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Index / McGill's Life Insurance

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Editor's Note:
  • A lowercase n following a page number refers the reader to a note on said page. Thus "249 n 15" refers to note 15 on page 249.
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    A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y
    Ability to finance, 781
    Accelerated benefits
       in group term life insurance, 842�43
       provision for, 896�97
    Accident hazards, 521
    Accidental death and dismemberment
       group
          taxation of, 858
          term insurance, 844�48
       traditional coverage of, 845�46
       voluntary coverage, 846�47
    Accidental death benefit rider, 899�901
       exclusion of aviation death, 525�26
       incontestable clause and, 904 n.
    Accidental death benefits
       exclusion from incontestable clause protection, 877
       with group universal life insurance, 865�66
       reinsured, 588
       types of, 900
    Accounting, considerations in, 752�60
    Accounting department, 719�20
    Accounting Principles Board, 757
    Accreditation, state regulator, 694�95
    Accumulation
       element. See Cash value
       guarantees, in equity-indexed annuities, 146
       period
          of deferred annuity, 135�36
          in future value, 382
       units, of variable annuities, 141�42, 143t
       of whole life insurance, 62
    ACE preference, 352
    Acquired immune deficiency syndrome (AIDS)
       blood test for, 519
       discrimination against people with, 656
       emergence of, 164�65
       impairing financial condition, 655�56
       insuring people with, 559
       privacy issues of, 657
       testing guidelines for, 656
    Acquisitions
       deferred costs in GAAP vs. statutory standards, 760
       federal and state regulation of, 692�93
       federal antitrust treatment of, 728�29
       friendly and hostile takeovers, 721�22
       Holding Company Act approval of, 726�27
       of 1980s, 807
    Actuarial assumptions/factors
       in annuities, 148�51
       in calculating reserves, 431�35
    Actuarial department, 719
    Actuarial opinion, statement of, 692
    Actuarial Standard Board, definition of disciplined current scale, 278
    Adjustable life insurance, 66�68
       variable, 77
    Adjusted premium, definition of, 486 n.
    Adjusted-premium method, 481�82
       illustration of, 482�84
       modifications of, 484
    Administrative costs
       of group insurance, 817
       for trade association groups, 824
    Administrative support, 746
    Adult day care, 214
    Advancement, definition of, 888
    Adverse selection, 25
       financial, 479�80
       of group insurance, 817
       mortality, 479
       safeguards against, 37
       in trade associations, 824
    Advertising, misrepresentation in, 646
    Aeronautical activities, incontestable clause exclusion of, 878
    Affiliations, life insurers, 721�30
    Affordability, 629
    Age
       extremes of, 544�45
       limiting for nonmedical insurance issue, 539�40
       misstatement of, 839, 891�92
          incontestable clause and, 879
       rating up of, 565�66
       risk and, 514�15
    Age Discrimination in Employment Act, 829
    Agency building, 739
    Agency system, 738
       branches of, 738�39
       building branch of, 743
    Agent/client relationship, 549
       agent's responsibility in, 550�54
       client's responsibility in, 554�55
    Agent/insurer relationship, 549
       agent�s responsibilities in, 555�57
       company�s responsibilities in, 557�58
    Agents
       company�s responsibility to, 557�58
       continuing education requirements for, 633
       due diligence in hiring, firing, and retaining, 561�62
       financial statements and, 753�54
       home service, 737
       independent, 738
       independent brokerage general, 740�41
       information from, 530�31
          for nonmedical insurance, 540
       licensing of, 631�33
       managing general, 740
       multiple-line exclusive, 737
       ordinary, 737
       personal-producing general (PPGAs), 737
       regulating variable insurance sales by, 679�80
       relationship with company, 741�42
       responsibility to client, 550�54
       responsibility to company, 555�57
       support and training of, 557
       variety of, 737�38
    Agents and Brokers Model Licensing Act, 632
       power to refuse, deny, or revoke license, 633
    Agents Continuing Education Model Regulation, 633
    Aggregate calculation approach, 400�1, 413t
    Aging population, 202�3
    Alcohol consumption, 523
    Alliances, 724�25
    Alternative minimum tax
       corporate, 340�41, 352�53
       exemption of, 352
       liability of, 353
    Alternative minimum taxable income (AMTI), 352
    Alumni associations, 827
    Alzheimer�s disease, 202
    American Academy of Actuaries, 277
    American Experience Table of Mortality, 50
    American Institute of Certified Public Accountants (AICPA)
       GAAP standards of, 758�59
    American Society of CLU & ChFC
       Life Insurance Illustrations Questionnaire, 269�76
       Professional Practice Guidelines,
    265�69, 270
    Amortization, 755
    Amount at risk, 30
    AMT. See Alternative minimum tax
         		Angle, John C., on policy illustrations, 270
    Annual certifications, NAIC regulation of, 277�78
    Annual gift tax exclusion, federal, 238, 292
    Annuitization, equity-indexed annuities, 147
    Annuity, 35. See also Life annuity
       actuarial considerations in, 148�51
       application of values of, 392�95
       calculating net single premium for, 398
       classifications of, 128�29
       contracts, 260
          annual premium rates of, 419 n.
          income taxation of, 288�90
          prospective reserves for, 431
          tax-deferred, 337
       deferred, 128�29, 289�90
          level annual premium for, 418
       definition of, 126
       equity-indexed, 144�48
       fixed versus equity-indexed, 148
       immediate, 128
          pricing and dividend policy of, 506
          pure, 130�31
          refund, 131�35
       income taxation of, 288�90
       for individual accumulating wealth, 151�52
       with insurance cash value, 55�56
       insurer's obligation in, 129
       joint, 138�40
       joint-and-last-survivor, 15
       versus life insurance, 126�27
       nature of, 126�29
       number of lives covered, 128
       ordinary, 388�90
          present value of payments, 391�92
       payments before starting date of, 289
       premium payment method, 129
       present value of payments, 391�92
       pure versus refund, 129
       range of monthly benefits, 133�34
       shift toward, 795
       single-life
          deferred, 135�38
          immediate, 130�35
       in structured settlements, 152�62,
    153�54
       taxation of amounts received as, 289�90
       time payments commence, 128�29
       uses of, 151�52
       variable, 140�43
       for wealthy individuals, 151
    Annuity due, 386�88
       versus ordinary annuity, 389f
       present value of payments, 392
    Annuity principle, 127�28
    Annuity Tables, declining mortality and, 149�50
    Annuity units, 142
    Antiselection, 25
    Antitrust actions, 625
    Antitrust laws
       for acquisitions and mergers, 728�29
       applicability to insurance business,
    667�74
       applying to insurance business, 672�74
       chilling effect of, 673�74
       enforcement of, 671
       federal, applicability to insurance business, 667�74
       impact on regulation, 674
       increasing applicability of, 667�74
       state action doctrine and, 671�72
       substantive content of, 670�71
          application of, 672�73
    Applicant information, 531�32
       for nonmedical insurance, 540
    Approval, policy, 904
    Armstrong Investigation, 624�25, 644
       contract language restrictions after, 886
       dividend distribution statute and, 654
    Armstrong Report, 625
    Asbestos exposure, 522
    Assessment associations, 712
    Assessment insurance, 23
       flat assessments, 23�24
       graded assessments, 24�25
    Asset segmentation, 797�98
    Asset shares, 454�55, 486
       calculation of for gross premiums,
    462�64
       calculation of for ordinary life policy, 488t�89t
       deductions from, 479�81
       for 10-pay life policy, 462t�63t
    Asset valuation reserves (AVRs), 635, 756, 806
       allocation of on income statement, 771
       on balance sheet, 69
    Asset/liability values, 780
    Assets
       on balance sheet, 765
       default of, 785
       duration, 494�95
       in financial position statement, 755
       in GAAP vs. statutory standards, 760
       intergenerational transfers of, 238
       life insurance
          distribution of, 795t
          growth rate of, 794
       match, in equity-indexed annuities, 148
       miscellaneous, 766
       nonadmitted, in GAAP vs. statutory standards, 762
       separate account, 767
       valuation of, 634�35
          in GAAP vs. statutory standards, 761�62
    Assignment provision, 895
       for group term life insurance, 837�38
    Association of Advanced Life Underwriting (AALU), 749 n.
       educational programs, 746
    Assumed cash value, 265
    Assumption of risk, 899�900
    Assumption reinsurance, 574
    Attained age method, 38
    Audit committee, 715
    Automatic agreements, 584
       modified, 589 n.
       supplementary coverage in, 588
    Automatic premium loans, 254�56
       advantages and disadvantages of, 255
       effects on cash value whole life insurance, 256f
    Automobile accidents, disability payments for, 170
    Availability of coverage, 629
    Average annual earnings, estimation of, 5
    Aviation activities, risk and, 525�26
    Avocation, risk and, 526
    AVRs. See Asset valuation reserves (AVRs)
    TOP
    Backdating, 894
    Balance sheets, illustrative, 763�64
       entries of, 764�70
       sample, 768t
    Balanced stock funds, 73
    Baldwin United and Charter Securities, failure of, 793
    Banks
       competition of, 699 n.
       marketing through, 746�47
       overlapping insurance companies,
    813�14
       savings, 712, 746�47
    Barbell strategy, 802
    Bargain life policies, 60�61
    Basket clause, 805
    Belth, Joseph
       benchmark prices of insurance of, 106t
       yearly cost method of, 124t
       yearly price of protection method of, 105�6
       yearly rate of return method of, 104�5
    Beneficiaries
       designation of for group term life insurance, 835�36
       in estate clearance, 613�14
       responsibility for paying federal estate taxes, 304
       taxation of, 334�35
    Benefit plans, life insurance in, 19�20
    Benefits
       accelerated, 896�97
          in group term life insurance, 842�43
       in group life insurance, 819
       in group term life insurance, 831�33
          nondiscriminatory, 854
       in income statement, 756
       payment method in settlement agreement, 617�18
       reductions of for group term life insurance, 833
       regulation of for group life insurance, 828
    Benefits-only reserve, 467
    Bernoulli�s Law. See Large numbers, law of
    Best (A.M.) ratings, 776�77, 810
       process of, 778�79
    Blackout period, 616, 915�16
    Blood pressure levels, 518
    Blood Pressure Study 1979, 518
    Blood tests, 519
    Board of directors, 714�15
       committees of, 715�16
    Bond fund options, 73
    Boycott, 668�69, 697 n.
         		Brokerage supervisor approach, 740
    Brokerages, investment banking and, 814
    Brokers, functions of, 737�38
    Build
       risk and, 515�16
       table for adults, 517t
    Build and Blood Pressure Study 1959, 515
    Build Study 1979, 515
    Bulk reinsurance, 710
    Burial expenses, 227�28
    Business
       buy-sell funding with joint-life policy, 60
       continuation of, 18�19
       fraud regulation in, 657�58
       growth of, 773
       life insurance uses for, 16�20, 314�55
       overhead insurance for, 196
       risk factors for, 786
    Business cycle, 810
    Business owners
       incidents of ownership attributed to, 301
       user of disability income insurance by, 195�200
    Business partners, joint-life policy for, 60
    Buyer resistance, 905�6
    Buy-sell agreements
       basic structure of, 345�46
       benefits of, 345
       corporate, 349�51
       funding with life insurance, 344�54
       partnership, 18�19
       for partnerships, 347�49
       for S corporations, 353�54
       sole proprietorship continuation agreements, 346�47
       tax implications of, 351�53
    Buy-sell funding
       disability, 197�200
       entity-type, 199�200
       reversal clauses in, 199
    TOP
    C corporation, 351�52
    C ratings, 776
    Calculator functions, 390�91
    California, Proposition 103, 651
    Call options, 801
    Canada, nonmedical insurance in, 538�39
    Cancellation, fair, 560�61
    Capital
       adequacy of, 492
       demutualization and ability to raise, 707
       method of providing, 913�15
       minimum statutory requirements of, 493
       to pay survivor $7,000 per year, 925t
       in present financial strength measurement, 779�80
       requirements, 912
          of insurer, 636�37
       risk-based, 637
       search for new, 794
    Capital gains, 495
    Capital markets, surplus from, 496
    Capital needs
       analysis of, 245�46
       beyond minimum requirements, 493
       for structured settlement, 156f
       surplus to meet, 497
    Capital-liquidation method, 913�14
    Capital-retention method, 914�15
    Cash, on balance sheet, 765�66
    Cash accumulation comparison method, 102�3, 113t�17t
    Cash equivalents, 765�66
    Cash flow statements, 757, 773
    Cash needs, 910
       analysis of, 910�16
       table of, 919t
    Cash option annuity, 138
    Cash refund annuity, 132�33
       modified, 133
    Cash surrender value, 247
       excess buildup of, 326�28
       impact of, 247�48
       of life insurance, 237
       postponement of, 486 n.
    Cash value
       compared to surrender value, 485�86
       corridor test for, 108t
       in current assumption whole life policies, 91�92
       of extended term insurance, 252
       of level premium plan, 33�34
       of ordinary life insurance, 51�56
       partial, in variable universal life policy, 96�97
       partial withdrawal of, 77�78
          in universal life policies, 81
       policy loans and, 51�54
       policy surrender for, 54
       versus protection in ordinary life contract, 33f
       taxation of, 285�86
       for traditional whole life policies, 692
       of universal life insurance, 691
       of variable life insurance, 73�74
    Cash value accumulation test, 284
    Cash-refund option, 607
    Catastrophe reinsurance, 582�83
    Catastrophic illness, accelerated benefits for, 842�43
    Caveat emptor, 559
    Caveat vendor, 559
    Census data, 369
    Certificates of insurance, group, 816
    Cession, 589 n.
    Cession form, 585
    CET Tables, 370
    Charitable deduction, 292, 294
    Charitable donations, life insurance funding, 236
    Chartered Life Underwriter (CLU) program, 632
    Chief executive officer (CEO), 716
    Child/home care fund, 911, 919t
    Children
       funding education for, 234
       life insurance benefits for, 230�31
       trusts for, 235�36
    Chronic illness, 212
    Churning, 552�53
    CIET Tables, 370
    Circulatory system, 518�19
    Civil servants, disability benefits of, 170
    Claim administration department, 719
    Claim examiners, 719
    Claims
       distribution of, 492f
       expected and unexpected, 491
       fraudulent, 554
          regulation of, 657
       for group term life insurance, 837
       handling of, 552
       settlement of
          ethical practices of, 560
          under modified coinsurance plan, 589 n.
          in reinsurance agreement, 585
    Claims committee, 716
    Clayton Act, 670, 671, 675
       Sec. 7, 728
    Cleanup fund, 10, 612�14
    Client
       discrimination against, 553�54
       responsibilities of, 554�55
    CLU and ChFC professional pledge, 551
    Coercion, 552
    Cognitive impairment, long-term care insurance for, 216�17
    Coinsurance, 578�79
       modified, 579�81
          claims settlements under, 589 n.
       supplementary coverage in, 588
    COLI. See Corporate-owned life insurance (COLI)
    Collateral assignment method, 322�23
    Collateralized mortgage obligations (CMOs), 73
    Combination benefit schedules, 833
    Combination coverage, 260�62
    Comity, doctrine of, 828
    Commerce clause limitations, 664�65
    Commission
       fair structures for, 557
       scales for, 741�42
    Commissioners Reserve Valuation Method (CRVM), 471�73, 589 n.
       versus preliminary term valuation,
    473�74
       terminal reserves under, 475t
         		Commissioners Standard Ordinary (CSO) Mortality Tables
       1941, 365, 369�70
       1958, 369�70
       1980, 23, 369�70, 399, 414
          for females, 29�30
          for males, 372t�74t
    Commissions
       ceding, 578�79, 581
       on income statement, 771
    Common stock accounts, 796
    Commutation, right of, 596
    Company bashing, 553
    Company capabilities, 781
    Comparative interest rate method, 104
    Comparative performance measures, 787�90
    Compensation
       commission, 741�42
       noncommission, 742
       packages, 314
       planning, 314�15
    Competition, increased, 747�78
    Compound interest, 379f
       application of values, 392�95
       definition of, 379
       functions of, 379�95
       future value of annual payments,
    386�91
       future values, 380�82
       present and discounted values, 382�86
       present value of 1 at rates of, 385t
       present value of 1 per year and, 394t
       present value of annual payments,
    391�92
    Comptroller, 719�20
    Conditions precedent, incontestable clause and, 879
    Confidential needs provision, 238�39
    Confidentiality, 552
       of AIDS testing results, 657
    Congress
       potential antitrust action of, 669�70
       regulatory function of, 625
    Connecticut, savings banks selling life insurance and annuities, 712
    Constant ratio method, 72�73
    Constitution
       Commerce Clause of, 664�65
       Contract Clause of, 695, 699 n.
       Supremacy Clause of, 625, 664
    Construction workers, 521
    Constructive receipt, 339�40
    Constructive transfer theory, 302
    Consumer Price Index, 140�41
    Contest, meaning of, 872�73
    Contestability, of term policy, 41
    Contestable period, 882 n.
       inception of, 873�74
    Contingency reserve, contribution to, 480
    Continuing education, 633
    Continuous premium whole life. See Ordinary life insurance
    Contract of adhesion, 883�85
    Contract rates, 593�95
       restrictions on, 594�95
    Contribution concept, 506 n.
    Contribution plans, 503
       for group life insurance, 819�20
       three-factor, 503
    Conversions
       of group term insurance, 841�42
       by merger or bulk reinsurance, 710
       of ordinary life contract, 56
       pure, 709�10
    Convertibility, 38
       retroactive, 38�39
       time limit for, 40
    Convexity, 495, 802
    Conway decision, 878
    Corporate alternative minimum tax (AMT), 340�41
    Corporate buy-sell agreements
       cross-purchase, 350�51
       entity, 350, 351
       insurance arrangements for, 351
       life insurance funding of, 349
       stock-redemption, 350, 351
    Corporate communications committee,
    720�21
    Corporate-owned life insurance (COLI)
       estate tax problems of, 301
       tax implications of, 351�53
    Corporations
       AMT exemption of, 352
       variable universal life insurance for, 99
    Corridor test, 66
       for cash value life insurance, 108t
    Cost method, interest-adjusted, 112t
    Cost-of-insurance charge, 75
    Cost-of-living adjustment (COLA) riders
       in disability insurance, 184�85
       in variable universal life policy, 97
    Costs
       of insurance, 426�28
       level premium technique and, 30�33
       of surrender, 480
    Courts, in insurance regulation, 627
    Covered call options, 803
    Credit card holder groups, 827
    Credit enhancement, 17�18
    Credit life insurance, 233
    Credit risk, 801
    Crediting rates, in Life Insurance Illustrations Questionnaire, 273
    Creditor-debtor groups, 826�27
    Creditors, financial statements and, 752
    Cremation expenses, 227�28
    Critical period income, 11
    Cross-purchase partnership buy-sell agreement, 348
       insurance arrangements for, 349
    Crummey power, 308
    CSG Tables, 370
    CSI Tables, 370
    Current assumption whole life insurance, 90�91
       cash value in, 91�92
       low premium/high premium designs of, 92
       redetermination of, 93
       uses of, 93�94
    Current cash value, 264�65
    Current interest assumptions, 395
    Current rates, 594�95
    Currently payable scale, 277
    Custodial care, 214
    Customer services department, 719
    TOP
    D ratings, 776
    Daily living needs, 226�27
    Date of policy, 874
    DBOs. See Death-benefit-only plans
    Death
       lump-sum needs at, 242�43
       paying expenses associated with,
    227�29
    Death benefits
       accelerated, taxation of, 857
       accidental, 899�901
       choice of in universal life insurance, 78, 83�84
       coordination of, 336
       of endowment policy, 64�65
       in gross estate, 299
       of group universal life insurance, 863
       incidental, 332�33
          designing, 337
       increasing, 84, 97
       insured preretirement, 332
       investment performance and, 94�96
       level or increasing, 78
       linked with investment performance, 71�73
       versus policy loans, 53
       in qualified plan, 332
       requirement for, 284
       of term insurance, 333
       using life insurance, 332�34
       of whole life policy, 65f
    Death claim settlement, 917
    Death needs, determining, 906�17
    Death proceeds
       income taxation of, 282�85
       taxation of, 856�57
    Death rates
       constructing tables of, 362�64
       increasing, 23�24
       at respective ages, 364t
    Death tax credit, state, 295
    Death taxes, 306
       life insurance to repay, 233�34
    Death-benefit-only plans, 339
    Deaths, number of in sample population, 363t
    Debts
       life insurance to repay, 233
       liquidation of, 910, 919t
       short- and long-term, 767
    Decennial census, 369
    Decrements, mortality rate, 368�69
    Deductibility, of premium payments, 288
    Deferred life annuity, 128�29, 135
       accumulation period in, 135�36
       level annual premium for, 418
       liquidation options in, 138
       liquidation period in, 136
       net single premium for, 406
       structuring contract in, 136�37
    Deferred policy acquisition costs, 766
    Deferred settlements, minimum-amount requirements of, 596�97
    Deferred whole life annuity
       for female aged 30, 412t, 413t
       net single premium for, 409�13
    Deferred-compensation plans
       life insurance in, 331�32
       nonqualified
          advantages of, 338�39
          death-benefit only, 339
          financing employer�s obligation in, 340�41
          income tax deferral requirements in, 339�40
          life insurance in, 338�41
          salary continuation, 338�39
          types of, 338
    Deficiency reserve, 474�75
    Deficit Reduction Act of 1984, 708
    Defined-benefit plans, 332
    Defined-contribution plans, 332
    Demographic shifts, 748
    Demutualization, 496, 707
       abuses and regulation of, 708�9
       alternatives to, 709�10, 731 n.
       reasons for, 707�8
    Department stores, marketing through,
    746�47
    Dependency period income, 11, 615
    Dependent benefits, 230�31
       with group universal life insurance, 865
    Dependent life insurance, group, 847�48, 858
    Deposit benefits, 617
    Depreciation, 755
    Diabetes, 519
    Dingel, Congressmen John, 693
    Direct recognition, 53
    Direct response marketing, 747
    Disability
       average duration of, 170t
       definition of, 173�74
       extended, 167�68, 170t
       incontestability of, 189�90
       likelihood of, 165�69, 170t
       long-term
          benefit period for, 181�83
          residual, 183�84
       partial, 183�84
       presumptive, 189
       probabilities table of, 166�67
       recurring, 179
       short-term
          benefit period for, 180�81
          salary continuation for, 171
       sources of funds for, 169�71
         		Disability benefits
       exclusion from incontestable clause protection, 877
       partial, 174
       reinsured, 588
       residual, 174�76
          start of, 178�79
    Disability income insurance, 164�65
       ability to keep coverage in force,
    176�77
       benefit duration, 180�83
       for business overhead, 196
       business uses of, 195�200
       buy-sell funding, 198�200
       COLA riders in, 184�85
       dividends, 192
       fund sources for, 169�71
       hospitalization benefits of, 191�92
       incontestability of, 189�90
       increasing base benefit amount, 185�86
       for key persons, 196�97
       lapsed or terminated, 182�83
       level of benefits payable, 184�86
       likelihood of needing, 165�69
       limitations on amount of coverage in, 192�95
       long-term, 177, 181�83
       for low-income individuals, 171
       minimizing fraudulent claims on,
    192�94
       modifying standard issue, 194�95
       organ donations in, 190
       policies, 171�92
       policy exclusions, 195
       policy provisions, 173�76
       premium payments, 186�87
       presumptive disability, 189
       for recurring disability, 179
       rehabilitation benefits, 188�89
       renewability provisions, 176
       residual benefits, 183�83
       return-of-premium option, 187�88
       right to purchase additional, 185
       risk classification in, 193�94
       salary continuation plans, 198
       short-term, 180�81
       situations warranting coverage by,
    172�73
       social security rider of, 190�91
       start of benefits, 177�79
    Disability waiver of premium, 865�66
    Disability waiver-of-premium rider, 901�3
    Disabled employees, continuation of group coverage, 840�41
    Disciplined current scale, 277�78
    Disclosure
       of executive bonus life plan, 320�21
       of split-dollar plan, 324
    Discontinuation, terms to describe, 477�78
    Discounting
       definition of, 382
       period, related to present value, 384�86
    Discrimination, 553�54
       against AIDS patients, 656
       unfair, 652�53
          in policyowner dividends, 654
    Disintermediation, 78, 814 n.
       curbing, 84�87
    Distribution
       changes in, 748�49
       function of, 736�37
       through banks and department stores, 746�47
       through direct response marketing, 747
    Diversification, 707�8
       under Holding Company Act, 726
    Dividend deposits, 279 n.
    Dividend formula, mortality element in, 507 n.
    Dividend scale
       direct recognition, 505
       equity of, 503�6
       for gross premium calculation, 465�66
       testing of, 505�6
    Dividends, 498, 618
       accumulation of, 377
       compared to surrender value, 485�86
       in disability income insurance, 192
       extra, 499�500
       first-year, 485�86
       illustrative computation of, 501�3
       on income statement, 771
       limits on stockholders� charge, 654
       mandated annual distribution of, 654
       misrepresentation of, 646
       nature and distribution of, 653
       nonreducing scale, 499
       payable, 767
       process of, 506
       for stock life insurance companies,
    703�4
       surrender, 484, 500
       terminal, 500�1
       unfair discrimination in, 654
       uses of, 57
    Divisible surplus, 889�90
    Double A rating, 776
    Double B rating, 776
    Downgradings, 811
    Downstream holding company, 724, 731 n.
    Drucker, Peter, on marketing, 733
    Drug addiction, 523�24
    Duff and Phelps ratings, 776�77, 810
    Duration, 494�95
    Duration balancing, 801�2
    Dusts, occupational exposure to, 522
    TOP
    Earnings
       diminishing, 7�8
       growth of, standards for, 788
       schedule, 831�32
       typical pattern of, 8f
    Earnings-per-share measures, 788
    Economic benefit, avoidance of, 339�40
    Economic security, preservation of, 2�3
    Economic status, 525
    Economic value
       diminishing nature of, 7�8
       five-step procedure for estimating, 5�6
       source of, 2�4
    Economics, of nonmedical insurance,
    540�42
    Educational needs, 13
       life insurance for, 234�35
    Educational support, 746
    Educational/vocational fund, 614, 911�12, 919t
    Effective date, 873�74
    Efficient frontier calculations, 803�4
    Eligibility requirements
       for group life insurance, 819, 823�28
       for group term life insurance, 834�35
          nondiscriminatory, 853
    Emergency funds, 614, 910, 919t
       life insurance for, 229�30
    Emergency needs, 13
    Employee benefit plans, 19�20
       life insurance in, 314�15
    Employees
       financial statements and, 753�54
       noncash incentives for, 708
    Employer
       contributions, taxation of, 848�51
       obligation in nonqualified deferred-compensation plan, 340�41
    Employment interruption, temporary, 840
    Endorsement method, 322
    Endowment insurance, 35
       contracts, 64�66
          modified for small impairments, 570
          reduced paid-up insurance for, 249, 250
       level annual premium for, 416�18
       net single premium for, 403�6, 411
       prospective reserves for, 431
       surrender benefit of, 253
       survivorship benefits in, 405�6
    Enhancement reserve fund, 260
    Entire contract clause, 838
    Entire contract statutes, 890
    Entity partnership buy-sell agreement, 348
       insurance arrangements for, 348�49
    Equal outlay comparison method, 103, 118t�22t
    Equipment expenses, 766
    Equitable Life Assurance Society of the United States, demutualization of, 496
    Equity, 641
       among policyowners, 513
       defining, 478
       in distribution of divisible surplus, 498
       in financial position statement, 756
       as regulatory goal, 629
    Equity kicker, 814 n.
    Equity securities, 764
    Equity split-dollar plans, 326�28
    Equity-indexed annuity, 144
       annuitization of, 147
       asset match, 148
       guarantees of, 146
       indexes used for, 147�48
       participation rate formula, 144�45
       product evolution, 144
       SEC regulation and, 145�46
       value at end of term, 146�47
         		ERISA
       on disclosure of split-dollar plans, 324
       Form 5500 series reporting requirements, 336
       in regulation of group life insurance, 830
       welfare benefit plans under, 320�21
    Estate clearance fund, 10, 612�14
    Estate enhancement, 305
    Estate liabilities, 614
    Estate liquidity, 305�6
       life insurance policies providing, 309
    Estate management costs, 228
    Estate planning
       executive bonus life plan in, 321
       life insurance in, 290�91, 305�11
       techniques, 306�7
    Estate tax
       changes in law regarding, 545
       credits against, 295
       federal, 298�304
          of life insurance, 298�304
          responsibility for payment by beneficiaries, 304
          tax rates, 291t
       in federal transfer tax system, 293�95
       marital deduction of, 302�3
       on split-dollar plans
          reverse, 331
          traditional, 330�31
    Estoppel, 898�99
    Ethical behavior, rewarding of, 558
    Ethics
       of classifying risk, 545�62
       defined, 545�46
       of market behavior, 549
       of market conduct, 552�54
       of risk classification, 545�62
    Examiner Handbook, NAIC, 639
    Excess-benefit plans, 339
    Exclusions
       in disability income insurance, 195
       in long-term care insurance, 209, 217
    Executive bonus life insurance plans,
    318�19
       applications of, 343t
       coordination of with group term plan, 319�20
       estate and gift tax planning considerations, 321
       reporting and disclosure requirements, 320�21
    Executive carve-outs
       split-dollar plan as, 330
    Executive officers, 716
    Executor costs, 228
    Expansion flexibility, 707�8
    Expense charges, 864
    Expense limitation formula, 486 n.�87 n.
    Expenses
       amount available for, 470t, 475 n.
       first-year allowance, 486 n.�87 n.
       future levels of, 496
       in income statement, 756�57
       in Life Insurance Illustrations Questionnaire, 274
       marketing, 743
       in pricing performance comparisons, 789�90
       saving, 495
    Experience rating, 587�88
       for group insurance, 817
    Expressio unius est exclusio alterius doctrine, 876
    Extended term insurance, 250�54
       disadvantage of, 253
       effects on life insurance options, 254f
    Extra percentage tables, 566�68
    TOP
    Face amount, 399
    Facility-of-payment provision, 836
    Fact finding, 907
    Facultative agreement, 583�84
       supplementary coverage in, 588
    Fair settlement, 560
    Fairness, 546�48, 641
       as regulatory goal, 629
    Family
       changing needs of, 66�68
       charitable donations of, 236
       death tax funds for, 233�34
       debt repayment funds for, 233
       dependent educational funds for,
    234�35
       gifts of policies to, 307
       income needs after death in, 243�46
       income to survivors in, 230�32
       moral obligation to protect, 3�4
       preservation of economic security, 2�3
       settlement options adapted to needs of, 612�16
       sources of immediate funds for, 226�30
       trusts, 235�36
       uses of life insurance by, 225�38
    Family history, risk and, 520�21
    Federal antitrust laws. See Antitrust laws
    Federal generation-skipping transfer taxation, 304�5
    Federal regulations. See Regulation
    Federal securities laws
       application to variable insurance products, 675�77
       mergers and acquisitions under, 729�30
    Federal taxes. See also Income tax, federal
       in GAAP vs. statutory standards,
    760�61
       of group term life insurance, 849�58
       rates, for estate and gift taxes, 291t
    Federal Trade Commission (FTC), 666
       in acquisitions and mergers regulation, 692�93
       as antitrust regulator, 674
       authority of, 666�67
       in trade practice regulation, 675
    Federal Trade Commission (FTC) Act, 666
       Sec. 5, 671, 675
       unfair trade practices under, 670
    Federal Trade Commission v. Ticor,
    697�98 n.
    Federal transfer tax system, 291�96
    Federalism, 629
    Federal-state regulation
       in acquisitions and mergers, 692�93
       early, 666�67
       in investment-oriented products, 675�92
       in trade practices, 675
    Fees, income statement, 771
    Fidelity Federal Savings & Loan Association v. De La Cuesta, 698 n.
    Fiduciary capacity, incidents of ownership held in, 300
    Field organizations
       functions of, 735�36
       need for, 735
       structure of, 738�41
    FIFO taxation method, 286
       of annuities, 289
    Fifth dividend option, 42
    Fifty percent refund annuity, 133
    Finances, lack of for permanent insurance, 44
    Financial Accounting Standards Board (FASB), 754, 757
    Financial condition, 633�39
       hazardous, 659�60
    Financial integration, 731 n.
    Financial investment, return for, 497
    Financial needs analysis, 245�46
    Financial planners
       function of, 738
       regulation of, 682�83
    Financial position
       performance measures and, 788
       statement of, 755�56
    Financial services convergence, 696
         		Financial statements, 751
       audiences for, 751
       cash flow statements for, 773
       form and composition of, 754�57
       GAAP/statutory form differences in, 763
       illustrative balance sheets for, 763�70
       illustrative income statements for,
    770�72
       life insurers, 638
       ratings and, 775�90
       schedules and notes for, 773�74
       substantive GAAP/statutory differences in, 760�63
       users of, 752�54
    Financial strength measurement
       future, 780�81
       present, 779�80
    Financialization, 793, 814 n.
    Fixed-amount installment option, 284, 597
       functional characteristics of, 605�6
       for group term insurance, 836
       for readjustment period, 615
       structure of, 603�5
       withdrawal during dependency period, 615
    Fixed-maturity investments, 764
    Fixed-period annuity, 153
    Fixed-period installment option, 597, 612
       functional characteristics of, 603
       for group term insurance, 836
       for life income for surviving spouse, 616
       for readjustment period, 615
       structure of, 602�3
    Fixed-premium variable life insurance, risks assumed in, 76�77
    Flat assessments, 23�24
    Flat extra premium, 568�69
    Flat-benefit schedules, 832
    Florida, rebate prohibition in, 651
    Foreign capital markets, 814
    Foreign insurers, 660 n.
    403(B) plans, benefits in, 337
    Fraternal benefit societies, 711
    Fraud
       deterrence and sanctions against,
    657�59
       incontestable clauses limiting, 871�72
       internal, 658�59
    Fraudulent claims, 554
       on disability insurance, 192�94
    Free look provision, 650, 885
    Fringe benefit plans, 315
       reporting rules applicable to, 318�19
    Front-end loading, 87�89
    FTC. See Federal Trade Commission (FTC)
    Full preliminary term valuation method, 468�71
       terminal reserves under, 475t
    Functional departments, 718�20
    Future income
       estimating needs for, 244�45
       estimating payments of, 245
    Future policy benefits, 767
    Future value
       of annual payments, 386�91
       of annuity with beginning-of-year payments, 386f
       beginning-of-year, 386�88
       calculator and spreadsheet functions in calculating, 390�91
       definition of, 378
       end-of-year, 388�90
    Future values, 380�82
       of 1 at various compound interest rates, 381t
       interest rate and accumulation period related to, 382
    TOP
    GA 1951 Table, 365
    GA 1983 Table, 365
    GAAP. See Generally accepted accounting practices (GAAP)
    Gender, risk and, 524
    General annuity calculation method, 411, 412t
    Generally accepted accounting practices (GAAP), 758�59
       cash flow statement, 773
       financial statements, in rating process, 778, 779
       reporting
          in illustrative balance sheets,
    763�70
          on income statement, 770�72
       statement, 759�60
          schedules and exhibits in, 774
       versus statutory standards, 760�63
    Generation-skipping transfer taxation,
    295�96, 304�5
       of life insurance, 304�5
    Genetic testing/screening, 559
    GICs. See Guaranteed investment contracts (GICs)
    Gift taxes
       executive bonus life plan and, 321
       federal, 233�34, 291�93
          annual exclusion in, 292
          deductions from gift tax base, 292
          exempt transfers, 292
          of life insurance transfers, 296�98
          rates for, 291t
          > unified credit, 292�93
       on life insurance transfers, 296�98
       rates, 233�34
    Gifts
       to family members, 307
       funding with life insurance, 237
       inadvertent, 298
       to trusts, 308
    Golden Rule, 551
    Government disability benefits, 170
    Government National Mortgage Association (GNMAs) funds, 73
    Government regulation. See Federal-state regulation; Regulation; State regulation
    Government securities, investment in, 796
    Government-provided life insurance,
    712�13
    Grace period, 887
       for group term life insurance, 838
       late remittance offers and, 887�88
    Graded assessments, 24�25
    Graded premium, 34 n.
    Graduation techniques, 364�65
    Grannum, Alfred O., 906
    Gratuitous transfer, within 3 years of death, 301�2
    Great Britain, nonmedical insurance in, 538
    Gross annual premium rates, at quinquennial ages, 566�67
    Gross estate
       items deductible from, 294
       policy value includable in, 303�4
       tax calculation of, 293�94
         		Group
       composition of, 822
       industry of, 822
       persistency of, 818
       prior insurance experience of, 821
       reasons for existence of, 818
       size of, 821�22
       stability of, 818
    Group annuitant mortality (GAM) tables, 371
    Group Annuity Tables, 365
    Group life insurance
       administration of, 820�21
       benefit limitations of, 828
       characteristics of, 817�22
       contract, 816�17
       contractual provisions of, 828
       determining benefits for, 819
       determining eligibility for, 819
       eligible groups for, 823�28
       experience rating of, 817
       governmental environment for, 822�30
       long-term care insurance, 220
       postretirement
          continuation of, 858�59
          universal, 859�67
          variable universal, 867�68
       premium payments for, 819�20
       regulatory jurisdiction for, 828�29
       significance of, 815�17
       term, 830�58
       transfer of, 576
       underwriting of, 817�22
       veterans, 712�13
    Group term carve-out, 319�20
    Group term life insurance, 315�16
       coordination of executive bonus life plan with, 319�20
       danger of sole reliance on, 44
       nondiscriminatory, 330
          rules applicable to, 317�18
       postretirement coverage, 318
       Sec. 79 requirements for, 316�17
    Growth stock funds, 73
    Guaranteed cash value
       in combination coverage, 260
       in universal life policy illustration, 264
    Guaranteed installments, per $1,000 of proceeds, 604t
    Guaranteed investment contracts (GICs), 686�88, 814 n.
       shift toward, 795
    Guaranteed issue nonmedical insurance, 542�43
    Guaranteed purchase option, 901
    Guaranty funds, 640�41, 661 n.
    Guideline premium requirement, 284
    TOP
    Habits, risk and, 523�24
    Hazardous financial condition, 659�60
    Hazardous materials, 522
    Hazards, excepted from incontestable clause protection, 877�78
    Health care costs, increasing, 203
    Health Insurance Portability and Accountability Act (HIPAA), 207
       effects on long-term care, 210�13
       favorable tax treatment under, 211�12
       federal income tax provisions under, 212�13
    Health records, ethical use of, 559�60
    Health risks, 164�65
    Heart, enlargement of, 517�18
    Heart disease, tests for, 516�19, 528 n.
    Heart murmurs, 516
    Hedging, 802�3
       synthetic, 803
    Heirs, equal shares to all, 309�10
    Heubner, S. S., on obligation to insure, 3�4
    HIV riders, 177
    HIV testing, 519
    Hobbes, Thomas, on selfish behavior, 546
    Holding companies, 723
       acquisition of, 732 n.
       downstream, 731 n.
       nature of, 724
       trend toward, 723�24
    Holding Company Act, 726�28
    Home health care, 214
       funding with life insurance, 237�38
       increasing costs, 203
       life insurance for costs of, 227�28
    Home insurance, 920t
         		Home office
       evaluation of, 531
       information from for nonmedical insurance, 540
    Home work, economic value of, 921t
    Hospitalization benefits, 191�92
    Hostile takeovers, 721�22, 731�32 n.
    Huebner, Dr. Solomon S., on age and life insurance selection, 65�66
    Human life
       bases for insurance of, 8�9
       calculating present value of, 6�7
       diminishing nature of economic value of, 7�8
       estimating economic value of, 5�6
       hypothetical illustration of economic value of, 7f
       measuring monetary value of, 4�7
       source of economic value of, 2�4
       values of, 1
    Human life value approach, 5�9
    Human resources committee, 721
    Human resources department, 720
    Hunter, Arthur H., 562 n.
    Hybrid contracts
       federal securities and state insurance regulation of, 688�92
       Securities Act of 1933 application to, 686�88
    Hybrid/general account policies, regulation of, 686�92
    Hypertension, 518
    TOP
    Illustrated scale, 278
    Illustration actuaries, 277
    Immediate money fund, 919t
    Immunization, 494
    Impairments, small, 570
    Incidents of ownership
       attributed to business owner, 301
       held by insured in fiduciary capacity, 300
       possession of, 299�300
       right or option to repurchase policy, 300�1
    Income
       computing present value of payments, 14
       during dependency period, 11
       in needs analysis, 913
       objective for, 912
       readjustment, 11
       for surviving dependent spouse, 12
       total, analysis of, 927t
    Income needs, 912
       calculation of, 922t
       ongoing, 243�46
       settlement options adapted to, 614�16
    Income producer, death of, 11
    Income statements, 756�57
       illustrative
          line entries on, 770�72
          sample, 772t
    Income stock funds, 73
    Income tax
       on annuity contracts, 288�90
       on death proceeds of life insurance, 282�85
       deductibility of premium payments in, 288
       deferral in nonqualified deferred-compensation plans, 339�340
       for early depletion in variable universal life policy, 98�99
       exclusions
          requirement for, 282
          for settlement options, 284�85
          tests for, 283�84
       federal
          on income statement, 772
          of long-term care services, 212�13
          payable, 769
       liability, in group term life insurance, 849�52
       life insurance defined for, 283�84
       on living proceeds of life insurance, 285�88
    Income-needs analysis, complications of, 915�16
    Income-tax-free payments, 155�56
    Incontestability, group term life, 838�39
    Incontestable clause, 869, 889
       accidental death benefit and, 904 n.
       fraud and, 871�72
       inception of contestable period, 873�74
       matters excluded from, 876�77
       meaning of contest, 872�73
       nature and purpose of, 869�74
       reformation of contract and, 880
       reinstatement and, 880�81
       relationship to other policy provisions
          conditions precedent, 879
          excepted hazards, 877�78
          misstatement of age or sex, 879
          reformation, 880
          reinstatement, 880�81
       types of, 874�75
    Incorporation by reference, 890
    Indemnity reinsurance, 574
       limiting amount of insurance on one life, 574�75
       reducing drain on surplus, 575
       stabilizing mortality experience, 575
       transferring substandard insurance, 576
       utilizing reinsurer�s expertise, 576
    Independent brokerage general agent (IBGA), 740�41
    Indeterminate premium policies, 437
       whole life, 90
    Index policies, regulation of, 689�90
    Individual annuitant mortality (IAM) tables, 371
    Individual Annuity Table, 1983, 150
       mortality rates of, 414
    Individual calculation approach, 399�400
    Individual employer groups, 823
    Individual retirement plans (IRAs)
       benefits in, 337
       death benefits and, 337
    Industrial chemical exposure, 522
    Industry sanctions, against fraud, 659
    Inflation
       adjustments for disability income insurance, 185�86
       double-digit, 66
       effects on life insurance investments, 792�93
       hedge against, 97
       impact of, 924t
       offsetting, 926t
       protection against, in long-term care insurance, 216, 219
    Information
       from agent, 530�31
       from applicant, 531�32
       from attending physicians, 533
       from inspection report, 533
       from medical examiner, 532�33
       from Medical Information Bureau, 534
       sources of
          for nonmedical insurance, 540
          for risk classification, 530�34
    Information systems department, 720
    Informed consent, 547, 559
    Insolvency, 693
       investment problems in, 804�5
       primary insurer, 587
    Inspection reports, 533
       information from for nonmedical insurance, 540
    Installment amount option, 597
    Installment financing, 413
    Installment options, 284, 597, 607
       for group term insurance, 836
    Installment payments, 617
    Installment refund annuity, 132
    Installment refund option, 607
    Installment time option, 597
    Instrument Flight Rated (IFR) designation, 525
    Insurability option, 543�44
    Insurance
       amount of, 449
       basic principles of, 21�34
       business of, 667�68
       cost of, 426�28
       definitions of, 21
       expenses of
          calculation of, 34 n.
          in gross nonparticipating premium calculation, 457t
          level premium technique effect on, 30�33
          probable assumptions of in calculating gross premiums, 456
          reserve effect on, 32t
       recapture of, 586
       risks of, 785
       as social system, 548�49
    Insurance charges, 71
    Insurance commissioners, 626
       powers of, 645
    Insurance companies. See also Life insurance companies
       agent's responsibilities to, 555�57
       combination, 589 n.
       examinations of, 639
       expenses of
          loading of, 450�52
          nature of, 448�49
       failures of, 793
       federal solvency regulation of, 693
       insolvency of, 587
       limitations on disability coverage by, 192�95
       relationship with agents, 741�42
       reliability to perform obligations,
    633�41
       responsibilities of
          to agents, 557�58
          to insured, 558�62
       supervision, rehabilitation, and liquidation of, 639�40
       surplus from operations, 495�96
    Insurance industry, antitrust law applicability to, 667�74
    Insurance Information and Privacy Protection Model Act, 652
    Insurance needs
       regular review of, 917
       who determines, 905
    Insurance policies. See also Life insurance policies; specific policies
       costs of, 449
       creation of, 558
       fair cancellation or nonrenewal of,
    560�61
       filing and approval of, 904
       language restrictions in, 886
       marketing of, 559
       nontraditional, 486
       operative and effective dates of, 873�74
       provisions of, 883�094
       risk and, 524�25
    Insurance principle, illustration of, 22
    Insurance rates
       gender-neutral, 653
       regulation of, 644
       unfair discrimination in, 660 n.
    Insurance regulation. See Life insurance, regulation of; Regulation; State regulations
    Insurance Regulatory Information System (IRIS), 639, 699 n.
       ratios, 782, 783t
    Insurance/investment risks, 780
         		Insured/insurer relationship, 549
       company's responsibilities in, 558�62
    Insurer investments
       limitation on nature of, 634
       regulation of, 634�35
       valuation of assets, 634�35
    Insurers
       business-generating activities of,
    645�52
       capital and surplus requirements of, 636�37
       controls over unauthorized, 630�31
       diversification of, 726
       early warning systems for, 639
       examination of, 661 n.
       financial statements of, 639
       formation and licensing of, 630
       management of, 727
       monitoring financial condition of,
    637�39
       personnel of, 679
       protection against loss for, 640�41
       registration of, 727
       regulating operations of, 641�55
       solidity of, 633�39
       standards for transaction with affiliates, 727
    Insurers Supervision, Rehabilitation and Liquidation Model Act, 640
    Interdepartmental committees, 720�21
    Interest
       assumptions, increasing, 150�51
       compound, 379
          functions of, 379�95
       credited on income statement, 771
       definition of, 378
       excess, 495
       on proceeds, retention of, 598�99
       simple, 378f, 379
    Interest crediting rates, 87�88
    Interest income, principal needed to provide, 600t�1t
    Interest maintenance reserve (IMR), 635, 806, 808
    Interest option, 597
       functional characteristics of, 598�99
       for group term insurance, 836
       for readjustment period, 615
       structure of, 598
    Interest rates
       in calculating reserves, 434�35
       cost comparisons that isolate, 103�6
       crediting of, 377
       definition of, 378
       discounting period and, 384�86
       in dividend formula, 503
       for group universal life insurance, 864
       in illustrative dividend computation, 502, 503
       in Life Insurance Illustrations Questionnaire, 273
       in participating policy premiums,
    258�59
       probable assumptions of in calculating gross premiums, 456
       relationship to assets value, 494�95
       risk assumption and, 395
       in time value of money, 377�78
    Interest risk, 786
    Interest-adjusted cost indexes, 100�2, 259
       disclosure of, 648
    Interest-Index Annuity Contracts Model Regulation, 690
    Interest-only option, 284
       in estate clearance, 613
       for life income for surviving spouse, 616
    Interest-rate-based competition, 792
    Interest-sensitive whole life policy, 90
    Intergenerational transfers, 238
    Intermediate care, 214
    Internal funds flow, 87�89
    Internal policy accumulations, 377
    Internal Revenue Code (IRC)
       in regulation of group life insurance, 830
       Sec. 79, 315�16
          exceptions in, 850�51
          general tax rules under, 851�52
          nondiscrimination requirements of, 317�18, 330
          nondiscrimination rules under,
    853�55
          requirements in, 849�50
          requirements under, 316�17
          Uniform Premium Table I, 851�52
       Sec. 130, 155
       Sec. 1035, 287�88
       Sec. 7702, 66, 283�84
       Sec. 162 plans. See Executive bonus life insurance plans
       Sec. 104(a)(2), 155
       Sec. 101(f), 66
       Secs. 2033-2042, 312 n.
    International stock funds, 73
    Internationalization, 696, 814
    Interstate commerce, regulation of, 664�65
    Interstate compacts, 695
    Invested assets, 765
    Investment Advisers Act of 1940, 660 n., 677, 681�82
       advising prospective buyers, 682�83
       advising separate accounts, 682
       regulating variable life insurance, 684
       requirements of, 685
    Investment committee, 715
    Investment Company Act of 1940, 143, 676, 677, 680�81, 698 n.
       applicability to life insurer general accounts, 688
       requirements of, 685
       Sec.3(a)(8), 698�99 n.
    Investment department, 720
    Investment funds
       switching in variable universal life policy, 97�98
       with variable life insurance, 73
    Investment gains (losses), net, 770�71
    Investment income
       accrued, on balance sheet, 766
       net, 770
    Investment markets, industry role in, 794�97
    Investment operation overlap, 813�14
    Investment portfolio. See also Life insurance portfolio
       sample characteristics of, 798t
       in variable life policy, 76
    Investment-oriented products, SEC regulation of, 675�92
    Investment-related charges, 681
    <1 a href="chap1.htm">Investment(s). See also Life insurance investment
       barbell strategy, 802
       characteristics changes in, 795�96
       choices with variable life insurance,
    70�71
       commercial rating agencies and, 810�14
       covered call options, 803
       diversity in, 800
          insufficient, 801
       duration balancing, 801�2
       earnings from
          constant ratio calculation of, 72�73
          level additions calculation of, 72
       efficient frontier calculations, 803�4
       enhanced liquidity of, 796�97
       hedging, 802�3
       historical perspective on, 792�94
       individualization of product accounts, 797
       inflation and technology effects on, 792�93
       internationalization of, 814
       life insurance portfolio management of, 794�804
       new conservatism in, 812�13
       objectives of, 46�47
       performance of, 791
          death benefit and, 94�96
          death benefits linked with, 71�73
       practical decisions and problems of, 798�801
       product differentiation, 797�98
       regulation of, 804�9
       regulators and rating agencies in,
    793�94
       in separate and pooled separate accounts, 796
       short-term, 765
    Investments of Insurers Model Act, 809
    Investment-type product policy fee income, 770
    Investors, 752
    IRAs. See Individual retirement plans (IRAs)
    IRIS. See Insurance Regulatory Information System (IRIS)
    Irrevocable trusts, 308
       for estate liquidity, 309
    IRS Rev. Rul. 64-328, C.B. 1964-2, 324
    Issue, date of, 874
    TOP
    Joint annuity, 138
       joint-and-last-survivor, 15, 139�40
       joint-life, 138�39
    Joint-and-last-survivor annuity, 15, 139�40
    Joint-and-one-half annuity, 140
    Joint-and-survivor annuity, rating up age in, 565�66
    Joint-and-two-thirds annuity, 140
    Joint-life annuity, 138�39
       used in structured settlements, 153
    Joint-life insurance, 59�60
    Jumbo clause, 584
    Jumbo risks, 587
    Justice Department, in acquisitions and mergers regulation, 692�93
    Juvenile insurance, 545
    TOP
    Keogh plan, 337
    Key employee
       life insurance for, 342�44
       valuing of, 341�42
    Key person
       disability benefits for, 196�97
       indemnification, 16�17
       protection of with life insurance, 341�44
    Kimball, Spencer, 660 n.
    Kulp, C. A., defining insurance, 21
    TOP
    Labor union groups, 827
    Lapse, definition of, 477
    Large numbers, law of, 362
    Late remittance offer, 887�88
    Ledger statements, interest adjustments and, 259
    Legal department, 720
    Legal reserve, 28
    Legislative regulation, 626
    Leisure activities, high-risk, 526
    Length-of-service schedules, 832�33
    Less value statues, 893
    Level additions model, 72
    Level annual premium concept, 414
    Level premium insurance, 27�28
       effect on cost of insurance, 30�33
       ordinary life policies, 29�30
       overcharging of policyholders in, 44�45
       significance of, 33�34
       term policies of, 28�29
       under whole life policies, 80
    Liabilities
       on balance sheet, 767�69
       duration, 494�95
       versus equity, 756
       in financial position statement, 755�56
       separate account, 69
    License
       continuing education requirements for, 633
       duration of, 633
       obtaining, 632
    Licensing, 630
       of agents, 631�33
       of consultants, 660 n.
       of insurers, 630
       problems with, 711
    Liens, 569�70
    Life and Health Insurance Guaranty Association Model Act, 640�41
    Life and Health Insurance Policy Language Simplification Model Act, 643
    Life annuity
       calculating present values of, 407�9
       deferred, 607
       dual roles of, 406
       with guaranteed payments, 408�9
       immediate
          and decreasing term insurance, 607
          net single premium for, 410t
          payable, 407�8
       net single premium for, 406
       nonrefund, 409
       temporary, 409
          prospective reserves for, 431
    Life expectancy, 361
       table of, 361t
    Life income option, 597
       functional characteristics of, 612
       for group term insurance, 836
       monthly income provided by, 607�11
       principal amount to provide $10 per month, 608t, 609t
       with specified period of guaranteed payments, 607
       straight, 606�7
       structure of, 606�11
       for surviving spouse, 616
    Life insurance
       adequacy of, 928t
       analysis of needs for, 9�13
       versus annuities, 126�27
       bases for, 8�9
       basic principles of, 21�34
       basic types of, 35. See also Annuity; Endowment life insurance; Term insurance; Universal life insurance; Whole life insurance
       for business continuation, 18�19
       business purposes of, 16�20
       business uses of, 314�55
       buyer resistance to, 905�6
       charitable donations, 236
       comparing policy costs for, 100�6, 108t�24t
       credit purposes of, 17�18
       for death taxes, 233�34
       debt repayment funds, 233
       in deferred-compensation plans, 331�32
       dependent educational funds from,
    234�35
       determining death needs in, 906�17
       economic bases of, 1�20
       in employee benefit plans, 19�20,
    314�15
       in estate planning, 290�91, 305�11
       estate tax marital deduction and, 302�3
       ethical basis of, 549
       executive bonus, 318�21
       family purposes of, 2�16
       family survivor income, 230�32
       family uses of, 225�38
       federal estate taxation of, 298�304
       in fully insured pension plans, 335�6
       function of, 126
       funding buy-sell agreements with,
    344�54
       funding home health care or nursing home care, 237�38
       funding individual gifts, 237
       funding trusts, 235�36
       generation-skipping transfer taxation of, 304�5
       as gifts to family members, 307
       as gifts to trusts, 308
       group, 19�20, 815�68
       group term, 315�18
       immediate funds from, 226�30
       income tax definition of, 283�84
       investment program objectives of,
    46�47
       for key person indemnification, 16�17
       for key person protection, 341�44
       marketing of, 733�49
       to meet needs, 15�16
       in nonqualified deferred-compensation plans, 338�41
       outlook for, 278
       payable to estate, 298�99
       probabilities in, 359�69
       providing confidential needs, 238�39
       purchase of, 916
       in qualified plans, IRAs, and 403(b) plans, 332�37
       regulation of, 623, 663�99
          goals of, 628�29
          licensing in, 630�33
          at state level, 624�28
          substantive content of, 633�62
       right amount of, 905�28
       risk pooling in, 22�23
       savings vs. protection elements of, 45
       settlement options of, 284�85
       split-dollar plans, 322�31
       supplementing retirement income, 237
       tax treatment of, 282�312
       transfer tax implications in, 296
       transfer-for-value rule for, 283
       transferring assets to younger generation, 238
       transfers, federal gift taxation of,
    296�98
         		Life insurance carriers, types of, 701�32
    Life insurance companies
       accounting in, 752�60
       acquisitions of, 721�22
       affiliations, 721�30
       alliances of, 724�25
       commercial, 702
          assessment associations, 712
          conversion of, 706�11
          fraternal benefit societies, 711
          mutual, 704�6
          nongovernmental, 711
          savings banks, 712
          stock, 702�4
       distribution of ratings of, 777t
       financial statements of, 760�74
          users of, 752�54
       government-provided, 712�13
       holding companies, 723�24
       internal organization of, 713�14
          bases of, 717�18
          functional areas of, 718�21
          organizational structure, 714�17
       investments of, 791�814
       levels of authority in, 714�16
       managers� span of control in, 716�17
       mergers of, 722�23
       regulation of, 725�30
    Life Insurance Illustration Questionnaire, 271�74
    Life insurance industry, diversification of, 800
    Life insurance investment
       qualitative constrains on, 805�6
       regulation of
          liberalization of, 805, 806�7
          model law for, 805, 808�9
          reserve accounts, 806
          reversion to strict rules in, 807�9
          writedowns, 806
    Life Insurance Management and Research Agency (LIMRA), 788
    Life Insurance Marketing Research Association, withdrawals in ordinary insurance study of, 485
    Life insurance policies
       actual cost of, 661 n.
       face amount of, 303
       illustrations of, 256�70
       impact of cash surrender on, 247�48
       inside buildup of, 286
       on lives of others owned by decedent, 303�4
       long-term care benefits in, 205
       regulations for illustrations, 275�78
       valuation of, 296�98
       value includable in gross estate, 303�4
    Life insurance portfolio
       management of
          financialization of, 793
          industry in investment markets, 794�97
          inflation and technology effects on, 792�93
          investment decisions and problems in, 798�801
          investment organization and principles of, 797�98
          technical aspects of, 801�4
       vulnerability of, 811
    Life insurance tables, safety margins in, 365
    Life insurer general accounts, 688
    Life Underwriter Training Council (LUTC), 749 n.
    Life-care facilities, 204
    Life-income option, 284
    LIFO taxation method, 286
       of annuities, 289
       of modified endowment contracts,
    286�87
    Limitations, statute of, 881 n.
    Limited-payment life insurance, 49, 57�59
       level annual premium for, 416
       versus vanishing-premium policy, 58�59
    Limited-payment whole life insurance
       prospective reserves for, 431
    Linton yield method, 123t
    Liquidation
       of deferred annuity, 138
       order for, 732 n.
       systematic, with reference to life contingencies, 606�12
       systematic, without reference to life contingencies, 602
          fixed-amount option, 603�6
          fixed-period option, 602�3
    Liquidation period, 136
    Liquidity
       enhanced, 796�97
       of estate, 306
       in present financial strength measurement, 780
       safety net, 811
    Litigation, chilling effect of, 673�74
    Live investment portfolio
       management of
          technology and inflation effects on, 792�93
    Living benefits, shift toward, 748
    Living proceeds, income taxation of,
    285�88
    Loading, 398, 447�48
       adding margins in, 452�54
       asset shares in, 454�55
       formula for, 449�50
          testing, 454
       in gross premium valuation, 436
       in illustrative dividend computation, 502, 503
       of participating premiums, 450�55
       present values computation in, 450�52
    Loans. See also Policy loans
       definition of, 888
       from group universal life insurance, 865
       nonpayment of, 893
    Long-term care
       accelerated benefits for costs of, 842�43
       federal taxation of, 211�13
       sources of, 203�5
    Long-term care insurance, 177, 201�2
       aging population and, 202�3
       amount of, 215
       benefits of, 214�16
       checklist for comparing policies in, 220�24
       contracts for, 42
       cost of, 206
       development of, 205�8
       duration of, 215
       early policies, 205�6
       eligibility for, 216�17
       exclusions in, 217
       favorable tax treatment eligibility of, 211�12
       group coverage in, 220
       Health Insurance Portability and Accountability Act and, 210�13
       improper sales practices for, 206
       inflation protection of, 216
       issue age for, 213
       NAIC model legislation on, 208�10
       need for, 202�3
       policy characteristics, 213�20
       preexisting conditions in, 217
       premiums of, 218�20
       renewability, 218
       restoration of full benefits, 215�16
       tax treatment of, 206
       types of, 214�15
       underwriting, 217�18
    Long-term Care Insurance Model Act,
    206�7
    Long-term care riders, 238
    Loss recognition, 762�63
    Lump-sum benefits, 591
       contract rates with, 594�95
       death, 336
       disadvantages of, 157
       for estate clearance, 613
       for group term insurance, 836
    Lump-sum needs, 14
       at death, 242�43
    TOP
    Management
       accountability of
          in mutual life insurance companies, 705
          in stock life insurance companies, 703
       financial statements and, 753
       of insurance company, 716
       regulation of, 659
       span of control of, 716�17
       strategy for future financial strength measurement, 780, 781
    Managing general agent approach, 740
    Mandatory security valuation reserve (MSVR), 635, 806
    Margins, adding in loading formula, 452�54
    Marital deduction, 292, 294
       as deferral of estate taxes, 310
       of federal estate tax, 302�3
    Marital infidelity, 524
    Market conduct
       ethics of, 552�54
       regulation of, 644�54
    The Market Conduct Handbook for Agents, 551
    Market value adjustment (MVA) contracts, regulation of, 689
    Marketing
       in banks and department stores, 746�47
       costs and profitability of, 742�43
       direct response, 747
       ethical, 559
       function of, 733�34
       future of, 747�49
       of long-term care insurance, 209�10
    Marketing committee, 720
    Marketing Life Insurance (Stalson), 735
    Marketing/agency department, 718�19
       distribution function of, 736�37
       function and activities of, 733�34
       structure of, 734�37
    Marketplace regulatory concerns, 655�60
    Massachusetts, savings banks selling life insurance and annuities, 712
    McCarran Act, 629, 663
       acquisitions and mergers under, 728�29
       antitrust exemption of
          narrowing scope of, 667�69
          potential congressional action and, 669�70
       impact on constitutional limitations, 665�66
       judicial preemption of, 674
       state action and, 671�72
       on unfair trade practices, 645
    McCarran-Ferguson Act, 625
    Medical care costs, life insurance for,
    227�28
    Medical examiner information, 532�33
    Medical Information Bureau (MIB)
       information from, 534
       privacy and, 651�52
    Medical insurance, inadequacy of, 203
    Medical records, privacy of, 651�52
    Medical tests results, confidentiality of, 657
    MedicoActuarial Mortality Investigation, 515
    Mergers, 722�23
       conversion by, 710
       federal antitrust treatment of, 728�29
       Holding Company Act approval of, 726�27
       regulation of, 692�93
       of 1980s, 807
    Military disability coverage, 170
    Military service
       incontestable clause exclusion of, 878
       risk and, 526�27
    Miller, Jerome S., insurance definition of, 21
    Million Dollar Round Table (MDRT), 746, 749 n.
    Miners, 521
    Minimum-amount requirements, 596�97
    Minimum-deposit policies, 260
    Minimum-premium approach, 80
    Mismatch risk, 801
    Misrepresentation
       of dividends, 646
       in solicitation and advertising, 646
    Model office, 463
         		Modified endowment contract (MEC), 285
       LIFO taxation of, 286�87
       provisions of, 98, 99
    Monahan decision, 874�75
    Monetary value
       measurement of, 4�7
       of needs, 13�15
    Money, time value of, 377�78
       compound interest functions in, 379�95
       current interest assumptions in, 395
       definition of terms, 378�79
    Money fund, immediate, 910
    Money management diversification, 813
    Monopoly, 670�71
    Monthly life income, 617
    Moody, 810
    Moody's ratings, 776�77
    Morals, risk and, 524
    Morbidity tables, 166
    Mortality
       decrements in, 368�69
       nonstandard, 366�67
       select, ultimate, and aggregate, 367�68
    Mortality assumptions
       adjustments to, 364�65
       compatibility with, 513
       establishing range of, 511
       at various age groups, 510f
    Mortality costs, 789
       for group universal life insurance,
    863�64
    Mortality experience, stabilizing, 575
    Mortality rates
       in annuity dividend formula, 507 n.
       declining, 149, 150
       gender-distinct, effects on premiums, 418�19
       in gross nonparticipating premium calculation, 457, 458t
       in illustrative dividend computation, 502, 503
       in Life Insurance Illustrations Questionnaire, 272
       for nonmedical insurance, 541
       probable assumptions of in calculating gross premiums, 456
       reductions due to selection, 367�68
       reflecting differences in, 366�69
       reserves and, 432�33, 439 n.
    Mortality risk, at extremes of age, 545
    Mortality savings, 495
    Mortality tables, 166
       adjusting data in, 364�65
       aggregate, 368
       Commissioners Standard Ordinary (CSO), 166, 167t
       common characteristics of, 369�71
       completing, 365�66
       constructing, 366t
       construction of, 362�64
       CSO 1980, 372t�74t
       decrement, 368�69
       multiple-decrement, 369
       nonstandard, 366�67
       probabilities in, 359, 360t
       reflecting mortality differences from, 366�69
       revised, 149�50
       select, 368t
       ultimate, 368
       U.S., 375t�76t
    Mortality trends, 148�49
    Mortgage
       loans for, 765
       as need, 10
       redemption needs, 12
    Mortgage cancellation fund, 614
    Mortgage vanish or mortgage acceleration plan, 911
    Mortgage/rent payment fund, 911, 919t
    Multiple-decrement tables, 369
    Multiple-employer trust (MET), 825�26
    Multiple-employer welfare arrangements (MEWA), 825�26
       regulatory jurisdiction of, 829
    Mutual insurance, 22
    Mutual life insurance companies, 731 n.
       demutualization of, 707
       management accountability of, 705
       participating policies of, 705�6
       participating policies/sharing in surplus, 705�6
       policyowner orientation of, 704�5
       universal life policies of, 78
    Mutualization, 706�7
    TOP
    NAIC. See National Association of Insurance Commissioners
    NASD. See National Association of Securities Dealers (NASD)
    National Association of Insurance Commissioners
       Accelerated Benefits Model Regulation, 896�97
       Agents and Brokers Model Licensing Act, 632, 633
       Agents Continuing Education Model Regulation of, 633
       capital standards of, 493
       disability probabilities table of, 166, 168t, 169t
       Group Life Insurance Standard Provisions Model Bill, 830�31
       in insurance company ratings, 782
       Insurance Information and Privacy Protection Model Act, 652
       in insurance regulation, 627�28
       Interest-Index Annuity Contracts Model Regulation, 690
       interstate compacts, 695
       Investments of Insurers Model Act, 809
       IRIS system, 699 n.
       life insurance advertising rules, 685
       life insurance illustrations model of, 275�78
       life insurance policy illustrations standards of, 270
       on long-term care insurance, 206�7
       Model Holding Company Act of, 732 n.
       Model Insurance Holding Company Systems Regulatory Act, 726�28
       model insurance investment law of, 804
       Model Investment Law, 794
          strict rules of, 808�9
       Model Law on Examinations, 639
       model legislation of, 208�10
       Model Life Insurance Disclosure Regulation, 647�48, 649
       Model Regulation on Advertising and Solicitation, 692
       Model Regulation to Eliminate Unfair Sex Discrimination, 653
       Model Rule Requiring Annual Audited Financial Reports, 660 n.
       Model Rules Governing the Advertising of Life Insurance, 646
       Model Unauthorized Insurers False Advertising Act, 660 n.
       Model Unfair Trade Practices Act, 660 n.
       Model Variable Contract Law, 683�84
       Modified Guaranteed Annuity Model Regulation, 689
       Modified Guaranteed Life Insurance Model Regulation, 689
       public table specifications of, 369
       reasons for formation of, 635
       in regulation of demutualization, 708�9
       Replacement of Life Insurance and Annuities Model Regulation, 649
       Standard Policy Provisions Model Act, 889
       standards and accreditation program, 694�95
       standards for companies deemed to be in hazardous financial condition, 659�60
       state regulatory's capability standards, 694
       state standards of, 699 n.
       statutory accounting standards of, 758
       Unauthorized Insurers Process Act, 660 n.
       Universal Life Insurance Model Regulation, 692
       Variable Life Insurance Model Regulation, 96, 677
    National Association of Securities Dealers (NASD), 678�79
       examination of, 746
       licensing by, 749 n.
       mandatory membership in, 698 n.
       series 6 licensing exam of, 143
    National Conference of Commissioners of Uniform State Laws, approval of Uniform Periodic Payment of Judgments Act, 160�61
    National Structured Settlement Trade Association, 160
    Need determination, simplifying, 905
    Needs
       deriving components of, 242�46
       insurance to meet, 15�16
       monetary evaluation of, 13�15
       special, 12�13
    Needs analysis, 9�13, 241�42, 909
       of cash needs, 910�16
       deriving components of needs for,
    242�46
       liquidating and nonliquidating approaches, 245�46
    Negotiated trusteeships, 823�24
    Net cash value, 74
    Net cost method, 100
       tradition, 109t
    Net level premium, 413
       concept of, 414
       deferred annuity, 418
       endowment insurance, 416�18
       under full preliminary term method, 471f
       limited-payment life insurance, 416
       ordinary life insurance, 415�16
       for ordinary life policy, 427�28
       regulation of, 435�36
       reserves, 467
       term insurance, 414�15
       universal basis for computing, 435
       valuation, 470t
          as safety margin, 436
          terminal reserves under, 475t
         		Net Payment Cost Comparison Index, 648
    Net payment cost index, interest-adjusted, 111t
    Net single premium
       calculating life annuity present values, 407�9
       calculation techniques for, 399�401
       concept of, 399
       deferred whole life annuity, 409�13
       definition of, 398
       endowment insurance, 403�6
       life annuities, 406
       for ordinary life policy, 430�31
       term insurance, 401�2
       whole life insurance, 402
    Net surrender cost index, interest-adjusted, 110t
    New York
       age misstatement provision in, 892
       agent-company relationship in, 741�42
       incontestable clause in, 889
       insurance investment law of, 804�5
       introduction of incontestable clauses in, 870
       proportion of insurance sales in, 804
       Regulation 126, 807
       reinstatement provisions of, 890�91
       savings banks selling life insurance and annuities, 712
    New York City, in financial markets, 804
    No-fault auto insurance, disability benefits, 170
    No-lesser-amounts statutes, 570
    Noncash employee incentives, 708
    Noncontributory plans, group life, 819�20
    Nondiscrimination rules, 330
       for group term life insurance, 853�55
       Sec. 79, 317�18
    Nonforfeiture factor, 486 n.
    Nonforfeiture laws, 481, 892�93
       illustration of adjusted premium method of, 482�84
       rationale for, 481�82
       standard, 246, 486 n., 506 n., 643, 684, 892�93
          illustration of adjusted premium method in, 482�84
          for individual deferred annuities, 661 n.
          minimum requirements of, 692
          rationale of, 481�82
          surrender dividend payment requirement of, 500
    Nonforfeiture options, 892�93. See Surrender options
       net cash value and, 74
       regulation of, 642�43
    Nonlevel term insurance, 42
    Nonmedical insurance, 538
       economics of, 540�42
       guaranteed issue, 542�43
       history of, 538�39
       paramedical examination, 543
       policyowner, 542
       special branches of, 542�43
       underwriting safeguards of, 539�40
    Nonparticipating policies, 57
    Nonqualified plans, deferred-compensation, 332, 338�41
    Nonrecognition provision, IRC, 287�88
    Nonsmoker discount, 220
    Nursing home care
       accelerated benefits for, 842�43
       funding with life insurance, 237�38
       increasing costs, 203
    TOP
    OASDI (Old Age, Survivors, and Disability Insurance) program, 713
       in calculating insurance needs, 15
    Occupational risk, 521�23
    Old-age support, annuities for, 151�52
    One-year level term, 64f
    Ongoing income needs, 243�46
    Operating costs, 772
    Operative date, 873�74
    Oral testimony, 882 n.
    Ordinary life insurance, 49�50
       annuity or retirement income, 55�56
       cash value or accumulation element of, 51�56
       conversion of, 56
       hypothetical expense and loading factors for, 453t
       increased reserves with duration, 437
       level annual premium for, 415�16
       level premium plan applied to, 29�30
       lowest premium outlay in, 51
       net level premium for, 427�28
       nonforfeiture or surrender options,
    54�55
         		   participating vs. nonparticipating, 57
       permanent protection under, 50
       policy loans, 52�54
       progression of reserve funds for,
    440t�45t
       proportion of protection and savings elements in, 33f
       prospective reserves for, 430�31
       reduced paid-up insurance for, 249
       reserve effect on cost of, 32t
       surrender options of, 54�55
    Organ donations, 190
    Organization
       by function, 717
       by product, 717�18
       by territory, 718
    Original age method. See Retroactive conversion
    Over-the-counter sales
       limits on, 731 n.
       regulation of, 678
       in savings banks, 712
    Ownership, incidents of, 299�301
    Ownership provision, 895
    TOP
    Paid-up additions, 57
    Paid-up value, in combination coverage, 260
    Paramedical examination, 543
    Parents, life insurance benefits for, 231
    Parker v. Brown, 671
    Participating policies, 57
       of mutual life insurers, 705�6
    Participating policy, 730 n.
    Participation rate formula, for equity-indexed annuity, 144�45
    Partnership
       buy-sell agreements for, 347�48
          insurance arrangements for, 348�49
          types of, 348
       buy-sell agreements in, 18�19
       incorporated, 19
    Paul v. Virginia, 624, 625
    Payment cost index, 101
    Pension Benefit Guarantee Corporation (PBGC)
       coverage of, 336
       UP-1984 Table of, 370
    Pension plans
       fully insured, 335�36
       group life insurance in, 19�20
       transfer of, 576
    Pension schedules, 833
    People and Performance (Drucker), 733
    Percentage rate, 378
    Performance areas, key, 753
    Performance measures, comparative,
    787�90
    Periodic income options, 591�92
    Periodic payment, guaranteed, 152�62
    Periodic Payments Settlement Act, 155
    Permanent insurance, 47 n.
    Persistency, 743
       in Life Insurance Illustrations Questionnaire, 274
    Personal history, risk and, 519�20
    Personal injury cases, structured settlements of, 152�62
    Personal injury claim adjusters, 153
    Personal savings, 203�4
    Personal-producing general agents (PPGAs), 737, 739�40
    Pfeffer, Irving, defining insurance, 21
    Physical condition, risk and, 516�19
    Physical examination, findings of, 532
    Physician information, 533
    Pierce v. Homesteaders Life Association, 898�99
    Pilots, risk of, 525�26
    Plan change provision, 895�96
    Poisons, occupational exposure to, 522
    Policy
       agent�s obligations associated with delivering, 552
       cost comparison methods, 100�6,
    108t�24t
       dividend accumulation, 377
       face page of, 885�86
       filing of, 904
       nontaxable exchanges, 287�88
       provisions of, 883�094
          common, 899�904
          optional, 894�97
          prohibited, 893�94
          required, 887�93
          standard, 886�87
          waiver and estoppel, 898�99
    Policy forms
       content of, 642�43
       filing of, 643
       nonforfeiture provisions of, 642�43
       readability of, 643
       regulation of, 672�73
       standard provisions of, 642
       unfair discrimination in, 643
    Policy illustrations
       complex, 260
       simple, 257�60
    Policy indebtedness, 252�53
    Policy loans
       on balance sheet, 765
       deduction of, 252�53
       definition of, 888
       effect of, 84�87
       interest rate for, 74
       for ordinary life insurance, 52�54
       provisions for, 888�89
    Policy proceeds left at interest, 377
    Policy-fee system, 449�50
    Policyowner
       benefits paid to, 771
       limited control of, 730 n.
       risks to, 76�77
    Policyowner funds, 767
    Policyowner nonmedical insurance, 542
    Policyowner orientation, 704�5
    Policyowner services department, 719
    Policyowners
       account balances, 767
       financial statements and, 753
    Pooled separate accounts, 796
    Pooling, 673
    Portfolio reinsurance, 589 n.
    Position schedules, 832
    Preemption doctrine, 664
    Preexisting conditions, 217
    Preferred risk, 367
    Preferred-risk policies, 60�61
    Prefunding, 98
       in universal life policies, 79�81
    Preliminary term, 469
    Preliminary term valuation, modified,
    471�74
    Premium, 22. See also Net level premium; Net single premium
       adjustments for group universal life insurance, 864�65
       annual accumulation of, 464t
       on balance sheet, 766
       basic approaches to, 456
       calculation of, 397�98
       competitive, 464�65
       computing on participating basis, 151
       contribution for group term life insurance, 835
       deductibility of in group term life, 849
       definition of, 397
       determining in yearly renewable term insurance, 26
       developing schedule of competitive, 464�65
       for disability income insurance, 186�87
       effective, 485
       evaluating, 460�64
       fixed, 68
       flat extra, 568�69
       flexibility of under universal life policies, 79, 89
       gender-distinct mortality effects on, 418�19
       graded, 34 n.
         		   gross, 398, 447�48, 485
          adequacy of, 493
          annual per $1,000, 51t
          deficiency of, 437
          definition of, 447�48
          insurance company expenses and, 448�49
          loading formula and, 449�50
          loading of, 450�55
          nonparticipating, 456�66
          paid at less than 1-year intervals, 466
          participating
           derived through tentative gross premiums, 465�66
           loading of, 450�55
          tentative, 457�60
           participating gross premiums derived through
          trial, evaluation of, 460�64
          valuation of, 422, 436
       for group term life insurance, 836�37
       illustrative calculation of, 457�60
       on income statement, 770
       level, 27�34
       levels of and redetermination frequency, 93, 94f
       of long-term care policies, 218�20
       lowest outlay for, 51
       low/high design in current assumption whole life policies, 92
       nonpayment of, 876
       one-year term for $1,000, 323t
       participating policy, 257�60
       payment adjustment, in participating policy, 257�58
       payment period, 218
       payments
          in annuities, 129
          deductibility of, 288
          fixed, 69f
          flexible, 69
          for group life insurance, 819�20
       rates
          assessment costs in, 661 n.
          insurance company expenses varying with, 448�49
       regulation of rates, 644
       return for overcharge of, 498�501
       return with notice of rescission, 872�73
       selecting most probable assumptions in, 456
       for short-term disability insurance, 181
       for standard and substandard annuities, 154f
       target, 82�83
       waiver of, 901�3
       of whole life vs. yearly term, 31f
    Premium loan clause, 53
       automatic, 255�56
       conventional, 254�55
    Premium loans, automatic, 254�56
    Present value, 382�83
       of 1 at various rates of compound interest, 385t
       of 1 per year at various compound interest rates, 394t
       of annual payments, 391�92
       calculating, 6�7
       calculation of, 400
       computation of in loading formula,
    450�52
       derivation of, 383�84, 391�92
       of expenses incurred at year of death, 452
       of expenses incurred every year, 452
       of expenses incurred only at time of issue, 451
       of expenses incurred only during definite number of renewal years, 451
       of future premiums, 429�30
       interest rate and discounting period related to, 384�86
       for life annuities, 407�9
       of 3-year annuity with beginning-of-year $1 payments, 393f
       of 3-year annuity with end-of-year $1 payments, 391f
    Price disclosure, 647�48
    Price fixing, 672
    Price indexes, 140�41
       for equity-indexed annuities, 147�48
    Pricing
       marginal, 743
       performance comparisons, 788�90
    Principal
       definition of, 378
       to provide specified annual interest income at various interest rates, 600t�1t
    Privacy
       of AIDS or HIV status, 657
       regulation of, 651�52
    Probabilities
       calculation of, 359�61
       definition of, 357�58
       in life expectancy, 361
       table of, 362t
    Probability fraction, 357
    Probability theory, 357�58
       application to life insurance, 359�69
    Probate expenses, 306
    Probate fund, 10
    Producers
       selection-rejection of, 744�45
       support of, 746
       training of, 745�46
       variety of, 737�38
    Productivity, 742
       diminishing period of, 7�8
    Professional associations, 827
    Professional educational programs, 746
    Professional Practice Guidelines, American Society of CLU & ChFC,
    265�69, 270
    Profit centers, 718
    Profit orientation, 702
    Profits, contribution to, 480
    Prohibited provisions, 893�94
    Projections, 365
    Property, 766
    Prospective reserve method, 482
    Prospectus, variable life policy, 74�75, 680
       expense information, 75
       investment portfolio information, 76
       surrender charges, 75�76
    Protection
       versus cash value in ordinary life contract, 33f
       moral obligation to provide, 3�4
       permanent, 50
       temporary need for, 43�44
       of whole life policy, 62, 65f
    Prudential Insurance Co. of America v. SEC, 676, 688
    Prudent-man rule, 793
    PS 58 costs
       in equity split-dollar plans, 326
       rates of, 323t, 324
       in reverse split-dollar plans, 329
       table of rates, 334
       tax-free recovery of, 334
    Public relations committee, 720�21
    Public tables, 372t�76t
       common characteristics of, 369�71
    Pure annuity, 129, 130�31
    TOP
    Qualified plans
       benefits in, 332�34
       deferred-compensation, 332
       incidental death benefits in, 337
       nonretirement benefits in, 332�33
       survivorship benefits in, 337
       taxation of beneficiaries of, 334
    Qualified terminal interest property trust (QTIP), 232, 303
    Qualifying medical conditions, accelerated benefits for, 896, 897
    Quarterly claims, 491�92
    TOP
    Rabbi trust, 340, 355 n.
    Racketeer Influenced and Corrupt Organization Act (RICO), 659
    Railroad workers, 521
    Rate classification, balance within, 512
    Rating agencies
       financial statements and, 752�53
       future of, 812�14
       in life insurance investment, 810�14
       multi-industry, 775�76
       reasons for role of, 810�11
       regulators and, 793�94
    Rating equivalences, 777t
    Ratings
       category differences in, 776�78
       classes of, 776
       comparative performance measures in, 787�90
       criteria for, 779
       of financial strength, 779�81
       impact of, 810�11
       process of, 778�81
       regulatory measures for, 781�87
    Readable contract laws, 643
    Readjustment income, 11, 614�15
    Readmission problems, 711
    Real estate, 765
    Real estate investment trust (REIT), 496
    Reasonableness, 641
       as regulatory goal, 629
    Rebating, 553, 662 n.
       criticism of prohibition on, 651
       regulation of, 650�51, 660 n.
    Recapture provision, 586
    Receivables, 766
    Recruits, training of, 745�746
    Redetermination, 93
       premium changes and, 94f
    Redlining, 560
    Reduced paid-up insurance, 248�50
       effects on life insurance options, 251f
    Re-entry term insurance, 40�41
    Reformation of contract, 880
    Refund annuity, 129, 131�35
       cash, 132�33
       fifty percent, 133
       installment, 132
       with life annuity certain, 131�32
       modified cash, 133
    Regional director approach, 739�40
    Regional trading blocks, 696
    Regulation, 623. See also Federal-state regulation; State regulation
       of demutualization, 708�9
       direct federal solvency, 693
       dual federal-state
          in acquisitions and mergers, 692�93
          in convergence of financial services, 696
          in internationalized trade, 696
          in investment-oriented products, 675�92
          in trade practices, 675
       goals of
          external, 629
          internal, 628�29
       government, 822�30
       of group life insurance, 822�30
          federal, 829�30
       of life insurance investments, 804�9
       of mergers and acquisitions, 725
          federal antitrust, 728�29
          federal securities laws in, 729�30
          state insurance regulation, 725�28
       in ratings, 781�87
       state
          agencies of, 626�28
          evolution of, 624�25
       state responses to nationwide problems of, 693�95
    Regulators, rating agencies and, 793�94
    Regulatory authority, 663
       allocating between federal and state government, 664�66
       early federal-state interaction in, 666�67
    Regulatory jurisdiction, 828�29
    Rehabilitation
       for disability income insurance, 188�89
       order of, 661 n., 732 n.
       under residual disability benefits, 183
    Reinstatement, 880�81, 890�91
    Reinsurance
       agreements in, 583�87
       assumption, 574
       bulk, 710
       definition of, 573
       duration of agreement, 586�87
       experience rating in, 587�88
       indemnity, 574�76
       with insolvency of primary insurer, 587
       nonproportional, 575, 581
          catastrophe, 582�83
          spread-loss, 583
          stop-loss, 581�82
       proportional, 577
          types of plans, 577�81
       purposes of, 574�76
       substandard, 588�89
       supplementary coverages, 588
       surplus from, 496�97
    Reinsured sums, reduction in, 586
    Reinsurer, expertise of, 576
    Reliability
       goal of, 641
       to perform insurance obligations,
    633�41
       as regulatory goal, 628
    Renewability
       of long-term care policies, 218
       of term insurance, 36�37
    Renewability period, limiting, 27
    Renewal provisions, long-term care, 209
    Repair costs, 229�30
    Replacement, 648�50
       costs of, 229�30
    Repurchase option, 300�1
    Rescission, notice of, 872�73
         		Reserve, 27�28
       aggregate vs. pro rata, 426
       asset valuation, 635
       of blocks of policies, 439 n.
       in calculating net single premium,
    421�22
       contingency, 438
          contribution to, 480
       cost of insurance and, 426�28
       deficiency, 436�37
       earnings on, 47 n.
       effects on insurance cost, 32t
       with extra percentage tables, 568
       in financial position statement, 755�56
       full net level premium, 589 n.
       in GAAP vs. statutory standards, 762
       initial, 422�23
       interest maintenance, 635
       mandatory security valuation, 635
       mean, 423�24
       methods of determining
          actuarial assumptions and, 431�35
          prospective, 428�31
          retrospective, 424�28
       modified, 422, 467�68
          full preliminary term valuation in, 468�71
          preliminary term valuation in,
    471�74
       mortality assumption effects on, 439 n.
       progression of, 440t�45t
       prospective, 422
       prospective calculation formula for, 437, 438 n.�39 n.
       regulation of, 635�36
       retrospective, 422
       safety margins in, 436
       special-purpose, 438
          in GAAP vs. statutory standards, 762�63
       statutory regulation of, 435�36, 474�75
       supplemental, 436�37
       terminal, 422�23, 432f
          under various valuation methods, 475t
       types of, 422�24
       unearned premium, 424
       voluntary, 438
    Reserve accounts, regulation of, 806
    Reserve funds, progression of, 424�26
    Reserve life insurance companies, 706
    Residence, risk and, 523
    Retention, 743
    Retired lives reserves (RLR) plans, 318
    Retirement
       group term life insurance after, 858�68
       needs for, 13
          calculation of, 14�15
    Retirement annuity, 136
    Retirement income
       with insurance cash value, 55�56
       supplementing with life insurance, 237
    Retroactive conversion, 38�39
    Return-of-premium option, 187�88
    Revenues, 756
       management of, 742�43
    Reverse Polish notation, 380
    Reverse split-dollar plans, 328�30
    Reverse yield curve, 78
    Revocable trusts, 308
    Riegel, Robert, defining insurance, 21
    Right to assign, 895
    Risk, 509�10
       age and, 514�15
       applicant's build and, 515�16
       assumption of, 899�900
       aviation activities and, 525�26
       avocation and, 526
       categories of
          balance within, 512
          in risk-based capital approach,
    784�86
       classification of, 510�11, 534�38
          ethical issues of, 545�62
       economic status and, 525
       factors affecting, 513�27
          assigning weights to, 535�37
          substandard classifications of, 537
       family history and, 520�21
       guiding principles of selection and, 511�13
       habits and, 523�24
       incidence of extra, 564
       information on, 529
          sources of, 530�34
       insurability options and, 543�44
       insurance against, 920t
       of insurance at extremes of age, 544�45
       insurance plan and, 524�25
       investment, 800�1
       limiting in nonmedical insurance, 540
       measurement of, 357
          application to life insurance, 359�69
          probability theory in, 357�58
          public tables in, 369�76
       military service and, 526�27
       morals and, 524
       for nonmedical insurance, 538�43
       numerical rating of, 562 n., 563
       occupation and, 521�23
       personal history and, 519�20
       physical condition and, 516�19
       rating of
          judgment method of, 535
          numerical system of, 535�38
       residence and, 523
       sex and, 524
       socialization of, 629
       substandard
          insurance of, 563�71
          removal of rating, 570�71
          treatment of, 565�70
          value of insurance for, 571
       tolerance for, 70�71
    Risk pooling, 22�25
    Risk-Based Capital for Life and/or Health Insurers Model Act, 637
    Risk-based capital (RBC), 782, 784
       adjustment formula in, 786
       risk categories in, 784�86
       testing effectiveness of, 786�87
    Risky behaviors, 524
    Robert Wood Johnson Foundation grants, for long-term care, 204
    Rogers, Oscar H., 562 n.
    Role morality, 550
    Rollover, early in policy period, 327�28
    TOP
    S corporations
       buy-sell agreements for, 353�54
          tax treatment of, 354
       reserving S election in, 353�54
    Safe harbors, 669
    Safety margins, 365
       for adequate gross premiums, 493
       in legal reserve, 436
    Salary continuation plans, 338�39
       with disability policies, 197
    Salary reduction, 338
    Sales load, 69
    Sales materials, 557
    Sales support, 746
    Savings account depositors, 827
    Savings banks, 712
       marketing through, 746�47
    Seasoning requirement, 711
    SEC. See Securities and Exchange Commission
    SEC v. National Securities, Inc., 729�30
    SEC v. Variable Annuity Life Insurance Company (VALIC), 143, 162 n., 676
    Second-to-die policy, 310�11
    Securities Act of 1933, 675�76, 677�78
       requirements of, 685
       Sec. 3(a)(8), 686�88, 691
    Securities and Exchange Commission, 666
       authority of, 667
       Division of Investment Management, 681
       equity-indexed annuities and, 145�46
       examination of, 746
       financial statements and, 752
       Investment Management Division, 698 n.
       in investment product regulation,
    675�92
       regulating variable insurance products, 677�83
       Rule 151, 687, 690, 698�99 n.
       in universal life insurance, 691
       in variable life insurance, 68, 69
    Securities Exchange Act of 1934, 678�79
       agents selling variable insurance under, 679�80
       insurer personnel under, 679
       proxy rules of, 729�30
       requirements of, 685
    Securities laws
       applied to variable life insurance,
    676�77
       mergers and acquisitions under, 729�30
    Securities Valuation Office, 635
    Security, annuities for, 151
    Security analysts, 752
    Segmentation of general account, 792�93
    Select term insurance, 40�41
    Selection
       costs of, 449
       at field level, 530�31
       principles of, 511�13
    Self-employed, disability income insurance for, 171
    Self-interest, 547
    Selfishness, 546�47
    Selling practices, regulation of, 673
    SEP (simplified employee pension) plan, 337
    Separate accounts, 796
    SERPs. See Supplemental executive retirement plans (SERPs)
    Servicemen's Group Life Insurance (SEGLI), 712�13
    Servicing responsibilities, 552
    Settlement options, 284�85, 591. See also Structured settlements
       adapted to basic family needs
          income needs, 614�16
          nonrecurrent needs, 612�14
       concepts of, 597
       contract vs. current rates in, 593�95
       general concepts and rules of, 592�97
       for group term life insurance, 836
       guaranteed payments table in, 619t�21t
       minimum-amount requirements in,
    596�97
       options for, 597
       required, 893
       right of commutation in, 596
       right of withdrawal in, 595�96
       sample of, 617�21
       structure and functional characteristics of, 597�612
       typical elements of, 592�93
       unfair practices in, 654�55
       use of options for, 612�16
    Settlement statement, 616 n.
    7-pay text, 287
    Sex
       misstatement of, 891�92
          incontestable clause and, 879
       risk and, 524
    Sex discrimination, unfair, 653
    Shareholder-employees
       in group term carve-out, 320
       life insurance plans for, 315
    Shareholders� equity, 769�70
    Sherman Act
       acquisitions and mergers under, 728
       Sec. 2, 670�71
    Sickness pay, 171
    Side investment funds, 260
    Single A rating, 776
    Single-life insurance, 59�60
    Single-premium deferred annuities (SPDAs)
       federal securities and state insurance regulation of, 689
       regulation of, 686�88
    Single-premium whole life policy, 57, 58
    Skilled nursing care, 214
    Smith, Adam, on self-interest, 547
    Smoothing, 364�65
    Social Security Administration, 713
       disability benefits of, 169
       disability claims processing by, 190�91
    Social security benefits, 912�13
       for ongoing income needs of survivors, 244
       resumption of, 916
       survivorship, 615, 923t
    Social security rider, disability income,
    190�91
    Society of Actuaries
       build studies of, 515
       study of policy illustrations by, 270
    Socio-economic hazards, 522�23
    Sole proprietorship continuation agreements, 346
       choosing purchaser in, 346�47
       life insurance funding of, 347
    Solicitation, misrepresentation in, 646
    Solvency
       assurance of, 480�81
       regulation of, 693
    Sound management regulation, 659
    South-Eastern Underwriters Association case, 625, 665, 669, 675�76
    Split-dollar life insurance plans, 260, 262, 322
       advantages of, 325�26
       basic concepts of, 322�24
       equity, 326�28
       as executive carve-out, 330
       ownership of, 322�23
       reporting and disclosure requirements, 324
       reverse, 328�30
          estate tax considerations of, 331
       taxation of, 323�24
       traditional, 325�26
          estate tax considerations of, 330�31
    Spouse
       coverage for long-term care, 220
       educational funding with life insurance, 234�35
    Spread-loss reinsurance, 583
         		Spreadsheet functions, 390�91
    St. Paul Fire & Marine Insurance Co. v. Barry, 669
    Stalson, J. Owen, on marketing, 735
    Standard & Poor ratings, 776�77, 810
    Standard & Poor�s 500 Composite Stock Price Index, 147�48
    Standard group, predominance of, 512, 527 n.
    Standard Oil Co. of New Jersey v. United States,     697 n.
    Standard Valuation Law, 474, 635, 644, 661 n.
       reserves regulation by, 435�36
       for variable life insurance, 684
    State action doctrine, 671�72
    State insurance commissioners, 692�93
    State insurance regulators, 752
    State nonoccupational disability funds, 169
    State regulation
       evolution of, 624�25
       of foreign insurers, 660 n.
       of group life insurance, 823�29
       under McCarran Act, 668
       of mergers and acquisitions, 692�93, 725�28
       in ratings, 781�87
       in response to nationwide regulatory problems, 693�96
       substantive content of, 633�62
       of universal life insurance, 691�92
    State regulatory agencies, 626�28
    State taxation, 858
    State valuation laws
       reserve requirements of, 428
       reserves regulation by, 435�36
    Statutes of limitation, 893�94
    Statutory accounting practices (SAP),
    757�58
       cash flow statement in, 773
    Statutory accounting standards, 760�63
    Statutory blue blank financial statement
       expenses in, 789�90
       information for performance comparisons in, 787�88
       schedules and exhibits in, 773�74
    Statutory regulation, reserve, 474�75
    Statutory reporting requirement, 757�58
       in illustrative balance sheets, 763�70
       on income statement, 770�72
    Statutory table, 369
    Stock fund options, 73
    Stock insurance companies
       distribution of surplus to shareholders, 703�4
       management accountability of, 703
       mutualization of, 706�7
       nonparticipating policies, 704
       profit orientation of, 702
       proxies of, 730 n.
       stockholder dividends, 703�4
       surplus liquidation, 703
       universal life policies of, 78
    Stock redemption
       buy-sell agreement, 350
          insurance arrangements for, 351
       disability, 199�200
    Stock subsidiary, 731 n.
    Stockbrokers, 738
    Stockholders, votes of, 730 n.
    Stop-loss reinsurance, 581�82
    Strategic alliances, 724�25
    Strategic business units (SBUs), 731 n.
    Structured settlement specialist, 159�60
    Structured settlements, 152�53
       advantages of, 155�57
       annuities used in, 153�54
       association for, 160
       disadvantages of, 157�58
       postsettlement opportunities for other advisers, 161�62
       profile of specialist in, 159�60
       sample case, 158, 159f
       services, 158
       Uniform Periodic Payment of Judgments Act, 160�61
    Subsidiary investment, 762
    Substandard classifications, scale of, 566t
    Substandard insurance, transferal of, 576
    Substandard life annuity, 153�54
    Substandard reinsurance, 588�89
    Substandard risk, 367
       incidence of, 564
       removal of rating, 570�71
       treatment of, 565�70
       value of insurance for, 571
    Successive beneficiary provision, 835
    Suicide provision, 894�95
       incontestable clause exclusion, 878
    Super producers, 738
    Supervisors, 716
       brokerage, 740
    Supplemental executive retirement plans (SERPs), 339
    Supplemental life insurance
       in group term insurance, 843�44,
    857�58
       taxation of, 857�58
    Supplementary coverages, 588, 616 n.
    Supreme Court
       criteria for preempting state regulation, 664
       rule of reason approach, 697 n.
       two-test approach of, 674
    Surplus
       apportioning methods for, 506 n.
       cash distribution of, 731 n.
       definition of, 491�92
       distribution of, 497�501
          principles of, 498�99
          special forms of, 499�501
          in stock life insurance companies, 703�4
       divisible, 498�99, 889�90
       general equity of dividend scale and, 503�6
       illustrative dividend computation for, 501�3
       managing, 492�97
       reducing drain on, 575
       required of insurer, 636�37
       sharing of in mutual life insurance companies, 705�6
       sources of, 495�97
    Surrender benefits, 246. See also Surrender options
       cost of, 480
       definition of, 477
       impact of electing, 247�48
       at selected durations for ordinary life and 20-payment life, 249t
    Surrender charges, 75�76
    Surrender Cost Comparison Index, 648
    Surrender dividends, 484
    Surrender options, 54�55, 246
       cash, 247�48
       extended term insurance, 250�54
       reduced paid-up insurance, 248�50
       in variable annuities, 142�43
    Surrender values, 477�78, 506 n. See Cash value
       in gross nonparticipating premium calculation, 459t
       guiding principles of, 478�81
       nonforfeiture legislation and, 481�84
       in nontraditional insurance products, 486
       related to other values, 485�86
    Surviving spouse, life income for, 12
    Survivor benefits
       life income, 616
       life insurance, 230�32
    Survivor needs, ongoing income, 243�46
    Survivorship benefits, 337, 923t
       in endowment insurance, 405�6
       of whole life policy, 65f
    Survivorship policy, 310�11
    TOP
    Table I rates, 315, 316t
    Taft-Hartley Act, 824
    Taft-Hartley trusts, 823�24
    Taggart, Grant, on simplifying need determination, 905, 906
    Takeover attempts, 730 n.
    Target premium amount, 82
       additional premium payments, 83
       always paid, 85f
       payment waived, 85f
       skipped or lower payments, 83
       uneven payment, 86f
    Tax Code
       forced out withdrawals, 98�99
       modified endowment contract provisions, 98, 99
    Tax committee, 715
    Tax deferral, annuity, 288�89
    Tax rate, estate and gift, 291t
    Tax Reform Act of 1986, GSTT of, 295�96
    Taxable distribution, GSTT, 295
    Taxable termination, 295�96
    Taxation
       of beneficiaries, 334�35
       federal transfer tax, 291�96
       of group term life insurance, 848�58
       of Keogh plan, 337
       of life insurance and annuities, 282�312
       of long-term care insurance, 206
       of postretirement group universal life insurance, 867
       of qualified long-term care insurance contracts, 211�12
       of S corporation buy-sell agreements, 354
       of split-dollar plan, 323�24
    Taxes. See also Income tax; Taxation
       in cash needs analysis, 912
       charitable donations and, 236
       demutualization advantages, 708
       gift, 233�34
    Taxpayer Relief Act of 1997, 352
    Technical support, 746
    Technology effects, 792�93
    Term life insurance, 35
       areas of usefulness, 43�44
       convertibility, 38�40
       critique of, 43�47
       death benefits in, 333
       decreasing, 42, 607
       fallacious arguments for, 44�45
       group, 830
          accidental death and dismemberment, 844�47
          added coverages in, 843�48
          contract provisions for, 830�43
          cost of employee coverage, 851�52
          danger of sole reliance on, 44
          dependent, 847�48
          for fewer than 10 full-time employees, 854�55
          supplemental, 843�44
          taxation of, 848�58
       guarding against contestability of, 41
       increasing, 42
         		   investment program objectives of,
    46�47
       level annual premium for, 414�15
       in level premium plan, 28�29
       long-term contracts, 42
       nature of, 36�42
       net single premium for, 401�2
       nonlevel, 42
       paid-up, 55
          surrender benefit of, 253
       re-entry, 40�41
       renewability, 36�37
       single-premium schedule, 41
       versus whole life, 49
       yearly renewable, 25�26
          determining premium of, 26
          limiting period of renewability in, 27
    Terminal illness, accelerated benefits for, 842�43
    Termination
       definition of, 478
       of group term life insurance, 839�42
       probable assumptions of in calculating gross premiums, 456
    Three-factor contribution plan, 503
    Time limit, for conversion, 40
    Top-hat plan, 338
    Total disability
       definition of, 902
       proof of, 902�3
    Trade, internationalization of, 696
    Trade associations, 824
    Trade practices, regulation of, 675
    Training, 745�746
    Transfer tax system, federal, 291
       estate taxes, 293�95
       generation-skipping, 295�96
       gift taxes, 291�93
    Transfer-for-value rule, 283
    Transfers
       within 3 years of death, 301�2
       exempt, 292
       federal gift taxation of, 296�98
    Treble damages, 673
    Trial gross premium evaluation, 460�64
    Triple A rating, 776
    Triple B rating, 776
    Trusteeships, negotiated, 823�24
    Trusts
       for estate liquidity, 309
       formula for building, 907�9
       funding with life insurance, 235�36
       gifts of policies to, 308
       irrevocable life insurance, 339
       rabbi, 340, 355 n.
       revocable, 340
    Twenty-payment life policy, 249
    Twisting, 552�53, 648
    TOP
    Ultimate term insurance, 40�41
    Unauthorized Insurers Model Act, 631
    Unauthorized Insurers Process Act, 660 n.
    Unbundling, 691
    Underwriting
       ethical, 559�60
       of group insurance, 817�22
       of group universal life insurance, 862�63
       of long-term care policies, 217�18
       safeguards for nonmedical insurance, 539�40
    Underwriting department, 719
    Unethical business conduct, 524
    Unethical practices
       of client, 554�55
       professional, 552�54
    Unfair discrimination, 652�53
       in policyowner dividends, 654
    Unfair financial planning practices, 647
    Unfair settlement practices, 654�55
    Unfair trade practices, 552
       antitrust laws and, 670�71
    Unfair Trade Practices Act, 645, 692
       on advertising practices, 646
       amendments on financial planning, 647
       prohibiting of redlining, 560
       prohibitions against misrepresentations, 649
       rebating prohibition, 650
       regulating policyowner dividends, 654
       on settlement practices, 654�55
    Unified credit, 292�93, 295
    Uniform Agent and Broker Licensing Act, 685
    Uniform Periodic Payment of Judgments Act, 157, 160�61
    Uniform Premium Table I, 851�52
    Union Mutual Life Insurance Company, demutualization of, 496
    United States, nonmedical insurance in, 539
         		Universal life insurance, 35, 77�78
       accidental death and waiver of premium, 865�66
       death benefits in, 83�84, 333
       extended term, 250�51
       federal securities and state insurance regulation of, 690�91
       flexibility to last lifetime, 89
       flexible premiums of, 79
       group
          advantages for employees, 860�61
          death benefits of, 863
          dependent coverage, 865
          employee options at retirement and termination of, 866
          enrollment and administration of, 866�67
          expense charges, 864
          interest rates, 864
          loans and withdrawals from, 865
          marketing of, 860
          mortality charges, 863�64
          nature of, 861
          postretirement, 859�67
          premium adjustments, 864�65
          taxation of, 867
          types of, 859�60, 861�62
          underwriting, 862�63
          variable, postretirement, 867�68
       internal funds flow, 87�89
       NAIC regulation of, 276�77
       policy fee income, 770
       policy illustrations for, 260, 262�69
       policy loan effects, 84�87
       prefunding, 79�81
       reduced paid-up insurance for, 250
       for retirement income, 237
       SEC involvement with, 691
       state regulation of, 691�92
       target premium amount in, 82�83
       Type I, A, 85f
       Type I, B, 86f
       variable, 94�99
       withdrawal feature of, 81
    Universal Life Insurance Model Regulation, 692
    UNUM Life Insurance Company, 496
    UP-1984 Table, 370
    Upstream holding company, 724
    Urinalysis, 519, 528 n.
    U.S. Life table, 360t
    U.S. v. South-Eastern Underwriters Association, 625, 665, 669, 675�76
    TOP
    Validation period, 460
    Valuation laws. See Standard Valuation Law; State valuation laws
    Valuation methods
       comparison of, 470t
       full preliminary term, 468�71
       modified preliminary term, 471�74
       net level premium valuation, 470t
    Valuation net premium, 439 n.
    Vanishing-premium policy, 58�59
       design of, 92
    Variable annuity, 140�41
       accumulation units, 141�42, 143t
       annuity units, 142
       cases of, 676
       state regulation of, 683�84
       surrender provisions, 142�43
    Variable life insurance, 68
       adjustable, 77
       cash values of, 73�74
       federal securities laws applied to,
    676�77
       fixed premium in, 69f
       increased investment fund options of, 73
       investment choices of, 70�71
       linkage of death benefits with investment performance, 71�73
         		   policies
          definition of, 680
          dual federal-state regulation of, 685�86
          federal securities laws applied to, 675�77
          SEC regulation of, 677�83
          state regulation of, 683�85
       policyowner risks in, 76�77
       prospectus, 74�76
       SEC objections to, 69
       state regulation of, 684�85
       universal, 94�96
          death benefit and investment performance in, 94�96
          extended term, 250�51
          group, postretirement, 867�68
          income tax burdens for early depletion in, 98�99
          reduced paid-up insurance for, 250
          ultimate flexibility of, 96�98
    Variable Life Insurance Model Regulation, 677
    Veterans Affairs, Department of, 712�13
    Veterans Group Life Insurance (VGLI), 713
    Veterans' groups, 827
    Veterans Insurance Act of 1974, 713
    TOP
    Waiver, 898�99
    Waiver-of-premium provision, 901�3
       for disability income insurance, 186�87
       for disabled employee, 840�41
       incontestability of, 903
       for long-term care, 219
    War exclusion clauses, 526�27, 528 n.
       incontestable clause exclusion of, 878
    The Wealth of Nations (Smith), 547
    Wealth replacement, 305�6
    Weight/height measurements, 515�16
    Weiss Research, 810
    Welfare, for long-term care, 204
    Whole life annuity
       deferred, 409�411, 412t, 413t
       net single premium for, 409�13
       present value of, 429�30
       prospective reserves for, 428�30
    Whole life insurance, 35
       adjustable life, 66�68
       annual premiums of versus yearly term premiums, 31f
       automatic premium loan effects on, 256f
       cost comparison methods for, 100�6
       current assumption, 90�94
       endowment policies, 64�66
       with fixed premiums, 68
       functions of, 62
         		   joint-life, 59�60
       limited-payment, 57�59
       net single premium for, 402
          of male aged 32, 403t
       participating vs. nonparticipating basis, 57
       principal types of, 49�59
       reduced amount of paid-up, 54�55
       reduced paid-up insurance for, 250
       "special," 60�61
       surrender benefits of, 253
       survivorship benefits of, 65f
       versus term insurance, 49
       terminal reserves for, 432f
       universal life, 77�89
       variable adjustable life, 77
       variable life, 68�77
       variable universal, 94�99
       variations of, 64�106
       withdrawal under, 691
    Widow(er), life income needs of, 616
    Willett, Allan, H., defining insurance, 21
    Williams Act, 729�30
    Wisconsin, State Life Insurance Fund of, 713
    Withdrawals
       cumulative, 596
       from group universal life insurance, 865
       limitations on, 595
       rates in gross nonparticipating premium calculation, 457, 458t
       right of, 595�96
       in universal life policies, 81
    Writedowns, 806
    Wrongful death cases, 152�62
    TOP
    Yearly cost method, 124t
    Yearly price of protection method, 105�6
    Yearly rate of return method, 104�5, 124t
    Yearly renewable term insurance, 577�78. See also Term insurance
       supplementary coverage in, 588
    Yearly return methods, 124t
    Yield
       annuities for, 151�52
       curves
          comparative, 799f
          normal, 799�800