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Insurance Terms
From Chapter 19 of PA Insurance Exam
| Term | Definition |
|---|---|
| Accelerated Benefits Rider | rider for a life insurance policy. accelerates death benefits while the insured is still alive when he or she has been diagnosed with a terminal illness. what amount is paid is subtracted from the face amount when death occurs. |
| Accident | unforseen and unintended event that causes death or damage |
| Accidental Death and Dismemberment Insurance (AD&D) | pays benefits in the event of accidental death or loss of sight, speech, limbs, arms, leg |
| Accidental Death Benefit | lump sum payment for a loss of life due to an accident that was the direct cause of death. |
| Accumulation Period | pay in period for an annuity. Tax deferred. followed by the annuity phase |
| Actuary | person who calculates policy rates, reserves, and dividends and makes other applicable statistical studies and reports |
| Additional Premium | Used in Universal Life Policies. additional premiums can be paid into the policy account in an amount above the target premium. Tax laws limit the amount of excess cash value that can be accumulated in a life insurance policy. |
| Address Change | States require that a producer notify the applicable regulatory department of any residence or business address change. (includes name change) |
| Adverse Selection | The chance of adding poor risks. sound underwriting reduces adverse selection. |
| Age Based Penalty | When an indicidual prematurely withdraws funds prior to age 59 1/2 from an annuity, a modified endowment contract or a qualitified plan, he or she will be assessed a 10% penalty. |
| Age Change | The date halfway between bithdays when the age of the applicant changes to the next higher age. with some insurers, the age is based upon the applicants age at his nearest birthday. in others it is based upon the age of his last birthday |
| Agent | authorized rep of an insuraer who is licensed to sell life insurance and annuity contracts. agents represent the insurer who sponsors them. |
| Alien Insurer | insurer from another country |
| Annuitant | the person whose life the annuity is based |
| Annuitization | the period for which annuity benefits are parid |
| Annuity | contract between an insurer and owner affording periodic income payments for a fixed period of time or during the lifetime of an annuitant, may be defined or systematic payout |
| An Annuity Certain | A type of annuity that provides a benefit payment payable for a specified length of time regardless of whether the annuitant lives or dies |
| Annuity Surrender charge | fee charge by the insurance company for a partial or full withdrawal of funds made during a specified period after the annuity is funded. |
| Application | statement of information given when a person applies for life, health or disability insurance. |
| Assignee | individual to whom the rights under a life insurance contract are transferred |
| Assignment | the act of transferring ownership rights of a life insurance policy by the owner to a third party (asignee). |
| Absolute Assignment | total or whole transfer of ownership |
| Collateral/or conditional Assignment | partial transfer of ownership of a contract. |
| Attained Age | age that a person or an insured has attained on a given date. for lfe insurance prposes, the age is based on either the nearest birthday or the last birthday depending on the company. "current age" |
| Attending Physician Statements | known as APS. these are used when the application or medical examiner's report reveals conditions or situations past or present about which more information is desired. applicant must sign off to the company for an APS |
| Authorized Insurer | this is an insurer that possesses a certificate of authority for a particular state. |
| Automatic Premium Loan | provision in a life insurance policy that states that if the policy owner fails to pay a premium by the end of the grace period, the amount of the premium due will be loaned to the insured automatically from the policy's cash value |
| Backdating | Making the effective date of a policy earlier than th application date. backdating is used to make the issue age lower than at applicant's real age in ordre to get a lower premium. Limited to 6 months by law. NOT allowed on variable products |
| Beneficiary | person designated to receive policy proceeds in the event of the insured's death. Include primary, contingent and tertiary beneficiaries |
| Binding Receipt (unconditional) | insurance becomes effective on the date of the receipt and continues for a specified period of time or until the insurer declines the application |
| Buyer's Guide | plamphlet that describes and compares various forms of life or health insurance. this guide must be provided to a consumer by the producer when the latter is attempting to solicit insurance. assists in buying decisions |
| Buy-Sell Agreement | An agreement between partners in a business or between an owner and a key employee. The agreement provides for the continuation of the business when for example one of the partners dies. Remaining partner(s) buy out the interest of the deceased partner |
| Cash Refund Annuity | Life annuity contract which provides that upon the death of the annuitant, a beneficiary will receive a lump sum payment that represents the difference between the amount the annuitant paid to the insurer and the total income payments received by the annu |
| Cash Value | equity portion of a whole life policy that increases with each subsequent premium payment. Interest is paid by the insurer on the cash value which is tax deferred. the cash value in a whole life policy is designed to equal the policys death benefit at100 |
| Cash Surrender Value | The amount that is available in cash upon the surrender of a policy by the owner before or after the policy matures (as a death claim or otherwise). Also referred to as surrender value. |
| Ceding Company | in a reinsurance transaction, this is the insurer that transfers risk to another insurer called the reinsurance company. |
| Certificateholder | this is ac covered employee in a group life or health plan. employer receives the master policy and each employee receives a certificate or a booklet describing their group benefits. |
| Certificate of Authority | This is the name of the license to trnsact insurance business that is issued to an insurance company |
| Certificate of Insurance | A document containing information regarding the master plicy of a group indicating that an eployee has coverage |
| Claim | the demand to an insurer for the payment of benefits under a policy |
| Commingling | this is a term that means that a producer is combinging premuims collected with personal funds. This is not legal. |
| Commission | Compensation or payments made by an insurer to a producer for the sale of an insurance policy |
| Common Disaster Clause | this provision defines the method of payment of the proceeds of the policy by the insurer if the insured and the named beneficiary die simultaneously in the same accident. beneficiaury considered to die first |
| Concealment | Failure by an applicant to disclose in his or her application a material fact that is relevant to the acceptance or the declination of an application for insurance coverage |
| Conditional Receipt | a form , normally required to be signed by the agent and geven to the prospective owner at the time a new application is completed. The issuring of a receipt is subject individual company rules.most require that the agent tocollect an initual premium. |
| Consideration | one of the requirements of a valid contract. representation on the application and the premium is the policy owner's consideration. the insurance companys 'promise to pay' is its consideration |
| Contingent Beneficiary | Secondary benefitiary |
| Continuing Education | States now have continung education regulations in place that require producers and other insurance pros to maintain competency by satisfyingspecific requirements on a regular basis in order to hold an insruance license. failure results in suspension |
| Contributory Plan | A term applied to a group insurance plan under which both the employee and the employer contribute to premium payment. also referred to as a shared premium plan |
| conversion period | group life insurance includes a conversion privilege that permits the policy owner thae right to change overage from term life to whole life without demonstrating insurability if effect during a 31 day conversion period. |
| convertibility | right of a policy owner to exchange an existing policy for other policies offered by the insurance company. may be the conversion of individual term insurance to an individual permanent plan that company sells or the conversion of group disability, L, H |
| Corridor | in universal life insurancea level of pure insurance must be maintained more than the accumulated cash value. tax law regulates the amount |
| Credit Life Insurance | life insurance designed to pay the balance of a loan if the insured dies before paying off the loan in full |
| Cross-purchase Plan | type of buy-sell plan where each partner buys a policy covering each of the other partners in oder to buy out their interest upon death |
| Death Benefit | amount that is paid upon the death of the insured. |
| Death Claim | completed form hat proves the insureds death. this must be filed with the insurer along with a copy of the death certifcate in order to receive policy proceeds |
| Decreasing Term Inurance | type of temporary or pure protection characterized by a reducing face amount each year. cost for this coverage remains constant. sometimes called mortgage redemption or mortgage protection insurance since usually use with a debt or loan |
| Defamation | is an unfair practive where a producer or insurer makes false and maliciously critical statements regarding the financal condition of a competing insurer |
| Deferred Annuity | Classicication of an annuity where income payment commence more than one year after the payment of the first or single premium to the insurer, usually at retirement |
| Deferred Compensation | A plan that allows selected individuals to defer the receipt of income in accordance with a written agreement with their employer. the plan may be qualited or non-qualified |
| Defined Benefit Plan | employee benefit retirement plan that uses a definite formula to determine the exact benefit amount. employer contributions to the plan are actuarially dtermined. benefits to the be paid in the future will determine the amount of the contributions |
| Defined Contribution Plan | employee benefit plan under which each participants benefitsare based solely upon the contributions made to the participants account. the amount of the contributions will determine the future benefits at retirement. |
| Dependent Rider | rider that may be added to a life insurance plicy specifically to provide coverage for dependents of the promary insured dependent riders may cover a spouse, children, or dpendent parents. Family rider, covers all family |
| Disclosure Statement | comparison form required by various state regulatory agencies to be given every policy owner when replacing an existing polcy with another. |
| Discount Value | difference between an amount due in the future and is present value computed at a specific rate of interest |
| Dividend | refund of part of the premium under a participating policy or share of suplus funds. |
| Dividend options (5) | -receive dividend in cash -reduce the premium -paid-up additional insurance -accumulate at interest -purchase 1yr term insurance |
| Domestic Insurer | is an insurer conducting business in the state in which it was formed organized or chartered. a company that has its home or princpal office in the state in which it is doing business |
| Endowment | whole life policy that, following an endowment period, pays a stated amount to the insured. in the insured dies during the endowment period, the face amount of the policy is paid to the primarjy beneficiary |
| Equity Indexed Annuity | fixed OR NON-variable annuity. pays a guaranteed minimum interest rate and account assets are tied to an index such as S&P. if index is higher than the rate each yr, contract owner receivesthe greater return |
| Estate Tax | tax payable to the Fed Govt and in some cases state govt on the death of an individual. |
| Estoppel | legal principle that protects an insured if the insurer or its produvers make an error and later the inurer attempts to deny a claim. ex, if producer makes false representation to an applicant who relies on the statement. later, they deny claim ... estopl |
| Evidence of Insurability | Any statement or proof of a persons hearlth history and current health status that qualifies that person for coverage |
| Exceptions | Provisionsin a plicy that eliminate coverage for specified causes of death. |
| Exclusion Ratio | This is a formula used to determine what portion of a periodic annuity payment is taxable |
| Exclusions | Another name for exceptions |
| Executor | An individual name in a will and approved by a probte court to carry out the provisions of the will |
| Experience Rating in Group Insurane | premium is computed on the basis of past losses and expenses incurred by the insurer in the settlement of claims and other expenses involving a particular group |
| Express Authority | granted to a producer by an insurer as indentified in the agency agreement to which both parties agree |
| Extended Term Insurance | a non-forfeiture option availabel when a policy is surrendered which the same face amount of the policy is contineud in force for a termporary period of time. allows greatest face amount of coverage |
| Face Amount | Another name for the death benefit of a policy |
| Facility of Payment Clause | provision in a policy that permits the insurer to pay insurance proceeds to persons other than the insured, the designated beneficiary or the edstate of the insured in order to pay burial expenses. |
| Fair Credit Reporting Act | fed law 1970. insurer the right to receie additional info with regard to applicants for insurance coverage. applicant must be informed of the name and address of the reporting agency |
| Family Income Policy | combimes whole life with a decreasing term rider in order to provide a death benefit. Monthly payments are made only from the date of death to the maturity date of the contract. then lump sum whole life is paid. |
| Family Maintanance Policy | Combines while life insurance and a level term rider. provides for the pament of a monthly income during a stated period of years once the insured dies monthly income is payable from the date of death to the end of the pre-selected period. lump after that |
| Fuduciary Responsibilityq | Producers possess this responsibility since they handle money of the public. A producer must account for all premiums or they failed to uphold duty. must act with a high degree of trust |
| Fixed Annuity | annuity contract that pays a predtermined amount of income every month to an annuitant. insurer bears the investment risk in a fixed annuity |
| Fixed Period | Settlement option under a life insurance policy that pays the beneficiary an amount of monethly income for a specified period of time rather than a lump sum settlement |
| Foreign Insurer | insurer conducting business in a state other than the state in which it was organized or charted. |
| Fraternal Association | Org that markets life and health insurance product sololey to members |
| Free0Look Period | all life insurance policies must include a ten day free look period. |
| General Agent | given supervisory authority over the agents under his or her jurisdiction. usually he or she performas the following: sleclting, writing, servicing the insurane business in force in his or her territory. usually not an employee of the life insurance compa |
| Grace Period | period of time after a premuium parment is due, during which the prodtection of the policy contineues even though the payment for the renewal premuim has not as yet been received |
| Guaranty Fund | Each Sate has a life and health insurance guaranty fend that is designed to protect policy owners against the insolvency of the insurer. ALL licensed insurers must participate. |
| Guidline Premium | maximum premium that can be paid into universal life policies and still have the bnenfit quality as life insurance under laws. |
| Hazard | condition present that increases the chance of a possilb e loss. |
| 3 Types of hazard | physical hazard (faulty wiring), moral hazard (criminal activities), morale hazards (carelessness) |
| Immediate Annuity | type of annuity that pays a monthly income commencing one, three, six, or twelve months after purchase. funded in lump sum |
| Implied Authority | granted to a producer by an insurer that is not specifically identified in the agenc agreement |
| Incontestable Clause | provision of life insurance policies that states once the policy has been in force for 2 years, the insurance co may not challenge the validity of the policy. |
| Increasing term insurance rider | type of rider is characterized by an increasing amount of term life coverage each yr. there are two primary types including a return of premuim rider and a return of cash value rider |
| Indexed Contracts | Contracts where the policyholder can share in a % of the growth of an indexed investment. principle or benefit is guaranteed and in many cases, a minimum interested in guaranteed. these products are not considers securities. |
| Individual Insurance | policy which affords protection to a policyholder. AKA personal insurance. |
| IRA | retirement plan. recieve tax deferral of interest while providing some tax deductibility of contributions. age based penalty apply. amount withdrawal must also be reported as ordinary income in the year received |
| Inspection Report | report that contains general info regarding the health habits finances and reputation of an applicant. this report is developed by a firm that specializes in rendering this type of service. |
| Installment Refund Annuity | same as a cash refund annuity. except money is refunded in installment payments and the insurer makes payments to the designated beneficiary until the total of the payments made to the annuitant and the beneficiary equals the consideration paid |
| Insurable Interest | relationship that exists between parties that justify owning life insruance on the other. unlimited insuracble interest in their own life. |
| Insurance | transfer of risk from one party to another through a legal contract |
| Insured | the individual covered by a life insurance policy |
| Insuring Clasuse | policy provision that describes the scope and limits of the coverage afforded. also identifies the parties to the contract and the annual premium |
| Investment Perforance | earnings in variable prudcts are based upon how the mkt performs since funds are invest securities |
| Irrevocable Beneficiary | policy owner may not change the designated beneficiary without the beneficiarys consent. irrevocable beneficiary is allowed to receive a copy of the policy to understand what ownedship right are present |
| Joint and Last Survivor Annuity | annuity issued on the lives of two of more persons that is payable as long as the survivor lives |
| Joint Life Insurnace | life insruance policy covering the lives of two of more persons that pays death benefit and ends when the first insured dies. AKA first to die insurance |
| Juvenile Insurance | life insurance policy owned by an adult and written on the lives of children |
| Key Employee Insurance | individual policy designed to reimburse an employer for the loss of a key employee's service and contributions due to death. employer generally pays the premium and is the owner of the contract |
| Lapse | term means that the policyholder failed to pay the premium within the grace period. therefore no voverage exists once the policy lapses |
| Larceny | An unfair trade practive involving the commingling or misappropriation of premiums by a producer |
| Law of Large Numbers | This is a mathematical rule that states that the more the number of events presnet the more accurately can we determine the possible outcomes. |
| Legal Capacity | One of the four requuired elements in a cntract. must be legally competent to enter into the contract. No minors, under the influence, insane |
| Level Premium | premium that remains constant thoughout the policy |
| Life Expectancy | average nmber of anticipated yrs of life remaining for individuals who are the same age in accordance with the mortality table |
| Life Insurance | insurance upon the lives of human beings that creates an immediate and guaranteed estate upon the death of an insured or at the end of a predetermined period. |
| Limited Payment Lfe insurance | plan of life insurance under which the premiums are payable for a specified number of yeras after which the policy remains in effect for like without any additional payments. matures at 100 |
| Living Benefits Rider | attache to a life insurance policy and allows for the payment of a percentage of death benefits for terminally ill insureds. no cost for this rider |
| Loan Value | amount speified in a whole life policy that the insurer will lend to a policy owner from the cash calue at the rate of interest the insurer chargesas identified in the contract |
| Long-term care rider | Attached to a life insurance policy allows for the payment of a percentage of the death benefit if an indiidual is not terminally ill but requires long-term care |
| Market Value Adjusted Annuity | type of annuity shifts some but not all of the investment rik from the insurer to the policy owner since the annuity acct value will fluctuate as market interest arates fluctuate. signle premium deferred annuity. allows owner to lock in a guaranteed rate |
| Maturity Date | date on which a policy becomes payable due to the death of the insured or as a resolut of an insured's living to the end of a specified period (100) |
| Maturity Value | amount paid under a whole life insurance contract if the insured reaches the age of the mortality table on which the contract was based. if an endowment contract, it is the cash calue amount at the end of the endowment period. |
| Minimum Premium | Also known as the Minimum Contination Premium, is the premium lower than the target premium. used in universal life policies to skip premiums or pay lower premiums. This limit must be above the insurer's costs and enough cash value to pay mortality charge |
| Misrepresentation | false statement that an applicant makes on an application for an insurnace policy. |
| Misstatement of Age | provision in a life insurance policy that states that if the age of the insured is understated on an application and the insurer later learns of the error, it will adjust the death venefit lower. |
| Modified Endowment Contract (MEC) | while life policy that fails the seven pay test. owner over funds the contract.cash distributions will be subject to tax. age bsed penalty applies. |
| Modified Life Policy | whole life plan that is characterized by a lower premium during the initial years of the contract to make it more affordable for the policy owner. premium then increases after this introductory period and remains level for the life of the contract |
| Moral Hazard | Habits, morals or financial practives of an insured that increase the possibility or extent of loss |
| Mortality | measure of the pobability of surviving or dying at each age. mortality rates usually reflect the actual experience of an insurance co with its insureds, adjusted for expect future changes |
| Mortality Table | statistical table that indicates the probablitliy of death and surival at each age up to age 100 |
| Mortgage Redemption plan | another name for decreasing term life insurance. tpy eof plan is used to provide funds to a survivor in ordre pay of debt |
| Mutual Insurance Co | life insurance co owned and controlled by its plicy holders. issue participating policies which may pay dividends |
| natural perosn | human being. when a corporation owns an annuity it must list a natural person as the annuitant. if it lists a non-living entity, it will lose the benefit of tax deferral |
| Net Amount At Risk | difference between the face amount of a policy and the reserve |
| Non-Contributory PLan | group employee benefit plan under which the emplorer paysfor the fill cost of the benefits for his emploees. eployer pays all plan |
| Non-Forfeiture Factor | actuarial figure, indicated in the polict tables of loan and surrender value that is used to calucate the non-forfeiture values of the policy |
| Non-Forfeiture Values | benefits reuquired by law to be made available to the policy owner in the event that he surrenders the policy by discontinuing premium payments. these state that the owner will not forfeit or lose all that he has invest in the policy. AKA nonfofeiture opt |
| Non-Medical Life Insurance | issued without requiring the applicant to submit to a medial exam. insurer relies onthe appklcants answers to the questions regarding his physical condition. |
| Non-Participating Insurance | type of life insurnace policy issued by a stock insurer. |
| Non-Qualified Annuity | class of annuity whose description is based upon the fact that interest or earnings paid into the contract are tax deffered and the contributions to the contract are not tax deductible. |
| Non-Qualified Distribution | Same as a premature distribution |
| Non-Qualified PLan | Type of retirement plan that permits tax deferral of interest but contributions are not tax deductivle. reason for the latter is due to the fact that employor may discriminate |
| Ordinary Income | When gains in a life insurance policy are realized upon surrender, they are taxed as ordinary income and not capital gains. Whenever interest or earnings are realized in any policy, they taxed as ordinary income. |
| Ordinary Life Insurance | policies of 1000 or multiples therof that provide coverage forthe entire life of the policyholder. premiums are payable until death |
| Ownership Provision | provision in a life insurance policy that identifies the owner rights in the contract. The policy owner Possesses the right to name or change the beneficiary, select premium payment mode, or assign one of more rights to another party. or borrow cash value |
| Paid-Up Additions | additional amount of insurance purchased through dividends that increases the amount of protection provided |
| Paid-Up Insurance | Life insurance on which future premium payments are not required. identifies ten twnty or thirty pay life inurance. mature at 100 |
| Payor Rider | rider that provides for the waiverof premiums on a policy covering a child following the death or the total disability of the adult owner |
| Pension Trust | plan under which an employer provides retirement benefits for his employees with favorable income-tax treatment for the employer and employee. Generally, policies are issued individually as special pension plan life insurance polices and r annuity contrac |
| Per Capita | type o benefitiary designationwhere proceeds are to be paid per head or person. |
| Per Stirpes | beneficiary designation with proceeds that are paid to a family life, branch or root. per stirpes means by the root |
| Permanant Disability | Disability that is expected to continue for the lifeimte of the insured. usually the disability is presumed to be permanent after it has continued for a specififed period. (1 yr) |
| Permanent Life Insurance | any plan of life insurance thatis disigned to last throughout the life of the insured |
| Physical Hazard | type of hazard that arises from the physical characteristics of an individual. it may exist because of a physical condition present at birth, past medical history or a current condition. |
| Policy | printed doc or contract issued by the insurer to the policy owner providng insurance coverage on the life of an insured |
| Policy Fee | small transaction fee charged by some insurers for the first or subsequent years of the life of an insurance policy, in addition to the reugalar premium |
| Policy Loan | loan made by an insurer to a policy owner under his or her policy perantn insurnace policy |
| Policy Proceeds | amount actually paid as a death surrend or maturity benefit. excludes outstanding loans and interest |
| Predetermined Premium | type of premium paid for the whole life insruance coverage. AKA fixed level or constant |
| Premature Distribution | withdawn funds from qualified plan. annuity, ira or MEC before 59 1/2. penalties are assessed and amounts are subject to taxation |
| Principal | one of the parties in an agency. the other is the agent |
| Producer | licensed insurance agent. may also be referred to as a field underwirter or agent |
| Public Adjuster | indibidual who determines or settles losses to commercial or person property on behalf of a insured. |
| Qualified Annuity | qualified annuity is characterized by tax deferral of interest and contributions that are tax deductible |
| Qualified Distribution | distribution of funds from a qualified plan, MEC, or annuity that is not subject to a penalty or taxation |
| Qualified plans | retirement vhicle that receives favorable tax treatment. tax deductivle while earnings are tax deferred. must be communicated to ALL employees. provide survivor benefits |
| Rated | method under which an insurer may issue a polic for a substandard risk by increasing the premiu based on the increased risk involved |
| ReAdjustment Income | in life insurance needs, the amount of income needed after the death or disability of a wage earner to allow the family unit to adjust to the new astandard toe living |
| ReAdjustment Period | in life insurance needs the period following the death or disability of a wage earner which the family needs to adjust to the new stand of living. Generally this will be less than one year, however, may be several years. |
| Rebating | paying, offering or giving anthing of value not specified in the policy to any person as an inducement to apply for or renew an inurance policy. illegal |
| Reinstatement | the reseumption of coverage under a policy that has lapsed. before an insurer allows his, the insured must prove insurability and all back premiums must be paid. in addition, all statements on the reinstamtne app are contestable for another two yr |
| Reinsurance | underwiriting by one insurance company (reinsrurer) of part or all of the an indibidual risk written by another insurer (ceding co). in other words, this is the transfer of risk from one insurer to another. |
| Facultative reinsurnace | reinsurer decides case by case whether to accept reinsuring the ceding co |
| Automatic reinsurance | contacts between a ceding co and reinsurer co are made where the reinsurer automatically accept applications |
| Renewable Term Life Insurance | insurance that may be renewed at the end of the policy term without evidence of insurabilit. premium increases at the end of each term and is based on the attained age of the insured at the time of renewal |
| Renewal | continuance of converage under a policy beyong the initital preoid |
| Replacement | producer convinces a prospective client to lapse or surrender a life or health policy and purchase a new one. producers must prodvide a 'notice reading replacement' to the consumer when this happens. producer must also notify the insurer |
| Reserve | combine funds required by law that are set aside by an insurer to assure the payment of future claims |
| Risk Avoidance | type of risk mangemanet where exposure is eliminatied. |
| Risk Fiancing | desciption of techniques or methids used to provide funds to pay for losses due to unexpected events |
| Risk Reduction | risk management that attemts to reduce the severity of a possible loss but is not eliminated |
| Risk Sharing | risk mangement such as a partnership where parties agree to share in uncertainty to minimize possible losses |
| Risk Transfer | occurs when risk is transfered to another. accomplished with insurance |
| Roth IRA | allows an individual to make non-deductivle contributions which are tax free when withdrawn. to be eligible to contribute an individual or family must meet income restrictions. May continue after age 70 1/2. early education expense withdraw allowed |
| Settlement Options | Methods by which a beneficiary may choose to reviece life insurance proceeds |
| Single Premium | payment of one premium that is large enough to cover the cost of a life or annnuity contract for life. aka lump sump premium |
| Spendthrift Provision | provision in a life insurance policy that states that when the proceeds of the poicy are lieft with the insurrer, no entity may have access or attach a lien. |
| Standard Provisions | certain provisions that must be included in a life insurance policy such as incontestable clause, grace period, assignment, reinstatementand so forth |
| Straight Life Annuity | referred to as a pure life annuity. provides income to an annuitant for life with no refund to a beneficiary |
| Suicide Clause | provision specifiying that in the ecent the insured commits suicide within two years from the date the policy was issued, the insurer's liability is limited to the payment of a single sum equal to the premiums actually paid. |
| Superannuation | means outliving one's income. straight life annuities protect against it |
| Surplus | amount by which the assets of an insurer exceed its liablilities |
| Systematic Premium Plan | plan under which the policy owner authorizes a bank to deduct the necessary funds from his or her acct each month to pay a premium that is forwarded to the insurer by the lender |
| Target Premium | suggested premium used in universal life policies. does not guarantee there will be adequate funds to maintain the policty to any time especially to life. gives an indication of what will be needed to maintain the policy. |
| Tax Sheltered Annuity (TSA) | type of qualified plan that receives tax deferral through a salary reduction. those eligible for this are: educational employees, clergymen, non-profit employees and employees of charitable orgs |
| Temporary License | Insurance license that may be issued to a survivor of a deceased producer for a specified period of time. 180 days. allows the income stream of renewals to continue until the holder disposeds of the business and decides to secure a producer licesnse |
| Total Disability | illness or injury that prevents an insured from continuously performing the dutures pertaining to his or her occupation or from engaing in any other tye of work for remuneration. |
| Trust | legal doc, instrument, or agreement where ownership of property is transferred and management of property is given to a named trustee for inte expressed in the agreement |
| Twisting | illegal sales practive involving a producer illegally or unfaily inducing to lapse his or her prsent insuance policy and purchase another. |
| Uniform Simultaneous Death Act | when the insured and beneficiary die in the same accident, the beneficiary is considered to have died first |
| Unilateral | Insurance policies are unilateral in nature sine the are one side. this means that the insurer draws up the language of the contract and the policy owner does not |
| Underwriting | analysis of info pertaining to an applicant that was obtained from various sources. determination of whether or not the insurance should be issued as requested, offered at a high premium or declined |
| Variable Annuity | annuity that invests funds in the stock market. once income commences, the monthly amount will vary based on investment performance. in a variable annuity the contract onwer baears the investment risk |
| Vesting Prvision | pension plan participant's right to receive benefits from employer contributions to a plan even if the participant is not longer an employee of that employer. all employee contributions made to a plan are fuly vested at the time they are made. |
| Viatical Settlement | transaction where the owner of a life insurance policy decides to sell the contract to a viatical settlement company. buys the contract for a perfectage of face amount from owner. change beneficiary to self |
| Viator | this is another name for the policy owner of a life insurance contract in a viatical settlement |
| Waiver | coluntarily relinquish or abandon a known riht under an insurance contract. this is a legal principal that protects the consumer if an insurer waives its rights uner a contract. common when an insurer fails to enfore a policy provision |
| Waiver of Premium | Benefit rider available to be included in a life insurance poicy that waives the payment of premiums after the policy owner has been totally disabled for a specific period of time (6 months). afterwhich, premiums are waived and unpaid will b refunded |
| War Clause | clause in the exlusive provision of a life insurance policy that limits an insurer's liability if death is caused as a result of war. |
| Warranties | must be avsolutely and literally true. breach of warranty will void policy whether material or not. |
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