LOMA Glossary

The LOMA Glossary of Insurance and Financial Services Terms

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P&C insurance company. See property/casualty insurance company.

package policy. An insurance policy that provides coverage from two or more types of insurance—property and liability, for example—in one policy.

package selling. In insurance sales, a prospecting method that involves developing a standardized sales presentation for a relatively simple insurance plan such as mortgage insurance and then looking for prospects who are likely to need that coverage.

paid-up addition. See dividend addition.

paid-up additional insurance dividend option. A policy dividend option under which the insurer uses any declared policy dividend to purchase paid-up additional insurance on the insured’s life. The paid-up additional insurance is issued on the same plan as the basic policy and in whatever face amount the policy dividend can provide at the insured’s age at the time of purchase.

paid-up additions option benefit. A supplemental life insurance policy benefit offered in connection with a whole life insurance policy that allows the policyowner to purchase paid-up additions to the policy on stated dates in the future without providing evidence of the insured’s insurability.

paid-up policy. A life insurance policy that requires no further premium payments but continues to provide coverage.

par policy. See participating contract.

par value. (1) For a bond, the amount of money originally borrowed and that must be repaid at maturity; the designated legal monetary value assigned to each bond—generally $1,000. Also known as bond principal, face amount, maturity value, face value, or simply principal. (2) For stock, the designated legal value assigned to each outstanding share of common stock.

paramedical report. The portion of an individual life insurance application that contains (1) a proposed insured’s answers to medical history questions recorded by a paramedical examiner and (2) the results of an examination that a paramedical examiner conducts. A paramedical examiner is a medical provider, other than a physician, such as a nurse or physician's assistant.

partial disability. A disability that prevents the insured either from performing some of the duties of his usual occupation or from engaging in that occupation on a full-time basis.

partial disability coverage. Partial disability coverage provides income replacement benefits to an insured whose disability prevents him either from performing some of the duties of his usual occupation or from engaging in that occupation on a full-time basis. Partial disability coverage is typically offered as a supplemental benefit to a disability income policy.

partial surrender. See withdrawal.

partial surrender provision. See policy withdrawal provision.

partial withdrawal. See withdrawal.

participating contract. An insurance or annuity contract that pays the contract owner a policy dividend when the insurer experiences favorable financial results. The portion of the insurer's earnings that is available for distribution is called the divisible surplus. Also known as a participating policy, a par policy, or a with profits policy. Contrast with nonparticipating policy.

participating policy. See participating contract.

participation limit. In reinsurance, a reinsurer's maximum monetary limit on coverage currently in force or yet-to-be-placed on any given person. If the total amount of insurance—currently in force plus yet-to-be-placed—with all companies on a given person exceeds a reinsurer’s participation limit, the reinsurer will automatically refuse to provide reinsurance on a policy covering that person.

participation rate. For equity indexed annuities, a percentage rate an insurer establishes to indicate how much of an increase in the index-linked investments will be used to calculate earnings for the annuities. For example, if the participation rate is 60 percent and the calculated change in the associated index is 8 percent, then the insurer will credit equity indexed annuities with 4.8 percent (.6 multiplied by .08) earnings. An insurer usually guarantees the participation rate for a set period, which may be from one year up to the entire term.

partnership. A type of company that is owned and operated by two or more people (the partners), who jointly earn all company profits and are responsible for all company debts. A partnership dissolves upon the death or withdrawal of one of the partners.

partnership insurance. A type of business insurance that provides cash so that the remaining partners in a business can buy the business interest of a deceased or disabled partner. See also business continuation insurance plan.

Patriot Act. See USA PATRIOT Act.

payback period. The number of years required for the estimated future earnings from an investment to equal the amount initially invested.

payee. (1) The person or entity who is to receive insurance policy proceeds in accordance with the terms of a settlement agreement. ( 2) The person or entity designated to receive the periodic income payments under an annuity contract.

payout annuity. An annuity in the payout period.

payout options. The choices an annuity contract owner has as to how the insurer will distribute the funds in an annuity during the payout period. Typically, insurers offer the following four options: (1) The lump sum distribution method allows the contract owner to receive the balance of his account in a single payment. (2) The fixed period option provides that the annuity’s accumulated value will be paid out over a specified period of time. (3) The fixed amount option provides that the annuity’s accumulated value will be paid out in a preselected payment amount until the accumulated value is exhausted. (4) A life annuity option provides that periodic income payments will be tied in some manner to the life expectancy of a named individual. The term "payout options" is more frequently associated with annuities, while the term "settlement options" is more frequently associated with life insurance policies.

payout period. For an annuity contract, the period during which the insurer makes periodic income payments to the payee. Also known as the liquidation period.

PBA. See principles-based approach.

PBGC. See Pension Benefit Guaranty Corporation.

PCP. See primary care provider.

PDB. See Producer Database.

pension. A lifetime monthly income benefit that begins at retirement.

Pension Benefit Guaranty Corporation (PBGC). In the United States, a federal corporation designed to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum.

pension plan. An arrangement under which a plan sponsor provides plan participants with a lifetime monthly income benefit that begins at retirement.

per capita beneficiary designation. A life insurance policy beneficiary designation in which the policy benefits are to be paid to a class of people, such as "my children," and all class members who survive the insured share the policy proceeds equally. For example, assume that a policyowner designated "his children" as the beneficiary of his life insurance policy. Also suppose that the policyowner had two children: Amy and Bob. If Amy predeceased her father, the policy's benefits would be paid entirely to Bob as the only surviving member of the class. Contrast with per stirpes beneficiary designation.

per stirpes beneficiary designation. A life insurance policy beneficiary designation in which a policy's proceeds are left to a class of people, such as "my children," and to which the descendants of a deceased class member take the deceased class member’s share of the policy proceeds by representation. Suppose a policyowner specified "his children" as the policy's beneficiary. Also suppose that the policyowner had two children: Amy and Bob; and that Amy had one child. If Amy predeceased her father, the policy's benefits would be divided so that Bob would receive one-half of the proceeds and Amy's child would receive the other half. Contrast with per capita beneficiary designation.

percentage rating method. A method of establishing individual health insurance premiums for substandard risks in which the insurer adds to the standard premium amount an extra percentage of that standard premium amount to reflect the additional risk.

percentage-of-income rule. A tool underwriters use to determine ability to pay premiums which stipulates the amount of money a proposed insured can afford to spend annually on insurance according to a specified percentage of the proposed insured’s current gross earned and unearned income.

period budget. A type of budget that covers a specific time frame, such as one month or one year, and expires at the end of that time frame. Contrast with rolling budget.

period certain. The stated period over which the insurer will make periodic income payments for a period certain annuity.

period certain annuity. An annuity with a period certain payout option. A period certain annuity is payable for a stated period of time, regardless of whether the annuitant lives or dies. Also known as an annuity certain.

permanent flat extra premium. In individual life insurance underwriting, an amount added to the premium for cases in which a nonmedical risk is expected to remain constant throughout the life of the policy. See also flat extra premium method. Contrast with temporary flat extra premium.

permanent life insurance. See cash value life insurance.

persistency. The retention of business that occurs when an insurance policy remains in force as a result of the continued payment of the policy’s renewal premium. Also known as retention.

persistency bonus. A sum of money paid as compensation to an insurance producer when a policy continues in force beyond an initial period, usually five years.

persistency rate. A measurement of the persistency of a block of insurance policies determined by the percentage of business in force at the beginning of a specified period that remains in force at the end of the period. Contrast with lapse rate.

personal factor. In the underwriting of insurance, a lifestyle choice that can significantly affect a person’s health or longevity.

personal history interview (PHI). During the underwriting process, a conversation between an underwriter or another insurance company employee and the proposed insured in which the underwriter verifies the accuracy of information already received about the proposed insured and obtains any additional information needed for underwriting.

personal information. In insurance underwriting and administration, information gathered about an individual in connection with specified transactions and from which judgments can be made about the individual’s personal characteristics, such as character, habits, finances, credit, and health.

personal loan. See installment credit.

personal property. Any property that is not real estate; examples include automobiles, computer equipment, and furniture. Contrast with real property.

personal risk. The risk of economic loss associated with death, poor health, injury, and outliving one’s economic resources.

personal risk factor. In the underwriting of insurance, a lifestyle choice that can significantly affect a person’s health or longevity.

personal selling. An insurance sales promotion process that relies on a company’s producers presenting information during face-to-face or telephone meetings with one or more prospective customers.

personal selling distribution system. A type of insurance distribution system in which commissioned or salaried sales representatives sell products through oral and written presentations made to prospective customers.

personal-producing general agent (PPGA). An independent insurance agent who receives special consideration from an insurance company if he or she satisfies minimum sales production requirements.

pharmaceutical database. In the United States, a database that insurers use during the underwriting process that contains prescription histories for proposed insureds. Prescription histories are indicative of medical conditions proposed insureds have or what treatments have been prescribed.

PHI. See personal history interview.

physical examination provision. A provision included in disability income insurance policies which grants the insurer the right to have an insured who has submitted a disability claim examined by a physician of the insurer’s choice, at the insurer’s expense.

physical hazard. In the underwriting of insurance, a physical characteristic that may increase the likelihood of loss. Contrast with moral hazard.

physicians' expenses. In health insurance, medical expenses that include charges associated with physicians’ visits both in and out of the hospital.

placement. In reinsurance, a process in which a direct writer and reinsurer activate reinsurance coverage for a new automatic, facultative, or fac-ob cession.

plan administrator. The party that is responsible for the administrative aspects of a group insurance or group retirement plan’s operation.

plan document. A detailed legal agreement that establishes the existence of an employer-sponsored retirement plan and specifies the rights and obligations of various parties to the plan.

plan participant. An employee or union member covered by a group retirement plan.

plan sponsor. An employer or union that establishes a group retirement plan.

platform employee. In a bank-distributed system of insurance sales, a bank employee whose primary function is to handle customer service issues and sell traditional bank products such as checking and savings accounts, but who is also licensed to sell insurance.

point-of-service (POS) plan. In the United States. a managed health care plan that offers incentives for plan members to use medical providers who belong to the plan's network of providers; but allows plan members to choose, at the point of service, whether to seek medical care from inside or outside of the network. Medical services provided by those outside of the network are usually reimbursed in a manner similar to a traditional indemnity plan. See also managed care plan and indemnity benefits.

point-to-point method. For equity indexed annuities, an index-crediting mechanism that involves comparing the value of the index at the start of the annuity contract term to its value at the end of the term to determine what, if any, excess interest has accrued because of a change in the index.

policy. See insurance policy.

policy anniversary. In general, the date on which coverage under an insurance policy became effective.

policy benefit. (1) The amount of money an insurer agrees to pay under a life insurance policy when a covered loss occurs. (2) The amount of money paid under a health insurance policy when an insurance claim is approved.

policy dividend. An amount of money an insurer pays to the owner of a participating life insurance policy from the company's divisible surplus. The payment is considered to be a return of a portion of the premium the policyowner paid to the company in that policy year. Also known as policyowner dividend. See also divisible surplus. Contrast with stockholder dividend.

policy dividend options. The ways in which the owner of a participating insurance policy may receive policy dividends. See also additional term insurance dividend option, cash dividend option, dividend accumulations option, paid-up additional insurance dividend option, and premium reduction dividend option.

policy filing. The act of submitting a policy contract form and any other legally required forms and documents to the appropriate regulatory authority for approval.

policy form. A standardized form that shows the terms, conditions, benefits, and ownership rights of a particular type of insurance product.

policy issue. The insurance company unit that prepares the insurance contract and facilitates the delivery of the policy to the customer.

policy loan. A loan a policyowner receives from an insurer using the cash value of a life insurance policy as security.

policy loan provision. A life insurance policy provision that gives the policyowner the right to take out a loan for an amount that does not exceed the policy’s cash value less one year’s interest on the loan.

policy loan repayment dividend option. An option included in a life insurance policy that, if chosen by the policyowner, allows the insurer to apply policy dividends toward the repayment of an outstanding policy loan.

policy proceeds. See death benefit.

policy reserve. See contractual reserve.

policy rider. A form that is attached to an insurance policy and changes or amends the policy’s provisions. The policy rider becomes part of the insurance contract and either expands or limits the benefits payable under the contract. Also known as an endorsement or a rider.

policy summary. A document that insurers provide to prospective insurance purchasers that includes information specific to the policy being purchased including premium and benefit data. Contrast with Life Insurance Buyer's Guide.

policy term. The specified period of time during which a term life insurance policy provides coverage.

policy withdrawal. See withdrawal.

policy withdrawal provision. A universal life insurance policy provision that permits the policyowner to reduce the amount of the policy’s cash value by withdrawing up to the amount of the cash value in cash. Often called a partial surrender provision.

policyholder. In group insurance, the employer or other organization that decides what kind of coverage to purchase for the group, negotiates the terms of the group insurance contract, and enters into the group insurance contract with the insurer.

policyowner. A person or business that owns an insurance policy.

policyowner dividend. See policy dividend.

policyowner dividend liabilities. In insurance, amounts that represent all policy dividends that have been declared by an insurer's board of directors, but which have not yet been paid to policyowners.

pooling. A method used in determining group insurance premium rates in which an insurer combines several small groups into one large group, or pool, and underwrites the pool as if it were one group.

population mortality table. A type of mortality table that shows the rates of death for the population as a whole or for a cross-section of the general population. Population mortality differs by country, so a mortality table valid one country may not be valid in another country.

portability. (1) A characteristic of group insurance coverage that allows the group insured to continue insurance coverage after leaving the group. (2) A characteristic of an employer-sponsored retirement plan that allows a participating individual to move vested retirement benefits from that plan to another employer-sponsored or individual retirement plan when the participating individual leaves employment with the plan sponsor.

portfolio. A collection of assets with differing degrees and kinds of risk, usually assembled for meeting a defined set of goals.

portfolio immunization. Investment strategies designed to protect fixed-income portfolios against interest-rate risk.

portfolio method. For fixed annuities, an interest-crediting method under which the insurer applies one specified current interest rate to all money in an annuity account on the interest-crediting date, regardless of when the money was paid into the account. Contrast with new money method.

portfolio performance. A portfolio’s change in market value over a specified performance period.

portfolio reinsurance. See assumption reinsurance.

portfolio segment. A portion of a life insurance company’s general account that typically is designated to support a specified product line of the insurer’s guaranteed products.

portfolio segmentation method. See segmentation method.

POS plan. See point-of-service plan.

positive variance. A variance in which the actual amount or percentage of an amount is greater than expected. Contrast with negative variance.

post-notice. A notice that must be sent to an insurance applicant in the United States if an underwriter denies an application or rates a policy based wholly or partially on information contained in a report from a consumer reporting agency. See also consumer credit report and pre-notice.

PPA. See preferred provider arrangement.

PPGA. See personal-producing general agent.

PPO. See preferred provider organization.

pre-approach letter. In direct-mail insurance prospecting, a personalized letter that is narrowly targeted to prospects who would be attracted to the idea presented in the letter.

pre-contract training. A trial program that permits a candidate for insurance sales who has satisfied an insurer's initial screening process to prepare to become a producer while continuing to work at a current job.

pre-existing condition. (1) For purposes of individual health insurance, an injury or sickness that occurred or manifested itself within a specified period before the policy was issued and that was not disclosed on the application for insurance. (2) For group health insurance, a condition for which an individual received medical care during a specified period, such as three months, immediately prior to the effective date of coverage.

preference beneficiary clause. A life insurance policy provision which states that, if the policyowner does not name a beneficiary, then the insurer will pay the policy proceeds in a stated order of preference. Also known as a succession beneficiary clause.

preferred beneficiary. In Canada, a certain family member of the insured for whom policyowners of in-force policies issued prior to July 1, 1962, in common law jurisdictions have limitations on their ability to change the beneficiary designation.

preferred class. See preferred risk class.

preferred premium rate. For insurance, a lower-than-standard premium rate charged insureds who are classified as preferred risks. Also known as preferred risk discount.

preferred provider. In the United States, a health care provider, such as a physician, who enters into a preferred provider arrangement with a health care insurer. See also preferred provider arrangement.

preferred provider arrangement (PPA). A contract between a health care insurer and a health care provider or group of providers who agree to provide specified covered services to insureds at agreed-upon fees.

preferred provider organization (PPO). A managed health care plan that arranges with health care providers for the delivery of health care at a discounted cost and provides incentives for PPO members to use the health care providers who have contracted with the PPO, but that also provides some coverage for services rendered by health care providers who are not part of the PPO network. See also managed health care plan and preferred provider arrangement (PPA).

preferred risk class. In individual life insurance underwriting, a risk class composed of proposed insureds whose anticipated mortality is lower than average and who represent the lowest degree of mortality risk. Contrast with standard risk class, substandard risk class, and declined risk class.

preferred risk discount. See preferred premium rate.

preferred stock. A type of stock that typically does not carry the voting rights of common stock, but does carry a stated dividend rate that is paid before any payment of common stock dividends by the same company. In the event of a company's liquidation, owners of preferred stock have a prior claim to assets over common stockowners. Contrast with common stock.

premature distributions. Withdrawals taken from an annuity before the contract owner reaches age 59½.

premium. (1) In insurance, a specified amount of money an insurer charges in exchange for the coverage provided by an insurance policy or annuity contract. (2) In reference to bond prices, the amount by which a bond’s current market price exceeds its par value.

premium bond. A bond that has a market price that is greater than the bond’s principal or par value. Contrast with discount bond.

premium payment mode. For insurance policies, the frequency—monthly, quarterly, semiannual, or annually—at which renewal premiums are payable.

premium rate. The amount an insurer charges per unit of insurance coverage. For example, the premium rate may be 30 cents per $1,000 of insurance coverage.

premium receipt. A written acknowledgment that an insurer has received the initial premium submitted with an application for insurance. A premium receipt typically provides the proposed insured with some type of temporary insurance coverage while the application for insurance is being underwritten. See also temporary insurance agreement.

premium reduction dividend option. A policy dividend option under which the insurer applies policy dividends toward the payment of renewal premiums.

premium refund. See experience refund.

premium tax. Type of tax levied by a government on an insurer’s premium income.

premium-based reciprocity. In reinsurance, a type of reciprocal arrangement involving the exchange of blocks of reinsurance business representing approximately the same amount of gross premium on the reinsured risks. See also reciprocal arrangement. Contrast with results-based reciprocity.

premiums paid in advance. The liability an insurer records when a policyowner pays a premium in one accounting period for coverage that does not begin until the next policy anniversary date. Also known as advance premiums.

pre-need funeral insurance. A form of insurance that provides funds to pay for the insured’s funeral and burial, which have been arranged while the insured is living. Also known as pre-need insurance.

pre-need insurance. See pre-need funeral insurance.

pre-notice. A notice that must be given to an insurance applicant in the United States by an insurer that discloses clearly and adequately to the applicant that the insurer may use a consumer reporting agency to compile a consumer report on the insurance applicant. See also consumer credit report and post-notice.

preplacement. The process by which a reinsurer (1) reviews a direct writer’s request for coverage, (2) establishes appropriate records and reserves capacity for the case, and (3) as necessary, follows up on reservations for capacity that have been inactive for a specified period of time.

prescription drug coverage. Medical expense insurance coverage that provides benefits for the purchase of drugs and medicines that are prescribed by a physician and are not available over-the-counter.

present value (PV). The amount that, if invested at a specified interest rate on a specified date, would grow to equal a specified future amount. Contrast with future value.

present value interest factor (PVIF). The present value of $1.00 at a given rate of interest for a stated number of periods. A present value interest factors table shows the present value of $1.00 for various interest rates and a number of discounting periods. Contrast with future value interest factor.

present value interest factor for an annuity (PVIFA). The interest factor that represents the present value of a $1.00 annuity at a given rate of interest for a stated number of periods.

presumptive death certificate. A court-issued document stating that a person is presumed to be dead.

presumptive disability. According to the terms of some disability income policies, a stated condition that if present, automatically causes the insured to be considered totally disabled and thus eligible to receive disability income benefits. Examples of presumptive disabilities include total and permanent blindness, loss of the use of any two limbs, and loss of speech or hearing.

pretext interview. An interview in which one person attempts to gain information from another person by refusing to identify himself or herself, pretending to be someone else, or misrepresenting the purpose of the interview. In the United States, the National Association of Insurance Commissioners (NAIC) Model Privacy Act prohibits insurers or insurance sales agents from conducting pretext interviews.

pricing risk. For an insurer, the risk that the insurer’s experience with product expenses or benefits will differ significantly from the assumptions used in the product’s financial design, causing the insurer to lose money on its products. One of four officially recognized C risks. Also known as C-2 risk.

primary beneficiary. The party designated to receive a life insurance policy's proceeds following the death of the insured. Also known as the first beneficiary. See also contingent beneficiary.

primary care physician (PCP). In a managed health care plan, a physician, usually a general or family practitioner, who serves as the insured’s personal physician and contact with the managed care plan.

principal. (1) In an agency relationship, the party that authorizes another party, the agent, to act on the principal’s behalf in contractual dealings with third parties. (2) In investments, a sum of money originally invested; the amount of money upon which interest is calculated. (3) For an annuity, the amount of money the purchaser pays as premiums. See also par value.

principles-based approach (PBA). An approach to reserve valuation in which the valuation actuary applies stochastic (probabilistic) analysis to develop probabilities for various outcomes and then applies professional judgment to set appropriate values. Contrast with rules-based approach.

prior approval requirement. In the United States, a type of policy form filing requirement imposed by the states on individual and group life insurance, health insurance, and annuity policy forms; stipulates that a policy form must be filed with, and approved by, the state insurance department before the form is used in the state.

private placement. A method of issuing securities in which the issuer sells the security directly to a limited number of investors, typically institutional investors. Contrast with a public offering.

privileged information. For insurance regulatory purposes, information about an individual that relates to either an insurance claim or a civil or criminal proceeding.

probability. The likelihood that a given event will occur in the future.

probationary period. In group insurance, the length of time—typically, from one to six months—that a new group member must wait before becoming eligible to enroll in a group insurance plan, as specified in the group master contract. Also called a waiting period.

proceeds. The amount of money that an insurance company is obligated to pay for the settlement of an insurance policy. Proceeds may be a death benefit or the policy’s cash or accumulated value. See also death benefit and cash value.

producer. In insurance sales, any individual who is licensed to sell insurance products. Producers include agents, bank-affiliated sales personnel, and brokers. See agent. See also broker.

Producer Database (PDB). An electronic database in the United States that was developed by the National Association of Insurance Commissioners (NAIC) and is accessible to all participating state insurance departments. The database contains licensing, appointment, and disciplinary information about producers across the country.

producer group. An organization of independent insurance producers that negotiates compensation, product, and service agreements with insurance companies.

producer of record. From an insurer's perspective, the agent, broker, or other type of producer currently providing service to a policyowner or annuity contract owner.

product portfolio. See liability portfolio.

professional association. An association of individuals who share a common occupation, such as an association of medical doctors, attorneys, or engineers. A professional association generally is considered to be an eligible group for group insurance purposes.

professional development. The process of enhancing knowledge, skills, and behaviors through continuous education, training, and participation in professional organizations.

professional liability insurance. Insurance covering individuals who provide professional services, such as physicians and lawyers, from losses they incur as a result of being held responsible for losses of their clients.

profit. The excess of revenues over expenses during a defined period of time, which is a measure of a company’s financial success during a relatively short period of time. Also known as net income. Contrast with loss.

profit center. A line of business that (1) is evaluated on its profitability, (2) is responsible for its own revenues and expenses, and (3) makes many of its own decisions regarding operations. See also strategic business unit (SBU).

profit sharing plan. A retirement savings plan that is funded primarily by cash contributions payable from the employer’s profits.

profitability. The overall degree of success a business has in generating positive returns for its owners, including the company’s ability to generate profits and increase the value of the company.

profitability analysis. The process of determining which company operations are losing or making money by comparing the sales an activity generates with the expenses incurred to generate those sales.

projection method. A method of modifying tabular mortality that involves multiplying the tabular mortality rates by a chosen percentage. See also setback method.

property insurance. Insurance that provides protection against financial loss from property damage and theft.

property/casualty (P&C) insurance company. An insurance company that insures against financial loss from property damage and theft by providing property insurance, such as homeowners insurance and automobile insurance, and from being held responsible for harming others or their property by providing liability insurance. Also known as a nonlife insurance company and general insurance company.

proportional reinsurance. A type of reinsurance under which the direct writer and the reinsurer agree to share premiums and claim obligations according to a specified amount or percentage.

proposal for insurance. In group insurance, a document that details the specifications of a group insurance plan proposed by an insurer for a group prospect, and that allows the prospect to compare the costs and benefits of the plan to those offered by other insurers.

proposed group. See group prospect.

proposed insured. The term used during the underwriting process to refer to the person whose life, health, or income is to be covered by an insurance policy.

proprietary mortality table. A type of mortality table that a single insurance company develops for internal use, based largely on its experience with its own customers. Contrast with published mortality table.

prospect. A potential customer for an insurer’s products or services.

prospecting. The process a sales intermediary uses to identify, contact, and qualify potential customers.

prospective reserve valuation method. For insurance companies, a method of computing a value for a reserve liability by looking at a contract’s expected future cash flows—its premiums and payments on behalf of contract owners. Contrast with retrospective reserve valuation method.

prospectus. A written document describing specific aspects of a security being offered for sale; often includes fund expenses and fees, and past product performance.

proximate cause. For an accidental death or accidental disability insurance claim, the event that directly caused the death or disability, or the event that led to an unbroken chain of events resulting in death or disability.

public mortality table. See published mortality table.

public offering. A method of issuing securities in which the security issuer makes a new security available for sale to the public. Contrast with private placement.

published mortality table. A type of mortality table that is based on the mortality of the public at large or a broad cross-section of the population and that is made available to the general public through printed documents and electronic sources. Also known as public mortality table. Contrast with proprietary mortality table.

punitive damages. Monetary awards which are in addition to compensatory damages when a defendant’s conduct meets the jurisdiction’s standards for behavior that is so egregious as to warrant such damages. See also compensatory damages.

pure risk. A risk that involves no possibility of gain; either a loss occurs or no loss occurs.

PV. See present value.

PVIF. See present value interest factor.

PVIFA. See present value interest factor for an annuity.

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