Transfer-For-Value Rule Definition.

The Transfer-For-Value Rule is a federal income tax rule that applies to the transfer of a life insurance policy for value. The rule provides that the transfer of a life insurance policy for value will not trigger a taxable event if the transferee is a family member of the transferor or if the transferee pays … Read more

High-Risk Hobbies May Fall into the Category of a Hazardous Activity for Life Insurance.

A high-risk hobby is any activity that has a high potential for causing serious injury or death. Some examples of high-risk hobbies include skydiving, rock climbing, and motorcycling. While these activities can be exciting and enjoyable, they also come with a certain amount of risk. When determining whether or not to approve life insurance coverage … Read more

Free of Particular Average (FPA) Definition.

Particular Average (PA) is defined as a loss to an insured item, caused by a peril not excluded by the policy, which is less than a total loss. In other words, it is damage to your belongings while in transit that is less than the value of the item. There are two types of Particular … Read more

Level-Premium Insurance Is Term Life With Static Premium Payments.

Level-premium insurance is a type of life insurance policy in which the premium payments are static, meaning they do not increase over time. This can be contrasted with other types of life insurance policies, such as whole life insurance, which typically have increasing premiums as the policyholder gets older. One advantage of level-premium insurance is … Read more

Accumulation Option Definition.

An accumulation option is a life insurance policy provision that allows the policyholder to increase the death benefit by adding a specified percentage of the premiums paid to the policy’s cash value. What are the 5 settlement options for life insurance? 1. Cash settlement: This is the most common settlement option, whereby the policyholder receives … Read more

Accidental Death and Dismemberment (AD&D) Insurance.

Accidental Death and Dismemberment (AD&D) Insurance is a form of life insurance that provides benefits in the event of death or dismemberment due to an accident. AD&D policies are typically less expensive than traditional life insurance policies, and they may be offered as standalone policies or as an addition to a life insurance policy. AD&D … Read more

Introduction to Allocated Loss Adjustment Expenses (ALAE).

An insurance company’s Allocated Loss Adjustment Expenses (ALAE) are the expenses associated with investigating and settling policyholder claims. This includes the costs of claims adjusters, investigators, legal fees, and other related expenses. ALAE is a major factor in the company’s overall loss ratio. Which would not be a type of allocated loss adjustment expense? There … Read more

Life Insurance Guide to Policies and Companies.

A life insurance policy is a contract between an insurance company and an individual. The insurance company agrees to pay a sum of money to the individual’s beneficiaries in the event of the individual’s death. The individual agrees to pay premiums to the insurance company. A life insurance company is a company that sells life … Read more

Family Income Rider.

A family income rider is an insurance rider that provides a death benefit in the form of a regular income stream to the policyholder’s beneficiaries. The rider is typically added to a term life insurance policy, and pays out a death benefit if the policyholder dies while the policy is active. The income stream can … Read more