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
Government group that provides reinsurance for private insurers that write riot and civil commotion insurance. Riot losses in major cities in the 1960s caused insurers to stop writing this ...
Legislation that provided temporary rules for implementing the employee retirement income security act of 1974 (erisa). ...
A newer generation of life insurance policies that are credited with interest currently being earned by insurance companies on these policies. ...
That which adjoins. Most property insurance policies such as the homeowners insurance policy provide structural coverage on an adjacent building on the same basis as the primary building. ...
Financial instrument traded on the Chicago Board of Trade (CBOT). By purchasing this future, the insurance company can hedge its risk exposure against possible future catastrophic losses. ...
Trust established under the auspices of the Internal Revenue Code that permits the maintenance of a separate account within the employer's defined benefit pension plan from which to pay the ...
An exception to section 101 (a) (1) OF THE INTERNAL REVENUE CODE tax-exempt Status Of the DEATH BENEFIT in a life insurance policy where the transfer of the interest in the policy by the ...
Time interval during which policy is in force. ...
Option clause in a disability income policy that the insured can exercise that would permit the insured the right to purchase additional limits of coverage regardless of the insured's ...
Have a question or comment?
We're here to help.