Chapter 36 Vocabulary

Question 1

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.

Answer 1

Insurance

Question 2

In the context of insurance, the transfer of certain risks from the insured to the insurance company by contractual agreement.

Answer 2

Risk Management

Question 3

A prediction concerning potential loss based on known and unknown factors.

Answer 3

Risk

Question 4

In insurance law, the contract between the insurer and the insured.

Answer 4

Policy

Question 5

In insurance law, the price paid by the insured for insurance protection for a specified period of time.

Answer 5

Premium

Question 6

In insurance law, the insurer, or the one assuming a risk in return for the payment of a premium.

Answer 6

Underwriter

Question 7

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.

Answer 7

Insurance Interest

Question 8

A written, temporary insurance policy.

Answer 8

Binder

Question 9

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.

Answer 9

Incontestability Clause

Question 10

An instrument made by a testator directing what is to be done with her or his property after death.

Answer 10

Will

Question 11

Having left a will at death.

Answer 11

Testate

Question 12

One who makes and executes a will.

Answer 12

Testator

Question 13

A person appointed by a testator in a will to administer her or his estate.

Answer 13

Executor

Question 14

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.

Answer 14

Administrator

Question 15

As a noun, one who has died without having created valid will. As an adjective, the state of having died without a will.

Answer 15

Intestate

Question 16

State statutes that specify how property will be distributed when a person dies intestate (without a valid will).

Answer 16

Intestacy Laws

Question 17

A gift of real property by will, or the act of giving real property by will.

Answer 17

Devise

Question 18

A gift of personal property by will (from the verb to bequeath).

Answer 18

Bequest

Question 19

A gift of personal property under a will.

Answer 19

Legacy

Question 20

One designated in a will to receive a gift of real property.

Answer 20

Devisee

Question 21

One designated in a will to receive a gift of personal property.

Answer 21

Legatee

Question 22

A will written entirely in the testator’s handwriting.

Answer 22

Holographic Will

Question 23

An oral will made before witnesses. Usually, such wills are limited to transfers of personal property.

Answer 23

Nuncupative Will

Question 24

A written supplement or modification to a will. Must be executed with the same formalities as a will.

Answer 24

Codicil

Question 25

The process of proving and validating a will and settling all matters pertaining to an estate.

Answer 25

Probate

Question 26

Various instruments, such as living trusts and life insurance plans, that may be used to avoid the formal probate process.

Answer 26

Will Substitutes

Question 27

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.

Answer 27

Per Stirpes

Question 28

A method of distributing an intestate’s estate so that each heir in a certain class (such as grandchildren) receives an equal share).

Answer 28

Per Capita

Question 29

An arrangement in which title to property is held by one person (a trustee) for the benefit of another (a beneficiary).

Answer 29

Trust

Question 30

A trust created by the grantor (settlor) and effective during his or her lifetime.

Answer 30

Living (Inter Vivos) Trust

Question 31

A trust that is created by will and therefore does not take effect until the death of the testator.

Answer 31

Testamentary Trust

Question 32

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.

Answer 32

Charitable Trust

Question 33

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.

Answer 33

Spendthrift Trust

Question 34

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.

Answer 34

Totten Trust

Question 35

An equitable trust that is imposed in the interests of fairness and justice when someone wrongfully holds legal title to property.

Answer 35

Constructive Trust

Question 36

An implied trust that arises when one party holds the legal title to another’s property only for that other’s benefit.

Answer 36

Resulting Trust