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Xcel Texas Pre-licensing Education - Life and Health Insurance Insurance Glossary

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Xcel Texas Pre-licensing Education - Life and Health Insurance Insurance Glossary 1. Absolute assignment ️ 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 pol...

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  • August 15, 2024
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  • 2024/2025
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  • xcel texas pre licensing education life and heal

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Xcel Texas Pre-licensing Education - Life and Health Insurance
Insurance Glossary


1. Absolute assignment

✔️ 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)



2. Accelerated benefits rider

✔️ A life insurance rider that allows for the early payment of some portion of the policy's face
amount should the insured suffer from a terminal illness or injury.



3. Acceptance

(See offer and acceptance)

✔️



4. Accidental bodily injury provision

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



5. 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.



6. Accidental death benefit rider

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



7. Accidental dismemberment

, ✔️ 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 may not be considered dismemberment.



8. 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.



9. Accident and health insurance

✔️ 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.



10. Accumulation unit

✔️ 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.



11. 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.



12. Acute illness

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



13. 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, rates, values, and so on.



14. 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
specific needs. Such adjustments are not retroactive and apply only to the future.

,15. Administrative-services-only (ASO) Plan

✔️ 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.



16. Admitted insurer

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



17. 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.



18. 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.



19. Advertising Code

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



20. Agency

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



21. 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.

, 22. 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 ✔️A contract that provides a stipulated sum payable at certain regular intervals during the
lifetime of one or more persons, or payable for a specified period only.



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.

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