chapter 1 terms to know

Question 1

adverse selection

Answer 1

insuring of risks that are more prone to losses than the average risk

Question 2

agent/producer

Answer 2

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

Question 3

applicant or proposed insured

Answer 3

a person applying for insurance

Question 4

beneficiary

Answer 4

a person who receives the benefits of an insurance policy

Question 5

death benefit

Answer 5

the amount paid upon the death of the insured in a life insurance policy

Question 6

insurance policy

Answer 6

a contract between policyowner (and/or insured) and an insurance company which agrees to pay the insures of the beneficiary for loss caused by specific events

Question 7

insured

Answer 7

a person covered by the insurance policy; may or may not be the policyowner

Question 8

insurer (principal)

Answer 8

the company who issues an insurance policy

Question 9

lapse

Answer 9

policy termination due to nonpayment of premium

Question 10

life insurance

Answer 10

coverage of human lives

Question 11

policyowner

Answer 11

the person entitled to exercise the rights and privileges in the policy

Question 12

premium

Answer 12

the money paid to the insurance company for the insurance policy