Glossary

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A

Absolute Assignment
In life insurance, the permanent legal transfer of ownership rights of a policy. See collateral assignment.

Acceptance
Agreeing to the terms of an offer to enter into a contract, thereby making it a binding contract. Also, the act of accepting delivery of a deed.

Accidental death and dismemberment rider (AD&D)
A Rider (or endorsement) that provides for a specific benefit, as the result of an accident, if the insured dies or loses any two limbs or the sight of both eyes. This additional amount is payable in addition to a life insurance policy's face amount.

Accidental death benefit rider (ADB)
A supplemental benefit rider which provides for an amount of money in addition to the face amount of a life insurance policy. This additional amount is payable only if the insured dies as the result of an accident.

Accrued interest
Interest that has been earned but has not been collected.

Accumulation at interest dividend option
Dividend option under which a policy's dividends are left on deposit with the company to earn interest. Both the interest and accumulated dividends are available to the policy owner for withdrawal at any time.

Accumulation period
The period during which premiums are payable on a deferred annuity.

Accumulation units
The term used to express ownership shares in a variable annuity's separate account fund. The premiums paid by the purchaser of a variable annuity are credited to the purchaser's account in this form.

ACH
See Automated Clearing House.

Actuary
(1) A technical expert in life insurance, particularly in mathematics. A person in this job applies the theory of probability to the business of insurance and is responsible for the calculation of premiums, policy reserves, and other values.

(2) The department in Western United Life Assurance Company concerned with creating and maintaining tables used in the system as well as gathering data and generating statutory reports.

Ad litum
A guardian "ad litum" protects or defends a suit for a minor or incompetent person.

Additional term insurance dividend option
Dividend option under which the annual dividend is applied as a single premium to purchase one-year term insurance. The amount of insurance which can be purchased using this option is usually limited to the amount of the policy's cash value. (Also called fifth dividend option.)

Adjustable life insurance policy
A life insurance contract designed specifically to allow policy owners to alter the policy's plan by changing the amount of their coverage or the amount of their premium.

Administrative services only (ASO)
A self-insurance arrangement in which an organization (usually an employer) hires an outside firm to administer the employer's health insurance program, but the employer retains responsibility for providing funds to pay claims. See also, self-insured group and third-party administrator (TPA).

Administrator
A person appointed by the probate court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no will (the person died intestate).

Adverse selection
See antiselection.

Advocacy advertising
A form of advertising intended to promote a specific cause or idea. Advocacy advertising can be used by specific insurance companies or by organizations comprising many insurers.

Age of majority
The age at which a person can legally enter into a contract.

Agency
(1) A relationship of trust created when one person, the principal, delegates to another, the agent, the right to represent the principal in dealing with third parties.

(2) The Western United Life Assurance Company department concerned with agent/agency matters: licensing, maintaining records, paying commissions and processing agent termination.

Agency office
In insurance, a field office that is established and maintained by a general agent, also called a branch agent.

Agency relationship
In law, the relationship between two parties by which one party is authorized to perform certain acts for the other party.

Agency system
In insurance, a distribution system in which insurance companies use commissioned agents to sell and deliver insurance policies. The agency system is the most common system for distributing individual life insurance products. Includes the branch office distribution system and the general agency distribution system (also called the ordinary agency system).

Agency, apparent
Agency which appears to exist because of the acts of the agent and/or the principal.

Agent
In an agency relationship, the one who is authorized to represent another (the principal).

Agent, actual authority of
The authority which is given to an agent by a principal, either expressly or by implication.

Agent, general
An agent authorized to handle all the matters of the principal in one area or in specified areas.

Agent, implied authority of
The authority of an agent which is implied as necessary to the performance of the express authority.

Amendment
A change in a document made to correct an error or to alter (by modification, deletion, or addition) an agreement without changing the principal idea or essence of the document.

Amortization of premium
The writing down of the excess of the purchase price of a bond over its par (face) value such that if the bond were held to maturity, its par value would equal its basis to the investor at date of maturity.

Annually renewable term (ART)
See yearly renewable term.

Annuitant
The person who receives annuity benefit payments.

Annuity
A sum of money received in a series of equal, or nearly equal payments over a period of time. There are many kinds of annuities, for example: joint and survivor annuity, periodic level premium annuity, life income with period certain annuity, lump-sum annuity, flexible premium annuity, refund annuity, straight life annuity, temporary life annuity, variable annuity and multi-funded annuity.

Annuity certain
An annuity that provides a benefit amount payable for a specified period of time regardless of whether the annuitant lives or dies.

Annuity period
Time span between the benefit payments made under an annuity contract.

Annuity purchase
Purchase of annuities that are fully assignable. Proof that the annuity is assignable is required, along with a power of attorney from the annuitant giving the purchaser the right to receive and cash the funds.

Annuity units
The term used to express the annuitant's share of the funds in a variable annuity account after the accumulation period has ended.

Antiselection
The tendency of persons who possess a greater likelihood of loss to apply for or continue insurance to a greater extent than others. Also known as adverse selection and selection against the insurer.

Applicant
A person applying for an insurance policy.

Application
A form which must be completed by an individual who is seeking insurance coverage. This form provides the insurance company with information relevant to its decision to accept or reject the risk.

ASB
Abbreviation for Actuarial Standards Board.

Assessment method
An early method of funding life insurance under which members of the plan were charged in advance the amount estimated to be required to pay each year's claims. Also known as pre-death assessment method.

Asset
Property of all kinds, real and personal, tangible and intangible.

Assets, liquid
Cash on hand or other assets that can be readily turned into cash. Real estate holdings are not considered very liquid.

Assign
To transfer a right, title, or interest in property to another person.

Assignee
The one to whom a right, title, or interest in property has been transferred.

Assignor
One who transfers a right, title or interest in property.

Attained age conversion
The changing of insurance from one form to another (e.g., from term life insurance to whole life insurance) at a premium rate that is based on the age the insured person has reached when the change takes place.

Attending physician statement (APS)
An insurance company form completed by a medical doctor who has treated an insured or a proposed insured for an illness or injury. The form provides the insurance company with information relevant to underwriting the risk or settling a claim.

Attorney-in-fact
One who has the authority to act for another under a power of attorney. The power of attorney may be limited to a particular act or purpose, or it may be general. In real estate transactions, the power of attorney must be written and recorded.

Automated clearing house (ACH)
A facility provided to handle payments between financial institutions electronically rather than by paper based transactions.

Automatic premium loan (APL)
An insurance policy loan authorized in advance by the policy owner to be used only to pay a premium which remains unpaid at the end of a grace period.