Glossary of Insurance Related Terms

Tax Sheltered Annuity

An annuity program under which contributions reduce the taxable income of participating employees, and the benefits are not taxable until distributed. (LI)

Tax-Deferral

Postponing the payment of income taxes until some point in the future, often at retirement. Generally, the cash value growth inside life insurance is eligible for deferral, unless the amount of cash received through surrender exceeds the policy's tax basis.

Tax-Payer Identification Number (TIN)

The policy owner's Social Security number. The insurer must have a certified tax-payer identification number to avoid backup withholding when there is taxable gain.

Teachers Insurance and Annuity Association

An organization selling Life and Health Insurance and annuities to college and university staff members. (LI,H)

Temporary insurance agreements

Legal agreements between an insurer and a proposed insured that provide a guaranteed amount of temporary life insurance coverage for a specific period of time, usually the underwriting period.

Ten-day free look

The period of time after delivery of an insurance policy during which the policyowner may review the policy and return it to the company for a full refund of the initial premium. Full coverage is in force during this period. Also called a ten-day free look.

Ten-Year Level Term

A Term Life insurance policy with a level death benefit where the premium remains the same for ten years.

Term Conversion

Many Term policies come with conversion rights guaranteeing that, for a specified period of time, the policy can be converted to a permanent plan for the equivalent amount of coverage, without having to provide additional evidence of insurability.

Term insurance

Life insurance under which the benefit is payable only if the insured dies during a specified period.

Term Life Insurance

A life insurance plan that provides death benefit protection only and for a specified period of time (term). The policy pays benefits only if the insured dies during the term.

Termination

Termination of a policy upon the policy owner's failure to pay the premium within the grace period.

Tertiary Beneficiary

In life insurance, a beneficiary designated as third in line to receive the proceeds or benefits if the primary and secondary beneficiaries do not survive the insured.

Thaisoi

An ancient Greek benevolent society which was a step in the evolution of Life and Health Insurance. (LI,H)

Third Party Administrator (TPA)

A firm which provides administrative services for employers and other associations having group insurance policies. The TPA in addition to being the liaison between the employer and the insurer is also involved with certifying eligibility, preparing reports required by the state and processing claims. TPA's are being used more and more with the increase in employer self-funded plans. (LI,H)

Third-Party Owner

A policyowner who is not the insured.

Thirty-Year Level Term

A Term Life insurance policy with a level death benefit where the premium remains the same for thirty years.

Tontine Policy

A kind of policy that came into use after the Civil War. It was a high premium contract that paid dividends to those participants who were still living at the end of a stated period, at the expense of those who had died or let their policies lapse. It is almost the opposite of insurance and is no longer allowed by law. (LI)

Total disability

A disability that meets the definition in a disability income policy and that entitles the insured to receive full disability income benefits. When a disability begins, it is typically considered a “total disability” if it prevents an insured person from performing the essential duties of his or her regular occupation. Under many insurance policies, the definition of total disability changes at the end of a specified period after the disability begins, usually two years. Thereafter, insureds are considered totally disabled only if their disabilities prevent them from working at any occupation for which they are reasonably fitted by education, training, or experience.

Transfer for Value

Transfer of the ownership of a life insurance contract for valuable consideration.

Triple Indemnity

A provision that some or all of the benefits under a policy will be increased by a stated multiple, such as 100% or 200%, in the event that a peril occurs in a specified way, e.g., double indemnity on Life Insurance for accidental death. (LI)

Triple Protection

A form of Life Insurance that is usually a combination of Whole Life and twice as much Term Insurance. The Term portion applies until a stated date. Such a policy might be used to provide maximum protection to an individual at an earlier age when the need for insurance is greater but the ability to pay is less. (LI)

True Group Insurance

Group insurance issued under a master contract with certificates of insurance that are not policy contracts issued to persons included in the group. This would be in contrast to Franchise or Wholesale "Group" Insurance, under which a covered person is issued an individual policy contract. (LI,H)

Trust

A legal instrument allowing one party to control property for the benefit of another.

Trust agreement

In a trusteed pension plan, the contract between the plan sponsor and the trustee that describes the trustee’s authority and responsibilities for investing and administering plan assets. Trust agreements are also found when group insurance is provided through a multiple-employer trust (MET).

Trustee

The institution or individual that is named to hold, manage, and distribute a trust's assets.

Twenty-Five Year Level Term

A Term Life insurance policy with a level death benefit where the premium remains the same for twenty-five years.

Twenty-Year Level Term

A Term Life insurance policy with a level death benefit where the premium remains the same for twenty years.

Twisting

A prohibited insurance sales practice that occurs when an agent induces a policyowner to cancel an insurance policy and use the cash value of that policy to buy a new policy, when doing so is not in the policyowner’s best interests.