Term Life Insurance Glossary
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Sales Illustration
A graphic representation used by an agent to help explain an insurance product to a potential customer. Sales illustrations often consist of numeric charts describing the customer's goals and the cost elements and mechanics of the insurance product being proposed.
Sometimes simply called an illustration.
Second Insured rider
A rider that may be added to a permanent life insurance policy to provide term insurance coverage on the life of an individual other than the policy's insured.
Also known as an optional insured rider or additional insured rider.
Secondary beneficiary
Second-to-die life insurance
See last survivor life insurance.
Settlement
(1) See financial settlement. (2) In the United States, an irrevocable action that relieves the plan or plan sponsor of the obligation for a pension benefit and that eliminates the risk to the plan assets used to carry out the settlement. One example of a settlement is payment of a lump-sum benefit to a plan participant, thus discharging any further benefit obligation to the participant. Settlement is defined in FASB Statement No. 88.
Settlement Options
Choices available to the policyowner or the beneficiary of a term life insurance policy regarding the method by which the insurer will pay policy proceeds.
Also known as optional modes of settlement. See also fixed amount option, fixed period option, interest option, joint and survivorship option, life income option, life income option with period certain, and life income option with refund.
Short-Term Disability Income Insurance
Disability income insurance that provides a benefit for a short disability or for the first part of a long disability. Group short-term disability generally specifies a maximum benefit period of less than one year, commonly 13, 26, or 52 weeks. Individual short-term disability insurance features a maximum benefit period of from one to five years.
See also disability income insurance, and long-term disability income insurance.
Simultaneous Death Act
A state or provincial law which provides that if the insured and the primary beneficiary both die under conditions in which it is impossible to determine which one died first, the insured will be presumed to have survived the primary beneficiary unless there is a policy provision to the contrary.
Social Security
In the United States, a federal program that provides monthly income benefits to qualified workers who retire or become disabled and to the surviving spouses and dependent children of covered workers who have died.
Sole Proprietorship Insurance
Insurance on the life of the sole proprietor of a business. Sole proprietorship insurance is used either to pay the salary of someone hired to run the business after the owner's death or disablement or to compensate the owner's family for the loss of potential income due to the failure of the business after the owner's death or disability.
Split Funding
A method of funding a pension plan in which a portion of the total contributions to the plan are used to purchase an allocated funding instrument while the remainder of the contributions are placed in an unallocated fund.
Split-Dollar Insurance Plan
A type of business insurance in which an employee is covered by individual term life insurance that is paid for jointly by the employee and the employer. The employee names the beneficiaries. Each year the employer pays the portion of the premium that is equal to the increase in the policy's cash value for that year, and the employee pays the balance of the premium. If the employee dies, the employer will receive an amount of the proceeds equal to the cash value of the policy, while the beneficiaries of the policy will receive the remaining benefits.
Spouse and Children's Insurance Rider
A rider that may be added to a permanent life insurance policy to provide term insurance coverage on the insured's spouse and children.
Standard Premium Rate
The premium rate charged for insurance on a member of the standard risk class.
Standard Risk Class
A risk class made up of individuals whose anticipated likelihood of loss is not significantly higher or lower than average. Most insureds are included in the standard risk class.
Stock Insurance Company
An insurance company that is owned by people who buy shares of the company's stock.
Contrast with mutual insurance.
Substandard Premium Rate
The premium rate charged for insurance on an insured person classified as having a greater than average likelihood of loss. This premium rate is higher than a standard premium rate.
Substandard Risk Class
A risk class made up of people with medical or nonmedical impairments that give them a greater than average likelihood of loss. Substandard risks pay higher-than-standard premiums. Members of this risk class are called special class risks.
Successor Beneficiary
Search contingent beneficiary.
Successor Owner
A person designated to become the owner of a term life insurance policy if the owner dies before the person insured by the policy dies. In Quebec, known as the contingent owner.
Suicide Clause
Life insurance policy wording which specifies that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time (usually two years) after the policy's date of issue. Also called suicide exclusion provision.
Superstandard Risk Class
See preferred risk class.
Supplemental Executive Retirement Plan (SERP)
A nonqualified deferred compensation retirement plan designed to provide benefits for a group of executives, without regard to benefits provided under a qualified retirement plan.
Supplemental Group Term Life Insurance
Term life insurance over and above the basic coverage provided by a group policy. The supplemental coverage may provide an additional amount of the same type of term life insurance or may provide a different type of term life insurance. Supplemental coverage is usually contributory and subject to stricter underwriting standards than is the basic group coverage.
Surrender Charge
(1) Expense charges sometimes imposed when a policyowner surrenders a universal life policy. (2) A charge imposed if the contractowner surrenders a deferred annuity policy within a stated number of years after it was purchased.
Survivorship Life Insurance
See last survivor life insurance.
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