Insurance Handbook - Alaska Department of Community and ...

Glossary
part of the responsibility for paying the
health insurance claims of their employees.
Firms that self insure for health claims are
exempt from state insurance laws mandating
the illnesses that group health insurers
must cover.
*SEPARATE ACCOUNT
In the United States, an investment account
maintained separately from an insurer’s
general account to help manage the
funds placed in variable insurance products
such as variable annuities. Contrast with
General account. (See Segregated account)
*SETTLEMENT OPTIONS
Choices given to the owner or beneficiary
of a life insurance policy regarding the
method by which the insurer will pay the
policy’s proceeds when the policy owner
does not receive the benefits in one single
payment. Typically, the owner can elect (1)
to leave the proceeds with the insurer and
earn a specified interest rate, (2) to have
the proceeds paid in a series of installments
for a pre-selected period, (3) to have the
proceeds paid in a pre-selected sum in a
series of installments for as long as the
proceeds last, or (4) to have the insurer tie
payment of the proceeds to the life expectancy
of a named individual through a life
annuity. Also known as optional modes of
settlement. (See Life annuity)
SEVERITY
Size of a loss. One of the criteria used in
calculating premiums rates.
SEWER BACKUP COVERAGE
An optional part of homeowners insurance
that covers sewers.
SHARED MARKET
See Residual market.
120 I.I.I. Insurance Handbook www.iii.org/insurancehandbook
*SHORT-TERM DISABILITY
INCOME INSURANCE
A type of disability income coverage that
provides disability income benefits for a
maximum benefit period of from one to
five years. Contrast with Long-term disability
income insurance.
*SINGLE PREMIUM POLICIES
A type of life insurance or annuity contract
that is purchased by the payment of one
lump sum. (1) A single-premium deferred
annuity (SPDA) is an annuity contract
purchased with a single premium payment
whose periodic income payments generally
do not begin until several years in the
future. (2) A single premium immediate annuity
(SPIA) contract is an annuity contract
that is purchased with a single premium
payment and that will begin making periodic
income payments one annuity period
after the contract’s issue date.
SOFT MARKET
An environment where insurance is plentiful
and sold at a lower cost, also known
as a buyers’ market. (See Property/casualty
insurance cycle)
SOLVENCY
Insurance companies’ ability to pay the
claims of policyholders. Regulations to
promote solvency include minimum
capital and surplus requirements, statutory
accounting conventions, limits to insurance
company investment and corporate
activities, financial ratio tests and financial
data disclosure.
SOLVENCY II
A collection of regulatory requirements
for insurance firms that operate in the
European Union, scheduled to take effect
in 2012.