Insurance Terms

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F
Face Amount
Fair Market Value
Family Support Ratio
Fannie Mae
Federal Estate Tax
Federal Gift Tax
Federal Methodology
Federal Unemployment Tax Act (FUTA)
FICA—Federal Insurance Contributions Act
Fiduciary
Fiduciary Capacity
Fiduciary Income Tax Return
Fiduciary Responsibility
Financial Responsibility Law
Fixed Annuity
Fixtures
Flexible Spending Arrangement (FSA)
Float
Floater
Flood Insurance
Forced Liquidation or Sale
Foreclose
Fraudulent Conveyance
Freddie Mac
Free Look Period
Fringe Benefits
Future Benefit Increase Rider
Face Amount
The amount of death benefit coverage that is purchased under a life insurance policy.
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Fair Market Value
The price at which property would change hands between a willing buyer and a willing seller, where both parties have reasonable knowledge of the relevant facts and neither party is under any compulsion to buy or sell.
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Family Support Ratio
A formula used to determine life insurance need using the income replacement approach. This formula considers the percentage of the insured's after-tax income that goes toward supporting family members minus the percentage that would be needed for the insured's self-maintenance.
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Fannie Mae
The Federal National Mortgage Corporation (FNMA) is a publicly owned government-sponsored corporation that was established in 1938 to purchase government-backed and conventional mortgages. The objective of this organization is to increase the affordability of home mortgage funds for low, moderate, and middle-income home buyers. Fannie Mae is a shareholder-owned company that is traded on the New York Stock Exchange.
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Federal Estate Tax
A tax that is imposed by the federal government, and some state governments, on the transfer of assets to heirs. The Taxpayer Relief Act of 1997 provided that the amount of assets each person can exclude from estate taxes is $675,000 in 2000 and 2001, rising to $2,000,000 as of 2008 and $3,500,000 as of 2009.
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Federal Gift Tax
A federal tax that is imposed on the transfer of securities, property, or other assets. The tax is based on the fair market value of the transferred assets and applies to transfers valued over $12,000 per individual per year for 2008.
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Federal Methodology
Federal methodology is a formula that was created by Congress and is used to determine financial need when an individual applies for federally funded student aid with the Free Application for Federal Student Aid (FAFSA).
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Federal Unemployment Tax Act (FUTA)
Legislation under which federal and state governments require employers (and, in some states, employees) to contribute to a fund that pays unemployment insurance benefits.
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FICA—Federal Insurance Contributions Act
Commonly known as Social Security, it is a federal law that requires employers to withhold wages and make payments to finance the Old Age, Survivors, Disability, and health insurance (OASDHI) plan.
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Fiduciary
A person, company, or association that holds assets in trust for a beneficiary. The fiduciary is charged with the responsibility of investing the assets wisely for the beneficiary's benefit. Examples of fiduciaries include executors of wills and estates, trustees, and those who administer the assets of underage or incompetent beneficiaries.
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Fiduciary Capacity
A person is said to act in a fiduciary capacity when business is transacted, or money and property are handled for the benefit of another. The term is not limited to technical or express trusts, but may also apply to such offices or relations as attorneys, guardians, executors, brokers, and agents.
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Fiduciary Income Tax Return
An income tax return that is filed by the court representative or estate administrator for a decedent's estate, trust, or a bankruptcy estate to report income, deductions, gains, losses, distributions, income that is accumulated or held for future distribution, income tax liability of the estate or trust, and employment taxes on wages paid to household employees. The return is not required if the decedent's estate is not probated.
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Fiduciary Responsibility
The duty that arises when one individual acts on behalf of, or for the benefit of, a third party.
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Financial Responsibility Law
A law that requires the operator of an automobile to show proof of financial ability to pay for automobile-related losses. In many states evidence usually takes the form of a minimum amount of automobile liability insurance.
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Fixed Annuity
A type of annuity that guarantees your principal and provides an investment return at least equal to a specified fixed rate until you annuitize. In addition, the amount of your payout can be fixed once you begin receiving distributions from the annuity.
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Fixtures
Improvements attached to real estate that are not intended to be moved and so become part of the real estate.
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Flexible Spending Arrangement (FSA)
Account into which an employee contributes pre-tax earnings to pay for eligible healthcare-related expenses. The employee can draw from the account by electronic funds transfer, special FSA debit card, or by applying for a reimbursement check. All of these methods are usually subject to verification that the expense is FSA eligible by providing receipts. FSA funds expire at the end of each plan year, are not portable between employers, and cannot be used by self-employed people.
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Float
The time period between the deposit of a check in a bank and payment. The term also applies to the number of shares of a corporation that are outstanding and available for trading by the public.
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Floater
Coverage for property which moves from location to location. If the floater covers "scheduled" property, coverage is listed separately for each item. If the floater covers "unscheduled" property, all property is covered for the same limits of insurance.
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Flood Insurance
Insurance that provides coverage for losses resulting from a flood. This coverage is not included in a standard homeowners policy, but can sometimes be added for an extra premium. In addition, depending on the community where you live, you may be eligible for federal flood insurance through the National Flood Insurance Act.
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Forced Liquidation or Sale
A sale that occurs when creditors force a debtor to sell or auction off assets to satisfy debts.
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Foreclose
The process by which a lender seizes an asset (usually a home or other real estate) after the owner has defaulted on the loan.
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Fraudulent Conveyance
The gift, sale, or transfer of property made with the intent of defrauding creditors by attempting to place assets beyond the reach of creditors.
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Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), a publicly chartered agency that buys qualifying residential mortgages from lenders, packages them into new securities backed by those pooled mortgages, provides certain guarantees, and then resells the securities on the open market. Established in 1970, the corporation's stock is owned by savings institutions across the U.S. and is held in trust by the Federal Home Loan Bank System.
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Free Look Period
An insurer may cancel an auto insurance policy for any reason during the Free Look Period, which is usually the first 30 days of the policy. The exact number of days varies by state. For this reason, consumers should make careful decisions about changing companies after having a number of losses—because an insurer may decide to exercise its right to cancel a policy during the free look period, leaving the consumer in need of a replacement policy. In life insurance and annuities contracts, there is also a provision for a Free Look Period that allows the policyholder the right to cancel the contract within the first 10 days after purchase.
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Fringe Benefits
Non-cash benefits (such as group health insurance, term life insurance, and disability insurance) made available to employees in addition to salary, but are generally not taxable to the employee.
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Future Benefit Increase Rider
A rider attached to a disability insurance policy that guarantees the insured's right to purchase additional coverage without going through medical underwriting to prove physical insurability. Also called a Guaranteed Purchase Option Rider.
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