Definitions

Accidental Death Benefit (ADB) - If the cause of the Insured's death is due to an accident, the death benefit is the face amount of the basic policy plus the face amount of the Accidental Death Benefit purchased. It is not necessarily the same amount as the face value of the basic policy, although the benefit is commonly referred to as "Double Indemnity".

Active Participant - Someone who benefits from an employer-sponsored retirement plan. An employer indicates on the W-2 wage statement whether or not the employee is an active participant.

Annuity - In the broadest sense, an annuity is a series of periodic payments. Annuities may be broadly classified into deferred and immediate annuities.

Annuity, Deferred - An accumulation annuity under which payments are made by the annuitant, either through a single premium or a series of periodic payments, and left to accumulate, tax deferred, over a period of years until retirement.

Annuity, Immediate - A payout annuity under which the first distribution payment falls due within twelve months and 28 days after the receipt of the single premium purchase payment.

Assignment Life Insurance - The legal transfer of ownership rights under life insurance policy from one person to another, also the document effecting the transfer.

Beneficiary, Life Insurance - The person to whom the proceeds of a life insurance contract are payable at the death of the insured.

Beneficiary, Disability Insurance - The recipient of the claim payment is the beneficiary. The beneficiary of a policy is the owner unless policy rights have been assigned to a third party.

Buy/Sell Agreement - Executed Agreement which establishes insurable interest for funding by insurance. An agreement between two or more parties to buy and sell a business interest upon the occurrence of death or disability.

Buy Out (DI) - This plan is used to buy the interest of a partner or stockholder who becomes disabled for a long period of time.

Charitable Life - A program to make life insurance part of a charitable giving plan. Through this program the donor can make a tax deductible gift of life insurance underwritten on a non-medical basis.

Collateral Assignment - Assignment of a Life Insurance Policy as collateral. Can include death proceeds only, specific amount of proceeds, DI policies, and split dollar arrangements

Conversion - The process of changing a term policy to a permanent plan of insurance.

Disability Insurance (DI) - A form of insurance that provides income when an insured is unable to work because of a disability caused either by sickness or accident.

Disability Overhead Expenses (DOE) (DI) - A reimbursement plan designed to cover business expenses during the total or partial disability of professionals or business people.

Dividend Life Insurance - A dividend on participating life insurance contracts is the refund of that part of the premium paid at the beginning of the year which still remains after the company has set aside the necessary reserve and made deductions for claims and expenses. The dividend may also include a share in the company's investment, mortality and operating costs.

Employee Plan - Is a tax qualified pension or profit sharing plan sponsored by an employer (i.e. corporation, partnership) for the purpose of providing retirement benefits or life insurance for an employee.

Fiduciary - An individual or a trust institution charged with the duty of acting for the benefi9t of another party as to matters within the scope of the relationship between them.

Group Long Term Disability Insurance (Group LTD) - This is a master constract issued to an employer. It covers all or some of the employees of that firm, and provides long-term benefits on a group basis. Benefits are usually paid to age 65. These plans usually pay 50% - 70% of salary, and are reduced by income from other sources.

Life Annuity - An annuity in which payments cease upon the death of the annuitant

Life Annuity with Period Certain - A life annuity with a guarantee that payment will continue for a specific number of years. If the annuitant dies before the certain period has expired, payments will be made to a beneficiary for the duration of the certain period.

Life Insurance - Indemnification for a loss caused by a person's death. The indemnification is made possible by a system which spreads the loss over a large group of people exposed to the same risk.

Medical Information Bureau - A service utilized by all life insurance companies who are members of the MIB. Member companies are required to provide brief, coded reports of significant underwriting information to the MIB on a confidential basis. These reports do not include whether an application is issued, rated or declined. Only member companies have access to this information, which is used to protect against the omission of significant underwriting information by forgetful or dishonest applicants.

Mortality and Expense Risk Charge - This charge covers the annuity guarantees and other insurance company expenses. Deducted daily as a percentage of the account assets. Also known as the annuity rate and expense guarantee charge.

Mutual Company - A life insurance company which has no stockholders but is owned and managed by its policy owners. Any earnings in excess of those necessary for the operation of the company are returned to the policy owners in the form of policy dividends.

Non-Qualified Money - Money on which taxes have been paid; after-tax dollars

Permanent Disability (DI) - A disability that will last as far into the future as can be foreseen.

Permanent Life Insurance - A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.

Qualified Money - Normally, IRA, SEP, TDA, or Pension Plan money; money on which taxes have not been paid; pre-tax dollars.

Split Dollar - A type of business insurance where the employer company pays the premiums and is the owner of the policy, usually the cash value, and the beneficiary named by the insured employee receives the remainder of the benefits payable.

Suitability - The process by which you make sure that the financial products you recommend make sense for a client.

1035 Exchange - Method for moving non-qualified (after tax) money from one company's annuity to another company without tax consequences.

Tax-Deferred Annuity (Personal/Non-Qualified) - A general term referring to an annuity that may be purchased by anyone with after-tax dollars. Investment earnings accumulate tax deferred until money is withdrawn or converted to income.

Term Insurance - Insurance protection during a limited number of years which expires without value if the insured survives the stated period. The protection period may be one or more years and usually covers the needs for temporary protection.

Variable Annuity (VA) - An annuity contract that provides retirement income payments which fluctuate according to the investment performance of the underlying mutual funds. The insurance company guarantees that payments will continue for the lifetime of the annuitant, but it cannot guarantee the amount of the annuity payment or the performance of the account.

Variable Life Insurance (VLI) - An individual policy which provides a life insurance benefit which varies according to the investment experiences of any separate account or accounts maintained by the insurer relating to such policy.

Waiver of Premium (WP), Life Insurance - A benefit where the company will waive the payment of all premiums becoming due during the total disability of the insured.

Waiver of Premium, Disability Insurance - A benefit where the company will waive premiums which become due while the insured is totally or partially disabled. If the disability lasts for at least 90 days or the disability lasts beyond the beginning date, if sooner.