Term Life Insurance Glossary
R
Rated Policy
A policy issued to insure a person classified as having a greater-than-average likelihood of loss. The policy may be issued (a) with special exclusions, (b) with a premium rate that is higher than the rate for a standard policy, or (c) with exclusions and a higher than standard premium rate.
Redating
The process by which an insurer reinstates a term life insurance policy without requiring the payment of past due premiums.
Reduced Paid-up Insurance Option
A nonforfeiture option under which the net cash value of a term life insurance policy is used as a net single premium to purchase a smaller amount of fully paid insurance of the same kind and for the same period as the policy being surrendered.
Refund Life Income Option
See life income option with refund.
Registered Representative
Any person who is licensed with the National Association of Securities Dealers and who is engaged either in selling securities as the agent or representative of a broker-dealer or in training the sales persons associated with a broker-dealer.
Reinstatement
The process by which an insurer puts back into force a term life or health insurance policy that has been terminated for nonpayment of premiums or a term life insurance policy that has been continued as extended term or reduced paid-up insurance.
Reinstatement Provision
A term life insurance policy provision that describes the conditions the policyowner must meet in order for the insurer to reinstate the policy if it has terminated because of nonpayment of renewal premiums.
Reinsurance
A type of insurance that one insurance company, known as the ceding company, purchases from another insurance company, the reinsurer, in order to transfer risks on insurance policies that the ceding company issued.
Reinsurance Treaty
A broadly worded statement of an on-going agreement between a reinsurer and a ceding company. The three common types of reinsurance treaties are automatic, facultative, and facultative-obligatory.
Usually just called a treaty.
Reinsurer
An insurance company that accepts the risk transferred from another insurance company in a reinsurance transaction.
Also called the assuming company.
Renewable Term Life Insurance
A type of term life insurance which includes a renewal provision that gives the policyowner the right to renew the insurance coverage at the end of the specified term without submitting evidence of insurability.
Renewal Premiums
Premiums payable after the initial premium.
Renewal Provision
(1) A term life insurance policy provision that gives the policyowner the right to continue the insurance coverage at the end of the specified term without submitting evidence of continued insurability. (2) A provision in an individual health insurance policy describing the circumstances under which the insurance company may refuse to renew the coverage, may cancel the coverage, or may increase the policy’s premium rate.
Replacement
The act of surrendering an insurance policy or part of the coverage of an insurance policy in order to buy another policy.
Rescission
An equitable remedy under which the insurer seeks to void a policy or have it declared void. Rescissions usually occur when there has been material misrepresentation in the insurance application.
Residual Disability Benefit
A partial disability benefit amount that is established according to a formula specified in a disability income insurance policy. The amount of the benefit varies according to the percentage of income loss attributable to the disability.
See also partial disability benefit.
Retention
(1) In reinsurance, the amount of a reinsured risk that the ceding company retains.
Retention Limit
The maximum amount of insurance that an insurance company will carry on any individual without ceding part of the risk to a reinsurer.
Revocable Beneficiary
A named beneficiary whose right to life insurance policy proceeds is not vested during the insured’s lifetime and whose designation as beneficiary can be cancelled by the policyowner at any time prior to the insured’s death.
Contrast with irrevocable beneficiary. See also beneficiary.
Rider
An amendment to an insurance policy that becomes a part of the insurance contract and expands or limits the benefits payable.
Also called an endorsement.
Risk Class
A group of insureds who present a substantially similar risk to the insurance company. Among the most common risk classes used by life insurance companies are standard, preferred, nonsmoker, substandard, and uninsurable.
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