Definition of "Supplementary Contract"

An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.

A form of settlement under a life insurance or annuity contract whereby funds are made payable or used by the beneficiary to purchase a new insurance policy. This form of liability represents money held for an insured which will eventually be paid out.

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