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Definition of Default premium
A differential in promised yield that compensates the investor for the risk inherent in
Difference in promised yields between a default-free bond and a riskier bond.
Yearly amount payable by a client for a policy or component.
A benefit that automatically forfeits premium payments.
the additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control
The percentage by which the conversion price in a convertible security exceeds the
A provision under which default on one debt obligation triggers default on another debt
Failure to make timely payment of interest or principal on a debt security or to otherwise comply
The failure by a debtor to make a principal or interest payment in a timely
Failure of a debtor to make timely payments of principal and interest as they become due.
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
Contractually specified events that allow lenders to demand immediate repayment of a debt.
A currency trades at a forward premium when its forward price is higher than its spot price.
A premium that remains unchanged throughout the life of a policy
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.
Forward rate minus expected future short-term interest rate.
Risk premium of market portfolio. Difference between market return and return on risk-free Treasury bills.
Extra average return from investing in longversus short-term Treasury securities.
The option price.
1) Amount paid for a bond above the par value.
This is your payment for the cost of insurance. You may pay annually, semi-annually, quarterly or monthly. The least expensive method is annually. Using any of the other payment modes will cost you more money. For example, paying monthly will cost about 17% more. If you pay annually and terminate your coverage part way through the year, you may not receive a refund for the remaining months to the annual renewal date.
Annual amount payable, by a client, for selected product or service.
A bond that is selling for more than its par value.
Premium (Credit Insurance)
Annual or monthly amounts payable, by a client, for a selected insurance coverage to insure debt obligations to their creditors are protected.
A nonqualified stock option whose option price is set substantially
Payment schedule of policy premiums, usually selected by the policy owner (monthly, quarterly, annually).
After premiums have been paid for a number of years, further annual premiums may be paid by the current dividends and the surrender of some of the paid-up additions which have built up in the policy. In effect, the policy can begin to pay for itself. Whether a policy becomes eligible for premium offset, the date on which it becomes eligible and whether it remains eligible once premium offset begins, will all depend on how the dividend scale changes over the years. Since dividends are not guaranteed, premium offset cannot be guaranteed either.
The reward for holding the risky market portfolio rather than the risk-free asset. The spread
The additional rate of return required on a risky project
Expected return in excess of risk-free return as compensation for risk.
The difference between the yields of two bonds because of differences in their risk.
The difference between the required rate of return on a riskless asset with the same expected life.
Risk premium approach
The most common approach for tactical asset allocation to determine the relative
Single-premium deferred annuity
An insurance policy bought by the sponsor of a pension plan for a single
Tender offer premium
The premium offered above the current market price in a tender offer.
Excess of the yields to maturity on long-term bonds over those of short-term bonds.
Also called time value, the amount by which the option price exceeds its intrinsic value. The
premiums paid for coverage not yet provided.
This term relates to participating whole life insurance and the use of the dividend to reduce or completely eliminate the need for future premiums. In the 1980's life insurance company's profits from investment were exceedingly high compared to historical experience. It became common for a salesperson to show new prospective clients how quickly his or her insurance company's dividends would cover the future cost of future premiums. In some cases more emphasis was put on the value of future dividends than on the fact that future dividends were not guaranteed and could only be projected based on current earnings. Many life insurance buyers have since learned that the dividends they expected in the 80's no longer exist in the 90's and they are continuing to dig into their pockets to pay insurance premiums.
Waiver of Premium
This is an option available to the applicant for life insurance which sets certain conditions under which an insurance policy will be kept in full force by the insurance company without the payment of premiums. Very specifically, a life insured would have to become totally disabled through injury or illness for a period of six months before the benefit kicks in. When it does, the insurance company retroactively pays premiums from the beginning of the disability until the time the insured is able to perform some form of regular activity. 'Totally disabled' is highlited here, because that is what is required to receive this benefit.
Waiver of Premium
A benefit that allows CLA to pay premiums on behalf of the insured.
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