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Glosary of Life Insurance Terms

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See Preferred Provider Organization.
P.S. 58 Charges
The cost of one-year term insurance used in the calculation of economic benefit for a stockholder under a split dollar plan.
Paid Business
Insurance for which the application has been signed, the medical examination completed, and the settlement for the premium tendered.
Paid-Up Additions (or "Adds")
See Dividend Additions.
Paid-Up Insurance
Insurance on which all premiums are paid but which has not yet matured by either death or endowment. An example would be a Limited Payment Life policy for which the premium-paying period is over.
An employee or former employee who is eligible to receive benefits from an employee benefit plan or whose beneficiaries may be eligible to receive benefits from the plan.
Partnership Insurance
Life or Health Insurance sold to a partnership, usually for guaranteeing business continuity in case of the death or disability of one of the partners. For instance, two partners might buy Life Insurance on each other so that in the event of one partner's death, the other can use the insurance proceeds to purchase his share of the business from his heirs.
Past Service Benefit
A term used in Pension or Retirement Insurance policies to refer to credit given an employee for the amount of time the person was employed prior to the effective date of the retirement plan. Example: An insured starts a pension plan on January 1, 1980. It states that all eligible employees will be given credit for their length of service or employment prior to that date.
An abbreviation for payment as in "20-Pay Life policy."
See Current Disbursement.
Payor Benefit
A rider or provision often found in juvenile policies under which premiums are waived if the person paying the premium, usually one of the parents, becomes disabled or dies while the child is still a minor.
Per Capita
Literally "by heads." Distribution among survivors by persons on a share-and-share-alike basis. The term is often used in beneficiary designations. Contrast with Per Stirpes.
Per Stirpes
Literally "by branches." Distribution of property between or among two or more beneficiaries with the provision that if one dies before the insured, his heirs shall have his full share distributed among them. Contrast with Per Capita.
Permanent Life Insurance
A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as endowments and Whole or Ordinary Life policies.
The staying quality of insurance policies, i.e., the renewal quality. High persistency means that a high percentage of policies stay in force to the end of the period coverage, while low persistency means that a high percentage of policies lapse for nonpayment of premiums.
Policy Fee
(1) A one-time charge added to the first premium to help defray acquisition costs, now illegal in many states.
(2) A flat, per policy charge that does not change with the size of the policy and thus serves as a form of quantity discount. Various insurers call it by other names, such as quantity discount factor and quantity adjustment fee.
Policy Loan
A loan made by an insurer to a policy owner of a part or all of the cash value of the policy assigned as security for the loan. This is one of the usual nonforfeiture values.
Policy Proceeds
The amount actually paid on a life insurance policy at death or when the insured receives payment at surrender or maturity. It includes any dividends left on deposit and the value of any additional insurance purchased with dividends; and it excludes any loans not repaid, plus unpaid interest on those loans.
Policy Reserve
A reserve which exists because of the concept that each policy has a pro rata share of the total reserve established for all policies.
Postdated Check Plan
A premium-paying arrangement under which the policy owner gives the insured a series of checks, each dated ahead of the date on which premiums fall due for a year or more. The insurer then presents each check on its date.
Preauthorization Check Plan
A premium-paying arrangement by which the policy owner authorizes the insurer to draft money from his or her bank account for the payments. This is usually done on a monthly basis.
Preferred Provider Organization (PPO)
An organization of hospitals and physicans who provide, for a set fee, services to insurance company clients. These providers are listed as preferred and the insured may select from any number of hospitals and physicians without being limited as with an HMO. Coverage is 100%, with a minimal copayment for each office visit or hospital stay. Contrast with Health Maintenance Organization.
Preliminary Term
A reserve system in Life Insurance under which the entire first-year premium is used for clean and acquisition costs. The effect is to reduce the first year's premium, making it more attractive to the prospective buyer.
Premium Load
A Universal Life term, also called a "front-end load," meaning the percentage of premium deducted from each premium payment to help cover expenses. Some policies provide for a "no load" feature.
Premium Receipt Book
The policy owner's record of premium paid, usually used for a Weekly Payment or Monthly Debit Ordinary policy.
Premium Refund
A special provision which allows a beneficiary to collect the face amount of a policy plus all the premiums that have been paid.
Primary Beneficiary
The beneficiary named as first to receive proceeds or benefits from a policy when they become due.
Principal Sum
The amount payable in one sum in the event of accidental death or certain accidental dismemberments. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof. Examples would be half the principal sum for loss of one arm, half the principal sum for the loss of one leg, etc.
The amount payable by a policy, usually in reference to the face amount of a Life Insurance policy, payable at the death of the insured.
Prospective Reserve
A Life or Health Insurance reserve which it is estimated will be sufficient to pay future claims when probable future premiums, interest, and survivorship benefits are added to it.
Pure Endowment
An endowment payable if the designated person is alive at the end of the endowment period but not payable if the person is not alive at that time. This type of policy is not often used today.
Pure Mortality Cost
See Mortality Cost.

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