Term Life Insurance Glossary
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National Association of Insurance Commissioners (NAIC)
In the United States, an association of state insurance commissioners designed to promote consistent insurance regulation. Although the NAIC has no legal power, the recommendations of the NAIC and the actions taken at its semiannual meetings carry great weight with the individual state insurance commissioners, the state legislatures, and the insurance industry. Similar to the Canadian Council of Insurance Regulators (CCIR) in Canada.
National Association of Securities Dealers (NASD)
A voluntary association of securities firms empowered by the Maloney Act of 1938 to regulate the affairs of securities firms and to promote fair and ethical practices in the securities business.
Needs Analysis
Part of the fact-finding stage in the personal selling process; the process of developing a detailed personal and financial picture of a prospect in order to evaluate his or her insurance needs.
Noncontributory Group Insurance
A group insurance plan in which the insureds pay no portion of the premium for their insurance. The group policyholder pays the entire premium. If a group plan is noncontributory, the enrollment of group members is automatic; all eligible group members are covered.
Contrast to contributory group insurance.
Nonforfeiture Factors
Special values, similar to annual premiums, that some insurers use to calculate their policies’ cash values. Each insurer calculates its own nonforfeiture factor. In the United States, the nonforfeiture factor can never be greater than the adjusted premiums required by the Standard Nonforfeiture Law.
Nonforfeiture Options
The various ways in which a policyowner may apply the cash value of a life insurance policy if the policy lapses.
See also automatic nonforfeiture option, automatic premium loan (APL), cash surrender value option, extended term insurance option, and reduced paid-up insurance option.
Nonforfeiture Values
The benefits, as printed in a life insurance policy, that the insurer guarantees to the policyowner if the policyowner stops paying premiums. These amounts may be used in a variety of nonforfeiture options.
Nonmedical Application
An application for insurance in which the proposed insured is not required to undergo a medical examination. However, a nonmedical application does contain questions that the proposed insured must answer about his or her health.
Nonparticipating policy
A term life insurance policy for which the policyowner does not share in the insurer’s surplus through policy dividends.
Also called a nonpar policy.
Nonsmoker risk class
An underwriting risk class that includes people who are standard risks and who have not smoked cigarettes for a specified period of time, usually 12 months, before applying for insurance. People in the nonsmoker risk class pay lower than standard premiums.
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