A Glossary of Life Insurance and Financial Terms
[T to Z]
This glossary is arranged in alphabetical order.
Click on a letter or scroll to search.
T U V W X Y Z
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 specified term.
This could be the person (broker or agent) who helps you choose the
proper type of life insurance or disability insurance and the insurance
company for your particular needs. This could also be the person at the
insurance company's head office who reviews your application for coverage
to determine whether or not the insurance company will issue a policy to
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.
A dictionary meaning for the word viatica is "the eucharist
as given to a dying person or to one in danger of death". In the context
of Viatical Settlement it means the selling of one's own life insurance
policy to another in exchange for an immediate percentage of the death
benefit. The person or in many cases, group of persons buying the rights
to the policy have high expectation of the imminent death of the previous
owner. The sooner the death of the previous owner, the higher the profit. Consumer knowledge about this subject is poor and little is known about the entities that fund the companies that purchase policies. People should be very careful when considering the sale of their policy, and they should remember a sale of their life insurance means some group of strangers now owns a contract on their life. If a senior finds it difficult to pay for an insurance policy it might be a better choice to request that current beneficiaries take over the burden of paying the premium.
The practice selling personal life insurance policies common in the United States and is spilling over into Canada. It would appear to have a definite conflict with Canada's historical view of 'insurable interest'.
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.
This is a legal document detailing how you want your assets to be distributed upon your death. You may also stipulate how you wish to be buried or who you would like to take care of any surviving dependent family
members. In my opinion, it is very important to be quite specific about your wishes for the distribution of special assets such as the antique grandfather clock, the classic silver tea set or the antique piano. If you think that your beneficiaries may dispute how your things are to be distributed, consider stipulating that an auction be held in which all
beneficiaries may bid on the item which they value and all moneys collected are then shared in the same manner in which you distributed your other liquid assets. Remember that a will is automatically revoked upon marriage unless the will specifically states that the will is made in contemplation of marriage.
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.
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