back-dating
Making the effective date of an insurance
policy earlier than the date of the application so that the premium
rate will be lower. State law usually limits back-dating to not more
than six months. Also called dating back.
back-loaded policy
A life insurance policy (usually a
universal life insurance policy) in which most of the expense
charges occur when the policyowner surrenders the policy or makes
cash withdrawals from the policy. Such charges are usually highest
in the early policy years and are often eliminated at the end of a
certain number of years. See also front-loaded policy and universal
life insurance.
backloading
The practice of providing a higher accrual
of pension benefits during a participant's later years of
employment. The practice is designed to encourage and reward long
service.
band grading
The grouping of life insurance policies
according to death benefit amounts for the purpose of calculating
loading.
basic death benefit
The death benefit according to the
terms of the original, basic contract of a life insurance policy.
The basic death benefit does not include the benefit for any
supplementary riders, such as an accidental death benefit (ADB)
rider. For policies whose death benefit remains constant, the basic
death benefit is equivalent to the face amount. Compare to death
benefit and policy proceeds.
basic mortality table
A mortality table without a
safety margin. Also called a basic experience table. See also
mortality table and safety margin.
basic services
Under dental insurance, dental services,
such as fillings, periodontics, and oral surgery, which are often
covered at 80 percent of their reasonable and customary charges.
basket clause
(1) From an investment point of view, a
provision that allows insurance companies to invest a small
percentage of their assets generally without regard to statutory
restrictions. (2) From an accounting point of view, a clause which
permits life and health insurers to hold a specified amount of their
assets as nonauthorized assets, which are not restricted in the same
way as authorized assets.
beneficiary
The person or other party designated to
receive life insurance policy proceeds. See also contingent
beneficiary, irrevocable beneficiary, primary beneficiary, and
revocable beneficiary.
beneficiary declaration
In Canada, an insurance policy
beneficiary designation that is made in a separate written document
after the insurance policy has been issued.
beneficiary for value
In the common law jurisdictions
of Canada, a person who belongs to the class of beneficiaries
composed of persons who were named as life insurance policy
beneficiaries in return for providing valuable consideration to the
insureds (U.S.: policyowners). The 1962 revision of the Uniform Life
Insurance Act abolished this class of beneficiaries.
benefit
The amount of money paid when an insurance
claim is approved. Also called the policy benefit.
benefit of survivorship
Describes the fact that annuity
payments will be made as long as the designated recipient is alive
at the time the payment is due. This concept is used in the
calculation of amounts due under life insurance settlement options.
benefit schedule
Under a group insurance plan, a table
or schedule which specifies the amount of coverage provided for each
class of insured. Insureds are often classified with reference
either to earnings or to rank or position. Also known as schedule of
benefits.
best-earnings plan
A pension plan which specifies that
each participant's benefit will be calculated according to the
final-average formula.
binding premium receipt
A type of initial premium
receipt that makes insurance coverage effective immediately but only
until the insurance company either rejects the application or
approves it and issues a policy. Compare to conditional premium
receipt.
birthday rule
A rule included in some coordination of
benefits provisions that specifies the manner in which benefits for
dependent children are to be coordinated between two insurance
plans. According to the birthday rule, benefits for dependent
children will be paid by the plan of the parent whose birthday falls
earlier in the year.
blended rates
Group mortality rates that are based partially
on a group's own experience and partially on manual rates. Blended
rates are used to determine the appropriate group insurance premium
rates for intermediate-size groups. See also experience rating and
manual rates.
Blue Cross plan
A hospital expense insurance plan offered by a
regionally-operated health care provider affiliated with a large
national nonprofit health care organization. This plan generally
provides benefits on a "service-type" basis.
B: Part
Two
