Category: Glossary

severity: The ultimate loss on a mortgage incurred by an insurer as a percentage of the insurer’s exposure.

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settlement options: One of several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have policy proceeds paid.

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separate account: An asset account established by a life insurance company separate from other funds, used primarily for pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.

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self-insurance: A program financed entirely by the employer for insuring employees instead of purchasing coverage from a commercial carrier.

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self-administration: Maintenance of all records and assumption of responsibility, by a group policyholder, for those covered under its insurance plan. Responsibilities include preparing the premium statement for each payment date and submitting it with a check to the insurer. The insurance company, in most instances, has the contractual prerogative to audit the policyholder’s records.

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second-to-die life insurance: A form of insurance, traditionally used as an estate planning tool, that pays a death benefit only upon the death of the insured who survives the longest. Its main purpose is to pay estate taxes upon the death of the second insured. Because it is based on joint life expectancy, its premium is less than the total premiums for individual policies on the same lives. This type of insurance is available in many forms, including policies with interest-rate features and flexible premiums.

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SVO: Securities valuation office, a division of NAIC

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SR-22: A form from the DMV that shows a driver holds auto insurance. Many states require it for high-risk drivers.

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SPDA: Single premium deferred annuity

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SPAC: Single premium annuity contract

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