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AALU The Association for Advanced Life Underwriting (AALU), a conference of NALU is a national association of nearly 2,000 advanced life insurance professionals who are committed to preserving insurance through political involvement. AALU's members sell and service substantial volumes of life insurance for business continuation, estate and retirement planning, wealth accumulation and transfer, executive compensation, charitable planning, and employee benefits for individuals, families, estates, small businesses and corporations.
Accelerated Benefits Benefits available in some life insurance policies before death, usually triggered by long-term, catastrophic or terminal illness, which advance a portion of the death benefit of the insurance policy. Also known as Living Benefits .
Accidental Death Benefits A provision added to a life insurance policy for payment of an additional benefit in case death results from an accident. This provision is often called Double Indemnity .
Activities of Daily Living (ADLs) Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting, and transferring. Many long-term care policies use the inability to do a certain number of ADLs (such as 2 out of 6) to decide when to pay benefits.
Actuarial Assumptions Assumptions that actuaries make in regard to earnings, mortality, turnover, interest, and other areas necessary for calculating premium rates.
Actuarial Valuation The valuation of a plan by an actuary to determine if assets are sufficient to meet any payouts.
Adjustable Life Insurance A life insurance contract designed specifically to allow the policyowner to alter the policy's plan by changing the amount of the coverage or the amount of the premium. The insurer calculates the specific plan of insurance that can be provided based on the requested death benefit and premium. Therefore, an adjustable life insurance policy can use insurance plans that range from a term insurance policy of short duration to a limited-payment whole life insurance policy.
Affiliate A "referral only" agent of SSF who does not sell the product to the consumer.
Agent An authorized representative of insurance companies who sells and services insurance contracts.
Agent's Statement A portion of the insurance application in which the agent lists any knowledge or opinions concerning the applicant not otherwise revealed in the application.
Applicant The person, usually the owner of an existing life insurance contract, who indicates an interest in the sale of the contract.
Application A statement of information made by someone applying for life insurance or a life settlement. The information gathered helps the life insurance or settlement company assess whether the risk presented by the applicant is acceptable and provides specific information about the insured and the policy.
APS Attending Physician's Statement - medical reports from one's physician.
Assignee The party to whom contractual rights are transferred in an assignment.
Assignment The legal transfer of one party's interest in an insurance policy to another party.
Assignemnt for Value When the policyowner receives something of value as an inducement to transfer his or her ownership interest to someone else.
Assignment of Benefits The transfer of benefits to another. This could be used to assign a portion of the death proceeds to someone other than the original beneficiary(ies) named when the policy was issued.
Assignor The person or party who transfers the contractual rights in an assignment.
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Bankrupt A person who upon his own petition or that of his creditors is adjudged insolvent by a court and whose property is administered for and divided among his creditors under a bankruptcy law.
Basic Death Benefit The death benefit as originally listed, excluding any supplementary riders or provisions.
Beneficiary The person or financial instrument (for example, a trust fund), named in the policy as the recipient of insurance money in the event of the insured's death.
Benefits Payments made by an insurance company when an insurance claim is approved, such as at time of death, retirement, or disability.
Broker An individual or organization that is licensed by the state and seeks insurance on behalf of a customer. Brokers do not work with a single entity but can work with multiple insurance companies or customers.
Business Continuation Insurance A type of business insurance designed to provide funds so the remaining partners in a business, or the remaining stockholders in a closely-held corporation, can buy the business interest of a deceased or disabled partner or stockholder.
Business Life Insurance Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee (also known as key person insurance).
Buy/Sell Agreement An agreement made by the part-owners of a business to purchase the interest of a disabled or deceased owner. Values of the owner's share of the business and the terms of the buying and selling are established before death or at the beginning of a disability.
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Cancelable Policy An insurance policy that can be terminated at any time by the insurer.
Cancellation Termination of an insurance policy or coverage while the policy is still in effect.
Capacity The largest amount of insurance the insurer will underwrite.
Career Agent An agent who works full-time out of the insurance company's field office instead of being an independent contractor or broker who has an agreement to do business with the insurance company.
Case Manager Stone Street Financial representative who will be administering the case through the process. Point of contact.
CaseTrackT The policy tracking system used by Stone Street Financial for the benefit of the Partners to provide real time case status and instant notification of status changes.
Cash Value In a life insurance policy, the amount of money, before adjustment for factors such as policy loans or late premiums, that the policyowner will receive if the policyowner allows the policy to lapse or cancels the coverage and surrenders the policy to the insurance company. Cash values are a feature of most types of permanent life insurance, such as whole life and universal life. Also called inside build-up and policyowner's equity.
Cash-Payment Option An option in life-insurance plans in which dividends are paid in cash to the policyholder.
Cash-Refund Option An insurance option that states that if any proceeds remain after the death of the beneficiary, the balance of the benefits will be paid to the contingent payee in a lump sum.
Certificate of Insurance A statement issued to individuals insured under a group policy, setting forth the essential provisions relating to their coverage.
Certified Financial Planner (CFP) A professional designation conferred by the College of Financial Planning to candidates who pass examinations demonstrating a high level of competence in the analysis and development of client-oriented personal financial plans. To qualify for this designation, a person must meet both educational and work experience requirements.
Chartered Financial Consultant (ChFC) A professional designation conferred upon an individual by the American College as a result of the successful completion of financial courses. This designation indicates that the individual has a broad and in-depth knowledge of the financial planning process as well as the various financial products available in the marketplace. ChFC candidates must pass a national exam in insurance, investment, taxation, employee benefits plans, estate planning, accounting and management.
Chartered Life Underwriter (CLU) A professional designation conferred upon an individual by the American College as a result of the attainment of high standards of education and proficiency in the art and science of life underwriting. The CLU program delves deeply into the life insurance business, its place in the economy, its operation and distribution systems, and its investment basis. CLU candidates must pass a national examination that covers life insurance, insurance law, taxation, group benefits, investments, and retirement and estate planning.
Chronic Illness A condition which restricts a person from performing everyday functions (see ADL) and activities they usually do without help.
Churning The practice where policy values in an existing life insurance policy are utilized to purchase another insurance policy with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation
  1. without a reasonable basis for believing that the replacement will result in an actual benefit to the policyholder.
  2. in a fashion that is fraudulent, deceptive, or otherwise misleading or that involves a deceptive omission.
Claim Notification to an insurance company that payment of an amount is due under the terms of the policy.
Clean Sheeting The practice of concealing adverse health information from an insurer or deliberately placing insurance applications below non-medical limits to avoid full underwriting.
Closing The process of finalizing the purchase of insurance or other financial products, by having the purchaser read and sign the final documents as well as any other legal details.
Combination Plans Life insurance policies that combine features of term and whole life policies.
Commission The fee, generally a percentage of the commitment amount, paid to a Partner for assisting in the sale of a policy.
Commitment to Purchase An offer from Stone Street Financial that it is interested in purchasing a policy at a stipulated price; see contract of adhesion.
Competency Qualification based on the meeting of certain minimum requirements of age and soundness of mind.
Conditionally Renewable Policy An insurance policy that the insurer can refuse to renew for predetermined reasons.
Confirmation Certificate Certificate provided to a beneficiary, stating the amount of insurance proceeds, current interest rate, and other account information.
Consumer Report An investigative report of an individual's credit history or other personal information; regulated under the Fair Credit Reporting Act.
Contestability Period The time period (usually two years) at the beginning of an insurance policy during which an insurer can challenge the death claim based on material misrepresentations submitted at time of issue.
Conversion Privilege The right to convert from group to individual coverage or from individual term to permanent insurance without evidence of insurability.
Corporate Owned Life Insurance (COLI) Any life insurance a corporation pays for and pays death benefits to the corporation rather than to the beneficiaries of an insured owner or employee. Generally used with programs that throw off substantial income from tax savings where the company leverages the insurance's tax-free inside buildup and death benefits against its tax deductions for interest paid on loans unrelated to the life insurance.
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Death Benefit The amount of money paid or due to be paid when a person insured under a life insurance policy dies. This amount does not include adjustments for outstanding policy loans, dividends, paid-up additions, or late premium payments.
Declination The rejection by a life insurance or settlement company of an application for life insurance or life settlement, usually for reasons of health or occupation.
Dependent An individual who relies on someone else for support.
Dirty-sheeting The underlying insurance policy was procured by a healthy person who in turn sells the policy to a viatical/life settlement firm by claiming the they have serious health problems. As evidence of these serious health problems, the person submits to the viatical/life settlement firm the forged medical records of another person.
Dividend An amount of money returned to the holder of a participating policy. The money is a partial refund of the premium paid. It results from actual mortality, interest and expenses that were more favorable than expected when the premiums were set.
Dual Life Insurance Another name for Second-to-Die Life Insurance .
Due Diligence The care that a reasonable person/company exercises under the circumstances to avoid harm to other persons or their property.
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Endowment Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.
Estate Planning An insurance program designed not only to provide funds for the prospect's dependents upon the death of the prospect, but also to conserve, as much as possible, the personal assets that the prospect wants to bequeath to heirs. Estate planning usually involves accountants, lawyers, and the trust officers of banks, as well as insurance agents.
Expiration Date The date when an insurance policy ends.
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Face Amount The amount stated on the face of the insurance policy that will be paid in case of death or at maturity. It does not include dividend additions or additional amounts payable under accidental death or other special provisions.
Fair Credit Reporting Act (FCRA) Federal law requiring consumer-reporting agencies to be impartial and maintain the consumer's right to privacy.
Family Policy A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the primary insured and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
Fence-posting The underlying insurance policy was procured as a result of the submission of an application using a fictitious person or by using a real person without their knowledge.
Fiduciary A person or organization, which holds, manages and has discretionary authority and control over money belonging to another person or organization, or who renders investment advice in exchange for compensation. When an insurance company manages pension funds, the insurance company is acting as a fiduciary.
Fraud Deceit, trickery, or breach of confidence used to gain some unfair or dishonest advantage.
Fraud Prevention Program Stone Street Financial program in order to observes the highest ethical standards and that its fraud prevention efforts comply with the state and federal requirements. To prevent fraud against Stone Street Financial and its financing sources, including its reinsurers. To prevent fraud against others, including insurance companies and the sellers of life insurance policies. To strengthen consumer confidence in Stone Street Financial. To enhance company profitability. To contribute to the life settlement industry's efforts to eliminate life settlement and insurance fraud.
Fraudulent Claim A claim in which the claimant knowingly uses false information in order to collect on the policy.
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General Agent (GA) The individual in charge of a field office or an insurer that uses the general agency distribution system. The general agent is an independent entrepreneur who is under contract to the insurer.
Grace Period A period (usually 31 days) following each premium due date, other than the first due date, during which an overdue premium may be paid. All provisions of the policy remain in force throughout this period.
Group Life Insurance Life insurance that usually does not require medical examinations, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example, a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
Guaranteed Insurability An option that permits the policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.
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Illustration Date Date the inforce illustration is produced by the insurance carrier.
Incontestable Clause A provision in the insurance policy that defines a time limit, generally two years, after which the insurance company agrees not to dispute the validity of the policy. During the contestable period, the insurance company may contest the contract based on any misstatement or presentation of false information by the insured at the time of application.
Inforce Illustration Policy statement provided by insurance carrier projecting future policy values for a contract that is currently in force. The values used to initiate the illustration are the actual policy values on the illustration date.
Institutional Funding The use of a line of credit from a large bank known worldwide, in order to provide funds for purchasing life settlements.
Insurability Acceptability to the company of an applicant for insurance.
Insurance Agent A sales representative of an insurance company.
Insured The person on whose life the policy is issued.
Insurer The insurance company or party that provides the insurance policy.
Irrevocable Beneficiary A beneficiary who cannot be removed later by the policyholder, without the beneficiary's consent.
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Joint and Survivorship Option Insurance settlement option in which payments are made to multiple parties and continue until all parties are deceased.
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Key-Person Insurance Life insurance purchased by a business on the life of a person (usually an employee) whose continued participation in the business is necessary to the firm's success and whose death or disability would cause financial loss to the company.
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Lapse Termination of an insurance policy because premiums were not paid on time.
Life Expectancy The average number of years of life remaining to a person at a particular age based on a given set of age-specific death rates, and the mortality condition of the individual in the period mentioned.
Life Insurance Insurance that provides protection against the economic loss caused by the death of the person insured.
Life Insurance Carrier A company issuing life insurance coverage.
Life Settlement Lump sum cash settlement paid to an insurance policyholder in exchange for contract ownership rights.
Life Settlement Provider The company that becomes the new policy owner in return for a payment made to the seller. The buyer becomes the policy owner, must pay all future premiums, and eventually collects the entire death benefit from the insurance company.
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Maturity Value The amount payable under a whole life insurance policy if the insured person lives to the last age on the mortality table on which the values of the contract were based.
Misrepresentation (1) A false or misleading statement made to induce a prospect to purchase insurance. Misrepresentation is a prohibited insurance sales practice. (2) A false or misleading statement made by an applicant for insurance. Certain misrepresentations provide a basis for the insurer to avoid the policy.
Misstatement-Of-Age Provision A provision in an insurance policy that delineates the results if it is learned that the insured has misstated their age, intentionally or unintentionally, in the application. (Age is often a significant factor in the calculation of premiums and benefits.)
Mortality The death rate; ratio of number of deaths to a given population.
Mortality Rate The frequency of death within a particular group.
Moratlity Table A statistical table showing the death rate (probability of death) at each age.
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NAIC (National Association of Insurance Commissioners) An association of state insurance commissioners established in order to create consistent insurance regulations.
Net Premium The amount of money that must be collected in order to meet the benefits to be paid.
Notary Public A public officer authorized by the state to verify the identity, authenticity and intent of people signing documents.
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Partner Brokers and insurance agencies who desire to concentrate on Life Settlements and are authorized representatives of Stone Street Financial.
Payee The person to whom benefits are payable.
Policy A written document that serves as evidence of an insurance contract and contains the pertinent facts about the policyowner, the insurance coverage, the insured, and the insurer.
Policy Anniversary The annual anniversary of the date on which a policy was issued.
Policy Fee An additional cost added to the premium to cover expenses. It is a set fee that is not based on policy size.
Policy Loan Under an insurance policy, the amount that can be borrowed at a specified rate of interest from the issuing company by the policyholder, who uses the value of the policy as collateral for the loan. In the event the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the amount payable.
Policy Proceeds The amount of benefits the beneficiary receives after all adjustments, fees, and other factors are taken into consideration.
Policy Provisions Statements describing the operation of the policy.
Policy Replacement When a policy which has been in force for a period of time is replaced with a newly issued contract.
Policy Summary A summary of the policy, containing any data required by law, that is given to the applicant during the application process.
Policyholder The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.
Power of Agency The agent's right to act on behalf of an insurer.
Power of Attorney A written document making an appointment which delegates medical care and property management decisions to another party.
Premium The payment, or one of a series of payments, required by the insurer to put an insurance policy in force and keep it in force.
Price Commitment A communication between Stone Street Financial and its Partner which represents the value a specific life insurance policy is worth. This amount is non-negotiable.
Pricing Date Date the value available to pay commissions, expenses and the Lifetime Settlement is determined using the Pricing Model.
Pricing Horizon Period of time over which Stone Street expects to realize a specified internal rate of return (IRR) on a Life Settlement. This is used to determine the Target Payout amount for the Life Settlement.
Pricing Model Proprietary program designed to determine the purchase price of an insurance contract based on policy values and actuarial information.
Primary Beneficiary The beneficiary with the first right to collect on policy benefits.
Proceeds The money the insurance company pays the beneficiary(ies).
Producer The person or company who represents the seller of the policy to the life settlement company. The producer is paid a commission by the buyer if the sale is completed.
Purchaser Individual or entity who becomes owner of the policy in return for cash payment to the seller.
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Quote Estimates of the cost of insurance, based on the initial information given by the applicant (non-binding).
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Representation Statements by insurance applicants as to some past or existing fact or circumstance. Such statements must be true to the best of the applicant's knowledge and belief, but are not warranted as exact in every detail.
Rider An amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or excluding certain conditions from coverage.
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Secondary Beneficiary The party who will receive insurance proceeds should the primary beneficiary die before the insured person. Also called Contingent Beneficiary .
Second-to-Die Life Insurance A form of insurance, traditionally used as an estate-planning tool, that pays a death benefit only upon the second death. Its main purpose is to pay estate taxes upon the death of the second insured. Because it is based on joint life expectancy, its premium is less than the total premiums for individual policies on the same two lives.
Seller Individual or entity who owns the insurance policy being sold.
Senior Settlement See Life Settlements
Settlement Agreement The agreement as to how policy proceeds will be paid to the beneficiary.
Settlement Option Payments Disbursement of benefits in multiple payments rather than in a lump sum.
Sole-Proprietorship Insurance Insurance on the life of the sole proprietor of a business. Sole proprietorship insurance is used either to pay the salary of someone hired to run the business after the owner's death or disablement or to compensate the owner's family for the loss of potential income due to the failure of the business after the owner's death or disability.
Split-Dollar Insurance Plan A form of employee benefits in which the employee has individual life insurance that is partially paid for by the employer.
Straight Life Insurance Whole life insurance on which premiums are payable for life.
Surrender To cancel an insurance policy before its maturity date.
Surrender Charge A fee charged when the policy is surrendered.
Survivor Income Benefit Insurance Life insurance that provides income benefits to a survivor (often limited to a spouse or children).
Survivorship Clause In life insurance, a provision requiring that the beneficiary survive the owner of the policy by a set amount of time in order to receive the benefits.
Survivorship Insurance See second-to-die insurance.
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Target Payout The present value of future policy cash flows as determined by the Pricing Model. This is the amount available to pay commissions, expenses, and the life settlement on a specified contract.
Term Insurance Life insurance under which the benefit is payable only if the insured dies during a specified period.
Terminal Illness or Terminally Ill Defined by HIPPA (see above), a person certified by a physician to have an illness or physical condition that reasonably can be expected to result in death within 24 months.
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Underwriter (1) The person who assesses and classifies the potential degree of risk that a proposed insured represents. (2) The person or organization that guarantees that money will be available to pay for losses that are insured against. In this sense, the insurance company is the underwriter.
Underwriting The process of classifying applicants for insurance or life settlements by identifying such characteristics as age, sex, health, occupation and hobbies. People with similar characteristics are grouped together and are charged a premium based on the group's level of risk. The process includes rejection of unacceptable risks.
Universal Life Insurance A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at varying rates.
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Variable Life Insurance Investment based life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The assets fluctuate according to the investment experience of funds managed by the life insurance company. Premium payments may be fixed as to timing and amount (scheduled premium variable life) or subject to change by the policyholder (flexible premium variable life). Because variable life policies have investment features, life insurance agents selling these policies must be registered representatives of a broker-dealer licensed by the National Association of Securities Dealers and registered with the Securities and Exchange Commission.
Verification of Coverage (VOC) Confirmation from the Insurance Carrier on the specifics of an inforce life insurance policy. The VOC form asks specific questions about all aspects of the policy, such as whether it is past the contestability and the suicide period, if the policy has already been assigned to someone else, if there is an irrevocable beneficiary, what the premiums are, if the premiums are current, etc.
Viatical Settlement Lump sum cash settlement paid to an insurance policyholder in exchange for contract ownership rights, where the insured has a chronic or life threatening illness with a life expectancy of two years or less.
Viatication / Viaticating Transacting a viatical settlement process.
Viator The person who submits his or her life insurance policy for a viatical settlement.
Void Contract A contract that is not valid for any reason, including legal issues.
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Warehousing The practice of holding an application for the sale of a life insurance policy, usually with underlying cleansheeting issues, until the policy clears the contestability period.
Wet Ink The transfer of a newly issued life insurance policy purchased with the intent to resell it at a profit (before the ink on the policy is dry).
Whole Life Insurance Life insurance that remains in force during the insured's entire lifetime, provided premiums are paid as specified in the policy. Whole life insurance also builds a savings element (called the case value) as a result of the level premium approach to funding the death benefit.
 
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