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
Provision applied as a rider attached to an ordinary life insurance policy for the purpose of meeting estate planning requirements. When the insured dies, the beneficiary is entitled to ...
Group that, with the exception of the government, establishes the standards for all financial accounting and reporting for the various entities in the United States. The standards enable ...
Practice in which no funds are set aside on a mathematical basis to pay for expected losses. This occurs when a risk manager is not aware of an exposure, when the cost of treating an ...
Nominal interest rate minus the rate of inflation. ...
Relationship of the frequency of illness, sickness, and diseases contracted by individual members of a group to the entire group membership over a particular time period. ...
Same as term Casualty Actuarial Society: accrediting body for the ACAS (Associate of the Casualty Actuarial Society) designation and the FCAS (Fellow of the Casualty Actuarial Society) ...
Same as term Exclusions: provision in an insurance policy that indicates what is denied coverage. For example, common exclusions are: hazards deemed so catastrophic in nature that they are ...
Coverage usually written as an endorsement to property policies such as the Standard Fire Policy. A loss must be by the intentional acts of vandals. This peril is of particular importance ...
Standard set under the occupational safety and health act that sets allowable levels of worker exposure to such toxic substances as asbestos, certain chemicals, and radiation. In many cases ...
Have a question or comment?
We're here to help.