An advance on policy proceeds to insureds in situations when death is imminent. Generally, a percentage of the face amount is paid to the insured while living as a lien against the face amount to be paid after death. At the time of death, the remaining death benefit, net of the lien, will be paid to the beneficiary. It is intended to help alleviate the financial burden associated with terminal illness, so that people in this situation are not forced to turn to "living benefit" companies that buy policies for heavily discounted amounts. The advance is available on a case-by-case basis, when a doctor certifies that the insured is not expected to live longer than 6 months.

This is the gross income provided by an occupation, minus all tax-deductible business expenses. It does not include income from sources such as an investment or property, that would not be affected by a disability.

A voluntary contribution, based on a salary reduction agreement, made to a 403(b) Tax-Deferred Annuity, a 401(k) plan, a salary reduction SEP (SAR-SEP), and/or a IRC §457 eligible Deferred Compensation Plan.

A transaction that allows Insurance Service Account Plus payors to have premium payments drawn directly from their bank accounts, eliminating the need to write checks. EFTs simplify record keeping, eliminate postage fees, and reduce bank processing charges.

An expert in group health, group disability insurance and other employee benefits products.

A tax-qualified pension or profit sharing plan sponsored by an employer (i.e. corporation, partnership), for the purpose of providing retirement benefits or life insurance for an employee.

(ERISA.) The law that covers pension plans, and other qualified employee benefit plans, including vesting requirements and plan design.

Non-qualified employer-paid insurance programs for five or more employees that sometimes qualifies for lower policy minimums, liberalized and simplified underwriting, and list billing. Eligible programs include Supplemental Income, Split Dollar, and Key Person.

A change made in a life insurance policy, as requested by the policyowner and acknowledged by the company, such as a change of beneficiary. Endorsements also include revisions in wording for the purpose of clarifying particular provisions of an insurance contract.

A split dollar arrangement, between an employer and employee, under which the employer owns the policy but, through an endorsement, provides the employee with a death benefit.

The arrangement whereby the business, rather than an individual owner, purchases the insurance that will be used to secure the business in the event of an owner's death.

1. The standard of fairness applied in the establishment of premiums, dividends, and policy values. The premise is that all insureds with similar characteristics should be categorized under the same underwriting classification, pay the same premium, and receive the same dividends and policy values. 2. Level of ownership interest. 3. Corporate stocks.

A component used in determining a product's interest-adjusted cost or payment. It is the average annual dividend paid after applying an interest factor (usually 5%). The basic premium minus the ELAD produces the net payment index.

The transfer of property to the state because there are no beneficiaries or distributees to inherit the assets.

A blended product offered by Northwestern Mutual comprised of a permanent base and an optional term component. Over time, the term component is replaced with paid-up additions. The paid-up additions may be purchased by dividends, additional premiums, and/or lump sum payments. The purpose of ECL is to protect the value of an estate by providing funds to pay the taxes and administrative costs that become due upon the insured estate owner's death.

Planning for the orderly handling and administration of an estate upon the death of the owner. This usually involves drawing up a will and setting up trusts and insurance, with the intention of minimizing loss to the estate value incurred by estate taxes and administrative expenses.

A provision that can be added to a newly issued Joint CompLife policy that provides extra protection to cover the estate taxes that would be owed if both insureds die within three years of the policy's ownership being transferred from the insureds' estate to a trust. When death occurs during this time, the proceeds are included in the gross estate. Since the extra protection is only needed for a limited period of time, the rider is designed to drop off automatically on the fourth policy anniversary.

The depletion of an estate's assets due to taxes, administrative expenses, funeral expenses and debts. Estate Shrinkage is a decline in value of the estate at time of the estate owner's death.

A tax imposed on the right of a person to transfer property at death. This is a federal tax, but can also be imposed as a state tax and is paid out of the estate's assets.

Statements and representation regarding an insured's or prospective insured's state of health, avocations and financial condition, that might affect insurance acceptability.

In universal life, or other policies issued by stock companies, the amount of interest credited to a contract in excess of what the guaranteed rate would have provided. For example, if the guaranteed rate is 5% and the total rate credited is 9%, the excess interest portion is 4%.

Under IRC §1035, certain insurance and annuity policies may be exchanged for new policies with no gain or loss recognized on the exchange. Tax rules must be followed to achieve the desired result.

Provision that indicates a circumstance or event, such as an act of war, that would cause the benefit to be denied.

The principal amount invested in the annuity contract, divided by the expected return, and expressed as a fraction or a percentage. It is applied to each annuity payment to determine the portion of payment that may be excluded from the annuitant's gross income. The balance is included as gross income the year payment is received.

In disability insurance, a policy amendment waiving the liability of the company for certain conditions that were in existence before the date of the policy. Other companies may use the term "waiver" rather than Exclusion Rider.

Disabilities not covered by a disability insurance contract. For example, benefits will not be paid for undisclosed or misrepresented disabilities in the application, those caused or contributed to by an act or incident of war (declared or undeclared), those excluded by an agreement for limitation of coverage, and those disabilities or losses during any period the insured is incarcerated.

To validate a document. To carry out the provisions of a will or trust.

A plan whereby an employee owns a life insurance policy that was purchased, all or in part, by the employer. The employee treats the employer's payments as reportable income for tax purposes. The employer deducts its payments as compensation under IRC §162. Also known as an Employee Bonus Plan.

The individual appointed in a will to carry out the will's provisions. A co-executor acts as executor with another or others.

The amount of property the federal government lets an individual transfer without being subject to transfer tax.

The expected value or mean of a probability distribution of returns. The weighted arithmetic average of all possible outcomes, where the weights are the probabilities that each outcome will occur.Growth of Unit Value

The charges assessed against a policy to cover part or all of the insurance company's acquisition and maintenance expenses related to issuing and servicing the policy, including charges covering various federal, state and local taxes.

Factors, such as expenses, mortality, investments and rate of lapses, which are used to determine an insurance product's cost.

The date on which the insurance policy ceases to protect the policyowner.

A non-forfeiture option on whole life insurance which allows coverage to be extended for a limited time period by using the policy's cash value to purchase term insurance equal to the face amount. If premium payments are not resumed, the policy will terminate without value at the end of the term insurance period.

The term and paid-up additions element on Extra-Ordinary Life (EOL) plans.

The amount charged in addition to the regular rate to cover any extra hazard or special risk.

A permanent life insurance product offered by Northwestern Mutual that provides a 60/40 mix of whole life insurance and term insurance. The dividends are used, over time, to convert the term portion to permanent life insurance through paid-up additions.