LOMA Glossary

The LOMA Glossary of Insurance and Financial Services Terms

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S&L. See savings and loan association.

SAD. See Special Activities Database.

salaried sales agent. See salaried sales representative.

salaried sales representative. A company employee who is paid a salary for making insurance sales and providing sales support. Also known as a salaried sales agent.

salary continuation plan. A short-term disability income insurance plan that provides 100 percent of an insured’s salary, beginning on the first day of the insured’s absence from work due to sickness or injury and continuing for some specified time.

sale-and-leaseback transaction. A method of investing in real estate in which the owner of a building sells the real estate to an investor but immediately leases back the real estate from the investor.

sales aid. Promotional material, such as a brochure or an illustration, used in conjunction with a sales presentation to help explain complex products.

sales commission. See commission.

sales presentation. In insurance sales, the promotional message a producer delivers to a prospect to explain the product or products recommended in a proposal, stimulate the prospect’s interest in those products, and motivate the prospect to purchase the products.

sales promotion. A company-sponsored program that is designed to motivate new sales activity and uses incentive programs, that are usually monetary, to encourage producers to sell an insurance product. Sales promotions are occasionally used to encourage insurance customers to purchase a product, although customer sales promotions are not monetary.

sales revenue. The total dollar volume of sales, which for insurance is calculated by multiplying the sales volume by the average contract size.

sales volume. The number of units of product sold.

saliva test. See oral specimen test.

salvage value. The residual value or selling price of an asset at the end of its useful life.

SAP. See statutory accounting practices.

Sarbanes-Oxley Act (SOX). A U.S. federal law that requires public companies to take specific precautions related to corporate governance, effective internal controls, and preventing and detecting fraudulent behavior on the part of management and the company’s external auditors. Also known as Sarb-Ox.

Sarb-Ox. See Sarbanes-Oxley Act.

SAS 70. An auditing standard developed and maintained for service organizations by the American Institute of Certified Public Accountants (AICPA). Also known as Statement on Auditing Standards No. 70, Service Organizations.

SAS 70 Service Auditor’s Report (SAR). Under SAS 70 standards, a type of audit report that evaluates the effectiveness of internal control over financial reporting as required under SOX. See also SAS 70 and Sarbanes-Oxley Act.

savings and loan association (S&L). A depository institution that principally pools the savings of people and makes residential mortgage loans. Also known as a thrift.

savings bank life insurance (SBLI). In the United States, inexpensive life insurance coverage sold by authorized savings banks to people who live or work in the state in which the insurance is sold. Savings bank life insurance is permitted in three states--Massachusetts, New York, and Connecticut.

savings incentive match plan for employees (SIMPLE) 401(k). In the United States, a special arrangement whereby an employer with 100 or fewer employees can establish a simplified 401(k) retirement savings plan for eligible employees (including self-employed individuals) that functions in much the same way as a regular 401(k) plan--both the employer and the employee can make contributions to the plan up to a specified maximum. Employer contributions are deductible from the employer’s current taxable income, employee contributions are on a pre-tax basis, and all earned income accumulates on a tax-deferred basis. Withdrawals are taxable as income.

savings incentive match plan for employees (SIMPLE) IRA. In the United States, a written salary reduction agreement between an employer with 100 or fewer employees and its employees that allows eligible employees (including self-employed individuals) to choose to reduce compensation by a certain percentage each pay period and have the employer contribute the amount of the salary reduction to a SIMPLE IRA on the employee’s behalf. The employer must also make either matching contributions or nonelective contributions. All contributions must be fully vested in the employee. Employer contributions are deductible from the employer’s current taxable income, employee contributions are on a pre-tax basis, and all earned income accumulates on a tax-deferred basis. Withdrawals are taxable as income.

savings plan. A retirement plan to which a plan sponsor may make contributions on behalf of a plan participant if the participant makes contributions to the plan.

SBLI. See savings bank life insurance.

SBU. See strategic business unit.

schedule. A part of the reinsurance treaty that addresses variable elements of the agreement, such as the plans covered, retention limits, binding limits, reinsurance premium rates, and allowances. Also known as an exhibit or a condition.

schedule of benefits. (1) Under a group insurance plan, a table that specifies the amount of coverage provided for each class of insureds. (2) For medical expense claim purposes, a listing of medical treatments and the maximum benefit amounts an insurer will pay for each treatment.

scheduled net debt. For purposes of determining the benefit payable under a consumer credit insurance policy, the lump-sum amount needed to pay off the debt on a given date according to the credit agreement’s repayment schedule.

screening. In the product development process, a weeding out process designed to evaluate new product ideas quickly and inexpensively in order to select those ideas that warrant further investigation.

seasoning requirement. In the United States, a licensing requirement that many states impose on foreign and alien insurers, which are eligible to receive a certificate of authority only if they have been actively engaged in the business of insurance for a specified time—usually years. See also alien corporation and foreign corporation.

SEC. See Securities and Exchange Commission.

second insured rider. A supplemental life insurance policy benefit that provides term insurance coverage on the life of a person other than the policy’s insured. Also known as an optional insured rider, other insured rider, and additional insured rider.

second mortgage. A mortgage loan secured by the borrower’s equity in real estate that is already collateral for a first mortgage. See also first mortgage.

secondary beneficiary. See contingent beneficiary.

second-to-die life insurance. See last survivor life insurance.

Section 1035 Exchange. In the United States, a tax-free exchange of one life insurance policy or annuity contract for another policy or contract covering the same person that is performed in accordance with Section 1035 of the Internal Revenue Code.

secured bond. A bond in which the issuer pledges something of value—collateral—to guarantee the safety of the bondholder’s investment. Contrast with debenture.

Securities and Exchange Commission (SEC). In the United States, a federal government agency that regulates the investment industry.

securities broker. An individual, corporation, or other legal entity that is engaged in the business of buying and selling securities for the accounts of others.

securities dealer. An individual, corporation, or other legal entity that is engaged in the business of buying and selling securities for its own account.

securities exchange. See stock exchange.

security. A financial asset that represents either (1) an obligation of indebtedness owed by a business, a government, or an agency, which is known as a debt security or (2) an ownership interest, which is known as an equity security.

segmentation method. The approach an insurer uses for dividing a general account into portfolio segments to support more effective management of the relationship between specific assets and associated liabilities. Also known as portfolio segmentation method.

segregated account. See separate account.

segregated fund. See separate account.

segregation of duties. An internal control that requires an employer to design jobs so that job tasks will not place an employee in a position to conceal errors or irregularities in the normal course of his or her employment. Also known as dual control.

select and ultimate mortality table. A type of mortality table that combines coordinated sets of select mortality rates and ultimate mortality rates. See also select mortality table and ultimate mortality table.

select mortality table. A type of mortality table that shows the expected mortality rates of people who have recently been underwritten for insurance policies. See also select and ultimate mortality table. Contrast with ultimate mortality table.

selection against the insurer. See antiselection.

selection of risk. See underwriting.

self administration. A method of reinsurance record administration in which the direct writer maintains detailed records for each ceded policy and sends the reinsurer periodic reports describing the individual risks ceded and reinsurance premiums due for each policy.

self-administered group plan. A group insurance plan for which the group policyholder is responsible for handling the administrative and recordkeeping aspects of the plan. Contrast with insurer-administered group plan.

self-insurance. A risk-management technique by which a person or business accepts financial responsibility for losses associated with specific risks.

self-insured group plan. A plan for which the group sponsor rather than an insurance company is financially responsible for the claims incurred by group members.

self-insured retention limit. In reinsurance, a stated maximum monetary amount of risk that a self-insured entity will carry at its own risk.

self-regulatory organization (SRO). A nongovernmental organization that exercises regulatory authority over an industry or profession.

SEP plan. See simplified employee pension plan.

separate account. Traditionally, an asset account designated for supporting an insurance company’s financial products for which the performance is linked to investment results. The customer, not the company, directly bears the investment risk for assets held in these accounts. Also known as a segregated fund, segregated account, unit trust, and unit-linked portfolio. Contrast with general account.

service fee. Compensation paid to an insurance sales producer equal to a small percentage of the premiums payable after the renewal commissions have ceased. See administrative charge.

service recovery. The efforts an organization makes to fully resolve the problem that caused a customer’s dissatisfaction and win back the customer’s goodwill.

setback method. A method of modifying tabular mortality rates that consists of showing future decreases in mortality for people of a given age by using the tabular mortality rate for a younger age. See also projection method.

settlement agreement. A contractual agreement between a life insurance policyowner and an insurer governing the rights and obligations of the parties after the death of the insured. See also supplementary contract.

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 policyowner does not receive the benefits in one single payment. Typically, the owner can elect to (1) have the proceeds paid into an interest-bearing account, (2) have the proceeds paid in a series of installments for a pre-selected period, (3) have the proceeds paid in a pre-selected amount in a series of installments for as long as the proceeds last, or (4) have the insurer tie payment of the proceeds to the life expectancy of a named individual through a life annuity. The term "settlement options" is more frequently associated with life insurance policies, while the term "payout options" is more frequently associated with annuities. Also known as optional modes of settlement.

sex-distinct mortality table. A type of mortality table that shows different mortality rates for males and females. Also known as a gender-based mortality table. Contrast with a unisex mortality table.

share. A unit of ownership of a stock corporation. Also known as a share of stock.

share of stock. See share.

shareholder. See stockholder.

Shopper’s Guide to Long-Term Care Insurance. In the United States, a National Association of Insurance Commissioners publication designed to provide consumers with information about the long-term care insurance coverages that are available and to help consumers make informed purchase decisions.

short-term assets. See current assets.

short-term group disability income coverage. Group disability income coverage that provides a maximum benefit period of one year or less; such coverage commonly specifies a maximum benefit period of 13, 26, or 39 weeks. Contrast with long-term group disability income coverage.

short-term individual disability income coverage. A type of disability income coverage that provides an individual with disability income benefits for a maximum benefit period of from one to five years. Contrast with long-term individual disability income coverage.

short-term liabilities. See current liabilities.

SIFI. See systemically important financial institution.

SIMPLE 401(k). See savings incentive match plan for employees 401(k).

simple interest. Interest that is earned on the original principal amount of money only. Contrast with compound interest.

SIMPLE IRA. See savings incentive match plan for employees IRA.

simplified employee pension (SEP) plan. In the United States, a qualified employer-sponsored pension plan whereby an employer establishes and makes contributions into an individual retirement account or individual retirement annuity for each participating employee; however, the employee owns the account. Self-employed people also may establish a SEP plan.

simultaneous death act. A state statute which provides that if an insured and beneficiary die at the same time or under circumstances that make it impossible to determine which of them died first, the insured is deemed to have survived the beneficiary, and policy proceeds are payable as though the insured outlived the beneficiary, unless the policy provides otherwise.

single life annuity. See straight life annuity.

single-employer group. A group made up of the employees of one company.

single-premium annuity. An annuity that is purchased by the payment of a single, lump-sum amount.

single-premium deferred annuity (SPDA) contract. A deferred annuity that is purchased with a lump-sum premium payment and provides periodic income payments that begin more than one annuity period after the annuity is purchased.

single-premium immediate annuity (SPIA) contract. An immediate annuity that is purchased with a lump-sum premium payment and provides periodic income payments that begin one annuity period after the annuity is purchased.

single-premium whole life insurance policy. A type of limited-payment whole life policy that requires only one premium payment.

SIU. See special investigative unit.

small employer. In the United States for purposes of the Health Insurance Portability and Accountability Act (HIPAA), an employer that has at least 2 but no more than 50 employees.

social insurance program. An insurance plan that is established by law and administered by a government and that provides assistance to specified groups of the population, such as the elderly, disabled, and unemployed.

Social Security. In the United States, a federal social insurance program that provides specified benefits, including a monthly retirement income benefit, to people who have contributed to the plan during their income-earning years. The program also provides a benefit to qualified disabled individuals, as well as to the widows, widowers, and surviving dependent children of qualified deceased workers.

Social Security Act. See Old Age, Survivors, Disability and Health Insurance (OASDHI) Act.

Social Security Disability Income (SSDI). In the United States, a federal social insurance program that provides disability income benefits to U.S. workers who become disabled as a result of nonwork-related accidents or illnesses, who are under age 65, and who have paid a specified amount of Social Security tax for a prescribed number of quarter-year periods.

SOH. Statement of health. See nonmedical supplement.

sole proprietorship. A business that is owned and operated by one person.

solvency. (1) A company’s ability to meet its financial obligations on time. (2) For an insurer, the ability to maintain capital and surplus above the minimum standard of capital and surplus required by law. Also known as statutory solvency.

Solvency II. In Europe, insurance solvency legislation that is designed to regulate insurance company solvency in the public interest and to facilitate the development of a single market in insurance services among European Union member nations.

solvency law. Any law designed to ensure that insurance companies are financially able to meet their debts and to pay policy benefits when they come due.

SOX. See Sarbanes-Oxley Act.

SPDA contract. See single-premium deferred annuity contract.

Special Activities Database (SAD). In the United States, a database that is maintained by the National Association of Insurance Commissioners and that enables state insurance regulators to exchange information about companies and individuals who (1) have been the subject of an insurance department investigation, (2) have been charged with violations, or (3) are suspected of engaging in unlawful activities.

special class. See substandard risk class.

special investigative unit (SIU). Within an insurance company, a group of individuals--often composed of representatives of the claim, legal, and internal audit functions as well as independent investigators--that is responsible for detecting, investigating, and resolving claims, particularly those involving insurance fraud.

special surplus. For insurers in the United States, the part of an insurer’s surplus that the insurer’s board of directors has set aside (1) to meet unforeseen contingencies or (2) to pay for certain extraordinary expenses. Also known as special surplus funds, assigned surplus, appropriated surplus, earmarked surplus, and contingency reserves.

special surplus funds. See special surplus.

special termination. A provision in a reinsurance agreement that allows a direct writer to completely withdraw from a reinsurance agreement if the reinsurer experiences a specified business event—such as the loss of its insurance license, a significant rating agency downgrade, or the loss of a significant proportion of its capital and surplus.

specialized medical questionnaire. A document sometimes used during individual underwriting that requests detailed information on a specific illness or condition from a proposed insured's attending physician or from a physician who examines the proposed insured at the request of the insurance company.

specific deductible. See deductible.

specific stop-loss coverage. See individual stop-loss coverage.

speculation. The unethical purchase of insurance to make a profit on the proceeds rather than to protect against the risk of financial loss.

speculative risk. A risk that involves three possible outcomes: loss, gain, or no change.

spendthrift trust clause. A provision that may be included in a life insurance policy or settlement agreement to protect the policy proceeds from being seized by the beneficiary’s creditors.

SPIA contract. See single-premium immediate annuity contract.

split-dollar life insurance plan. An arrangement between the owner of a life insurance contract and a non-owner of the contract under which either party to the arrangement pays all or part of the premiums, and one of the parties paying the premiums is entitled to recover (either conditionally or unconditionally) all or any portion of those premiums and such recovery is to be made from, or is secured by, the proceeds of the contract.

spouse and children’s insurance rider. A supplemental life insurance policy benefit offered by some insurers that provides term life insurance coverage on the insured’s spouse and children. Also known as a family insurance rider.

spread compression. The narrowing of an insurer’s interest spread.

spread expansion. A phenomenon consisting of a widening of an insurer’s spread that occurs when market interest rates fall and the insurer reduces crediting rates to the new market level while it continues to earn a higher overall rate of return on investments.

spread-loss coverage. A nonproportional reinsurance arrangement—similar to a loan—­between a direct writer and a reinsurer in which the reinsurer agrees to pay the direct writer if the direct writer’s total claims for a specified block of business in a stated period exceed a specified monetary amount. In return, the direct writer is required to repay the reinsurer’s funds over time with interest payable according to specified terms, thus “spreading the loss.”

SRO. See self-regulatory organization.

SSDI. See Social Security Disability Income.

stakeholder. Any party that has an interest in how a company conducts its business.

standard class. See standard risk class.

Standard Nonforfeiture Law for Individual Deferred Annuities. A model law developed by the National Association of Insurance Commissioners that requires individual fixed deferred annuities to provide a minimum nonforfeiture benefit if the contract owner surrenders the contract before income payments begin.

Standard Nonforfeiture Law for Life Insurance. A National Association of Insurance Commissioners model law that requires most individual life insurance policies to provide specified minimum nonforfeiture values.

standard premium rate. A premium rate charged insureds who are classified as standard risks.

standard risk class. In insurance underwriting, the group of proposed insureds who represent average risk within the context of the insurer’s underwriting practices and therefore pay average premiums in relation to others of similar insurability. Also known as a standard class. Contrast with declined risk class, preferred risk class, and substandard risk class.

Standard Valuation Law. A National Association of Insurance Commissioners' model law that imposes minimum requirements on the size of insurance and annuity reserves and establishes guidelines insurers must follow when calculating their reserves.

state code. In the United States, all of the statutes of a given state, which are compiled, organized into some systematic form, and published in a series of books. See also state insurance code.

state insurance code. The portion of a state code that is devoted to regulating the insurance industry within the applicable state.

state insurance department. In the United States, the administrative agency in each state that is responsible for making sure that companies operating in the state comply with applicable regulatory requirements.

state of domicile. In the United States, the state in which a company is incorporated and has its principal legal residence. Also known as the domiciliary state.

stated interest rate. See nominal interest rate.

statement of cash flows. See cash flow statement.

statement of financial condition. See balance sheet.

statement of health (SOH). See nonmedical supplement.

statement of operations. See income statement.

statement of owners' equity. A financial statement that provides information about changes that occurred in owners’ equity between two sequential balance sheets.

Statement on Auditing Standards (SAS) No 70, Service Organizations. See SAS 70.

static budget. A type of budget that is generally not subject to change unless management has approved the changes. Also known as a fixed budget or a fixed-amount budget. Contrast with a flexible budget.

static mortality table. A type of mortality table that has not been adjusted to provide for future changes in mortality. Contrast with mortality table with projection.

statistical phase of IRIS. The initial phase of the Insurance Regulatory Information System used in the United States to monitor the financial condition of insurers during which regulators compare the financial ratios reported in an insurer’s Annual Statement with a set of 12 standard ratios as a way to test a company’s solvency and profitability and its financial stability. Any unusual results require an analytical analysis of the company. See also analytical phase of IRIS.

statutory accounting practices (SAP). Guidelines that all insurers in the United States must follow when preparing the Annual Statement and specified other financial reports that are submitted to state regulators. Also known as statutory accounting principles.

statutory accounting principles. See statutory accounting practices.

statutory reserve. See contractual reserve.

statutory solvency. See solvency definition 2.

steering control. An organizational control that is established before a business process is begun and describes how a company intends to implement the process. Also known as a feedforward control. Contrast with concurrent control and feedback control.

stock. A type of security that represents an ownership interest in a company. See also common stock and preferred stock.

stock bonus plan. A retirement plan that is funded primarily by employer contributions and that provides benefits in the form of shares of company stock rather than cash.

stock corporation. A corporation whose ownership is divided into units known as shares or shares of stock.

stock dividend. See stockholder dividend.

stock exchange. An organized marketplace where specific types of securities, such as common stock and bonds, are bought and sold by members of the exchange. Also known as a securities exchange.

stock insurance company. An insurance company that is owned by the people and organizations that own shares of the company’s stock. Contrast with mutual insurance company.

stock redemption insurance. See stock repurchase insurance.

stock repurchase insurance. A type of business insurance coverage that provides the remaining stockholders of a company with money to buy the stock of a deceased partner. Also known as stock redemption insurance.

stockholder. A person or organization that owns shares of stock in a corporation. Also known as a shareholder.

stockholder dividend. A portion of a corporation’s earnings paid to the owners of the company’s stock. Also known as a stock dividend. Contrast with policy dividend.

stop-loss insurance. Insurance purchased by an employer that self-insures a group health insurance plan which enables the employer to place a maximum dollar limit on its liability for paying health insurance claims.

stop-loss provision. See maximum out-of-pocket provision.

stop-loss ratio reinsurance. See stop-loss reinsurance.

stop-loss reinsurance. A type of nonproportional reinsurance in which the reinsurer agrees to pay for a portion of total claims on a block of business in an amount between stated lower and upper limits for a specified operating period. Also known as stop-loss ratio reinsurance or excess-of-loss ratio reinsurance.

STP. See straight-through processing.

straight life annuity. A type of life annuity that provides periodic income payments for only as long as the annuitant lives and provides no benefit payments after the annuitant’s death. Also known as a life only annuity and a single life annuity.

straight life insurance policy. See continuous-premium whole life policy.

straight-through processing (STP). A fully automated application of technology in which all steps in a specified type of transaction process can be conducted without a need for human intervention, subject to legal and regulatory restrictions. Insurers sometimes use STP for underwriting and claim processing.

strategic business unit (SBU). An organizational unit of a company that acts like an independent business in that it (1) generates its own identifiable profits, (2) has its own set of customers and competitors, (3) has its own independent management, (4) has its own budget, and (5) has its own set of strategic goals and strategies.

strategic planning. The process of determining an organization’s major long-term corporate goals and the broad, overall courses of action or strategies that the company will follow to achieve these goals.

strategy. In business, a comprehensive plan for future action directed toward achieving various goals, including making the corporate vision a reality.

structured settlement annuity. An immediate annuity issued to a person who is entitled to receive a specified sum of money from a third party; the terms of the annuity contract are structured to carry out the terms of the agreement between the annuitant and the third party.

subaccount. An investment fund within an insurance company separate account. Also known as a fund option or a unit-linked fund. See also separate account and segregated account.

subrogation. A legal right that permits an insurer to recover payments made to an insured when the insured received payment for the claim through a separate legal action.

subscription. See quota share.

subsidiary. A company that is owned or controlled by another company known as a holding company.

substandard class. See substandard risk class.

substandard premium rate. A higher-than-standard premium rate charged insureds who are classified as substandard risks.

substandard risk class. In the underwriting of life insurance, a group of proposed insureds whose anticipated mortality rates are higher than average, but who are still considered to be insurable. Also known as a special class, a substandard class, or an impaired risk class. Contrast with declined risk class, preferred risk class, and standard risk class.

succession beneficiary clause. See preference beneficiary clause.

successor beneficiary. See contingent beneficiary.

successor payee. See contingent payee.

suicide exclusion provision. A life insurance policy provision that typically states that if the insured dies as a result of suicide within a certain period—usually one or two years from the date the policy was issued, the insurance company does not have to pay the policy proceeds.

suitability. In insurance sales, the process of determining whether a particular insurance or annuity product is an appropriate purchase for an applicant based on the applicant’s needs and financial condition. Some states in the United States have a regulatory requirement that places a duty on agents and/or insurers to have a reasonable method of deciding that a specific financial services product is suited to a customer’s needs.

suitability requirement. A regulatory requirement that imposes a duty on insurers and/or insurance producers to have reasonable grounds on which to decide that a specific product is suitable for a customer’s needs.

Suitability Rule (Conduct Rule 2310). In the United States, a Financial Industry Regulatory Authority conduct rule that requires registered persons to have reasonable grounds for recommending investment products to customers based on the customers’ financial situation, tax status, and investment objectives.

summary plan description. For employee benefit plans, a written document that is understandable by the average plan participant and that reasonably informs participants and beneficiaries about their rights and obligations under the plan. In the United States, the Employee Retirement Income Security Act (ERISA) requires employers that sponsor employee benefit plans to provide employees with a summary plan description.

superintendent of insurance. See insurance commissioner.

Supervisory Rule (Conduct Rule 3010). In the United States. a Financial Industry Regulatory Authority (FINRA) conduct rule that requires broker-dealers registered with the Securities and Exchange Commission and FINRA as principals to establish and maintain a supervisory system and written supervisory procedures to oversee the activities of each registered person that acts on behalf of the principal.

supplemental benefit. A benefit or additional coverage added to the coverage specified in a basic insurance policy.

supplemental illustration. A life insurance policy illustration that is provided along with a basic illustration and that presents the information in a different format than that used in the basic illustration.

supplemental major medical policy. An insurance policy issued in conjunction with an underlying basic medical expense insurance policy to provide benefits for expenses that exceed the benefit levels of the underlying basic plan and, often, for expenses that are not covered by the underlying plan.

supplementary contract. A settlement agreement between an insurer and a life insurance policy beneficiary entered into after the insured's death by means of which the beneficiary selects a settlement option.

surplus. The cumulative amount of money that remains in an insurance company over time and is calculated as the insurer’s assets minus its liabilities and its capital. Compare to retained earnings.

surplus relief. A decrease in potential surplus strain that strengthens an insurer’s financial position. Contrast with surplus strain.

surplus strain. The decrease in an insurer’s surplus caused by the high first-year costs and the reserving requirements associated with new products. Also known as new business strain. Contrast with surplus relief.

surrender. A transaction in which the owner of a cash value life insurance contract or deferred annuity contract elects to terminate the contract prior to its maturity and receive the cash surrender value or the accumulation value.

surrender benefit. See cash surrender value.

surrender charge. (1) A specific charge imposed if the owner of a cash value life insurance policy surrenders the policy for its cash surrender value. (2) A fee typically imposed if a deferred annuity contract is surrendered within a stated number of years after it was purchased.

surrender rate. For a block of insurance or annuity contracts, the ratio of the number of contracts surrendered during a contract year to the total number of contracts in force at the beginning of the year.

surrender value. See cash surrender value.

survivor benefit. See death benefit definition 2.

survivorship clause. A policy provision included in some life insurance policies which states that the beneficiary must survive the insured by a specified period, usually 30 or 60 days, to be entitled to receive the policy proceeds. Also known as a common disaster clause.

survivorship life insurance. See last survivor life insurance.

sweep account. See asset management account.

systematic risk. See nondiversifiable risk.

systemically important financial institution (SIFI). As identified by the Financial Stability Oversight Council, a financial institution whose failure could potentially pose a risk to the U.S. financial system and which is therefore subject to more stringent regulatory standards than other firms.

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