4.1 Terms

Question 1

Activities of daily living (ADLs)

Answer 1

a person’s essential activities that include bathing, dressing, eating, transferring, toileting, continence.

Question 2

assignments

Answer 2

transfer of rights of policy ownership

Question 3

contingent beneficiary

Answer 3

a beneficiary who has the first claim to the policy proceeds after the death of the insured (usually after the death of the primary beneficiary)

Question 4

National Association of Insurance Commissioners (NAIC)

Answer 4

• an organization formed to resolve insurance regulatory issues
• composed of insurance commissioners from all 50 states, the District of Columbia, and the 4 U.S. territories,

Question 5

Primary beneficiary

Answer 5

a beneficiary who has the first claim to the policy proceeds after the death of the insured

Question 6

Principal amount

Answer 6

the face value of the policy; the original amount invested before the earnings

Question 7

Trust

Answer 7

an arrangement in which funds or property are held by a person or corporation for the benefits of another person (trust beneficiary)

Question 8

Provisions

Answer 8

define the characteristics of an insurance contract and are fairly universal from one policy to the next

Question 9

Riders

Answer 9

added to a policy to modify provisions that already exist

Question 10

Options

Answer 10

offer insurance companies and insureds ways to invest or distribute a sum of money available in a life policy.