life insurance Flashcards
1
Q
Accelerated Benefits
A
Riders attached to life insurance policies that allow death to be used to cover nursing or convalescent home expenses
2
Q
Accidental Death benefits
A
A policy rider that states the cause of death will be analyzed to determine if it complies with the policy description of accidental death
3
Q
Accidental Death insurance
A
A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death
4
Q
Accidental Death Insurance
A
An insurance policy that provides payment if the insured’s death is the result of an accident
5
Q
Accumulation period
A
The time before an annuitant retirement during which the annuitant is making payments or investments in an annuity
6
Q
Actual cash value (ACV)
A
the required amount to pay damages or for property loss.This amount is calculated based on the property’s current replacement value minus depreciation.
7
Q
Adhesion
A
Ac contract offered on a “take -it - or leave it basis by insurer, in which the insured’s only option is to either accept or reject the contract. any ambiguities in the contract will be settled in favor of the insured.
8
Q
Adjustable life
A
Life insurance that permits changes in the face amount, premium amount ,period of protection, and the duration of the premium payment period.
9
Q
Adjuster
A
A representative of an insurance company who investigates and acts on the behalf of the company to obtain agreements for the amount of the insurance claim
10
Q
Administrator
A
An individual appointed by a court as fiduciary to settle the financial affairs and estate of a deceased person
11
Q
Admitted (Aurthorized) insurer
A
an insurance company authorized and licensed to transact buisness in a particular state
12
Q
Adverse selection
A
the tendency of risks with higher probablity of loss to purchase and maintain insurance more often than the risks who present lower probablity
13
Q
Agency
A
An insurance sales office or company
14
Q
agent
A
An individual who is licensed to sell negotiate or affect insurance contracts on behalf of the insurer
15
Q
Agent Appointment
A
the authorization of agent to act for or represent an insurer
16
Q
Agent Authority
A
Special powers granted to agent by his or her agency contract
17
Q
Aleatory
A
A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the insured will pay premiums is unequal to the amount the insurer will pay in the event of a loss
18
Q
alien insurer
A
an insurance company that is corporated outside of the united states
19
Q
annual statement
A
a detailed financial report that an insurance company must submit every year to the insurance department of states in which it conducts
20
Q
annuity
A
a contract that provides income for a specified period of years,or for life
21
Q
apparent authority
A
the appearance or the assumption of authority based on the actions,words or deeds of the principal or because of circumstances the principal created
22
Q
Applicant
A
a person making application for ,or offering himself,herself or another to be insured under an insurance contract
23
Q
Application
A
a document that provides information for underwriting purposes. after the policy is issued ,any unanswered questions are considered waived by the insurer
24
Q
Assignment
A
the transfer of ownership rights of a life insurance policy from one person to another
25
Attained date
the age of the insured at a determined date
26
attending physician statement APS
a statement usually obtained from the applicant doctor
27
authorized (admitted) insurer
an insurance company authorized and licensed to transact buisiness in a particular state
28
avoidance
a method of dealing with risk by deliberately keeping away from it if a person wanted to avoid the risk of being killed in a n airplane crash,he or she might choose to never fly in a plane.
29
Basic illustration
A ledger or proposal used in the sale of a life insurance policy that shoes both guaranteed and negotiated elements
30
beneficiary
the person who receives the proceeds from the policy when the insured dies
31
birthday rule
the method of determining primary coverage for a dependent child under which the plan of the parent whose birthday occurs first in the calender year is designated as primary
32
broker
an individual who represents as insured in the process of purchasing and negotiating a contract of insurance
33
buy-sell agreement
a legal contract that determines what will be done with a buisness in the event that an owner dies or becomes disabled
34
buyers guide
a booklet that describes insurance policies and concepts,and provides general information to help an applicant make an informed decision
35
cash value
the amount to which a policyowner is entilted if the policy is surrendered before maturity
36
certificate
a statement or booklet that confirms that a policy has been written and that describes the coverage in general
37
certificate of authority
a document that authorizes a company to start conducting business and specifies the kind of innsurance a company can transact. it is illegal for an insurance company to transact insurance without this certificate
38
claim
a request for payment of the benefits provided by an insurance contract
39
coercion
an unfair trade practice in which an agent uses physical or mental force with the intent of inducting an applicant to purchase insurance
40
coinsurance clause
a provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance
41
commingling
a practice in which a person in a fiduciary capacity illegally mixes his/her personal funds with funds he/she is holding in trust
42
commission
th epayment made by insurers to agents or brokers for the sale and service of policies
43
commisioner
the chief executive and administerative officer of a state insurance department (in some states known as director or superintendent)
44
concealment
the withholding of known facts that,if material,can void a contract
45
conditional contract
a type of an aggreement in which both parties must perform certain duties
46
consideration
the binding force in a contract that requires something of value to be exchanged for the transfer risk.the consideration on the part of the insured is the representations made in the application and the payment of preminum;the consideration on the part of the insurer is the promise to pay in the event of loss
47
consumer report
a written and /or oral statement regarding a consumer credit,character,reputation, or habits collected by a reporting agency from employment records,credit reports and other public sources
48
contract
an agreement between two or more parties enforceable by law
49
contributory
a group insurance plan that requires the employees to pay part of the premium writing business on the owner,immediate family,relatives, employer or employees
50
convertible
a policy that may be exchanged for another type of polciy by contractual provision at the option of the policyowner,and without evidence of insurability(term life changed to a form of permant life)
51
countersignature
the act of signing an insurance polciy by licensed resident agent
52
coverage
the inclusion of causes loss(perils) which are covered within a scope of a policy
53
credit of insurance
a special type of coverage written to pay off the balance of a loan in the event of the death of the debtor
54
death benefit
the amount payable upon the death of the person whose life is insured
55
decreasing term
a type of life insurance that feauures a level premium and a death benefit that decreases each year over the duration of the policy
56
defamation
an unfair trade practice in which one agent or insurer makes an innjurious statement about another with the intent of harming the persons or company reputation
57
dependent
a person who relies on another for support and maintenance
58
director
the chief executive and administative officer of the insurance department (in some states,known as commisioner or superintendent
59
disclosure
an act of identfiying the name of the producer,representative or firm,limited insurance representative,or temporary insurance producer on any policy solicitation
60
domestic insurer
an insurance company that conducts business in the state of incorporation
61
domicile of insurer
insurers location of incorporation and the legal ability to write business in a state
62
earned premium
the amount of the premium for which the polciy protection has been given
63
effective date
the date when an insurance policy begins(also known as the inception date)
64
employee retirement income security act(ERISA)
the act that stipulates federal standards for private pension plans.
65
endorsement
a form changing the provisions of and attached to a life insurance policy (also known as a rider)
66
endow
to reach the maturity date or time
67
estoppel
a legal impediment to denying a fact or restoring a right that has been previously waived
68
excess insurance
insurance that pays over and above or in addition to basic policy limits
69
exclusions
causes of loss,exposures,conditions,etc listed in the policy for which the benefits will not be paid
70
expiration
the date specified in the policy as the date of termination
71
express authority
the authority granted to an agent by means of the agents written contract
72
hazard
a circumstances that increases the likelihood of a loss
73
group life
life insurance provided for members of group
74
grace period
period of time after th epremium due date duriing which premiums may still be paid
75
free look
a period of time,usually required by law,during which a policyowner may insect anewly issued individual life or health insurance policy for a stated number of days and surrender it in exchanged for a full refund of premium if not satisfied for any reason
76
fraud
intentional misrepresentation or deceit with intent to induce a person to part with something of value
77
fraternal benefit societies
life or health insurance conpanies formed to provide insurance for members of an affiliated lodge,religious oganization with a reprersentative form of government.
78
flexible premium
a policy feature that allows th epolicyholder to vary premium payments in the amount and/timing.
79
fixed insurer
an insurance company that is incorporated in another state.
80
fixed annuity
an annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments
81
face
the first page of a policy
82
fair credit reporting act
a federal law that established procedures consumer reporting agencies must follow in order to ensure that records are confidential,accurate ,relevant and property used
83
extension of benefits
a provision that allows coverage to continue beyond the poilicy expiration date employees who are not actively at work due to disability or who have dependents hospitalized on that date. this coverage continues only until the employee returns to work or the dependent leaves the hospital.
84
what are many types of life insurance policies called
products
85
what are two types of life insurance policies
temporary& permanent
86
temporary
term life insurance
87
permanent
whole life insurance
88
term life insurance policy
its the cheapest;alot more coverage for lowest premium;no cash value;if it expires prior to the insured death nothing is payable at the end of the term
89
what are characteristics of term life insurance policy
alot more coverage for lowest premium;no cash value'
90
what are three types of term coverage
level;increasing;decreasing
91
level term insurance
figured at attanined age;the premium stays the same
92
increasing term insurance
level premiums and death benefit increasing each year;inflation/cola
93
decreasing term insurance
death benefit and premium decreases each year;mortage or other debt if the insured dies;
94
return of premium
an increasing term policy that pays an additional death benefit to the beneficiary equal to the amount of the premium paid.; if the insured death occurs in a specific time; or outlives it
95
what are the different special features of term insurance policy
renewable;convertible&renewable&convetible
96
what is renewable
allows the policyowner to renew the coverage at the expiration date without evidence of insurability
97
convertible
right to convert a permanent insurance policy without evidence of insurability;based on attained age
98
whole life insurance policy
lifetime protection;cash value;endow at the insured age 100'level premium;living benefit
99
what are the key characteristics of whole life
cash value;living benefit;lifetime protection
100
annually renewable term=special feature policy
face amount stays the same;every year premium is going to increasing based on attained age;renewable;good for 10 years.
101
what are the three basic forma of whole life insurance
straight whole life;limited-pay while life;single premium whole life
102
straight life=(continuous premium whole life=continous pay)
the policyowner pays the premium from the time the policy is issued until the insured death age 100;lowest annual premium
103
limited payment
the premiums for coverage will be completely paid -up well before age 100;shorter premium paying period than straight life;(so will only pay for beyond a certain period of time;cash value builds up faster;65 pay choice
104
how many pay choices does limited payment have
3
105
what are the 3 pay choices limited payment has
20-pay life;30- pay life;65 pay-life
106
describe the different 3 pay choices-20,30,65
?????
107
single premium
provides a level death benefit to the insured age 100 for a one time ,lump-sum payment;paid up after one premium and generates immediate cash.
108
indexed whole life(equity index whole life)
is that the cash value is dependent upon the performance of the equity index,such as s&p 500 although there is a guranteed minimum interest rate.assumes inflation risk;keep up with inflation without requiring evidence of insurability;
109
modified premium whole life
charges a lower premium in the first few years then a higher level premium for the rest of the insurers life;for the younger buyer
110
graded premium whole life
premium starts out relatively low and then level off at a point in the future;keep increasing for 5-10 years then remains level thereafter
111
indeterminate premium whole life
premium rates that vary from year to year;based on companys expected mortality ,expense,and investments;specifies two premium rates;guaranteed&nonguranteed
112
what are the difference between the two premium rates guranteed and nonguaranteed
guranteed-level premium
nonguaranteed-lower premium rate that the policy owner actually pays for a set period of time
113
interest-sensitive whole life=current assumption
provides guarented death benefit to age 100;sets intitial premium base on current assumptions about risk,interest,and expense;benefit added to add interest rates
114
endowment
provide a permenent death protection if the insured should die prematurely and they accumulate cash value;matures at an earlier age
115
flexible premium policies
allow the policyowner to pay more or less than the planned premium
116
adjustable life
best of both worlds;term and permanent coverage;need proof of insurability
117
universal life=flexible premium adjustable life
policyowner has the flexiblity to increase the amountof premium paid into the policy and to later decrease it again;may even skip a premium and policy will not lapse as long as theres cash value to cover monthly deductible
118
what are two types of adjustable life premiums
minimum&target premium
119
minimum premium
the amount to keep the policy in force for the current year
120
target premium
is a recommened amount that should be paid on a policy in order to cover the cost of insurance preotection and to keep the policy enforced throughout its lifetime
121
what are the two componets of a universal life policy
insurance componet;annually renewable term insurance
122
how many death benefits does universal life policy have?; and what are they
option A& option B
123
Option A
level death benefit;remains level while the cash value gradually increases thereby lowering it with the insurer in the later years
124
Option B
includes the annual increase in cash value so that the death gradually increases each year by the amount that the cash value increases.
125
statutory definition
gap mainained between the cash value an the death benefit in a life insurance policy;if its not maintained the policy is no longer defined as life insurance for tax purposes and loses tax advantages with policy.
