FinancialMarketsChap7

FinancialMarketsChap7 - Chapter 7 Insurance Companies 1....

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1. 401 (k), 117- authorized by the Revenue Act of 1978, are employer sponsored plans where an employee elects to contribute pretax dollars to a tax-deferred retirement plan. Limits to contributions and employer matching. 2. Annuity, 100 - “a mutual fund in an insurance wrapper.” Is treated as an insurance product and receives tax advantages. A common type is where a holder will get back no less than the amount invested in the annuity. Large premium for this though. It has a mortality and expense fee imposed. 3. Bankassurance , 104- Commercial bank distribution of insurance company products. Insurance companies are attracted by commercial bank’s customer contacts. 4. Cash value life insurance, 1 08- also known as permanent or investment-type life insurance. Whole life insurance . Build up of cash value or investment value inside the policy. It can be borrowed against by the policyholder. 5. Crediting Rate, 99- The amount paid in addition to a principal amount in an investment type insurance contract. The interest rate offered on an investment-type insurance policy. 6. GAAP surplus, 103- Generally accepted accounting principles (GAAP) surplus are a measure of the amount of reserves an insurance company is required to hold. Surplus as calculated by accountants using the Generally Accepted Accounting Principles. It is measured in a slightly different way than the statutory surplus. 7. General account product , 111- A product whose guaranteed performance is supported by the insurance company to the extent of its solvency. 8. Gramm-Leach-Bliley Act (GLB) , 114- Financial Modernization Act of 1999, removed the anti-affiliation restrictions among commercial banks, insurance, and investment banks. 9. Guaranteed investment contract or guaranteed income contract (GIC) , 99- the first major investment product developed by insurance companies. In return for a single premium, the company agrees to pay the principal plus the crediting rate. 10. Health insurance company, 98 - pays the insured for all or a portion of the cost of medical treatment by doctors, hospitals and others. Deductible- minimum insured has to pay in one year before the insurance kicks in. Also co-pay, portion of medical costs above the deductible that the insured has to pay. 11.
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This note was uploaded on 01/27/2010 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.

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FinancialMarketsChap7 - Chapter 7 Insurance Companies 1....

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