term list

Question 1

: Policy assignment under which the assignee (person to whom the policy is assigned) receives full control
over the policy and also full rights to its benefits. Generally, when a policy is assigned to secure a debt, the owner retains all rights in
the policy in excess of the debt, even though the assignment is absolute in form. (See assignment)

Answer 1

absolute assignment

Question 2

A life insurance rider that allows for the early payment of some portion of the policies face amount
should the insured suffers from a terminal illness or injury

Answer 2

accelerated benefits rider:

Question 3

: Disability income or accident policy provision that requires that the injury be accidental in order
for benefits to be payable

Answer 3

Accidental bodily injury provision

Question 4

: Insurance providing payment if the insured’s death results from an accident,
if the insured accidentally severs a limb above the wrist or ankle joints, or totally and irreversibly loses eyesight.

Answer 4

Accidental death and dismemberment (AD&D)

Question 5

A life insurance policy rider providing for payment of an additional benefit when death occurs by
accidental means.

Answer 5

Accidental death benefit rider:

Question 6

: Often defined as “the severance of limbs at or above the wrists or ankle joints, or the entire
irrevocable loss of sight.” Loss of use in itself may or not be considered dismemberment.

Answer 6

Accidental dismemberment:

Question 7

: Unforeseen, unexpected, unintended cause of an accident. Requirement of an accident-based
policy that the cause of the mishap must be accidental for any claim to be payable.

Answer 7

Accidental means provision:

Question 8

: Under which benefits are payable in case of disease, accidental injury, or accidental death. Also
called health insurance,personal health insurance,and sickness and accident insurance.

Answer 8

Accident and health insurance:

Question 9

Premiums an annuitant pays into annuities are credited as accumulation units. At the end of the accumulation
period, accumulation units are converted to annuity units

Answer 9

Accumulation unit

Question 10

: A life-threatening condition brought on by the human immunodeficiency
virus; insurers must adhere to strict underwriting and claims guidelines in regard to AIDS risks and AIDS-relatedconditions.

Answer 10

Acquired immune deficiency syndrome (AIDS) :

Question 11

: A serious condition, such as pneumonia, from which the body can fully recover with proper medical attention.

Answer 11

Acute illness:

Question 12

n: A life insurance policy is a contract of adhesion because buyers must adhere to the terms of the contract already in
existence. They have no opportunity to negotiate terms, rates, values, and so on.

Answer 12

Adhesion

Question 13

Combines features of both term and whole life coverage with the length of coverage and amount of
accumulated cash value as the adjustable factors. Premiums may be increased or decreased to fit the specific needs. Such
adjustments are not retroactive and apply only to the future.

Answer 13

Adjustable life insurance:

Question 14

: Arrangement under which an insurance company or an independent organization, for a
fee, handles the administration of claims, benefits, and other administrative functions for a self-insured group

Answer 14

Administrative-services-only (ASO) Plan:

Question 15

An insurance company that has met the legal and financial requirements for operation within a given state

Answer 15

admitted insurer:

Question 16

: Type of care (usually custodial) designed for individuals who require assistance with various activities of daily living,
while their primary caregivers are absent. Offered in care centers.

Answer 16

Adult day care

Question 17

: Selection “against the company.” Tendency of less favorable insurance risks to seek or continue insurance to a
greater extent than others. Also, tendency of policy owners to take advantage of favorable options in insurance contracts.

Answer 17

Adverse selection:

Question 18

Rules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance
advertising.

Answer 18

Advertising Code:

Question 19

Situation wherein one party (an agent) has the power to act for another (the principal) in dealing with third parties.

Answer 19

Agency:

Question 20

: Anyone not a duly licensed broker who solicits insurance or aids in placing risks, delivering policies, or collecting premiums
on behalf of an insurance company.

Answer 20

Agent:

Question 21

: The section of an insurance application where the agent reports personal observations about the applicant

Answer 21

Agent’s report:

Question 22

Feature of insurance contracts in that there is an element of chance for both parties and that the dollar given by the
policyholder (premiums) and the insurer (benefits) may not be equal.

Answer 22

Aleatory

Question 23

Company incorporated or organized under the laws of any foreign nation, providence, or territory.

Answer 23

Alien Insurer:

Question 24

Surgery performed on an outpatient basis.

Answer 24

Ambulatory surgery

Question 25

Difference between the face amount of the policy and the reserve or policy value at a given time. In other words,
the dollar amount over what the policy owner has contributed of cash value toward payment of the policyowner’s own claim.
Because the cash value increases every year, the net amount at risk naturally decreases until it finally reaches zero when the cash
value or reserve become the faceamount

Answer 25

Amount at risk:

Question 26

Annually renewable term (ART) : A form of renewable term insurance that provides coverage for one year and allows the policy
owner to renew coverage each year without evidence of insurability. Also called yearly renewable term(YRT).

Answer 26

Annually renewable term (ART) :

Question 27

One to whom an annuity is payable, or a person upon the continuance of whose life further payment depends

Answer 27

Annuitant:

Question 28

The number of annuity units denotes the share of the funds an annuitant will receive from a variable annuity
account after the accumulation period ends and benefits begin. A formula is used to convert accumulation units to annuity units.

Answer 28

Annuity unit

Question 29

A definition of total disability that requires that for disability income benefits to be payable, the insured must be
unable to perform any job for which the insured is “reasonably suited by reason of education, training, or experience.”

Answer 29

Any occupation

Question 30

The authority an agent appears to have, based on the principal’s (the insurer’s) actions, words,
deeds, or because of circumstances the principal (the insurer) created.

Answer 30

Apparent authority:

Question 31

Form supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis
of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives
information to the home office underwriting department, so it may consider whether an insurance policy will be issued and, if so, in
what classification and at what premiumrate

Answer 31

Application:

Question 32

Authorization or certification of an agent to act for or represent an insurance company.

Answer 32

Appointment:

Question 33

Rarely used today, a type of conditional receipt that provides that coverage is effective as of the date the
application is approved (before the policy is delivered).

Answer 33

Approval receipt:

Question 34

An insurance company characterized by member-insureds who are assessed an individual portion of
each loss that occurs. No premium payment is payable inadvance.

Answer 34

Assessment mutual insurer:

Question 35

Person (including corporation, partnership, or other organization) to whom a right or rights under a policy are transferred
by means of an assignment.

Answer 35

Assignee:

Question 36

Commercial health policy provision that allows the policy owner to assign benefit
payments from the insurer directly to the health care provider.

Answer 36

Assignment provision (health contracts) :

Question 37

Signed transfer of benefits of a policy by an insured to another party. The company does not guarantee the validity of
an assignment.

Answer 37

assignements

Question 38

Person (including corporation, partnership, or other organization or entity) who transfers a right or rights under an
insurance policy to another by means of an assignment.

Answer 38

Assignor:

Question 39

With reference to an insured, the current insurance age.

Answer 39

Attained age:

Question 40

The actions and deeds an agent is authorized to conduct on behalf of an insurance company, as specified in the
agent’s contract.

Answer 40

Authority:

Question 41

Company duly authorized by the insurance department to operate in the state.

Answer 41

Authorized company:

Question 42

Authorizes insurer to automatically pay any premium in default at the end of the grace
period and charge the amount so paid against the life insurance policy as a policy loan.

Answer 42

Automatic premium loan provision:

Question 43

Average Indexed Monthly Earnings (AIME) : The basis used for calculating the primary insurance amount (PIA) for Social Security
benefits

Answer 43

Average Indexed Monthly Earnings (AIME) :

Question 44

The average wage base for computing virtually all Social Security benefits prior to

Answer 44

Average Monthly Wage (AMW) :

Question 45

Either attached by rider or included in standard policy language excepting from coverage certain deaths or
disabilities due to aviation, such as “other than a fare-paying passenger.”

Answer 45

Aviation exclusion:

Question 46

The practice of making a policy effective at an earlier date than the present

Answer 46

Backdating:

Question 47

Health insurance policy that provides “first dollar” benefits for specified (and limited) health care,
such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coveragelimits.

Answer 47

Basic medical expense policy:

Question 48

Person to whom the proceeds of a life or accident policy are payable when the insured dies. The various types of
beneficiaries are primary beneficiaries (those first entitled to proceeds), secondary beneficiaries (those entitled to proceeds if no
primary beneficiary is living when the insured dies), and tertiary beneficiaries (those entitled to proceeds if no primary or secondary
beneficiaries are alive when the insured dies).

Answer 48

Beneficiary:

Question 49

May be either money or a right to the policy owner upon the happening of the conditions set out in the policy.

Answer 49

Benefit: