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Contingent Annuitant Annuities are financial products that pay a fixed income stream to an individual and are commonly used by retirees. A contingent annuitant is someone designated by an annuitant to receive the annuitant’s payments when they pass away. A contingent annuitant is included in an annuity contract when you want to provide ongoing financial security to another individual. Annuities with a contingent annuitant do not stop payments until both the annuitant and the contingent annuitant have passed. Essentially, having a contingent annuitant means that the annuity will continue to pay until two people pass away as opposed to just one. If the policy does not allow for a contingent annuitant, the annuity stops making payments when the annuitant dies. For annuities with a contingent annuitant, the payments may be smaller as they are meant to last longer by covering both the annuitant and the contingent annuitant until death. The difference between a contingent annuitant an...

Risk Based Capital (RBC) Ratio Ratio used to identify insurance companies that are poorly capitalized. Calculated by dividing the company's capital by the minimum amount of capital regulatory authorities have deemed necessary to support the insurance operations. For example, a company with a 200% RBC ratio has capital equal to twice its risk based capital. Risk-based capital requirement refers to a rule that establishes minimum regulatory capital for financial institutions. RBC is based on two factors: 1) an insurance company's size; and 2) the inherent riskiness of its financial assets and operations. That is, the company must hold capital in proportion to its risk. Risk-based capital requirements exist to protect financial firms, their investors, their clients, and the economy as a whole. These requirements ensure that each financial institution has enough capital on hand to sustain operating losses while maintaining a safe and efficient market. #benewinsurance #in...

Disability Income A policy designed to compensate insured individuals for a portion of the income they lose because of a disabling injury or illness. Policies pay out benefits for short or long term disability coverage. A disability is any condition of the body or mind (impairment) that makes it more difficult for the person with the condition to do certain activities (activity limitation) and interact with the world around them (participation restrictions). Generally disability results from the interaction between individuals with a health condition, such as cerebral palsy, Down syndrome and depression, with personal and environmental factors including negative attitudes, inaccessible transportation and public buildings, and limited social support. In Africa, one the foremost causes of disability is infectious and communicable disease; the incidence of these diseases have been greatly reduced or eliminated in higher income countries. Other causes include war, trauma, accidents, a...

Workers’ Compensation Class Codes Workers’ comp class codes are numbers that insurers use to classify companies and employees by exposure to risks. Riskier jobs carry higher premiums. That’s why, workers’ class codes are an important part of the formula insurers use to estimate how much a company’s compensation insurance will cost. There are four factors that influence the cost of their workers’ comp coverage: Location, type of work, payroll, claims history. Generally, the more risk a worker faces, the higher the cost of workers’ compensation insurance in the industry. For example, construction workers likely have a higher level of risk than graphic designers. The workers’ compensation codes for both of these jobs would reflect the difference in risk. Workers’ compensation insurance providers use the codes to determine how risky your business is to insure and how much to charge you for your insurance. Each workers’ comp class code includes information on the losses accumulated by ...

Retrospective Rating The process of determining the cost of an insurance policy based on the actual loss experience determined as an adjustment to the initial premium payment. In a sentence it is a rating plan that adjusts the premium during the policy period. A Retro coverage period lasts 12 months and can begin any calendar quarter. An insured entity can benefit or be hurt by a retrospectively rated insurance, as premiums rise and fall depending on how many losses they incur. Companies have an incentive to implement further safety and loss controls to avoid increased premiums. Workers' compensation, general liability, and auto liability are some areas where retrospectively rated insurance applies well. In a nutshell one can say it is a loss control mechanism used by insurers #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

Term Life Insurance Life insurance payable only if death of the insured occurs within a specified time, such as 5, 10, 20, or 30 years, or before a specified age. Importantly, term life insurance policies do not possess monetary unless the holder dies within the term. However, term life insurance may be less costly than other life insurance options, such as whole life insurance. At the end of your term, coverage will end and your payments to the insurance company will be complete. If you outlive your term life insurance policy, the money you have put in, will stay with the insurance company. Term life insurance is not a savings or investment plan. These policies have no value other than the guaranteed death benefit and feature no savings component as found in a whole life insurance product. Upon renewal, term life insurance premiums increase with age and may become cost-prohibitive over time. Term life premiums are based on a person’s age, health, and life expectancy. #benewinsu...

Insurance Insurance is a means of protection from financial loss. Insurance companies sell financial product to safeguard you and / or your property against the risk of loss, damage or theft (such as flooding, burglary or an accident). It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. An economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling. Insured party(ies) covered by an insurance policy. Insurance company is an insurer or reinsurer authorized to write life, and or Non Life (property and/or casualty) insurance under the laws of any jurisdiction. Insurance is govern by six basic principles that should be upheld, ie Insurable interest, Utmost good faith, proximate cause, indemnity, subrogation, contribution and loss of minimi...

Risk Most often individuals/corporate bodies do not see the need getting an insurance cover. Our daily life and activities exposes us and or our businesses to known or unknown eventualities. A risk is an uncertainty concerning the possibility of loss by a peril for which insurance is pursued. Not every risk is insurable, while insurance is designed to help protect against the many risks or losses associated with the running of our lives or businesses, it has never been intended to cover everything. Risk can either be; Pure Risk ( where there is no possibility of a positive outcome something bad will happen or nothing at all will occur e.g fire, flood) OR Speculative Risk( there is a chance of loss, profit, or a possibility that nothing happens e.g Gambling). Insurance is more concerned with pure risk. Therefore for a risk to be considered insurable it must: -The loss should not be 'reasonable' not catastrophic. -Losses can be predicted by actuaries. -Loss must be the r...

Independent Agent A representative of multiple insurance companies who sells and services policies for records which they own and operate. A one-stop shopping for all of your needs. The independent agent acts as a middleman to connect insurance buyers and sellers in order to facilitate a transaction. Independent agents receive commissions for the policies that they sell and are not considered employees of any specific insurance company. It is often beneficial for a customer to work with an independent agent because they may be able to quickly research multiple policies and rates across various insurance companies. Independent agents are different from captive agent we will examine their differences in a subsequent post. An independent insurance agent is a trained professional working on your behalf which makes you more likely to get a fair settlement. This is a major advantage when it comes to filing a claim. Insurance claims are complicated, and it’s easy for policyholders to ge...

Stock Insurance Company A stock insurance company is a corporation owned by its stockholders or shareholders, and its objective is to make a profit for them. Policyholders do not directly share in the profits or losses of the company. Some well-known stock insurers include Allstate, MetLife, Prudential UnitedHealth, HDFC Life Insurance, SBI Life Insurance. Traditionally, stock insurers have been called nonparticipating insurers because policyholders do not participate in the profits of the insurer, and thus do not receive dividends. A stock insurer distributes profits to shareholders in the form of dividends. Alternatively, it may utilize profits to pay off debt or reinvest them in the company. It should be noted that a stock insurance company different from a mutual insurance company; A stock insurance company is owned by its shareholders. It may be privately held or publicly traded. While a mutual insurance company is owned by its policyholders. #benewinsurance #insurtech #...

Variable Annuity An annuity is a contract between you and an insurance company in which you make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning either immediately or at some point in the future. A variable annuity is a contract between you and an insurance company. It serves as an investment account that may grow on a tax-deferred basis and includes certain insurance features, such as the ability to turn your account into a stream of periodic payments. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. Variable annuity is different from fixed annuities in that, fixed annuities provide a guaranteed return. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but there is also a risk that the account of a variable annuity will fall in value. The benefit of variable annuities is that it give the contract holder periodic p...

Producer OR Agent Its is an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently. Insurance producers are required to be licensed in their jurisdiction of operation in which they sell insurance. This may require passing an examination or meeting pecific educational and/or ethical requirements. Now I'm going to let you in on an industry secret “producers” and “agents” are really the same person. The term “producer” is more of an insurance industry term while “agent” is a more common term but both are used to identify the person you can contact to set up and officially start your policy. There are basically two broad categories of insurance agents; independent insurance agent who works with everyone insurance company and Captive agents that sells insurance for one specific company, only. This particular insurance company is, typically, a “name brand” company. Some of the responsibilities for Insurance Producer are: -Ab...

Risk Retention Group A risk retention group (RRG) is a state chartered insurance company that insures commercial businesses and government entities against liability risks. Risk Retention Groups (RRGs) are liability insurance companies owned by its members. RRGs allow businesses with similar insurance needs to pool their risks and form an insurance company that they operate under state regulated guidelines. RRGs may be formed under a state's captive or traditional insurance laws. Risk Retention Groups usually form in industries that face extremely high risks, such as medical and legal malpractice. In fact, medical malpractice coverage currently makes up the bulk of Risk Retention Group activity. Example: A group of 400 medical businesses are finding it difficult to obtain liability insurance coverage. With Risk Retention Groups there is more stability of insurance as in fluctuating market conditions, a Risk Retention Group allows members to more accurately know what their insu...

Total Liabilities Policy OR Umbrella Policies Total liability policies is an insurance cover which increases the amount of maximum available coverage in the event of extreme circumstances. Since they are only adding on to other policies, they can never be purchased by themselves. They often have lower premiums than normal policies, since they only come into effect when the other policy has reached its max coverage limit. Remember liability insurance provides protection against claims resulting from injuries and damage to people and/or property. For example a contractor purchases a policy will definitely need some form of general liability coverage, but they may also want to extend that coverage with a higher policy limit. Total liability coverage adds to the total allowed sum of claims for not just general liability policies, but potentially for other coverage like worker’s compensation and commercial auto insurance. #benewinsurance #insurtech #inclusiveinsurance #insurance #re...

Preferred Risk A preferred risk is a policyholder who is considered significantly less likely to file claims. Therefore, insurance companies prefer it over a standard or higher risk because the former represent a better chance to make more profit. For the insurer, fewer claims equates to more money taken in and less money paid out. To the insurer a preferred risk is better to a standard or average risk since it has low claim frequency and severity. In this the insurance company makes more profits with respect to the premium collection. Contrarily riskier risk groups will pay higher premiums for example, people who are sick, older, or have a poor driving record, example, people who are sick, older, or have a poor driving record. Insurance companies rate risks on different terms as applicable to their field. For example, an applicant for life insurance who does not smoke can usually obtain a reduced premium rate to reflect greater life expectancy. For flood insurance, a policyholde...

Third Party Person other than the insured or insurer who has incurred losses or is entitled to receive payment due to acts or omissions of the insured. A person who purchases insurance is known as the first party. Any insurance company, that provides insurance to a buyer is called as the second party. Damages caused to any vehicle plying on road, property or person is known as the third-party and considered to be a liability for any insured vehicle moving on road. The third party is important in law, legal provisions regarding third party insurance gives an obligation to users of automobile must purchase a mandatory a third party insurance cover under law. In automobile insurance we hear most often of third party insurance cover as in most jurisdiction it is a compulsory insurance policy. The two main categories of third-party insurance are liability coverage and property damage coverage. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

Vision Insurance Policy Limited benefit expense policies. Vision care insurance usually covers preventative and routine eye care. This eye care insurance is often a value add-on to larger insurance packages. It is ideal for people of all ages, irrespective of whether they wear glasses or not. This plan provides benefits for eye care and eye care accessories. Generally provides a stated amount per annual eye examination. Vision insurance is a wellness plan designed to offset the costs of routine checkups (eye exams) and prescription eyeglasses and contact lenses. Vision insurance typically includes coverage for annual exams, lenses, frames, and contacts. Providers may offer higher-tier plans that also include appointments for contact fittings, lens protection, and surgery, lastly, may include surgical benefits for injury or sickness associated with the eye. To select a vision insurance plan, first, estimate your current and future eye care needs. Each vision plan is different so ...

Variable life Insurance It is a permanent life insurance policy with a death benefit and cash value that is in the stock market rather than your insurance company. The payout amounts are determined by the performance of the underlying securities. Variable life insurance policies are considered more volatile than standard life insurance policies and are ideal only for those who can stomach the additional risk. It has combine characteristics of life insurance and investment. It includes an insurance component and an investment component all in one product. Variable policies have tax advantages whether or not the underlying investments perform well. The different between variable life insurance term life is that: variable life insurance is a permanent life insurance policy, meaning it lasts until the policyholder's death, combined with a cash value account invested in bonds or stocks. Simply term life lasts for a specific number of years and has no investment portion. The diff...

Active Work Requirement Being actively at work means an employee or partner has not received medical advice to refrain from work and is actively engaged in or is otherwise following their normal occupation, i.e. the employee or partner is mentally and physically capable of working their normal contracted number of hours, either at their usual place of business or at the location to which the business requires them to travel Absence from work does not include holidays, maternity, paternity and adoption leave, or any other authorised leave approved by the insurer To be eligible for disability benefits, you must be working at least the minimum number of hours per week as described in your policy, for earnings that are paid regularly. Many policies require that you are performing the material and substantial duties of your regular occupation. Insurance companies require employees to be active at work before their coverage kicks in to protect themselves against exploitation. With an...

Date of Issue It simply refers to the date your insurer created the contract (your insurance policy), which isn't necessarily when your coverage starts. Therefore your insurance policy can be issued days, weeks or even months before the commencement date (policy date) of the coverage. Essentially, the issue date indicates a contract has been created and sent to the parties involved, but it isn’t necessarily providing the benefits of coverage. Cancellation of a policy prior to the date of issue and prior to the commencement date is possible. You can cancel a policy prior to the effective date and get a full refund. Insurance companies can not charge you for coverage that you never actually had. To locating the date of issue on your policy document, the date of issue and the effective date are items found on the your declarations page. The declarations page is a one or two page summary of your policy including your bio data. #benewinsurance #insurtech #inclusiveinsurance #ins...