table of underwriting requirements

For each insurance product, a document that specifies the kinds of information the underwriter must consider in assessing the insurability of a person who is proposed for coverage under that policy.

table rating method

In determining premium charges for life insurance, an approach to charging for substandard risks by dividing those risks into broad groups according to their numerical ratings.

tabular mortality

See expected mortality.

tabular mortality rate

A mortality rate shown in a mortality table.

tangible asset

In accounting, an asset that has physical form. Contrast with intangible asset.

target market

A group of consumers to whom a business will attempt to sell a particular product.

target market conduct examination

In the United States, an examination by state insurance regulators of one or more specific areas of an insurer’s operations to ensure that those operations are in accordance with state insurance laws and regulations. Contrast with comprehensive market conduct examination. See also market conduct examination.

tax cost basis

The amount of money contributed to an annuity that will not be subject to taxation because it has already been taxed.

tax-deferred basis

Accumulation of investment income on which income taxes are not payable until money is withdrawn from the investment vehicle.

tax-qualified employee benefit plan

An employee benefit plan, such as a retirement plan, that is eligible to receive favorable federal income tax treatment.

Tax Sheltered Annuity (TSA).

In the United States, a retirement annuity sold only to organizations offering qualified retirement plans under section 403(b) of the U.S. Internal Revenue Code. See also 403(b) plan.

tax withholding

A deduction for income taxes that is taken from a disbursement and sent to a federal, state, or provincial tax authority and that reduces the amount of income taxes that must later be submitted.

T-bills

See treasury bills.

team underwriting

A method used to organize underwriting work in which underwriters are divided into small groups, usually including one or more senior underwriters who handle large-amount or complex cases, and one or more lower-level underwriters who handle simpler cases.

technical design

For an insurance product, the phase of product development that involves creating the product language, product provisions, pricing and dividend structures, and underwriting and issue specifications.

telemarketing

A direct response sales method that uses the telephone to produce sales.

Telephone Transfer Authorization

Permission given by a life insurance or annuity contract owner authorizing the insurer to act on subaccount transfer requests communicated over the phone.

teleunderwriting

An underwriting method by which a home office employee or a third party administrator, rather than the sales agent, takes responsibility for gathering much of the information needed for underwriting.

temporary account

In accounting, an account that is zeroed out to a permanent account on the balance sheet at the end of each accounting period.

temporary flat extra premium method

In life insurance, an approach to charging for substandard risks that involves adding an amount to the premium for an impairment for which the extra mortality risk is expected to decrease and eventually disappear over a limited time period.

temporary insurance agreement (TIA)

A premium receipt given by an insurer to an insurance applicant, at the time an insurance policy is applied for and when the initial premium is paid, that provides insurance coverage of a specified amount for a specified time, usually for the time required to underwrite the case. Also known as binding premium receipt.

ten-day free look provision

See free-look provision.

terminal illness (TI) benefit

See accelerated death benefit.

term life insurance

Life insurance that provides a death benefit only if the insured dies during the period specified in the policy. If the insured survives until the end of the period, coverage ceases without value. Contrast with permanent life insurance.

term to maturity

For investments, the amount of time that must pass before an asset can be converted to cash for an approximation of its value.

third-party administrator (TPA)

(1) An organization that provides administrative services for customers of a financial services company. (2) In group insurance, an organization that administers group benefit plans for a self-insured group but that does not have financial responsibility for paying benefits.

third-party applicant

In life insurance, a person who applies for coverage on the life of another person.

third-party distribution system

See nonagency-building distribution system.

third-party notification provision

A provision in a long-term care (LTC) insurance policy that allows the policyowner to designate a person for the insurer to contact in the event that the policyowner misses a premium payment.

thrift and savings plan

In the United States, a retirement savings plan to which an employer is obligated to make contributions on behalf of an employee if the employee makes a specified contribution to the plan.

thrifts

See savings and loan (S&L) association.

TIA

See temporary insurance agreement.

time clause

See common disaster clause.

time limit on certain defenses provision

An individual health insurance policy provision that limits the time during which the insurer may contest the validity of the contract on the ground of misrepresentation in the application or may reduce or deny a claim on the ground it results from a preexisting condition. See also incontestability provision.

time of payment of claims provision

An individual health insurance policy provision which states that after receiving written proof of loss for which the policy provides periodic benefit payments, the insurer will pay those benefits as described in the policy.

time-period concept

An accounting principle stating that a company’s financial statements should report the company’s business operations during a specified time period, usually referred to as an accounting period.

top-down budgeting

A budgeting process that begins with a company’s senior management and is passed down to lower-level management.

top-heavy plan

A retirement plan under which, for a given plan year, the present value of accrued benefits for key employees exceeds a specified percentage of the present value of accrued benefits for all employees.

total asset turnover

A financial ratio that measures how efficiently a company has used its total assets to generate revenues.

total disability

For disability insurance purposes, an insured’s disability that meets the requirements of the definition of total disability included in the disability insurance policy or policy rider and that qualifies for payment of the specified disability benefits. When a disability begins, total disability is usually the complete and continuous inability of an insured to perform the essential duties of his regular occupation. After a disability has existed for a specified period, total disability usually exists only if the insured is prevented from working at any occupation for which he is reasonably fitted by education, training, or experience. See also disability and residual disability..

total leverage

A combined effect of operating leverage and financial leverage—represents the effect whereby incurring fixed costs automatically magnifies both risks and potential returns to a company’s owners. See also positive leverage effect.

TPA

See third party administrator.

trade association

An association of firms that operate in a specific industry.

trail commissions

See asset-based commissions.

transaction confirmation

For annuity contracts, a document that an insurer sends to the contract owner showing the details of an annuity transaction. For variable annuities, the Securities and Exchange Commission (SEC) requires insurers to send a confirmation of each financial transaction that is not a regularly scheduled transaction. Also known as confirmation statement.

transaction processing system

An organized collection of procedures, software, databases, and devices used to record high-volume, routine, and repetitive business transactions.

transfer fee

For variable annuities, an amount an insurer charges for the administrative processing of an asset transfer between subaccounts. A transfer fee usually is charged once a customer’s number of transfers within a given period has exceeded the contract’s maximum.

transfer for value rule

In the United States, a federal income tax rule stating that when the ownership of a life insurance policy has been transferred for a valuable consideration, policy proceeds paid following the insured’s death are taxable to the recipient to the extent the proceeds exceed the total amount the recipient paid for the policy.

transfer price

In accounting, the price of a good or service that one business segment or line of business charges another segment or line of the same company.

transplant donor benefit

A disability income policy benefit that specifies that if an insured undergoes surgery to donate a part of his body to another person, the insurer will treat that surgery as a sickness and will pay benefits for it.

treasury bills (T-bills)

A type of low risk security issued and guaranteed by the U.S. government that can easily be converted into cash.

treasury stock

Stock that has been repurchased at market price by the issuing company with the intention of reselling the stock at a later date.

trend

A change that occurs over time.

trend analysis

A type of financial analysis that involves calculating percentage changes in financial statement items over several successive accounting periods, rather than over just two periods.

trust

A legal arrangement whereby one or more persons—called the trustees—hold legal title to property on behalf of another person—called the trust beneficiary—and are responsible for administering the property for the benefit of the trust beneficiary.

trust beneficiary

See trust.

trustee

See trust.

trusteed pension plan

A type of pension plan that is funded through a trust arrangement. The plan sponsor chooses a trustee, usually a bank or a trust company, that invests the contributions and pays benefits in accordance with the trust agreement. Also known as uninsured plan and self-administered plan. Contrast with combination pension plan and fully-insured pension plan.

Truth in Lending Act

In the United States, a federal consumer protection law that requires creditors that deal with consumers to make certain written disclosures concerning finance charges and related aspects of consumer credit transactions and that establishes requirements for the advertising of credit terms.

TSA

See Tax Sheltered Annuity.

turnaround time

For the customer service function, the amount of time necessary to complete a particular customer-initiated transaction.

twisting

An illegal insurance sales practice, in which a sales agent misrepresents the features of a contract in order to induce the contract owner to replace his current contract, often to the disadvantage of the contract owner. See also misrepresentation.

tying

A prohibited insurance sales practice in which a financial institution makes the completion of one financial transaction, such as approval for a loan, dependent upon another financial transaction, such as the purchase of insurance.

LOMA's Glossary of Insurance and Financial Services Terms Copyright © 2002 LOMA (Life Office Management Association, Inc.). Used with permission from the publisher. All right reserved. Copying or downloading this information without permission from the publisher is a violation of federal and international law. For information on purchasing a copy of the Glossary or for additional information on LOMA and its educational programs, visit LOMA's Web site at www.loma.org. LOMA is a registered service mark of the Life Office Management Association, Inc.