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G

General Agency System
Type of life insurance marketing system in which the general agent is an independent businessperson who represents only one insurer, is in charge of a territory, and is responsible for hiring, training, and motivating new agents.

Generation Skipping Tax
A transfer tax imposed on a gift or inheritance to those at least two generations younger than the person making the transfer.

Gift
A voluntary transfer of property to another person, made without receiving consideration in return.

Grace Period
A period of time after a premium due date, usually 30 or 31 days, during which an insurance policy remains in force and the overdue premium may be paid without penalty.

Gross Premium
The full amount of premium, ignoring taxes or deductions.

Graded Commission Scale
A commission scale providing for payment of a high first-year commission and lower renewal commissions.

Gross Estate
All of the assets and liabilities owned at death.

Gross Negligence
The failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another.

Guaranteed Insurability
An option that permits the policy holder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

Gross Rate
The sum of the pure premium and a loading element.

Group Contract
A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals by reference to their relationship to the entity.

Group Creditor Life Insurance
Life insurance provided to debtors by a lending institution to provide for the cancellation of any outstanding debt should the borrower die. Normally, term insurance is limited to the amount of the loan.

Group Insurance
Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.

Group Life Insurance
Life insurance, usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.

Group Ordinary Life Insurance
Group insurance plan providing life insurance for employees. Traditional whole life policy is split into decreasing insurance protection and increasing cash values.

Group Paid-Up Life Insurance
Accumulating units of single premium whole life insurance and decreasing term insurance, which together equal the face amount of the policy. Provided through a group life insurance plan.

Group Permanent Plan
Type of pension plan in which cash value life insurance is issued on a group basis and cash values in each policy are used to pay retirement benefits when a worker retires.

Group Term Life Insurance
Most common form of group life insurance. Yearly renewable term insurance on employees during their working careers.

Group Universal Life Products (GULP)
Universal life insurance plans sold to members of a group, such as individual employees of an employer. There are some differences between GULP plans and individual universal life plans -- for instance, GULP expense charges generally are lower than those assessed against individual policies.

Guaranteed Investment Contract
An investment contract with an insurer in which the insurer guarantees both principal and interest on a pension contribution.

Guaranteed Premiums
The guaranteed maximum payment for the purchased policy.

Guaranteed Purchase Option
Benefit that can be added to a life insurance policy permitting the insured to purchase additional amounts of life insurance at specified times in the future without requiring evidence of insurability.

Guaranteed Renewable
A contract that the insured has the right to continue in force by the timely payment of premiums (1) until at least age 50 or (2) in the case of a policy issued after age 44 for at least five years from its date of issue, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force, except that the insurer may make changes in premium rate by classes.

Guaranteed Renewable Contract
A contract that the insured person or entity has the right to continue in force by the timely payment of premiums for a substantial period of time, during which period the insurer has no right to make unilaterally any change in any provision of the contract, while the contract is in force, other than a change in the premium rate for classes of policy holders.

Guaranteed Renewable Contract
A health policy which the company guarantees to renew for life or until the insured reaches a specified age, usually 65.

Guaranty Fund
A fund, derived from assessments against solvent insurance companies, to absorb losses of claimants against insolvent insurance companies.

H

Hazard
The exposure of vulnerability to injury, loss or damage.

Home Office
The headquarters of an insurance company, that typically houses the actuarial, claims, investment, law, marketing and service areas.

Hospice
Health care facility providing medical care and support services such as counseling to terminally ill persons.

Human Life Value
For purposes of life insurance, the present value of the family's share of the deceased provider's future earnings.

I

Immediate Annuity
An annuity providing for payment to begin immediately.

Incidents of Ownership
Various rights that may be exercised under the policy contract by the policyowner. Some of the incidents of ownership may include rights: (1) to cash-in the policy, (2) to receive a loan on the cash value of the policy, and (3) to change the beneficiary designation.

Incontestability Clause or Period
Life policies provide that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured.

Indemnification
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.

Indemnity
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.

Independent Adjustor
Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.

Independent Agent
An independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.

Individual Retirement Account/ Annuity (IRA)
A retirement savings plan which allows individuals to contribute toward an account on a tax-deferred basis. The contributions and earnings are taxable as income only when withdrawn or paid out after retirement.

Industrial Life Insurance
Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis. The premiums are generally collected at the home by an agent of the company. Sometimes referred to as debit insurance.

In-Force Policy
Existing insurance policies for which the premiums are being paid or for which premiums have been fully paid.

Inspection Report
Documentation of an application or a summary statement of the proposed insured's occupation, residence, health history, lifestyle and general financial status. This report is prepared by the insurer or an investigating agency for consideration in the underwriting process.

Installment Income
The settlement option, or payment plan, which provides that the proceeds of a life insurance policy or annuity contract will be paid in a fixed amount at regular intervals for as long as the proceeds last, or for a fixed number of months or years.

Insurability
Acceptability by the insurer of an applicant for insurance based on factors such as the person's age, health, occupation, etc.

Insurable Interest
The fact that the person effecting the insurance must suffer a financial loss at the death of the proposed insured. For the policy to be issued, both the owner and beneficiary must have an insurable interest.

Insurance
A system for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration (premium), to assume the specified losses suffered by the insured.

Insurance Commissioner
The top insurance regulatory official in a state.

Insurance Department
A governmental bureau in each state charged with the administration of insurance laws, including the licensing of agents and insurers and their regulation and examination. In some jurisdictions the department is a division of another state department or bureau.

Insurance Needs Calculator
An automated program for estimating a person's life insurance needs. Also referred to as Financial Needs Analysis.

Insured
A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.

Insurer
The party that provides insurance coverage, typically through a contract of insurance.

Interest-Adjusted Method
A method of determining a policy's annual net cost by incorporating an interest factor into the calculation to reflect the time-value of money.

Interest-Adjusted Net Payment Index
An index of the average annual net payment (premium minus the equivalent annual dividend), which incorporates the time-value of money.

Interest-Adjusted Surrender Cost Index
This index is the average annual cost of insurance upon surrender, which incorporates the time-value of money.

Interest Income Option
One of the settlement options, or payment plans, under which the proceeds of a life insurance policy are held by the company to earn interest that is paid periodically to the beneficiary. The total insurance benefit is not paid out until some specified date in the future, but there are limits as to the length of time a principal sum may be held.

Interest Rate
The rate of interest credited on a policy's cash value.

Irrevocable Beneficiary
A beneficiary that cannot be changed without their written consent.

Irrevocable Trust
A trust that cannot be revoked or amended by the party who establishes it. This type of trust is often established when life insurance is purchased to protect an estate.

Issue Date
The date from which suicide and incontestability periods are calculated.

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