Definition of "Enhanced ordinary life"

Jane Bartlett real estate agent

Written by

Jane Bartlettelite badge icon

RE/MAX Complete

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.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Risk distribution included by type of coverage, by kind of risk, and by geographical location. ...

Coverage on fur coats as well as other clothes that have, fur trim. Protection is provided at any location on an all risks basis subject to the exclusions of wear and tear, war, and nuclear ...

Premium charged for an insurance policy whose coverage does not vary according to the insured loss experience. The premium is calculated either on a specified rating basis or on a ...

Illnesses or disability for which the insured was treated or advised within a stipulated time period before making application for a life or health insurance policy. A preexisting condition ...

Unexpected, unforeseen event not under the control of the insured that results in bodily injury. ...

Classification of occupations according to the degree of risk inherent in that occupation. ...

Damage through an insured's negligent acts and/or omissions resulting in bodily injury and/or property damage to a third party; damage to an insured's property; or amount an insurance ...

Table used in calculating various nonforfeiture values for industrial life insurance policies. These tables give the minimum values that must be generated to the policyowner. The insured's ...

Same as term Assignment Clause: feature in a life insurance policy allowing a policyowner to freely assign (give, sell) a policy to another or institution. For example, in order to secure a ...

Popular Insurance Questions