Insurance Terms

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R
Railroad Retirement Tax Act
Rated Policy
Recapture Rule
Recurrent Disability
Refinance
Remainder Interest
Remainderperson
Remainders
Renters Insurance
Replacement Cost
Representative Payee
Resident Alien
Residual Disability
Residual Value
Residuary Estate
Return of Capital
Reverse Gift Technique
Reversion
Revocable
Revocable Trust
Rider
Right of First Refusal
Right of Reversion
Right of Revocation
Risk
Risk Management
Roth IRA
Railroad Retirement Tax Act
Federal legislation that provides for retirement, disability, and survivor benefits paid to railroad workers and employees of companies connected with the railroad industry.
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Rated Policy
A policy for which the insured pays a higher-than-standard premium because of a higher risk due to a physical impairment, past medical condition, hazardous occupation, or a hazardous hobby. This type of policy is sometimes called an extra-risk policy.
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Recapture Rule
Reclamation by the government of tax benefits previously taken.
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Recurrent Disability
A disability that recurs or comes back again after disappearing the first time. Disability policies may not pay income benefits for a recurrent disability unless it meets the provisions of the policy.
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Refinance
In banking, refinance means to change the maturity date, the interest rate, or the amount of existing debt. With bonds, it means to retire existing bonded debt by issuing new securities to reduce the interest rate, or to extend the maturity date, or both. With mortgages, it means to pay off an existing mortgage loan and replacing it with a new one, usually in a different amount or at a lower interest rate.
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Remainder Interest
The right to receive whatever is left over of a life estate when the life tenant, the holder of the life estate interest, dies. This remainder interest automatically either reverts back to the original owner of the property, or passes to a beneficiary known as the remainderperson.
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Remainderperson
One who is entitled to receive the principal of the trust when the intervening life estate(s) terminate.
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Remainders
Estates that take effect after the termination of a prior estate, such as a life estate.
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Renters Insurance
Insurance for renting tenants. A typical renters policy consists of two main components: liability coverage and personal property coverage.
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Replacement Cost
The cost of replacing or repairing lost or damaged property without allowing for depreciation in value or considering the market value. Some auto insurance companies offer Guaranteed Replacement Cost coverage on new cars, if the loss occurs within the first 12 months of ownership or 12,000 miles driven.
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Representative Payee
An individual designated by the Social Security Administration to act as guardian for a minor child's benefits. Benefit checks are made payable in the representative payee's name on behalf of the child and the representative payee must file an accounting that details how benefits have been spent.
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Resident Alien
An individual who is a lawful, permanent resident of the United States at any time during the calendar year who is not a citizen but is taxed on income following the same rules as a US citizen.
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Residual Disability
The inability to perform one or more important daily job duties, or the inability to perform the usual daily job duties for the time period normally required for the performance of such duties.
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Residual Value
The expected value of an asset at the end of a specified period, such as the value of a car at the end of the lease.
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Residuary Estate
The assets remaining in a decedent's estate after disbursements of bequests and payment of estate debts and expenses.
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Return of Capital
Generally, return of capital refers to the recovery of all or part of an investor's original investment in an asset. The amount of capital returned reduces the investor's acquisition cost basis in the asset by that same amount. Although returns of capital are generally not directly taxable in themselves, they may result in higher capital gains tax liability later on if they do in fact reduce the cost basis in the asset.
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Reverse Gift Technique
An estate planning tool where property is transferred to the terminally ill spouse who is less affluent to provide a stepped up basis and to better utilize the dying spouse's unified credit. If the spouse dies more than one year after the transfer, the property passes back to the surviving spouse with a step-up in basis as well.
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Reversion
The return, by operation of law, of property ownership rights to the original owner or that person's heirs after the expiration of an estate created by the owner's transfer of property to another person.
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Revocable
Can be altered, amended, revoked, or terminated during the lifetime of the grantor.
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Revocable Trust
The provisions of this type of trust can be altered, amended, revoked, or terminated by the grantor as many times as desired during the grantor's lifetime.
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Rider
A provision attached to a policy that adds benefits not found in the original policy or that changes the original policy.
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Right of First Refusal
The right of a party to acquire property before it is offered to others.
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Right of Reversion
The right to have property returned to the original transferor after it as been used by another party.
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Right of Revocation
The right to recall, revoke, rescind, cancel, abrogate, or make void a power or grant.
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Risk
In finance, risk is the possibility of losing or of not gaining in value. For insurance purposes, risk refers to the probability that a given covered event, such as death or a car accident, will occur. In terms of investments, risk is a measure of a particular investment's volatility and of the possibility that it will cause an investor some degree of financial loss. Specific types of risk include actuarial risk, interest rate risk, inflation risk, and credit risk.
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Risk Management
Procedures to minimize the adverse effect of a possible financial loss by identifying potential sources of loss, measuring the financial consequences of a loss occurring, and using controls to minimize actual losses or their financial consequences.
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Roth IRA
An individual retirement account which permits account holder's capital to accumulate tax free under certain conditions. Individuals can invest up to $2,000 per year, subject to income limitations. Withdrawals of principal and earnings are totally tax free after age 59 1/2 as long as the assets have remained in the IRA for at least five years after the first contribution. In addition, there are no minimum distribution requirements.
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