(1) Giving the wrong age for oneself on an application for Life and Health Insurance or for a beneficiary who is to receive benefits on a basis involving his life contingency. (2) A provision in most Life and Health policies setting forth the action to be taken if a misstatement of age is discovered after the policy is issued. This is one of the uniform provisions for Individual Health Insurance policies.

The pure mortality cost of a Life Insurance policy from its inception to its maturity date, divided by the number of years the policy is to be in force. See also Level Premium Insurance.

This term has several meanings, only a few of which will be mentioned here. (1) Under a modified coinsurance provision in Life Reinsurance, the ceding insurer retains and maintains the entire reserve, with the annual increase in reserve being transferred to the ceding insurer by the reinsurer at the end of the year. (2) Under Preliminary Term Insurance, a modified reserving system permits at least part, if not all, of the first year’s net premium on a Life Insurance policy to be used to meet first-year acquisition costs and claim expenses, and requires that part of the renewal loading be added to the policy reserve accumulation. (3) Any premium that is altered from the regular premium for similar Life policies, such as the premium for a Modified Life policy.

The reserve needed by an insurer to cover net level policies which are in their later years. Loosely speaking, the level premium system of paying for a long-term Life or Health policy involves overpayment in the early years and underpayment in the later years.

An Ordinary Life contract under which the premiums are modified so as to be lower than normal for the first three to five years, and higher than normal after that. A special case is a level Term policy, under which no part of the premium goes towards savings, that is automatically converted to a Whole Life policy at a designated time.

(1) See the third definition of Net Premium for the definition applicable to participating Life Insurance policies. (2) In a non-participating policy, the book rate.

In the calculation of premium, it is the rate of return on the company’s investment of premium dollars over the lifetime of the policy. Insurance company investment experience will affect life insurance cost.

Under Universal Life insurance, the level death benefit option provides the greater of (1) the face amount of the policy at the time of death, or (2) a stipulated percentage of the accumulation value.

Usually a Life Insurance agent. It can be more narrowly defined as a risk appraiser. See also Risk Appraiser.

A method of determining the cost of Life Insurance that takes into account the interest that might have been earned on premium money if it had been invested rather than put into premiums.