PAC system

See preauthorized check system.

package selling

An insurance sales method that involves putting a simple insurance plan into a standardized presentation and then looking for customers who can use that package of coverage.

paid-up additional insurance option

An option, available to the owners of participating life insurance policies, that allows the policyowner to use policy dividends to purchase additional insurance on the insured’s life; the paid-up additional insurance is issued on the same plan as the basic policy and in whatever face amount the dividend can provide at the insured’s attained age. See also dividend, participating policy, and policy dividend options.

paid-up policy

An insurance policy that requires no further premium payments but continues to provide coverage.

paramedical report

The portion of an insurance application designed to be completed by the proposed insured and a medical technician, a physician’s assistant, or a nurse, rather than a physician. The proposed insured answers questions about his or her health history and the examiner records the results of certain physical measurements. In life insurance, the paramedical report is known as Part II of the insurance application. See also medical report and Part II.

par policy

See participating policy.

Part I

The section of a life insurance application that identifies the proposed insured (and the policyowner, if different from the proposed insured), specifies the amount and type of coverage requested, and provides basic insurability information. See also Part II.

Part II

The section of a life insurance application that provides medical information about the proposed insured. See also medical report, paramedical report, and Part I.

partial disability

See residual disability.

partial surrender provision

See policy withdrawal provision.

participating policy

A type of insurance policy that allows policyowners to receive policy dividends. Also known as par policy. See also dividend.

partnership insurance

A type of business insurance that provides cash so that the remaining partners in a business can buy the business interest of a deceased or disabled partner. See also business continuation insurance plan.

par value of a bond

See bond principal.

par value of stock

The designated legal value assigned to each outstanding share of common stock; primarily used for accounting purposes. Also known as nominal value and face value.

payback period

In capital budgeting, the number of years that must pass before the earnings a product produces equal the initial investment in the product.

payee

(1) The person or party who is to receive insurance policy proceeds in accordance with the terms of a settlement agreement. See also settlement agreement. (2) The person, usually the annuitant, who receives periodic annuity benefit payments according to the terms of an annuity contract. See also annuitant.

payment of insurance money into court

In Canada, a procedure available to insurers in the common law jurisdictions under which an insurance company that cannot determine which claimant is entitled to receive insurance policy proceeds may pay the proceeds to a court and ask the court to decide the proper recipient and thus obtain a valid discharge. In Quebec, an insurer in such a situation can obtain a valid discharge by paying the policy proceeds to the Minister of Finance. See also interpleader.

payout options

payout options provision

An annuity contract provision that grants the contract owner several choices as to how the insurer will distribute the contract’s accumulated value. Also known as settlement options provision. See also payout options.

payout period

(1) The period during which a payee receives payments. (2) The period during which an insurer makes annuity benefit payments. Also known as liquidation period and annuitization period.

payroll deduction method

An automatic insurance premium payment technique whereby a policyowner’s employer deducts insurance premiums directly from the employee’s paycheck.

PBGC

See Pension Benefit Guaranty Corporation.

PCP

See primary care physician.

pension

A lifetime monthly income benefit payable to a person upon his or her retirement.

Pension Benefit Guaranty Corporation (PBGC)

In the United States, a federal corporation that is responsible for guaranteeing the payment of retirement benefits for participants in defined benefit retirement plans when those plans become financially unable to pay benefits. See also Employee Retirement Income Security Act (ERISA).

Pension Benefits Act

A law enacted by the federal government and each of the provincial governments in Canada to govern the terms and operation of private pension plans.

pension fund

(1) Assets used to pay the pensions of retirees. (2) An investment management company that manages the assets used to pay the pensions of retirees.

pension plan

An agreement under which an employer or employee organization establishes a plan to provide covered employees with a lifetime monthly income benefit that begins at their retirement. The covered employees are pension plan participants. The entity that establishes or maintains the pension plan is the pension plan sponsor.

pension plan administrator

See plan administrator.

pension plan beneficiary

The individual who receives benefits under a pension plan. Current or former plan participants, as well as dependents, spouses, and survivors of plan participants, can all be pension plan beneficiaries.

pension plan document

A detailed legal agreement establishing the existence of a pension plan and specifying the rights and obligations of various parties to the pension plan.

pension plan valuation method

See actuarial cost method.

per capita beneficiary designation

A type of life insurance policy beneficiary designation in which the life insurance benefits are divided equally among the designated beneficiaries who survive the insured. For example, if the policy specifies two beneficiaries, but only one is surviving at the time of the insured’s death, then the remaining beneficiary receives the entire policy benefit. Contrast with per stirpes beneficiary designation.

percentage-of-income rule

In life insurance, a rule that underwriters use to determine the amount of money an applicant can afford to spend on insurance according to the applicant’s income. Insurers often stipulate that a maximum of 20 percent of an applicant’s gross income can be used to buy life insurance. Also known as 20-percent rule. See also factor table.

performance plan

See master budget.

period budget

A budget that covers a specific time frame, such as one month or one year, and expires at the end of that time frame.

period certain

The stated period over which an insurer makes periodic benefit payments under an annuity certain. See also annuity certain.

period certain annuity

See annuity certain.

periodic annuity payment factor

Number that shows, for annuitants at a given age, the periodic income payment amount that a contract owner can purchase for each $1,000 of single premium applied.

periodic fee

An amount that an insurer charges the owner of an unbundled insurance product, at predetermined intervals, for example, every year or month, to compensate the insurer for administrative expenses.

periodic level-premium annuity

See level premium policies.

period of confinement

In long-term care (LTC) insurance, a continuous time period during which an insured person is receiving uninterrupted long-term care at an acute hospital, a skilled nursing facility, or another inpatient facility.

permanent account

In accounting, a balance sheet account that has a balance at the beginning of each accounting period.

permanent flat extra premium

See flat extra premium method.

permanent life insurance

Life insurance that provides coverage throughout the insured’s lifetime, provided premiums are paid as stated in the policy, and also provides a savings element. Contrast with term life insurance.

persistency

A measure of how long the various policies in a group of policies remain in force as a result of the continued payment of renewal premiums.

persistency bonus

A sum of money paid as compensation to an insurance agent when a policy continues in force beyond an initial period, usually five years.

persistency rate

For a specified group of insurance contracts, a measure of the percentage of contracts that remain in force during a specified period, such as a year. Contrast with lapse rate.

personal history interview (PHI)

In insurance underwriting, a conversation with the proposed insured during which an underwriter clarifies information and gathers additional information needed for underwriting.

personal line of credit

See line of credit.

personal property

Any property that is not real estate, including goods such as clothing, furniture, and automobiles, and intangible items such as contractual rights. In Quebec, known as moveable property. Contrast with real estate.

personal-producing general agency (PPGA) system

A nonagency building insurance distribution system that uses personal-producing general agents to distribute insurance and annuity products. See also nonagency building distribution system and personal-producing general agent.

personal-producing general agent

A commissioned insurance sales agent who generally works alone, is not housed in one of an insurer’s field offices, engages primarily in the sales of new policies, and holds contracts with several insurers.

personal selling distribution system

A distribution system in which commissioned or salaried salespeople sell products through verbal and written presentations made to prospective purchasers.

per stirpes beneficiary designation

A type of life insurance policy beneficiary designation in which the life insurance benefits are divided among a class of beneficiaries; for example, children of the insured. The living members of the class and the descendants of any deceased members of the class share in the benefits equally. Contrast with per capita beneficiary designation.

PHI

See personal history interview.

physical damage insurance

In property casualty insurance, coverage for losses the insured incurs due to damage to his covered automobile caused by collision or other perils.

physical examinations provision

An individual health insurance policy provision that gives the insurer the right to conduct a medical examination of the insured at the insurer’s expense when reasonably necessary to the settlement of a pending claim.

Physicians’ Current Procedural Terminology

One of the most commonly used codes for medical treatments that health care providers use to communicate information about medical expense claims to insurers. See also diagnostic and treatment codes and International Classification of Diseases and Related Health Problems (ICD).

physiological age

For a person, the relative age or youthfulness of his or her vital organs and their functioning.

plan administrator

(1) In a group insurance plan, the party responsible for handling the administrative aspects of the plan. (2) For purposes of the Employee Retirement Income and Security Act (ERISA) in the United States, the individual or organization designated in a retirement plan’s summary plan description as being responsible for assuring the plan complies with applicable regulatory requirements.

plan continuation valuation

An assessment of the value of a pension plan that is based on the assumption that the plan will continue in operation. Contrast with plan termination valuation.

plan document

(1) A document that specifies the terms of a retirement plan. (2) For purposes of the Employee Retirement Income and Security Act (ERISA) in the United States, a written document by which a qualified retirement plan must be established and maintained and that describes the benefits provided by the plan, the plan’s funding, and the procedure that will be followed to amend the plan.

plan participant

An employee or union member who is covered by a group retirement plan that is sponsored by the employer or union. See also plan sponsor.

plan sponsor

The employer or union that establishes a group retirement plan for the benefit of plan participants. See also plan participant.

plan termination valuation

An assessment of the value of a pension plan that is based on the assumption that the plan is being terminated as of the valuation date. Contrast with plan continuation valuation.

plan trustee

An individual or entity appointed by a qualified retirement plan sponsor who holds legal title to the retirement plan assets on behalf of the plan participants. See also plan participant and plan sponsor.

PNO policy

See premium notice ordinary policy.

point of service (POS) plan

Seeended HMO.

point-to-point method

For an equity-indexed annuity, a method for crediting excess interest that involves comparing the value of the index at the start of the annuity contract term to its value at the end of the term to determine what, if any, excess interest has accrued because of a change in the index.

policy

A written document that contains the terms of the contractual agreement between an insurance company and the owner of the policy.

policy accounting

See premium accounting.

policy acquisition expenses

Any costs that an insurer incurs related to obtaining and issuing new insurance business.

policy and contract claims

An insurer’s liabilities for all types of insurance policy and annuity contract claims that must be settled. Also known as claim liabilities.

policy anniversary

As a general rule, the date on which coverage under an insurance policy became effective.

policy benefit

See benefit.

policy charge

An amount that an insurer adds to a policy’s premium or deducts from a policy’s cash value in order to pay for the insurer’s expenses and to provide the insurer with a profit. Also known as policy fee.

policy dividend

See dividend.

policy dividend options

Ways in which the owner of a participating insurance policy may receive policy dividends. See also additional term insurance option, cash dividend option, dividend accumulations option, paid-up additional insurance option, and premium reduction option.

policy filing

The act of submitting a contract form and any other legally required forms and documents to the insurance departments of the states and provinces where the insurance or annuity contract will be issued and sold.

policy form

A standardized contract form, drafted by an insurer and filed with insurance regulators, that shows the terms, conditions, benefits, and ownership rights of a particular insurance product.

policy grace notice

A written notification from an insurance company to a policyowner notifying the policyowner that the policy’s grace period is about to expire. Also known as lapse notice.

policyholder

In group insurance, the employer or other type of organization that decides what kind of coverage to purchase for the group, negotiates the terms of the master contract, enters into a group insurance contract with the insurer, and usually administers part or all of the coverage. Contrast with policyowner. See also group insurance.

policy illustration

See sales illustration.

policy issue

The insurance company function that involves preparing the insurance contract, including modifying the applied-for coverage according to instructions from the underwriter, and facilitating the delivery of the policy to the customer, usually by way of the agent who sold the insurance.

policy lapse

See lapse.

policy liability

See policy reserve.

policy loan

A loan that an insurer makes to the owner of a permanent life insurance policy that is secured by the policy’s cash value. When the policy’s benefits are paid, the amount of any outstanding loan is deducted from the policy benefits.

policy loan provision

A provision that is included in permanent life insurance policies that build a cash value and that specifies the terms on which a policyowner may obtain a loan. See also policy loan.

policyowner

The person or other entity that enters into an individual contract of insurance with an insurer and actually owns the individual insurance policy. Contrast with policyholder.

policyowner dividend liabilities

In insurance accounting, amounts that represent all policyowner dividends that have been declared by an insurer’s board of directors, but which have not yet been paid to policyowners.

policyowner dividend payment options

See policy dividend options.

policyowner service

In an insurance company, all customer service activities performed for agents and for the people or parties who own or hold insurance policies and annuities. Also known as customer service and client service.

policy premium method (PPM)

A type of prospective gross level-premium reserve valuation method that is used by insurers in Canada. See gross reserve valuation method and prospective reserve valuation method.

policy proceeds

See benefit.

policy prospectus

See prospectus.

policy reserve

For an insurer, a liability amount that, together with future premiums and investment income, the insurer estimates it will need to pay contractual benefits as they come due under in-force policies. Policy reserves represent the insurer’s obligations to customers. Also known as contractual reserve, legal reserve, and statutory reserve.

policy rider

An addition to an insurance policy that becomes a part of the insurance contract and that is as legally effective as any other part of the policy. Riders usually expand or limit the benefits payable under the contract. Also known as endorsement.

policy rights

The contractual rights of an insurance policy owner, such as the right to the policy values, the right to assign the values to another party, and the right to designate the beneficiary of the policy proceeds upon the death of the insured.

policy summary

A written statement that describes specific elements of the insurance policy being considered for purchase and provides the consumer with cost comparison information.

policy term

The specified period of time during which a term life insurance policy provides coverage.

policy withdrawal provision

A universal life insurance policy provision that permits the policyowner to reduce the amount in the policy’s cash value by withdrawing up to the amount of the cash value in cash. Also known as partial surrender provision.

pooling

A method of calculating group insurance premium rates by which the insurer considers several small groups as one large group for risk assessment purposes. Contrast with experience rating.

population mortality table

A chart that shows rates of death for the general population, based on data from a population census.

portability

The degree to which an individual’s insurance coverage or pension benefits can be continued when the participating individual leaves the providing benefit plan.

portfolio

In investments, a diversified collection of various securities usually assembled by an investor for the purpose of meeting a defined set of financial goals.

portfolio method

An accounting method that insurers use for deferred annuities that credits all funds in the contract owner’s annuity account with one specified current rate of interest, regardless of when the money was placed in the account. Contrast with new money method.

positive leverage effect

An effect of earning a better profit due to the presence of leverage. See also financial leverage and total leverage.

POS plan

Seeended HMO.

post-notice

A notice that must be sent to an insurance applicant if an underwriter denies an application or rates a policy based wholly or partially on information contained in a report from a consumer reporting agency. See also consumer credit report and pre-notice.

PPA

See preferred provider arrangement.

PPGA

See personal producing general agency.

PPM

See policy premium method.

PPO

See preferred provider organization.

preadmission certification

Authorization from an insurer approving nonemergency, inpatient hospital treatment. Also known as precertification.

precedent

A court’s decision which must generally be followed by that court and the lower courts in the same jurisdiction in cases involving the same issue and substantially the same facts.

precertification

See preadmission certification.

predictive quality

A characteristic of accounting information that enables interested users to form a reasonably accurate estimate of a company’s financial strength or earnings potential.

pre-existing condition

(1) According to most group health insurance policies, a condition for which an individual received medical care during the three months immediately prior to the effective date of her coverage. (2) According to most individual health insurance policies, an injury that occurred or a sickness that first appeared or manifested itself within a specified period—usually two years—before the policy was issued and that was not disclosed on the application for insurance.

pre-existing conditions provision

An individual and group health insurance policy provision which states that benefits will not be paid for pre-existing conditions until the insured has been covered under the policy for a specified length of time.

preference beneficiary clause

A life insurance policy provision which states that if the policyowner does not name a beneficiary, then the insurer will pay the policy proceeds in a stated order of preference. Also known as succession beneficiary clause.

preferred beneficiary

In Canada, a spouse, child, parent, or grandchild named as the beneficiary in any life insurance policy issued before July 1, 1962. A preferred beneficiary’s written consent is required for the policyowner to change the beneficiary to anyone outside this group of family members, to obtain a policy loan, to surrender a policy, or to assign a policy. The 1962 revision of the Uniform Life Insurance Act abolished the vested rights of this class of beneficiaries.

preferred provider arrangement (PPA)

A contract between a health care insurer and a health care provider or group of providers who agree to provide specified covered services to insureds.

preferred provider organization (PPO)

A managed health care plan that arranges with health care providers for the delivery of health care at a discounted cost and provides incentives for PPO members to use the health care providers who have contracted with the PPO, but that also provides some coverage for services rendered by health care providers who are not part of the PPO network. See also managed health care plans and preferred provider arrangement (PPA).

preferred risk class

In insurance underwriting, the group of proposed insureds who represent a significantly lower than average likelihood of loss within the context of the insurer’s underwriting practices. Contrast with declined risk class, standard risk class, and substandard risk class.

preferred stock

A type of equity security that represents ownership in a corporation that typically does not carry the voting rights of common stock, but does carry a stated dividend rate that is paid prior to any payment of common stock dividends by the same company. Contrast with common stock. See also dividends.

pre-funded inflation protection option

In a long-term care (LTC) insurance policy, a provision that guarantees that the policy’s daily benefit amount will increase by a certain amount or percentage each year after the insured person reaches age 65, the cost of which is built into the policy’s premium structure.

Pregnancy Discrimination Act

In the United States, a federal law that requires employers to treat pregnancy, childbirth, or related medical conditions the same as any other medical condition.

premature distributions

Withdrawals from a deferred annuity made before the contract owner is age 59_.

premium

(1) In insurance, a specified amount of money an insurer charges in exchange for the coverage provided by an insurance policy or annuity contract. (2) In reference to bond prices, the excess of a bond’s market price over the bond’s par value.

premium accounting

The accounting process that encompasses the maintenance of detailed accounting records and reports of insurance policy transactions. Also known as policy accounting.

premium bond

A bond that has a market price that is greater than the bond’s principal or par value. Contrast with discount bond.

premium deposits

Amounts that an insurer’s policyowners leave on deposit with the insurer to pay for future premiums.

premium income

The revenue that insurance companies receive from insurance and annuity policy sales.

premium notice ordinary (PNO) policy

In the home service insurance distribution system, an insurance policy that usually has a minimum face amount of $10,000 to $15,000, and for which premiums are paid through the mail, automatic bank draft, payroll deduction, or electronic funds transfer (EFT).

premium payment mode

For insurance policies, the frequency
(monthly, quarterly, or annually) at which renewal premiums are payable.

premium receipt

A written acknowledgment that an insurer has received the initial premium submitted with an application for insurance. A premium receipt typically provides the proposed insured with some type of temporary insurance coverage while the application for insurance is being underwritten. See also temporary insurance agreement.

premium reduction option

An option, available to the owners of participating insurance policies, that allows the insurer to apply policy dividends toward the payment of renewal premiums. See also dividend and policy dividend options.

premiums outstanding

For Canadian insurers, individual life insurance and annuity premiums that were due on or before the Annual Return date, but for which the insurer has not yet received payment by that date. In the United States, these amounts are called uncollected premiums.

premium suspense account

For insurance accounting purposes, a liability account used to record transactions that are intended as premiums but which the insurer cannot accept as income until a particular event occurs.

premium tax

A tax that a state or province levies on an insurer’s premium income earned within that state or province.

pre-need funeral insurance

A form of insurance that provides funds to pay for the insured’s funeral and burial, which have been arranged while the insured is living. Also known as pre-need insurance.

pre-notice

A notice that must be given to an insurance applicant by an insurer that discloses clearly and adequately to the applicant that the insurer may use a consumer reporting agency to compile a consumer report on the insurance applicant. See also consumer credit report and post-notice.

preplacement

In a reinsurance arrangement, the period during which a reinsurance analyst reviews the request for coverage, establishes appropriate records and reserves facilities for the case, and follows up on reserved facilities that have been inactive for a specified period of time. See also reinsurance.

prescription drug coverage

Insurance that provides benefits for the purchase of drugs and medicines that are prescribed by a physician and that cannot be purchased without a doctor’s prescription.

present value (PV)

The amount of money that must be invested today in order to accumulate a specified amount of money by a certain date. Contrast with future value (FV).

present value interest factor (PVIF)

A number that represents the present value of $1.00 discounted at an interest rate of i percent for n periods. A present value interest factors table shows the present value of $1.00 for various interest rates and a number of periods. Contrast with future value interest factor (FVIF).

present value interest factor for an annuity (PVIFA)

A number that represents the present value of a $1.00 annuity at a given rate of interest and for a stated number of periods. Contrast with future value interest factor for an annuity (FVIFA).

present value of an annuity

The amount that must be invested now in order to provide for a specified, equally spaced series of equal future payments, given a specified interest rate and a specified number of periods. Contrast with future value of an annuity.

present value of an annuity due (PVAd)

The amount that must be invested now in order to provide for a specified, equally spaced series of equal future payments made at the beginning of each payment period, given a specified interest rate and a specified number of periods. Contrast with present value of an ordinary annuity (PVA).

present value of an ordinary annuity (PVA)

The amount that must be invested now in order to provide for a specified, equally spaced series of equal future payments made at the end of each payment period, given a specified interest rate and a specified number of periods. Contrast with present value of an annuity due (PVAd).

presumptive death certificate

court-issued document stating that a person is presumed to be dead.

presumptive disability

According to the terms of some disability income policies, a stated condition that if present, automatically causes the insured to be considered totally disabled and thus eligible to receive disability income benefits. Examples of presumptive disabilities include total and permanent blindness or loss of two limbs.

pre-tax contributions

Contributions to a tax-advantaged account made with money on which income taxes have not yet been paid.

pretext interview

An interview in which one person attempts to gain information from another person by refusing to identify himself or herself, pretending to be someone else, or misrepresenting the purpose of the interview. In the United States, the National Association of Insurance Commissioners (NAIC) Model Privacy Act prohibits insurers or insurance sales agents from conducting pretext interviews.

pricing risk

See C-2 risk.

prima facie premium rates

In the United States, the maximum premium rates that state insurance laws permit insurers to charge for specific types of consumer credit insurance.

primary beneficiary

The party designated to receive the proceeds of a life insurance policy following the death of the insured. Also known as first beneficiary. See also contingent beneficiary.

primary care physician (PCP)

In a managed health care plan, a physician, usually a general or family practitioner, who serves as the insured’s personal physician and contact with the managed care plan.

principal

(1) In an agency relationship, the party that authorizes another party, the agent, to act on the principal’s behalf in contractual dealings with third parties. (2) In investments, a sum of money originally invested; the amount of money upon which interest is calculated. (3) For an annuity, the amount of money the purchaser pays as premiums. (4) An officer or manager of a National Association of Securities Dealers (NASD) member, who is involved in the day-to-day operation of the securities business, has qualified as a registered representative, and has passed additional examinations. See also registered principal.

prior approval requirement

In the United States, a type of policy form filing requirement imposed by the states on individual and group life insurance, health insurance, and annuity policy forms; stipulates that a policy form must be filed with, and approved by, the state insurance department before the form is used in the state.

privileged information

According to the National Association of Insurance Commissioners (NAIC) Model Privacy Act in the United States, information about an individual that relates to either an insurance claim or a civil or criminal legal proceeding.

pro forma financial statements

In accounting, financial statements that project or estimate a company’s financial condition based on current information and assumptions about company goals and activities.

probability

A numerical likelihood that a particular outcome will occur.

probationary period

In group insurance, the length of time—typically, from one to six months—that a new group member must wait before becoming eligible to enroll in a group insurance plan, as specified in the group master contract.

proceeds

The amount of money that an insurance company is obligated to pay for the settlement of an insurance policy. Proceeds may be a death benefit or the policy’s cash or accumulated value.

producer

See agent.

product actuary

An expert in the mathematics of insurance and finance who determines the financial design of a new insurance product.

product line

See line of business.

product mix

See product portfolio.

product portfolio

The total assortment of products offered by a company. Also known as product mix.

professional association

An association of individuals who share a common occupation, such as an association of medical doctors, attorneys, or engineers. A professional association generally is considered to be an eligible group for group insurance purposes.

professional development

The completion of professional or educational programs and/or participation in professional organizations that enhance an individual’s ability to perform a job.

professional liability insurance

Insurance that covers individuals who provide professional services, such as physicians and lawyers, from losses they incur as a result of being held responsible for the losses of their clients.

profit

See net income.

profitability ratios

Financial ratios that measure a company’s profitability by comparing the company’s gain from operations to the resources employed or invested to earn the gain.

profit center

In a business organization, a department or other business segment to which both costs (expenses) and revenues can be traced.

profit margin ratio

For a life insurance or an annuity product, a profitability ratio determined by dividing the product’s present value of profits by the present value of premiums over the product’s lifetime.

profit sharing plan

A type of defined contribution retirement plan that is funded primarily by employer contributions payable from the employer’s profits. Contributions to a qualified plan must be substantial and recurring and cannot unduly benefit highly paid employees. Because employer contributions are based on profits, the amount of such contributions may vary from year to year.

profit-volume analysis

See cost-volume-profit (CVP) analysis.

projection method

A method for modifying mortality tables so as to account for a projected improvement in future mortality. The procedure involves multiplying the tabular rates by a chosen percentage. Contrast with setback method.

prolonged disability

As defined by the Canada Pension Plan and Quebec Pension Plan, a disability that is expected to be of long, continued, and indefinite duration or which is likely to result in death.

proofs of loss provision

An individual health insurance policy provision that specifies the time within which claimants must provide the insurer with proof of a covered loss.

property

An asset that can be owned or possessed.

property insurance

Insurance that provides a benefit payable if a specified property belonging to the insured is damaged, destroyed, or lost as the result of the occurrence of a specified risk, such as fire, theft, accident, or other cause described in the policy.

proportional reinsurance

A type of reinsurance coverage for which the ceding company and the assuming company agree to share premiums and claims according to a specified amount or a specified percentage at the time the reinsurance agreement is made. See also reinsurance, ceding company, and reinsurer.

proposal for insurance

In group insurance, a document that details the specifications of the plan proposed by an insurer for a proposed group, and that allows a proposed policyholder to compare the costs and benefits of the plan to those offered by other insurers.

proprietary mortality table

A mortality table developed by a single insurance company, based largely on the mortality rates the company has experienced with its own customers. Contrast with published mortality table. See also mortality table.

prospect

A potential buyer of a product or service.

prospecting

The process of identifying, contacting, and qualifying potential customers.

prospective reserve valuation method

For insurance companies, a method of computing a value for a reserve liability by finding the present values of a contract’s future cash flows—its future premiums and future benefit payments. Contrast with retrospective reserve valuation method.

prospectus

A communication, usually written, that offers a security for sale and that must contain most of the information included in the security issuer’s registration statement.

prospectus supplement

A document explaining any material changes to a security’s investment characteristics that may be provided in lieu of a prospectus if a security undergoes a material change between the publication of two annual prospectuses. Also known as sticker.

provision for future policy benefits

See policy reserve.

proximate cause

For an accidental death or accidental disability insurance claim, the event that directly caused the death or disability, or the event that led to an unbroken chain of events resulting in death or disability.

prudent person approach

In the United States, a regulatory requirement that establishes statutory guidelines insurers are to follow in making investment decisions; requires an insurer to act as a prudent person would in making decisions about which assets the insurer includes in its investment portfolio.

public mortality table

See published mortality table.

published mortality table

A mortality table that shows the mortality rates experienced by the insurance industry as a whole. Also known as public mortality table. Contrast with proprietary mortality table.

punitive damages

In a lawsuit, money awards that are intended to punish an individual or entity that has acted in a malicious, fraudulent, or oppressive manner toward the plaintiff, and thus to dissuade others from similar behavior in the future. See also compensatory damages.

PV

See present value.

PVA

See present value of an ordinary annuity.

PVAd

See present value of an annuity due.

PVIF

See present value interest factor.

PVIFA

See present value interest factor for an annuity.