Insurance Terms Flashcards

Questions and Answers

What is a 401 K Plan?

A qualified retirement plan where the employee can set aside income with pre-tax dollars (correct)

A savings account with tax penalties

A stock investment plan

A type of life insurance

What is the difference between Absolute Assignment and Collateral Assignment?

There is no difference

Absolute is temporary while Collateral is permanent

Absolute is permanent and irrevocable; Collateral is temporary and revocable (correct)

Absolute is revocable while Collateral is irrevocable

What is an Accelerated Death Benefit?

A policy provision that allows payment of death benefit before death if terminally ill.

What does an Accidental Death Benefit provide?

An additional benefit if the insured dies within 90 days of an accident. Signup and view all the answers

What does it mean to Accumulate at Interest?

Leaving dividends with the insurer to invest and earn interest. Signup and view all the answers

What is Adhesion in insurance contracts?

Insurer created documents that favor the insured in case of ambiguities. Signup and view all the answers

What does Adverse Selection refer to?

Insuring risks that are more prone to losses than average risks. Signup and view all the answers

What is the purpose of an Agency Agreement?

It defines the terms between the agent and the insurance company. Signup and view all the answers

Which of the following describes Agent Authorities?

Expressed, Apparent, and Implied authorities Signup and view all the answers

What is an Agent/Producer?

A legal representative of an insurance company. Signup and view all the answers

What is included in an Agent's Report?

A report disclosing observations about the proposed insured's risks. Signup and view all the answers

What does aleatory mean in insurance?

An unequal exchange of value in a contract. Signup and view all the answers

What is an Annual Renewable Term?

A life insurance contract allowing yearly renewal without proof of insurability. Signup and view all the answers

Who is an Annuitant?

The person who buys an annuity. Signup and view all the answers

What is an annuity?

A contract that guarantees income for a specified time or life of the annuitant. Signup and view all the answers

What is an appointment in the context of insurance?

Authorization of an agent by an insurer to represent the company. Signup and view all the answers

What is a Blackout Period?

The time between the youngest child turning 16 and widow(er) reaching retirement age with no benefits. Signup and view all the answers

What is a Buy-Sell Agreement?

A business use of life insurance where partners buy insurance on each other. Signup and view all the answers

What is a Cash Nonforfeiture Option?

Lump-sum payment of current cash value upon surrender of the policy. Signup and view all the answers

What does the Cash Settlement Option provide?

A payment option regarding death benefits. Signup and view all the answers

What is cash value in insurance policies?

The equity amount legally available to the policyowner. Signup and view all the answers

What is the role of a commissioner in insurance?

A public official regulating the state's insurance department. Signup and view all the answers

What does Conditional mean in the context of policy?

Certain conditions must be met for the policy to be effective. Signup and view all the answers

Study Notes

Retirement Plans

401 K Plan: A retirement plan allowing employees to save a portion of their income with pre-tax dollars.

Insurance Assignments

Absolute Assignment: Permanent and irrevocable transfer of rights and benefits by the policyholder.
Collateral Assignment: Temporary and revocable transfer of benefits by the policyholder.

Death Benefits

Accelerated Death Benefit: Allows partial or full payment of the death benefit before death if the insured is terminally ill.
Accidental Death Benefit: Additional benefit paid if the insured dies within 90 days of an accident due to that accident.

Dividend Options

Accumulate at Interest: The policy owner leaves dividends with the insurer to earn interest over time.

Contract Law

Adhesion: Ambiguities in contracts are settled in favor of the insured since the insurer drafts the contract.
Aleatory: Contract features unequal exchange of value, where one party may gain significantly more than the other.

Risk Management

Adverse Selection: Tendency to insure higher-risk individuals, leading to potential financial losses.

Agency Relationships

Agency Agreement: A legal document outlining the terms between the agent and the insurance company, specifying agent powers and compensation.
Agent Authorities: Includes expressed (written power), apparent (assumed by public), and implied (assumed during business transactions).

Agent Roles

Agent/Producer: Legal representative of an insurance company encompassing both agents and brokers.
Agent's Report: Written report detailing the agent’s observations regarding the proposed insured's risks.

Insurance Policies

Annual Renewable Term: Term life insurance allowing yearly renewal without proof of insurability, with increasing premiums.
Annuitant: Individual who purchases an annuity, may not necessarily be the policy owner.
Annuity: Contract ensuring income for a specified period or the annuitant's lifetime to mitigate the risk of outliving savings.

Business Considerations

Buy-Sell Agreement: A life insurance arrangement where business partners insure each other, facilitating buyout of the deceased partner's share using death benefits.

Policy Options

Cash Nonforfeiture Option: Lump-sum cash value payment received upon policy surrender, irrecoverable after surrender.
Cash Value: Insurance policy’s equity available to owners, accumulating over time, also referred to as living benefit.

Regulatory Framework

Commissioner: Public official overseeing the state’s insurance department, ensuring compliance with insurance laws.

Survivor Benefits

Blackout Period: Timeframe between a child's 16th birthday and the surviving spouse's retirement age, during which survivor benefits are not provided.

Policy Conditions

Conditional: Certain conditions must be satisfied for the policy to remain valid or benefits to be payable.

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Description

Test your knowledge on essential insurance terms with these flashcards. Each card includes a key term along with its definition, helping you understand various concepts related to retirement plans and assignments. Perfect for students and professionals looking to refresh their knowledge.