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A Glossary of Insurance Terms

Many times we encounter terminology in the arcane world of insurance lingo that we don’t understand. Keep this guide close at hand so you won’t be confused by the next big word or phrase that comes at you from the home office or advanced underwriting.

By Ron Hauenstein, CLU, ChFC

Many times we encounter terminology in the arcane world of insurance lingo that we don't understand.

Keep this guide close at hand so you won’t be confused by the next big word or phrase that comes at you from the home office or advanced underwriting.

Actuary: Someone who is fascinated by the number of cadavers that will be able to dance on the head of a pin in the year 2037. (See Alien and Phantom Menace.)

Agent: An individual with little capacity to discern truth from fiction, as in the difference between “guaranteed” and “not guaranteed.” Generally immune to pain of rejection. Usually willing to believe any statement made by a home-office executive. Also susceptible to promises and claims from clients and prospects, such as “I’ll call you next week,” or “No, I’ve never used drugs.” (See “Eternal Optimist.”)

Business overhead expense: The cost of fluorescent light bulbs.

Cash value: A mysterious and probably fictitious sum of money that is never as large as it was promised to be. Heavily promoted by agents as a reason to take out a second mortgage, forgo vacations for the next decade, hock the car and sell the wife’s heirloom jewelry.

Credit card: A device that allows you to buy something you don’t need at a price you can’t afford with money you don’t have to impress people you don’t like.

Declination: A system of going broke rapidly.

Full disclosure: Goal of company compliance officers. Generally impossible to achieve in less than 157 pages. (See link to "Sources of Bail Bonds.")

Home office procedure: Mysterious edicts not compiled in any written form. Constantly morphing. Can have life expectancy measured in nanoseconds.

IMSA: Generally believed to stand for Insurance Marketplace Standards Association, an industry watchdog that sets guidelines for sales practices. Among agents, it stands for “I Might Say Anything.”

Interpolated terminal reserve: A term used at cocktail parties to impress CPAs and proctologists. A life insurance policy value that can only by calculated by a Tibetan monk on the fourth Thursday of February. Generally near zero.

NALIAFPCPAPCABTOIASBEPAPGSMLMD: The new name NALU finally agreed to after 37 deadlocked ballots. Seeking to broaden the organization’s base, delegates voted to be the “National Association of Life Insurance Agents, Financial Planners, Certified Public Accountants, Property & Casualty Agents, Bank Trust Officers, Independent Agents, Stock Brokers, Estate Planning Attorneys, Planned Giving Specialists, & Multi-Level Marketing Dropouts.” It also agreed to adopt horizontal stationery to accommodate the new title. When properly pronounced, rhymes with an infectious, terminal disease.

NIMCRUT: Something you kill with a fly swatter.

Prospectus: A tome designed to (1) kill any possibility of a sale; (2) create hernias; and (3) threaten national forests.

Often carefully concealed by a thick layer of dust.

Qualified lead: An extremely rare occurrence. An individual with the need, and motivation to buy, as well as the ability to pay for, life insurance. Last sighted in 1952.

Second-to-die policy: A special type of life insurance created for the two-headed alien market. Developed in consultation with George Lucas.

Target premium: The amount of money needed to properly fund an agent’s lifestyle.

Trail commission: A system of going broke slowly.

Underwriting department: A spot in cyberspace that is generally unreachable by even the most advanced communications devices. More difficult to negotiate with than a grenade-laden terrorist. (See also “Application Aging Unit.”)

Ron Hauenstein, CLU, ChFC, has had employment applications rejected by several dictionary publishers. He welcomes your glossary contributions at 818 W. Riverside Ave., Suite 500, Spokane WA 99201, or e-mail: rhauenstein@ft.newyorklife.com.

 


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