Tag: insurance

80-10-10 Mortgage definition explanation

What is 80-10-10 Mortgage?
A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an 80% loan-to-value ratio, the second position lien has a 10% loan-to-value ratio and the borrower makes a 10% down payment. 80-10-10 mortgage transactions are piggy-back mortgage transactions, and are frequently used by borrowers to avoid paying private mortgage insurance. Read more for examples and further explanation including related video clips and also comments
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Chartered Life Underwriter – CLU definition explanation

What is Chartered Life Underwriter – CLU?
A professional designation for individuals who wish to specialize in life insurance and estate planning. Individuals must complete five core courses and three elective courses, and successfully pass all eight two-hour, 100-question examinations in order to receive the designation. Read more for examples and further explanation including related video clips and also comments
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Systematic Withdrawal Schedule definition explanation

What is Systematic Withdrawal Schedule?
A method of withdrawing funds from an annuity account by which the annuitant withdraws funds from the account in specified amounts for a specified payment frequency. The annuitant is not guaranteed lifelong payments as he or she is with the standard annuitization method. With the systematic withdrawal schedule, the annuitant chooses instead to withdraw funds from his or her account until it is emptied, bearing the risk that the funds become depleted before he or she dies. Read more for examples and further explanation including related video clips and also comments
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Permanent Life Insurance definition explanation

What is Permanent Life Insurance?
An umbrella term for life insurance plans that do not expire (unlike term life insurance) and combine a death benefit with a savings portion. This savings portion can build a cash value – against which the policy owner can borrow funds, or in some instances, the owner can withdraw the cash value to help meet future goals, such as paying for a child’s college education. The two main types of permanent life insurance are whole and universal life insurance policies. Read more for examples and further explanation including related video clips and also comments
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Life Option definition explanation

What is Life Option?
An annuitization-method option for a typical annuity offered by an insurance company with which the annuitant chooses to receive regular income payments from his or her annuity account for life. The insurance company guarantees that the annuitant will receive payments for the rest of his or her life, and structures the payment amounts to provide room for the insurance company’s profit margin. Read more for examples and further explanation including related video clips and also comments
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Human-Life Approach definition explanation

What is Human-Life Approach?
A method of calculating the amount of life insurance a family will need based on the financial loss the family would incur if the insured person were to pass away today. It is usually calculated by taking into account a number of factors including but not limited to the insured individual’s age, gender, planned retirement age, occupation, annual wage, employment benefits, as well as the personal and financial information of the spouse and/or dependent children.

Since the value of a human life has economic value only in its relation to other lives such as a spouse or dependent children, this method is typically only used for families with working family members. The human-life approach contrasts the needs approach. Read more for examples and further explanation including related video clips and also comments
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Elimination Period definition explanation

What is Elimination Period?
The length of time between when an injury or illness begins and receiving benefit payments from an insurer. Also known as the “”waiting”” or “”qualifying”” period, policyholders must in the interim pay for these services and can be thought of as a deductible. Read more for examples and further explanation including related video clips and also comments
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Cash Surrender Value definition explanation

What is Cash Surrender Value?
The sum of money an insurance company will pay to the policyholder or annuity holder in the event his or her policy is voluntarily terminated before its maturity or the insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies. Also known as “”cash value””, “”surrender value”” and “”policyholder’s equity””. Read more for examples and further explanation including related video clips and also comments
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Actuarial Risk definition explanation

What is Actuarial Risk?
The risk that the assumptions that actuaries implement into a model to price a specific insurance policy may turn out wrong or somewhat inaccurate.

Possible assumptions include the frequency of losses, severity of losses and the correlation of losses between contracts.

Also known as “”insurance risk””. Read more for examples and further explanation including related video clips and also comments
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