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D

Death Benefit
A payment made to a designated beneficiary upon the death of the employee annuitant.

Decreasing Term Insurance
Level Premium Term insurance with death benefits that decrease each policy anniversary. The death benefit may decrease according to a schedule that fits a declining need, such as a loan balance.

Deferred Annuity
Annuity payments that will begin at some future date.

Deferred Compensation
Arrangements by which compensation to employees for past or current services is postponed until some future date.

Deposit Term Insurance
A form of term insurance, not really involving a "deposit," in which the first-year premium is larger than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases the partial endowment can be applied toward the purchase of a new term policy, or, perhaps, a whole life policy.

Direct Beneficiary
The named beneficiary, to whom death proceeds will be paid directly upon the insured's death.

Disability Insurance (DI)
A form of insurance coverage that provides a portion of income lost as the result of a total or partial disability caused by either an accident or an illness.

Disability Overhead Expense (DOE)
A reimbursement plan designed to cover business expenses during the total or partial disability of a professional or business person.

Dividend
A refund of part of the annual premium, which is left over after the company has set aside the necessary reserve.

Domestic Insurer
An insurance company is a domestic company in the state in which it is incorporated.

Double Indemnity
A policy provision usually associated with death, which doubles payment of a designated benefit when certain kinds of accidents occur.

E

Earned Premium
That portion of a policy's premium payment for which the protection of the policy has already been given. For example, an insurance company is considered to have earned 75 percent of an annual premium after a period of nine months of an annual term has elapsed.

Economic Policy
Special type of participating whole life insurance in which the dividends are used to buy term insurance or paid-up additions equal to the difference between the face amount of the policy and some guaranteed amount.

Education 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.

Effective Date
The date on which the insurance under a policy begins.

Electronic Funds Transfer (EFT)
A transaction that allows payers to have premium payments drawn directly from their bank accounts, eliminating the need to write checks.

Eligibility Date
The date on which an individual member of a specified group becomes eligible to apply for insurance under the (group life or health) insurance plan.

Eligibility Period
A specified length of time, frequently 31 days, following the eligibility date during which an individual member of a particular group will remain eligible to apply for insurance under a group life or health insurance policy without evidence of insurability.

Elimination Period
The period of time between the date the illness or disability commences and the beginning of the benefit payment period. It is sometimes referred to as the Qualifying Period.

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.

Endorsement
An additional piece of paper, not a part of the original contract, which cites certain terms and which, when attached to the original contract, becomes a legal part of that contract.

Endow
When an insurance policy's guaranteed cash value equals the initial death benefit, it is said to "endow" or mature. Whole Life contracts typically endow at the insured's age 100.

Endowment Insurance
An insurance policy that pays a stated amount at the end of a specified period or upon the death of the insured if it occurs within that period.

Entity Plan
The arrangement whereby the business, rather than an individual owner, purchases the insurance that will be used to secure the business in the event of an owner's death.

Estate Planning
Planning for the orderly handling and administration of an estate upon the death of the owner. This usually involves drawing up a will and setting up trusts and insurance, with the intention of minimizing loss to the estate value incurred by estate taxes and administrative expenses.

Evidence of Insurability
Any statement of proof of a person's physical condition and/or other factual information affecting his/her acceptance for insurance.

Examiner
A physician appointed by the medical director of a life insurer to examine applicants.

Exclusion
Provision that indicates a circumstance or event, such as an act of war, for which benefits will not be paid.

Executive Bonus Plan
A plan whereby an employee owns a life insurance policy that was purchased, all or in part, by the employer. The employee treats the employer's payments as reportable income for tax purposes. The employer deducts its payments as compensation. Also known as an Employee Bonus Plan.

Expected Mortality
The number of deaths which theoretically will occur among a group of people during a given period of time, according to the mortality table in use.

Expense Charges
The charges assessed against a policy to cover part or all of the insurance company's acquisition and maintenance expenses related to issuing and servicing the policy, including charges covering various federal, state and local taxes.

Expiration Date or Expiry
The date on which the insurance policy ceases to protect the policyowner.

Extra Premium or Extra Percentage Table
The amount charged in addition to the regular rate to cover any extra hazard or special risk. Usually this premium is shown as a percentage of the standard premium. A form of Sub-Standard Risk rating

F

Face Amount
The amount stated on the policy that will be paid in case of death. It does not include additional amounts payable under accidental death or other special provisions or acquired through the application of policy dividends, and can be reduced by loans or withdrawals.

Face Page
The first page of a life insurance policy. It includes basic information such as the policy number, type of policy, amount of insurance and premium amount, as well as the name of the insured, the owner and the beneficiary.

Facility of Payment
A contractual provision that allows the insurer, under stated conditions, to pay insurance benefits of up to $1,000 to a person or persons other than the insured, the designated beneficiary, or the insured's estate.

Facultative Reinsurance
An individual reinsurance negotiated and placed individually.

Facultative/Obligatory
A reinsurance term for a contract where the reinsured can select which risks he cedes to the reinsurer, but where the reinsurer is obliged to accept all cessions made.

Fair premium
The premium level that is just sufficient to fund an insurer's expected costs and provide insurance company owners with a fair return on their invested capital.

Family Income Policy
Special life insurance policy combining decreasing term and whole life insurance that pays a monthly income of $10 for each $1000 of life insurance if the insured dies within the specified period. The monthly income is paid to the end of the period, at which time the face amount of insurance is paid.

Family Policy
A life insurance policy providing coverage on all or several family members in one contract. The primary breadwinner's coverage is typically Whole Life insurance, with the spouse and children, including those born after the policy is issued, insured with small amounts of Term Life insurance.

Fiduciary
A person who holds something in trust for another.

Fidelity Bond
Bond that protects an employer against dishonest or fraudulent acts of employees, such as embezzlement, fraud, or theft of money.

Fifteen-Year Level Term
A Term Life insurance policy with a level death benefit where the premium remains the same for fifteen years.

Final Expenses
Immediate expenses incurred at the time of a person's death. These include funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes.

Five-Year Level Term
A Term Life insurance policy with a level death benefit where the premium remains the same for five years.

Fixed Amount Option
Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.

Fixed Annuity
Annuity whose periodic payment is a guaranteed fixed amount.

Fixed Expenses
Fixed expenses are those not directly related to a policy (for example: a premium tax or the payment of a commission associated with the sale of a policy). Includes: advertising, accounting, planning, rent, computer facilities, etc. These expenses must be allocated to each "block" of policies sold; the distribution is discretionary and can be critical. Some insurers assume too many (or too few) policies will be sold, thereby reducing (or increasing) the fixed expense factor assumed in the pricing of the policy. This may lead to lower credits or increased policy charges.

Fixed Period Option
Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.

Flat Schedule
A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.

Flexible Premium Policy or Annuity
A life accident policy or annuity under which the policy holder or contract holder may vary the amounts or timing of premium payments.

Flexible Premium Variable Life Insurance
A life insurance policy that combines the flexible premium feature of Universal Life insurance with the equity-based benefit feature of Variable Life insurance. Cash values are not guaranteed and the death benefit usually has little or no guarantee. Policy values depend on the performance of a separate account.

Foreign Insurer
An insurer is a foreign company in any state other than the one in which it is incorporated.

Fortuitous Loss
Unforeseen and unexpected loss that occurs as a result of chance.

Franchise Insurance
Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless its simultaneously discontinues or modifies all other policies in the same group.

Fraternal Insurance
Insurance provided by fraternal orders or societies to their members. Such insurance may be written on an assessment or legal reserve basis

Fraternal Life Insurance
Life insurance provided by fraternal orders or societies to their members.

Fraternal Society
A social organization that provides insurance for its members.

Free-Look Period
A provision required in most states whereby policyowners have a period of time – usually, 10, 20 or 30 days, depending on the state – to examine their newly issued policy, and return it for a full refund of premium if not satisfied for any reason.

Fronting Company
A domestic insurance company that provides claims or administrative services to a captive.

Funeral Expenses
Expenses incurred for a funeral and burial. These can include casket, vault, grave plot, headstone and funeral director.

Future Increase Option
A provision found in some insurance policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured's physical condition.

(some definitions taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)