The amount of money needed to buy a medical care program. Either the premium cost for an insured program or an amount charged for anticipated claim loss and other fees.
Insurance Encyclopedia
Funding method
System used by employers to pay for health insurance plans such as prospective premium payment, retrospective premium payment, shared risk, or self-funding.
Funding plan
The plan to ensure that money will be available to pay out pension benefits as they fall due. It involves setting contributions at a certain level, such as the standard contribution rate.
Funding ratio
The funding level expressed as a percentage.
Funding standard account
Bookkeeping account that is kept to determine if a defined benefit pension plan (DBPP) meets minimum funding standards set by law. Some of the entries to the account are derived actuarially. Failure to satisfy minimum funding standards can cause penalty taxes and enforcement actions. Also called minimum funding standard account and minimum funding standards .
Funding vehicle
Legal document (insurance contract) that states the policies and management of pension funds by a funding agency such as an insurance company. Also called funding instrument .
Funds at Lloyd’s
FAL is members’ capital held in trust at Lloyd’s to pay claims when premiums trust funds are insufficient. The amount is calculated at member level using the risk-based capital model. The amount for individuals is equal to a ratio between 20 per cent and 30 per cent of the premiums they are permitted to write (depending on membership type, nature of risk, liquidity and resources). The ratio for corporate members is 50 per cent (except for dedicated corporate motor at 40 per cent). The funds must be maintained in value and be in a Council-approved form, i.e. readily realisable assets such as cash securities, letters of credit and bank and other guarantees. See LLOYD’S CHAIN OF SECURITY.
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Funds of an approved form that are lodged and held in trust at Lloyd’s as security for a member’s underwriting activities. They comprise the members deposit, personal reserve fund and special reserve fund and may be drawn down in the event that the member’s syndicate level premium trust funds are insufficient to cover his liabilities. The amount of the deposit is related to the member’s premium income limit and also the nature of the underwriting account. (See risk based capital).
Funds at Lloyd’s for Lloyd’s
Funds of an approved form that are lodged and held in trust at Lloyd’s as security for a member’s underwriting activities. They comprise the members deposit, personal reserve fund and special reserve fund and may be drawn down in the event that the member’s syndicate level premium trust funds are insufficient to cover his liabilities. The amount of the deposit is related to the member’s premium income limit and also the nature of the underwriting account. (See risk based capital).
Funds withheld
Assets that would normally be paid over to a reinsurer but are withheld by the cedant to permit statutory credit for non-admitted reinsurance, to reduce a potential credit risk or to retain control over investments. (See: Rating)
Funeral expenses insurance
Pre-paid plans purchased by a lump sum or periodic payments. A plan covers the funeral director’s fees and expenses and disbursements’, i.e. doctor’s fees, church fees, cost of a minister, cremation/burial fees, grave digging and cost of a plot. These plans have superseded the limited amounts available under industrial life and friendly society insurances.