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Life insurance exam > life insurance > Flashcards

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

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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

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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

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4
Q

Accidental Death Insurance

A

An insurance policy that provides payment if the insured’s death is the result of an accident

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5
Q

Accumulation period

A

The time before an annuitant retirement during which the annuitant is making payments or investments in an annuity

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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.

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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.

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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.

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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

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10
Q

Administrator

A

An individual appointed by a court as fiduciary to settle the financial affairs and estate of a deceased person

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11
Q

Admitted (Aurthorized) insurer

A

an insurance company authorized and licensed to transact buisness in a particular state

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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

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13
Q

Agency

A

An insurance sales office or company

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14
Q

agent

A

An individual who is licensed to sell negotiate or affect insurance contracts on behalf of the insurer

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15
Q

Agent Appointment

A

the authorization of agent to act for or represent an insurer

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16
Q

Agent Authority

A

Special powers granted to agent by his or her agency contract

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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

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18
Q

alien insurer

A

an insurance company that is corporated outside of the united states

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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

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20
Q

annuity

A

a contract that provides income for a specified period of years,or for life

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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

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22
Q

Applicant

A

a person making application for ,or offering himself,herself or another to be insured under an insurance contract

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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

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24
Q

Assignment

A

the transfer of ownership rights of a life insurance policy from one person to another

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25
Q

Attained date

A

the age of the insured at a determined date

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26
Q

attending physician statement APS

A

a statement usually obtained from the applicant doctor

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27
Q

authorized (admitted) insurer

A

an insurance company authorized and licensed to transact buisiness in a particular state

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28
Q

avoidance

A

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.

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29
Q

Basic illustration

A

A ledger or proposal used in the sale of a life insurance policy that shoes both guaranteed and negotiated elements

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30
Q

beneficiary

A

the person who receives the proceeds from the policy when the insured dies

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31
Q

birthday rule

A

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

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32
Q

broker

A

an individual who represents as insured in the process of purchasing and negotiating a contract of insurance

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33
Q

buy-sell agreement

A

a legal contract that determines what will be done with a buisness in the event that an owner dies or becomes disabled

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34
Q

buyers guide

A

a booklet that describes insurance policies and concepts,and provides general information to help an applicant make an informed decision

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35
Q

cash value

A

the amount to which a policyowner is entilted if the policy is surrendered before maturity

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36
Q

certificate

A

a statement or booklet that confirms that a policy has been written and that describes the coverage in general

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37
Q

certificate of authority

A

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

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38
Q

claim

A

a request for payment of the benefits provided by an insurance contract

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39
Q

coercion

A

an unfair trade practice in which an agent uses physical or mental force with the intent of inducting an applicant to purchase insurance

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40
Q

coinsurance clause

A

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

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41
Q

commingling

A

a practice in which a person in a fiduciary capacity illegally mixes his/her personal funds with funds he/she is holding in trust

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42
Q

commission

A

th epayment made by insurers to agents or brokers for the sale and service of policies

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43
Q

commisioner

A

the chief executive and administerative officer of a state insurance department (in some states known as director or superintendent)

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44
Q

concealment

A

the withholding of known facts that,if material,can void a contract

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45
Q

conditional contract

A

a type of an aggreement in which both parties must perform certain duties

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46
Q

consideration

A

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

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47
Q

consumer report

A

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

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48
Q

contract

A

an agreement between two or more parties enforceable by law

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49
Q

contributory

A

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

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50
Q

convertible

A

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)

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51
Q

countersignature

A

the act of signing an insurance polciy by licensed resident agent

52
Q

coverage

A

the inclusion of causes loss(perils) which are covered within a scope of a policy

53
Q

credit of insurance

A

a special type of coverage written to pay off the balance of a loan in the event of the death of the debtor

54
Q

death benefit

A

the amount payable upon the death of the person whose life is insured

55
Q

decreasing term

A

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
Q

defamation

A

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
Q

dependent

A

a person who relies on another for support and maintenance

58
Q

director

A

the chief executive and administative officer of the insurance department (in some states,known as commisioner or superintendent

59
Q

disclosure

A

an act of identfiying the name of the producer,representative or firm,limited insurance representative,or temporary insurance producer on any policy solicitation

60
Q

domestic insurer

A

an insurance company that conducts business in the state of incorporation

61
Q

domicile of insurer

A

insurers location of incorporation and the legal ability to write business in a state

62
Q

earned premium

A

the amount of the premium for which the polciy protection has been given

63
Q

effective date

A

the date when an insurance policy begins(also known as the inception date)

64
Q

employee retirement income security act(ERISA)

A

the act that stipulates federal standards for private pension plans.

65
Q

endorsement

A

a form changing the provisions of and attached to a life insurance policy (also known as a rider)

66
Q

endow

A

to reach the maturity date or time

67
Q

estoppel

A

a legal impediment to denying a fact or restoring a right that has been previously waived

68
Q

excess insurance

A

insurance that pays over and above or in addition to basic policy limits

69
Q

exclusions

A

causes of loss,exposures,conditions,etc listed in the policy for which the benefits will not be paid

70
Q

expiration

A

the date specified in the policy as the date of termination

71
Q

express authority

A

the authority granted to an agent by means of the agents written contract

72
Q

hazard

A

a circumstances that increases the likelihood of a loss

73
Q

group life

A

life insurance provided for members of group

74
Q

grace period

A

period of time after th epremium due date duriing which premiums may still be paid

75
Q

free look

A

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
Q

fraud

A

intentional misrepresentation or deceit with intent to induce a person to part with something of value

77
Q

fraternal benefit societies

A

life or health insurance conpanies formed to provide insurance for members of an affiliated lodge,religious oganization with a reprersentative form of government.

78
Q

flexible premium

A

a policy feature that allows th epolicyholder to vary premium payments in the amount and/timing.

79
Q

fixed insurer

A

an insurance company that is incorporated in another state.

80
Q

fixed annuity

A

an annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments

81
Q

face

A

the first page of a policy

82
Q

fair credit reporting act

A

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
Q

extension of benefits

A

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
Q

what are many types of life insurance policies called

A

products

85
Q

what are two types of life insurance policies

A

temporary& permanent

86
Q

temporary

A

term life insurance

87
Q

permanent

A

whole life insurance

88
Q

term life insurance policy

A

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
Q

what are characteristics of term life insurance policy

A

alot more coverage for lowest premium;no cash value’

90
Q

what are three types of term coverage

A

level;increasing;decreasing

91
Q

level term insurance

A

figured at attanined age;the premium stays the same

92
Q

increasing term insurance

A

level premiums and death benefit increasing each year;inflation/cola

93
Q

decreasing term insurance

A

death benefit and premium decreases each year;mortage or other debt if the insured dies;

94
Q

return of premium

A

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
Q

what are the different special features of term insurance policy

A

renewable;convertible&renewable&convetible

96
Q

what is renewable

A

allows the policyowner to renew the coverage at the expiration date without evidence of insurability

97
Q

convertible

A

right to convert a permanent insurance policy without evidence of insurability;based on attained age

98
Q

whole life insurance policy

A

lifetime protection;cash value;endow at the insured age 100’level premium;living benefit

99
Q

what are the key characteristics of whole life

A

cash value;living benefit;lifetime protection

100
Q

annually renewable term=special feature policy

A

face amount stays the same;every year premium is going to increasing based on attained age;renewable;good for 10 years.

101
Q

what are the three basic forma of whole life insurance

A

straight whole life;limited-pay while life;single premium whole life

102
Q

straight life=(continuous premium whole life=continous pay)

A

the policyowner pays the premium from the time the policy is issued until the insured death age 100;lowest annual premium

103
Q

limited payment

A

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
Q

how many pay choices does limited payment have

A

3

105
Q

what are the 3 pay choices limited payment has

A

20-pay life;30- pay life;65 pay-life

106
Q

describe the different 3 pay choices-20,30,65

A

?????

107
Q

single premium

A

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
Q

indexed whole life(equity index whole life)

A

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
Q

modified premium whole life

A

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
Q

graded premium whole life

A

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
Q

indeterminate premium whole life

A

premium rates that vary from year to year;based on companys expected mortality ,expense,and investments;specifies two premium rates;guaranteed&nonguranteed

112
Q

what are the difference between the two premium rates guranteed and nonguaranteed

A

guranteed-level premium
nonguaranteed-lower premium rate that the policy owner actually pays for a set period of time

113
Q

interest-sensitive whole life=current assumption

A

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
Q

endowment

A

provide a permenent death protection if the insured should die prematurely and they accumulate cash value;matures at an earlier age

115
Q

flexible premium policies

A

allow the policyowner to pay more or less than the planned premium

116
Q

adjustable life

A

best of both worlds;term and permanent coverage;need proof of insurability

117
Q

universal life=flexible premium adjustable life

A

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
Q

what are two types of adjustable life premiums

A

minimum&target premium

119
Q

minimum premium

A

the amount to keep the policy in force for the current year

120
Q

target premium

A

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
Q

what are the two componets of a universal life policy

A

insurance componet;annually renewable term insurance

122
Q

how many death benefits does universal life policy have?; and what are they

A

option A& option B

123
Q

Option A

A

level death benefit;remains level while the cash value gradually increases thereby lowering it with the insurer in the later years

124
Q

Option B

A

includes the annual increase in cash value so that the death gradually increases each year by the amount that the cash value increases.

125
Q

statutory definition

A

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.

Life insurance exam (1 decks)

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