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TERM CERTAIN
ANNUITY |
An form of annuity
that pays out over a fixed period rather
than when the annuitant dies.
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TERM INSURANCE |
A form of life
insurance that covers the insured person for
a certain period of time, the “term” that is
specified in the policy. It pays a benefit
to a designated beneficiary only when the
insured dies within that specified period
which can be one, five, 10 or even 20 years.
Term life policies are renewable but
premiums increase with age.
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TERRITORIAL RATING |
A method of
classifying risks by geographic location to
set a fair price for coverage. The location
of the insured may have a considerable
impact on the cost of losses. The chance of
an accident or theft is much higher in an
urban area than in a rural one, for example.
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TERRORISM COVERAGE |
Included as a part of
the package in standard commercial insurance
policies before September 11, 2001 virtually
free of charge. Since September 11,
terrorism coverage prices have increased
substantially to reflect the current risk.
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THIRD-PARTY
ADMINISTRATOR |
Outside group that
performs clerical functions for an insurance
company.
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THIRD-PARTY
COVERAGE |
Liability coverage
purchased by the policyholder as a
protection against possible lawsuits filed
by a third party. The insured and the
insurer are the first and second parties to
the insurance contract. (See
First-party coverage)
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TIME DEPOSIT |
Funds that are held in
a savings account for a predetermined period
of time at a set interest rate. Banks can
refuse to allow withdrawals from these
accounts until the period has expired or
assess a penalty for early withdrawals.
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TITLE INSURANCE |
Insurance that
indemnifies the owner of real estate in the
event that his or her clear ownership of
property is challenged by the discovery of
faults in the title.
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TORT |
A legal term denoting
a wrongful act resulting in injury or damage
on which a civil court action, or legal
proceeding, may be based.
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TORT LAW |
The body of law
governing negligence, intentional
interference, and other wrongful acts for
which civil action can be brought, except
for breach of contract, which is covered by
contract law.
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TORT REFORM |
Refers to legislation
designed to reduce liability costs through
limits on various kinds of damages and
through modification of liability rules.
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TOTAL LOSS |
The condition of an
automobile or other property when damage is
so extensive that repair costs would exceed
the value of the vehicle or property.
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TRANSPARENCY |
A term used to explain
the way information on financial matters,
such as financial reports and actions of
companies or markets, are communicated so
that they are easily understood and frank.
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TRAVEL INSURANCE |
Insurance to cover
problems associated with traveling,
generally including trip cancellation due to
illness, lost luggage and other incidents.
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TREASURY SECURITIES |
Interest-bearing
obligations of the U.S. government issued by
the Treasury as a means of borrowing money
to meet government expenditures not covered
by tax revenues. Marketable Treasury
securities fall into three categories —
bills, notes and bonds. Marketable Treasury
obligations are currently issued in book
entry form only; that is, the purchaser
receives a statement, rather than an
engraved certificate.
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TREATY REINSURANCE |
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A standing agreement
between insurers and reinsurers. Under a
treaty each party automatically accepts
specific percentages of the insurer’s
business. |
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UMBRELLA POLICY |
Coverage for losses
above the limit of an underlying policy or
policies such as homeowners and auto
insurance. While it applies to losses over
the dollar amount in the underlying
policies, terms of coverage are sometimes
broader than those of underlying policies.
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UNBUNDLED CONTRACTS |
A form of annuity
contract that gives purchasers the freedom
to choose among certain optional features in
their contract.
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UNDERINSURANCE |
The result of the
policyholder’s failure to buy sufficient
insurance. An underinsured policyholder may
only receive part of the cost of replacing
or repairing damaged items covered in the
policy.
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UNDERWRITING |
Examining, accepting,
or rejecting insurance risks and classifying
the ones that are accepted, in order to
charge appropriate premiums for them.
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UNDERWRITING INCOME |
The insurer’s profit
on the insurance sale after all expenses and
losses have been paid. When premiums aren’t
sufficient to cover claims and expenses, the
result is an underwriting loss. Underwriting
losses are typically offset by investment
income.
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UNEARNED PREMIUM |
The portion of a
premium already received by the insurer
under which protection has not yet been
provided. The entire premium is not earned
until the policy period expires, even though
premiums are typically paid in advance.
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UNINSURABLE RISK |
Risks for which it is
difficult for someone to get insurance. (See
Insurable risk)
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UNINSURED MOTORISTS
COVERAGE |
Portion of an auto
insurance policy that protects a
policyholder from uninsured and hit-and-run
drivers.
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UNIVERSAL LIFE
INSURANCE |
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A flexible premium
policy that combines protection against
premature death with a type of savings
vehicle, known as a cash value account, that
typically earns a money market rate of
interest. Death benefits can be changed
during the life of the policy within limits,
generally subject to a medical examination.
Once funds accumulate in the cash value
account, the premium can be paid at any time
but the policy will lapse if there isn’t
enough money to cover annual mortality
charges and administrative costs. |
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