applicant
A person making application for himself/herself or another to be insured under an insurance contract. The applicant may be the insured, the owner or both.
application
A written formal request by an applicant to an insurer requesting the insurer issue a policy based upon information contained in the application. It is the primary source of information used for underwriting purposes.
beneficiary
One or more "parties" named in the policy to receive the policy proceeds, or death benefits, if the insured dies while the contract is in force.
insurable interest
The relationship that must exist between the applicant and insured, at the time of application and policy issuance, in order for the contract to be valid. An individual has an insurable interest in his or her own self. Insurable interest also exists if a
policy owner
The individual who has the ownership rights in a policy. The policyowner and insured are usually the same, but not necessarily. Any changes made to a policy must be approved by the policyowner in writing with his/her signature.
third party ownership
A policy owned by a person other than the insured.
issue age (original)
Insured's age on the policy issue date
attained age
Insured's age at any point in time typically used at renewal or conversion
effective date
The date when insurance coverage begins
expiration age
The date when which insurance coverage ends
advertising
Producers are governed under the rules and regulations (referred to as Unfair Trade Practices) with regard to what they can and cannot use or say when soliciting insurance.
do not call registry
he Federal Trade Commission amended the Telemarketing Sales Rule to give consumers a choice about whether they want to receive most telemarketing calls. It is prohibited under the Telephone Consumer Protection Act (TCPA) for most telemarketers or sellers
sales presentation
producers are required to provide all buyers the following:
-buyers guide: generic brochure developed by NAIC to assist prospective buyers of life insurance
-policy summary: computer generated illustration detailing premiums, guaranteed and non-guaranteed
replacement
any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, or terminated; reduced in value; amended w/reduction in benefit or term; r
replacing insurer
the insurer responsible for issuing the new policy
existing insurer
The insurer who issued the policy to be replaced
conservation
The act of saving or keeping the existing policy and preventing it from being replaced
binding receipt (unconditional)
If premium is paid, coverage will begin immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer. This may also be referred to as a temporary insurance agreement.
acceptance conditional receipt (approval)
The coverage becomes effective at application approval. If the company doesn't approve the application, coverage was never in effect
conditional receipt
If premium is paid, coverage will be in effect the date of application or completion of the medical exam, whichever is later, as long as the policy would have been issued as applied for.
Fair Credit Reporting Act: Notice of Information Practices & Disclosure
The insurance company must meet requirements under the FCRA when gathering information from a third party to use during underwriting. The applicant must be notified and give consent for information to be received by a third party. This information is disc
Disclosure at Point of Sale: Issues Relating to AIDS
Insurance companies may refuse to issue a policy to individuals based on positive HIV test results. However, Applicants must consent to be tested for HIV and be informed that testing for HIV may determine insurability.
Medical Information Bureau (MIB)
primary purpose is to collect adverse medical information about an applicant's health and act as an information exchange
Inspection Report
general report of the applicant's finances, character, morals, work, hobbies, and other habits. This is sometimes referred to as a Consumer Investigative Report. This can be completed by the insurer or a third-party provider. The applicant must be made aw
agent's report
personal statement submitted by the producer to the insurer regarding the applicant's financial condition, any personal knowledge of the applicant, etc. This information remains confidential between the producer and the insurer, and it does not become par
total premium paid to the insurer
mortality-interest+expenses
net premium
takes into account interest and mortality factors
mortality-interest
gross premium
additional charges (Expenses) are added to the net premium rate to insurer to meet all costs under contract
net premium+expenses
Survivor protection
Providing funds for surviving spouses and dependents
estate creation
Life insurance proceeds paid in a lump sum provide financial assets to create an immediate estate the insured can pass on to survivors.
estate conservation
Provides money to pay any estate taxes or loans which must be satisfied upon the death of the estate owner, (the insured) preserving the insured's estate
cash accumulation
An amount of cash accessible to the policyowner from within permanent life insurance policies
liquidity
Immediate funds available upon death to pay creditors, taxes and final expenses as well as cash values available for policy loans, withdrawals, and full surrenders
pre-need plan
A type of coverage with a small face amount, typically purchased to pay the burial expenses of the insured.
charities
To help fund favorite charitable organizations upon the insured's death
security
Peace of mind knowing that future insurability is not an issue, and benefits will be in place as long as the required premiums are paid.
Exemption from creditor claims/probate
The policy's values are normally exempt from any creditor claims, unless the policy was assigned as collateral for a loan that still exists at the time of the insured's death.
Viatical Settlements
A terminally ill insured/owner selling his/her policy to a third party for less than the death benefit but more than the cash values in order to obtain funds when no other sources are readily available.
capital liquidation
Assumes both principal (capital) and interest are liquidated over the relevant time period to provide the required income for the dependents. When income is paid out under capital liquidation the account balance will decrease as each payment is distribute
capital retention/conservation
Assumes the desired income will be generated by the interest only, thus retaining or conserving the principal
group
An insurance plan normally owned by an employer, creditor or association, under which coverage is provided for the employees, debtors or members. Group insurance generally provides protection for an employee's named beneficiary, typically their spouse if
individual
The greatest difference between group and individual life insurance is the full latitude of ownership. Unlike group policies, individual policies may be of any classification or type of insurance. Individual life policies may also build or preserve an est
ordinary life insurance
Any type of life insurance that is not group, industrial or government insurance. A large number of people are insured with an ordinary life policy making this the larger portion of the life insurance in force today.
industrial (home service)
Synonymous with debit life insurance and makes up only about .03% of the life insurance today. These small policies, normally $250 to $1,000, were originally sold to pay funeral expenses
permanent
A life insurance policy that remains in force to age 100 or beyond. The premium is always higher than that on a term policy at issuance when the amount of coverage and underwriting factors are equal. This policy provides for living benefits for the policy
term
Lowest of initial premium outlay and designed for someone with a large insurance need but with limited cash flow. This coverage is often referred to as temporary, as it is usually written to cover a short time period. This policy does not build cash value
participating
A class of policy marketed by a mutually owned company. The word participating means a dividend may be paid to the policyowner when they are declared by the board of directors. The company is not required to issue only participating policies, but only par
nonparticipating
A policy marketed by a stock insurer. A stock insurer is a company under the control of the stockholders who would receive a share of any profits in the form of a corporate dividend, as opposed to a policy dividend. Stock dividends are treated as ordinary
fixed
The policy has a fixed amount of coverage, benefits and premium. Without riders, future inflationary trends will cause the purchasing power of the policy's benefits to be reduced .
flexible
Universal and Variable Universal Life policies have given the policyowner more flexibility in terms of premiums, investment objectives and other policy benefits. These policies assist the insured during inflationary periods with the changing needs of the
variable
A policy introduced in the 1970s that uses separate account(s) for the cash value accumulation. The separate accounts are similar in nature to mutual funds, and a securities license and life license are required to sell this policy. The policyowner takes