Insurance

Question 1

401 K Plan

Answer 1

A qualified retirement plan in which the employee can set aside a portion of their income with pre-tax dollars

Question 2

Absolute Assignment vs Collateral Assignment

Answer 2

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

Question 3

Accelerated Death Benefit

Answer 3

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

Question 4

Accidental Death Benefit

Answer 4

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

Question 5

Accumulate at Interest

Answer 5

The Dividend Option where the policy owner leaves the dividends with the insurer to invest and earn interest

Question 6

Adhesion

Answer 6

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.

Question 7

Adverse Selection

Answer 7

The tendency for less favorable risk to seek or continue insurance to a greater extent than more favorable risk

Question 8

Agency Agreement or Agency Contract

Answer 8

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

Question 9

Agent Authorities

Answer 9

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

Question 10

Agent/Producer

Answer 10

Anyone who sells or AIDS in the selling of insurance. Legally represents the company

Question 11

Agents Report

Answer 11

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

Question 12

Aleatory

Answer 12

Unequal exchange of value. One party may obtain a far greater value than the other under the contract

Question 13

Annual Renewable Term

Answer 13

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

Question 14

Annuitant

Answer 14

The person that buys an annuity; may or may not be the policy owner

Question 15

Annuity

Answer 15

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

Question 16

Appointment

Answer 16

Authorization of an agent/producer by an insurer to represent the company

Question 17

Blackout Period

Answer 17

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

Question 18

Buy-Sell Agreement

Answer 18

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

Question 19

Cash Nonforfeiture Option

Answer 19

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

Question 20

Cash Settlement Option

Answer 20

Upon maturity of an insurance policy the beneficiary receives a lump-sum payment of the entire policy proceeds due

Question 21

Cash Value

Answer 21

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

Question 22

Commissioner

Answer 22

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

Question 23

Conditional

Answer 23

Certain conditions must be met in order for policy to pay-out

Question 24

Conditional Report

Answer 24

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