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
Tax-exempt income that, for comparative purposes, has been increased by an amount equal to the taxes that would be paid if this income were fully taxable at statutory rates. ...
Central (main) office of an insurance company whose facilities usually include actuarial, claims, investment, legal, underwriting, agency, and marketing departments. ...
Changing state of the economy associated with changes in human wants and desires such that losses or gains occur. Dynamic changes are not insurable. ...
Statutory surplus plus the interest maintenance RESERVE plus the ASSET VALUATION RESERVE. ...
Performance of management functions associated with administering an employee benefit insurance plan, to include actuarial services, booklet and contract plan designing, billing, ...
Single insurance policy for only one kind of property at only one location of an insured. For example, property insurance on a rare piano in the insured's home would cover only that piano, ...
Person covered under an employee benefit insurance plan. ...
Adaptation of a standard insurance contract for special needs. Standard forms do not cover all needs but they can be adapted by an underwriter, broker, or an insurance company at the ...
Single payment or periodic payments that are made to purchase an annuity. ...
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