A

Question 1

Absolute Assignment

Answer 1

Policy assignment under which the assignee received full control over the policy and also full rights to its benefits

Question 2

Accelerated Benefits Rider

Answer 2

A life insurance rider that allows for the early payment of some portion of the policies face amount should the insured suffers from a terminal illness or injury

Question 3

Accidental Bodily Injury Provision

Answer 3

Disability income or accident policy provision that requires that the injury be accidental in order for benefits to be payable

Question 4

Accidental Death and Dismemberment (AD&D)

Answer 4

Insurance providing payment if the insured’s death results from an accident, if the insured accidentally severs a limb above the wrist or ankle joints, or totally and irreversibly loses eyesight.

Question 5

Accidental Death Benefit Rider

Answer 5

A life insurance policy rider providing for payments of an additional benefit when death occurs by accidental means

Question 6

Accidental Dismemberment

Answer 6

The severance of limbs at or above the wrist or ankle joins, or the entire irrevocable loss of sight

Question 7

Accidental Means Povision

Answer 7

Unforeseen, unexpected, unintended cause of an accident. Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim to be payable.

Question 8

Accident and Health Insurance

Answer 8

Under which benefits are payable in case of disease, accidental injury, or accidental death. Also called health insurance, personal health insurance, and sickness and accidental insurance.

Question 9

Accumulation Unit

Answer 9

Premiums an annuitant pays into annuities are credited as accumulation units. At the end of the accumulation period, accumulation units are converted to annuity units.

Question 10

Acquired Immune Deficiency Syndrome (AIDS)

Answer 10

A life threatening condition brought on by the human immunodeficiency virus; insurers must adhere to strict underwriting and claims guidelines in regard to AIDS risks and AIDS related conditions

Question 11

Acute Illness

Answer 11

A serious condition, such as pneumonia, from which the body can fully recover with proper medical attention

Question 12

Adhesion

Answer 12

A life insurance policy is a contract of adhesion because buyers must adhere to the terms of the contract already in existence. They have no opportunity to negotiate terms, rates, values, and so on.

Question 13

Adjustable Life Insurance

Answer 13

Combines features of both terms and whole life coverage with the length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be increased or deceased to fit the specific needs. Such adjustments are not retroactive and apply only to the future.

Question 14

Administrative Services Only (ASO)

Answer 14

Arrangement under which an insurance company or an independent organization, for a fee, handles the administration of claims, benefits, and other administrative functions for a self insured group.

Question 15

Admitted Insurer

Answer 15

An insurance company that has met the legal and financial requirements for operation within a given state

Question 16

Adult Day Care

Answer 16

Type of care designed for individuals who require assistance with various activities of daily living, while their primary caregivers are absent.

Question 17

Adverse Selection

Answer 17

Selection “against the company.” Tendency of less favorable insurance risk to seek or continue insurance to a greater extent than others. Also, tendency of policy owners to take advantage of favorable options in insurance contracts.

Question 18

Advertising Code

Answer 18

Rules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance advertising.

Question 19

Agency

Answer 19

Situation where in one party (an agent) has the power to act for another (the principal) in dealing with third parties

Question 20

Agent

Answer 20

Anyone not a duly licensed broker who solicits insurance or aids in placing risks, delivering policies, or collecting premiums on behalf of an insurance company

Question 21

Agent’s Report

Answer 21

The section of an insurance application where the agent reports personal observations about the applicant

Question 22

Aleatory

Answer 22

Feature of insurance contracts in that there is an element of chance for both parties and that the dollar given by the policy holder (premiums) and the insurer (benefits) may not be equal

Question 23

Alien Insurer

Answer 23

Company incorporated or organized under the laws of any foreign nation, providence, or territory

Question 24

Ambulatory Surgery

Answer 24

Surgery performed on an outpatient basis

Question 25

Amount at Risk

Answer 25

Difference between the face amount of the policy and the reserve or policy value at a given time. In other words, the dollar amount over what the policy owner has contributed of cash value toward payment of the policy-owner’s own claim. Because the cash value increases every year, the net amount at risk naturally decreases until it finally reaches zero when the cash value or reserve become the face-amount.

Question 26

Annually Renewable Term (ART)

Answer 26

A form of renewable term insurance that provides coverage for one year and allows the policy owner to renew coverage each year without evidence of insurability. Also called yearly renewable term (YRT)

Question 27

Annuitant

Answer 27

One to whom an annuity is payable, or a person upon the continuance of whose life further payment depends