Secondary Market - The secondary market is populated by buyers willing to pay what they determine to be fair market value.
Section 1035 Exchange - This refers to a part of the Internal Revenue Code that allows owners to replace a life insurance or annuity policy without creating a taxable event.
Section 7702 - Part of the Internal Revenue Code that defines the conditions a life policy must satisfy to qualify as a life insurance contract, which has tax advantages.
Separate Account - A separate account is an investment option that is maintained separately from an insurer's general account. Investment risk associated with separate-account investments is born by the contract owner.
Solvency - Having sufficient assets -- capital, surplus, reserves -- and being able to satisfy financial requirements -- investments, annual reports, examinations -- to be eligible to transact insurance business and meet liabilities.
Standard Auto - Auto insurance for average drivers with relatively few accidents during lifetime.
State of Domicile - The state in which the company is incorporated or chartered. The company also is licensed (admitted) under the state's insurance statutes for those lines of business for which it qualifies.
Statutory Reserve - A reserve, either specific or general, required by law.
Stock Insurance Company - An incorporated insurer with capital contributed by stockholders, to whom earnings are distributed as dividends on their shares.
Stop Loss - Any provision in a policy designed to cut off an insurer's losses at a given point.
Subaccount Charge - The fee to manage a subaccount, which is an investment option in variable products that is separate from the general account.
Subrogation - The right of an insurer who has taken over another's loss also to take over the other person's right to pursue remedies against a third party.
Successive Periods - In hospital income protection, when confinements in a hospital are due to the same or related causes and are separated by less than a contractually stipulated period of time, they are considered part of the same period of confinement.
Surplus - The amount by which assets exceed liabilities.
Surrender Charge - Fee charged to a policyholder when a life insurance policy or annuity is surrendered for its cash value. This fee reflects expenses the insurance company incurs by placing the policy on its books, and subsequent administrative expenses.
Surrender Period - A set amount of time during which you have to keep the majority of your money in an annuity contract. Most surrender periods last from five to 10 years. Most contracts will allow you to take out at least 10% a year of the accumulated value of the account, even during the surrender period. If you take out more than that 10%, you will have to pay a surrender charge on the amount that you have withdrawn above that 10%.
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