Enhanced Ordinary Life
Definition of "Enhanced ordinary life"
Modified participating level coverage permanent life insurance policy under which the dividends are credited to the policy, thereby reducing the premiums below that usually charged for an ordinary life insurance policy. The structure of the policy is such that the dividends are used to purchase increments of paid-up additions of permanent life insurance. As the face amount (face of policy) is reduced (usually after 2, 3, or 4 years that the policy is issued), the accumulated paid-up additions are generally sufficient to make up the difference between the reduced face amount of insurance and the initial face amount of insurance purchased. The purpose of this approach is to maintain the death benefit at a level at least equal to the original amount of insurance purchased. Most of these policies guarantee that the death benefit will not fall below the original amount of insurance purchased, regardless of the fact that the dividends prove to be inadequate to purchase sufficient amounts of paid-up additions.
Another approach to the structuring of this product is to stipulate that the face amount of the policy is equal to 50 to 90% of the death benefit. The difference between the face amount and the death benefit is comprised of paid-up additions of permanent insurance and term insurance purchased by the dividends. This procedure will guarantee that the payable death benefit will not fall below that initially purchased. As time goes on, the aggregate paid-up additions should be sufficient so that it is no longer required that term insurance be purchased.
Popular Insurance Terms
Insured's age at the date a term life insurance policy is issued. An original age or retroactive conversion option permits the insured to convert the term policy to a cash value policy as ...
Coverage for property damage by a covered peril to insured cotton during the time period from its weighing in at the gin until its delivery to the buyer. Written either on a specified peril ...
In health insurance, the applicable average rate charged for a semiprivate room in the geographical area in which the charge is incurred. ...
Written document containing instructions on managing one's assets during one's lifetime. The document may be revoked (unless made irrevocable at creation), terminated, or amended at any ...
Exposure present only at certain times of the year. For example, resort property faces a business interruption risk only from damage that cannot be repaired in time for the resort season. ...
The cancellation provision clause appears in an insurance policy to leave a door open for the insurance company or insured to cancel a policy. This type of cancellation applies in instances ...
Types of contracts that insure building contractors for damage to property under construction. The completed value form requires a 100% coinsurance because insurance carried must equal the ...
Retirement taken after the normal retirement age. For example, if the normal retirement age is 65 or 70 an employee may continue to work beyond those ages. Normally the election of deferred ...
Determination that policies entered into on or after June 21,1988, that fail the 7-pay test (aggregate premiums paid at any time during the first 7 years of the contract exceed the annual ...
Have a question or comment?
We're here to help.