Definitions Flashcards
absolute assignment
assignment by a policy owner of all control and rights in the policy to a third party
accelerated benefits
riders on life insurance policies that allow the life insurance policy’s death benefits to be used to offset expenses incurred in a convalescent or nursing home facility
accidental death and dismemberment
a policy or a provision in a disability income policy that pays either a specified amount or a multiple of the weekly disability benefit if the insured dies, loses his or her sight, or loses two limbs as a result of an accident.
accidental means….
wording in certain accident policies that restricts recovery to loss for bodily injury that is both unexpected and unintended
acquisition cost
expenses incurred by an INSURER that are directly related to putting the business on the books of the company. The largest portion of this cost is usually the agent’s or sales representative’s commissions or bonus.
additional monthly benefit
riders added to disability income policies to provide additional benefits during the first year of a claim while the insured is waiting for social security benefits to begin.
adhesion
term used to describe certain contracts. insurance policies are contractions of adhesion because the terms are DRAWN UP by the INSURER and the INSURED simply “adheres.” For this reason ambiguous provisions are often interpreted by courts in favor of the INSURED.
administrative services only (ASO)
an arrangement with an insurance company to administer a self-insured fund or multiple employer trust. The insurer provides only its services, NOT insurance coverage.
Adverse Selection
selection against the insurer in terms of insuring more poor risks than good or average risks; the tendency of more poor risks to buy and maintain insurance than good risks.
Aleatory
a contract in which the number of dollars to be given up by each party are not equal. Insurance contracts are of this type because the policyholder pays a premium and may collect nothing from the insurer or may collect a great deal more than the amount of the premium if a loss occurs.
Annual Renewable Term
Term life insurance that may be renewed annually without evidence of insurablity until some state age. ——When a renewable term policy is being renewed the rates will be based on the age the insured has reached AT THE TIME OF THE RENEWAL. Often called “Step Rate Premiums”
Reentry Option - Reissue
common feature of term policies - option gives the insured the opportunity to provide evidence of insurability at the end of the term in order to qualify to renew the policy at a lower premium rate than the guaranteed rate that is available without evidence of insurablity
Level Term
provides a level death benefit and level premium during the policy term
Decreasing Term
temporary protection for a specified period of time. Face amount decreases throughout the life of the policy down to zero the date of policy expiration. - Annual premium for a decreasing term policy remains level during the term of the policy.
Increasing term
death benefit increases over the life of the policy, and the premium remains level
Indeterminate Premium Term
Where the premium may fluctuate between the current premium charge and a maximum premium charge that is stipulated in the insurer’s premium tables, based on the insurer’s mortality experience, expenses, and investment returns
Interim Term
May be used to cover the period of time before permanent protection is to begin. Temporary term protection that will convert automatically at some future date, usually no later than 11 months. Premium is based in the age at application - premium for the permanent coverage is also based on attained age when permanent protection begins.
Whole Life Insurance (Ordinary Insurance) - Define and Characteristics
designed to provide protection for the whole life of the insured. Characteristics, Level Premium, Level Face Amount, Guaranteed Cash Value, Nonforfeiture Value, Policy Loans
Whole Life Insurnace - Types (6)
Continuous Premium, Limited Payment, Single Premium, Indeterminate Premium, Current Assumption, Economatic Whole Life
Universal Life
a flexible premium, adjustable benefit life insurance contract that accumulates cash value. - Prime feature of UL is premium flexibility- premiums paid accumulate and together with interest, make up the policy’s cash value- after sufficient cash value is accumulated, the policyowner has considerable flexibility with regard to subsequent premium payments. - May increase death benefit - may need to prove insurability -
Universal Life Death Benefits - Option A,
Opt A - provides level death benefit equal to the policys face amount. As Cash value increases the mortality risk decreases. Thus the cost of the death protection actually decreases over the life of the policy and accordingly more of the premium can be placed in the cash account - exactly the same concept that applies to whole life
Universal Life Death Benefits - Option B,
Provides for an increasing death benefit equal to the policy’s face amount plus the cash account. Mortality risk remains at a level amount equal to the policy’s face value. Thus, the policyowner will incur a higher expense for the cost of the death protection over the life of the policy and less of the premium will be deposited in the cash account.
Types of Life Insurance Policies
Term Insurance, Whole Life, Adjustable Life, Universal Life, Variable Life, Variable Universal Life, Industrial Life, Credit Life,
Insuring Clause
contains the basic promise of the life insurance company to pay a specified sum of money, in a lump sum or an equivalent income stream, to the beneficiary upon the death of the insured,
