Missouri Life Insurance Exam Verified A+
Insurance Plans and Policies - 401(k) Plan:
️ A qualified retirement plan in which the employee can set aside a portion of their income with pre
tax dollars. - Accelerated Death Benefit:
️ Policy provision that allows full or partial payment o...
Missouri Life Insurance Exam Verified A+
Insurance Plans and Policies
- 401(k) Plan:
✔️ A qualified retirement plan in which the employee can set aside a portion of their income with pre-
tax dollars.
- Accelerated Death Benefit:
✔️ Policy provision that allows full or partial payment of the policy's death benefit before the
insured's death if he/she is terminally ill.
- Accidental Death Benefit:
✔️ An extra cost rider that requires the insurance company to pay an additional benefit in the event
that the insured dies within 90 days of an accident as a direct result of the accident.
- Annuity:
✔️ A contract/policy that guarantees to pay income for a specified period of time or for the life of the
annuitant. Designed to prevent people from outliving their savings.
- Convertible Term:
✔️ Term insurance that specifically permits "conversion" of the policy into permanent protection
without proof of insurability.
- Decreasing Term:
✔️ Term life insurance in which the face amount of the policy decreases over time in scheduled steps.
Most often used to cover a debt obligation (mortgage).
- Equity Indexed Annuity:
✔️ The annuity that has a guaranteed minimum interest rate and allows the annuitant to invest
money in an index (i.e.: S&P 500). The investments grow as the index grows.
, Assignments and Beneficiary Designations
- Absolute Assignment vs. Collateral Assignment:
✔️ Absolute: A permanent and irrevocable transfer of rights and/or benefits by the policyowner.
✔️ Collateral: A temporary and/or revocable transfer of benefits by the policyowner.
- Contingent Beneficiary:
✔️ An alternate beneficiary designated to receive the policy proceeds in the event that the primary
beneficiary dies before the insured.
- Buy-Sell Agreement:
✔️ Business use of Life Insurance where partners in a business buy life insurance on each other. They
agree that when one of them dies, the survivors have the right to purchase the deceased partner's share
of the business. The death benefit from the insurance is used to finance the purchase.
Insurance Terms and Concepts
- Adhesion:
✔️ Since the insurer created all the documents of the contract, any ambiguities in the contract will be
settled in favor of the insured.
- Adverse Selection:
✔️ The tendency for less favorable risks to seek or continue insurance to a greater extent than more
favorable risks.
- Aleatory:
✔️ Unequal exchange of value. One party may obtain a far greater value than the other under the
contract.
- Commissioner:
✔️ Public official in charge of the state's department of insurance. Charged with regulating the
insurance industry in his/her state by enforcing the insurance laws.
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