|Variable life insurance policy|
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Definition of Variable life insurance policy
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
Also referred to as the weighted-average life (WAL). The average number of years that each
Refers to the fact that the merger of two firms decreases the probability of default on
Procedures followed by a firm in attempting to collect accounts receivables.
A random value that can take any fractional value within specified ranges, as
A monthly fixed-dollar payment beginning at retirement age. It is nominal
A random variable that can take only a certain specified set of discrete possible
An established guide for the firm to determine the amount of money it will pay as dividends.
A value determined within the context of a model.
A variable whose value is determined outside the model in which it is used. Also called
A federal institution that insures bank deposits.
The use of government spending and taxing for the specific purpose of stabilizing the economy.
A contract promising a stated nominal interest rate over some specific time
The law of averages. The average outcome for many independent trials of an experiment
Actions taken by the Board of Governors of the Federal Reserve System to influence the
A random variable that has a normal probability distribution.
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put
A function that assigns a real number to each and every possible outcome of a random experiment.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
Term life insurance
A contract that provides a death benefit but no cash build-up or investment component.
Provides a death benefit only, no build-up of cash value.
Traditional view (of dividend policy)
An argument that "within reason," investors prefer large dividends to
A whole life insurance product whose investment component pays a competitive interest rate
A value determined within the context of a model. Also called endogenous variable.
Annuity contracts in which the issuer pays a periodic amount linked to the investment
A cost that is directly proportional to the volume of output produced. When production is zero,
Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.
Variable rate CDs
Short-term certificate of deposits that pay interest periodically on roll dates. On each roll
Variable rated demand bond (VRDB)
Floating rate bond that can be sold back periodically to the issuer.
Variable rate loan
Loan made at an interest rate that fluctuates based on a base interest rate such as the
Weighted average life
Whole life insurance
A contract with both insurance and investment components: (1) It pays off a stated
Those that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc.
An approach to costing that estimates and accumulates the costs of a product/service over
Costs that have both fixed and variable components.
A cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services.
A method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs.
Expenses that change with changes in either sales volume
an unknown item for which a linear programming
an unknown variable that is to be predicted
a variable that, when changed, will
a critical factor that management believes will
life cycle costing
the accumulation of costs for activities that
product life cycle
a model depicting the stages through
a variable used in a linear programming problem
a variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints
a cost that varies in total in direct proportion
a cost accumulation and reporting method
variable cost ratio
the proportion of each revenue dollar
variable overhead efficiency variance
the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
variable overhead spending variance
the difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity
The period over which a company expects to be able to use an asset.
The estimated life span of a fixed asset, during which it can be expected to
A cost that changes in amount in relation to changes in a related activity.
Procedures to collect and monitor receivables.
Standards set to determine the amount and nature of credit to extend to customers.
Costs that change as the level of output changes.
A monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession.
A policy designed to increase an economy's prosperity at the expense of another country's prosperity.
Decreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism.
Demand Management Policy
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
A policy that is a conscious, considered response to each situation as it arises. Contrast with policy rule.
A change in government spending or taxing, designed to influence economic activity.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
Theory that anticipated policy has no effect on output.
A formula for determining policy. Contrast with discretionary policy.
Tax-Related Incomes Policy (TIP)
Tax incentives for labor and business to induce them to conform to wage/price guidelines.
A program in which workers and firms pay contributions and workers collect benefits if they become unemployed.
Federal Insurance Contributions Act of 1935 (FICA)
A federal Act authorizing the government to collect Social Security and Medicare payroll taxes.
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
A federal Act expanding upon many of the insurance reforms created by
Policy Acquisition Costs
Costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
A company’s stated goal for how soon a customer order will be
The time period during which inventory can be retained in stock and beyond
Shelf life control
Deliberate usage of the oldest items first, in order to avoid exceeding
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
In medical insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced.
Dead Peasants Insurance
Also known as "Dead Janitors insurance", this is the practice, where allowed, in several U.S. states, of numerous well known large American Corporations taking out corporate owned life insurance policies on millions of their regular employees, often without the knowledge or consent of those employees. Corporations profiting from the deaths of their employees [and sometimes ex-employees] have attracted adverse publicity because ultimate death benefits are seldom, even partially passed down to surviving families.
insurance that pays you an ongoing income if you become disabled and are unable to pursue employment or business activities. There are limits to how much you can receive based on your pre-disability earnings. Rates will vary based on occupational duties and length of time in a particular industry. This kind of coverage has a waiting period before you can begin collecting benefits, usually 30, 60 or 90 days. The benefit paying period also varies from 2 years to age 65. A short waiting period will cost more that a longer waiting period. As well, a long benefit paying period will cost more than a short benefit paying period.
Errors and Omissions Insurance
insurance coverage purchased by the agent/broker which provides protection against loss incurred by a client because of some negligent act, error, oversight, or omission by the agent/broker.
Group Life Insurance
This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
Level Premium Life Insurance
This is a type of insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than actual cost of protection in the earlier years of the policy and less than the actual cost of protection in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
The average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table.
Life Income Fund
Commonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement Income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80.
Commonly sold in the form of reducing term life insurance by lending institutions, this is life insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional life insurance companies. No matter where it is purchased, the reducing term insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage.
This is an administrative fee which is part of most life insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy. Knowing about this hidden fee is important because some insurance companies offer a policy fee discount on additional policies purchased under certain conditions. Sometimes they reduce the policy fee or waive it altogether on one or more additional policies purchased at the same time and billed to the same address. The rules are slightly different depending on the insurance company. There could be enormous savings if several people in the same family or business were intending to purchase coverage at the same time.
This is the person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation. There are instances in marriage breakup (or relationship breakup with dependent children) where appropriate life insurance on the support provider, owned and paid for by the ex-spouse receiving the support is an acceptable method of ensuring future security.
Split Dollar Life Insurance
The split dollar concept is usually associated with cash value life insurance where there is a death benefit and an accumulation of cash value. The basic premise is the sharing of the costs and benefits of a life insurance policy by two or more parties. Usually one party owns and pays for the insurance protection and the other owns and pays for the cash accumulation. There is no single way to structure a split dollar arrangement. The possible structures are limited only by the imagination of the parties involved.
Temporary Life Insurance
Temporary insurance coverage is available at time of application for a life insurance policy if certain conditions are met. Normally, temporary coverage relates to free coverage while the insurance company which is underwriting the risk, goes through the process of deciding whether or not they will grant a contract of coverage. The qualifications for temporary coverage vary from insurance company to insurance company but generally applicants will qualify if they are between the ages of 18 and 65, have no knowledge or suspicions of ill health, have not been absent from work for more than 7 days within the prior 6 months because of sickness or injury and total coverage applied for from all sources does not exceed $500,000. Normally a cheque covering a minimum of one months premium is required to complete the conditions for this kind of coverage. The insurance company applies this deposit towards the cost of a policy at its issue date, which may be several weeks in the future.
Term Life Insurance
A plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term.
Yearly Renewable Term Insurance
Sometimes, simply called YRT, this is a form of term life insurance that may be renewed annually without evidence of insurability to a stated age.
Export Credit Insurance
The granting of insurance to cover the commercial and political risks of selling in foreign markets.
A firm licensed to sell insurance to the public.
A course of action adopted by a financial institution to guide and usually determine present and future decisions in the light of given conditions.
Accidental Dismemberment: (Credit Insurance)
Provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident.
Amortization (Credit Insurance)
Refers to the reduction of debt by regular payments of interest and principal in order to pay off a loan by maturity.
Beneficiary (Credit Insurance)
The person or party designated to receive proceeds entitled by a benefit. Payment of a benefit is triggered by an event. In the case of credit insurance, the beneficiary will always be the creditor.
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