Insurance Terms and Concepts: A Comprehensive Glossary, Exams of Nursing

Download Insurance Terms and Concepts: A Comprehensive Glossary and more Exams Nursing in PDF only on Docsity! Life Insurance Colorado Life Insurance Colorado Test Questions (203 Terms) with Certified Solutions Updated 2023 (Vocabulary words for Colorado license). accelerated benefits - Answer: Riders attached to life insurance policies which allow death benefits to be used to cover nursing or convalescent home expenses. accidental death benefits - Answer: 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. Life Insurance Colorado accidental death insurance - Answer: An insurance policy that provides payment if the insured's death is the result of an accident. Accumulation Period - Answer: The time before an annuitant's retirement during which the annuitant is making payments or investments in an annuity. actual cash value ACV - Answer: The required amount to pay damages or for property loss, which is calculated based on the property's current replacement value minus depreciation. Adhesion - Answer: 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 insured. Adjustable Life - Answer: Life insurance which permits changes in the face amount, premium amount, period of protection, and the duration of the premium payment period. Adjuster - Answer: 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 claim. administrator - Answer: an individual appointed by a court as a fiduciary to settle the financial affairs an estate of a deceased person Life Insurance Colorado attending physician statement APS - Answer: A statement usually obtained from the applicant's doctor. authorized (admitted) insurer - Answer: An insurance company authorized and licensed to transact business in a particular state. Avoidance - Answer: 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 - Answer: A ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements. beneficiary - Answer: the person who receives the proceeds from the policy when the insured dies. Birthday rule - Answer: 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. Broker - Answer: an individual who represents an insured in the process of purchasing and negotiating a contract of insurance. Life Insurance Colorado buy-sell agreement - Answer: 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 - Answer: A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. cash value - Answer: the amount to which a policy owner is entitled if the policy is surrendered before maturity. certificate - Answer: a statement or booklet that confirms that a policy has been written and that describes the coverage in general. certificate of authority - Answer: a document that authorizes a company to start conducting business and specifies the kind or kinds of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate. Certificate of Insurance - Answer: A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided. Claim - Answer: a request for payment of the benefits provided by an insurance contract. Life Insurance Colorado coercion - Answer: an unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance. co-insurance clause - Answer: 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 - Answer: A practice in which a person in a fiduciary capacity illegally mixes his/her personal funds with funds he/she is holding in trust. Commission - Answer: the payment made by insurers to agents or Brokers for the sale and service of policies. Commissioner - Answer: the chief executive and administrative officer of a state insurance department (in some states, known as Director or Superintendent). Concealment - Answer: the withholding of known facts that, if material, can void a contract. conditional contract - Answer: A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable. Consideration - Answer: The Binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the Life Insurance Colorado domestic insurer - Answer: An insurance company that conducts business in the state of incorporation. domicile of insurer - Answer: Insurer's location of incorporation and the legal ability to write business in a state. Earned Premium - Answer: The amount of the premium for which the policy protection has been given. effective date - Answer: The date when an insurance policy begins (also known as the inception date). Employee Retirement Income Security Act (ERISA) - Answer: The act that stipulates federal standards for private pension plans. endorsement - Answer: a form changing the provisions of and attached to a life insurance policy (also known as a rider). endow - Answer: to reach the maturity date or time at which the face amount equals cash values. Estoppel - Answer: A legal impediment to denying a fact or restoring a right that has been previously waived. Life Insurance Colorado excess insurance - Answer: Insurance that pays over and above or in addition to basic policy limits. exclusions - Answer: Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid. expiration - Answer: the date specified in the policy as the date of termination. Express Authority - Answer: The authority granted to an agent by means of the agent's written contract. extension of benefits - Answer: 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 hospitalized on that date. This coverage continues only until the employee returns to work or the dependent leaves the hospital. face - Answer: the first page of a policy Fair Credit Reporting Act - Answer: A federal law that established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used. Fiduciary - Answer: an agent / broker who handles insurer's funds in a trust capacity Life Insurance Colorado Fixed Annuity - Answer: An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments. flexible premium - Answer: A policy feature that allows the policyholder to vary premium payments in the amount and/or timing. Foreign Insurer - Answer: An insurance company that is incorporated in another state. fraternal benefit societies - Answer: Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government. fraud - Answer: intentional misrepresentation or deceit with the intent to induce a person to part with something of value Free Look - Answer: A period of time, usually required by law, during which a policyowner 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 reason. Grace Period - Answer: Period of time after the premium due date during which premiums may still be paid, and the policy and its rider's remain in force. Life Insurance Colorado investigative Consumer Reports - Answer: A report similar to consumer report, but one that also provides information on the consumer's character, reputation and habits. Issue Age - Answer: The individual's age when a policy is issued. joint life - Answer: A single policy that is designed to insure two or more lives. Juvenile Life - Answer: Any life insurance written on the life of a minor. lapse - Answer: termination of a policy because the premium has not been paid by the end of the grace. law of large numbers - Answer: A principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss. Level Premium - Answer: A policy premium that remains the same over the period of time premiums are paid. life expectancy - Answer: average number of years remaining for a person of a given age to live, as shown on the mortality table. Life Settlement - Answer: An arrangement that allows the policyowner sell their existing life insurance policy to a third party for compensation. Life Insurance Colorado Limited-pay Whole Life - Answer: 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 premiums for coverage will be completely paid-up well before age 100. liquidation - Answer: selling assets as a method of raising capital living benefits Rider - Answer: A rider attached to a life insurance policy that provides LTC benefits or benefits for the terminally ill by using available life insurance benefits. Lloyd's associations - Answer: Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk. Loan Value - Answer: The amount of money an insured can borrow using the cash value of his/her life insurance policy as collateral. loss - Answer: the reduction decrease or disappearance of value of the person or property insured in a policy, by a Peril insured against. lump sum - Answer: Settlement method that pays the beneficiary the entire proceeds of a life insurance policy in one payment rather than in installments. Life Insurance Colorado market value adjusted annuity - Answer: A single-premium deferred annuity that allows a contract owner to lock in a guaranteed interest rate over a specified maturity period. maturity date - Answer: the date when the face amount of the life insurance becomes payable. medical information Bureau MIB - Answer: 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 - Answer: A false statement or lie that can render the contract void. Mode of Payment - Answer: The method of premium payment, whether annually, semiannually, quarterly, or monthly. mortality table - Answer: A table showing the probability of death at specified ages. Mutual companies - Answer: Insurance organizations that have no capital stock, but are owned by the policyholders. Life Insurance Colorado permanent life insurance - Answer: a general term used to refer to various forms of whole life insurance policies that remain in effect h100 so long as the premium is paid. persistency - Answer: The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer. personal contract - Answer: An agreement between an insurance company and an individual that states that insurance policies cover the individual's insurable interest. physical exam and autopsy - Answer: A provision that allows an insurer, at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law. Policy Loan - Answer: A nonforfeiture value in which an insurer loans a part or all of the cash value of the policy assigned as security for the loan to the policyowner. Policyholder - Answer: the person who has possession of the policy, usually the insured. Preferred Risk - Answer: An insurance classification for applicants who have a lower expectation of incurring loss, and who, therefore, are covered at a reduced rate. Life Insurance Colorado Premium - Answer: a periodic payment to the insurance company to keep the policy in force. primary beneficiary - Answer: The person who is named as first to receive benefits from a policy. Primary Policy - Answer: A basic, fundamental insurance policy which pays first with respect to other outstanding policies. principal amount - Answer: The full face value of a policy private insurance - Answer: Insurance furnished by nongovernmental insuring organizations. Pro rata cancellation - Answer: Termination of an insurance policy, with an adjustment of the premium charge in proportion to the exact coverage that has been in force. proceeds - Answer: the amount payable by the insurance company, usually in the insured's death or when the policy matures. Producer - Answer: an insurance agent or broker Pure Protection - Answer: Insurance whereby premiums are paid for protection in the event of death or disability, not for cash value accumulation. Life Insurance Colorado Qualified Plan - Answer: A retirement plan that meets the IRS guidelines for receiving favorable tax treatment. rate service organization - Answer: 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 - Answer: Any inducement offered in the sale of insurance products that is not specified in the policy. reciprocal Exchange - Answer: An unincorporated group of individuals who mutually insure one another, each separately assuming a share of each risk. Reciprocity - Answer: a situation in which two parties provide the same help or advantages to each other (for example, producer A living in state A can transact business as a non-resident in state B if State B's resident producer can transact business in state A) reduction - Answer: lessening the possibility or severity of a loss. Reinsurance - Answer: A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another Life Insurance Colorado settlement options - Answer: Choices available to the insured/owner for distribution of insurance proceeds. Sharing - Answer: 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 - Answer: A life insurance policy designed to provide a level death benefit to the insured's age 100 for a one-time, lump sum payment. speculative risk - Answer: an uncertainty or chance of a loss occurring in a situation that involved the opportunity for either loss or gain spendthrift clause - Answer: A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them. standard provisions - Answer: Requirements approved by state law that must appear in all insurance policies. Standard Risk - Answer: An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle. Life Insurance Colorado Stock Companies - Answer: Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company. straight life - Answer: A basic policy that charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit. substandard risk - Answer: An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. superintendent - Answer: The Head of the State Department of Insurance ( in some States, known as commissioner or director). surrender - Answer: an act of giving up a life policy, in which the insurer will pay the insured the cash value policy has build up. Term Insurance - Answer: insurance that provides protection for a specific. Of time. terminally ill - Answer: a person who is expected to die within a short. Of time due to a specific illness or sickness total disability - Answer: A condition which does not allow a person to perform the duties of any occupation for payment as a result of injury or sickness. Life Insurance Colorado transfer - Answer: a basic principle of insurance under which the risk of financial loss is assigned to another party. Twisting - Answer: 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 - Answer: A person who evaluates and classifies risks to accept or reject them on behalf of the insurer. Underwriting - Answer: the process of reviewing, accepting or rejecting applications for insurance. unearned premium - Answer: The portion of premium for which policy protection has not yet been given. unilateral contract - Answer: a contract that legally binds only one party to contractual obligations after the premium is paid. Universal Life - Answer: a combination of annual renewable term and a cash account invested in the general fund of the insurance company Utmost Good Faith - Answer: 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.