Adverse Financial Selection
Process in which the policy-holder surrenders the policy when:
- cash proceeds can be invested elsewhere at a higher return than that being earned on the cash value within the policy;
- economic recession or depression exists and the cash is required to meet other financial obligations. If the policy-holder exercises the CASH SURRENDER VALUE option during these economic circumstances, the company may have to sell assets at a "fire sale" and will have fewer funds to invest at advantageous rates of return.
Popular Insurance Terms
Transaction in which the ceding company pays a premium and is guaranteed certain future payments to fund future losses. If losses are less than was expected, the ceding company receives a ...
Addition to reflect exposures with a greater probability of loss than standard exposures. For example, insuring a munitions factory obviously requires a premium greater than that required ...
Method of selling insurance directly to insureds through a company's own employees, through the mail, or at airport booths. The company uses this method of distribution rather than ...
Associated insurers that are under common stock ownership or interlocking directorates. Such an arrangement makes it easier to exchange insurance products for sale to the consumer, reduces ...
Payment for coverage that remains throughout the same premium-paying period. ...
Deductible that applies for the year. For example, a business pays for the first $40,000 of losses incurred during the year and the insurance company pays for all losses above that amount ...
State law that stipulates that the worth of separate accounts must be valued at current market with the exception of those separate accounts established and maintained for guaranteed ...
Monetary sum paid to an intermediary who acts as the contact between the lender (an insurance company) and the borrower. ...
Government reinsurance program that provided coverage for U.S. properties during World War II. Private insurers shared the first layer of coverage, with the government providing ...
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