
If the premium due remains unpaid after the end of the grace period, an automatic loan from the policy’s “cash surrender value” is advanced to cover the premium. APL prevents a lapse in the policy due to inadvertence, illness or accident |
| Claim |
A demand made by the insured or the insured's beneficiary for payment of the benefits as provided by the policy |
| Coverage |
The scope of protection provided under an insurance policy |
| Death Benefit |
The limit of insurance or the amount of benefit that will be paid in the event of the death of a covered person |
| Deductible |
Amount of loss that the insured pays before the insurance begins |
| Dividend |
The return of part of the policy's premium for a policy issued on a participating basis by either a mutual or stock insurer |
| Estate |
Includes all the property and property rights that a person owns, including rights from which no lifetime benefit will be received (e.g. Life Insurance death benefits) |
| Grace Period |
The length of time (usually 31 days, 60 days for AAFMAA) after a premium is due and unpaid during which the policy, including all riders, remains in force
If a premium is paid during the grace period, the premium is considered to have been paid on time
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| Jet Issues |
Jet Issues take the speed and simplicity of a simplified Life Insurance and combines it with the higher face amounts and competitive premiums of a fully underwritten Life Insurance policy
Jet Issues don’t require a Paramed exam
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| Lapse |
Termination of an insurance policy due to non-payment of premium |
| Lapse Ratio |
The ratio of the number of Life Insurance policies that lapsed within a given period to the number in force at the beginning of that period |
| Living Benefits |
This feature allows you, under certain circumstances such as terminal or catastrophic illness, the need for long-term-care, or confinements to a nursing home, to receive the proceeds of your Life Insurance policy before you die
Also known as "accelerated death benefits"
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| Modified Endowment Contracts |
MECs are the result of paying too much funding premium into an adjustable life policy in too short a period of time (usually in the first 7 years)
When a policy becomes an MEC, the tax status of death benefit is unaffected and any policy build up continues to grow tax deferred
However, any withdrawal of cash values prior to the insured’s age 59 ½ or total disability will be subject to a 10% penalty
Additionally, withdrawals from the policy are taxed on the LIFO tax basis meaning the cash value “last in is the first out” therefore generating an instant taxable event
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| Net Single Premium |
The amount of money that must be collected at the time of issue in order to meet the benefits to be paid later (present value of expected benefits) |
| Net Yield on Assets |
Rate of return on an investment after subtracting all expenses including commissions, costs of purchase and taxes
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| Policy |
The written contract effecting insurance including all clauses, riders, endorsements and papers attached thereto and made a part thereof |
| Premium |
The price of insurance protection for a specified risk for a specified period of time |
| Qualifying Event |
An occurrence that triggers an insured's protection |
| Reduced Paid Up |
Non-forfeiture option to provide continuation of the original insurance plan at a reduced amount |
| Renewal |
The automatic re-establishment of in-force status effected by the payment of another premium |
| Section 1035 Exchange |
Part of the Internal Revenue Code that allows owners to replace a Life Insurance or annuity policy without creating a taxable event |
| Section 7702 |
Part of the Internal Revenue Code that defines the conditions a life policy must satisfy to qualify as a Life Insurance contract, which has tax advantages |
| SGLI |
Servicemembers’ Group Life Insurance - SGLI is administered by the Department of Veterans Affairs and exists to provide insurance benefits for Veterans and service members who may not be able to get insurance from private companies because of their Military service, or a service connected disability |
| Stop Loss |
Any provision in a policy designed to cut off an insurer's losses at a given point |
| TAMRA |
Technical and Miscellaneous Revenue Act of 1988 - imposes additional limits on the funding of an insurance contract |
| Term life Insurance |
Life insurance that provides protection for a specified period of time. Common policy periods are one year, five years, 10 years or until the insured reaches age 65 or 70
Doesn't build up any of the nonforfeiture values associated with whole life policies
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| TSGLI |
Traumatic Servicemembers’ Group Life Insurance - payments are designed to help traumatically injured service members and their families with financial burdens associated with recovering from a severe injury
Payments range from $25,000 to $100,000 based on the qualifying loss suffered
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| Underwriting |
Process of selecting risks for insurance and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process also includes rejection of those risks that do not qualify |
| VGLI |
Veterans Group Life Insurance (VGLI) - Five-year renewable term plan available to all members who are retired, separated or released from active duty - Reservists who are injured while performing active duty are also eligible. VGLI may be issued in multiples of $10,000 to a maximum of $400,000
VGLI is not issued in excess of the amount of SGLI carried at the time of separation from service |
| Whole life Insurance |
Life insurance which might be kept in force for a person's whole life and which pays a benefit upon the person's death, whenever that might be |