LIFE SETTLEMENT GLOSSARY EXAMPLE

D

death benefit

The base amount payable when the insured under a life insurance policy dies before deducting outstanding policy loans or late premium payments, and before adding the value of dividends.

death claim

A claim filed for payment under the terms of a life insurance policy.

declaration

On of the beginning pages of an insurance policy that states information about the insured, coverage, premiums, and other supplemental information.

declined risk class or uninsurable risk class

Pertaining to life insurance, the group of proposed insured's whose life expectancies are so shortened that the insurer cannot provide insurance coverage at an affordable cost.

decreasing term life insurance

A type of term life insurance that has a decreasing death benefit until the end of the coverage period.

deferred premium

Premiums due an insurance company between the dates of its last and next annual statements.

demutualization

The process an insurer follows to switch from a mutual company to a stock company.

dependent life insurance

Typically an optional form of group life insurance that covers the spouse, children, or other dependents of the group member and is paid for by the group member.

deposit premium

The initial premium tendered when an initial application is made for an insurance policy.

deposit term life insurance

A type of term life insurance that requires a much larger premium payment in the first year, with lower premiums thereafter.

depository institution

Financial institutions that receive funds from public deposits. Examples are commercial banks, savings and loan associations, savings banks and credit unions.

derivatives

Contracts that are frequently used as a hedge and are valued according to an underlying asset, like a security or currency.

direct insurer or direct writers

Otherwise known as direct insurers, direct writers, or direct-writing companies, these are insurance companies that do not use agents to distribute their policies but instead deal directly with consumers.

direct sales/direct response

A sales process used by direct writers to sell insurance through it's own employees via mail, phone, or online.

disability waiver

A rider available on life insurance policies to keep the policy in force by waiving premiums if the insured is totally disabled. Life settlement policies typically have a higher value if this rider is in effect and premiums are being waived.

dividend

An amount normally paid to whole life policy owners in addition to the guaranteed benefits of the policy. Insurance companies calculate dividends based on the profitability of policies.

dividend accumulation option

Same definition as the accumulate at interest dividend option.

dividend options

Most commonly one of five possible alternatives that whole policy owners can choose to receive dividends from participating policies. Alternatives can be cash, reduce premiums, accumulate at interest, paid up additional insurance, or supplementary one year term insurance.

double indemnity benefit

An additional death benefit rider to a life insurance policy that pays twice the normal face amount if the death of the insured results from an accident.