You are in:
Life Settlement Glossary
- early warning system
- A system established by insurance regulators to recognize insurers
who might need interventional regulatory attention.
- earned premium
- The portion of an insurance premium that applies to the expired
part of the policy period. Even though premiums are paid at the
beginning of a policy period they are not completely earned by the
company until the end of the period. For some life insurance policies,
however, unearned premiums are still retained by the insurer even if a
policy is cancelled mid-term.
- earnings rate
- For a life settlement, the rate of return expected by the buyer on
outlays to purchase a policy and keep it in force until the end of the
insured's life expectancy.
- economic loss
- For life insurance, the anticipated financial loss resulting from
the death of a person proposed for coverage. Among other factors, this
amount is used to calculate the insured's maximum insurance capacity.
- An amendment or rider to a policy that is used to either add or
- The condition whereby the cash value of a life insurance policy is
equal to the death benefit when the policy matures. For most policies
maturity is at the insured's age 95 or 100.
- endowment insurance
- Life insurance that pays the face amount to the insured's
beneficiary upon the death of insured or in cash to the insured if
still living on the endowment date.
- enhanced death benefit guarantee
- A rider or policy provision that guarantees to keep a policy in
force under circumstances where it would otherwise lapse due to
- errors and omissions
- (E&O) Insurance Liability insurance carried by an agent,
producer, or broker to protect a policyholder from the negative
consequences of neglectful acts and/or omissions caused by the agent,
producer, or broker.
- A financial condition where property is held until it can be until
it can be conveyed to another upon the fulfillment of an agreement. For
life settlements, the buyer normally deposits the proceeds into an
escrow account where it remains until the escrow agent releases it to
the seller according to the terms of the purchase agreement.
- escrow agent
- For life settlements, a regulated financial institution responsible
for accepting investor funds, transferring funds to purchase policies,
paying insurance premiums and receiving death benefits.
- escrow companies
- A neutral third party that according to a legal contract receives
money to be held in a trust pending fulfillment of conditions in the
contract such as the transfer of life insurance policy ownership in a
life settlement transaction.
- Everything a person owns at the time of death minus all outstanding
debts or other financial liabilities.
- estate plan
- A plan normally completed with the assistance of an attorney to
address the best possible method of transferring assets to heirs when
an individual dies. When there is a lack of liquidity, life insurance
is often part of the plan.
- estate tax
- Taxes on wealth transfer imposed by State and Federal Governments.
- evidence of insurability
- For life insurance, proof that a proposed insured meets the
standards required for the insurance company to issue a policy.
- excess interest
- Pertaining to life insurance, the difference between the interest
rate an insurance company actually pays and the minimum rate guaranteed
by the policy.
- exchange of insured provision
- A provision within the minority of life insurance contracts that
allows a policy owner to change insured's under a policy to avoid
expense loads, assuming the new insured meets the underwriting
standards required for acceptance.
- Specific situations (such as suicide during the first two years of
a policy) where the insurance company has the right not to pay a claim
that would otherwise be owed.
- exclusive agent
- Normally an agent who by contractual agreement owes their exclusive
allegiance to one insurance company for any risks it is able to insure.
- exclusive marketing arrangement (see q&a)
- Pertaining to life insurance, typically the sole right granted by
an insurance company to a marketing organization granting sole rights
to represent a particular product and/or concept to the public, often
through an exclusive agency force selected by the marketing
- expected mortality
- The actuarial number of deaths expected to occur within a given
group of lives at a given point in time.
- expense charge
- Pertaining to life insurance, the regularly scheduled
administrative costs payable by the policy owner to the insurance
company in conjunction with an inforce life insurance policy, most
commonly universal life.
- extended term insurance option
- Normally the default nonforfeiture option for whole life insurance
policies, whereby upon lapse the cash value purchases term life
insurance equal to the face amount of the policy but payable only for a
limited amount of time.
- extra-percentage tables method
- For life insurance, the method an insurance company uses to assess
additional premiums for substandard risks. These assessments are
expressed in progressively increasing tables based on additional
percentages of the standard rate.
Copyright © Policy Settlement •
115 South Cedar Street – Rushville, IL 62681 •
All rights reserved.