Life Insurance Glossary

AADLs

See Advanced Activities of Daily Living

ABC

See Activity-Based Costing

Absolute Assignment

An irrevocable transfer of complete ownership of a life insurance policy or an annuity from one party to another. Contrast with Collateral Assignment.

See also Assignment

ACB

See Adjusted Cost Basic.

Accelerated Benefits Model Regulation

In the United States, a National Association of Insurance Commissioners (NAIC) model regulation designed to regulate accelerated death benefit provisions and to impose disclosure standards on insurers that provide such benefits.

Accelerated Death Benefit

A benefit included in a life insurance policy or added to a life insurance policy through a policy rider that gives the policyowner the right to receive a portion–usually between 50 and 80 percent–of the policy's death benefit during the insured's lifetime when the insured is terminally ill as defined in the policy. Also known as terminal illness (TI) benefit.

Acceptable Alternative Mechanism

For purposes of the Health Insurance Portability and Accountability Act (HIPAA) in the United States, a state-approved plan that provides health insurance coverage to all eligible individuals without imposing preexisting conditions exclusions and gives eligible individuals a choice of health insurance coverage.

Accident Insurance

A type of health insurance coverage that only provides benefits for an insured's death, dismemberment, disability, or medical care that results from the insured being in an accident.

See also Health Insurance

Accidental Death and Dismemberment (AD&D) Benefit

A supplementary life insurance policy benefit that provides for an amount of money in addition to the policy's basic death benefit. This additional amount is payable if the insured dies as the result of an accident or if the insured loses any two limbs or the sight in both eyes as the result of an accident.

Accidental Death Benefit (ADB)

A supplementary life insurance policy benefit that provides a death benefit in addition to the policy's basic death benefit if the insured's death occurs as the result of an accident.

See also 

Account

The basic tool that a company uses to record, group, and summarize similar types of financial transactions.

Account Fee

In unbundled variable insurance products, an annual charge to customers generally expressed as the lesser of a specified dollar amount or a percentage, such as 2 percent of the account value.

Account Form

The presentation format of a balance sheet in which asset accounts appear on the left side and liabilities and owners' equity accounts appear on the right side.

Account Payable

A liability account that represents a contractual promise of payment by the holder of the account to another party.

Account Receivable

An asset account that represents a contractual promise by another party to pay an amount to the holder of the account.

Accounting

A system or set of rules and methods for collecting, recording, summarizing, reporting, and analyzing a company's financial information.

Accounting Controls

The policies and procedures used to authorize financial transactions, safeguard assets, and provide reliable, timely, and fairly presented financial information about a company.

Accounting Entry

A record of a financial transaction that includes at least one debit and one credit and shows the monetary value of the transaction in balance on a specified date.

See also

Accredited Reinsurer

A reinsurance company that is not licensed in the ceding company's jurisdiction, but meets specified financial and reporting requirements of that jurisdiction and holds a license in and is domiciled in at least one other jurisdiction.

Accrual-Basis Accounting

An accounting system in which a company records revenues when they are earned and expenses when they are incurred, even if the company has not yet received the revenues or paid the expenses.

Accrued Income

(1) In accounting, income that has already been earned, but which is not receivable until a specified date in the next accounting period.

(2) In investments, the amount of interest that has been earned on a bond, but which is not yet payable to the bondholder as of the financial reporting date.

Accumulated Cost of Insurance

For a life insurance product at a specified point in time, the total amount the insurer has paid in benefits, accumulated at interest.

Accumulated Value

The total of an amount of money invested plus the interest earned by that money.

Accumulated Value of an Annuity

At any given date during the accumulation period of a fixed deferred annuity, the net amount paid for the annuity, plus interest earned, less the amount of any withdrawals or surrender charges. The accumulated value of a variable, deferred annuity is calculated based on the value of the contract owner's interest in the separate accounts used to fund the annuity. Also known as accumulation value of an annuity and account value of an annuity.

Accumulated Value of Net Premiums

For a life insurance product at a specified point in time, the total of the net premiums collected, accumulated at interest.