target-benefit pension plan
A defined contribution plan where
the contribution amount is designed to provide the participant with a
specific (or "target") benefit. However, the sponsor does not guarantee
the benefit, so no adjustment is made if actual investment results (or
other variables) differ from initial projections. At retirement, the funds
in the employee's account may be paid in a lump sum or used to purchase an
annuity.
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tax-deferred annuity (TDA) plan
See Section 403(b) Plan.
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Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA)
United States federal legislation designed to increase tax
revenues through a variety of means such as restrictions on the tax
deductibility of certain investments, including some life insurance and
pension products, and the elimination of distinctions in tax law
applicable to partnerships and sole proprietorships.
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tax-sheltered annuity (TSA) plan
See Section 403(b) Plan.
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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. Also known as interim insurance agreements and
temporary insurance receipts.
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temporary life annuity
A series of regular periodic payments,
each of which is made only if a designated person is then alive, with the
number of such payments limited to a specified number.
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ten-day free look
See free examination period.
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terminal policy dividend
A substantial extra dividend or
pro-rata dividend covering the period between the last policy anniversary
date and the termination date of the policy.
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termination expenses
The cost of processing death benefit
claims and cash surrenders.
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term insurance
Life insurance under which the benefit is
payable only if the insured dies during a specified period. See also
convertible term insurance, credit life insurance, decreasing term
insurance, deposit term insurance, family income insurance, increasing
term insurance, level term insurance, mortgage redemption insurance, and
renewable term insurance.
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territory
(1) The geographical area for which a home service
agent has exclusive responsibility. Home service districts are divided
into territories. Also called an account, an agency, or a debit. (2) The
geographical area for which an insurance agent or general agent has
responsibility.
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testamentary disposition
In life insurance, the use of a will
to indicate the person or party to whom the proceeds of a life insurance
policy should be distributed.
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third-party administrator (TPA)
An organization that
administers an insurance contract for a self-insured group but that does
not have financial responsibility for paying claims. The self-insured
group pays its own claims. See also administrative services only (ASO)
contract and self-insured group insurance.
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third-party application
An insurance application submitted by
a person or party other than the proposed insured.
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third-party endorsement
A method of marketing individual
insurance to groups. In the third-party endorsement method, a life
insurance company makes an agreement with an organization (such as a club,
a business, or a professional association) to sell individual insurance to
members or employees of the organization. The organization endorses the
insurer's products, but the group members are free to buy the products or
not.
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third-party insurance
Insurance coverage applied for by
someone other than the proposed insured.
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third-party payer
Any payer of health-care services other
than you. This can be an insurance company, an HMO, a PPO, or the federal
government.
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three-factor contribution method
A method for calculating
policy dividends, considering separately the contributions arising from
interest, mortality, and loading.
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thrift plan
See savings plan.
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top-heavy plan
In the United States, a pension plan or
employee-benefit plan which provides more than 60% of its accrued benefits
to the owners, executives or most highly paid employees of a company
(known as key employees). To remain qualified, a top-heavy plan must
provide certain minimum benefits to nonkey employee participants. See also
key employee.
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total disability
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.
Therefore, 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. See also
disability.
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total-needs programming
A basis for selling life insurance in
which the agent takes into consideration all the prospect's financial
needs, calculates the amount of money required to take care of all those
needs, determines the amount of funds that will be available when the
prospect dies, and calculates the amount of life insurance required to
provide the difference. Sometimes called financial planning. Contrast to
single-need selling.
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traditional net cost (TNC) method
An insurance policy cost
comparison method that is prohibited by the NAIC Model Life Insurance
Solicitation Regulation primarily because it ignores the time value of
money.
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travel accident benefit
An accidental death benefit often
included in group insurance policies issued to employer-employee groups.
This benefit is payable only if an accident occurs while an employee is
traveling for the employer.
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triple indemnity
A type of accidental death benefit coverage
that pays an additional benefit equal to twice the policy's basic death
benefit if the accident is sustained while the insured is a passenger in a
public conveyance operated by a licensed common carrier, such as a bus,
train, or airplane.
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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).
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trusteed pension plan
A pension plan in which the plan
sponsor chooses a trustee to be responsible for investing the plan's
assets or for choosing an investor for the plan's assets. Also known as a
pension trust.
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trust fund plan
A pension plan under which employer and
employee contributions are forwarded to a trustee, who is responsible for
investing the contributions and is often responsible for making benefit
payments to plan participants. The duties of the trustee, who may be an
individual or an institution such as a bank trust department, are spelled
out in a trust agreement. A trustee generally does not guarantee that the
trust fund will be adequate to pay current and future pension benefits.
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twisting
A form of misrepresentation in which an agent
induces a policyowner to cancel an insurance policy and use the cash value
of that policy to buy a new policy. In the process, the agent does not
inform the policyowner of the differences between the two policies nor the
financial consequences of the replacement. Twisting involves a misleading
or incomplete comparison of the policies to the disadvantage of the
policyowner. Twisting is a prohibited insurance sales practice.
