face amount
In a life insurance
policy whose benefit is not variable, the amount stated as payable at
the death of the insured or (in the case
of an annuity) at the maturity of the contract. It
is generally shown on the first page of the policy. Also
called the face value. See also basic death benefit,
death benefit, and policy proceeds.
face page
The first page of an insurance policy. The
face page normally includes the insured's name and age, the name of
the policyowner (if different from the insured's name), the amount
of premiums, the policy number, the date on which the policy was
issued, and the signatures of the insurance company's president and
secretary.
facility-of-payment clause
A life insurance policy
provision that permits an insurer to pay all or part of the policy
proceeds either to a blood relative of the insured or to anyone who
has a valid claim to those proceeds. The facility-of-payment clause
enables the insurer to pay benefits in a timely manner when such
benefits cannot be made to the beneficiary identified in the
insurance contract.
factor table
A table used by insurance underwriters to
determine an applicant's net worth by specifying what an applicant's
annual income should be multiplied by to arrive at the maximum
allowable amount of insurance.
Fair Credit Reporting Act (FCRA)
A United States
federal law designed to help ensure that consumer reporting agencies
act fairly, impartially, and with respect for the consumer's right
to privacy when preparing consumer reports on individuals. See also
consumer reporting agency.
family benefit
A life insurance policy rider that
provides term insurance coverage on the insured's spouse and
children.
family deductible
A single deductible which, when
satisfied, relieves a family of the burden of satisfying a
deductible for each individual family member.
family income insurance
A specialized individual policy
that commonly combines whole life insurance with decreasing term
insurance. The whole life insurance portion of the policy is usually
paid as a lump sum when the insured dies. The decreasing term
insurance portion of the policy provides an income for a
predetermined period to help support the insured's family.
family insurance policy
A life insurance policy that
covers all the members of a family under one contract.
FASB Statement No. 35
Issued in the United States by
the Financial Accounting Standards Board (FASB) in 1985, Statement
35 contains rules by which to measure and report a defined benefit
pension plan's assets and liabilities in accounting reports that are
issued by the pension plan itself. The Statement is titled
"Accounting and Reporting by Defined Benefit Plans."
FASB Statement No. 87
Issued in the United States by
the Financial Accounting Standards Board (FASB) in 1985, Statement
87 governs the ways in which an employer accounts for and reports
the costs of pension benefits offered to its employees. The
Statement, titled "Employers' Accounting for Pensions," requires
that, for accounting purposes, employers use a cost method known as
the projected unit credit method to determine the net periodic cost
of the pension benefits offered to employees. Statement 87 also
requires that an employer recognize a liability if the net periodic
cost is greater than employer contributions to the plan, and an
asset if net periodic cost is less than employer contributions to
the plan. An employer must also recognize a liability known as the
unfunded accumulated benefit obligation if the accumulated
obligations of the plan sponsored by the employer exceed the fair
market value of the plan's assets.
FASB Statement No. 88
Issued in the United States by
the Financial Accounting Standards Board (FASB) in 1985, Statement
88 establishes accounting requirements for employers whose defined
benefit pension plans are curtailed or terminated, or experience
other special events, such as a settlement of a pension obligation
through a lump-sum cash payment of benefits to a plan participant.
The Statement is titled "Employers' Accounting For Settlements and
Curtailments of Defined Benefit Pension Plans and Termination
Benefits."
federally qualified HMO
In the United States, a Health
Maintenance Organization which satisfies specific requirements set
forth in the Health Maintenance Organization Act of 1973. Federally
qualified HMOs are entitled to certain grants and loans from the
federal government and are eligible to be used by employers to
satisfy the dual choice provision.
fee-for-service
A payment system for
health care where the health-care provider is paid for each
procedure or service rendered.
fee schedule
A schedule or list of maximum benefits
that will be paid under a group medical contract for certain listed
procedures. See also relative value schedule. May simply be called a
schedule.
fee schedule basis
A compensation plan used in health
maintenance organizations (HMOs) and preferred provider
organizations (PPOs) in which a physician is paid a predetermined
amount for each service that the physician provides. See also
capitation basis.
fiduciary
A person or organization who holds, manages
and has discretionary authority and control over money belonging to
another person or organization, or who renders investment advice in
exchange for compensation. When an insurance company manages pension
funds, the insurance company is acting as a fiduciary.
field force
Those insurance agents who work out of an
insurer's field offices.
field offices
An insurance company's local sales
offices.
field underwriting
The first step in the risk selection
process. Field underwriting occurs when an agent gathers pertinent
information about the proposed insured and reports that information
on the application blank so the home office underwriter can make an
underwriting decision.
final average (final earnings) benefit formula
A type
of defined-benefit formula in which the retirement benefit amount is
derived on the basis of a participant's average compensation during
a specified period (usually the three to five years preceding
retirement) during which the participant was most highly
compensated. Contrast with career average benefit formula.
financial institution
An organization that helps to
channel funds through an economy by accepting the surplus money of
savers and supplying that money to borrowers, who pay to use the
money. Insurance companies are financial institutions.
financial intermediary
A financial institution that
borrows money on its own account and loans money to other borrowers.
Insurance companies are financial intermediaries.
financial settlement
A lump sum payment
by an insurer to a disabled insured that extinguishes the insurer's
responsibility under the disability contract. Also known as a
buy-out or commutation.
first-dollar coverage
Medical expense insurance under
which no deductible or coinsurance is applicable to covered
expenses.
first-year commission
An amount paid to an insurance
agent based on a policy's first annual premium amount.
F: Part
Two
