LIFE SETTLEMENT GLOSSARY EXAMPLE

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indemnify

Providing a financial payment to offset a covered loss that has occurred.

immediate annuity

An income annuity that is purchased with a lump sum with periodic payments that may begin immediately or at some specified point in the future. Immediate annuities have a variety of uses from providing a retirement income to hedging against an insured living beyond their assumed life expectancy for a life settlement transaction.

impairment

Typically a medical condition that substantially limits one or more major life activities and/or reduces an individuals life expectancy.

in force illustration or ledger

A projection of future premiums and death benefits based on current and guaranteed assumptions, usually prepared by the home offices of the insurance companies that issued the policy being illustration upon either a policy holder's or their advisor's request.

income date

The date payments are scheduled to begin under an immediate annuity.

incontestable clause

A uniform two year life insurance policy provision that allows an insurance company to either contest payment of a claim or rescind a policy as of it's inception based on proven material misrepresentations made by the applicant or the insured in the policy application.

increasing term life insurance

Another term for annually renewable term life insurance.

independent agent

A self-employed, commissioned insurance agent who represents a number of different insurance companies at the same time, hopefully on behalf of the their client.

indeterminate premium life insurance

A type of life insurance that has two premium rates, one that is guaranteed and one that is non-guaranteed.

indexed life insurance

A type of life insurance policy where cash values and/or death benefits are determined based upon a certain financial index or combination of indexes.

initial premium

The first premium that is paid to the carrier for a life insurance policy.

inspection report

A report prepared by a consumer reporting agency regarding a proposed insured�s lifestyle, occupation, and economic standing.

institutional investor

For life settlements, typically the end buyers of policies such as banks, hedge funds, pension funds, or other established financial intermediaries.

insurability

Acceptable to an insurance company as a suitable risk for coverage.

insurability provision

A life insurance provision that requires the insured to still be insurable for coverage when a policy is delivered based on the underwriting rules of the company that issued the policy.

insurability statement

A questionnaire insurance companies sometimes require applicants and/or insured's to complete when too much time has passed between when the original application was submitted and the policy was actually issued.

insurable

Eligible to receive coverage from an insurance company based on their present underwriting guidelines.

insurable interest

A requirement that an applicant has an economic interest or expectation of loss upon the insured's death, based on conditions that exist when a life insurance policy is purchased.

insurable risk

Risks that are eligible for coverage based on an insurance company's defined criteria for acceptance.

insurance association

Typically, non-profit organizations that represent member insurance companies who have adopted the associations code of ethics and agree to abide by standards regarding fairness, honesty, and openness in how they advertise, sell and service their products. Associations may also work toward strengthening consumer trust and confidence in their industry and represent member companies before federal and state legislators, regulators, and courts.

insurance company

A business entity that sells, underwrites and issues contracts of insurance. Also know as carriers or insurers.

insurance company ratings

Written evaluations of insurance companies financial strength and/or claims paying ability.

insurance regulatory information system / IRIS

A variety of financial ratios developed by state insurance commissioners to measure insurance companies financial strength.

insurance score

A measurement used by insurance companies to indicate how well consumers manage their personal financial affairs.

insurance settlement

An insurance settlement is typically defined as the payment of proceeds by an insurance company to the insured to settle a covered insurance claim according to the guidelines within an insurance policy. The term is also sometimes used to refer to a life settlement.

insurance trust

A trust established during the lifetime of the creator and funded by life insurance policies and/or their proceeds.

insured

For life insurance, the individual whose life is covered by an insurance policy.

insurer

The same definition as insurance company.

interest option

A life insurance policy settlement option where the proceeds of a life settlement stay on deposit with the insurance company who pays interest only to the beneficiary until such time they request a portion or all or part of the deposited proceeds.

interest rate

For life insurance, typically the earnings rate assumed in fixed rate life insurance policies such as whole life and universal life or the rate assigned to the general account of a variable life policy.

interest-adjusted cost comparison index

An index often used in a life insurance buyer's guide and created to compare life insurance policy costs by taking into account the time value of money.

interest-sensitive insurance

A type of life insurance policy where the cash values and death benefits vary based on the issuing insurance companies investment earnings.

intermediation

An intervention process developed to bring about an insurance settlement when the insured and the insurer are unable to reach an equitable agreement.

internal rate of return or irr

The internal rate of return is the rate of return anticipated or received from a series of cash flows over a projected time horizon.

intrinsic economic value

A valuation that indicates the present value of a life insurance policy assuming it is held until the insured's death.

investigative consumer report

A consumer report that relies on interviews with persons who are associated with or who have knowledge of a particular consumer's character, lifestyle, or reputation.

investment income

For life insurance companies, income produced by the investment of assets which is often used to offset it's other source of income, underwriting operations, which are often unprofitable.

investor

For life settlements, typically refers to the ultimate owner of a settled life insurance life settlement policy, otherwise known as the financing entity, funder, or buyer.

irrevocable beneficiary

A life insurance policy beneficiary whose rights to the death benefit proceeds cannot be cancelled by the policyowner unless the beneficiary consents.

irrevocable trust

A trust which cannot be changed or revoked by the grantor without the consent of the beneficiary and whose contributions may not be withdrawn by the grantor.

issue age

The age of the insured at the time a life insurance was issued. Can either be based on the insured's last or nearest birth date deepening on the issuing insurance company's guidelines.

issue date

The date a life insurance policy was actually issued by the insurance company. Among other things, it governs the contestability and suicide clause of the policy.