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Chapter 6 contiuned
| Premium mode | frequency of payments |
| higher frequency= | higher total premiums |
| policy owners can | use cash value and dividends to pay for the premiums |
| minimum deposit insurance | Uses policy loans to pay premiums |
| earned premium | Amount the insurer is entitled to for providing coverage |
| unearned premium | amount paid but coverage not yet provided |
| reserves | funds insurers set aside to pay for current or future claims |
| interest adjusted net cost method | considers premiums, death benefits, cash value, and dividends |
| surrender cost index | determines the average costs per 1,000 for a policy surrendered for cash value |
| net payment cost index | estimates average annual premium outlay without assuming surrender |
| comparative interest rate method | determines the rate of return required on an investment to yield the same return as a cash value policy |
| What does a vatical settlement do? | enables an individual with a chronic/terminal illness to sell their existing policy to a third party |
| Vatical settlement receives | A percentage of the face value |
| What does the new owner do in a vatical settlement? | Pays premiums and collects the death benefit |
| what is the original policy owner called in a Vatican settlement | Viator |
| lump sum | entire death benefit paid at once |
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user-2016087