Life Insurance Glossary B

B’s

back-dating
Making the effective date of an insurance policy earlier than the date of the application so that the premium rate will be lower. State law usually limits back-dating to not more than six months. Also called dating back.

back-loaded policy
A life insurance policy (usually a universal life insurance policy) in which most of the expense charges occur when the policyowner surrenders the policy or makes cash withdrawals from the policy. Such charges are usually highest in the early policy years and are often eliminated at the end of a certain number of years. See also front-loaded policy and universal life insurance.

backloading
The practice of providing a higher accrual of pension benefits during a participant’s later years of employment. The practice is designed to encourage and reward long service.

basic death benefit
The death benefit according to the terms of the original, basic contract of a life insurance policy. The basic death benefit does not include the benefit for any supplementary riders, such as an accidental death benefit (ADB) rider. For policies whose death benefit remains constant, the basic death benefit is equivalent to the face amount. Compare to death benefit and policy proceeds.

basic mortality table
A mortality table without a safety margin. Also called a basic experience table. See also mortality table and safety margin.

basket clause
(1) From an investment point of view, a provision that allows insurance companies to invest a small percentage of their assets generally without regard to statutory restrictions. (2) From an accounting point of view, a clause which permits life and health insurers to hold a specified amount of their assets as nonauthorized assets, which are not restricted in the same way as authorized assets.

beneficiary
The person or other party designated to receive life insurance policy proceeds. See also contingent beneficiary, irrevocable beneficiary, primary beneficiary, and revocable beneficiary.

beneficiary declaration
In Canada, an insurance policy beneficiary designation that is made in a separate written document after the insurance policy has been issued.

beneficiary for value
In the common law jurisdictions of Canada, a person who belongs to the class of beneficiaries composed of persons who were named as life insurance policy beneficiaries in return for providing valuable consideration to the insureds (U.S.: policyowners). The 1962 revision of the Uniform Life Insurance Act abolished this class of beneficiaries.

benefit
The amount of money paid when an insurance claim is approved. Also called the policy benefit.

benefit schedule
Under a group insurance plan, a table or schedule which specifies the amount of coverage provided for each class of insured. Insureds are often classified with reference either to earnings or to rank or position. Also known as schedule of benefits.

binding premium receipt
A type of initial premium receipt that makes insurance coverage effective immediately but only until the insurance company either rejects the application or approves it and issues a policy. Compare to conditional premium receipt.

blended rates
Group mortality rates that are based partially on a group’s own experience and partially on manual rates. Blended rates are used to determine the appropriate group insurance premium rates for intermediate-size groups. See also experience rating and manual rates.

broker
(1) An insurance salesperson agent who sells insurance products for more than one insurance company. (2) For a career agent, to submit insurance applications to companies other than the agent’s own company.

brokerage manager
A salaried insurance company employee or an independent agent whose responsibility is to appoint brokers on behalf of the company and to encourage brokers to sell the products of a particular insurance company.

brokerage shop
An agency operated by an independent general agent who is under contract to a number of insurance companies. Also known as a brokerage general agency.

bundled insurance product
An insurance product in which the mortality, investment, and expense factors used to calculate premium rates and cash values are not identified separately in the policy. Traditional whole life insurance is an example of a bundled insurance product. See also unbundled insurance product.

business-continuation insurance
A type of business insurance designed to provide funds so the remaining partners in a business, or the remaining stockholders in a closely-held corporation, can buy the business interest of a deceased or disabled partner or stockholder. See also partnership insurance and stock repurchase insurance.

business insurance
Insurance that is intended to serve the insurance needs of a business rather than the needs of an individual.