Concept of insurance - ANSWERThe transfer of risk from one party to another through a legal contract.
Law of Large Numbers - ANSWERThe larger the number of risks insured in the same risk pool; the more predictable losses become.
Peril - ANSWERAn immediate, specific event that causes a loss....
Concept of insurance - ANSWERThe transfer of risk from one party to another through a legal
contract.
Law of Large Numbers - ANSWERThe larger the number of risks insured in the same risk pool; the
more predictable losses become.
Peril - ANSWERAn immediate, specific event that causes a loss.
Loss - ANSWERAn unintended, unforeseen reduction, or destruction of financial or economic value.
Hazard - ANSWERCreates an increased possibility that a peril (a cause of a loss) will actually occur.
Occurrence - ANSWERIs any event that causes a loss.
Risk - ANSWERRisk is defined as thepotential or uncertainty for loss.
Speculative risk - ANSWERA situation in which either profit or loss is possible, not insured.
Industrial life insurance - ANSWERIssues very small face amounts, such as $1,000 or $2,000.
Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.
Ordinary life insurance - ANSWERLife insurance of commercial companies not issued on the weekly
premium basis. It is made up of several types of individual life insurance, such as temporary (term),
permanent (whole).
Group life insurance - ANSWERInsurance written for members of a group, such as a place of
employment, association, or a union. Coverage is provided to the members of that group under one
master contract. The group is underwritten as a whole, not on each individual member. One of the
benefits of group life coverage is usually there is no evidence of insurability required.
Term life insurance - ANSWERLife insurance that pays a death benefit if the policyholder dies within
a specific time period but has no remaining value at the end of this time.
,LIFE AND HEALTH INSURANCE EXAM
Whole life insurance - ANSWERSometimes called straight life insurance or ordinary life insurance;
can provide lifetime insurance coverage; in this case, fixed premiums are paid for life; pays interest
on the cash value portion with a guaranteed minimum interest rate during life of the contract.
Joint survivor or last survivor life policies - ANSWERCover the lives of two individuals and saves on
premium costs by averaging the ages of the two insureds. Joint Life Survivor or Last Survivor policies
only pay the death benefit upon the death of the last insured person. For example, say B and M
purchase a joint life survivor policy. If B were to die first and then M died 10 years later, no benefits
would be paid out from the policy until M died. A Joint Life and Survivor policy covers two lives but
only pays benefits after the death of the last insured.
Family maintenance policy - ANSWERPays a monthly income from the date of death of the insured
to the end of the preselected period.
Family income policy - ANSWERCombines Whole Life insurance with a Decreasing Term
Rider also written on the same person.
Adjustable life policy - ANSWERWhole life insurance policy, but you can change your policy as your
needs change. You can change your premium payments to increase or decrease coverage.
Universal life insurance policy - ANSWERIncorporates flexible premiums and an adjustable death
benefit. The investment gains from a Universal Life Policy usually go toward the cash value. The
policy owner can use the cash value to manipulate the flexible aspects of a universal life insurance
policy. A customer who wants a policy that gives them the most options and the most control would
be looking for a Universal Life Policy. Universal policies use gains to fund the cash value and give the
policy owner options for flexible premiums and adjustable death benefits.
Variable Life Insurance - ANSWERLife insurance in which the benefits are a function of the returns
being generated on the investments selected by the policyholder.
Equity index universal life insurance - ANSWERCombines most of the features, benefits, and security
of traditional life insurance with the potential of earned interest based on the upward movement of
an equity index.
Cash value - ANSWERThe equity amount or "savings" accumulation in a whole life policy.
, LIFE AND HEALTH INSURANCE EXAM
Endowment policy - ANSWERIs a contract providing for payment of the face amount at the end of a
fixed period, at a specified age of the insured, or at the insured's death before the end of the stated
period.
Face amount plus cash value policy - ANSWERContract that promises to pay at the insured's death
the face amount of the policy plus a sum equal to the policy's cash value.
Juvenile Insurance - ANSWERWritten on the lives of children who are within specified age limits and
generally under parental control.
Non-medical life insurance - ANSWERTypically does not require a medical exam and tends to be
more expensive than medically underwritten policies. The insurer will average out everyone's risk
and charge accordingly. Although insurers typically will not require a medical exam, they will still
inquire about the applicant's medical history and lifestyle.
Target premium - ANSWERIs a suggested premium used in Universal Life policies. It does not
guarantee there will be adequate funds to maintain the policy to any time, especially to life. It may
give an indication of what will be needed (under conservative estimates), to maintain the policy.
Accidental death benefit rider - ANSWERPays a multiple of the death proceeds if the cause of death
is a covered accidental event.
Accelerated benefits rider - ANSWERAllows the insured to receive a portion of the death benefit
before death if the insured has a terminal illness and is expected to die within 1-2 years. Whatever
amount is withdrawn in an accelerated death benefit will decrease the death benefit when death
occurs.
Accumulate interest options - ANSWERAllows dividends to accumulate interest. Interest is the ONLY
thing you can be charged tax on.
Automatic premium loan provision - ANSWERAn overdue premium is automatically borrowed from
the cash value after the grace period expires.
Cash option - ANSWERThe "cash" dividend option allows the policy owner to cash out the dividends
they receive.
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