Accumulation Account: The savings portion of a universal life policy, also referred to as the current value. This is the cash value which earns interest and is differentiated from the cash surrender value, which is typically less in the early years.
After-Tax: The net amount of money you keep after taxes have been deducted from your earnings.
Appraisal: The estimated market value of your property. It is usually conducted by a professional who is not an employee of the lender. Real estate, tax, and insurance appraisals may differ widely and are used for different reasons.
Basic Medical Insurance: Hospitalization and surgical benefits excluding major medical benefits.
Basis: The amount that is subtracted from sales proceeds to determine gain for income tax purposes. The cost basis in a life insurance policy is your contributions minus dividends paid, since dividends are considered to be a partial return of basis.
Beneficiary: A person you have designated to receive benefits when you die.
Benefit Period: Period over which benefits are payable.
Birthday Rule: If both spouses' plans cover your dependant, such as a child, the plan of the employee whose birthday occurs earlier in the year pays first.
Bodily Injury Liability: Mandatory insurance coverage for medical bills, loss of income, and compensation for pain and suffering for others injured in an accident that you caused.
Buy-Sell Agreements: An agreement made before death where the sale of an individual's interest in a business is to be sold to the remaining owner(s) at death, and each owner agrees to buy the shares of the deceased owner.
Cash Surrender Value: The amount of cash that you can take out of a life insurance policy.
Cash value: Generally, the same as the cash surrender value in a whole life and universal-life policy.
Co-payment: A minimal amount you have to pay for doctor's visits in a Preferred Provider Organization (PPO) or Health Maintenance Organization (HMO).
COBRA: A law which requires employers with 20 or more employees maintaining group health plans to permit employees, their spouses, and their dependants to continue, on a self-pay basis, group coverage for a period ranging from 18 to 36 months (depending on the qualifying event) after they leave their job.
Coinsurance: A specified amount of insurance your medical plan will pay up to specified limit.
Collision Coverage: Insurance coverage for physical damage to your car.
Comprehensive Coverage: Insurance coverage for damage due to theft, fire, vandalism, or other perils other than what your collision coverage will pay for.
Contingent Beneficiary: The person next in line after the first named beneficiary (primary beneficiary). If your primary beneficiary dies before you, the contingent beneficiary may receive benefits after your death.
Convertible: Insurance that can be exchanged for another one at the option of the policyholder.
Cost of Mortality: The actual cost per thousand dollars of benefit. Mortality costs typically rise as your age increases.
Cost-of-Living Increase: A provision whereby the actual benefit increases each year, either at a fixed percentage or tied to the Consumer Price Index.
Custodial Care: The care an older person needs to be able to perform activities of daily living.
Deductible: The amount you pay before the insurance company will pay anything toward a claim for losses incurred.
Dental Maintenance Organization (DMO): An organization providing comprehensive dental services for a fixed premium.
Disability Waiver of Premium: A rider or provision in a policy that allows the policyholder to stop making premium payments if he or she meets the insurance company's definition of disability.
Dividend: In a participating life insurance policy, the dividend is considered the unused portion of the premium which is returned to the premium payer. This is generally non-taxable.
Dividend Scale: The insurance company's projection of future dividends based on assumptions including cost of mortality, investment experience and company expenses.
Elimination Period: More commonly referred to as the "waiting period," the number of days that must lapse after onset of disability before benefits can be paid.
Executor: The person you appoint to supervise your estate after you die.
Expense Experience: The company's actual expenses opposed to their projected expenses.
Extended Term Insurance: A non forfeiture option in a whole life policy. The face amount of the policy stays in effect and the policy stays in force for as many years as the cash value will pay for term insurance.
Face Amount: The amount stated on the face of a life insurance policy that will be paid at death of the insured or at the maturity of the contract, whichever comes first. It does not include dividend additions, or additional amounts payable under accidental death or other special provisions.
Flexible Benefits Program: A plan that offers employees a choice among a number of alternative benefits, typically qualifying as a Section 125 plan. Employees have an opportunity to pay for most benefits on a pre-tax basis.
Floater: An amendment to an insurance policy that provides coverage for portable (hence floating) personal property, such as silverware, sporting equipment, jewelry, furs, etc.
Guaranteed Renewable Clause: A clause in an insurance policy that guarantees the owner the right to renew a policy.
Health Maintenance Organization (HMO): A prepaid medical group practice plan in which individual subscribers pay an annual fee in return for entitlement to a wide range of health services.
Imputed Income: The cost of benefits you receive that are taxed as additional compensation.
In-Force Ledger: A life insurance illustration which projects future values of an existing policy.
Inter Vivos Trust: A trust that is established during a person's lifetime.
Incontestability Clause: If you die within the first two years of the issue of your new life insurance policy, the insurance company can deny a claim if there were material representations on the application which would have made a difference in the coverage issued. The incontestability clause says that, after two years from the date of issue, a claim cannot be denied except in cases of fraud.
Indemnity Plan: A medical plan which reimburses you for covered medical expenses.
Irrevocable Life Insurance Trust: A trust where insurance is the main asset. When you die, the beneficiaries of the trust get the assets or the trustee manages the assets to support these individuals. If done correctly, this is an excellent way to prevent the policy from being included in any estate tax calculation, while still benefiting your loved ones.
Interest Assumptions: The interest rate the insurance company projects that your policy savings will earn.
Interest-Sensitive Whole Life: A cross between the traditional whole life policy and a universal life policy.
Internal Rate of Return: The net rate at which your cash value (accumulation account) in a life insurance policy grows after contract charges have been deducted.
Liability Coverage: Insurance coverage that pays for claims for bodily injury or property damage from an automobile accident for which you are responsible.
Limited Payment Policies: Insurance policies with guaranteed, limited premium paying periods that cease prior to maturity of the policy.
Major Medical: Physician fees and services not covered under the basic medical plan. You could buy these coverages separately, but they are generally packaged together with basic medical coverage as a comprehensive plan.
Managed Care Programs: Health care programs such as HMOs and PPOs. These programs impose controls on the utilization of health care services, the providers who offer such care, and the fees charged for such services.
Maturity: In a whole life policy, the date at which the guaranteed cash value equals the face amount of the policy, usually age 95 or 100.
Medical Information Bureau (MIB): A membership organization of life insurance companies to which insurers report health impairments of applicants for life insurance; the information is then available to member companies for underwriting purposes.
Mortgage: A type of loan in which the borrower (home buyer) pledges the property as security to the lender for repayment of the loan.
Mutual Life Insurance Company: An insurance company owned by the policyholders. It does not have stockholders; it may be incorporated or unincorporated.
Net Payment Index: In an insurance policy, a measure of the cost of insurance maintained in force for a specified period of time, usually 10 or 20 years.
Net Worth: What you own (assets) minus what you owe (liabilities).
Non-participating Policy: An insurance policy where the premium is calculated to equal as closely as possible the anticipated cost of insurance protection. Dividends are not paid to the policy owner.
Out-of-Pocket Costs: Money that a covered individual or family pays for medical services rendered that are not reimbursed by the health plan.
Paid-up Additions: Small pieces of additional whole life insurance having cash value that are purchased with annual policy dividends. Over time, paid-up additions increase the total cash value and the total death benefit.
Participating Policy: Policies that entitle the policyholder to receive dividends. In other words, the policy owner shares in the experience of the company.
Permanent Insurance: A phrase used to cover any form of life insurance except term. It is typically used to refer to policies such as whole life that accrue cash value.
Personal Injury Protection (PIP): Insurance coverage for doctor, hospital, and funeral costs for you and others in your car due to an accident, no matter who is responsible.
Point-of-Service Plan: A plan that allows participants the choice of receiving service from "in-network" or "out-of-network" providers. In-network services are typically free or at little cost, while out-of-network services are more costly.
Policy Loan: A loan made by an insurance company to a policyholder on the security of the cash value of his policy.
Pre-Disability Earnings: The amount of earnings before you became disabled.
Preexisting Conditions: A condition that existed before coverage under a current health or disability plan began.
Preferred Provider Organization (PPO): A health care delivery organization composed of physicians, hospitals, or other health care providers that contract with subscribers to provide health care services at a predetermined fee.
Pre-tax: The money you earn before taxes are deducted.
Primary Beneficiary: The individual first designated to receive the proceeds of an insurance policy.
Primary Care Physician: The physician that a subscriber of a HMO or a PPO names as his or her primary caregiver.
Primary Plan: An insurance policy which pays first with respect to other outstanding policies.
Probate: The process whereby the court reviews your estate to make sure that the will is authentic, that all actions against the will are heard, and creditors are paid, before the assets are paid out to the people named in the will.
Property Damage Liability: Mandatory insurance coverage for damages to another person's property or car that you are responsible for.
Prospectus: A document giving detailed information about an investment to prospective buyers.
Provider Network: Physicians and hospitals that belong to a group that provides health care to subscribers.
Pure Insurance: The portion of the death benefit that is not derived from the cash value buildup in the policy.
Quick-Pay Illustration: A computer-generated illustration showing how the premiums in a cash value policy can vanish in the early years of the policy. It is based on dividend or interest assumptions, depending upon the type of policy, which are not guaranteed.
Rated: An insurance policy that is issued at a higher rate than the standard premium to cover the extra mortality risk of the insured.
Reasonable and Customary Charges: This is the usual fee charged for a particular service, rendered in a particular area, by service providers with similar training and experience.
Reduced Paid-up Policy: A non forfeiture option in a whole life policy that provides for continuation of the original insurance plan, but for a reduced amount. This has to be requested by the policy owner.
Renewable: Some term life insurance contracts provide that they may be renewed without medical examination. A contract that is guaranteed renewable typically means that the insurer cannot cancel the policy as long as premiums are paid. The premiums are not guaranteed.
Respite Care: Temporary care for a senior, so the regular caregiver can have some time for himself or herself.
Secondary Plan: A health care plan that the insured submits claims to after the primary plan pays benefits.
Split Definition of Disability: Usually found in disability policies, it combines an "own occupation" definition with an "any occupation" definition.
Stock Life Insurance Company: An insurance company owned by stockholders, usually for the purpose of making a profit.
Stop-Loss Provision: It is the maximum amount of out-of-pocket expenses a covered individual can incur in a calendar year.
Sub account: One of many investment choices in a variable annuity or variable life insurance policy. The account is not tied to the investment performance of the insurance company.
Substandard: A risk that is typically associated with some physical impairment requiring the use of a waiver, a special policy form, or higher premium charge.
Suicide Clause: A life insurance policy provision that limits the insurer's liability to the return of premiums if the insured commits suicide during the first two years of the policy.
Target Premium: The amount of the scheduled contribution (premium) in a universal life policy the insurance company determines is required for the policy to mature at either age 95 or 100.
Tax-Deferred: Refers to an investment where interest earned (and sometimes the principal invested) is not taxed until the amounts are withdrawn.
Term Insurance: Life insurance that only provides pure insurance for a stated period of time. The policy does not accumulate cash value.
Trust: A legal entity that holds assets for a period of time under the control of an appointed party, the trustee.
Total Cash Value: In a whole life policy, it is the total of the guaranteed cash value plus the cash value of any paid-up additions.
Umbrella Policy: A liability insurance policy that pays for claims over and above the amount covered by the primary policy.
Underwriting: The process by which an insurance company determines whether or not and on what basis it will accept an application for insurance.
Uninsured Motorist Coverage: Insurance coverage for the cost of injuries or death due to an accident caused by someone without insurance or by a hit-and-run driver.
Universal Life: A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time and vary the premium payments.
Variable Life: Life insurance under which the benefits are not fixed but increase or decrease relative to the performance of the underlying assets (sub accounts).
Wage Continuation Plans: Corporate disability plans designed to pay income to a disabled employee, usually a shareholder or executive with the company.
Whole-Life: A permanent life insurance policy that has a guaranteed level premium and a guaranteed cash value.
Investment products and services are offered through INFINEX INVESTMENTS, Inc. Member FINRA/SIPC. The Investment Center at South Shore Bank is a trade name of the Bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.