The right to use the proceeds of a pension plan or insurance policy to purchase an annuity at a minimum rate guaranteed in the contract. Insurers are exposed to the risk of falling interest rates and may use derivative contracts to protect themselves against potential losses. See also OPEN MARKET OPTION.
Tag: RAW
Guaranteed asset protection (GAP)
Pays the difference between the amount outstanding on a loan and the amount paid by an insurer if the asset, e.g. a car, is written off or stolen. It prevents the former asset owner being left with a debt. Cover is available on cars, caravans, motor cycles and light commercial vehicles and non-vehicular assets. See VEHICLE REPLACEMENT INSURANCE.
Guaranteed bonds
See: Growth Bonds; INCOME BONDS.
Guaranteed cash value
Guaranteed amount available to the insured on surrender of a life insurance policy based on a table of guaranteed values scaled to the number of years in which the policy is in force.
Guaranteed cash value (Life Insurance)
A term for a concept in whole life insurance. Under a whole life insurance policy, the cash value of the policy increases over the policy’s term until the insured reaches the age of 100. At this age, the cash value of the policy will be equal to the face amount of the policy.
Guaranteed Cost Premium
Insurance which does not vary with the insured loss experience. Such a premium is charged on a prospective basis, fixed or adjustable or on a specified rating basis.
Guaranteed cost premium (Liability Insurance/Worker’s Compensation)
A premium based on another factor besides loss experience, for example, a certain specified rating. The cost is guaranteed because it will never be adjusted on the basis of the insured’s loss experience during the policy’s term.
Guaranteed cost reinsurance
A form of reinsurance that has no adjustable features. The final premium rate for the coverage is exactly as set forth ab initio in the contract.
Guaranteed eligibility
Specific period (3 to 6 months) in which patients who are insured in prepaid health plans are eligible for Medicaid regardless of their actual eligibility for Medicaid. A state may apply to the Centers for Medicare and Medicaid Services (CMS) for a waiver to have this put into its contracts.
Guaranteed for Freight
Freight payable whether the goods are delivered or not, provided the failure to deliver the goods resulted from causes beyond the carrier’s control.