Glossary

 
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Illustration

Is a document utilized by life insurance agents that depicts year-by-year numbers indicating how a policy will work. It typically assumes that amounts being paid today will continue in all future years.

 

Immediate Payment Annuity

Is an annuity contract in which periodic payments begin immediately after (but sometimes up to a year after) the policy’s issue.

 

Impaired Risk

Is a person who does not meet the normal health requirements of a standard insurance policy. Protection is provided under a waiver and is usually subject to a higher premium charge. This is also known as Substandard Risk.

 

In-Force

An in-force policy is one for which the premium payments are up to date and that provides life or other forms of insurance protection.

 

Incontestability Provision

Is a contract provision that limits the period during which the insurer can contest the validity of an insurance policy if it is considered that false information was provided at the time of application.

 

Indebtedness

Is the sum of any unpaid loans plus any accrued loan interest due.

 

Indemnity Reinsurance

A form of reinsurance in which the risk is passed to a reinsurer (in return for a premium), which reimburses the ceding company for a proportion of its covered losses. The ceding company retains its liability to and contractual relationship with the insured.

 

Indexed Annuity

Is a special class of annuity that yields returns on contributions based on a on a formula linked in part to a published equity index, such as the Standard & Poor’s 500 composite Stock Price Index. It may also be referred to as an Equity Indexed Annuity.

 

Individual Life Insurance

Is a life insurance policy on a single person with premiums payable annually, semi-annually, quarterly or monthly.

 

Individual Policy Pension Trust

Is a pension plan in which the employer, or the employer and employee, can make level annual premium payments, with a view to funding the employee’s retirement benefits through an individual deferred annuity. Each individual will also have had a separate life insurance purchased and the pension plan and the life insurance will typically be held in the trust, providing both life insurance and retirement benefits.

 

Individual Retirement Account (IRA)

Is an interest-earning retirement savings account in which the allowable contributions and earnings up to a specified dollar limit aren't taxed until the funds are withdrawn, after age 59½. IRAs are for workers who are not covered by an employment-based retirement plan, regardless of income, or whose income does not exceed certain taxable income levels.

 

Initial Specified Amount

Is the original amount of death benefit payable, as specified in the policy.

 

Insolvency

Occurs when an insurer can no longer meet its future financial obligations to its policyholders. Insurance insolvency standards and the regulatory actions taken vary from state to state. Typically, the first indications of an insurer’s financial stress will be its inability to pass the financial tests that regulators routinely administer.

 

Institutional Investor

Is an organization such as a bank, insurance company or other corporate entity that buys and sells large quantities of securities.

 

Insurability

Is the characteristic of being acceptable for insurance and is also the notional limit imposed on the death benefit value that an individual may insure with a given carrier. This is important for a seller to consider when settling a policy as selling the policy may leave the insured with insufficient insurable capacity, should he or she wish to take out a further policy in the future.

 

Insurable Risk

Is a risk that conforms to the norms and specifications of the insurance policy in a way that fulfills the criteria required for an insurer to be able to offer affordable and effective cover. The criteria would take into account whether the risk is definable or accidental by nature and be part of a group of similar risks large enough to make losses predictable.

 

Insurance

Is an arrangement by which an insurance company contractually undertakes to pay compensation for specified loss, damage, illness, or death in return for payments of specified premiums. The pooling of many individual policyholders’ risks together enables an insurer to charge an affordable premium to each.

 

Insurance Examiner

Is the state insurance department representative assigned to oversee the official audit and examination into the affairs of an insurance company.

 

Insured

Is the individual on whose life an insurance policy is issued. Also known as the Insured Life.

 

Insured Life

See Insured.

 

Interest Crediting

Is the act of crediting interest to the policy's value.

 

Interest Crediting on Loan Account Value

Is the act of crediting interest to the policy’s loan account value, to compensate the insurer.

 

Interest Maintenance Reserve (IMR)

Is the reserve amount required to spread the impact of some realized capital gains and losses on fixed-income assets, which are amortized into income of the remaining life of the investment sold, rather than reflecting them immediately in earnings and surplus.

 

Interest Rate

Is the percentage amount payable or charged for the use of money or for the borrowing of money.

 

Interest Rate of Return

Is the interest rate calculated to be earned on a given Life Settlement purchase assuming that the actual and projected life expectancy are the same.

 

Investment Grade Bonds

Investment-grade bonds are higher quality and more highly-rated (at least rated Baa by Moody’s or BBB by Standard & Poor’s) than high-yield bonds.

 

Investment Objectives

Are the goals that an investor or a Variable Investment Option seeks to achieve. Investment objectives typically come in three forms; current income, capital appreciation, or a combination of the two.

 

Investment Options

Are the underlying sub-account options available as funding options to a variable annuity or a variable Universal Life insurance policy.

 

Investment Return

Are the gains made or losses incurred as a result of investment performance.

 

Investment Risk

Is the possibility that the actual return on an investment may differ from the expected return, including the possibility that some or all of the original capital invested could be lost.

 

Investment Strategy

The classification used in determining a client's personal investment objectives and his or her tolerance to risk.

 

Issue Age

Is the age of an insured at time of policy issue, as stated on the contract.

 
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