equity pension
A pension which provides benefit amounts
that, at least in part, vary in accordance with the investment
results of a portfolio of common stocks and other investment
vehicles. The equity portion of the pension benefit is meant to
provide retirees with benefits that increase as inflation rises.
equivalent level annual dividend (ELAD)
One amount
presented to consumers as part of the interest-adjusted method of
comparing the costs of life insurance policies. The equivalent level
annual dividend is meant to represent the part of the
interest-adjusted payment and the cost that is, in effect, not
guaranteed by the insurer, because dividends will change in the
future as the insurer's experience changes. This amount gives the
buyer an indication of the extent to which these nonguaranteed
amounts affect the interest-adjusted payment and the cost of a
policy.
equivalent single payment
One payment that can replace
several other payments, because it equals the value of the other
payments.
equivocal suicide
An apparent suicide in which there is
doubt about whether the deceased intended to die as a result of an
apparently self-destructive act.
error and omissions (E&O) insurance
Insurance
designed to cover claims that result from the negligent acts or
mistakes of an agent, including (1) his or her vicarious liability
stemming from negligent acts or (2) mistakes committed by
individuals for whom the agent is legally liable.
estate planning
An insurance program designed not only
to provide funds for the prospect's dependents upon the death of the
prospect, but also to conserve, as much as possible, the personal
assets that the prospect wants to bequeath to heirs. Estate planning
usually involves accountants, lawyers, and the trust officers of
banks, as well as insurance agents.
evidence of insurability
Proof that a person is an
insurable risk.
excess interest
The amount of interest above the
guaranteed amount, that an insurance company pays on a settlement
option when interest rates are high.
exchange program
A program that allows a proposed
insured who is replacing a policy to obtain the new policy on the
basis of little or no evidence of insurability if his or her
insurability has recently been established by the company that
issued the original policy.
exclusions
Specific conditions or circumstances for
which the policy will not provide benefits.
exclusive agents
Career agents who are
under contract with one insurance company only and who are not
permitted to sell the products of other insurers. Also known as
captive agents.
exclusive territory
Under the general agency
distribution system, a territory in which no individual other than
the general agent is permitted to offer the insurer's products.
Compare to nonexclusive territory and overlapping territory.
exculpatory statute
Legislation in community-property
states that allows an insurer to pay the proceeds of a life
insurance policy in accordance with the terms of that policy without
fear of double liability.
exoneration statutes
Statutes that excuse the insurer
from liability if a party claims policy proceeds which the insurer
has already paid to a third party in good faith and without
knowledge of any conflicting claim.
experience rating
The process of using a group's own
premium and claims experience to calculate premium rates. If the
claims experience for the previous year was favorable, the insurer
considers reducing the premium rates for the coming year. If the
experience was unfavorable, the insurer attempts to discover the
reason and may propose higher premium rates for the next year. See
also blended rates and manual rates.
experience refund
(1) The portion of a group insurance
premium that is returned to a group policyholder whose claims
experience is better than had been expected when the premium was
calculated. Also called a dividend, an experience rating refund, and
a retroactive rate reduction. See also dividend. (2) The portion of
a reinsurance premium that is returned to the ceding company when
claims experience is better than had been expected when the premium
was calculated.
experimental underwriting
The practice of cautiously
accepting specific types of risk that are considered uninsurable
according to the insurer's normal underwriting guidelines.
express authority
The authority that a principal
explicitly confers on an agent. See agent and principal. Compare to
apparent authority and implied authority.
extended spouse's allowance
In Canada, an Old Age
Security (OAS) benefit payable to a person who has been receiving a
spouse's allowance and whose spouse dies. The benefit is payable
until the recipient reaches age 65 or remarries. See also spouse's
allowance.
extended term insurance option
A nonforfeiture option
in which the cash value of a policy is applied as a net single
premium to purchase paid-up term insurance. The amount of term
insurance is equal to the death benefit of the policy being
surrendered less any outstanding policy loans. The insured maintains
the same amount of coverage but usually for a shorter period of time
than the original coverage. See also nonforfeiture options.
extra-percentage tables method
A commonly used plan for
rating substandard risks. Under this method, each substandard class
is charged a premium rate that is a certain percentage above the
standard premium rate. Contrast with flat extra premium method.
