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Life insurance Entire Glossary

Terms in this set (199)

Accelerated Benefits
Riders attached to life insurance policies that allow death benefits to be used to cover nursing or convalescent home expenses
Accidental Death benefits
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
Accidental Death insurance
An insurance policy that provides payment if the insured's death is the result of an accident
Accumulation Period
The time before an annuitant's retirement during which the annuitant is making payments or investments in an annuity
Actual Cash Value
The required amount to pay damages or for property loss. This amount is calculated base on the property's current replacement value minue depreciation
Adhesion
A Contracted offered on a "take-it-or-leave-it basis by an 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.
Adjustable life
Life insurance that permits changes in the face amount, premium amount, period of protections, and the duration of the premium payment period.
Adjuster
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
Administrator
An individual appointed by a court as fiduciary to settle the financial affairs and estate of a deceased person
Admitted (authorized) insurer
An insurance company authorized and licensed to transact business in a particular state.
Adverse Selection
The tendency or risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability
Agency
An insurance sales office or company
Agent
An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of the insurer.
Agent appointment
The authorization of an agency by his or her agency contract
Agent's Authority
Special powers granted to an agent by his or her agency contract
Aleatory
A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount of the insurer will pay in the event of a loss.
Alien Insurer
an insurance company that is incorporated outside the United States
Annuity
A contract that provides income for a specified period of years, or for life
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds or the principal or because of circumstance the principal create
Application
A document that provides information for underwriting purposes. After the policy is issued, any unanswered questions are considered waived by the insurer
Applicant
A person making application for, or offering himself, herself or another to be insured under an insurance contract
Assignment
the transfer of ownership rights of a life insurance policy from one person to another
Attained age
the age of the insured at a determined date
Attending Physician's Statement (APS)
A statement usually obtained from the applicant's doctor
Authorized (admitted) Insurer
An insurance company authorized and licensed to transact business in a particular state.
Avoidance
A method of dealing with risk by deliberately keeping away from it.
Basic Illustration
A ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements.
Beneficiary
The person who receive the proceeds from the policy when the insured dies.
Birthday Rule
The method of determining primary coverage for a dependent child, under which the plan of the parent whos birthday occurs first in the calendar year is designated as primary
Broker
An individual who represents an insured in the process of purchasing and negotiating a contract of insurance
Buy-Sell Agreement
A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.
Cash Value
The amount to which a policyowner is entitled if the policy is surrendered before maturity.
Certificate of Authority
A document that authorizes a company to start conducting business and specifies that kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate.
Certificate of Insurance
A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.
Claim
A request of payment for the benefits provided by an insurance contract
Coercion
An unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance.
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
Commingling
A practice in which a person in fiduciary capacity illegally mixes her/his personal funds with fund he/she is holding in trush
Commission
The payment made by insurer to agents or broker for the sale and service of policies.
Commissioner
The chief executive and administrative officer of a state insurance department (in some states, known as Director or Superintendent)
Concealment
The withholding of know facts that , if material, can void a contract
Consideration
The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the Representation made in the application and the payment of premium;The consideration on the part of the insurer is the promise to pay in the event of a loss.
Conditional Contract
A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable
Consumer Report
A written and/or oral statement regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
Contract
An agreement between two or more parties enforceable by law
Contributory
A group insurance plan that requires the employees to pay part of the premium
Controlled Business
An entity that obtains and possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer or employees.
Convertible
A policy that may be exchanged for another type of policy by contractual provision, at the option of the policyowner, and without evidence of insurability. (I.e Term life changed to form of a permanent life)
Countersignature
The act signing an insurance policy by a licensed resident agent
Credit life insurance
A special type of coverage written to pay off the balance of loan in the event of the death of the debtor
Death Benefit
The amount payable upon the death of the person whose life is insured
Decreasing Term
A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy
Defamation
An Unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation
Direction
The Chief executive and administrative office of the insurance Department (in some states, known as Commissioner or Superintendent)
Dependent
A person who relies on another for support and maintenance
Disclosure
An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation
Domestic Insurer
An insurance company that conducts business in the state of incorporation
Domicile of insurer
Insurer's location of incorporation and the legal ability to write business in a state
Earned Premium
The amount of the premium for which the policy protection has been given
Effective date
The date when an insurance policy begins (also know as the inception date
Employee Retirement Income Security Act
(ERISA) The act that stipulates federal standards for private pension plans.
Endorsement
A Form changing the provisions of and attached to life insurance policy. (Also known as a rider)
Endow
To reach the maturity date or time at which the face amount equals cash values
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived.
Excess insurance
Insurance that pays over and above or in addition to basic policy limits
Exclusions
Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.
Expiration
The date specified in the policy as the date of termination
Express Authority
The authority granted to an agent by means of the agent's written contract
Extension of benefits
A Provision that allows coverage to continue beyond the policy's expiration date for 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 war or the dependent leaves the hospital
Face
The first page of a policy
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 properly used.
Fiducairy
An agent/broker who handles insurer's funds in a trust capacity
Fixed Annuity
An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase of payment or payments
Flexible premium
A policy feature that allows the policyholder to vary premium payments in the amount and or timing
Foreign Insurer
An insurance company that is incorporated in another state
Fraternal Benefit socieities
Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government
Fraud
Intentional misrepresentation or deceit with the intent to induce a person to part of something of value.
Free look
a period of time, usually required by aw, during which a policy owner may inspect a newly issued individual life or health insurance policy for a stated number of days and surrender it in exchange for a full refund of premium if not satisfied for any reason
Grace Period
Period of time after the premium due date during which premiums may still be paid, and the policy and its riders remain in force.
Group life
Life insurance provided for members of a group
Hazard
A circumstance that increases the likelihood of a loss
Hazard, Moral
The effective of a person's reputation, character, living habits, etc on his/her insurability
Haard, Morale
The effect a persons's indifference concerning loss has on the risk to be insured.
Hazard, Physical
A type of hazard that arises from the physical characteristics on an individual, such as a physical disability due to teeth current circumstance or a condition present at birth
Implied authority
Authority that is not express or written into the contract, but which the agent is assumed to have in order to transact the business of the insurance for the principal
Indemnify
To restore the insured to the same condition as prior to loss with no intent of loss or gain
Isolvent Organization
A member organization which is unable to pay its contractual obligations and is placed under a final order of liquidation or rehabilitation by a court of competent jurisdiction
Insurability
The acceptability of an applicant who meets an insurance company's underwriting requirement of insurance
Insurable interest
A financial interest in the life of another person; a possibility of losing something of value if the insured should die. In life insurance, insurable interest must exist at the time of policy application or policy issue.
Insurance
A Contract whereby on party (insurer) agrees to indemnify or guarantee another party (insured) against a loss by a specified future contingency or peril in return for payment of a premium
Insured
the person or organization that is protected by insurance; the party is to be indemnified.
Insurer
An entity that indemnifies agents losses, provides benefits, or renders services (also known as "company" or "insurance company")
Insuring Clause
A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.
Intentional injury
An act that is intended to cause injury. Self-OInflcited injuries are not covered under accident insurance; intentional injuries inflicted on the insured by another are covered.
Investigative Consumer Reports
A report similar to consumer report, but one that also provides information not eh consumer's character, reputation and habits.
Issue age
the individual's age when the policy is issued.
Join life
A single policy that is designed to insure two or more elites.
Juvenile Lie
Any life insurance written on the life of a minor
Lapse
Termination of a policy because the premium has not been paid by the end of the grace period
Law of large Numbers
A principle state that the large the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss
Level premium
A policy premium that remains the same over the period of time premiums are paid.
Life expectancy
Averagenumber of years remaining for person of a given age to live, s shown on the mortality table.
Life settlement
An arrangement that allows the policy owner see their existing life insurance policy to a third party for compensation
Limited-Pay Whole life
A variation of whole life insurance that charges a level annulal premium and provides a level, guaranteed death benefit to the insured's age 1-- and will endow for the face amount if the insured lives to age 100. Limited-pay life is designed so that the premiums for coverage will be completely paid-up well before age 100
Liquidation
Selling assets as a method of raining capital
Living Benefits Rider
A rider attached to a life insurance policy that provides LTC benefits or benefits for the terminally ill by using available life insurance benefits
Lloyd's Association
Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk
Loan Value
The amount of money an insured can borrow using the cash value of his/her life insurance policy as collateral
Loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.
Lump Sum
Settlement method that pays the beneficiary the entire proceeds of a life insurance policy in one payment rather than in installments
Market Value adjusted annuity
A single-premiums deferred annuity that allows a contract owner to lock in a guaranteed iterate rate over a specified maturity period
Maturity Date
The date when face amount of life insurance becomes payable
(MIB) Medical Information Bureau
An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to the database for underwriting purposes
Misrepresentation
A false statement or life that can render the contract void
Mode of Payment
the method of premium payment, whether annually, semiannually, quarterly , or monthly.
Mortality Table
A table showing the probability of death at specified ages.
Mutual Companies
Insurance organization s that have no capital stock, but are owned by the policyholders.
Nonadmitted (non authorized)
An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance a particular state
Nonauthorized (Nonadmitted)
An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance a particular state
Noncancellable
An insurance contract that the insured has a right to continue in force by payment of premiums that remained the same for a substantial period of time
Nonforeiture Values
Those guaranteed values in a life insurance policy that cannot be taken from the insured, even if he or she ceases to pay premums
Nonmedical
A life of health insurance policy this is underwritten based not he insured's statement of health rather than a medical examination
Nonparticipating Policies (on par)
insurance that does not pay dividends
Nonqualified Plan
A type of benefit plan that may discriminate, is not required to be filed with the IRS, and does not provide a current tax deduction for contributions
Nonrenewal
A termination of a policy by an insurer on the anniversary or renewal date
Nonresident agent
An agent licensed in a state in which he or she is not a resident
Option
A choice of ways of receiving policy dividends, nonforfeiture values, death benefits, or cash values.
Overinsurance
An excessive amount of insurance that would result in overpayment to the insured in the event of a loss.
Paid- up insurance
A policy in which all premiums have been paid but which has not matured due either to death or endowment
Participating Policies (PAR)
Insurance that pays dividends to policyholders
Payor Benefit
A rider found in juvenile policies which waives the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor
Peril
The cause of a possible loss
Permanent Life Insurance
A general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid
Persistency
The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer
Personal Contract
An agreement between an insurance company and an individual that states that insurance policies cover the indidivual's insurance interest
Physical Exam and Autopsy
A provision that allows an insurer, at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law
Policy Loan
A nonforfeiture value in which an insurer loans a part or all of the cash value of the policy assigned as security for the loan to the policyowner
Policyholder
The person who has possession of the policy, usually the insured
Policyowner
The person who is entitled to exercise the rights and privileges in the policy. This person may or may not be the insured
Preferred Risk
An insurance classification for applicants who have lower expectations of incurring loss, and who, therefore, are covered at a reduced rate.
Premium
A periodic payment to the insurance company to keep the policy in force.
Primary Beneficiary
The person who is named as first to receive benefits from a policy
Primary Policy
A basic, fundamental insurance policy which pays first with respect to other outstanding polices.
Principal Amount
The full face value of policy
Private Insurance
Insurance furnished by nongovernmental insuring organizations
Pro Rate Cancellation
Termination of an insurance policy, with an adjustment of the premium charge in proportion to the exact coverage that has been in force.
Proceeds
The amount payable by the insurance company, usually in at the insured's death or when the policy matures.
Producer
Insurance agent or broker
Pure Protections
Insurance whereby premiums are paid for protection in the event of death or disability, not for cash value accumulation
Qualified Plan
A retirement plan that meets the IRS guidelines for receiving favorable tax treatment
Rate Service Organization
An organization that is formed by, or on behalf of , a group if insurers to develop rates for those insurers, and to file the rates with the insurance department on behalf of its members. They also act as a collection point for actuarial date
Rebating
Any inducement offered in the sale of insurance products that is not specified in the policy
Reciprocal Exchange
An unincorporated group of individuals who mutually insure one another, each separately assuming a share of each risk
Reciprocity
A situation in which two parties provide the same help or advantages to each other. (for example, Producer A living in State A can transact business as a nonresident in State B if State B's resident producers can transact business in State A)
Reduction
Lessening the possibility or severity of a loss
Reinsurance
A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (the ceding company) for part or all of its liability from insurance policies it has issued.
Renewability Clause
A clause that defines the insurance company's and the insured's right to cancel or renew coverage.
Renewable term
Insurance which can, at the election of the policy owner, be renewed at the end of a term without evidence of insurability
Representations
Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true.
Rescission
The termination of an insurance contract due to either to material misrepresentation by the insured or by fraud, misrepresentation, or duress on the part of the agent/insurer
Retention
A method of dealing with risk by intentionally or unintentionally keeping a portion of it for the insured's account; the amount of responsibility assumed but not reinsured by the insurance company
Rider
Any supplemental agreement attached to and made a part of the policy indicating the policy expansion by additional coverage, or a waiver of a coverage or condition
Risk
Uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change
Risk, Pure
The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change
Risk Retention Group
A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry
Risk, Speculative
The uncertainty or chance of a loss occurring in a situation that involves the opportunity for with loss or gain.
Risk, Standard
An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle.
Risk, Substandard
An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium
Rollover
Withdrawing the money from a qualified plan and placing it into another qualified plan.
Secondar Beneficiary
The person who is named to receive benefits upon the death on the insured with the (primary) first-named beneficiary is no longer alive or does not collect all the benefits due to his/her own death
Settlement options
choices available to the insured/owner for distribution of insurance proceeds
Sharing
A method of dealing with risk for a a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur with in that group
Single Premium Whole Life (SPWL)
A life insurance policy designed to provide a level death benefit to the insured's age 100 for a one-time, lump sum payment
Speculative Risk
An Uncertainty or chance of a loss occurring in a situation that involved the opportunity for with loss or gain.
Spendthrift Clause
A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them.
Standard Provisions
Requirements approved by the state law that must appear in all insurance policies
Standard Risk
An applicant or insured who is considered to have an average probability of a loss based on health, vocation, and lifestyle.
Stock companies
Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company
Straight life
A basic policy that charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefits.
Substandard Risk
An applicant or insured who has a hight than normal probability of loss, and who may be subject to an increased premium
Superintendent
The head of the state department of insurance (in some states, known as Commissioner or Director).
Surrender
An act of giving up a life policy, in which the insurer will pay the insured the cash value the policy has built up.
Term Insurance
Insurance that provides protection for a specific period of time.
Terminally Ill
A person who is expected to die within a short period of time due to a specific illness or sickness
Total Disability
A condition which does not allow a person to perform the duties of any occupation for payment as a result of injury or sickness.
Transfer
A basic principle of insurance under which the risk of financial loss is assigned to another party.
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's the insured's disadvantage.
Underwriter
A person who evaluates and classifies risks to accept or reject them on behalf of the insurer.
Underwriting
The process of reviewing, accepting or rejecting application for insurance.
Unearned Premium
The portion of premium for which policy protection has not yet been given.
Unilateral Contract
A contract that legally binds only one party to contractual obligations after the premium is paid.
Universal Life
A combination of Annual Renewable Term and a cash account invested in the general fund of the instance company.
Utmost Good Faith
The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk.
Valued Contract
A contract that pays a stated amount in the event of a loss (disability insurance/life insurance)
Waiting period
Time between the beginning of a disability and the start of disability insurance benefits
Waiver
The voluntary abandonment of a know or legal right or advantage
Waiver of cost
A disability rider, found in Universal Life insurance, that waives the cost of the insurance but does not waive the cost of premiums necessary to accumulate cash values.
Warranty
A material stipulation in the policy that if breached may voice coverage.
Whole Life Insurance
Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be.
Sets with similar terms