New York Life

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Death Benefit
Life insurance policy proceeds payable to the beneficiary upon proof of the insured's death. Also available in some annuities. In Account Summary, the total Death Benefit that would be payable if the insured had died on the specified "as of" date. This amount includes the Death Benefit amount(s) of the base policy and any term riders, any dividends, and interest earned. It has been reduced by any outstanding loan, loan interest due, and unpaid premiums due on that date, and, if applicable, amounts accelerated due to terminal or chronic illness. This value includes only the death benefit amount applicable to the insured listed on the statement and not any other insured covered by riders.

Declined Risk
An underwriting term meaning an applicant is determined to be uninsurable under the insurance company's guidelines. (See also "Preferred risk," "Standard" and "Rated.")

Decreasing Term Insurance
A term life insurance policy with a level premium and a death benefit that decreases over time. Decreasing term insurance is sometimes used as mortgage cancellation insurance, with the death benefit reducing as the principal amount of the mortgage declines over the term of the mortgage.

Deferred Compensation
In business, an arrangement whereby present salary or future raises are not taken currently, but are postponed until some future date, such as at retirement. Life insurance can be used to fund the plan, which pays retirement benefits to the employee and/or a death benefit to the employee's beneficiaries.

Defined Benefit Plan
A retirement plan which provides a fixed or specific benefit to the employee at retirement. The benefit is often based on a percentage of income and years of service.

Defined Contribution Plan
A retirement plan which provides for a specific dollar amount or percentage of income to be contributed to the plan. The actual benefit received by employees is not guaranteed, but depends on the contributions and their returns.

Distributions
Amounts paid to shareholders of a mutual fund. Income distributions represent income received by the fund and may be taxable or tax-exempt. Capital gain distributions represent capital gains received by the fund and are taxable, even if the fund invests in tax-exempt securities. Nontaxable distributions represent the return of capital investors paid into the fund and are not subject to income tax.

Dividend
A portion of the company's surplus that is distributed to the owners of participating policies. Dividends are not taxable (unless, if taken in cash, total dividends exceed all premiums paid). Dividends can be taken in cash, used to reduce the premium, left to accumulate at interest, or used to purchase paid-up additional insurance. Dividends are not guaranteed.

With regard to mutual funds, dividends are income paid by a company or mutual fund to its shareholders. Mutual funds may receive income on common and preferred stock as well as income from income distributions, which may be taxable or tax-exempt, depending on the nature of the fund and its investments. (Also called "ordinary dividends.")

Dividends Applied to Premium
Using accumulated policy dividends to pay the full or a portion of the premium due in order to reduce your out-of-pocket cost.

Dividend (Paid Up) Additions
A life insurance policy dividend option whereby dividends are used to purchase additional, fully paid-up life insurance within a policy. This increases the face amount and the potential for increases in cash value in the policy.

Dividend Option Term Rider
Combines a decreasing term rider with the paid-up additions dividend option. Each year, the amount of term insurance decreases automatically by the same amount as the increase in permanent insurance provided by the paid-up additions. The remaining term insurance may be convertible to any whole life policy New York Life makes available on an attained age or original age basis.

Dollar Cost Averaging
Dollar Cost Averaging is an investing methodology that employs a consistent disciplined approach to investing. With Dollar Cost Averaging, a person sets up a regularly scheduled program of investing a specific amount over time. The strategy can reduce an investor's timing risk. Be aware, however, it does not assure a profit nor protect against loss in declining markets. Since it involves continuous investment regardless of fluctuating price levels, investors should consider their ability to continue purchases through periods of low price levels.

Double Indemnity
This term, no longer in common usage, refers to an accidental death benefit, which may pay a multiple (often double) of the stated death benefit if death results from an accident.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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