Glossary of Insurance Related Terms

Ultimate Mortality

Descriptive of the insured's mortality experience after the select period, when mortality increases due to health deterioration.

Ultimate Mortality Table

A mortality table based on mortality experience from which the first few policy years after issue (usually five) have been excluded to eliminate the effect of possible adverse selection. (LI)

Underwriter

(1) The person who assesses and classifies the degree of risk that a proposed insured represents. (2) The person or organization that guarantees that money will be available to pay for losses that are insured against. In this sense, the insurance company is the underwriter.

Underwriting

(1) The process of assessing and classifying the degree of risk that a proposed insured represents. Also called selection of risks. (2) Providing guarantees that money will be available to pay for losses that are insured against.

Underwriting Classes

Classification given to an individual based on personal and family health history.

Underwriting department

The department in a life and health insurance company that selects the risks that the company will insure. The underwriting department tries to make sure that the actual mortality or morbidity rates of the company’s insureds do not exceed the rates assumed when premium rates were calculated. The underwriter considers an applicant’s age, weight, physical condition, personal and family medical history, occupation, financial resources, and other selection factors to determine the degree of risk represented by the proposed insured. This department also participates in the negotiation and management of reinsurance agreements, through which an insurance company transfers some or all of an insurance risk to another insurance company. Also called the new business department.

Underwriting impairments

Factors that tend to increase an individual’s risk above that which is normal for his or her age.

Underwriting Profit or Loss

The amount of money which an insurance company gains or loses as a result of its insurance operations. It excludes investment transactions and federal income taxes.

Underwriting requirements

Printed instructions that indicate what evidence of insurability is required for a given situation and which of several optional information sources will be needed to provide underwriters with necessary information. Sources of information may include medical records and the results of physical examinations. Underwriting requirements are graduated based on the proposed insured’s age and the amount of coverage requested.

Unearned Premium

The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.

Uniform Premium

A rating structure in which one premium applies to all insured, regardless of age, sex, or occupation.

Uniform Provisions

A set of provisions required by state law in Life Insurance policies. The actual wording of the provisions can vary, but the intent must be the same as the wording of the uniform provisions. (LI)

Unilateral Contract

A contract having promises by one party only.

Uninsurable

An individual who is unable to obtain insurance coverage due to the high risk he or she represents to the insurance company. For example, most insurance companies would consider an individual with a serious life-threatening disease to be uninsurable for purposes of purchasing life insurance.

Uninsurable Risk

One not acceptable for insurance due to excessive risk.

Uninsurable risk class

The group of people with a risk of loss so great that an insurance company will not offer them insurance.

Unisex Rates

Rates that are used for both male and females.

Unisex States

States that allow the use of Unisex rates (as of August 30, 2001: only Montana).

United States Government Life Insurance (USGLI)

A form of Life Insurance issued to members of the armed forces during World War I until about the end of World War II. (LI)

Universal Life

A combination flexible premium, adjustable life insurance policy. The premium payer may select the amount of premium he or she can pay and the policy benefits are those which the premium will purchase. Or, the premium payer may change the amount of insurance and pay premium accordingly. Many believe this is the only true solution to the "buy term invest the difference" problem. (LI)

Universal life insurance

A form of permanent life insurance that is characterized by its flexible premiums, flexible face amounts, and unbundled pricing factors.

Unscheduled Premium Payments

In Universal Life insurance, the policyowner can pay extra premiums in addition to the scheduled premium payment amount. These payments can be made at any time, but are subject to a minimum amount. (LI)