Life Insurance and Life Settlement Terms - R
Rate
The cost of a unit of insurance, typically per $1,000. Charges are based on historical loss experience for similar risks and may be regulated by state insurance offices.
Rate Regulation
The method by which states monitor insurance companies’ rate changes, done either through earlier approval or open competition models.
Rated Policy
An insurance policy that is categorized as having a greater-than-average likelihood of loss, generally issued with special exclusions, a premium rate that is higher than the rate for a standard policy, a reduced face amount, or any combination of these.
Rating Agencies
Six main credit agencies determine insurers’ financial strength and feasibility to meet claims obligations. They are A.M. Best Co.; Duff & Phelps Inc.; Fitch, Inc.; Moody’s Investors Services; Standard & Poor’s Corp.; and Weiss Ratings, Inc.
Rating Bureau
The insurance business which is based on the spread of risk.
Real Estate Investments
Investments normally owned by life insurers that comprise commercial mortgage loans and real property.
Receivables
Amounts payable to a business for goods or services provided.
Reciprocal Exchange
Unincorporated association organized to write insurance for its members, each of whom presumes a share of the risks covered.
Redlining
Literally means to draw a red line on a map around areas to get special treatment. Refusal to issue insurance based solely on where applicants live is unlawful in all states.
Reduced Paid-Up Insurance Option
One of more than a few nonforfeiture options included in life insurance policies that allows the owner of a policy with cash values to stop premium payments and to use the policy’s net cash value to buy paid-up insurance of the same plan as the original policy.
Registered Principal
An officer or manager of a National Association of Securities Dealers (NASD) member, who is entailed in the day-to-day operation of the securities business, has been eligible as a registered representative, and has an NASD Series 24 or 26 registrations.
Relation Of Earnings To Insurance Clause
A clause included in a few individual disability policies that limits the amount of benefits that an insurer will disburse when the total amount of disability benefits from all insurers exceeds the individual’s usual earnings.
Renewable Term Insurance Policy
The word life insurance policy that gives the policy owner the choice to continue the coverage at the end of the specified term without presenting evidence of insurability, even though typically at a higher premium based on the insured’s attained age.
Renters Insurance
A type of insurance that covers a policyholder’s belongings against perils like fire, theft, windstorm, hail, explosion, vandalism, riots, and others. It also gives personal liability coverage for damage the policyholder or dependents cause to third parties.
Replacement Cost
Insurance that pays the dollar amount required to replace damaged personal property or dwelling property without reducing for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.
Repurchase Agreement /'REPO
Agreement among a buyer and seller where the vendor agrees to rebuy the securities at an agreed upon time and price. Repurchase agreements involving U.S. government securities are used by the Federal Reserve to control the money supply.
Reserves
A Company’s finest estimate of what it will pay for claims.
Residual Disability Insurance
Residual Desirability Insurance is related to Income Protection Insurance.
Residual Disability
In disability income insurance, a condition in which the insured is not entirely disabled, but is still unable to function as prior to the sickness or injury, and thus suffers a reduction in income of at least the percentage—typically 20 percent to 25 percent—specified in the disability income plan.
Residual Market
Facilities, like assigned risk plans and FAIR Plans, that exist to give coverage for those who cannot get it in the regular market.
Retention
The sum of risk retained by an insurance company that is not reinsured.
Retrocession
The reinsurance bought by reinsurers to guard their financial stability.
Retrospective Rating
A method of permitting the final premium for a jeopardy to be adjusted, subject to an agreed-upon maximum and least limit based on actual loss experience. It is available to huge commercial insurance buyers.
Return On Equity
Net income divided by whole equity. Measures profitability by showing how efficiently invested capital is being used.
Revocable Beneficiary
A life insurance policy beneficiary whose right to the policy’s proceeds may be cancelled or reduced by the policy owner at any time before the insured’s death.
Redating
The process by which an insurer reinstates a term life insurance policy without requiring the payment of past outstanding premiums.
Refund Life Income Option
A kind of life income settlement option in which the insurer guarantees that if the beneficiary expires prior to the total amount paid under the option equals the proceeds of the policy, then the insurer will disburse the difference to a contingent payee.
Reinstatement
The method by which an insurer puts back into force a term life or health insurance policy that has been terminated for nonpayment of premiums or a term life insurance policy that has been sustained as extended term or reduced paid-up insurance.
Reinsurance
A kind of insurance that one insurance concern, called the ceding company, buys from another insurance company, the reinsurer, in order to transfer risks on insurance policies that the ceding concern issued.
Reinsurance Treaty
A broadly worded statement of an on-going agreement among a reinsurer and a ceding company. The three common kinds of reinsurance treaties are automatic, facultative, and facultative-obligatory.
Reinsurer
An insurance concern that accepts the risk transferred from another insurance concern in a reinsurance transaction.
Renewable Term Life Insurance
A kind of term life insurance which includes a renewal provision that gives the policyowner the right to renew the insurance coverage at the end of the specified term without submitting proof of insurability.
Renewal Premiums
Premiums which are payable after the initial premium.
Renewal Provision
A term life insurance policy provision that gives the policyowner the right to carry on the insurance coverage at the end of the specified term without submitting proof of continued insurability.
Replacement
The act of surrendering an insurance policy or part of the coverage of an insurance policy in order to purchase another policy.
Rescission
An equitable remedy under which the insurer seeks to annulled a policy or have it declared void. Rescissions generally happen when there has been material misrepresentation in the insurance application.
Residual Disability Benefit
A partial disability benefit sum that is established according to a formula specified in a disability income insurance policy. The sum of the benefit varies according to the percentage of income loss attributable to the disability.
Retention
In reinsurance, the amount of a reinsured jeopardy that the ceding company retains
Retention Limit
The maximum sum of insurance that an insurance concern will carry on any individual without ceding part of the risk to a reinsurer.
Revocable Beneficiary
A named beneficiary whose right to life insurance policy proceeds is not vested at the time of the insured’s lifetime and whose designation as beneficiary may be cancelled by the policyowner at any time prior to the insured’s death.
Registered Representative
Any person who is licensed with the National Association of Securities Dealers and who is engaged either in vending securities as the agent or representative of a broker-dealer or in training the sales persons associated with a broker-dealer.
Rider
An attachment to an insurance policy that changes the policy’s coverage or terms.
Risk
The chance of loss or the person or unit that is insured.
Risk Management
Management of the varied risks to which a business firm or association may be subject. It includes analyzing all exposures to gauge the likelihood of loss and choosing options to better manage or lessen loss.
Risk Retention Groups
Insurance concerns that band together as self-insurers and form an organization that is chartered and licensed as an insurer in at least one state to handle liability insurance.
Risk-Based Capital
The requirement for insurance companies to be capitalized according to the inherent riskiness of the type of insurance they sell. Higher-risk types of insurance, liability as opposed to property business, usually necessitate higher levels of capital.
Rollover
A direct transfer of retirement funds from one qualified plan to another plan of the same kind or to an individual retirement arrangement (IRA) that does not pass through the hands of the owner and therefore does not incur any tax liability for the owner.
Rider
An amendment to an insurance policy that becomes a portion of the insurance contract and expands or limits the benefits payable
Risk Class
A group of insured who present a substantially alike risk to the insurance company. Amongst the most common risk classes used by life insurance firms are standard, preferred, nonsmoker, substandard, and uninsurable.
