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NALC
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Sarasota,
Florida 34232
Telephone:
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Fax: 941-379-6112
2008 Fall Conference
September 10 - 13, 2008
Westin
Bay Shore
Vancouver, BC
 The NALC held its 2007
Fall Conference September
12-15, 2007,
at The Coeur d’Alene, Coeur D’Alene, Idaho
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Use this glossary to become familiar with terms relating to life insurance and retirement programs.
Click on the terms below to read a definition. Use your
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Benefits available in some life insurance policies prior
to death, which maybe used to help pay the costs of long-term care or terminal
illness.
A provision added to a life insurance policy for payment
of an additional benefit if death is caused by an accident. This provision is
often referred to as “double indemnity.
An authorized representative of an insurance company who
sells and services insurance contracts.
A financial product that allows a person to save for your
future on a tax-deferred basis and then allows the person to choose a payout
option that best meets need for income when the person retires.
Payment option include a lump sum, income for life, or income for a
certain period of time.
A provision in a life insurance policy that any premium
not paid by the end of the grace period (usually 30 or 31 days) will be paid
automatically by a policy loan if there is sufficient cash value.
The person or financial instrument (for instance, a trust
fund) named in a life insurance policy as the recipient of policy proceeds in
the event of the policyholder's death.
Also known as the cash surrender, this is the amount
available in cash upon surrender of a permanent life insurance policy before it
becomes payable upon death or maturity.
A contract in which annuity payouts begin at a future
date.
A pension plan that specifies the benefits an employee
will receive after retirement. Benefits typically are based on length of service
and salary, and usually are funded by the employer on behalf of each plan
participant.
A pension plan that specifies the contributions made by
employees and, in many cases, the employer on behalf of each plan participant.
These funds accumulate for each plan participant until retirement. At
retirement, funds are distributed either as a lump sum or monthly annuity.
Benefits are based on the amount of contributions plus earnings.
Insurance that provides periodic payouts when you are
unable to work due to illness or injury.
In life insurance, an amount of money returned to the
holder of a participating policy. The money is a partial refund of the premium
paid. It results from actual mortality, interest and expenses that were more
favorable than expected when the premiums were set.
A requirement for potential insurance policyholders to
obtain proof of physical or medical tests, such as blood pressure or cholesterol
screening, before purchasing an individual insurance policy.
The amount stated on the face of a life insurance policy
that will be paid in the case of death or policy maturity. It does not include
dividend additions, or additional amounts payable under accidental death or
other special provisions.
A person or organization that is authorized to control or
manage pension assets, or that is authorized or responsible for administering a
pension plan. Fiduciaries are legally obligated to discharge their duties solely
in the interest of plan participants and beneficiaries, and are accountable for
any actions that may be construed by courts as breaching that trust.
An annuity contract in which the premiums you pay are
invested in the general assets of the life insurance company, and the company
guarantees fixed payout every month.
An annuity contract that permits varying the amount and
frequency of premium payments from year to year for payouts that will occur in
the future.
An employer-sponsored retirement savings plan which
allows employee contributions to be made on a before-tax basis.
A retirement savings plan similar to a 401(k) plan for
employees of charitable and educational organizations.
A period (usually 30 or 31 days) following each insurance
premium due date, other than the first due date, during which an overdue premium
may be paid. All provisions of the policy remain in force throughout this
period.
A contract offered by insurance companies that guarantees
a rate of return on assets for a fixed period, and payment of principal and
accumulated interest at the end of the period.
A contract in which annuity payouts begin immediately or
within one year.
The person on whose life an insurance policy is issued.
An annuity where payouts are made as long as a person
lives, and after death, to a designated beneficiary as long as he or she lives.
An insurance policy terminated at the end of the grace
period because of nonpayment of premiums. (See nonforfeiture values.)
An insurance contract that provides financial protection
if a person is unable to care for himself or herself because of a chronic
illness, disability, or cognitive impairment, such as Alzheimer's disease.
The value of a life insurance policy if it is cancelled,
either in cash or in another form of insurance.
This is the most common type of permanent life insurance.
With this type of policy, premiums generally remain constant over the life of
the policy and must be paid periodically in the amount specified in the policy.
Life insurance designed to provide lifelong financial
protection. As long as the person pays the necessary premiums, the death benefit
will be paid. Most permanent policies have a feature known as cash value that
builds up, tax-deferred, over the life of the policy and can be used to help
fund financial goals, such as retirement or education expenses.
The printed document issued to the policyholder by a
company stating the terms of the insurance contract.
A policy illustration shows how your life insurance
policy will work. It illustrates
premiums, death benefits, cash values, and information about other factors that
may affect your costs.
The amount that can be borrowed under an insurance policy
at a specified rate of interest from the issuing company by the policyholder,
who uses the value of the policy as collateral for the loan. In the event the
policyholder dies with the debt partially or fully unpaid, the insurance company
deducts the amount borrowed, plus any accumulated interest, from the amount
payable to beneficiaries.
The payment, or one of regular periodic payments, that a
policyholder makes to own an insurance policy.
An employee benefit plan that meets Internal Revenue Code
requirements. Employer contributions to such plans are immediately deductible by
the employer, and contributions to and earnings in such plans are not included
in the employee's or beneficiary's income until actually distributed to that
recipient.
The restoration of a lapsed insurance policy. The company
requires evidence of insurability and payment of past-due premiums plus
interest.
An amendment to an insurance policy that modifies the
policy by expanding or restricting its benefits or excluding certain conditions
from coverage.
An individual retirement account (IRA) in which earnings
on contributions are not taxed, as long as the contributions have been in the
account for five years, and the account holder is at least age 59 ˝, disabled
or deceased. Contributions to a Roth IRA are not tax deductible.
One of several ways, other than immediate payment in a
lump sum, in which the insured or beneficiary may choose to have policy proceeds
paid.
An annuity whose periodic payouts stop when the annuitant
dies.
Life insurance
that covers the insured for a certain period of time, known as the term.
The policy pays death benefits only if the insured dies during the term.
An individual retirement account set up by an individual
to provide retirement income that allows contributions to be deducted from
income and permits earnings on contributions to accumulate tax- deferred until
retirement.
The process of classifying applicants for insurance by
identifying characteristics such as age, gender, health, occupation and hobbies.
People with similar characteristics are grouped together and are charged a
premium based on the group's level of risk.
A type of permanent life insurance that allows you, after
your initial payment, to pay premiums at any time, in virtually any amount,
subject to certain minimums and maximums. This policy also permits the insured
to reduce or increase the death benefit more easily than under a traditional
whole life policy. To increase a death benefit, the insurance company usually
requires a person to furnish satisfactory evidence of continued good health.
A contract in which the premiums paid are invested in
funds offered by the insurance company, including bond and stock funds. The
selection of funds should depend on the level of risk you want to assume. The
account value reflects the performance of the funds in which you decide to
invest. Over the long term, variable annuities invested in equities generally
reflect the growth and performance of the economy and can serve as a hedge
against inflation.
A type of permanent insurance that provides death
benefits and cash values that vary with the performance of a portfolio of
investments. A person allocate premiums among a variety of investments offering
different degrees of risk and reward, including stocks, bonds, combinations of
both, or accounts that guarantee interest and principal.
The right of an employee to all or a portion of the
benefits he or she has accrued, even if employment terminates. Employee
contributions, as in a 401(k) plan, always are fully vested. Employer
contributions vest according to a schedule defined by the plan and are usually
based on years of service.
A written agreement entered into between a viatical settlement provider and a
viator under which the viatical settlement provider will pay compensation in
return for the viator’s assignment, transfer, sale devise or bequest of the
death benefit or ownership of all or a portion of the insurance policy or
certificate of insurance to the viatical settlement provider. A viatical
settlement contract also includes a contract for a loan or other financial
transaction secured primarily by an individual or group life insurance policy,
other than a loan by a life insurance company pursuant to the terms of the life
insurance contract, or a loan secured by the cash value of a policy.
The owner of a life insurance policy or a certificate holder under a group
policy insuring the life of an individual with a catastrophic, life-threatening
or chronic illness or condition who enters or seeks to enter into a viatical
settlement contract.
A provision that sets certain conditions under which an
insurance policy will be kept in full force by the company without the payment
of premiums. It is used most frequently for those policyholders who become
totally and permanently disabled, but may be available in certain other cases.
The most common type of permanent life insurance. With
this type of policy, premiums generally remain constant over the life of the
policy and must be paid periodically in the amount specified in the policy.
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