Preliminary Term
Definition of "Preliminary term"
Life insurance accounting method that does not require any terminal reserve for a policy at the end of the first year. First-year policy acquisition expenses, such as agent commission, medical examination, and premium tax, are often too large to leave enough of the end-of-the-year premium for addition to the premium reserve required under state full valuation reserve standards. In order to avoid taking the difference between the amount of the premium remaining and the required addition to reserves out of the insurance company's surplus account, the full preliminary term reserve valuation method is sometimes used. This leaves more of the premium available to cover acquisition cost and first-year claims.
Popular Insurance Terms
Bureau insurer that files its statistical and underwriting experience with a rating bureau. ...
Agreement prepared by an insurance company and offered to prospective insureds on a take-it-or-leave-it basis. If the contracts are misinterpreted by insureds, courts have ruled in their ...
Independent agency supported by the insurance industry that tests a variety of materials, products, and devices, such as appliances and electrical equipment, to assure that they meet safety ...
Coverage for persons whose medical history includes serious illness such as heart disease or whose physical condition is such that they are rated below standard. A policy may specifically ...
Percentage of income required by a retiree to maintain a desired standard of living during the retirement years. ...
Commission paid to an agent after the first year commission has been paid to that agent. Renewal commissions generally form a substantial portion of an agent's income after four years in ...
Five primary sectors of insurance coverage. Their purposes are: LIFE INSURANCE provides income to a beneficiary in the event of the death of the insured. HEALTH INSURANCE provides two types ...
Health insurance plan where a group of physicians and dentists provide medical services to a group of individuals for a predetermined fee. It is a basic type of HEALTH MAINTENANCE ...
Circumstance in which there is a probability loss to personal property or real property resulting from property damage, destruction, or disappearance. ...
Have a question or comment?
We're here to help.