Loma 280 Insurance Exam

Front 1

401K Plan

Back 1

In the US, a type of savings plan that allows employees to make contributions on a pre-tax basis

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absolute assignment

Back 2

an assignment of a life insurance policy under which the policy owner transfers all of his/her policy ownership rights to the assignee

Front 3

accelerated death benefit

Back 3

a supplemental life insurance policy benefit which provides that a policyowner may elect to receive all or part of the policy's death benefit before the insured's death if certain conditions are met. Also known as a living benefit

Front 4

acceptance

Back 4

the offer's unqualified agreement to be bound to the terms of the offer

Front 5

accidental death and dismemberment (AD&D) benefit

Back 5

a supplemental life insurance policy benefit that provides an accidental death benefit and provides a dismemberment benefit payable if an accident causes the insured to lose any two limbs or sight in both eyes

Front 6

accidental death benefit

Back 6

a supplemental life insurance policy benefit that provides a death benefit in addition to the policy's basic death benefit if the insured dies as a result of an accident

Front 7

accumulated value

Back 7

during a deferred annuity's accumulation period, the amount paid for the deferred annuity, plus the investment earnings, minus the amount of any withdrawals and fees. Also known as accumulation value or income value

Front 8

accumulation at interest dividend option

Back 8

a policy dividend option under which the policy dividends are left on deposit with the insurer to accumulate at interest

Front 9

accumulation period

Back 9

the period between the contract owner's purchase of a deferred annuity and the beginning of the payout period

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actively-at-work provision

Back 10

a group insurance policy provision which states that, in order to be eligible for coverage, an employee must be actively at work - rather than ill on leave - on the day the insurance coverage is to take effect

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activities of daily living (ADLs)

Back 11

the activities of eating, bathing, dressing, continence, toiling, or transferring into or out of a bed, chair, or wheelchair

Front 12

actuarial assumptions

Back 12

the assumed values used in the financial design of a product

Front 13

actuary

Back 13

an expert in financial risk management and the mathematics and modeling of insurance, annuities, and financial instruments

Front 14

additional term insurance dividend option

Back 14

a policy dividend option under which the insurer uses each policy dividend to purchase one-year term insurance of the insured's life

Front 15

administrative services only (ASO) contract

Back 15

a contract under which an insurer or other organization agrees to provide some or all administrative services for a self-insured group health insurance plan

Front 16

aggregate stop-loss insurance

Back 16

stop-loss insurance under which the stop-loss insurer begins to reimburse the employer for claims when the employer's total claims exceed a stated dollar amount within a stated period of time

Front 17

aleatory contract

Back 17

a contract under which one party provides something of value to another party in exchange for a conditional promise

Front 18

allowable expenses

Back 18

those reasonable and customary expenses than an insured incurred and that are covered under the insured's group medical expense plans

Front 19

annual statement

Back 19

an accounting report which every US insurer prepares each calendar year and files with the insurance department in each state in which it operates

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annuitant

Back 20

the person whose lifetime is used to determine the amount of benefits payable under an annuity contract

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annuity

Back 21

a series of periodic payments

Front 22

annuity contract

Back 22

a contract under which an insurer promises to make a series of periodic payments to a named individual in exchange for a premium or series of premiums

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annuity period

Back 23

the time span between each of the payments in the series of periodic annuity payments

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anti-selection

Back 24

the tendency of individuals who believe they have a greater-than-average likelihood of loss to seek insurance protection to a greater extent than do other individuals. Also known as adverse selection or selection against the insurer

Front 25

applicant

Back 25

the person or business that applies for an insurance policy

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asset

Back 26

an item of value that a company owns. Examples of assets include cash, buildings, and investments

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assignee

Back 27

the party to whom life insurance property rights are transferred

Front 28

assignment

Back 28

an agreement under which an insurance policy owner transfers some or all of his ownership rights in the policy to another party

Front 29

assignment provision

Back 29

a life insurance policy provision which describes the roles of the insurer and the policy owner when the policy is assigned

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assignor

Back 30

the policy owner who makes an assignment of a life insurance policy

Front 31

attachment point

Back 31

For stop-loss insurance, the total dollar amount of claimsthat the employer must pay within a stated period of time before the stop-lossinsurer begins to reimburse the employer. Sometimes referred to as the aggregate deductible.

Front 32

attained age

Back 32

The age an insured has reached (attained) on a specified date

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attained age conversion

Back 33

A conversion of a term life insurance policy to a cashvalue life insurance policy in which the premium rate for the cash value policyis based on the insured’s age at the time the policy is converted

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automatic dividend option

Back 34

A specified policy dividend option that the insurerwill apply if a policyowner does not choose an option

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automatic nonforfeiture benefit

Back 35

A specific nonforfeiture benefit that becomeseffective automatically when a renewal premium for a cash value life insurancepolicy is not paid by the end of the grace period and the policyowner has notelected another nonforfeiture option

Front 36

automatic premium loan (APL) option

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A cash value life insurance policy nonforfeiture option under which the insurer will automatically pay an overdue premium for the policyowner by making a loan against the policy’s cash value aslong as the cash value equals or exceeds the amount of the premium due

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back-end sales charge

Back 37

An amount charged to an annuity contract owner whenshe withdraws money from an contract. Also known as a surrender charge

Front 38

bargaining contract

Back 38

A contract in which both parties, as equals, set the termsand conditions of the contract

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basic medical expense coverage

Back 39

Medical expense insurance coverage provid-ing separate benefits for each type of covered medical care cost. Basic coverage typically provides benefits for hospital, surgical, and physicians’ expenses

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beneficiary

Back 40

The person or party the policyowner names to receive the life insurance policy benefit

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benefit formula

Back 41

A formula that describes the calculation of the a plan’s financialobligation to participants in a retirement plan

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benefit period

Back 42

The time during which the insurer agrees to pay income benefitsto the insured under a disability income or long-term care insurance policy

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benefit schedule

Back 43

A schedule included in a group life insurance policy that definesthe amount of life insurance the policy provides for each insured

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benefit trigger

Back 44

A long-term care insurance policy requirement specifyingthe conditions that establish an insured’s eligibility to receive long-term carebenefits

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bilateral contract

Back 45

A contract in which both parties make legally enforceablepromises when they enter into the contract

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blended rating

Back 46

A method of setting group insurance premium rates under whichthe insurer uses a combination of manual rating and experience rating

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block of policies

Back 47

A group of policies issued to insureds who are all the same age,the same sex, and in the same risk classification

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board of directors

Back 48

A group of individuals who are responsible for overseeing themanagement of a corporation

Front 49

business continuation insurance plan

Back 49

An insurance plan designed to enable abusiness owner (or owners) to provide for the business’ continued operation ifthe owner or another key person dies

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buy-sell agreement

Back 50

An agreement in which (1) one party agrees to purchase thefinancial interest that a second party has in a business following the secondparty’s death and (2) the second party agrees to direct his estate to sell his inter-est in the business to the purchasing party

Front 51

calendar-year deductible

Back 51

A deductible that applies to the total of all allowableexpenses an insured incurs during a given calendar year

Front 52

capital

Back 52

An amount of money that a company’s owners invested in the company,usually through the purchase of company stock

Front 53

cash dividend option

Back 53

A policy dividend option under which the insurance company sends the policyowner a check in the amount of the policy dividend thatwas declared

Front 54

cash payment nonforfeiture option

Back 54

A cash value life insurance policy nonforfeiture option under which the policyowner discontinues premium payments andreceives the policy’s cash surrender value in a lump-sum payment

Front 55

cash surrender value

Back 55

The amount of the cash value that a policyowner is entitledto receive upon surrender of the policy. Also known as the surrender value orsurrender benefit

Front 56

cash value life insurance

Back 56

Life insurance that provides insurance coveragethroughout the insured’s lifetime and provides a savings element, known as thecash value. Sometimes referred to as permanent life insurance

Front 57

certificate holder

Back 57

An individual who is insured under a group insurance plan and who has received a certificate of insurance

Front 58

certificate of authority

Back 58

A document that grants an insurer the right to conduct aninsurance business and sell insurance products in the jurisdiction that grants thecertificate. Also known as a license

Front 59

certificate of insurance

Back 59

A document that describes the coverage that the groupinsurance contract provides and a group insured’s rights under the contract

Front 60

children's insurance rider

Back 60

A supplemental life insurance policy benefit that provides term life insurance coverage on the insured’s children

Front 61

claim

Back 61

A request for payment under the terms of an insurance policy

Front 62

claim costs

Back 62

The costs the insurer predicts that it will incur to provide the policy benefits promised under a health insurance policy

Front 63

class designation

Back 63

A beneficiary designation that identifies a certain group of persons, rather than naming each person

Front 64

closed contract

Back 64

A contract for which only those terms and conditions that areprinted in—or attached to—the contract are considered to be part of the con-tract

Front 65

cognitive impairment

Back 65

A reduction in a person’s ability to think, reason, or remember

Front 66

coinsurance

Back 66

An expense participation requirement imposed by many medicalexpense plans; the requirement, generally, is a specified percentage of all allowable expenses that remain after the insured has paid the deductible and thatmust be paid by the insured

Front 67

collateral assignment

Back 67

A temporary assignment of the monetary value of a lifeinsurance policy as collateral—or security—for a loan

Front 68

commutative contract

Back 68

A contract under which the parties specify in advance thevalues that they will exchange. Moreover, the parties generally exchange itemsor services that they think are of relatively equal value

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compounding

Back 69

Calculating an interest amount on both the principal and theaccrued interest

Front 70

compound interest

Back 70

Interest on both the principal and the accrued interest

Front 71

comprehensive major medical policy

Back 71

A medical expense insurance policy thatcombines the coverages provided by both a supplemental major medical policyand an underlying basic medical expense policy

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conditional promise

Back 72

A promise to perform a stated act if a specified, uncertainevent occurs. If the event does not occur, the promise will not be performed

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consideration

Back 73

A requirement for the formation of a valid informal contract thatis met when each party gives or promises something that is of value to the otherparty

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consolidation

Back 74

As it relates to the financial services industry, the combination offinancial services institutions within or across sectors

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contingent beneficiary

Back 75

The party named to receive the policy proceeds if theprimary beneficiary should die before the insured. Sometimes referred to as asecondary beneficiary or successor beneficiary

Front 76

contingent payee

Back 76

(1) The person or party who will receive any life insurance pro-ceeds still payable at the time of the payee’s death. Also known as the successorpayee. (2) The person or other entity who will receive any remaining annuitypayments upon the death of the payee

Front 77

continuous-premium whole life policy

Back 77

A whole life insurance policy underwhich premiums are payable until the death of the insured. Sometimes referredto as a straight life insurance policy or an ordinary life insurance policy

Front 78

contract

Back 78

A legally enforceable agreement between two or more parties

Front 79

contract of adhesion

Back 79

A contract that one party prepares and that the other partymust accept or reject as a whole, generally without any bargaining between theparties to the agreement

Front 80

contract of indemnity

Back 80

An insurance policy under which the amount of the policybenefit payable for a covered loss is based on the actual amount of financial lossthat results from the covered event, as determined at the time of the event

Front 81

contract owner

Back 81

The person or other entity who owns and exercises all the rightsand privileges of an annuity contract

Front 82

contractual capacity

Back 82

The legal capacity to make a contract

Front 83

contributory plan

Back 83

A group insurance plan under which insured group membersmust pay part or all of the premium for their coverage

Front 84

convergence

Back 84

The movement toward a single financial institution being able toserve a customer’s banking, insurance, and securities needs

Front 85

conversion privilege

Back 85

Principles of Insurance (1) A term life insurance policy provision that allows thepolicyowner to change (convert) the policy to a cash value policy without providing evidence that the insured is an insurable risk. (2) A group life insurance policy provision that allows a group insured whose coverage terminatesfor certain reasons to convert her group life insurance coverage to an individuallife insurance policy, usually without presenting evidence of her insurability

Front 86

conversion provision

Back 86

A group medical expense insurance policy provision thatgives an insured group member who is leaving the group a limited right topurchase an individual medical expense policy without presenting evidence ofinsurability

Front 87

convertible term insurance policy

Back 87

A term life insurance policy that gives thepolicyowner the right to convert the term policy to a cash value life insurancepolicy

Front 88

coordination of benefits (COB) provision

Back 88

A group medical expense insurancepolicy that is designed to prevent a group insured who is covered under morethan one group medical expense policy from receiving benefit amounts thatare greater than the amount of medical expenses the insured actually incurred

Front 89

copayment

Back 89

A specified, fixed amount paid by a managed care plan member to anetwork provider when she receives services from the provider

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corporation

Back 90

A legal entity that is created by the authority of a governmental unit,through a process known as incorporation, and is separate and distinct from thepeople who own it

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cost of benefits

Back 91

The value of all benefits under a product. Sometimes referred toas the cost of insurance

Front 92

cost-of-living adjustment (COLA) benefit

Back 92

A disability income insurance benefitthat provides for periodic increases in the disability income benefit amount thatthe insurer will pay to a disabled insured; these increases usually correspond toincreases in the cost of living

Front 93

credit life insurance

Back 93

A type of term life insurance designed to pay the balancedue on a loan if the borrower dies before the loan is repaid

Front 94

daily benefit amount

Back 94

Under a long-term care insurance policy, the maximumamount the insurer will pay for each day of an insured’s long-term care at a carefacility or in the patient’s home

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death benefit

Back 95

An amount of money payable to a beneficiary designated by adeferred annuity contract owner if the contract owner dies before the annuitypayments begin. Also known as a survivor benefit

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declined risk

Back 96

A proposed insured who is considered to present a risk that is toogreat for the insurer to cover

Front 97

decreasing term life insurance

Back 97

Term life insurance that provides a policy benefitthat decreases in amount over the term of coverage

Front 98

deductible

Back 98

A flat dollar amount of eligible medical expenses that the insured mustpay before the insurer begins making any benefit payments under a medicalexpense insurance policy

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deferred annuity

Back 99

An annuity under which periodic income payments are scheduled to begin more than one annuity period after the date on which the annuitywas purchased

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defined benefit formula

Back 100

A retirement plan benefit formula that specifies theamount of retirement benefit a plan sponsor promises to provide to each planparticipant

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defined benefit plan

Back 101

A retirement plan structured according to a defined benefitformula

Front 102

defined contribution formula

Back 102

A retirement plan benefit formula that specifiesthe level of contributions that the plan sponsor promises to make to the plan

Front 103

defined contribution plan

Back 103

A retirement plan structured according to a definedcontribution formula

Front 104

dental expense coverage

Back 104

Medical expense insurance coverage that provides benefits for routine dental examinations, preventive dental work, and dental procedures needed to treat tooth decay and diseases of the teeth and jaw

Front 105

direct writer

Back 105

In a reinsurance transaction, the insurance company that purchasesreinsurance to transfer all or part of the risks on insurance policies the companyissued

Front 106

disability buyout coverage

Back 106

Disability income insurance coverage that providesbenefits designed to fund the buyout of a partner’s or owner’s interest in a business should he become disabled

Front 107

disability income benefit

Back 107

A supplemental life insurance policy benefit that provides a monthly income benefit to the policyowner-insured if she becomestotally disabled while the policy is in force

Front 108

disability income coverage

Back 108

Health insurance coverage that provides incomereplacement benefits to an insured who is unable to work because of sicknessor injury

Front 109

dividend options

Back 109

Specified methods by which the owner of a participating lifeinsurance policy or participating annuity may receive policy dividends

Front 110

divisible surplus

Back 110

A portion of an insurance company’s surplus set aside specifically for distribution to owners of participating policies

Front 111

domicile

Back 111

The jurisdiction in which a company incorporates

Front 112

dread disease (DD) benefit

Back 112

An accelerated death benefit under which the insureragrees to pay a portion of the policy’s face amount to the policyowner if theinsured suffers from one of a number of specified diseases. Also known as acritical illness benefit

Front 113

eligibility period

Back 113

A specified period of time, usually 31 days, during which a newgroup member may first enroll for group insurance coverage. Also known as anenrollment period

Front 114

elimination period

Back 114

The specific amount of time that the insured must be disabledbefore becoming eligible to receive disability income benefits or the specificamount of time the insured must be receiving long-term care before becomingeligible to receive long-term care benefits

Front 115

endowment insurance

Back 115

Insurance that provides a policy benefit payable eitherwhen the insured dies or on a stated date if the insured is still alive on that date

Front 116

entire contract provision

Back 116

An insurance and annuity policy provision that definesthe documents that constitute the contract between the insurance company andthe policyowner

Front 117

equity-indexed annuity (EIA)

Back 117

A type of annuity that offers certain principal andearnings guarantees, but also offers the possibility of additional earnings bylinking the contract to a published index

Front 118

estate

Back 118

The accumulated assets that an individual owns when he dies

Front 119

estate plan

Back 119

A plan that considers the amount of assets and debts that a person islikely to have when she dies and how best to preserve those assets so that theycan be distributed as she desires

Front 120

evidence of insurability

Back 120

Proof that a given person is an insurable risk

Front 121

exclusion

Back 121

An insurance policy provision that describes circumstances underwhich the insurer will not pay the policy proceeds following an otherwise cov-ered loss

Front 122

experience rating

Back 122

A method of setting group insurance premium rates underwhich the insurer considers the particular group’s prior claims and expenseexperience

Front 123

extended term insurance nonforfeiture option

Back 123

A cash value life insurance policy nonforfeiture option under which the policyowner discontinues paying pre-miums and uses the policy’s net cash surrender value to purchase term insur-ance for the full coverage amount provided under the original policy, for as longa term as the net cash surrender value can provide

Front 124

face amount

Back 124

The amount of the policy benefit that is payable if the insured dieswhile the policy is in force

Front 125

family income coverage

Back 125

A plan of decreasing term life insurance that providesto the beneficiary a stated monthly income benefit amount if the insured diesduring the term of coverage

Front 126

family income policy

Back 126

A cash value life insurance policy with a family incomecoverage rider

Front 127

family policy

Back 127

A whole life insurance policy that includes term life insurance coverage on the primary insured’s spouse and children

Front 128

federal system

Back 128

A system of government in which a federal government and anumber of lower level governments share governmental powers

Front 129

financial design

Back 129

A set of values for the numerous elements of a life insuranceproduct

Front 130

financial institution

Back 130

A business that owns primarily financial assets, such asstocks and bonds, rather than fixed assets, such as equipment and raw materials

Front 131

financial intermediary

Back 131

An organization that collects funds from one group ofpeople, businesses, and governments, known as suppliers, and channels themto another group, known as users

Front 132

financial model

Back 132

A computer-based mathematical model that approximates theoperation of real-world financial processes

Front 133

financial services industry

Back 133

The industry that is made up of various kinds offinancial institutions that help people, businesses, and governments save, borrow, invest, and otherwise manage money

Front 134

first-dollar coverage

Back 134

Medical expense coverage under which the insurer beginsto reimburse the insured for eligible medical expenses without first requiring anout-of-pocket contribution from the insured

Front 135

fixed amount annuity

Back 135

An annuity that guarantees the payment of periodic incomepayments of a specified minimum dollar amount for as long a period as theannuity’s accumulated value will provide, regardless of whether the annuitantlives or dies

Front 136

fixed amount option

Back 136

(1) A life insurance policy settlement option under whichthe insurance company pays equal installments of a stated amount until the policy proceeds, plus the interest earned, are exhausted. (2) An annuity contractpayout option under which the insurer provides periodic income payments of atleast a specified minimum amount for as long a period as the annuity’s accumulated value will provide, regardless of whether the annuitant lives or dies

Front 137

fixed annuity

Back 137

An annuity contract under which the insurer guarantees the minimum interest rate that will be applied to the annuity’s accumulated value during the accumulation period and the minimum amount of the periodic incomepayments that will be made during the payout period

Front 138

fixed period option

Back 138

(1) A life insurance policy settlement option under which theinsurance company agrees to pay policy proceeds in equal installments to thepayee for a specified period of time. (2) An annuity contract payout optionunder which the insurer makes annuity payments for a specified period of time

Front 139

fixed premium universal life insurance policy

Back 139

A universal life insurance policythat requires a series of scheduled premium payments of a specified amount fora specified length of time (typically 8 to 10 years) or until the insured’s death,whichever comes first

Front 140

fixed subaccount

Back 140

A subaccount that guarantees payment of a fixed rate of interestfor a specified period of time

Front 141

flexible-premium annuity

Back 141

An annuity that is purchased by the payment of periodic premiums that can vary between a set minimum amount and a set maximum amount

Front 142

flexible premium universal life insurance policy

Back 142

A universal life insurance policy that allows the policyowner to alter the amount and frequency of premiumpayments, within specified limits

Front 143

formal contract

Back 143

A contract that is enforceable because the parties met certainformalities concerning the form of the agreement

Front 144

fraternal benefit society

Back 144

A nonprofit organization that is operated solely for thebenefit of its members and that provides social, as well as insurance, benefits toits members

Front 145

fraudulent misrepresentation

Back 145

A misrepresentation that was made with the intentto induce the other party to enter into a contract and that did induce the innocentparty to enter into the contract

Front 146

free-look provision

Back 146

An insurance and annuity policy provision that gives thepolicyowner a stated period of time—usually at least 10 days—after the policyis delivered in which to examine the policy

Front 147

front-end sales charge

Back 147

An amount charged to an annuity contract owner at thetime she pays for the annuity. The front-end charge compensates the insurer forsales commissions and other expenses associated with acquiring the business

Front 148

fully insured plan

Back 148

A group health insurance plan under which the group policyholder makes periodic premium payments to an insurance company, and theinsurance company bears the responsibility for all claim payments

Front 149

fully self-insured plan

Back 149

A group insurance plan under which the group policyholder—usually an employer—takes complete responsibility for all claim payments and related expenses

Front 150

funding mechanism

Back 150

The way in which a group insurance plan’s claim costs and administrative expenses are paid

Front 151

funding vehicle

Back 151

An arrangement for investing a retirement plan’s assets asthose assets are accumulated

Front 152

future purchase option benefit

Back 152

A disability income benefit that grants theinsured the right to increase the benefit amount in accordance with increases inthe insured’s earnings

Front 153

general account

Back 153

An undivided investment account in which an insurer maintainsfunds that support its contractual obligations to pay benefits under its guaran-teed insurance products, such as whole life insurance and other nonvariableproducts

Front 154

grace period

Back 154

A specified length of time within which a renewal premium that isdue may be paid

Front 155

grace period provision

Back 155

An insurance policy provision that specifies a length oftime following each renewal premium due date within which the premium maybe paid without loss of coverage

Front 156

graded-premium policy

Back 156

A whole life insurance policy that calls for three ormore levels of annual premium payment amounts, increasing at specified pointsin time—such as every three years—until reaching the amount to be paid as alevel premium for the rest of the life of the policy

Front 157

group creditor life insurance

Back 157

Group life insurance issued to a creditor, such as abank, to insure the lives of the creditor’s current and future debtors

Front 158

group insurance

Back 158

A method of providing life or health insurance coverage for agroup of people under one insurance contract

Front 159

group insurance policy

Back 159

A policy that is issued to insure the lives or health of aspecific group of people, such as a group of employees

Front 160

group insured

Back 160

An individual covered by a group insurance policy

Front 161

guaranteed insurability (GI) benefit

Back 161

A supplemental life insurance policy benefit that gives the policyowner the right to purchase additional insurance ofthe same type as the basic life insurance policy—for an additional premiumamount—on specified option dates (typically every three years) during the lifeof the policy without supplying evidence of the insured’s insurability

Front 162

guaranteed minimum accumulation benefit (GMAB)

Back 162

A variable annuity contract feature which guarantees that the accumulated value will be at least a min-imum amount if the contract remains in force for a specified period of time—typically 7 to 10 years

Front 163

guaranteed minimum death benefit (GMDB)

Back 163

A variable annuity contract feature which guarantees that, if the annuitant dies before periodic income payments begin, the beneficiary will receive at least a stated amount, regardless ofthe contract’s accumulated value at that time

Front 164

guaranteed minimum income benefit (GMIB)

Back 164

A variable annuity contract feature that guarantees a minimum periodic income payment regardless of theannuity’s investment performance if the contract remains in force for a specified period of time—typically 7 to 10 years

Front 165

guaranteed minimum withdrawal benefit (GMWB)

Back 165

A variable annuity contract feature which guarantees that up to a certain percentage of the amountpaid into the contract will be available for withdrawals annually during theaccumulation period, even if subaccount investments perform poorly

Front 166

health maintenance organization (HMO)

Back 166

A health care financing and delivery system that provides comprehensive health care services to plan members,often referred to as subscribers, in a particular geographic area

Front 167

immediate annuity

Back 167

An annuity that provides periodic income payments that generally are scheduled to begin one annuity period after the date the contract isissued

Front 168

incontestability provision

Back 168

An insurance and annuity policy provision thatdescribes the time limit within which the insurer has the right to avoid the contract on the ground of material misrepresentation in the application

Front 169

increasing term life insurance

Back 169

Term life insurance that provides a death benefitthat starts at one amount and increases by some specified amount or percentageat stated intervals over the policy term

Front 170

indemnity benefits

Back 170

Contractual benefits that are provided under insurance policies based on the actual amount of the insured’s financial loss

Front 171

indemnity method

Back 171

A method of determining the amount of benefit payable undera long-term care insurance policy under which the insurer pays the insured thedaily benefit amount regardless of the actual expenses for long-term care of theinsured

Front 172

individual deductible

Back 172

For stop-loss insurance, the dollar amount of claims thatan employer must pay for any individual in a stated period of time before thestop-loss insurer reimburses the employer for any excess amount

Front 173

individual retirement annuity

Back 173

An individual deferred annuity that qualifies forfavorable federal income tax treatment because it meets the requirements specified in the federal tax laws for individual retirement arrangements

Front 174

individual retirement arrangement (IRA)

Back 174

A tax-deferred savings arrangementthat an individual establishes and that meets certain requirements specified inthe U.S. federal tax laws

Front 175

individual stop-loss coverage

Back 175

Stop-loss insurance under which insurer reim-burses the employer for all claims paid for any individual that exceed astated amount in a stated period of time.

Front 176

inflation protection provision

Back 176

A long-term care insurance policy provision thateither automatically increases the benefit amount each year by a specified percentage or allows the insured to opt for a higher daily benefit amount at specified intervals during the lifetime of the policy without having to show evidenceof insurability

Front 177

informal contract

Back 177

A contract that is enforceable because the parties to thecontract met requirements concerning the substance of the agreement ratherthan requirements concerning the form of the agreement

Front 178

insurable interest

Back 178

The interest an insurance policyowner has in the risk that isinsured. A policyowner has an insurable interest if he is likely to suffer a genu-ine loss or detriment should the event insured against occur

Front 179

insurance commissioner

Back 179

The individual who is responsible for directing theoperations of the state insurance department

Front 180

insurer-administered group plan

Back 180

A group insurance plan for which the insureris responsible for handling the administrative and recordkeeping aspects of theplan

Front 181

intangible property

Back 181

Property that represents ownership of a legal right, such asa contractual right

Front 182

interest option

Back 182

A life insurance policy settlement option under which the insurance company invests the policy proceeds and periodically pays interest onthose proceeds to the payee

Front 183

investment earnings

Back 183

The money an insurer earns from investing the funds itreceives from customers

Front 184

investment management fee

Back 184

A fee charged the owner of a variable annuity whichcovers the costs of managing and operating the investment funds underlying thevariable subaccounts

Front 185

joint and survivor life annuity

Back 185

A life annuity that provides periodic income pay-ments to two or more annuitants, and those payments continue until both or allof the annuitants die

Front 186

joint mortgage life insurance

Back 186

A variation of mortgage life insurance that pro-vides the same benefit as a mortgage life insurance policy except the joint policyinsures the lives of two people

Front 187

joint whole life insurance

Back 187

A plan of whole life insurance that has the same features and benefits as individual whole life insurance, except that it insures twopeople under the same policy

Front 188

juvenile insurance policy

Back 188

An insurance policy that is issued on the life of a childbut owned and paid for by an adult, usually the child’s parent or legal guardian

Front 189

key person

Back 189

Any person or employee whose continued participation in a businessis vital to the success of the business and whose death would cause the businessto incur a significant financial loss

Front 190

key person disability coverage

Back 190

Disability income coveragee that provides ben-efit payments to a business if an insured key person becomes disabled

Front 191

key person life insurance

Back 191

Individual life insurance that a business purchases onthe life of a key person

Front 192

lapse rate

Back 192

The percentage of a specified group of policies in force at the beginning of a specified period, such as a year, that are terminated by the end of thatperiod for reasons other than the death of the insured

Front 193

last survivor life insurance

Back 193

A variation of joint whole life insurance under whichthe policy benefit is paid only after both people insured by the policy have died

Front 194

law of large numbers

Back 194

A mathematical theory which states that, typically, themore times we observe a particular event, the more likely that our observedresults will approximate the true probability that the event will occur

Front 195

legal actions provision

Back 195

A health insurance policy provision that limits the timeduring which a claimant who disagrees with the insurer’s claim decision has theright to sue the insurer to collect the amount the claimant believes she is owedunder the policy

Front 196

legal reserve system

Back 196

The system insurers use to set financial values for life insurance products

Front 197

level premium system

Back 197

A life insurance premium system that allows a policyowner to pay the same premium amount each year a policy is in force

Front 198

level premium term life insurance

Back 198

Term life insurance that provides a policybenefit that remains the same over the term of the policy

Front 199

liability

Back 199

A company’s debt or future obligation

Front 200

life annuity

Back 200

An annuity that provides periodic income payments for at least thelifetime of a named individual

Front 201

life annuity with period certain

Back 201

A life annuity which guarantees that the insurerwill make periodic income payments throughout the annuitant’s life and guarantees that the payments will be made for at least a certain period, even if theannuitant dies before the end of that period

Front 202

life income option

Back 202

A life insurance policy settlement option under which theinsurance company agrees to pay the policy proceeds in periodic installmentsover the payee’s lifetime

Front 203

life insurance

Back 203

Insurance that pays a benefit upon the death of a named person

Front 204

life with refund annuity

Back 204

A life annuity that provides periodic income paymentsthroughout the lifetime of the annuitant and guarantees that at least the purchaseprice of the annuity will be paid out

Front 205

limited-payment whole life policy

Back 205

A whole life insurance policy for which pre-miums are payable only for a stated period of time or until the insured’s death,whichever occurs first

Front 206

long-term care (LTC) coverage

Back 206

Health insurance that provides benefits for med-ical and other services to insureds who need care for an extended period in theirown homes or in a qualified facility

Front 207

long-term care (LTC) insurance benefit

Back 207

An accelerated death benefit underwhich the insurer agrees to pay a monthly benefit to a policyowner if the insuredrequires constant care for a medical condition

Front 208

long-term group disability income coverage

Back 208

Group disability income coveragethat provides a maximum benefit period of more than one year

Front 209

long-term individual disability income coverage

Back 209

Individual disability incomecoverage that provides a maximum benefit period of five years or more

Front 210

loss ratio

Back 210

The ratio of benefits an insurer paid out for a block of policies to thepremiums the insurer received for those policies

Front 211

lump-sum distribution

Back 211

The distribution of the accumulated value of an annuityin a single payment

Front 212

major medical expense coverage

Back 212

Medical expense insurance coverage thatprovides substantial benefits for (1) basic hospital, surgical, and physicians’expenses, (2) additional medical services related to illness or injuries, and(3) preventive care

Front 213

managed care

Back 213

A method of integrating the financing and delivery of health careservices within a system that manages the access to health care services and thecost of those services

Front 214

managed care plan

Back 214

An arrangement that integrates the financing and management of health care with the delivery of health care services to a group of individuals who have enrolled in the plan

Front 215

manual rating

Back 215

A method of establishing group insurance premium rates that arebased on the experience of a broad class of groups rather than on a particulargroup’s claims and expense experience

Front 216

market conduct law

Back 216

A law that regulates how insurance companies conductbusiness

Front 217

market value adjusted (MVA) annuity

Back 217

An annuity that offers multiple guar-antee periods and multiple fixed interest rates

Front 218

master group insurance contract

Back 218

An insurance contract that insures a numberof people

Front 219

material misrepresentation

Back 219

A misrepresentation that is relevant to an insurancecompany’s evaluation of the proposed insured

Front 220

maturity date

Back 220

(1) The date on which the insurer will pay an endowment policy’sface amount to the policyowner if the insured is still living. (2) The date onwhich the insurer begins to make the periodic income payments under an annuity contract

Front 221

maximum out-of-pocket provision

Back 221

A major medical expense insurance policyprovision which states that the policy will cover 100 percent of allowable medical expenses after the insured has paid a specified amount out-of-pocket tosatisfy deductible and coinsurance requirements

Front 222

McCarran-Ferguson Act

Back 222

A U.S. federal law under which the U.S. Congress leftinsurance regulation to the state governments, as long as Congress determinesthat regulation to be adequate

Front 223

Medicaid

Back 223

In the United States, a joint federal and state program that providesbasic medical expense and nursing home coverage to low-income individualsand to certain aged and disabled individuals

Front 224

medical expense coverage

Back 224

A type of health nsurance coverage that provides benefits to pay for the treatment of an insured’s illnesses and injuries

Front 225

Medicare

Back 225

In the United States, a federal government program that provides medical expense benefits to persons age 65 and older and persons with certain disabilities

Front 226

misstatement of age or sex provision

Back 226

A life insurance or annuity policy provi-sion that describes the action the insurer will take to adjust the amount of thepolicy benefit in the event that the age or sex of the insured is incorrectly stated

Front 227

modified coverage policy

Back 227

A whole life insurance policy under which the amountof insurance provided decreases by specific percentages or amounts either whenthe insured reaches certain stated ages or at the end of stated time periods

Front 228

modified-premium whole life policy

Back 228

A whole life insurance policy for which theannual premium amount changes after a specified initial period (typically 5 or10 years)

Front 229

moral hazard

Back 229

A characteristic that exists when the reputation, financial position, or criminal record of an applicant or a proposed insured indicates that theperson may act dishonestly in the insurance transaction

Front 230

morbidity rate

Back 230

The rate at which sickness and accidents occur among a givengroup of people

Front 231

morbidity tables

Back 231

Charts that show the incidence of sickness and accidents, byage, occurring among a given group of people

Front 232

mortality and expense risk (M&E) charge

Back 232

A fee charged the owner of a variable annuity which covers various risks and expenses assumed by the insurer,including the risk involved in providing the annuity death benefit and certainother guarantees

Front 233

mortality experience table

Back 233

A type of mortality table that is compiled from acompany’s own records, reflecting its insureds’ actual mortality

Front 234

mortality rate

Back 234

The rate at which death occurs among a specified group of peopleduring a specified period, typically one year

Front 235

mortality tables

Back 235

Charts that indicate the number of people in a large group whoare likely to die at certain ages

Front 236

mortgage life insurance

Back 236

A plan of decreasing term insurance designed to provide a benefit amount that corresponds to the decreasing amount owed on amortgage loan

Front 237

mutual assent

Back 237

A meeting of the minds about the terms of an agreement

Front 238

mutual insurance company

Back 238

An insurance company that is owned by its policyowners

Front 239

National Association of Insurance Commissioners (NAIC)

Back 239

In the United States,a nongovernmental association of the insurance commissioners of all the stateswhose primary function is to promote uniformity of state insurance regulationby developing model laws and regulations as guidelines for the states

Front 240

net cash surrender value

Back 240

The amount the owner of a cash value life insurancepolicy actually receives—after the insurer makes any additions or subtractionsto the cash surrender value—upon surrendering the policy

Front 241

network

Back 241

A group of physicians, hospitals, and ancillary services providers that aspecific managed care plan has contracted with to deliver health care servicesto plan members

Front 242

noncontributory plan

Back 242

A group insurance plan under which insured group members are not required to pay any part of the group insurance premium

Front 243

non duplication of benefits provision

Back 243

A coordination of benefits provision that, ifincluded in a secondary provider’s plan, limits the amount payable by the secondary plan to the difference, if any, between the amount paid by the primaryplan and the amount that would have been payable by the secondary plan hadthat plan been the primary plan

Front 244

nonforfeiture provision

Back 244

A cash value life insurance policy provision that setsforth the options available to the owner of a cash value policy if the policy lapsesor if the policyowner decides to surrender—or terminate—the policy

Front 245

nonparticipating policy

Back 245

A type of insurance policy in which the policyownerdoes not share in the insurer’s surplus

Front 246

offer

Back 246

A proposal to enter into a binding contract with another party

Front 247

open contract

Back 247

A contract that identifies the documents that constitute the contract between the parties, but all the enumerated documents are not necessarilyattached to the contract

Front 248

open enrollment period

Back 248

A period of time—typically a specified 30 or 31 daysper year—during which eligible people who did not join a group insuranceplan at the first opportunity subsequently may join the plan without providingevidence of insurability

Front 249

operating expenses

Back 249

The expenses that arise in the normal course of an insurer’soperations

Front 250

original age conversion

Back 250

A conversion of a term life insurance policy to a cashvalue life insurance policy in which the premium rate for the cash value policyis based on the insured’s age when the original term policy was issued

Front 251

overinsurance provision

Back 251

An individual health insurance provision which statesthat the benefits payable under the policy will be reduced if the insured is over-insured

Front 252

overinsured person

Back 252

A person who is entitled to receive either (1) more in medical expense benefits than the actual costs incurred for treatment or (2) a greaterincome amount during disability than the amount that would have been earnedfrom working

Front 253

owners' equity

Back 253

The owners’ financial interest in a company, which is the difference between the amount of the company’s assets and the amount of its liabilities

Front 254

ownership of property

Back 254

The sum of all the legal rights that exist in a piece ofproperty

Front 255

paid-up additional insurance dividend option

Back 255

A policy dividend option underwhich the insurer uses any declared policy dividend to purchase paid-up additional insurance on the insured’s life

Front 256

paid-up additions option benefit

Back 256

A supplemental life insurance policy bene-fit that allows the owner of a whole life insurance policy to purchase single premium paid-up additions to the policy on stated dates in the future withoutproviding evidence of the insured’s insurability

Front 257

paid-up policy

Back 257

A life insurance policy that requires no further premium payments but continues to provide coverage

Front 258

partial disability

Back 258

A disability that prevents the insured either from performingsome of the duties of his usual occupation or from engaging in that occupationon a full-time basis

Front 259

participating policy

Back 259

A type of insurance policy under which the policyownershares in the insurance company’s divisible surplus

Front 260

payout annuity

Back 260

An annuity in the payout period

Front 261

payout options

Back 261

The choices an annuity contract owner has as to how the insurerwill distribute the funds in an annuity during the payout period

Front 262

payout options provision

Back 262

An annuity contract provision that lists and describeseach of the payout options from which the contract owner may select

Front 263

payout period

Back 263

The period during which the insurer makes periodic income payments under an annuity contract

Front 264

pension

Back 264

A lifetime monthly income benefit that begins at retirement

Front 265

period certain

Back 265

The stated period over which the insurer will make periodicincome payments for a period certain annuity

Front 266

period certain annuity

Back 266

An annuity that is payable for a stated period of time,regardless of whether the annuitant lives or dies

Front 267

periodic fee

Back 267

An amount charged the owner of an annuity contract at predetermined intervals—for example, every year or every month. A periodic fee typically compensates the insurer for its administrative expenses

Front 268

personal property

Back 268

All property other than real property

Front 269

personal risk

Back 269

The risk of economic loss associated with death, poor health, injury, and outliving one’s economic resources

Front 270

physical examination provision

Back 270

A disability insurance policy provision whichstates that the insurer has the right to have an insured who has submitted a claimexamined by a physician of the insurer’s choice, at the insurer’s expense

Front 271

plan administrator

Back 271

The party that is responsible for the administrative aspects ofa retirement plan’s operation

Front 272

plan document

Back 272

A detailed legal agreement that establishes the existence of anemployer-sponsored retirement plan and specifies the rights and obligations ofvarious parties to the plan

Front 273

point-of-service (POS) plan

Back 273

A managed care plan that combines features ofHMOs and PPOs; plan members who need medical care choose, at the point ofservice, whether to seek care in-network or out-of-network

Front 274

policy benefit

Back 274

A specific amount of money an insurer agrees to pay under aninsurance policy when a specific loss occurs

Front 275

policy dividend

Back 275

A life insurance policyowner’s or annuity contract owner’s shareof the divisible surplus

Front 276

policy loan

Back 276

A loan a policyowner receives from an insurer using the cash value ofa life insurance policy as security

Front 277

policy loan provision

Back 277

A cash value life insurance provision that specifies theterms on which the policyowner can obtain a loan against the policy’s cashvalue

Front 278

policy loan repayment dividend option

Back 278

A policy dividend option under whichthe insurer applies policy dividends toward the repayment of an outstandingpolicy loan

Front 279

policy reserves

Back 279

Liabilities that represent the amount an insurer estimates it needsto pay future benefits

Front 280

policy rider

Back 280

An amendment to an insurance policy that becomes part of the insurance contract and either expands or limits the benefits payable under the contract

Front 281

policy withdrawal provision

Back 281

A universal life insurance policy provision thatpermits the policyowner to reduce the amount of the policy’s cash value bywithdrawing up to the amount of the cash value in cash

Front 282

portability provision

Back 282

A provision in a group insurance policy that allows a groupinsured whose coverage terminates for certain reasons to continue her coverage under the group plan, typically without presenting evidence of insurability

Front 283

portable coverage

Back 283

Group insurance coverage that can be continued if an insuredemployee leaves the group

Front 284

preference beneficiary clause

Back 284

A policy provision included in some life insurancepolicies which states that if the policyowner does not name a beneficiary, thenthe insurer will pay the policy proceeds in a stated order of preference

Front 285

preferred premium rate

Back 285

A lower-than-standard premium rate charged insuredswho are classified as preferred risks

Front 286

preferred provider organization (PPO)

Back 286

A health care benefit arrangement thatprovides incentives for plan members to use network providers, but also provides at least some coverage for services rendered by non-network providers

Front 287

preferred risk

Back 287

A proposed insured who presents a significantly lower-than-average likelihood of loss

Front 288

premium reduction dividend option

Back 288

A policy dividend option under which theinsurer applies policy dividends toward the payment of renewal premiums

Front 289

prescription drug coverage

Back 289

Medical expense insurance coverage that providesbenefits for the purchase of drugs and medicines that are prescribed by a physician and are not available over-the-counter

Front 290

presumptive disability

Back 290

A stated condition that, if present, automatically causesthe insured to be considered totally disabled

Front 291

primary care provider (PCP)

Back 291

In a managed care plan, a network member whocoordinates plan members’ medical care and treatment

Front 292

principal

Back 292

The sum of money originally invested, loaned, or borrowed

Front 293

profit sharing plan

Back 293

A retirement savings plan that is funded primarily by cashcontributions payable from the employer’s profits

Front 294

property/casualty (P&C) insurance company

Back 294

An insurer that issues and sellsinsurance policies that cover property damage risk and liability risk. Alsoknown as property and liability insurer

Front 295

pure risk

Back 295

A risk that involves no possibility of gain; either a loss occurs or noloss occurs

Front 296

rate of return

Back 296

The investment earnings expressed as a percentage relative to theprincipal

Front 297

real property

Back 297

Land and whatever is growing on or attached to the land

Front 298

reduced paid-up insurance nonforfeiture option

Back 298

A cash value life insurancepolicy nonforfeiture option under which the policyowner discontinues payingpremiums and uses the policy’s net cash surrender value as a net single premiumto purchase paid-up life insurance of the same plan as the original policy

Front 299

reimbursement method

Back 299

A method of determining the amount of benefits payable under a long-term care insurance policy under which the insurer pays theinsured the amount of covered LTC expenses per day up to the stated maximumdaily benefit amount

Front 300

reinstatement

Back 300

The process by which an insurer puts back into force a life insurance policy that either has been terminated because of nonpayment of renewalpremiums or has been continued under the extended term or reduced paid-upinsurance nonforfeiture option

Front 301

reinstatement provision

Back 301

An individual life insurance policy provision thatdescribes the conditions that the policyowner must meet to put back into force alife insurance policy that either has been terminated because of nonpayment ofrenewal premiums or has been continued under the extended term or reducedpaid-up insurance nonforfeiture option

Front 302

reinsurance

Back 302

Insurance that one insurance company, known as the direct writeror ceding company, purchases from another insurance company, known as thereinsurer or assuming company, to transfer all or part of the risk on insurancepolicies that the direct writer issued

Front 303

reinsurer

Back 303

An insurance company that accepts risks transferred from anotherinsurer in a reinsurance transaction

Front 304

renewable term insurance policy

Back 304

A term life insurance policy that gives thepolicyowner the option to continue the coverage at the end of the specified termwithout presenting evidence of insurability

Front 305

renewal premium

Back 305

An insurance policy premium payable after the initial premium

Front 306

renewal provision

Back 306

The provision in a renewable term insurance policy that givesthe insured the right to continue coverage without presenting evidence of insur-ability

Front 307

return of premium (ROP) term insurance

Back 307

A form of term life insurance thatprovides a death benefit if the insured dies during the policy term and promisesa return of premiums if the insured does not die during the policy term

Front 308

revocable beneficiary

Back 308

A life insurance beneficiary who has no right to the policyproceeds during the insured’s lifetime because the policyowner has the unrestricted right to change the designation during the life of the insured

Front 309

right of revocation

Back 309

The life insurance policyowner’s right to change the beneficiary designation

Front 310

risk

Back 310

The chance or possibility of an unexpected result, either a gain or a loss

Front 311

risk class

Back 311

A grouping of insureds who represent a similar level of risk to the insurer

Front 312

risk management

Back 312

The process by which individuals and businesses identify andassess the risks they face and take measures to eliminate or reduce their expo-sure to those risks

Front 313

Roth IRA

Back 313

An IRA in which contributions are not tax-deductible, but qualifiedwithdrawals are tax-free

Front 314

salary continuation plan

Back 314

A fully self-insured group short-term disability incomeplan that typically provides 100 percent of the insured employee’s salary, beginning on the first day of the employee’s absence resulting from illness or injuryand continuing for a specified period

Front 315

savings plan

Back 315

A retirement plan to which a plan sponsor may make contributionson behalf of a plan participant if the participant makes contributions to the plan

Front 316

second insured rider

Back 316

A supplemental life insurance policy benefit that providesterm insurance coverage on the life of a person other than the policy’s insured

Front 317

security

Back 317

A certificate that represents either an ownership interest in a business(for example, a share of stock) or a debt owed by a business, government, oragency (for example, a bond)

Front 318

self-administered group plan

Back 318

A group insurance plan for which the grouppolicyholder is responsible for handling the administrative and recordkeepingaspects of the plan

Front 319

self-insurance

Back 319

A risk-management technique by which a person or businessaccepts financial responsibility for losses associated with specific risks

Front 320

separate account

Back 320

An investment account the insurer maintains separately fromits general account to isolate and help manage the funds placed in its variableproducts

Front 321

service fee

Back 321

A one-time fee charged an annuity contract owner for specific services

Front 322

settlement option

Back 322

Alternative methods that the owner or beneficiary of a lifeinsurance plicy can elect for receiving payment of the policy proceeds

Front 323

settlement options provision

Back 323

A life insurance policy provision that grants a policyowner or a beneficiary several choices as to how the insurance company willdistribute the proceeds of a life insurance policy

Front 324

short-term group disability income coverage

Back 324

Group disability income cover-age that provides a maximum benefit period of one year or less; such coveragecommonly specifies a maximum benefit period of 13, 26, or 39 weeks

Front 325

short-term individual disability income coverage

Back 325

Individual disability incomeinsurance coverage that provides a maximum benefit period ranging from one tofive years

Front 326

simple interest

Back 326

Interest on the original principal only

Front 327

simultaneous death act

Back 327

A law in many jurisdictions that governs how insurancecompanies are to evaluate common-disaster situations

Front 328

single-premium deferred annuity (SPDA) contract

Back 328

A deferred annuity thatis purchased with a lump-sum premium payment and provides periodicincome payments that begin more than one annuity period after the annuity ispurchased

Front 329

single-premium immediate annuity (SPIA) contract

Back 329

An immediate annuitythat is purchased with a lump-sum premium payment and provides periodicincome payments that begin one annuity period after the annuity is purchased

Front 330

social insurance program

Back 330

A welfare plan that is established by law and administered by a government and that provides the population with income security

Front 331

Social Security

Back 331

In the United States, a federal program that provides specifiedbenefits, including monthly retirement income benefits, to people who havecontributed to the plan during their income-earning years

Front 332

sole proprietorship

Back 332

A business that is owned and operated by one person

Front 333

solvent

Back 333

A term used to describe an insurance company that is able to meet its debts and to pay policy benefits when they come due

Front 334

speculative risk

Back 334

A risk that involves three possible outcomes: loss, gain, or nochange

Front 335

spouse and children's insurance rider

Back 335

A supplemental life insurance policybenefit offered by some insurers that provides term life insurance coverage onthe insured’s spouse and children

Front 336

spouse insurance rider

Back 336

A supplemental life insurance policy benefit that provides term life insurance coverage on the insured’s spouse

Front 337

standard premium rate

Back 337

A premium rate charged insureds who are classified asstandard risks

Front 338

standard risk

Back 338

A proposed insured who has a likelihood of loss that is not significantly greater than average

Front 339

state insurance code

Back 339

A set of laws in each state that regulate insurance in thatstate

Front 340

state insurance department

Back 340

An administrative agency in each state that isresponsible for making sure that companies operating in the state comply withapplicable regulatory requirements

Front 341

stock bonus plan

Back 341

A retirement plan into which a plan sponsor that is a stockcompany makes contributions on behalf of plan participants in the form of thecorporation’s stock

Front 342

stock corporation

Back 342

A corporation whose ownership is divided into units known asshares or shares of stock

Front 343

stockholder dividend

Back 343

A portion of a corporation’s earnings paid to the owners ofits stock

Front 344

stock insurance company

Back 344

An insurance company that is owned by the people andorganizations that own shares of the company’s stock

Front 345

stop-loss insurance

Back 345

Insurance purchased by an employer that self-insures a grouphealth insurance plan which enables the employer to place a maximum dollarlimit on its liability for paying health insurance claims

Front 346

straight life annuity

Back 346

A life annuity which provides periodic income payments foronly as long as the annuitant lives

Front 347

subaccount

Back 347

One of several alternative pools of investments to which the owner ofa variable life insurance policy or variable annuity allocates the premiums shehas paid and the cash values that have accumulated under her policy

Front 348

substandard premium rate

Back 348

A higher-than-standard premium rate chargedinsureds who are classified as substandard risks

Front 349

substandard risk

Back 349

A proposed insured who has a significantly greater-than-average likelihood of loss but is still found to be insurable

Front 350

suicide exclusion provision

Back 350

A life insurance policy provision which states thatpolicy proceeds will not be paid if the insured dies as the result of suicide asdefined by the policy within a specified period following the date of policyissue

Front 351

supplemental major medical policy

Back 351

An insurance policy issued in conjunctionwith an underlying basic medical expense insurance policy to provide benefitsfor expenses that exceed the benefit levels of the underlying basic plan and,often, for expenses that are not covered by the underlying plan

Front 352

surplus

Back 352

For an insurer, the amount by which the company’s assets exceed itsliabilities and capital

Front 353

surrender charge

Back 353

Principles of Insurance (1) A specific charge imposed if the owner of a cash valueinsurance policy surrenders the policy for its cash surrender value. (2) A feetypically imposed if a deferred annuity contract is surrendered within a statednumber of years after it was purchased

Front 354

surrender value

Back 354

The accumulated value of a deferred annuity less any surrendercharges included in the contract

Front 355

survivorship clause

Back 355

A policy provision included in some life insurance policieswhich states that the beneficiary must survive the insured by a specified period,usually 30 or 60 days, to be entitled to receive the policy proceeds

Front 356

tangible property

Back 356

Property that has physical form, such as automobiles, jewelry,or clothing

Front 357

terminal illness (TI) benefit

Back 357

A supplemental life insurance policy benefit underwhich the insurer pays a portion of the policy’s death benefit to a policyowner-insured who suffers from a terminal illness and has a physician-certified lifeexpectancy of less than a stated time, generally 12 or 24 months

Front 358

term life insurance

Back 358

Life insurance that provides a death benefit only if theinsured dies during the period specified in the policy

Front 359

third-party administrator (TPA)

Back 359

An organization other than an insurancecompany that provides administrative services to the sponsors of group benefitplans

Front 360

third-party policy

Back 360

A policy purchased by one person or business on the life ofanother person

Front 361

total disability

Back 361

A disability that meets the requirements of a disability benefitprovision in an insurance policy or policy rider and that qualifies a coveredperson to receive disability income benefits

Front 362

traditional IRA

Back 362

An IRA in which contributions may be tax-deductible and investment earnings are tax-deferred until the funds are withdrawn

Front 363

underwriter

Back 363

An insurance company employee who is responsible for evaluatingproposed risks

Front 364

underwriting

Back 364

The process of identifying and classifying the degree of risk represented by a proposed insured

Front 365

underwriting guidelines

Back 365

The general rules that an insurer uses when assigningproposed insureds to an appropriate risk class

Front 366

unilateral contract

Back 366

A contract in which only one of the parties makes a legallyenforceable promise when entering into the contract

Front 367

universal life (UL) insurance

Back 367

A form of cash value life insurance that is char-acterized by its flexible premiums, its flexible face amount and death benefitamount, and its separation of the three primary policy elements

Front 368

usual, customary, and reasonable (UCR) fee

Back 368

The amount that medical care providers within a particular geographic region commonly charge for a particularmedical service

Front 369

valued contract

Back 369

An insurance policy that specifies the amount of policy benefitthat will be payable when a covered loss occurs, regardless of the actual amountof loss that was incurred

Front 370

variable annuity

Back 370

An annuity under which the amount of the accumulated valueand the amount of the periodic income payments fluctuate in accordance withthe performance of one or more specified investment funds

Front 371

variable life (VL) insurance

Back 371

A form of cash value life insurance in which pre-miums are fixed, but the death benefit and other values may vary, reflecting theperformance of investment subaccounts that the policyowner selects

Front 372

variable universal life (VUL) insurance

Back 372

Cash value life insurance that combines the premium and death benefit flexibility of universal life insurancewith the investment flexibility and risk of variable life insurance

Front 373

vested interest

Back 373

A property right that has taken effect and cannot be altered orchanged without the consent of the person who owns the right

Front 374

vesting

Back 374

A retirement plan’s right to receive partial or full benefits under the planeven if he terminates employment prior to retirement

Front 375

vision care coverage

Back 375

Medical expense coverage that provides the insured withbenefits for expenses incurred in obtaining eye examinations and correctivelenses

Front 376

voidable contract

Back 376

A contract under which one party has the right to avoid hisobligations under the contract

Front 377

waiver of premium for disability (WP) benefit

Back 377

A supplemental life insurancepolicy benefit under which the insurer promises to give up— to waive—its rightto collect premiums that become due while the insured is totally disabled

Front 378

waiver of premium for payor benefit

Back 378

A supplemental life insurance policy benefit which provides that the insurance company will waive its right to collect apolicy’s renewal premiums if the policyowner dies or becomes totally disabled

Front 379

whole life insurance

Back 379

A type of cash value life insurance that provides lifetimeinsurance coverage usually at a level premium rate that does not increase as theinsured ages

Front 380

withdrawal charge

Back 380

A charge imposed on the owner of a deferred annuity whenthe owner withdraws more than a stated percentage of the annuity contract’saccumulated value in one year

Front 381

withdrawal provision

Back 381

A deferred annuity contract provision that gives the contract owner the right to withdraw all or part of the contract’s accumulated valueduring the accumulation period

Front 382

yearly renewable term (YRT) insurance

Back 382

A plan of term life insurance that pro-vides coverage for one year and is renewable for a stated number of years