Vocabulary Words Flashcards
Absolute assignment
Policy assignment under which the assignee receives full control over the policy and also full rights to its benefits. Generally, when a policy is assigned to secure debt, the owner retains all rights in the policy in excess of the debt, even though the assignment is absolute in form.
Accelerated benefits rider
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.
Accidental bodily injury provision
Disability income or accident policy provision that requires that the injury be accidental in order for benefits to be payable.
Accidental death and dismemberment (AD&D)
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.
Accidental death benefit rider
A life insurance policy rider providing for payment of an additional benefit when death occurs by accidental means
Accidental dismemberment
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
Accidental means provision
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
Accident and health insurance
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.
Accumulation unit
Premiums an annunitant pays into annuities are credited as accumulation units. At the end of the accumulation period, accumulation units are converted to annuity units
Acquired immune deficiency syndrome (AIDS)
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 related conditions.
Acute illness
A serious condition, such as pneumonia, from which the body can fully recover with proper medical attention
Adhesion
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, rate, values, and so on.
Adjustable life insurance
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
Administrative services only (ASO) Plan
Arrangement under which an insurance company or an independent organization, for a fee, handles the administration claims, benefits, and other administrative functions for self insured group
Admitted insurer
An insurance company that has met the legal and financial requirements for operation within a given state
Adult day care
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
Adverse selection
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
Adverse selection
Rules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance
advertising
Agency
Situation wherein one party (an agent) has the power to act for another (the principal) in dealing with third parties
Agent
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.
Agent’s report
The section of an insurance application where the agent reports personal observations about the applicant
Aleatory
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
Alien Insurer
Company incorporated or organized under the laws of any foreign nation, providence, or territory
Ambulatory surgery
Surgery performed on an outpatient basis
Amount at risk
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 face amount
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)
Annuitant
One to whom an annuity is payable, or a person upon the continuance of whose life further payment depends
Annuity unit
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
Any occupation
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.”
Apparent authority
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
Application
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 premium rate
Appointment
Authorization or certification of an agent to act for or represent an insurance company
Approval receipt
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)
Assessment mutual insurer
An insurance company characterized by member-insureds who are assessed an individual portion of
each loss that occurs. No premium payment is payable in advance
Assignee
Person (including corporation, partnership, or other organization) to whom a right or rights under a policy are transferred
by means of an assignment
Assignment provision (health contracts)
Commercial health policy provision that allows the policy owner to assign benefit
payments from the insurer directly to the health care provider
Assignment
Signed transfer of benefits of a policy by an insured to another party. The company does not guarantee the validity of
an assignment
Assignor
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
Attained age
With reference to an insured, the current insurance age
Authority
The actions and deeds an agent is authorized to conduct on behalf of an insurance company, as specified in the
agent’s contract
Authorized company
Company duly authorized by the insurance department to operate in the state
Automatic premium loan provision
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
Average Indexed Monthly Earnings (AIME)
The basis used for calculating the primary insurance amount (PIA) for Social Security
benefits
Average Monthly Wage (AMW)
The average wage base for computing virtually all Social Security benefits prior to
Aviation exclusion
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.”
Backdating
The practice of making a policy effective at an earlier date than the present
Basic medical expense policy
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 coverage limits
Beneficiary
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)
Benefit
May be either money or a right to the policy owner upon the happening of the conditions set out in the policy
Benefit period
Maximum length of time that insurance benefits will be paid for any one accident, illness, or hospital stay
