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Face Amount
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The amount stated on the face of the policy that will be paid upon the death of the insured. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.
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Face Page
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The first page of a life insurance policy. It includes basic information such as the policy number, type of policy, amount of insurance and premium amount, as well as the name of the insured, the owner and the beneficiary.
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Facility of Payment
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A contractual provision that allows the insurer, under stated conditions, to pay insurance benefits of up to $1,000 to a person or persons other than the insured, the designated beneficiary, or the insured's estate.
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Facultative Reinsurance
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An individual reinsurance negotiated and placed individually.
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Facultative/Obligatory
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A reinsurance term for a contract where the reinsured can select which risks he cedes to the reinsurer, but where the reinsurer is obliged to accept all cessions made.
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Fair premium
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The premium level that is just sufficient to fund an insurer's expected costs and provide insurance company owners with a fair return on their invested capital.
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Family Income Policy
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A combination of decreasing term and ordinary life insurance that, in the event of the insured's death within a specified period such as twenty years, pays a monthly income of $10 per $1000 of ordinary life face amount for the remainder of the specified period, and the face amount of ordinary life at the end of this period.
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Family Policy
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A life insurance policy providing coverage on all or several family members in one contract. The primary breadwinner's coverage is typically Whole Life insurance, with the spouse and children, including those born after the policy is issued, insured with smaller amounts of Term Insurance.
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Fidelity Bond
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Bond that protects an employer against dishonest or fraudulent acts of employees, such as embezzlement, fraud, or theft of money.
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Fiduciary
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A person who holds something in trust for another.
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Fifteen-Year Level Term
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A Term Life insurance policy with a level death benefit where the premium remains the same for fifteen years.
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Final Expenses
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Immediate expenses incurred at the time of a person's death. These include funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes.
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Five-Year Level Term
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A Term Life insurance policy with a level death benefit where the premium remains the same for five years.
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Fixed Amount Option
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Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.
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Fixed Annuity
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Annuity whose periodic payment is a guaranteed fixed amount.
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Fixed Expenses
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Fixed expenses are those not directly related to a policy (for example: a premium tax or the payment of a commission associated with the sale of a policy). Includes: advertising, accounting, planning, rent, computer facilities, etc. These expenses must be allocated to each "block" of policies sold; the distribution is discretionary and can be critical.
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Fixed Period Option
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Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.
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Flat Schedule
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A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
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Flexible Premium Policy or Annuity
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A life accident policy or annuity under which the policy holder or contract holder may vary the amounts or timing of premium payments.
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Flexible Premium Variable Life Insurance
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A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance.
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Foreign Insurer
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An insurer is a foreign company in any state other than the one in which it is incorporated.
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Fortuitous Loss
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Unforeseen and unexpected loss that occurs as a result of chance.
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Franchise Insurance
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Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless its simultaneously discontinues or modifies all other policies in the same group.
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Fraternal Insurance
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Insurance provided by fraternal orders or societies to their members, special group of people, namely, members of a lodge or a fraternal order. Such insurance may be written on an assessment basis or on a legal reserve basis.
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Fraternal Life Insurance
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Life insurance provided by fraternal orders or societies to their members.
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Fraternal Society
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A social organization that provides insurance for its members.
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Free-Look Period
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A provision required in most states whereby policyowners have a period of time – usually, 10, 20 or 30 days, depending on the state – to examine their newly issued policy, and return it for a full refund of premium if not satisfied for any reason.
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Fronting Company
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A domestic insurance company that provides claims or administrative services to a captive.
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Funeral Expenses
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Expenses incurred for a funeral and burial. These can include casket, vault, grave plot, headstone and funeral director.
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Future Increase Option
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A provision found in some insurance policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured's physical condition.
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