Chapter 36 Vocabulary Flashcards
A contract by which the insurer promises to reimburse the insured or a beneficiary in the event that the insured is injured, dies, or sustains damage to property as a result of particular, stated contingencies.
Insurance
In the context of insurance, the transfer of certain risks from the insured to the insurance company by contractual agreement.
Risk Management
A prediction concerning potential loss based on known and unknown factors.
Risk
In insurance law, the contract between the insurer and the insured.
Policy
In insurance law, the price paid by the insured for insurance protection for a specified period of time.
Premium
In insurance law, the insurer, or the one assuming a risk in return for the payment of a premium.
Underwriter
An interest that exists when a person benefits from the preservation of the health or life of the insured or the property to be insured.
Insurance Interest
A written, temporary insurance policy.
Binder
A clause in a policy for life or health insurance stating that after the policy has been in force for a specified length (usually two or three years), the insurer cannot contest statements made in the policyholder’s application.
Incontestability Clause
An instrument made by a testator directing what is to be done with her or his property after death.
Will
Having left a will at death.
Testate
One who makes and executes a will.
Testator
A person appointed by a testator in a will to administer her or his estate.
Executor
One who is appointed by a court to administer a person’s estate if the decedent died without a valid will or if the executor named in the will cannot serve.
Administrator
As a noun, one who has died without having created valid will. As an adjective, the state of having died without a will.
Intestate
State statutes that specify how property will be distributed when a person dies intestate (without a valid will).
Intestacy Laws
A gift of real property by will, or the act of giving real property by will.
Devise
A gift of personal property by will (from the verb to bequeath).
Bequest
A gift of personal property under a will.
Legacy
One designated in a will to receive a gift of real property.
Devisee
One designated in a will to receive a gift of personal property.
Legatee
A will written entirely in the testator’s handwriting.
Holographic Will
An oral will made before witnesses. Usually, such wills are limited to transfers of personal property.
Nuncupative Will
A written supplement or modification to a will. Must be executed with the same formalities as a will.
Codicil
The process of proving and validating a will and settling all matters pertaining to an estate.
Probate
Various instruments, such as living trusts and life insurance plans, that may be used to avoid the formal probate process.
Will Substitutes
A method of distributing an intestate’s estate so that each heir in a certain class (such as grandchildren) takes the share to which her or his deceased ancestor (such as mother or father) would have been entitled.
Per Stirpes
A method of distributing an intestate’s estate so that each heir in a certain class (such as grandchildren) receives an equal share).
Per Capita
An arrangement in which title to property is held by one person (a trustee) for the benefit of another (a beneficiary).
Trust
A trust created by the grantor (settlor) and effective during his or her lifetime.
Living (Inter Vivos) Trust
A trust that is created by will and therefore does not take effect until the death of the testator.
Testamentary Trust
A trust in which the property held by the trustee must be used for a charitable purpose, such as the advancement of health, education, or religion.
Charitable Trust
A trust created to protect the beneficiary from spending all the funs to which she or he is entitled. Only a certain portion of the total amount is given to the beneficiary at any one time, and most states prohibit creditors from attaching assets of the trust.
Spendthrift Trust
A trust created when a person deposits funds in his or her own name for a specific beneficiary, who will receive the funds on the depositor’s death. The trust is revocable at will until the depositor dies or completes the gift.
Totten Trust
An equitable trust that is imposed in the interests of fairness and justice when someone wrongfully holds legal title to property.
Constructive Trust
An implied trust that arises when one party holds the legal title to another’s property only for that other’s benefit.
Resulting Trust
