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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Vanishing Premium Policy


Synonyms:decreasing premium insurance policy, decreasing premium policy
Filed Under: estate-management, insurance
Tags: insurance, life insurance
 

Definition of vanishing premium policy

vanishing premium policy
1. A type of whole life insurance policy where dividends are used to pay policy premiums. The eventual goal of a vanishing premium policy is for the amount earned from dividends to increase enough to cover the total cost of premiums.

Related Terms and Acronyms:

  • death benefit (DB)   A payment or series of payments made to the beneficiaries of a life insurance policy.
      ➥  An amount paid to a beneficiary in a life linsurance policy.
  • dividend   Distribution of earnings to shareholders. In credit unions, it's the money paid to members for deposits, similar to the interest banks pay to their customers for deposits.
  • insurance policy   A legal contract between an insurer and entity that specifies what the insurer is required to cover and any benefits the insured entity is entitled to.
  • life insurance   An arrangement where an insurer agrees to pay a benefit to one or more beneficiaries in the event of the policyholder's death.
      ➥  CanEquity offers life insurance.
  • permanent life insurance   A class of life insurance policies, which include both universal and whole life insurance, with guaranteed death benefits at the end of their terms.
  • premium   A payment made to an insurance company for insurance coverage.
  • whole life insurance   Permanent life insurance with level premiums for the policyholder's entire lifetime.
  • with-profits policy   Insurance that pays the policyholder a portion of the insurer's profits.

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