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
Law, in several states, establishing a fund to guarantee benefits under policies issued by insurance companies that become insolvent. ...
Requirement that an individual must withdraw a minimum sum annually from retirement savings that have accumulated on a tax-deferred basis. This withdrawal must begin by April 1 of the year ...
Provision in an insurance policy that states the monetary value of each piece of property to be insured. ...
Standard property-liability insurance premium set by a rating bureau for a particular class of risk. ...
Unfriendly fire not confined to its normal habitat. For example, fire in the fireplace leaps onto the sofa. Property contracts protect against damage from a hostile fire, not from damage ...
Investment risk associated with the relationship between the yield (interest, dividends, and capital) of financial instruments and the rate of inflation in the economy. For fixed income ...
Same as term Mortality Table: chart showing rate of death at each age in terms of number of deaths per thousand. ...
Coverage usually provided as part of the special Multiperil insurance (smp) policy, generally replaced by the commercial package policy, through the attachment of the Blanket Crime ...
Actuarial method of crediting retirement benefits earned and the costs associated with these earned retirement benefits. An increment (unit) of benefit is credited for each year of ...
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