Accelerated Benefits
Riders attached to life insurance policies that allow death benefits to be used to cover nursing or convalescent home expenses
Accidental Death Benefits
A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death
Accidental Death Insurance
An insurance policy that provides payment if the insured's death is the result of an accident
Accumulation Period
The time before an annuitant's retirement during which the annuitant is making payments or investments in an annuity
Actual Cash Value (ACV)
The required amount to pay damages or for property loss. This amount is calculated based on the property's current replacement value minus depreciation
Adhesion
A contract offered on a "take-it-or leave-it" basis by an insurer, in which the insured's only option is to either accept or reject the contract. Any ambiguities in the contract will be settled in favor of the inusred
Adjustable Life
Life insurance that permits changes in the face amount, premium amount, period of protection, and the duration of the premium payment period
Adjuster
A representative of an insurance company who investigates and acts on the behalf of the company to obtain agreements for the amount of the insurance claims
Administrator
An individual appointed by a court as a fiduciary to settle the financial affairs and estate of a deceased person
Admitted (Authorized) Insurer
An insurance company authorized and licensed to transact business in a particular state
Adverse Selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often that the risks who present lower probability
Agency
An insurance sales office or company
Agent Appointment
The authorization of an agent to act for or represent an insurer
Agent's Authority
Special powers granted to an agent by his or her agency contract
Aleatory
A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss
Alien Insurer
An insurance company that is incorporated outside of the US
Annual Statement
A detailed financial report that an insurance company must submit every year to the insurance department of state(s) in which it conducts business
Annuity
A contract that provides income for a specified period of years, or for life
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created
Applicant
A person making application for, or offering himself, herself or another to be insured under an insurance contract
Application
A document that provides information for underwriting purposes. After the policy is issued, any unanswered questions are considered waived by the insurer
Assignment
The transfer of ownership rights of a life insurance policy from one person to another
Attained Life
The age of the insured at a determined date
Attending Physician's Statement (APS)
A statement usually obtained from the applicant's doctor
Authorized (Admitted) Insurer
An insurance company authorized and licensed to transact business in a particular state
Avoidance
A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he or she might choose to never fly in a plane)
Basic Illustration
A ledger or proposal used in the sale of a life insurance policy that show both guaranteed and nonguranteed elements
Beneficiary
The person who receives the proceeds from the policy when the insured dies
Binder (Binding Report)
A temporary contract that puts an insurance policy into force before the premium has been paid
Birthday Rule
The method of determining primary coverage for a dependent child, under which the plan of the parent whose birthday occurs first in the calendar year is designated as primary
Buy-Sell Agreement
A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled
Buyer's Guide
A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision
Cash Value
The amount to which a policy owner is entitled if the policy is surrendered before maturity
Certificate
A statement or booklet that confirms that a policy has been written and that describes the coverage in general
Certififcate of Authority
A document that indicated that an insurance policy has been issued, and that states both the amount and types of insurance provided
Claim
A request for payment of the benefits provided by an insurance contract
Coercion
An unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance
Coinsurance Clause
A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance
Commingling
A practice in which a person in a fiduciary capacity illegally mixes his/her personal funds he/she is holding in trust
Commissioner
The chief executive and administrative officer of a state insurance department
Concealment
The withholding of known facts that, if material, can void a contract
Conditional Contract
A type of agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable
Consideration
The binding force in a contact that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part
Consumer Report
A written an/or oral statement regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources
Contract
An agreement between two or more parties enforceable by law
Contributory
A group insurance plan that requires the employees to pay part of the premium
Controlled Business
An entity that obtains and possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer or employees
Convertible
A policy that may be exchanged for another type of policy by contractual provision, at the option of the policy owner, and without evidence insurabiltiy (i.e. term life changed to a form of permanent life)
Coordination of Benefits
A provision that helps determine the primary provider in situations where an insured is covered by more than one policy, thus avoiding claims overpayment
Countersignature
The act of signing an insurance policy by a licensed resident agent
Coverage
The inclusion of causes of loss (perils) which are covered within a scope of a policy
Credit Life Insurance
A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor
Custodial Care
Care that is rendered to help an insured complete his/her activities of daily living
Death Benefit
The amount payable upon the death of the person whose life is insured
Decreasing Term
A type of life insurance that features a level premium and a death benefit that decresases each year over the duration of the policy
Domestic Insurer
An insurance company that conducts business in the state of incorporation
Domicile of Insurer
Insurer's location of incorporation and the legal ability to write business in a state
Earned Premium
The amount of the premium for which the policy protection has been given
Effective Date/Inception Date
The date when an insurance policy begins
Employee Retirment Income Security Act (ERISA)
The act that stipulates federal standards for private pension plans
Endorsement
A form changing the provisions of and attached to a life insurance policy
Endow
To reach the maturity date or time at which the face amount equals cash values
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived
Excess Insurance
Insurance that pays over and above or in addition to basic policy limits
Exclusions
Causes of loss, exposures, conditions, etc. listed in the policy for wich the benefits will not be paid
Expiration
The date specified in the polcy as the date of termination
Express Authority
The authority granted to an agent by means of the agent's written consent
Extension of Benefits
A provision that allows coverage to continue beyond the policy's expiration date for employees who are not actively at work due to disability or who have dependents
Face
The first page of the policy
Fair Credit Reporting Act
A federal law that established procedures consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used
Fiduciary
An agent/broker who handles insurer's funds in a trust capacity
Fixed Annuity
An annuity that offers fixed payments and gurantees a minumum rate of interest to be credited to the purchase payment or payments
Flexible Premium
A policy feature that allows the policyholder to vary premium payments in the amount and/or timing
Foreign Insurer
An insurance company that is incorporated in another state
Free Look
A period of time, usually required by law, during which a policy owner may inspect a newly issued individual life or health insurance policy for a stated number of days and surrender it in exchange for a full refund of premium if not satisfied for any rea
Grace Period
Period of time after the premium due date during which premiums may still be paid, and the policy and its riders remain in force
Group Life
Life insurance provided for members of a group
Implied Authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal
Indemnify
To restore the insured to the same condition as prior to loss with no intent of loss or gain
Insolvent Organization
A member organization which is unable to pay its contractual obligations and is placed under a final order of liquidation or rehabilitation by a court competent jursidiction
Insurability
The acceptability of an applicant who meets an insurance company's underwriting requirements for insurance
Insurable Interest
A financial interest in the life of another person; a possibility of losing something of value if the insured should die. In life insurance, insurable interest must exist at the time of the application
Insuring Clause
A general statement that identifies the baisc agreement between the insurance company and the insured, usually located on the first page of the policy
Intentional Injury
An act that is intended to cause injury. Self-inflicted injuries are not covered under accident insurance; intentional injurieis inflicited on the inusred by another are covered
Intermidetiate Care
A level of care that is one step down from skilled nursing care; provided under the supervision of physicans or registered nurses
Investigative Consumer Reports
A report similar to consumer reports, but one that also provides information on the consumer's character, reputation and habits
Lapse
Termination of a policy because the premium has not been paid by the end of the grace period
Law of Large Numbers
A prinicple stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probaility of loss
Legal Reserve
The accounting measurement of an insurer's future obligations to pay claims to policy owners
Level Premium
A policy premium that remains the same over the period of time premiums are paid
Life Settlement
An arrangement that allows the policy owner to sell their existing life insurance policy to a third party for compensation
Limited-Pay Whole Life
A variation of whole life insurance that charges a level annual premium and provides a level, guaranteed death benefit to the insured's age 100 and will endow for the face amount if the insured lives to age 100. Limited-pay life is designed so that the pr
Liquidation
Selling assets as a method of raising capital
Living Benefits Rider
A rider attached to a life insurance policy that provided LTC benefits or benefits for the terminally ill by using available life insurance benfits
Lloyd's Associations
Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk
Loan Value
The amount of money an insured can borrow using the cash value of his/her life insurance policy as collateral
Loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against
Lump Sum
Settlement method that pays the beneficiary the entire proceeds of a life insurance policy in one payment rather than in installments
Market Value Adjusted Annuity
A single-premium deferred annuity that allows a contract owner to lock in a guaranteed interest rate over a specified maturity period
Maturity Date
The date when the face amount of the life insure becomes payable
Medical Information Bureau (MIB)
An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes
Misrepresentation
A false statement or lie that can render the contract void
Mode of Payment
The method of premium payment, whether annually, semiannually, quarterly, or monthly
Mortality Table
A table showing the probability of death at specified ages
Mutual Companies
Insurance organizations that have no capital stock, but are owned by the policyholders
Non-admitted (Non-authorized)
An insurance company that has not applied for, or has applied and been denied a certificate of authority and may not transact insurance in a particular sate
Non-authorized (non admitted)
An insurance company that has not applied for, or has applied and been denied a certificate of authority and may not transact insurance in a particular sate
Noncancellable
An insurance contract that the insured has a right to continue in force by payment of premiums that remain the same for a substantial period of time
Non-forfeiture Values
Those guaranteed values in a life insurance policy that cannot be taken from the insured, even if he or she ceases to pay premiums
Nonmedical
A life or health insurance policy that is underwritten based on the insured's statement of health rather than a medical exam
Nonparticipating Policies (non-Par)
Insurance that does not pay dividends
Non-qualified Plan
A type of benefit plan that may discriminate, is not required to be filed with the IRS, and does not provide a current tax deduction for contributions
Nonrenewable
A termination of a policy by an insurer on the anniversary or renewal date
Nonresident Agent
An agent licensed in a state in which he or she is not a resident
Option
A choice of ways of receiving policy dividends, non forfeiture values, death benefits, or cash values
Overinsurance
An excessive amount of insurance that would result in over payment to the insured in the event of a loss
Paid-Up Insruance
A policy on which all premium have been paid but which has not matured due either to death or endowment
Participating Policies (Par)
Insurance that pays dividends to policyholders
Payor Benefit
A rider found in juvenile policies which waives the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor
Peril
The cause of the possible loss
Permanent Life Insurance
A general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid
Persistency
The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer
Personal Contract
An agreement between an insurance company and an individual that states that insurance policies cover the individual's insurable interest
Policy Loan
A nonforfeiture value in which an insurer loans a part or all of the cash value of the policy assigned as secuirty for the loan to the policy owner
Policyholder
The person who has possession of the policy, usually the insured
Policy Owner
The person who is entitled to exercise the rights and privileges in the policy. This person may or may not be insured
Preferred Risk
An insurance classification for applicants who have a lower expectation of incurring loss, and who, therefore, are covered at a reduced rate
Premium
A periodic payment to the insurance company to keep the policy in force
Primary Beneficiary
The person who is named as first to receive benefits from a policy
Principal Amount
The full face value of a policy
Private Insurance
Insurance furnished by nongovernmental insuring organizations
Pro Rata Cancellation
Termination of an insurance policy, with an adjustment of the premium charge in proportion to the exact coverage that has been in force
Proceeds
The amount payable by the insurance company, usually in at the insured's death or when the policy matures
Producer
Insurance agent or broker
Pure Protection
Insurance whereby premiums are paid for protection in the event of death or disability, not for cash value accumulation
Qualified Plan
A retirement plan that meets the IRS guidelines for receiving favorable tax treatment
Rate Service Organization
An organization that is formed by, or on behalf of, a group of insurers to develop rates for those insurers, and to file the rates with the insurance department on behalf of its members. They may also act as a collection point for actuarial data
Rebating
Any inducement offered in the sale of insurance products that is not specified in the policy
Reciprocal Exchange
An unincorporated group of individuals who mutually insure one another, each separately assuming a share of each risk
Reciprocity
A situation in which two parties provide the same help or advantages to each other (ex: Producer A living in State A can transact business as a nonresident in State B if State B's resident producers can transact business in State A)
Reinsurance
A form of insurance whereby one insurance company (the re-insurer) in consideration of a premium paid to it, agrees to indemnify another insruance company (the ceding company) for part of all of its liabilities from insurance policies it has issued
Renew-ability Clause
A clause that defines the insurance company's and the insured's right to cancel or renew coverage
Renewable Term
Insurance which can, at the election of the policy owner, be renewed at the end of a term without evidence of insurability
Representations
Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true
Rescission
The termination of an insurance contract due either to material misrepresentations by the insured or by fraud, misrepresentation, or duress on the part of the agent/insurer
Retention
A method of dealing with risk by intentionally or unintentionally keeping a portion of if for the insured's account; the amount of responsibility assumed but not re insured by the insurance company
Rider
Any supplemental agreement attached to and make a part of the policy indicating the policy expansion by additional coverage, or a waiver of a coverage or condition
Risk
Uncertainty as to the outcome of an event when two or more possibilities exist
Risk, Pure
The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no change
Risk Retention Group
A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry
Risk, Speculative
The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain
Risk, Standard
An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle
Risk, Substandard
An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium
Rollover
Withdrawing the money from a qualified plan and placing it into another qualified plan
Secondary Beneficiary
The person who is named to receive benefits upon the death of the insured if the (primary) first-named beneficiary is no longer alive or does not collect all the benefits due to his/her own death
Settlement Options
Choices available to the insured/owner for distribution of insurance proceeds
Sharing
A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur within that group
Single Premium Whole Life (SPWL)
A life insurance policy designed to provide a level death benefit to the the insured's age 100 for a one-time, lump sum payment
Speculative Risk
An uncertainty or chance of a loss occurring in a situation that involved the opportunity for with loss or gain
Spendthrift Clause
A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she recieves them
Standard Provisions
Requirements approved by state law that must appear in all insurance policies
Standard Risk
An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle
Stock Companies
Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company
Straight Life
A basic policy that charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit
Substandard Risk
An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium
Superintendent
The head of the state department of insurance
Surrender
An act of giving up a life policy, in which the insurer will pay the insured the cash value the policy has built up
Term Insruance
Insurance that provides protection for a specific period of time
Total Disability
A condition which does not allow a person to perform the duties of any occupation for payment as a result of injury or sickness
Transfer
A basic principle of insurance under which the risk of financial loss is assigned to another party
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage
Underwriter
The process of reviewing, accepting or rejecting applications for insurance
Unearned Premium
The portion of premium for which policy protection has not yet been given
Unilateral Contract
A contract that legally binds only one party to contractual obligations after the premium is paid
Universal Life
A combination of Annual Renewable Term and a cash account invested in the general fund of the insurance company
Utmost Good Faith
The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk
Valued Contract
A contract that pays a stated amount in the event of a loss (disability insurance/life insurance)
Waiting Period
Time between the beginning of a disability and the start of disability insurance benefits
Waiver
The voluntary abandonment of a know or legal right or advantge
Waiver of Cost
A disability rider, found in Universal Life Insurance, that waives the cost of the insurance but does not waive the cost of premiums necessary to accumulate cash values
Waiver of Premium
Continuation of life insurance coverage if the insured become totally disabled and is unable to pay the premiums
Warranty
A material stipulation in the policy that if breached may void coverage
Whole Life Insurance
Insurance that is kept in force for a person's entire life and pays a benefits upon the person's death, whenever that may be