Life Insurance Test 1 Ch. 1
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13 terms
Terms | Definitions |
|---|---|
 Essence of Insurance | Sharing losses and, in the process, the substitution of a certain, small "loss" called the premium for an uncertain, large loss called the premium for an uncertain large loss |
| Econ. Def of Insurance | financial intermediation function by which individuals exposed to a specified contingency each contribute to a pool from which covered events suffered by participating individuals are paid. |
| Legal Def. of Insurance | an agreement, the insurance policy or insurance contract, by which one party, the policy owner, pays a stipulated consideration called the premium to the other party called the insurer, in return for which the insurer agrees to pay a defined amt. of money or provide a defined service if a covered event occurs during the policy term. |
| Life Insurance Covers: | death, living a certain amt of time(endowments, annuities, and pensions) |
| Incapacity | Called disability and long-term care insurance |
| Whole Life Insurance | life insurance policy that provides coverage for the whole of the insured's life |
| Term Insurance | Term policies promise to pay benefits only if insured dies during the policy term |
| Endowment Insurance | Pays benefits if insured dies during the policy term and also pays benefits if the insured survives the policy term. |
| Annuity | Contract that promises to pay the insured, or annuitant, a periodic (usually monthly) payment starting at a specified age, such as 65. If payments cease on the annuitant's death, we call the contract a life annuity |
| Health Insurance | any form of insurance whose payment is contingent on the insured incurring additional expenses or losing income because of incapacity or loss of good health |
| Disability Income Insurance | payment provoked because physical or mental incapacity prevents the insured from being able to work. |
| Long-term care insurance | incapacity prohibits the insured's activities of daily living |
| Group Insurance | Typically purchased by employers for the benefit of their employees |
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