Amount at Risk
Barron's Insurance Dictionary:
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Amount At Risk
1. difference between the face value of a permanent life insurance policy and its accrued cash value. The pure cost of protection is based on this difference. For example, if the face value of a life insurance policy is $100,000 and the cash value is $80,000 then the net amount at risk is $20,000. From the Internal Revenue Service perspective, a corridor of protection or net amount of risk must be apparent in a life insurance policy if the policy is to retain its tax advantaged treatment.
2. in property and liability insurance, the lesser of the policy limit or the maximum possible loss to the insured.
| Amortization Schedule, Amim, Americans With Disabilities Act (ADA) | |
| Amount of Insurance to Value, Analysis of Property and Casualty Policy, Ancillary Benefits |
Investopedia Financial Dictionary:
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Amount at Risk
The monetary difference between the death benefit paid by a permanent life insurance policy and the accrued cash value. For example, if a policy's death benefit is $200,000 and its accrued cash value is $75,000, then the amount at risk equals $125,000. The amount at risk determines the cost of protection provided by the policy.
Investopedia Says:
For property and casualty insurers, amount at risk means the lesser of the full amount of coverage in the policy and the maximum possible loss that can be sustained by the insured. Therefore, this amount ultimately pertains to the insurers and not the insured.
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Barron's Insurance Dictionary
Dictionary of Insurance Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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