AINS 21 Glossary Terms and Definitons
loss exposure - ANSWER-any condition or situation that presents the possibility of a loss
law of large numbers - ANSWER-a mathematical principle stating that as the number of similar but
independent exposure units increases, the relative accuracy of predicti...
cash value - ANSWER✔✔-the monetary amount, considered to be a form of savings, that accumulates in
a whole life insurance policy
term insurance - ANSWER✔✔-life insurance that provides coverage for a specified period, such as ten or
twenty years, with no cash value
universal life insurance - ANSWER✔✔-insurance that provides life insurance protection and a savings
component
medical insurance - ANSWER✔✔-insurance that covers medical expenses that result from illness or
injury
disability income insurance - ANSWER✔✔-a type of health insurance that provides periodic income
payments to an insured who is unable to work because of sickness or injury
stock insurer - ANSWER✔✔-an insurer that is owned by its stockholders and formed as a corporation for
the purpose of earning a profit for the stockholders
mutual insurer - ANSWER✔✔-an insurer that is owned by its policyholders and formed as a corporation
for the purpose of providing insurance to them
demutualization - ANSWER✔✔-the process by which a mutual insurer owned by its policyholders
becomes a stock company, which is then owned by its stockholders
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