Life Insurance glossary-ver 1 0-CONSOLIDATED

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					                          LIFE INSURANCE - GLOSSARY

Absolute Assignment - If absolute            Adjustable Life Insurance - a
assignment is done then there can be         variety of insurance allowing the
no reversion of the assignment to the        policyholder to change the type of
assignor or his estate.                      insurance, raise or lower the face
                                             amount of the policy, increase or
Accident benefit - If you pay a small        decrease the premium and lengthen or
additional premium, your nominee will        shorten the protection period.
receive twice the sum assured upon
your death by accident. If you suffer a      Adjuster - A trained individual who
permanent disability due to the              acts in settling claims arising out of
accident, then the amount is paid to         policy contracts.
you in installments, and subsequent
premiums under the policy are waived.        Adverse Selection - The tendency of
                                             persons who present a poorer-that-
Accident - An unforeseen, unintended         average risk to apply for, or continue,
event,     something      unexpected,        insurance to a greater extent than do
something    which   could    not  be        persons with average or better-than-
considered    as     a     foreseeable       average expectations of loss.
occurrence and consequence of an
undertaking.                                 Age Limits - Stipulated minimum and
                                             maximum ages below and above which
Accident Insurance - A type of life          the company will not accept proposals.
or health insurance providing a benefit
only as a result of death or accidental      Age Proof (Standard Age Proof/
bodily     injury    by    unforeseen,       Non Standard Age Proof) - At the
unexpected      or    an    unintended       time of proposal the proposer is asked
happening.                                   to furnish proof of the age as stated in
                                             the proposal form. The age proof can
Accidental            Death           and    be either Standard or Non Standard.
Dismemberment            Benefit    -   A    The Standard Age Proofs are based on
provision purchased in a life insurance      certain definite sources of information
policy to provide an additional amount       such as Birth Certificate, School
- usually equal to the policy face value     Certificate, while Non-Standard Age
- if the insured is killed in an accident.   Proofs are assumptions of the date of
Also know as "double indemnity." The         birth – horoscopes, elder’s declarations
dismemberment benefit, if included,          etc.    Certain restrictions are imposed
pays a set percentage for the loss of        on proposals with Non-Standard Age
eyesight, and loss of hands or feet at       Proofs.
or above the wrist or ankle.
                                             Agent - An insurance company
Actuary - A person professionally            representative    licensed     by    the
trained in the technical aspects of          Company, who solicits, negotiates or
pensions, insurance and related fields.      effects contracts of insurance, and
A specialist in the mathematics of risk,     provides service to the policyholder.
especially as it relates to insurance
calculations    such   as  expectancy,       Amendment - The formal document
premiums, dividends, and annuity             changing    the   provisions of an
rates. The actuary estimates how             insurance policy.
much money must be contributed to
an insurance or pension fund in order        Annuitant - An insured with a life
to provide for the future.                   annuity policy.
Annuity - A policy under which an          insurance policy to another by means
insurance company promises to make         of an assignment.
a series of periodic payments to a         Assignee - The party to whom an
named individual in exchange for a         assignment (a transfer of property or
premium or a series of premiums            rights to property) has been granted
called the purchase price.
                                           Assignment - Is the transfer of the
Annuity (retirement benefit) - It’s        rights, titles and interest of the policy
a periodic payment (usually monthly)       by the assignor to the assignee. The
payable by the insurer to the life         assignor is the absolute owner of the
assured. Generally, it is used in          policy. He/She could be the proposer,
context of retirement benefits. Under      the life assured or the absolute
this type of insurance contracts, the      assignee. Nomination is automatically
life assured pays a fixed premium          cancelled         by        Assignment.
(which could be a lumpsum or a             or
staggered payment) and the insurer,        The act of transfer of rights on a life
in return, provides the life assured a     insurance policy by the insured to
fixed amount of income throughout          another person in return of some
his/her lifetime.                          valuable consideration.

Annuity certain (annual payments)          Attending Physicians Statement
- These annuities are payable for a        (APS) - A written statement from a
certain minimum period and if the          physician who has treated, or is
policyholder dies during this period,      currently     treating the proposed
the remaining instalments are paid to      insured. The statement provides the
the beneficiary of the policy. These       insurance company with information
annuities operate as any normal            relevant to underwriting a risk or
annuity after the end of the certain       settling a claim.
period, i.e. payments will be made
throughout the life of the life assured.   Authorization - A form signed by the
No payments are made to the                proposed    insured    authorizing   an
beneficiary after the death of the life    insurance company to obtain and
assured, if he outlives the certain        disclose     information      regarding
period.                                    proposed life insurance coverage.

Anticipated Endowment - Unlike             Automatic Premium Loan (APL) -
endowment plans, in money back             An elective policy feature wherein the
policies, the policyholder gets periodic   insurance company pays any premium
"survival payments" during the term of     not paid by the end of the grace
the policy and a lump sum amount on        period, by making a loan equal to the
surviving its term. In the event of        premium from policy cash values.
death during the term of the policy,
the beneficiary gets the full sum          Aviation Clause - A clause limiting
assured, without any deductions for        the liability of the insurer if death is
the amounts paid till date, and no         related to, to a specified degree, with
further premiums are required to be        aviation.
paid. These type of policies are very
popular, since they can be tailored to     Backdating - A procedure for making
get specific amounts at specific periods   the effective date of a policy earlier
as per the needs of the policy holder.     than the application date. Backdating
                                           is often used to make the age of the
Assignor - The policy owner who            consumer at issue lower than it
transfers his or her rights under an       actually was, in order to get lower
premium.                                   an agent of one or more insurers and
                                           as a broker in dealing with one or
Bankers orders          Bank        is     more other insurers.
instructed to pay premium on due date      Business Insurance A policy which
on behalf of the insured.                  primarily provides coverage of benefits
                                           to a business as contrasted to an
Beneficiary             An   individual    individual. It is issued to indemnify a
designated in a will to receive an         business for the loss of services of a
inheritance,    or     the   individual    key employee or a partner who
designated to receive the proceeds of      becomes disabled.
an    insurance    policy,  retirement
account, trust, or other asset. In an      Captive Agent        One who sells
insurance policy the person who is         insurance for only one company as
nominated is normally the beneficiary.     opposed to an agent who represents
                                           several companies.
Benefits               The        claim
amount payable by the         insurance    Captive Insurance Company         A
company to a claimant.                     company owned by one or more non-
                                           insurance Industry for the main
Bonus - The insurance company              purpose of providing insurance covers
periodically values its assets and         to the owner.
liabilities. The premium payments that
it receives from you are used for three    Cash Refund Annuity A         form    of
purposes: to settle claims, to make        annuity contract which provides that if
investments, and to pay expenses. If       at the death of the annuitant
the insurance company makes profits,       installments paid to him have not
it declares a bonus for a certain period   totaled the amount of the premium
for its policyholders. It can disburse     paid for the annuity, the difference will
this bonus to you in three ways: the       be paid to a designated beneficiary in
bonus is added to the value of the         a lump sum.
policy; the bonus is distributed to you
physically; or your future premium         Cash Surrender Value
payments are reduced. In India,            or Cash Value            The    amount
generally the first method is adopted      that is available to the owner if a life
for with profit policies, and is paid to   insurance policy is surrendered any
you upon maturity of the policy.           time before the maturity date. The
                                           amount represents the cash value
Broker                  One         who    minus surrender charges and any
represents    an    insured    in    the   outstanding      loans      due   upon
solicitation,      negotiation        or   cancellation of the policy.
procurement of contracts of insurance,
and     who   may     render    services   Childrens       deferred    assurance
incidental to those functions. By law      plans                   Are    schemes
the broker may also be an agent of the     under which a minor child is the
insurer for certain purposes such as       beneficiary. The parent proposes for
delivery of the policy or collection of    insurance on the life of the minor and
the premium.                               pays premiums. The risk on life of
                                           child begins at a specified age. The
Brokerage Business Business                period before the specified age is
offered to an insurer by a broker. This    attained is called Deferment Period.
is sometimes called excess or surplus
business.                                  Claim                 A claim on the
Broker-Agent            One acting as      policy is the demand for performance
of the promise made by the insurer at         expenses prior to death. Accelerated
the time of making the contract. The          (or living) benefits paid reduce the
insurer is obliged to perform his part        death    benefit    payable  to  the
of contract, if the insured has               beneficiary(ies) upon death.
performed his.
                                              Date of commencement The date
Collateral              A   temporary         on which cover begins, following
assignment of the monetary value of a         acceptance of the risk by the insurer.
life insurance policy as security for a
loan. In the event of default, the            Dating Back
creditor would receive proceeds or            Backdating            Dating Back or
values only to the extent of his              Back Dating is an option to the life
interest.                                     assured to get the advantage of lower
                                              age wherein the policy is commenced
Conditional assignment The rights             from a date earlier than the date of
of the policy revert to the assignor in       signing of proposal form. However
case a specified event occurs. For            back dating is limited to within the
instance, if the assignee dies before         same financial year.
the assignor, then the policy would
revert to the assignor                        Death    Benefit   or    Death Claims
                                                                       The     amount
Convertible term assurance policy             payable, as stated in a life insurance
                          Is an ideal plan    policy,       to     the      designated
for people who can afford to pay large        beneficiary(ies) upon the death of the
premiums in their later years. These          insured. The amount paid is the face
types of policies permit the conversion       value, plus any riders that are
of term assurance policy into an              applicable, less any outstanding loans.
endowment contract.                           Deferment period         Deferment
Convertible Whole Life Policy          A      period is the period from the date of
mix of "whole life policy" and                commencement of the policy to the
"endowment policy", it provides for           date of commencement of risk on the
very low insurance premiums with              child's life under a Children's Deferred
maximum risk cover while the life             Endowment Assurance policy.
assured is just beginning his working         Deferred Annuity         An      annuity
career,     and     the    possibility   of   contract under which periodic benefits
converting      the     policy    to    an    are scheduled to begin at some
"endowment" policy after five years of        designated future date after the date
commencement.                                 on which the annuity was purchased.
Coverage                  Another word        Deferred                 Compensation
for insurance. Insurance companies                                     Arrangements
use the term coverage to mean the             by which compensation to employees
Rupee amount of insurance purchased           for past or current services is
Credit Life Insurance A group life            postponed until some future date.
insurance contract whereby a creditor         Deferred Group Annuity A type of
is protected in the event of death of         group annuity providing for the
the insured prior to the indebtedness         purchase each year of a paid-up
being paid in full.                           deferred annuity for each member of
Critical Illness Rider A rider added          the group, the total amount received
to a life insurance policy to protect the     by the member at retirement being
insured against financial loss in the         the sum of these deferred annuities.
event of a terminal illness. A critical       Defined Benefit Plan A pension plan
illness rider makes living benefits           stating either (1) the benefits to be
payable to the insured for medical            received       by    employees      after
retirement or (2) the method of              fully insured and have at least twenty
determining       such    benefits.   The    quarters of coverage out of the last
employer's contributions under such a        forty, ending quarter in which the
plan are actuarially determined.             disability occurs. Fewer quarters are
Defined contribution Plan A           plan   required for persons under age thirty.
under which the contribution rate is         Double Accident Benefit See
fixed and benefits to be received by         Accident Benefit
employees after retirement depend to         Double/Triple         Cover         Plans
some extent upon the contributions                                    These offer to
and their earnings.                          the beneficiaries double/triple the sum
Deposit       Administration        Group    assured on death of life assured during
Annuity                   A type of group    the term of the policy. On survival to
annuity providing for the accumulation       the date of maturity, the basic sum
of contributions in an undivided fund        assured is paid to the assured. These
out of which annuities are purchased         are low-premium plans, most useful
as the individual members of the             for situations such as housing.
group retire.                                Endorsements             Endorsements
Deposit Premium           The    premium     are used normally when the terms of
deposit paid by a policy holder when         an insurance contract are to be varied.
an application is made for an                Endorsements are attached to the
insurance policy.and is applied toward       policy document and the two together
the actual premium when asked to             constitute    the   evidence     of    the
pay.                                         insurance contract. Endorsements may
Disability                A       physical   be issued during the currency of the
impairment that substantially limits         policy e.g. when alterations in the
major life activities of an individual. It   risks are to be recorded. They could
may be partial or total.                     also be issued at the time of the issue
Disability Benefit                           of the policy to provide specific
Extended          Disability      Benefit    exclusion from the cover or specific
                          The Disability     extension to include an additional
Benefit under a policy provides for the      peril. Endorsements are issued on
waiver of future premium and/or              standard forms, or are separately
payment of a stipulated additional           typed, or are written on the policy
amount by installments in the event          itself.
the life assured becomes subject to          Endowment Policy         The      assured
disability.    The disability should be      has to pay an annual premium which
total and permanent and occuring out         is determined on the basis of the
of an accident. Intentional self-injury,     assured's age at entry and the term of
attempted suicide, injuries from riots,      the policy. The insured amount is
breach of law, from service in armed         payable either at the end of specified
forces,     aviation,  circus    etc   are   number of years or upon the death of
excluded from it.                            the insured person, whichever is
Disability Income Insurance            A     earlier.
form of health insurance that provides       EPDB                     Extended
periodic payments to replace income          Permanent Disability Benefit
when an insured person is unable to          Exclusions               Specific
work as a result of illness, injury, or      hazards listed in a policy for which
disease.                                     benefits will not be paid.
Disability Insured        Status of an       Experience rating        This is a form
individual who is insured for disability     of adjustment of premium found in the
benefits      under     that     Old-Age,    group Insurance schemes. The initial
Survivors, and Disability Insurance          rates of premium are charged based
program. The covered person must be          on certain mortality assumptions. At
the end of the year, the actual                 due premium is not paid that date
experience of the group is taken into           becomes the date of FUP.
account and the surplus (or deficit) in         Flat Schedule            A    type      of
premium,       after    adjusting        the    schedule in group insurance under
administrative experience is shared             which everyone is insured for the
with the policyholder.                          same benefits regardeless of salary,
Extended Term Insurance                 A       position, or other circumstances.
provision in some policies which                Free Cover Limit
provides the option of continuing the           No Evidence Limit        Under     Group
insurance for a particular insured              Insurance, the objective is to cover a
amount as per the policy condition as           cross section of able-bodied persons
term insurance.                                 who are able to perform their daily
Face Amount              The amount of          duties (and thus avoid the 'death-bed'
insurance provided by the terms of an           cases). For this purpose, generally,
insurance contract, usually found on            insurance cover is granted up to a limit
the first page of the policy. In a life         known as "Free Cover Limit" or "no
insurance policy, the death benefit.            evidence limit" subject to their
Facultative Reinsurance A type of               presence on the job as on the date of
reinsurance in which the reinsurer can          commencement of the scheme.
accept or reject any risk presented by          Fully Paid-up Insurance Insurance
an insurance company.                           on which all required premiums have
Family insurance         A life insurance       been paid.
policy providing insurance on all or            Graded commission Scale A
several family members in one                   commission      scale    providing     for
contract, generally whole life insurance        payment of high first-year commission
on the principal breadwinner and small          and lower renewal commissions to the
amounts of term insurance on the                insurance brokers and agents.
other spouse and children, including            Graded Premium Policy A type of
those born after the policy is issued.          Whole Life policy designed for the
Financial reinsurance          It    is     a   people who want more life coverage
mixture of banking and reinsurance              than they can currently afford. They
products. It is among the new, non-             pay a lower premium rate that
traditional solutions of alternative risk       increases gradually over the first three
transfer      (ART).      In      financial     to five years and then remains
reinsurance, for example, the client            constant over the life of the policy.
pays a higher premium, which - in               Gross estate             All   of     the
addition to the customary reinsurance           assets and liabilities owned at death.
procedure - is invested and earns               Gross Insurance Value Element
interest for the client. Thus, the client       (GIVE)                   Gross
has an extended cover that finances             Insurance value element is the amount
itself over the course of time.                 payable on death of a policy holder
First Premium            The            first   under a Deferred Annuity plan of
installment of the premium paid by the          insurance.
proposer. The payment of the first              Gross Premium            The    premium
premium signifies the commencement              paid by the policyholder.
of the contract.                                Group Contract           A contract of
First      Unpaid       Premium(FUP)            insurance made with an employer or
                         First      unpaid      other entity that covers a group of
premium refers to the first default in          persons identified as individuals by
paying premium by the policy holder.            reference to their relationship to the
On payment of the due premium a                 entity.
receipt is issued and this receipt              Group Insurance          Granting       of
indicates the date of next due. If this         insurance cover to a homogenous
group of individuals under a single           contest the statements contained in
policy (called Master Policy).                the application.
Guaranteed Addition Guaranteed                Increasing         Term        Insurance
additions are calculated at a rate per                                   Term        Life
every thousand of sum assured. They           Insurance in which the death benefit
are added to the basic sum assured            increases periodically over the policy's
and are payable on admittance of              term.
claim. This benefit is allowed only for       Indemnity                  Legal principle
each year for which premiums are              that specifies an insured should not
paid.                                         collect more than the actual cash value
Guaranteed                  Insurability      of a loss but should be restored to
                          Arrangement,        approximately the same financial
usually provided by riders, whereby           position as existed before the loss.
additional insurance may be purchased         Independent         Agency         System
at various times without evidence of                                     Type          of
insurability.                                 property     and     liability   insurance
Guaranteed Insurance Sum (GIS)                marketing system, sometimes called
                          A lump sum          the American agency system, in which
purchase price is given to purchase           the agent is an independent business
future pensions under Immediate               person        representing          several
Annuity Plan. This amount is referred         companies. The agency owns the
to as GIS. And the monthly pension            expirations or renewal rights to the
that is payable one month after               business,     and       the    agent     is
payment of first premium is calculated        compensated by commissions that
on the basis of age at entry.                 vary by line of insurance.
Guaranteed Insurance Sum (GIS)                Independent Agent An
                          Guaranteed          independent business person who
Insurance Sum is equal to purchase            usually represents two or more
price paid for a pension along with           insurance companies in a sales and
final Immediate Annuity Bonus.                service capacity and who is paid on a
Guaranteed Term           A     form     of   commission basis.
renewable      term    insurance       that   Individual Insurance Policies which
remains in force as long as the               provide protection to the policyholder
premiums are paid on time. With               and/or his/her family. Sometimes
guaranteed      term    insurance,      the   called Personal Insurance as distinct
insurance company cannot terminate            from group and blanket insurance.
the policy during the term.                   Insurable Risk             The conditions
Hazard                    A situation that    that make a risk insurable are (a) the
increases the chance of loss.                 peril insured against must produce a
Immediate Annuity A life annuity              definite loss not under the control of
policy under which the first benefit          the insured, (b) there must be a large
payment starts immediately from the           number of homogeneous exposures
date of purchase of the policy. This          subject to the same perils, (c) the loss
type of annuity must always be                must be calculable and the cost of
purchased with a single premium. The          insuring it must be economically
annuity is payable either for the life of     feasible, (d) the peril must be unlikely
the annuitant or for a certain period         to affect all insured simultaneously,
and thereafter till the annuitant is          and (e) the loss produced by a risk
alive.                                        must be definite and have a potential
Incontestability clause        A    clause    to be financially serious.
in the policy providing that if a policy      Insurance                  Insurance is a
has been in effect for a given length of      policy a person buys and upon that
time, the insurer shall not be able to        person's death, the family will be able
to get a certain sum of money.              days of grace, the policy is said to be
Joint Life Endowment Assurance              in lapsed condition. The insurer does
Plans                     The        sum    not cover the risk of lapsed policies, or
assured (plus any accrued bonuses)          covers only partial risk (to the extent
under this type of policy is payable on     of the paid-up value) of the policy
the end of the endowment term or on         during lapsation.
the first death of the two lives            Level Term Insurance            Term
assured, whichever is earlier. Typically    coverage on which the face value and
(though not a necessity) taken out by       premium remain unchanged from the
a couple, a variation is available for      date the policy comes into force to the
couples only. In this case, the sum         date of expiry of policy.
assured will be payable on first death      Lien                      In some cases
and then again on the second death          extra risk is expected to decrease over
(along with all vested bonuses) if both     a period of time. In such cases
deaths occur during the term of the         proposal is considered and accepted
policy. If one or both lives survive to     with lien. Lien operates through out
the maturity date, the sum assured          the period, on a decreasing basis. In
along with all vested bonuses will be       the event of death during the lien
payable on maturity date. Premiums          period full sum assured is not payable.
during this plan cease on the first         Eg: If 25% decreasing lien is imposed
death or the expiry of the selected         for 5 years. It is understood that in
term, whichever is earlier. Another         first year risk cover(sum assured
variation provides for annuity to           payable) is only up to 75%,second
both/surviving spouse, or a lump sum        year-80%, third year-85%,fourth year
amount to the legal heirs.                  90%,fifth year 95%, and from sixth
Key Employee or Key Person Any              year onwards lien is not operative.
person or employee whose continued          Life Annuity              An annuity that
participation in a business is necessary    makes      regular     (e.g.,     monthly,
to the success of the business and          quarterly, etc.) income payments for
whose death would cause the business        the life of a person (the annuitant).
a significant financial loss.               The annuitant cannot outlive the
Keyman Insurance This is a form             payments.       Upon     his/her    death,
of    reinsurance    which     seeks   to   however, all income payments cease
indemnify a business firm for the loss      and there are no beneficiary benefits.
of earning resulting from the death of      Life Assured              A         person
a valuable and important employee.          whose life is covered under a life
The loss can be through two ways:           insurance policy.
first, loss of earning may occur as         Life Expectancy           The number of
there may not be any replacement            years a person is expected to live as
available for the Key Man nor can one       determined       by    actuaries     using
be suitably trained to perform similar      mortality     (actuarial)    tables    This
functions. Second, the loss may occur       information is used to calculate
not because the man is irreplaceable,       annuity payments, life insurance
but because he is replaceable at a          premiums, and annual minimum
considerable cost to the firm, either in    distributions from IRAs.
terms of high salary or cost of training    Life Expectancy Tables          Mortality
and replacement. The loss of earning        tables that are used to calculate life
would include the cost of training and      expectancy figures.
reduced income of the firm during the       Limited      payment        life    policy
period of training.                                                   Premiums need
Lapse /                                     to be paid only for a certain number of
Lapsation                 If the premium    years or until death if it occurs within
under a policy is not paid within the       this period. Proceeds of the policy are
granted to the beneficiaries whenever        companies,        directly    or    through
death of the policyholder occurs.            reinsurance, after payments made for
Again, this policy can also be of the        reinsurance.
"with profits " or "without profits"         Nomination                  The process by
type.                                        which a policy holders gives the right
Loyalty additions         The      loyalty   to a person who can give valid
addition is given upon the maturity of       discharge to the insurer in case policy
the policy, and not before. It's a small     monies become payable due to death
percentage of the sum assured.               of the life assured.
Broadly speaking, loyalty addition is        Nominee                     Nominee is the
the      difference     between        the   person who is nominated to receive
performance of the insurance company         the amount under a policy and to give
and the guaranteed additions. It is an       a valid discharge to the insurer on
insurer’s effort to further share its        settlement of claim under a life
surplus after valuation with the policy      insurance policy.
holders.                                     Non Medical Business             Proposals
Master Policy             The       single   accepted       without     subjecting    the
policy issued to a party with which the      proposer        through       a     medical
insurer has entered into a contract for      examination is termed as Non-medical
group     cover     under    the    Group    Business.
Insurance.      The master policyholder      Noncontributory             A term applied
can either be an employer, a labor           to employee benefit plans under which
union or a voluntary association.            the employer bears the full cost of the
However the group should not be              benefits for the employees.
formed for the purpose of taking             Non-disabling Injury Benefit             A
insurance cover alone.                       benefit in some disability income
Maturity Claim            This is a claim    policies providing payment for medical
by the life assured for payment of           expense due to injury when medical
maturity proceeds of an endowment            care is necessary but the insured is
type of policy, after the completion of      not totally disabled.
the term of the policy. Under such           Non-forfeiture Benefit           Benefit
type of claim, the insurer usually           which prevents a life insurance policy
anticipates them in advance and sends        that has built up a cash value from
out intimations to the policyholders so      lapsing due to non-payment of
that they can receive the maturity           premiums by the policy-owner.
proceeds on the due date itself.             Non-participating policy Non-
Mortality Rate            The number of      participating policy is also known as a
deaths in a group of people, usually         without-profit or non-par policy. The
expressed as deaths per thousand.            policy owner does not share in any
Mortality Table           Tables showing     divisible surplus made by the life
the mortality rates of all the factors       insurance company. No bonus is paid
affecting mortality.       The mortality     on this policy.
tables not just show the rates of            Non-Standard Life           Any individual,
mortality but also the probability of        who cannot be granted a policy under
survival and the life expectation.           normal rates of premiums but can be
Mortality tables are used to calculate       granted with an extra premium over
premium rates for life assurance.            normal      rates     of     premium,      is
Net Premium               The portion of     considered as a Non-Standard Life.
the premium rate which is designed to        Occupational Hazard The             hazards
cover benefits of the policy, but not        relating to the occupation that a
expenses, contingencies, or profit.          person       is     pursuing      constitute
Net written premiums           Premiums      occupational        hazards.          Some
income       retained    by     insurance    occupations may be more hazardous
than others, such as mining, deep sea           Generally, there are two types of
exploration, aviation, armed forces,            bonuses       for   insurance     policies.
etc.                                            Reversionary bonus is a guaranteed
Occurrence policy          A        liability   addition to your insured amount and is
insurance policy that covers claims             paid when the policy matures (i.e.
arising out of occurrences that take            when the sum assured becomes
place during the policy period,                 payable) or when the life assured dies.
regardless of when the claim is filed.          Cash Bonuses are paid out at
Package Policy             A combination        periodical intervals.
of two or more individual polices or            Policy Loan               Some of the
coverage into a single policy. A                non-investment-linked whole life and
householders policy, for example, is a          endowment plans have a loan option.
package combining property, liability           It allows the policyholders to take a
and theft coverage for the individual           loan up to 90% of the surrender value
homeowner.                                      of the policy without the need of a
Paidup Value               Paid up value        guarantor or security. Interest is
is the reduced amount of sum assured            charged on the loan amount and
paid by the insurer in case of                  compounded on a half yearly basis.
discontinuation of the payment of               Policy reserves           The funds that
premiums after paying the full                  an      insurance       company      holds
premiums for the first three years.             specifically for the fulfillment of its
Paramedical Examination Physical                Policy obligations. Reserves are so
examination of an applicant by a                calculated that, together with the
trained person other than a physician.          future      premiums       and    interest
Partial Disability         The result of        earnings, they will enable the company
an illness or injury which prevents an          to pay all future claims.
insured from performing one or more             Policy Term               The period of
of the functions of his/her regular job.        coverage provided by an insurance
Participating Policy A participating            policy.
policy is also known as a with-profits          Policy year(Life)         Period between
or par policy. This type of policy is           a Policies anniversary dates.
entitled for bonus in the claims                Premium                   A      specified
proceeds.      A    participating     policy    amount of money that the insurer
charges a higher premium than a non-            receives in exchange for its promise to
participating policy.                           provide the policy proceeds when a
Partnership Insurance           A form of       specific loss occurs.
Business Insurance taken by the                 Premium Back Term Insurance
partners of a company seeking                   Plans                     These provide
indemnification of the loss on account          for refund of all the premiums paid, in
of exit.                                        the event of the life assured surviving
Physical Hazard            The     hazards      to the end of the policy term. The total
relating    to    the    person     himself     sum      assured     is   paid   to    the
constitute the physical hazards. They           beneficiaries in the event death occurs
are     age,     sex,    build,    physical     during the policy term.
conditions,      physical    impairments,       Premium Discount Plan A               Plan
personal history of life assured and            available in some rating jurisdictions
family history.                                 providing a percentage reduction on
Policy                     The contract of      premium dependent upon the size of
life insurance                                  the premium.
Policy Bonuses             In participating     Premium Flexibility The             policy
policies the company gives the                  holder's right to vary the amount of
policyholders a share in the profits of         premium paid each month towards a
the company in the form of bonuses.             life policy.
Premium Notice           Notice     of    a   is payable only in the event of survival
premium due, sent out by the                  to a fixed term. Pure Endowment has
company or one of its agencies to an          two variants: (a) with return of
insured. Synonym for " Renewal                premium on death, and (b) without
Notice"                                       return of premium on death.
Premium single           The       amount     Rated Policy            an     insurance
that constitutes payment in full for a        policy issued at a higher-than-
contract at its inception.                    standard premium rate to cover the
Premium        Waiver    Benefit(PWB)         extra risk where, for example, an
                         Premium              insured has impaired health or a
waiver benefits are the benefits which        hazardous occupation.
can be availed under children's               Rebating                Giving          a
policies, wherein the future premiums         consideration, usually all or part of the
payable upto vesting date are waived          commission, to the prospect or insured
in the event of death of the proposer.        as an inducement to by or renew.
Presumption of Death           If         a   Rebating is prohibited by law.
person is missing for seven years and         Reduced Paid-up Insurance             A
has not been heard of or has not              form of insurance available as a non-
contacted any person whom he would            forfeiture option. It provides for
have       done       under       ordinary    continuation of the original insurance
circumstances, the claimant can apply         plan, but for a reduced amount.
to the court of law for "presumption of       Reinstatement / Revival The
Death" certificate, which is submitted        process by which an insurer puts back
to the insurer instead of Death               into force a life insurance policy that
Certificate.                                  has been terminated for non-payment
Prohibited risk          The exposure         of premiums or a life insurance policy
or hazards       which an insurer has         that has been continued as an
decided not to insure under any               extended term or reduced paid-up
condition.                                    insurance.
Proportional Reinsurance               In     Reinsurance             Reinsurance
proportional reinsurance, the reinsurer       involves a contract made between two
assumes a percentage of the liability         parties, called the ceding insurance
which the direct insurer accepted from        company on the one hand and the re-
the insured and, for this service,            insuring company on the other. The
receives a corresponding percentage           ceding insurance company agrees to
of the premium. In the event of a             cede or give away and the re-insuring
claim, the reinsurer is proportionately       company agrees to accept a certain
liable, that is to say it must pay the        fixed share of risk upon terms as set
same percentage of the claim as it            out in the reinsurance contract.
received in the premium.                      Renewable         Term       Insurance
Proposal Form            A pre-designed                               Term insurance
form in which a person desiring to take       which can be renewed at the end of
a policy fills in the details such as his     the term, at the option of the
name, address, occupation, age,               policyholder and without evidence of
family history, health and habits to the      insurability, for a limited number of
insurer. The insurer assesses the risk        successive terms. The rates increase
based on the facts provided to him in         at each renewal as the age of the
the proposal form.                            insured increases.
Proposer                 Proposer is a        Renewal Commission            All
person who proposes the insurance             commissions paid to the agent for the
policy.                                       renewal premium are called renewal
Pure Endowment Policy Under this              commission.
form of life insurance the sum assured        Renewal Premium         All           the
premiums other than the first premium       Target Pension    Target pension is
are called renewal premiums.                the amount of pension which one
Revival                  A lapsed policy    wishes to receive under a pension
can be reinforced by the process of         policy.
revival. Revival is the reassessment of
risk at the time of revival, as if a new    Term                      Term is the
policy is being taken by the life           period for which insurance coverage is
assured. At the time of revival the         given.
insurer has the option to renew the         Term Insurance            Under a Term
terms and conditions of the policy.         Insurance Plan sum assured is payable
Riders                   Riders       are   only if the death occurs during the
additional benefits that one can add on     specific pre-determined term. If death
to the policy. The rider can be opted       does not take place during such term
for at the time of taking the basic         the amount of premium is forfeited.
policy or they can be added at the          This contract provides pure life
policy anniversary. Additional premium      insurance cover.
is charged for each rider. No Bonuses       Term Insurance Rider           An
are paid under the rider.          Some     endorsement or attachment to a life
examples of riders are: Premium             insurance      policy    that    provides
Waiver Benefit, Critical Illness Rider,     additional term coverage for the
Level Term Premium Rider.                   amount specified. If the insured dies
Short-Term       Disability     Income      during this time, the designated
Insurance                The provision      beneficiary(ies) can receive death
to pay benefits to a covered disabled       benefit proceeds..
person as long as he/she remains            Term Life Insurance A form of life
disabled up to a specified period not       insurance which provides coverage for
exceeding two years.                        a specified period of time and does not
Sum Assured              Sum assured is     build cash value.
the amount that an insurer agrees to        Total Disability          An illness or
pay on the occurrence of an event.          injury which prevents an insured
Surrender                                   person from continuously performing
Surrender Value                             every duty pertaining to his/her
Cash value                                  occupation or engaging in any other
Guaranteed Surrender Value                  type of work. (This wording varies
Special Surrender Value The                 among insurance companies.)
Insurance Laws provides for accrual of      Underwriter               a     company
certain benefits to policyholders, even     that receives the premiums and
if they are unable to keep their policies   accepts      responsibility    for    the
in force by payment of further              fulfillment of the policy contract
premium. In India, if at least three        Underwriting              The process of
years' premium has been paid within a       selecting risks for insurance and
policy,    the   policy    acquires     a   determining in what amounts and on
guaranteed surrender value (GSV).           what terms the insurance company will
The GSV is usually equal to 30% of the      accept the risk.
premium paid, less the first years'         Underwriting        Profit    or    Loss
premium and any extra premium                                         The amount of
under the policy. However, individual       money which an insurance company
insurer may offer a liberal value, called   gains or loses as a result of its
Special Surrender Value (SSV).              insurance operations. It excludes
Surrender Charge         Fee charged to     investment transactions and income
a policyholder when a life insurance        taxes paid to govt.
policy or annuity is surrendered for its    Unearned Premium The portion of
cash value.                                 a premium that a company has
collected but has yet to earn because        Under deferred annuity policies, the
the policy still has unexpired time to       expiry of the deferment period is the
run.                                         vesting date of the policy.
Variable Annuity         A       deferred    Waiting        Period         (Children
annuity contract which is investment         Assurance)               For the policies
sensitive. Under this the premiums           on the life of a minor, the risk
(Called     'deposits')    during      the   coverage may begin from a particular
deferment period are utilised to             age, say from the age of 10 years.
purchase units which are valued every        The period between the date of
month to reflect market fluctuations.        commencement of the policy and the
Dividends are utilised to purchase           date of commencement of risk is called
additional units. After the deferment        the waiting period.
period, the accumulated units are            Waiting Period (Disability Benefit)
exchanged for annuity units which are                                 A specific time
valued every year.      The amount of        that must pass following the onset of a
annuity is equal to the product of           covered disability before any benefits
number of units with current value of        will be paid under a disability income
each unit.                                   policy.
Vesting Bonus            It is the Bonus,    Whole Life Insurance          Whole Life
which the insurer declares after             Insurance provides for the payment of
evaluating its assets and liabilities, and   face value upon the death of the
that is added to the sum assured             insured, regardless of when it may
under a policy.                              occur.     The premium is payable
Vesting date             The date on         throughout the life of the policyholder
which the policyholder becomes the           and the death claim is paid to the
owner of a policy. In cases of policy        beneficiary as mentioned in the policy.
issued on the life of minors, the date
on which the life assured attains
majority is called the vesting date.
                               ANNUITY LIFE-GLOSSARY

Account Value           Sum total of        Anniversary Value The value equal
payments and earnings within the            to the Contract Value as of a Contract
account.                                    Anniversary, increased by the dollar
Accumulation (Life Products) Any            amount of any Premium Payments
increase in cash value of a life            made since that anniversary and
insurance                         policy.   reduced by the dollar amount of any
Accumulation Phase           The time       partial    Surrenders      since     that
during which assets accumulate inside       anniversary.
the annuity contract on a tax-deferred      Annual Maintenance Fee (AMF) An
basis prior to receiving annuity            annual charge deducted from annuities
payments.                                   on    the    most     recent     Contract
Accumulation Unit Value The daily           Anniversary or when an annuity
price of Accumulation Units on any          contract is Surrendered in full. The
Valuation                           Day.    charge is deducted proportionately
Accumulation Units In a variable            from the sub-accounts in use at the
annuity contract, if you allocate your      time.
Premium Payments to any of the sub          Annual Withdrawal Amount The
accounts, we will convert those             amount which can be withdrawn in any
payments into Accumulation Units in         Contract Year without contingent
the      selected     sub     accounts.     deferred          sales          charges.
Accumulation units are valued at the        Annuitization Phase The annuity
end of each Valuation Day and are           contract phase when we begin to make
used to calculate the value of your         periodic payout to you in your
Contract     prior   to   Annuitization.    contract.
Administrator (Employee Benefit             Annuity Calculation Date The date
Plan)      Under ERISA, the person          we    calculate your first        annuity
designated as such by the instrument        payment.
under which the plan is operated. If        Annuity Commencement Date The
the administrator is not designated         date we start to make annuity
and the plan sponsor cannot be              payments              to             you.
identified, the administrator may be        Annuity Payout Option Any of the
such person as is prescribed by             options available for Payout after the
regulation of the Secretary of Labor.       Annuity Commencement Date or date
Acts solely in the interest of plan         of the Contract Owner or Annuitant.
participants and beneficiaries and for      Annuity Unit An accounting unit of
the exclusive purpose of providing          measure used to calculate the value of
benefits and defraying reasonable           Annuity                       payments.
administrative expenses. Manages the        Annuity Unit Value Please refer to
plan's assets to minimize the risk of       Accumulation            Units        and
large loses. Acts in accordance with        Accumulation          Unit        Value.
the documents governing the plan.           Application,      Annuity      A    form
Allocated Plan A type of retirement         completed by someone wishing to
plan in which an individual account is      purchase an annuity contract. It must
set up for each employee in the plan.       be signed by the prospective owner
Allocation The distribution of the          and the financial professional who sold
employer's contribution to the account      the                              product.
of each participant. In a profit sharing    Asset Allocation An investment
plan, it also refers to the distribution    strategy where your investments are
of earnings and forfeitures for the         spread across a variety of asset
various                       accounts.     classes so that a portion of your assets
                                            has the opportunity to benefit from the
market’s         “best        performers.”      promissory notes issued to raise short-
Assumed Investment Return (AIR)                 term funds. The notes can be sold at a
The investment return upon which                discount with full payment on demand
variable annuity payments will be               at                               maturity.
based. Depending on the product type,           Common          Stock      A      security
the annual rate of return may be                representing ownership rights in a
selected by the client or a default rate        corporation.
may               be              assigned.     Contingent Annuitant The person
Automated Clearing House (ACH)                  you may designate to become the
The national computer system, linked            Annuitant if the original Annuitant dies
to the Federal Reserve Banking                  before we begin making payments.
system, that allows participants to             Contingent Beneficiary The person
electronically       transfer        money.     or persons who are named as the
Bond       An IOU (debt security) issued        contingent beneficiary/ies will receive
by company, municipality, government            the proceeds of the contract or policy
and its agency. The bond issuer                 only if the primary beneficary/ies have
promises to pay the bond holder a               died previous to the onset of the
stated rate of interest up to the date          payout to the primary beneficiary/ies.
of maturity, when the issuer promises           Contingent Deferred Sales Charge
to        repay        the         principal.   (Variable Annuity) The deferred
Breakpoint       See     Sales      Charge      sales charge that may apply when you
Breakpoint.                                     make a full or partial Surrender.
Broker (Broker of Record) A NASD                Contract Anniversary The annual
registered individual representing a            anniversary of the date the contract
broker/dealer or issuer when buying or          we issued your annuity. If the
selling a security for a client.                anniversary falls on a date that is not
Broker Dealer A general term for a              a Valuation Day, then the next
securities firm that buys and sells             Valuation Day will be your Contract
securities on behalf of its customers as        Anniversary        for     that      year.
well     as     its     own      inventory.     Contract Owner The owner or holder
Business Continuation Planning A                of              the              Contract.
planning process used to distribute or          Contract          Value         (Variable
dispose of a business interest at               Annuities) The total value of your
disability,   retirement,      or     death.    Annuity that we get by adding up the
Buy-Sell Agreement An agreement                 value of each of your Sub-Accounts
in which one party agrees to purchase           and Fixed Accumulation Features on
the financial interest that a second            any             Valuation            Day.
party has in a business following the           Conversion        Privilege    A    policy
second party’s death. The second                provision that permits the policy owner
party agrees to direct his or her estate        to change from one type of policy to
to sell the business interest to the            another without having to provide
purchasing party.                               evidence of insurability (typically from
Capital Gain/Loss Financial gain or             a   term     insurance    policy to a
loss when an investor sells an asset.           permanent          insurance       policy.
Capital        Gains       Distributions        Coupon       The annual rate of interest
Payments a mutual fund makes to                 on the face value of a bond that a
shareholders. These can be dividend             bond's issue promised to pay the
distributions, consisting of dividends          bondholder.
and interest earned by the fund, or             Cross Purchase Plan A business
capital gains distributions resulting           continuation agreement in which the
from profit made on the sale of                 business      owners     agree     among
securities     from      the       portfolio.   themselves to purchase the business
Commercial          Paper         Corporate     interest of a deceased owner. To
create the liquidity necessary to do          court of competent jurisdiction, or any
this, each owner purchases, owns and          other     proof    acceptable     to    the
is the beneficiary of the life insurance      Company.
policies insuring the lives of each of        Early        Distribution          Taxable
the             other              owners.    distributions (and certain deemed
Current Yield        The ratio of annual      distributions) are subject to ordinary
interest to the current market price.         income tax and if taken prior to age 59
Death Benefit (Annuity Products)              ½ , may also be subject to a 10 %
The amount payable after the Contract         federal income tax penalty. Typically,
Owner      or    the   Annuitant      Dies.   early distributions are penalized unless
Destination Fund             The fund(s)      the distribution is on account of death,
money is being transferred to.                disability or is part of a series of
Direct Rollover           Qualified plan      equivalent      payments.      An     early
money, other than IRA money, that             distribution is also called a Premature
moves directly from one financial             Distribution.
institution    to     another     financial   Earned Income              Under federal
institution. The client never receives        income tax laws, the income of an
the    qualified    plan   money.      The    individual from services he or she has
transaction     occurs    between      two    performed,      thus    excluding,     e.g.,
financial                     institutions.   income from the sale or rental of
Direct Transfer           Money moves         property      and     interest     income.
directly from one IRA to another IRA.         Effective Yield         The performance
The client never receives the IRA             yield of a money market fund or
money or the money moves from a               subaccount is based upon the income
non-IRA qualified plan to the same            earned by the fund/subaccount over a
type of plan at another institution.          seven-day period and then annualized.
Diversification                 Spreading     When the Effective Yield is calculated,
investments among many different              the income earned by the investment
securities or sectors to help reduce the      is assumed to be reinvested in sub
risk      of       market       downturn.     account units and thus compounded in
Dividend        The proportion of net         the course of a 52-week period.
earnings a corporation pays to it's           Equity      Ownership. Also, ownership
stockholders         when        declared.    interest in a corporation in the form of
Dollar Cost Averaging          Dollar Cost    common stock or preferred stock.
Averaging gives the potential for the         Also, total assets minus total liabilities.
stock market’s ups and downs to work          Also, the value of a property minus the
for you, because you are purchasing           owner's       outstanding       mortgage
more shares when prices are low and           balance.
fewer shares when prices are high.            Estate Liquidity The capability of a
This results in the opportunity to buy        person or entity to readily convert
more shares at a lower average unit           assets              into              cash.
price.     Continuous      or      periodic   Estate Planning          A plan for the
investment plans neither assure a             disposition of a person’s assets and
profit nor protect against loss in            debts at the time of death and for the
declining markets. Because Dollar Cost        preservation of those assets to pass on
Averaging        involves      continuous     to the individual’s heirs as desired.
investing regardless of fluctuating           Estate Transfer Conveyance of the
price levels, you should carefully            title to property from an estate to
consider your financial ability to            another                             person.
continue investing through periods of         Ex-Dividend        The period of time
fluctuating                         prices.   between the announcement of the
Due Proof of Death A certified copy           dividend and the payment. A security
of a death certificate, an order of a         becomes ex-dividend on the ex-
dividend date set by the SEC, which is      by the payment of periodic premiums
usually two business days before the        that can vary between set minimum
record date (set by the company             and          maximum              amounts.
issuing            the         dividend).   Forward Pricing The process used
Exchange Privilege Allows mutual            by mutual funds to determine the net
fund shareholders to transfer their         asset value of shares purchased and
investment from one fund to another         redeemed. The value, computed each
within the same family of funds,            day at the close of business of the New
usually for a very low or no sales          York Stock exchange, applies to all
charge.                                     purchases and redemptions made
Face Value The value of a bond that         during                that              day.
appears on the face of the bond,            Fractional Share          A portion of a
unless the value is otherwise specified     whole share if stock. Fractional shares
by the issuing company. Face value is       used     to     be      generated      when
ordinarily the amount the issuing           corporations declared stock dividends,
company promises to pay at maturity.        merged or voted to split stock. These
Face value is not as indication of          days    it   is    more      common       for
market                             value.   corporations      to    issue   the     cash
Fair Market Value The hypothetical          equivalent of fractional shares to
point at which property would change        investors. Mutual fund shares are
hands between a willing buyer and a         frequently      issued      in    fractional
willing seller, neither being under a       amounts.
compulsion to buy or sell and both          Front End Sales Charge A charge,
having knowledge of the relevant            usually deducted from your purchase
facts. It is the value in which the         payments.
property      (including    a   business    Fund (Sub Account) An investment
interest) is included in the gross estate   option within the variable annuity. The
for federal estate tax purposes.            objectives of each sub account have
Federal Estate Tax Federal tax              unique      long-term         goals      and
imposed on the right to transfer            investment          strategies.       These
property              by           death.   differences can affect the return and
Fiduciary An individual, corporation,       the degree of market and financial risk
or association entrusted with the           of                each                 fund.
management,           investment,      or   Fund       Exchange         (Sub-Account
disposition of another's property.          Transfers)        The ability to move a
Fixed Account Part of the issuing           sub-account value by $ or % from one
company's general account to which all      sub-account to another sub-account.
or a portion of the Account Value may       Sub-account        transfers     can      be
be                             allocated.   processed by whole dollar or whole
Fixed Annuity           An annuity that     percentage                        amounts.
guarantees a specific interest rate for     Future       Payment           Allocations
a specified period of time. An annuity      Indicates the allocation selection for
contract in which the issuing company       future investments in the variable
makes fixed (or guaranteed) dollar          annuity contract.
payments to the annuitant for the           Government Bonds Debt securities
terms         of       the      contract.   issued by the U.S. Treasury or a
Fixed Annuity Payout An annuity             federal                             agency.
providing guaranteed payments which         Guarantee Period For some fixed or
remain fixed throughout the payout          guaranteed annuity products, the
period and are not subject to market        period of time for which the initial or
fluctuations.                               subsequent        guarantee       rate     is
Flexible Premium Life Insurance A           applicable; the length of time the
life insurance policy that is purchased
guarantee rate applies (1,3, 5, 6, 7, 8,     Life Annuity with Cash Refund
9, 10 years).                                Payments are made for the lifetime of
Immediate Annuity An annuity                 the annuitant. If the annuitant dies
contract purchased as a distribution         before the cash refund period ends the
vehicle     with     payout     beginning    beneficiary receives payments until the
immediately.                                 end          of         the        period.
Individual Annuity            A Contract     Life Insurance Policy            A policy
issued by us that provides, in               under which the insurance company
exchange for premium payments, a             promises to pay a benefit upon the
series     of     annuity      payments.     death of the person who is insured.
Individual      Retirement       Account     Life Insurance Trust A type of trust
(IRA) A tax-deferred retirement              that consists of life insurance policies
account for an individual that qualifies     owned by the trustees and payable to
for special tax treatment under the          the trust on the death of the insured.
Internal          Revenue           Code.    Lump Sum Distribution A payout
Inflation      A period of rising prices     option by which a contract owner or
characterized by loss in the purchasing      policy owner receives the balance of
power         of        the        dollar.   his or her contract value in a single
Insured The person(s) or party(ies)          payment.
protected by an insurance policy.            Management Fee A fee paid by a
Interest The amount a borrower pays          mutual fund to the investment adviser
to a lender for the use of its money.        for               its            services.
Interest is paid by a corporation to its     Market Value Adjustment                  A
bondholders for the use of their             formula used to adjust the contract
money.                                       value of a modified guaranteed
Internal Revenue Code (IRC) The              annuity to reflect current interest rates
Internal Revenue Code of 1986, as            at     the      time     of    surrender.
amended.                                     Mortality Risk and Expense Charge
Investment Adviser's Act of 1940             Charges for assuming Mortality and
Federal legislation requiring that any       Expense Risks under the Contract.
individual who charges a fee for             Generally, the charges are deducted
investment advice must be registered         daily, at an annual rate specified in the
as an investment adviser. As amended         product’s                     prospectus.
in 1960, a law that established a            Mutual       Fund      A    professionally
pattern of regulation of investment          managed       portfolio    of   securities
advisers and is similar in many              invested on behalf of individuals who
respects to Securities Exchange Act          share a common investment objective
provisions governing the conduct of          or financial goal. Benefits include
brokers and dealers. It requires, with       diversification and professional money
certain exceptions, that persons or          management.
firms engaging for compensation in           Net Asset Value (NAV) The value of
the business of advising others with         a mutual fund share determined by
respect to their securities transactions     deducting the fund's liabilities from the
shall register with the commission and       total assets of the portfolio and
conform their activities to statutory        dividing this amount by the number of
standards designed to protect the            shares outstanding. This is calculated
interests           of          investors.   once a day, based on the closing
Investment Earnings           Investment     market price for each security in the
income           on        contributions.    fund's portfolio. For purposes of
Level Premium           A life insurance     SMART529, Net Asset Value (NAV) is
premium whereby the policy owner             the value of one unit of the investment
intends to pay the same premium              option excluding any sales charges.
amount each year the policy is active.       New York Stock Exchange (NYSE)
The oldest and largest stock exchange         Pre-Tax Employee Contribution A
in the U.S., located on Wall Street in        contribution to a retirement plan which
New York City. Responsible for setting        is made by a participant, and which is
policy, supervising member activities,        excluded from the participants taxable
listing   securities,    overseeing    the    income for federal tax purposes
transfer of member seats, and                 Preferred Stock       An issue of stock
evaluating                     applicants.    entitling the holder to preferential
Non-Diversified            Management         treatment over common stockholders
Company               Any management          on dividends and/or liquidation. It
company that is not diversified as            usually carriers a stated rate of return.
defined by the regulations of the             Primary Beneficiary The primary
Investment Company Act of 1940.               beneficiary is the person or persons
Non-Resident Alien A person who is            entitled to receive the death proceeds.
not a citizen of the United States or a       If the primary beneficiary dies the
resident alien                                proceeds will go to the contingent
Partnership       A     business     entity   beneficiary or to the estate of the
"owned" by individuals called partners,       owner if a contingent beneficiary is not
although no shares of stock are               named.
actually issued. Any income from the          Prospectus The disclosure document
business passes through to the                required by the Securities Act of 1933.
individual                       partners.    It must be given to purchasers of
Permanent Life Insurance Life                 securities registered with the SEC.
insurance that provides coverage              Public Offering Price The price at
throughout the insured’s lifetime and         which mutual fund shares are sold to
also provides an accumulation/cash            the public. It is the net asset value
value                             feature.    plus any sales charge. For purposes of
Plan A voluntary retirement plan of           SMART529, Public Offering Price (POP)
an employer which qualifies for special       is the price of one unit of an
tax treatment under a Section of the          investment option plus any applicable
Internal          Revenue            Code.    front-end sales charges
Plan Sponsor The business or                  Qualified      Retirement      Plan     A
employer sponsoring a retirement              retirement plan which meets the
plan.                                         qualification requirements set forth in
Policy Rider An amendment to an               the Internal Revenue Code and the
insurance policy that becomes part of         regulations. Qualified plans are eligible
the insurance contract and that either        for tax-favored treatment.
expands or limits the benefits payable        Redemption The process of turning
under             the            contract.    in mutual fund shares to the issuer in
Policy Value Also called Account              return for their current net asset
Value. With a variable life insurance         value.
policy there is no minimum Policy             Required Minimum Distribution
Value. The Policy Value equals the            (RMD) The minimum annual required
policy’s value in all of the sub accounts     distribution amount for an IRA holder
and any amounts in the Fixed                  who reaches age 70 1/2; also called
Accumulation Feature (Fixed Account).         mandatory minimum distribution. The
Policy Year (Annuity) The year                first minimum distribution is due by
commencing with the effective date of         April 1 of the calendar year following
a policy or with the renewal date of          the year the participant attains age 70
that policy, to be distinguished from         1/2. Distributions in subsequent years
the calendar year, which always starts        must be made by December 31.
from               January               1.   Right to Cancel/Right to Examine
Policyowner The person or entity that         The ability of the contract owner to
owns       an       insurance       policy.   cancel their contract within a certain
period of time without incurring               retirement.
contingent deferred sales charge. The          Social Security The government
time period and amount refunded is             program     which     provides   medical
determined        by      each        state.   benefits, disability benefits, death
Rollover Qualified money moved by              benefits and retirement benefits to
the individual from one company to             most workers. Both an employer and
another within 60 days of the date the         an employee contribute a percentage
owner        receives      the       money     of the employee's salary to Social
(constructive receipt). This allows            Security. Social Security often appears
continued tax-deferred status while            on an employee's pay stub and form
avoiding the 10% Federal Income Tax            W-2      under    the   heading    FICA.
penalty for premature withdrawal.              Source Fund         The fund money is
Sales Charge (Annuities)                The    transferred                        from.
amount charged on the purchase or              Spousal IRA        An IRA established by
redemption of an annuity contract.             an individual for his/her non-working
Sales Charge (Mutual Funds) The                spouse.
amount charged on the purchase or              Statement           of        Additional
redemption of mutual fund shares.              Information        A document available
Sales Charge Breakpoint The dollar             on request from a mutual fund which
amount at which a front-end sales              provides additional detail from the
charge        may       be        reduced.     fund's registration statement beyond
Security An investment instrument,             the basic information that must be
other than an insurance policy or fixed        provided in the fund's prospectus.
annuity, issued by a corporation,              Stock Redemption Plan A business
government or other organization that          continuation     plan   in   which    the
offers evidence of debt or equity.             business entity itself agrees to
Separate       Account      An     account     purchase     the     deceased    owner’s
established by an insurance company            interest in the business. To create the
solely for the investment of amounts           liquidity necessary to do this, the
deposited into owners of variable              business purchases, owns, and is the
annuity contracts or variable life             beneficiary of life insurance policies
insurance policies. The account is             insuring the lives of each of the
maintained      separately     from      the   owners.
insurance company's general assets.            Surrender-Annuity          A complete or
Short Term Capital Gain/Loss                   partial withdrawal from an annuity
Capital gain or loss from assets held          contract.
for      12      months        or      less.   Surrender       Charge      Adjustment-
Signature Guarantee A financial                Annuity        A formula used to adjust
institution    guarantees       that     the   the account value of certain Fixed
signature is not a forgery. A signature        Annuity contracts to reflect interest
guarantee may be executed by an                rate at the time of surrender.
'eligible' guarantor. Eligible guarantors      Surrender Value (Cash Value)-
include Commercial Banks, Trust                Annuity      The amount we pay you if
Companies, Savings Associations and            you terminate your contract before the
credit unions as defined by the Federal        Annuity Commencement Date. The
Deposit Insurance Act. Also included           Surrender Value is equal to the
are member firms of a domestic stock           Contract Value minus any applicable
exchange.                                      charges.
Simplified Employee Pension (SEP)              Survivorship Life Insurance: Also
IRA A retirement program for self-             called second-to-die insurance. A form
employed people or owners of small             of insurance which pays a death
companies allowing them to defer               benefit only upon the death of the last
taxes on investments intended for
surviving insured person. Often used           dividend amount bears to either the
by a married couple in estate planning.        original cost or the current market
Transfer Privilege         The ability to      value of the stock. If a mutual fund
transfer assets among variable annuity         mentions yield in its sales literature, it
investment options at no charge and            must report its total return for the last
without being subject to current               1, 5 and 10 years. See related terms:
income tax since the transfer is               7-Day Yield, 30-Day Yield, Current
occurring     within    a     tax-deferred     Yield and Effective Yield.
variable                          annuity.
Treasury Bonds          These very liquid
government-guaranteed issues have
maturities from five to 30 years, are
limited by statute to a 4 <% coupon
interest rate except for $10 billion,
which may be issued without regard to
any       interest       rate      ceiling.
Trust       A legal arrangement that is
created when a person or organization
transfers assets to a trustee for the
benefit of the recipients designated by
the                                   trust.
Trustee           A person, firm, or
corporation which is responsible for
managing the trust's assets.
Uniform Transfers/Gifts to Minors
Act     A law adopted in most states,
which permits a direct gift to a minor
without a trust or guardianship. The
donor appoints a custodian to manage
the gift until the minor reaches the
age              of              majority.
Unit Price      The daily price per unit.
This price fluctuates based on the
performance of the underlying funds.
Universal          Life        Insurance
Permanent life insurance that is
characterized by its flexible premiums,
face amounts, and death benefit
Variable Annuity Payout                  An
annuity providing payments which
vary in amount based on the
investment      performance       of    the
underlying                           funds.
Variable Universal Life Insurance
A type of permanent life insurance that
combines the premium and death
benefit flexibility of universal life
insurance with the ability to invest the
policy’s cash value in investment
Yield      An Investment return. In
stocks, the percentage the annual

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