Definition: Principal Financial Dental Insurance, also called a Principal Financial Plan or a PFI (Permanent Fund Investment), is a type of financial plan that aims to provide coverage for dental care expenses as a principal portion of an individual's earnings. The term comes from the fact that principal funds are used to fund these dental treatments and are not paid out in full at the end of the plan term, but instead continue to be available to the insured.
The definition of "principal financial dental insurance" can be broken down into three key components:
1.
Principal Financial
: This refers to the primary source or source of funds that covers dental expenses during a person's lifetime, typically through contributions from their employer or other sources. The amount of principal required for the insurance is typically based on the person's income and lifestyle.
2.
Dental Expenses
: These are the costs associated with dental treatment that are covered under the plan. This can include services such as cleanings, x-rays, fillings, and procedures like crowns and root canals.
3.
Investment Value
: The amount of money available to the insurance in the event that a person is unable to meet their financial obligations due to illness or disability.
The term "principal" here refers to the initial investment made in the dental fund. While this initial investment is not part of the income, it becomes an ongoing source of funds for the dental treatment plan.
When someone enrolls into a principal financial dental insurance program, they typically agree to pay a percentage of their earnings towards the dental expenses under the insurance contract. This percentage can range from 50% up to as much as 100% or more based on the individual's income and lifestyle factors. The amount that each person pays goes into an account called "principal fund." If the person is unable to meet their financial obligations due to illness, disability, or otherwise, this principal fund can be used to cover these expenses.
In summary, Principal Financial Dental Insurance is a type of financial plan designed to provide coverage for dental treatment costs as part of an individual's earnings. It typically involves contributions from employer or other sources and the availability of money in an account that may eventually be invested and used to pay for dental expenses if necessary.
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