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Benson Kearley IFG helps you understand...

The world of insurance can be quite hard to understand. We’re here to provide you with terms you can understand, give you advice and offer our help—all right at your fingertips.

Insurance Glossary

R

RATE

Fixed price for a certain coverage amount for a given period. May be expressed in dollars, cents or as a percentage.

RATED

Usually used in combination, rated-up or rated policy. A policy issued with an extra premium charge.

REAL RATE OF RETURN

The rate of return adjusted for inflation. A negative real return indicates wealth destruction as the assets are worth less today than yesterday.

RECONSTRUCTION COST

Appraisal enabling determination of the replacement cost of a dwelling.

REFUND

Repayment of a portion of the insurance premium.

REIMBURSEMENT

Payment of an amount of money related to the amount of the loss to or on behalf of the insured upon the occurrence of a defined loss.

REINSTATEMENT

Restoration of insurance following lay-up.

REINSURANCE

Placing of a part of the insurance (i.e. a portion of the risk) with another insurance company (the reinsurer), which assumes the responsibility in return for a percentage of the premium paid by the insured.

REINVESTMENT RISK

The risk that future returns will be less than they are today and future proceeds will have to be reinvested at the lower rate.

RENEWAL

Automatic continuation of an insurance contract upon payment of the premium.

RENTAL VALUE, LEASING VALUE

Value of rental amounts lost following loss.

REPLACEMENT COST

The cost to replace or repair an item without deduction for depreciation.

REPLACEMENT COST (AUTO)

Claim settlement without deduction for depreciation, but not exceeding the vehicle purchase price.

REPLACEMENT VALUE

Cash value established for the replacement of an item according to its current cost, without depreciation.

RETIRING ALLOWANCE

An amount received upon retirement from employment in recognition of long service or, with respect to loss of employment.

RETURN

A measure of performance that takes into consideration the initial value of the investments, the end value of the investments and includes earnings from reinvesting dividends.

RIDER

Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

RIOT

Disturbance of the peace by a crowd of people.

RISK (Insurance)

An estimate of the probability that certain perils will occur.

RISK (Investment)

The degree to which an investment may lose its original value.

RISK MANAGEMENT

Management of the pure risks to which a company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

RISK PREMIUM

Additional rate of return offered by assets that are risky (the return is uncertain) in nature. The higher the risk, the higher the risk premium. Historically the risk premium on T-Bills is less than bonds, which is less than the risk premium on stocks.

RISK TOLERANCE

The degree of risk an investor is willing to bear.

RISK UNDERWRITING

Analysis, as part of an insurability evaluation, of the circumstances surrounding a risk for the purpose of assessing its chances of being realized.

RISK-FREE RATE

A guaranteed rate of return on an essentially risk-free investment asset (e.g. T-Bills).

ROOF ASSEMBLY

Covering and supporting framework on top of a building.

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