| 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.
|
| 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 |
| A standing
agreement between insurers and reinsurers. Under a treaty each party
automatically accepts specific percentages of the insurer’s business. |
| 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 |
| 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. |
