Life and Annuities Glossary · Insurance

Accelerated death benefit: part of a life policy's face paid before death on terminal (and, with some riders, chronic) illness, treated as paid by reason of death for tax when the insured is certified as expected to die within 24 months (Life Products as Data).
Accelerated underwriting: issuing life coverage without an exam or fluids when data pulled in seconds (MIB, prescription history, MVR, a mortality score) and a rules engine clear the applicant (Life Underwriting).
Account value: the policy value of a universal life policy or deferred annuity: premiums in, charges out, interest or index credits added, recomputed every cycle (Life Products as Data).
AG 49-A, AG 49-B: NAIC actuarial guidelines interpreting Model #582 for indexed universal life, limiting the maximum illustrated rate, indexed loan benefits and, from May 1, 2023, illustration above the benchmark index account (Illustrations).
AG 55: NAIC Actuarial Guideline LV, requiring asset adequacy testing and an attribution analysis for large reinsurance transactions since 2016, first reported April 1, 2026 (Life Reserves, Capital & Private Equity).
Annuitant: the person whose life measures an annuity's payments, who may differ from the owner (Annuities & Riders).
Benefit base: a notional amount on a guaranteed withdrawal or death benefit rider, grown by roll-ups and step-ups, on which guaranteed payments are computed; never paid as cash (Annuities & Riders).
Block reinsurance, flow reinsurance: ceding all or part of a block of previously issued contracts, versus ceding a share of each new policy as it is written (Life Reserves, Capital & Private Equity).
Buffer, floor (RILA): downside protection on a registered index-linked annuity: with a buffer the insurer absorbs the first loss; with a floor the owner absorbs losses only down to a set level (Annuities & Riders).
Cap, participation rate, spread: the crediting parameters of an indexed strategy: the maximum credit, the share of the index change credited, and the amount subtracted from it (Annuities & Riders).
Cash value accumulation test (CVAT): the 7702 test under which cash surrender value may never exceed the net single premium for the contract's future benefits (Life Insurance & the Tax Code).
Cash value corridor: the 7702(d) minimum death benefit as a percentage of cash value, 250% through age 40 grading to 100% at 95, required with the guideline premium test (Life Insurance & the Tax Code).
Certificate of coverage: the document a group insurer issues for each covered person, stating the coverage under the employer's master policy (Group Life & Disability).
Contestable period: the period, two years from issue under the New York, Texas and Florida statutes, during which the insurer may void a life policy for material misrepresentation; it never ends if the insured dies within it (Death Claims & Unclaimed Benefits).
Conversion privilege: the right to exchange term or group life coverage for an individual permanent policy without evidence of insurability before a deadline (In-Force Administration).
Cost of insurance (COI): the monthly mortality charge on a universal life policy, the net amount at risk in thousands times the COI rate for the insured's class and age (Life Products as Data).
CTE 70: conditional tail expectation at 70, "the average of the highest 30% modeled outcomes," the measure that sets stochastic reserves under the Valuation Manual (Life Reserves, Capital & Private Equity).
Death Master File (DMF): the Social Security Administration's file of reported deaths, which insurers compare against their in-force books to find unclaimed benefits; recent deaths are in the Limited Access DMF, open only to certified users (Death Claims & Unclaimed Benefits).
Deductible sources of income: the other income an LTD certificate subtracts from the gross benefit, chiefly Social Security disability (Group Life & Disability).
Disciplined current scale: the scale of non-guaranteed elements an illustration actuary certifies annually as supported by recent experience, the limit on what an illustration may show (Illustrations).
Escheatment: turning unclaimed money over to the state after a dormancy period (Death Claims & Unclaimed Benefits).
Evidence of insurability (EOI): individual underwriting evidence required for group coverage above guaranteed issue limits or for late entrants (Group Life & Disability).
Financed purchase: buying a new policy with values withdrawn, surrendered or borrowed from an existing one, treated as a replacement under Model #613 (Best Interest, Replacements & 1035 Exchanges).
Fixed indexed annuity (FIA): a fixed annuity whose interest is computed from an index change subject to a cap, participation rate or spread, with a floor usually at 0% (Annuities & Riders).
Free look: the period after delivery in which an owner may return a policy or annuity for a refund; its length and refund depend on state law, replacement status and disclosure timing (Annuities & Riders).
GLWB, GMWB for life: a guaranteed lifetime withdrawal benefit rider letting the owner withdraw a percentage of a benefit base every year for life even after the account value is exhausted (Annuities & Riders).
Guideline premium test: the 7702 test limiting cumulative premiums to the greater of the guideline single premium and the sum of guideline level premiums, paired with the cash value corridor (Life Insurance & the Tax Code).
Illustration actuary: the actuary the insurer's board appoints to certify annually that illustrations follow Model #582 and the disciplined current scale (Illustrations).
Interim value: the daily value of a RILA segment before its term ends, computed by a prospectus formula approximating the fair value of its options (Annuities & Riders).
Investment in the contract: premiums paid less amounts received tax-free, the owner's basis in a life policy or annuity (Life Insurance & the Tax Code).
Lapse-supported illustration: an illustration that fails the self-support test when persistency after year five is assumed to be 100%, prohibited by Model #582 for policies with nonforfeiture values (Illustrations).
Market value adjustment (MVA): a positive or negative adjustment to an early withdrawal from a fixed guarantee period that passes interest rate changes since issue through to the owner (Annuities & Riders).
MIB: the member database of coded findings from individually underwritten life, health and disability applications in the past seven years, a consumer reporting agency under the FCRA (Life Underwriting).
Minimum nonforfeiture amount: the floor on a deferred annuity's cash surrender value, 87.5% of gross considerations accumulated at the nonforfeiture rate less withdrawals, a $50 annual charge, premium tax and loans (Annuities & Riders).
Modified coinsurance (modco): life reinsurance in which the cedent keeps the assets and reserves and passes the reinsurer its share through a periodic reserve adjustment (Life Reserves, Capital & Private Equity).
Modified endowment contract (MEC): a life policy that fails the 7-pay test, whose withdrawals and loans are taxed income first with a 10% additional tax before 59½ (Life Insurance & the Tax Code).
Multi-year guaranteed annuity (MYGA): a fixed deferred annuity guaranteeing one rate for its whole surrender charge period (Annuities & Riders).
Net amount at risk (NAR): the death benefit minus the account value (discounted a month at the guaranteed rate in many contracts), the amount the COI charge and YRT reinsurance are computed on (Life Products as Data).
Nonforfeiture options: the cash surrender value, reduced paid-up insurance and extended term insurance a permanent policy must offer on lapse under Model #808 (Life Products as Data).
Paid-up additions: small single-premium whole life additions bought with participating dividends, adding face and cash value (Life Products as Data).
Pension risk transfer (buy-out, buy-in): moving a pension plan's obligations to an insurer through a group annuity that pays retirees directly (buy-out) or is held as a plan asset (buy-in) (Life Reserves, Capital & Private Equity).
Principle-based reserving (PBR): statutory reserving under the Valuation Manual at the higher of a prescribed floor and a reserve modeled over economic scenarios with the company's experience (Life Reserves, Capital & Private Equity).
Registered index-linked annuity (RILA): an index-linked deferred annuity with a buffer or floor instead of a 0% floor, registered with the SEC because the owner can lose principal (Annuities & Riders).
Regulation Best Interest (Reg BI): Rule 15l-1, requiring a broker-dealer recommending a security, strategy or account to a retail customer to act in the customer's best interest, through disclosure, care, conflict of interest and compliance obligations (Best Interest, Replacements & 1035 Exchanges).
Replacement: a purchase of a new policy or annuity that lapses, surrenders, converts, reduces or finances from an existing one, with producer and insurer duties under Model #613 (Best Interest, Replacements & 1035 Exchanges).
Retained asset account: settling death proceeds into an insurer-held account with check or draft writing, included in Death Master File comparisons under the NCOIL model (Death Claims & Unclaimed Benefits).
Section 1035 exchange: a tax-free exchange of a life, endowment, annuity or qualified LTC contract for another allowed kind, with carryover basis (Life Insurance & the Tax Code).
Self-supporting illustration: an illustration whose policy cash flows, on the disciplined current scale's experience, cover all owner values from the 15th anniversary (20th for second-to-die) on (Illustrations).
Seven-pay test: the 7702A test comparing premiums paid in the first seven contract years with seven level premiums that would pay up the policy; failing it makes a MEC (Life Insurance & the Tax Code).
Sidecar (life): a separate, usually fully collateralized vehicle through which third-party investors share in reinsured life and annuity business for a share of premiums (Life Reserves, Capital & Private Equity).
Suitability (best interest) record: the consumer profile, options considered, rationale, disclosures and insurer review behind an annuity recommendation under Model #275 (Best Interest, Replacements & 1035 Exchanges).
Universal life secondary guarantee (ULSG): a no-lapse guarantee keeping a universal life policy in force while a shadow account or premium test is met, even at zero account value (Life Products as Data).
Valuation Manual: the NAIC's annual manual of statutory reserve requirements, operative January 1, 2017, with VM-20 for life, VM-21 for variable annuities and VM-22 for non-variable annuities (Life Reserves, Capital & Private Equity).
Yearly renewable term (YRT) reinsurance: reinsurance of a share of the net amount at risk for a yearly premium per thousand, with the cedent keeping reserves and cash values (Life Reserves, Capital & Private Equity).