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Definitions - I

Immediate Annuity
An annuity providing for payment to begin immediately.

Incidents of Ownership
Various rights that may be exercised under the policy contract by the policyowner. Some of the incidents of ownership may include rights: (1) to cash-in the policy, (2) to receive a loan on the cash value of the policy, and (3) to change the beneficiary designation.

Incontestability Clause or Period
Life policies provide that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured.

Indemnification
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.

Indemnity
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. 

Independent Adjustor
Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.

Independent Agent
An independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.

Individual Retirement Account/ Annuity (IRA): A retirement savings plan which allows individuals to contribute toward an account on a tax-deferred basis. The contributions and earnings are taxable as income only when withdrawn or paid out after retirement.

Industrial Life Insurance
Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis. The premiums are generally collected at the home by an agent of the company. Sometimes referred to as debit insurance.

In-Force Policy
Existing insurance policies for which the premiums are being paid or for which premiums have been fully paid.

Inspection Report: Documentation of an application or a summary statement of the proposed insured's occupation, residence, health history, lifestyle and general financial status. This report is prepared by the insurer or an investigating agency for consideration in the underwriting process.

Installment Income
The settlement option, or payment plan, which provides that the proceeds of a life insurance policy or annuity contract will be paid in a fixed amount at regular intervals for as long as the proceeds last, or for a fixed number of months or years.

Insurability
Acceptability by the insurer of an applicant for insurance based on factors such as the person's age, health, occupation, etc.

Insurable Interest
The fact that the person effecting the insurance must suffer a financial loss at the death of the proposed insured. For the policy to be issued, both the owner and beneficiary must have an insurable interest.

Insurance
A system for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration (premium), to assume the specified losses suffered by the insured.

Insurance Commissioner
The top insurance regulatory official in a state.

Insurance Department
A governmental bureau in each state charged with the administration of insurance laws, including the licensing of agents and insurers and their regulation and examination. In some jurisdictions the department is a division of another state department or bureau.

Insurance Needs Calculator
An automated program for estimating a person's life insurance needs. Also referred to as Financial Needs Analysis.

Insured
A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.

Insurer: The party that provides insurance coverage, typically through a contract of insurance.

Interest-Adjusted Method
A method of determining a policy's annual net cost by incorporating an interest factor into the calculation to reflect the time-value of money.

Interest-Adjusted Net Payment Index
An index of the average annual net payment (premium minus the equivalent annual dividend), which incorporates the time-value of money.

Interest-Adjusted Surrender Cost Index
This index is the average annual cost of insurance upon surrender, which incorporates the time-value of money.

Interest Income Option
One of the settlement options, or payment plans, under which the proceeds of a life insurance policy are held by the company to earn interest that is paid periodically to the beneficiary. The total insurance benefit is not paid out until some specified date in the future, but there are limits as to the length of time a principal sum may be held.

Interest Rate
The rate of interest credited on a policy's cash value.

Irrevocable Beneficiary
A beneficiary that cannot be changed without their written consent.

Irrevocable Trust
A trust that cannot be revoked or amended by the party who establishes it. This type of trust is often established when life insurance is purchased to protect an estate.

Issue Date
The date from which suicide and incontestability periods are calculated.

Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period.