Life Insurance Glossary

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Glossary of Definitions - R

Rate
The pricing factor upon which the insurance buyer's premium is based.

Rate Banding
Term Life insurance death benefit thresholds, whereby, the rate per thousand decreases as the amount of death benefit increases – similar to a quantity discount.

Rate Per Thousand
Price per unit (or $1,000) of death benefit. Term premiums are calculated by multiplying the rates per thousand of death benefit, then adding the Policy Fee.

Rated Policy
Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.

Rating Territory
A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.

Rebating
The granting of any form of inducement, favor, kickback or advantage to the purchaser of a policy, which is not available under the standard terms of the policy. Rebating is a penal offense in some states, whereby both the agent and the person accepting the rebate can be punished.

Re-Entry
A policy provision under which the insured, at the end of the specified term period, can renew (re-enter) the policy at a rate based on their attained age for another term period. Re-entry requires the insured to provide evidence of insurability. Also referred to as Re-Qualification.

Reinstatement
The period after the grace period (usually five years) during which the policy can be restored from a lapsed status through submission of acceptable evidence of insurability and unpaid premiums plus interest. Some companies allow reinstatement without evidence of insurability during the 31 days following the grace period if the insured is alive.

Renew
To continue the policy for another period of time.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.

Renewal
Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.

Replacement
The act of terminating a policy with one insurer for a new policy with another insurer. This practice is regulated by most states because often it is not in the insured's best interest to make such a switch.

Replacement Form
A state-specific form that must be completed if the applicant is replacing existing coverage. The replacement form notifies the existing insurer that the applicant is replacing their policy with a policy from another company.

Replacement ratio
The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.

Representative
An agent or sales representative.

Reserve
The amount of money an insurance company holds which, with future premiums and an assumed rate of interest, will pay all contractual obligations as they fall due.

Resident agent: An agent domiciled in the state in which he or she writes insurance.

Restrictions
Factors affecting what actions can be taken on a policy, such as ownership restriction because of a divorce or tax levy.

Retention Limit
The maximum amount of insurance an insurer can retain before ceding business to a reinsurer. The maximum amount may depend on the insured's age, health, coverage in force, as well as the insurance company's financial condition.

Revocable Beneficiary
A beneficiary whose rights are subject to the rights of the policyowner who may revoke or change the beneficiary designation and exercise any ownership rights under the policy without the beneficiary's consent.

Rider
A special provision attached to a policy that expands or restricts the benefits otherwise payable or excludes certain conditions from coverage..

Risk
In life insurance, it is the probability of mortality.

Risk Classification
An underwriting process used to determine the appropriate price category or Premium Rate Class of the proposed insured, according to risk factors associated with that person's health condition, occupation, lifestyle, etc.

Rollover
The tax-free transfer of accumulated assets from a qualified retirement plan to an IRA, which must be completed within 60 days of the termination of the original plan.

(some definitions taken from the National Association of Insurance Commissioners' Life Insurance Buyers Guide)