Definition of "Interest rate swap"

Geri Gray real estate agent

Written by

Geri Grayelite badge icon

PalmerHouse Properties

Contractual agreement between two parties in which they agree to exchange a stream of interest payments on either a fixed rate for a floating rate or a floating rate for a fixed rate. The insurance company is most likely to select a floating rate for a fixed rate because it needs to know exactly what it will be paying in future interest. In this way, the insurance company can hedge its interest rate exposure (risk that interest rates will rise or fall at some stipulated time), reflected by changes in the value of its assets on the balance sheet.

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

Federal law passed in 1920 that allows any seaman incurring bodily injury as the result of the performance of one or more functions of the job to bring a suit for damages against the ...

Payment of premiums and benefits as they come due. In pension plans, known as the "pay as you go basis." The plan depends on new employees coming into the work force so that their ...

Property damage resulting from aircraft traveling faster than the speed of sound. Although the vibrations caused by such high speed can cause damage, it is excluded on most property forms. ...

Charitable planning strategy under which a donor transfers title to his or her residence or farm to the charity. Upon transfer of title, the donor reserves the right to occupy the property ...

Allocation of funds in a retirement plan. ...

Arrangement by an employer in which employees share in profits of the business. To be a qualified plan, a predetermined formula must be used to determine contributions to the plan and ...

Sum of insurance provided by a policy at death or maturity. ...

Property damage coverage for a vehicle under the collision insurance and comprehensive insurance sections of the business automobile policy (BAP) and the personal AUTOMOBILE POLICY (PAP). ...

Injury covered in a health insurance policy that is isolated from any previous injury. ...

Popular Insurance Questions