Common stockholders vote on the company's board of directors, on matters involving company policy, and may receive a distribution of earnings through stock dividends declared by the company. Risk A life insurance applicant who faces a greater likelihood of early death than the group experience on which the Standard premium rates are calculated. Examples include persons in poor health and those who work in dangerous occupations. In the case of Northwestern Mutual, a policy provision stating that if the insured dies by suicide within one year of the date of issue, the amount payable will be limited to the total premiums paid, less any policy loans. The full benefit would be paid if suicide occurs after the first policy year.
Most companies have a two year suicide clause, except where state law mandates otherwise.
Surplus Total assets minus the sum of all liabilities. Surplus originates from investment and operating gain. Many variations are used in calculating this ratio. Usually, it compares capital and surplus plus Asset Valuation Reserve to total liabilities excluding Asset Valuation Reserve and separate accounts. A surplus ratio is one indicator of financial strength, however, since both surplus and reserve levels vary by such things as types of business and reserve requirements, other factors should also be used in evaluating a company's financial strength.