Validation Period
Length of time required to amortize the excess expenses of acquiring a given group of life insurance policies. In acquiring a policy, a life insurance company may incur expenses (such as the costs of sales commissions, paperwork, and medical examinations) that are greater than the amount allocated for loading in the first year's premium. In effect, this means new policies are acquired at a loss, forcing insurers to dip into surplus to add the new business. After the first year, because expenses are lower, premiums and their invested earnings begin to generate a contribution to surplus, gradually making up for the excess expense of the first year. The length of the validation period depends on many factors, including the levels of GROSS premiums and expenses, but in some companies validation periods can extend for 10 years or more.
Popular Insurance Terms
Threatening act, physical and/or verbal, which causes a person to reasonably fear for life or safety. For example, if a boxing champion said he was going to hit someone, this would probably ...
Standard property/casualty insurance premium set by a state rating bureau. States have responsibility for regulating insurers and making certain that rates are reasonable. To this end, ...
Important means of preventing accidents and injuries. Insurers take corporate safety programs into account when rating workers compensation and other business insurance policies. ...
Time that has elapsed between when claims actually occurred and when claims are actually paid. ...
Model state law of the NAIC that stipulates that the contract owner must receive annual reports concerning the annuity unit values, the manner in which the variable benefits are calculated, ...
Gross yield minus total costs (expenses). ...
Policy clause that excludes coverage for loss of property if the cause of the loss cannot be identified. Mysterious disappearance is an exclusion in a standard inland marine insurance ...
Type of disability income insurance that provides income payments to the wage earner when income is interrupted or terminated because of illness, sickness, or accident and can continue to ...
Sample of n elements selected from a population of A? elements in such a way that the sample has essentially the same characteristics as the population. The random sample serves as the ...
Have a question or comment?
We're here to help.