Life Insurance and Life Settlement Glossary - F

Life Insurance and Life Settlement Terms - F

Fair Market Value

This is defined as the price decided upon by a willing purchaser and willing seller.

Face Amount

The amount specified on the face of the policy that will be paid in case of death. It does not comprise additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Financing Entity

A firm or other business or legal entity that provides capital to a viatical or life settlement provider for the purpose of purchasing life insurance policies through viatical or life settlement transactions.

Flexible Premium Adjustable Life

A kind of life insurance policy that allows the policy owner to differ the amount of premiums payable, the death benefits and some other components of the policy without having to exchange the policy for a dissimilar policy.


A word used primarily by brokers in reference to a viatical or life settlement provider, which may also be used by some to refer to a financing entity.

Face Amount

The amount specified on the face of the policy that will be paid in case of death.

Facultative Reinsurance

A reinsurance policy that gives an insurer with coverage for specific individual risks that are strange or so large that they aren’t covered in the insurance company’s reinsurance treaties. This can comprise policies for jumbo jets or oil rigs.

Face Page

The first page of an insurance policy. The face page normally includes the insured’s name and age, the name of the policy holder ,the amount of premiums, the policy number, the date on which the policy was given, and the signatures of the insurance concern’s president and secretary.

Fair Access To Insurance Requirement Plans/FAIR PLANS

Insurance pools that vend property insurance to people who can’t purchase it in the voluntary market because of high risk over which they might have no control.

Family Benefit Coverage

A kind of supplementary benefit rider offered in conjunction with a life insurance policy that insures the lives of the insured’s spouse and children.

Family Insurance Policy

A whole life insurance policy that offers term life insurance coverage on the insured’s spouse and children.

Farmowners -Ranchowners Insurance

Package policy that guards the policyholder against named perils and liabilities and generally covers homes and their contents, along with barns, stables and other structures.

Federal Funds

Reserve balances that depository institutions lend each other, typically on an overnight basis. In addition, Federal funds include certain other types of borrowing by depository institutions from each other and from federal agencies.

Federal Insurance Administration

Federal agency in charge of managing the National Flood Insurance Program. It does not control the insurance industry.

Fidelity Bond

A type of protection that covers policyholders for losses that they incur as a result of fake acts by specified individuals. It typically insures a business for losses caused by the dishonest acts of its employees.

Fiduciary Bond

A kind of surety bond, sometimes called a probate bond, which is needed of certain fiduciaries, such as executors and trustees, that guarantees the performance of their responsibilities.

Fiduciary Liability

Legal responsibility of a fiduciary to protect assets of beneficiaries. A fiduciary, for instance a pension fund manager, is required to manage investments held in trust in the finest interest of beneficiaries.

Financial Settlement

A lump sum payment by an insurer to a disabled insured that extinguishes the insurer’s liability under the disability contract.

First Beneficiary

The party or parties who have first rights to get the benefits of a life insurance policy following the death of the insured.

First-to-Die Life Insurance

One insurance policy that covers two lives and that offers for payment of the proceeds at the time of the first insured’s death.

Fixed Amount Option

A life insurance settlement choice under which the insurer uses the policy proceeds plus interest to pay the beneficiary an amount of money in a series of equal installments for as long as the proceeds plus interest last.

Fixed Period Option

A word life insurance settlement option under which the insurer pays the beneficiary the policy proceeds plus interest in a series of equal installments for a stated length of time.

Financial Guarantee Insurance

Covers losses from specific financial transactions and guarantees that investors in debt instruments, like municipal bonds, get timely payment of principal and interest if there is a default.

Financial Responsibility Law

A state law requiring that all automobile drivers show evidence that they can pay damages up to a minimum amount if involved in an auto accident. Differs from state to state but can be met by carrying a minimum amount of auto liability insurance.

Finite Risk Reinsurance

Contract under which the final liability of the reinsurer is capped and on which anticipated investment income is particularly acknowledged as an underwriting component.

Fire Insurance

Coverage guarding property against losses caused by a fire or lightning that is typically included in homeowners or commercial multiple peril policies.

First Party Coverage

Coverage for the policyholder’s own property or individual. In no-fault auto insurance it pays for the cost of hurts.

Fixed annuity

An annuity that guarantees a definite rate of return.

Flat Amount Formula

A method of finding the retirement benefit for participants in a defined benefit pension plan. A flat amount formula provides the same periodic benefit amount, for instance $500 per month, to every retiree.

Flat Extra Premium Method

A method for rating substandard risks used when the extra risk is considered to be constant. The underwriter assesses a definite extra premium for each $l,000 of insurance.

Flexible Premium

A premium payment method at times offered in connection with annuities and with some types of life insurance that lets the contract owner or policy owner to alter the amount and the frequency of payments, within stated boundaries defined by the insurer and the law.

Flexible Benefit Plan

An employee benefit plan that gives every employee several choices as to the types and/or amounts of group benefits.


Attached to a houseowners policy, a floater insures movable property, covering losses wherever they may occur. Among the items often insured with a floater are expensive jewelry, musical instruments and furs. It provides broader coverage than a regular houseowners policy for these items.

Flood Insurance

Coverage for flood damage is obtainable from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents.

Forced Plane Insurance

Insurance bought by a bank or creditor on an uninsured debtor’s behalf so if the property is damaged, funding is available to repair it.

Foreign Insurance Company

Name given to an insurance firm based in one state by the other states in which it does business.

Fraternal Benefit Society

A nonprofit organization that is operated exclusively for the benefit of its members and that provides its members with social and insurance benefits.

Fraternal Insurer

A nonprofit organization that is operated exclusively for the benefit of its members and that provides its members with social and insurance benefits.


Intentional lying or concealment by policyholders to get payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance concern managers, employees, agents and brokers for financial benefit.

Fraudulent Claim

A kind of claim that occurs when a claimant intentionally uses false information in an attempt to collect policy proceeds.

Fraudulent Misrepresentation

According to general law, a false statement that meets the following three criterion: (1) the party that makes the statement is aware that it is not factual or disregards whether it is true; (2) the party that makes the statement does so to persuade another party to enter into a contract; (3) the other party does enter into a contract as a result of the statement and suffers a loss as of the contract.

Free Examination Period

The period of time after delivery of a word life insurance policy during which the policyowner may review the policy and return it to the company for a complete refund of the initial premium.

Free Looking Period

A period of up to one month during which the purchaser of an annuity may cancel the contract with no penalty.


Number of times a loss happens. One of the criteria used in calculating premium rates.


A procedure in which a prime insurer acts as the insurer of record by issuing a policy, but then passes the whole risk to a reinsurer in exchange for a commission. Often, the fronting insurer is licensed to do business in a state or country where the jeopardy is located, but the reinsurer is not.

Family Life Insurance Policy

A contract that gives insurance within a single policy for a father, mother, and born and unborn children. The father's coverage is naturally Whole Life Insurance, with the mother and children insured for smaller amounts of Term Insurance.

Flexible Premium Variable Life

A entire life contract and a security which features flexible premium payments, no certain cash values and either a minimum guaranteed death benefit or no definite death benefit.