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Life Settlement Glossary
- An insurance company practice allowing a policy to be dated up to
six months prior to the date of the application so the premium will be
- balance sheet
- An insurance company's assets such as investments and reinsurance,
and liabilities like reserves to pay future claims. Based on a certain
date, it also states policyholder surplus which can be one indicator of
an insurance company's financial condition.
- bank owned life insurance - (BOLI)
- Typically high cash value life insurance covering a bank's officers
for the purpose of accumulating tax deferred earnings for the bank.
- basic death benefit
- The death benefit of a policy without including supplementary
riders such as an accidental death benefit.
- basis point
- .01% which represents the lowest measurement used to express the
yield of a financial instrument.
- beneficial interest
- Distribution rights to interest or principle from a trust.
- The individual(s) or entity chosen by the policy owner to receive
the death benefit upon the insured's death.
- Bernstein Research
- A well recognized Wall Street research firm that published a 2005
white paper about the future of life settlements.
- best life settlement
- The life settlement option that best matches the policy owners
prioritized concerns and objectives.
- Best's ratings
- Financial soundness ratings assigned to insurance companies by A.M.
Best Co. These ratings can effect whether or not a life insurance
policy will qualify for a life settlement.
- beneficial interest trade
- A technique designed to hide the underlying ownership of a life
insurance policy from an insurance company, often done to facilitate a
- binding premium receipt
- A premium receipt that provides temporary insurance to an applicant
from the time period beginning when the receipt is executed and ending
when the policy applied for is either declined, placed, or non-taken.
- For life insurance, a surety required by some states to guarantee
payment or reimbursement of financial losses that result from an
insurance producers dishonesty or other covered acts.
- bond rating
- A financial strength rating of a bond provided by an established
rating agency such as Standard & Poor's or Moody's Investors Service.
- book of business
- The amount of insurance an insurer or agency has in force at a
certain point in time.
- For life insurance, loan taken against a policy's cash value.
- For life settlements, an individual or entity whose primary
responsibility is to negotiate the sale of a life insurance policy by
the policy owner to the buyer. Brokers owe a fiduciary responsibility
to the policy owner.
- An individual or entity that purchases, sells, or manages
securities under SEC regulations and subject to NASD licensure
- bundled insurance product
- A life insurance product (typically whole life) where the factors
used to compute premium rates and cash values are not specifically
identified in the policy.
- business life insurance
- Business owned life insurance policies purchased for purposes such
as buy-sell agreements, key man protection, salary continuation, and
- For life settlements, buyers are most often referred to as funders,
purchasers, or investors. Ultimately buyers are the entities (typically
institutional) that assume ownership of a policy after is has been
- buyer's guide
- An informational brochure state insurance departments require
insurance companies to give life insurance applicants to assist them in
making informed decisions.
- buy-sell agreement
- A legal agreement between business partners regarding what happens
to a party's shares in the event of death, disability, or departure.
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