Limit Protection is a provision in a liability policy whereby amounts paid by an insurer to protect an insured person against a claim or claim reduce the policy’s applicable insurance limit. General liability policies are not normally subject to such a provision, although a standard commercial general liability (CGL) policy provides indemnity protection to a named insured “up to a certain limit” when said insured has a contractual obligation to provide such protection. Protection within limits is more common in professional liability policies.
Defense-only insurance is liability insurance that covers defense costs, but not settlement or indemnity payments. Protection-only policies are best suited to policyholders who have effective loss control programs and are willing to defend, rather than settle, claims made against them. Such coverage is most commonly (though not exclusively) used to cover defense costs associated with labor practice liability (EPL) claims, in which defense payments make up the majority of the costs associated with a claim. One disadvantage of protection-only policies is that they expose the policyholder to potentially large uninsured judgments. Directors and Officers’ Liability (D&O) insurance and other types of professional liability policies also only provide protection against allegations of intentional or unlawful conduct by the insured person.
Deferred Acquisition Costs (DAC) is the sum of an insurer’s acquisition costs incurred as the insurance premium is written, but earned and expensed over the life of the policy. The unearned portion is capitalized and recognized as an asset on the insurer’s balance sheet. In accordance with statutory accounting, all acquisition costs are 100% recognized as earned and expensed at policy inception, resulting in an immediate reduction in profits. In life insurance, acquisition costs are recognized as the premium is earned, creating a tax effect called the “DAC tax”.
A deferred compensation plan is an arrangement between an employee and his or her employer to defer some portion of the employee’s current income or salary until a specified date in the future. Deferred compensation plans may be qualified or non-qualified plans for Internal Revenue Code deductions and other tax benefits. Wages received in one period are actually paid in a later period. Life insurance is a popular method of funding deferred compensation plans because the deferred amounts can be used to pay cash value life insurance premiums. The cash value may then be available at retirement to supplement other income, or if the insured dies before retirement, the insured’s designated beneficiary will receive a death benefit on the insurance policy.
A deferred group annuity is a retirement plan whereby a payable annuity is purchased each year for each employee. These benefits are paid out as monthly income at retirement.
Deferred Payment Items is coverage for merchants, distributors, and product manufacturers who sell their items using time-based payment plans. This coverage may be in the form of sellers only, which covers the insured against the unpaid balance owed to the seller until the full payment of the property, or in the form of dual interests for sellers and sellers, which covers the entire cost of the item until final payment. payment is made. The form of dual interest of sellers and sellers applies to both the buyer and the seller in case of loss of goods before full payment. The buyer does not need to continue making payments for an item that is no longer in use, and the seller can retain the good faith aspects of terminating the buyer’s payments.
A deferred tax asset is the amount of loss reserves or unearned premium that is not deducted from an insurer’s income when calculating income tax. The deferral of the tax deduction arises from the requirement to discount reserves for losses and unearned premiums. The insurer accounts for an asset equal to the expected future tax credit.
A deficit carryover or deficit carryover is the carryover of a debit or loss from one reporting period to another in accordance with a reinsurance contract.
A defined benefit plan is a pension plan that provides defined benefits for each employee. The employer must make sufficient contributions to the plan to fund the promised benefits. Individual accounts are not maintained, as is done in defined contribution plans.