2.1 - Life Basics

Question 1

Applicant

Answer 1

A person making application for himself/herself or another to be insured under an insurance contract. The applicant may be the insured, the owner or both.

Question 2

Application

Answer 2

A written formal request by an applicant to an insurer requesting the insurer issue a policy based upon information contained in the application. It is the primary source of information used for underwriting purposes.

Question 3

Beneficiary

Answer 3

One or more “parties” named in the policy to receive the policy proceeds, or death benefits, if the insured dies while the contract is in force.

Question 4

Insurable Interest

Answer 4

The relationship that must exist between the applicant and insured, at the time of application and policy issuance, in order for the contract to be valid. An individual has an insurable interest in his or her own self. Insurable interest also exists if a financial or economic loss by the owner results in the event that the insured dies. Examples of insurable interest include a policy taken out on a family member, business partner, or debtor of the policyowner.

Question 5

Policyowner

Answer 5

The individual who has the ownership rights in a policy. The policyowner and insured are usually the same, but not necessarily. Any changes made to a policy must be approved by the policyowner in writing with his/her signature.

Question 6

Third-Party Ownership

Answer 6

A policy owned by a person other than the insured.

Question 7

Issue (Original) Age

Answer 7

Insured’s age on the policy issue date

Question 8

Attained Age

Answer 8

Insured’s age at any point in time typically used at renewal or conversion

Question 9

Effective Date

Answer 9

The date when insurance coverage begins

Question 10

Expiration Date

Answer 10

The date when insurance coverage ends