GAAP reserves
Reserves that
are calculated in accordance with generally accepted accounting principles.
general account
An undivided account in which life and
health insurers formerly recorded all incoming funds. General
accounts are still usually insurers' largest accounts, but since the
early 1960s, life and health insurers have begun using other
accounts as well. See also separate account.
general agency distribution system
Along with the
branch office system, the general agency distribution system is part
of the agency system, which is the most common system used to sell
individual life insurance products. Under the general agency system,
each field office is headed by a general agent, who is an
independent entrepreneur under contract to the insurer. As an
independent entrepreneur, the general agent has a great deal of
control over how the field office is to operate. Typically, the
staff of the field office is employed by the general agent, not the
insurer; salaries and office expenses are paid by the general agent,
not the insurer; and the soliciting agents are under contract to the
general agent, not the insurer. In a traditional general agency
system, all commissions from the insurer are paid to the general
agent. The general agent keeps a portion of each commission, called
an overriding commission, and then pays the remaining commission to
the appropriate soliciting agent. Some insurers have modified this
procedure and now pay commissions directly to soliciting agents and
overriding commissions directly to general agents. See also agency
system, branch office distribution system, and overriding
commission.
general agent (GA)
The individual in charge of a field
office of an insurer that uses the general agency distribution
system. The general agent is an independent entrepreneur who is
under contract to the insurer.
generally accepted accounting principles (GAAP)
The set
of accounting principles used by most firms outside the life
insurance industry and sometimes used by life and health insurance
companies. GAAP is based on the going-concern concept of asset
valuation.
good health provision
A provision contained in some
group credit policies stating that a policy is void if the insured
was not in good health when the application was signed or when the
policy was delivered, whichever was specified in the contract.
grace period
The length of time (usually 31 days) after
a premium is due and unpaid during which the policy, including all
riders, remains in force. If a premium is paid during the grace
period, the premium is considered to have been paid on time.
graded-premium whole life insurance
A type of whole
life insurance in which premiums increase once or at specified
points in time, such as every three years, until a premium that
remains level is reached.
gross premium
The amount that policyowners actually pay
for their insurance. The gross premium equals the net premium plus
the loading.
group creditor life insurance
Group insurance coverage
wherein a master contract is issued to cover the lives of current
and future debtors of the policyowner. The beneficiary of such
coverage is the policyowner.
group deferred annuity
A type of annuity sometimes used
to fund a pension plan. Employer contributions under a group
deferred annuity contract are used to purchase deferred annuities to
provide for the retirement benefits of plan participants.
group insurance
Insurance that provides coverage for
several people under one contract, called a master contract.
group life insureds
In Canada, the persons who are
insured by a group life insurance contract. Usually simply called
"insureds" in the United States.
group ordinary life insurance
Group life insurance in
which at least a part of the coverage is permanent and builds a
cash-value.
group paid-up insurance
A type of contributory group
life insurance in which the employee's contributions are used to
purchase paid-up whole life insurance and the employer's
contributions are used to purchase term insurance. The amount of
insurance coverage on each employee remains level each year.
Therefore, as the amount of paid-up insurance on an employee
increases over time, the amount of term insurance which the employer
must purchase to make up the difference decreases.
group permanent life insurance
Any of several types of
life insurance which build a cash value and are underwritten on a
group basis. Group permanent life insurance is often used to fund
group pension plans and/or to provide life insurance coverage that
will continue after retirement.
G: Part
Two
