Glossary

 
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General Account

Is an undivided account in which life insurers record all incoming funds, excluding income from policyholders that have designated a different account, typically for whole life policies for example. A general account is usually an insurer’s largest account, the proceeds from which are used to pay claims.

 

Grace Period

Is a period following each insurance premium due date (with the exception of the first) during which an overdue premium may be paid to maintain the policy. All policy provisions remain in force during this period and no late fees are charged.

 

Graded Death Benefit Whole Life Policies

Are policies made available for people who are unable to qualify for other life insurance coverage, usually due to an adverse health history. These policies typically pay a death benefit equivalent to one third of the face value of the policy in the first year, one half of the face value in the second policy year and the face value of the policy from the third year onwards. Some policies however can run for up to five years before their full face value is payable. There are some instances when the premium payer will pay more premiums into the policy than the policy’s actual face value.

 

Gross Premium

Is the total amount of premium paid into a policy.

 

Gross Rate of Return

Is the after tax (but before the deduction of fees and expenses) annual rate of the gross investment return for an underlying variable investment option.

 

Group Annuity

Is a pension plan that provides annuities at retirement for all eligible persons under a single master contract. It is usually issued to an employer for the benefit of its employees. Each group member holds a certificate as evidence of his or her annuity.

 

Group Life Insurance

Is a life insurance contract on a group of people under a master policy, typically with no requirement for individual medical assessments. These are usually issued to an employer for the benefit of employees. Each group member holds a certificate as evidence of his or her insurance.

 

Guaranteed Change of Plan (GCOP)

Is a provision that allows for a survivorship contract to be exchanged for two single life contracts without evidence of insurability in the event of a change in estate tax law or divorce.

 

Guaranteed Insurability

Is an option that allows a policyholder to purchase additional predetermined amounts of life insurance at certain times in the future, without having to undergo a medical examination or otherwise providing evidence of good health.

 

Guaranteed Investment Contract (GIC)

Is a contract offered by an insurance company that guarantees the owner principal repayment and a fixed or floating interest rate for a predetermined period of time. GICs are sometimes used to fund the fixed-income option in defined contribution plans, such as 401(k)s.

 

Guideline Level Premium

Is the maximum annual premium allowed payable over the life, or cumulatively at any point in time, into a policy.

 

Guideline Premium Test

Is a two-part test that establishes guidelines for both the premiums that can be paid into a contract and the level to which the cash values for any given face amount are permitted to increase. The test is based on age and amount of death benefit. It is determined by a mathematical formula designed to maintain a proportionate balance between premium, cash value and death benefit. It is designed to deter people from buying life insurance with the intention of using it as an investment vehicle.

 

Guideline Single Premium

Is the maximum single premium allowed payable over the life or at any point in time into a policy.

 
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