Absolute Assignment - answer✔✔Policy assignment when assignee receives full control over
the policy and full rights to its benefits.
Accelerated benefits rider - answer✔✔Life insurance rider that allow for early payment of some
portion of policy's face amount, should the insured suffer from terminal illness/injury.
adhesion - answer✔✔Contract must be accepted by the insured exactly as it is written by the
insurer. Terms of contract cannot be negotiated. Contract is offered on a take it or leave it basis.
admitted insurer - answer✔✔An insurance company that has been approved to operate within a
given jurisdiction.
accidental death benefit rider - answer✔✔Life insurance policy rider providing for payment of
an additional benefit when death occurs by accidental means.
adjustable life - answer✔✔Policy allows the policymaker to adjust the policy's face amount,
premium, and type of protection without having to complete a new application or any additional
underwriting.
agents (producer) report - answer✔✔Section of an insurance application where the agent, details
personal observations about the applicant.
annually renewable term (ART) - answer✔✔A form of renewable term insurance that provides
coverage for one year and allows policyowner to renew coverage each year, without evidence of
insurability.
apparent authority - answer✔✔The insured believes the agent has authority to act based on
actions, words or deeds of the agent. Even though the agent may not have been granted such
authority by the insurer, they will be held liable for the actions of the agent.
automatic premium loan provision - answer✔✔Authorizes the insurer to automatically pay any
premium in default at the end of the grace period. The premium owed plus interest charged is
deducted from the policy's cash value.
beneficiary - answer✔✔Person to whom the proceeds of a life or accident policy are payable
when the insured dies.
annuitant - answer✔✔One to whom an annuity is payable, or a person upon the continuance of
whose life further payment depends.
attained age - answer✔✔With reference to an insured, the current insurance age.
aviation exclusion - answer✔✔The insurer will not pay a claim if the insured dies as a result of
flying an aircraft or acting as a member of a flight crew. In most cases, the insurer will offer the
applicant the opportunity to purchase a rider offsetting the exclusion.
buyers guide - answer✔✔A generic publication that explains life insurance in a way that an
average consumer can understand. It does not contain specific product or policy information
Buy-sell agreement - answer✔✔Agreement that a deceased businessowner's interest will be sold
and purchased at a predetermined price or at a price according to a predetermined formula.
Churning - answer✔✔Replacing one life contract with another within the same company without
demonstrating a benefit to the client.
common disaster provision - answer✔✔This policy provision provides an alternative beneficiary
in the event that the insured and the original beneficiary die as the result of a common accident.
Consideration - answer✔✔Element of a legal contract consisting of premium payment and
statements made by the prospective insured in the application.
Cash Value - answer✔✔The equity amount or savings accumulation in a permanent life policy.
Collateral assignment - answer✔✔Assignment of a policy to a creditor as a security for a debt.
At the insured death, the creditor is entitled to be reimbursed out of policy proceeds for the
amount owed and any excess will go to the beneficiary.
Conditional receipt - answer✔✔Given to the policyowners when they pay a premium at time of
application. in this case, the applicant is covered the later of the date of the application or proof
of insurability, even though the policy may not have been issued.
Consideration, legal purpose, offer, acceptance. and competent parties. - answer✔✔The five
parts of a legal contract.
Contingent beneficiary - answer✔✔Persons named to receive proceeds in case the original
beneficiary is not alive.
cost-of-living (col) rider - answer✔✔A rider available with some policies that provides for an
automatic increase in benefits ( typically tied to the consumer price index.) offsetting the effects
of inflation. This will result in an automatic increase in premium.
defined benefit plan - answer✔✔A pension plan under which benefits are determined by a
percentage of the recipients salary.
discrimination - answer✔✔In insurance, the act of treating certain groups of people unfairly in
the sale and pricing of policies. This does not apply to age, sex, occupation, and medical history.
conversion privilege (convertibility) - answer✔✔Allows the policyowner, before an original
insurance policy expires, to elect to have a new permanent policy issued that will continue the
insurance coverage without evidence of insurability.
credit life insurance - answer✔✔Decreasing term insurance covering the unpaid balance of a
mortgage or installment loan. If the borrower dies, benefits pay balance due. May be individual
or group policy.
defined contribution plan - answer✔✔A tax-qualified retirement plan in which annual
contributions are determined by a percentage of the employee's salary.
dividend - answer✔✔Policyowners share in the divisible surplus of a company issuing
participating policies, paid as a return of premium.
dividend options - answer✔✔The different ways in which the insured under a participating, life
insurance policy may elect to receive surplus earnings: in cash, as a reduction of premium, as
additional paid-up insurance, left on deposit at interest, or as additional term insurance.
estate - answer✔✔Most commonly, the quantity of wealth or property at an individual's death.
extended term insurance - answer✔✔Nonforfeiture option providing for the cash surrender value
of a policy to be used as a net single premium at the insured's attained age to purchase term
insurance for the net death benefit.
fiduciary - answer✔✔Person in a position of special trust and confidence.
endow - answer✔✔When the cash value in a permanent policy is equal to the death benefit, the
policy matures (or is paid out). This is assumed to happen at age 100.
exclusion ratio - answer✔✔A percentage used to determine the amount of annual annuity
income exempt from federal income tax.
face amount - answer✔✔This is the same as the guaranteed death benefit. This benefit may be
decreased by loans or increased by additional riders or provisions.
fraternal insurance - answer✔✔A not-for-profit insurance company.
Owned by policy owners.
Issues participating (PAR) policies.
Run by the lodge system.
May assess policy owners.
No legal reserve requirement.
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