Insurance Flashcards
401 K Plan
A qualified retirement plan in which the employee can set aside a portion of their income with pre-tax dollars
Absolute Assignment vs Collateral Assignment
Absolute: a permanent & irrevocable transfer of rights and/or benefits by the policy owner
Collateral: a temporary &/or revocable transfer of benefits by the policy owner
Accelerated Death Benefit
Policy provision that allows full or partial payment of the policy’s death benefit before the insured’s death if he/she is terminally ill
Accidental Death Benefit
An extra cost rider that requires the insurance company to pay an additional benefit in the event that the insured dies within 90 days of an accident as a direct result of the accident
Accumulate at Interest
The Dividend Option where the policy owner leaves the dividends with the insurer to invest and earn interest
Adhesion
Since the insurer created all the documents of the contract, any ambiguities in the contract will be settled in favor of the insured. Since the insurer wrote the contract they are stuck with it.
Adverse Selection
The tendency for less favorable risk to seek or continue insurance to a greater extent than more favorable risk
Agency Agreement or Agency Contract
A legal document containing the terms of the agreement between the agent & the insurance company. It clearly defines what an agent can & cannot do, and how he/she will be compensated
Agent Authorities
Expressed: Power or authority specifically granted in writing to an agent by the insurance company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has based upon his/her actions.
Implied: Power or authority that is NOT expressly granted by the company but that an agent can assume or that are implied he/she has in order to transact insurance business
Agent/Producer
Anyone who sells or AIDS in the selling of insurance. Legally represents the company
Agents Report
A written report from the agent submitted to the insurer along with the application disclosing what the agent knows, observed, or learned about the proposed insured’s risks
Aleatory
Unequal exchange of value. One party may obtain a far greater value than the other under the contract
Annual Renewable Term
A term life insurance contract which gives the policy owner the option to renew the policy each year without showing proof of insurability. Premium increase @ each renewal
Annuitant
The person that buys an annuity; may or may not be the policy owner
Annuity
A policy that guarantees to pay income for a specified period of time or for the life of the annuitant. Designed to prevent people from outliving their savings
Appointment
Authorization of an agent/producer by an insurer to represent the company
Blackout Period
The period of time between the youngest child turning 16 & the widow(er) reaching retirement age during which no Social Security Survivor Benefits are paid to the surviving spouse
Buy-Sell Agreement
Business use of life insurance where partners in a business buy life insurance on each other. They agree that when one of them dies the survivors have the right to purchase the deceased partner’s share of the business. The death benefit from the insurance is used to finance the purchase
Cash Nonforfeiture Option
Policy owner receives a lump-sum payment of the current cash value of the policy upon surrender of the policy. The policy CANNOT be reinstated
Cash Settlement Option
Upon maturity of an insurance policy the beneficiary receives a lump-sum payment of the entire policy proceeds due
Cash Value
The part of an insurance policy that is the equity amount legally available to the policy owner. The cash value accumulates throughout the duration of the policy. Also known as living benefit or policy savings
Commissioner
Public official in charge of the state’s department of insurance. Charged with regulating the insurance industry in his/her state by enforcing the insurance law
Conditional
Certain conditions must be met in order for policy to pay-out
Conditional Report
An interim insurance under which the insurance company agrees to start coverage on the later of either the date of application or the date of medical exam IF the proposed insured is found to be insurable on that date
