Terminal Funding
Definition of "Terminal funding"
Former method of funding a pension plan. When employees retire, the employer sets aside a lump sum that will pay them lifetime monthly benefits. When determining the amount, these factors are considered life expectancy, the promised monthly benefit, and expected earnings on the sum set aside. The lump sum can either be placed in a trust fund or used to buy an annuity. Terminal funding, along with the current disbursement method, are no longer permitted for qualified pension plans under the employee retirement income security act of 1974 (erisa). ERISA requires current funding of future pension liabilities.
Popular Insurance Terms
Rules stating that every administrator of a qualified pension plan, profit sharing plan, section 401 (K) plan salary reduction plan), section 403(b) plan, and stock bonus plan must provide ...
Act by a person who is terminally ill of cashing in a life insurance policy to pay for the necessary associated illness, medical expenses, and final wishes. This terminally ill person ...
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Found under the "Exceptions and Exclusions Section for All Medical Benefits" in many health insurance policies that exclude: complications arising from elective, nontherapeutic voluntary ...
Determination of: property covered, property excluded; perils covered, perils excluded; location covered, location excluded; time period the policy is in force;persons covered, persons ...
Expectation of illness or injury. The probability of such occurrence is shown by a morbidity table, which is important in determining the premiums for health insurance policies. ...
Form of state rating legislation that allows each property/liability insurer to choose between using rates set by a bureau or its own rates. Individual states regulate insurers and approve ...
Retirement arrangement in which contributions are divided between allocated (insured) and unallocated funding instruments (an uninsured plan). It seeks to combine the advantages of ...
Legislation mandating that factors taken into account in the calculation of premium rates for automobile insurance include the insured's driving record, annual miles driven, and years of ...
Have a question or comment?
We're here to help.