The rate of return earned on the premium the company has invested over the term of the policy.
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(i) The relationship of the assured, or reassured, to the subject matter exposed to risk. (ii) The sum paid for use of money, a participation. (iii) A property in land or chattels used in conjunction with the terms, right, estate and title.
Insurance Encyclopedia
Interest adjusted cost (Life Insurance)
A way of calculating the true cost of life insurance that accounts for the interest the money used to pay premiums would have accrued if the money had been invested.
Interest and Liabilities Agreement
A reinsurance contract between the ceding insurer and one or multiple reinsurers in which the percentage of participation of each reinsurer is specified.
Interest clause
1. Reinsurance clause under which the reinsurer and the reinsured share any interest awarded on damages in proportion to their respective shares of the actual loss in those cases where the reinsured’s net loss exceeds a given level, e.g. £250,000. In long-tail liability business large claims may take years to settle and interest may be awarded. 2. Treaty clause describing the business and limits covered.
Interest option
Provision in a life insurance policy in which the proceeds of the policy are temporarily left on deposit with the insurance company and the money earned on those proceeds is paid either annually, semiannually, quarterly, or monthly to the beneficiary.
Interest or No Interest
Phrase at one time used in Marine Insurance Policy where it was doubtful whether the insured had insurable interest. A policy made with these words is deemed to be a gaming or wagering contract and is void.
Interest profit
The profit attributable to a life insurer earning a higher rate of interest than that assumed at a previous valuation. The profit becomes a part of the surplus.
Interest rate risk
A risk associated with investments. By investing in bonds, the investor runs the risk that he or she will purchase at a certain interest rate and the economy will improve after the purchase, making current interest rates higher than it was at the time of purchase. The investor is then locked into a lower interest rate.
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A risk faced by investors who invest in bonds characterized by an individual being locked into a lower interest rate when interest rates are generally increasing in the economy.
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UK: Risk that changes in interest rates will affect the resale value of debt securities held in a fund portfolio, e.g. a pension fund. There is an inverse relationship between the rate of interest and the value of the underlying security such as a bond.
Interest sensitive provision (Life Insurance)
A provision that guarantees a certain amount of interest plus an additional percentage if the current interest rate is higher than a certain percentage specified in the contract. This provision is usually found in flexible premium policies.
interest-adjusted cost
Represents the average annual cost of a life insurance policy. This amount is obtained by calculating the premiums, dividends, and cash values. This cost amount is one figure calculated under the interest-adjusted net cost (IANC) method for comparing the costs of life insurance policies. Also called surrender cost index (SCI) .