Life Insurance and Life Settlement Glossary - S

Life Insurance and Life Settlement Terms - S

Sales Illustration

A graphic representation used by an agent to help elucidate an insurance product to a potential customer. Sales illustrations often consist of numeric charts describing the consumer’s goals and the cost elements and mechanics of the insurance product being proposed.

Second Insured rider

A rider that may be added to a enduring life insurance policy to provide term insurance coverage on the life of an individual other than the policy's insured.


This is similar to financial settlement.

Settlement Options

Choices available to the policyowner or the beneficiary of a word life insurance policy regarding the method by which the insurer will disburse policy proceeds.

Short-Term Disability Income Insurance

Disability income insurance that gives a benefit for a short disability or for the first part of a long disability. Group short-term disability generally specifies a maximum benefit period of less than one year, usually 13, 26, or 52 weeks. Individual short-term disability insurance features a maximum benefit period of from one to five years.

Simultaneous Death Act

A state or provincial law which gives that if the insured and the primary beneficiary both die under conditions in which it is impossible to find which one expired first, the insured will be presumed to have survived the initial beneficiary unless there is a policy provision to the contrary.

Social Security

In the United States, a federal program that provides monthly income benefits to eligible workers who retire or become disabled and to the surviving spouses and dependent children of covered workers who have expired.

Sole Proprietorship Insurance

Insurance on the life of the sole owner of a business.

Split Funding

A method of funding a pension plan in which a portion of the whole contributions to the plan are used to buy an allocated funding instrument while the remainder of the contributions are placed in an unallocated fund.

Split-Dollar Insurance Plan

A kind of business insurance in which an employee is covered by individual term life insurance that is paid for together by the employee and the employer.

Spouse and Children's Insurance Rider

A rider that may be added to a permanent life insurance policy to offer term insurance coverage on the insured's spouse and children.

Standard Premium Rate

The premium rate imposed for insurance on a member of the standard risk class


Standard Risk Class

A risk class made up of individuals whose anticipated likelihood of loss is not notably higher or lower than average. Most insured are included in the standard jeopardy class.

Stock Insurance Company

An insurance concern that is owned by people who purchase shares of the company's stock.

Substandard Premium Rate

The premium rate charged for insurance on an insured person classified as having a larger than average likelihood of loss. This premium rate is elevated than a standard premium rate.

Substandard Risk Class

A risk class made up of populace with medical or nonmedical impairments that give them a greater than average likelihood of loss. Substandard risks disburse higher-than-standard premiums. Members of this risk class are known as special class risks.

Successor Owner

A person designated to become the owner of a term life insurance policy if the owner expires before the person insured by the policy dies.

Suicide Clause

Life insurance policy wording which tells that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time (usually two years) after the policy's date of issue.

Supplemental Executive Retirement Plan (SERP)

A nonqualified deferred compensation retirement plan designed to give benefits for a group of executives, without regard to benefits provided under a eligible retirement plan.

Supplemental Group Term Life Insurance

Term life insurance over and above the basic coverage given by a group policy. The supplemental coverage may offer an additional amount of the same kind of term life insurance or may provide a different type of term life insurance.

Surrender Charge

Expense charges at times imposed when a policyowner surrenders a universal life policy.

Survivorship Life Insurance

Whole life insurance that covers two persons and offers for payment of the proceeds when both insured have expired. It is normally designed to pay estate taxes.


Damaged property an insurer takes over to lessen its loss after paying a claim. Insurers receive salvage rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims on cargoes lost at sea now have the right to recover sunken treasures.


A list of individual items or groups of items that are covered under one policy or a listing of precise benefits, charges, credits, assets or other defined items.

Secondary Market

Market for previously given and outstanding securities.

Section 1035 Exchange

In the United States, a tax free replacement of an insurance policy for another insurance contract covering the same person that is performed according with the conditions of Section 1035 of the Internal Revenue Code.

Section 415

A section of the Internal Revenue Code that offers for dollar limitations on benefits and contributions under eligible retirement plans.

Securities And Exchange Commission / SEC

The company that oversees publicly-held insurance companies. Those concerns make periodic financial disclosures to the SEC, including an annual financial statement (or 10K), and a quarterly financial statement (or 10-Q). Concerns must also disclose any material events and other information about their stock.

Securities Outstanding

Stock held by shareholders.

Securitization Of Insurance Risk

Using the capital markets to enlarge and diversify the assumption of insurance risk. The giving of bonds or notes to third-party investors directly or indirectly by an insurance or reinsurance concern or a pooling entity as a means of raising money to cover risks.

Segregated Account

In Canada, an investment account that insurers maintain separately from a common account to help manage the funds placed in variable insurance products like variable annuities.


The concept of assuming a financial jeopardy oneself, instead of paying an insurance company to take it on. Each policyholder is a self-insurer in terms of paying a deductible and co-payments.

Separate Account

In the United States, an investment account maintained separately from an insurer’s general account to help manage the funds placed in variable insurance products such as variable annuities. Contrast with general account.

Settlement Options

Options given to the owner or beneficiary of a life insurance policy regarding the method by which the insurer will disburse the policy’s proceeds when the policy owner does not get the benefits in one single payment.


Size of a loss. One of the criterion used in calculating premiums rates

Sewer Back-Up Coverage

An optional portion of homeowners insurance that covers sewers.

Shared Market

This is similar to residual market.

Short-Term Disability Income Insurance

A kind of disability income coverage that gives disability income benefits for a utmost benefit period of from one to five years. Contrast with long-term disability income insurance.

Single Premium Annuity

An annuity that is paid in full upon buying.

Single Premium Policies

A kind of life insurance or annuity contract that is bought by the payment of one lump sum.

Soft Market

An environment where insurance is abundant and sold at a lower cost, also known as a buyers’ market.


Insurance firms ability to disburse the claims of policyholders.

Specified Disease Coverag

A kind of health insurance coverage that provides benefits for the diagnosis and treatment of a specifically named disease or diseases, like cancer.

Spendthrift Trust Clause

Life insurance provision that guards policy payouts from the beneficiary’s creditors.

Split-Dollar Life Insurance Plan

An agreement under which a business offers individual life insurance policies for certain employees, who share in paying the cost of the policies.

Spread Of Risk

The selling of insurance in manifold areas to multiple policyholders to minimize the danger that all policyholders will have losses at the same time. Concerns are more likely to insure perils that offer a good spread of risk. Flood insurance is an instance of a poor spread of risk because the people most likely to purchase it are the people close to rivers and other bodies of water that flood.


Practice that augments the money available to disburse auto liability claims.

Standard Risk Class

In insurance underwriting, the group of proposed insured who represent average jeopardy within the context of the insurer’s underwriting practices and thus disburse average premiums in relation to others of alike insurability.

Statutory Accounting Principles / SAP

More conservative standards than under GAAP accounting rules, they are fixed by state laws that emphasize the present solvency of insurance firms. SAP helps makes sure that the concern will have enough funds readily available to meet all anticipated insurance obligations by recognizing liabilities earlier or at a elevated value than GAAP and assets later or at a lower value.

Stock Insurance Company

An insurance firm owned by its stockholders who share in profits through earnings distributions and increases in stock value.

Straight Life Annuity

A kind of life annuity contract that provides periodic income payments for as long as the annuitant lives but provides no benefit payments after the annuitant’s death.

Structured Settlement

Legal agreement to disburse a designated person, generally someone who has been injured, a specified sum of money in periodic payments, typically for his or her lifetime, instead of in a single lump sum payment.


The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

Substandard Premium Rates

The premium rates charged insured that are classified as substandard risks. This also called special class rates.

Substandard Risk Class

In insurance underwriting, the group of proposed insured who represent a considerably greater-than-average likelihood of loss within the context of the insurer’s underwriting practices. This is also called special class risk.

Suicide Exclusion Provision

A life insurance policy provision stating that policy proceeds will not be paid if the insured expires as the result of suicide as defined within the policy within a specified period following the date of policy given.


A federal law enacted in 1980 to start cleanup of the nation’s abandoned hazardous waste dump sites and to respond to accidents that release dangerous substances into the environment. The law is officially known as Comprehensive Environmental Response, Compensation, and Liability Act.

Supplemental Coverage

A sum of coverage that adds to the amount of coverage specified in a basic insurance policy.

Surety Bond

A contract guaranteeing the performance of a precise obligation.


The remainder after an insurer’s liabilities is subtracted from its assets. The financial cushion that guards policyholders in case of unexpectedly high claims.

Surplus Lines

Property/casualty insurance coverage that isn’t available from insurers licensed in the state, known as admitted concern, and must be bought from a non-admitted carrier.

Surrender Charge

A charge for withdrawals from an annuity contract prior to a designated surrender charge period, usually from five to seven years.

Surrender Cost Comparison Index

A cost comparison index, used to compare insurance policies, which takes into account the time value of money and measures the rate of a policy over a 10- or 20-year period assuming the policy holder surrenders the policy for its cash value at the finish of the period. Contrast with net payment cost comparison index.


The simultaneous purchasing, selling or exchange of one security for another among investors to change maturities in a bond portfolio, for instance, or because investment goals have changed.