Insurance Terms and Definitions, Exams of Nursing

Download Insurance Terms and Definitions and more Exams Nursing in PDF only on Docsity! Life Insurance Terms Study Guide 2024 Accelerated benefits rider Correct Answer is may be added to a life insurance policy that permits the policy owner to "accelerate" or receive a certain percentage of the death benefit while the insured is still alive when he or she has been diagnosed with a terminal illness. Whatever amount is paid to the owner under the rider is subtracted form the face amount when death occurs and the remainder is paid to the designated beneficiary Accident Correct Answer is an unforeseen, unintended, unexpected event, or fortuitous event that causes death, injury or damage Accidental Death and Dismemberment Insurance Correct Answer is a form of insurance affording benefits in the event of accidental death; the accidental loss of sight, speech or hearing; loss of use of limbs (paralysis); or loss of member (arm or leg) Accidental Death Benefit Correct Answer is a lump sum payment for loss of life due to an accident that was the direct cause of death. The cause of cause of death must be accidental for a benefit to be payable under the policy Accumulation Period Correct Answer is the pay in period of an annuity during which the contract owner receives tax deferral. During this period the contract owner is referred to as the policyowner. Once this period end, the annuity phase or the income phase commences Actuary Correct Answer is a person who calculate policy rates, reserves, and dividends and makes other applicable statistical studies and reports Additional Premium Correct Answer is used in universal life policies. Can be paid into the policy account in an amount above the target premium. current tax laws limit the amount of excess cash value that can be accumulated in a life insurance policy. The insurance company may not accept the additional premium if it nears this limit without increasing the limit of life insurance (subject to underwriting) Address Change Correct Answer is most states require that a producer notify the applicable regulatory department of any residence/business address change. And if a producer legally changes his/her name, notice of the change must be provided Adverse Selection Correct Answer is the tendency of a disproportionate number of poor risks to seek or buy insurance or maintain existing insurance in force (the selection again the insurance company). Sound underwriting reduces adverse selection Age Based Penalty Correct Answer is when an individual prematurely withdraws funds prior to age 59.5 from an annuity, a modified endowment contract, or a qualified plan, he or she will be assess a 10% penalty. No such penalty will be assessed if the distribution is made after this stipulated age Age Change Correct Answer is the date halfway between bdays when the age of the applicant changes to the next higher age. With some insurers, the age is based upon the applicant's age at his nearest bday. In others, it is based upon the ages of his last bday Agent Correct Answer is an authorized rep of an insurer who is licensed to sell life insurance and annuity contracts. Represents the insurer who sponsors him or her Alien Insurer Correct Answer is an insurer organized under the laws of a country other than the US Annuitant Correct Answer is the individual whose life the annuity is based. If the annuity is paid out for a lifetime, the annuitant's age is used to determine payments. The person who normally receives the annuity payment, however, that may not or may not be the case Annuitization Correct Answer is the period for which annuity benefits are paid Annuity Correct Answer is a contract btwn an insurer and owner affording periodic income payments for a fixed period of time or during the lifetime of an annuitant. May be defined as the systematic reimbursement or liquidation of an estate Annuity Certain Correct Answer is an annuity that provides a benefit payment payable for a specialized length of time regardless of whether the annuitant lives or dies Annuity Surrender Charge Correct Answer is a fee charged by the insurance company for a partial or full withdrawal of funds made during a specified period after the annuity is funded. Contract language determines the size of the fee and the length of surrender charge period. Intended to discourage the movement of funds for the defined period, allowing the insurance company to recover their setup and administration costs group benefits. Possesses an incident of ownership in the contract since they are allowed to designate the beneficiary Certificate of Authority Correct Answer is the name of the license to transact insurance business that is issued to an insurance company Certificate of Insurance Correct Answer is document containing info regarding the master policy of a group indicating that an employee has coverage Claim Correct Answer is the demand to an insurer for the payment of benefits under a policy Commingling Correct Answer is that a producer is combining premiums collected with personal funds. Not a legal activity and may be construed as larceny Commission Correct Answer is compensation or payments made by an insurer to a producer for the sale of an insurance policy Common Disaster Clause Correct Answer is this provision defines the method of payment of the proceeds of the policy by the insurer if the insured and the named beneficiary die simultaneously in the same accident Concealment Correct Answer is failure by an applicant to disclose in his or her application a material fact that is relevant to the acceptance or the declination of an application for insurance coverage Conditional Receipt Correct Answer is form, normally required to be signed by agent and given to the prospective owner at the time a new application is completed. Issuing is subject to company rules. Most require that agent collect an initial premium and most most usually grant some level of limited coverage, under special conditions, before issuance of the policy. W/o valid receipt, no coverage is in force until policy is issued, delivered, and accepted (initial premium paid) Consideration Correct Answer is one of the requirements of a valid contract. Representations on the application and the premium is the policy owner's consideration. The insurance company's "promise to pay" is its consideration Consultant Correct Answer is an individual who provides advice and consultation for a fee. Must secure a consultant's license and referred to as insurance advisers counselor, specialist, or analyst Contingent Beneficiary (Secondary) Correct Answer is person who is entitled to a death benefit only if there is no primary beneficiary when the insured dies. Minor may be listed but an insurer is not permitted to pay policy proceeds to a minor beneficiary Continuing Education Correct Answer is regulations in place that require producers and other insur. professionals to maintain competency on a reg basis to hold license. License may be suspended or revoked until compliance is completed Contributory plan Correct Answer is A term applied to a group insurance plan under which both employee and employer contribute to premium payment this is also referred to as the shared premium plan Conversion Period Correct Answer is Life insurance includes the conversion privilege that permits the policy owner the right to change coverage from term life to whole life with without demonstrating insurability if effected during a 31 day conversion period. Also available to employee if he or she wishes to change group term coverage to permanent whole life insurance Convertibility Correct Answer is The base of the policy owner to exchange an existing policy for other policies offered by the insurance company. May be the conversion of individual term insurance to an individual payment plan that company sells or the conversion of group disability, life or health to an individual plan Corridor Correct Answer is In universal life insurance a level of pure insurance must be maintained more than the accumulated cash value. Tax law regulates the amount Credit life insurance Correct Answer is Life insurance designed to pay the balance of a loan if the insured dies before the loan has been repaid in full. Generally sold by a lender or finance company Cross- purchase plan Correct Answer is A type of buy sell plan where is partner buys a policy covering each of the other partners in order to have sufficient funds available to buy out the deceased partner's interest upon his or her death Death benefit Correct Answer is The amount that is paid upon the death of the insured. Also called the face amount, coverage amount or policy proceeds Death claim Correct Answer is The completed form that proves the insured's death. Must be filed with the insurer along w/ a copy of the death certificate in order to receive policy proceeds Decreasing term insurance Correct Answer is I type of temporary or pure protection characterized by reducing face amount each year. Sometimes called mortgage redemption or mortgage protection insurance it is primarily used in conjunction with debt or loan Defamation Correct Answer is An unfair practice where a producer or insurer makes false and maliciously critical statements regarding the financial condition of the competing insurer Deferred annuity Correct Answer is Where income payments commence more than one year after the payment of the first (or single) premium to the insurer, usually at retirement Deferred compensation Correct Answer is A plan that allows selected individuals to differ the receipt of income in accordance with a written agreement with their employer. May be qualified or nonqualified Defined benefit plan Correct Answer is Employee benefit retirement plan that uses a definite formula to determine the exact benefit amount. Employer contributions to the plan I'm actuarially determined. The benefit to be paid in the future Will determine the amount of the contributions Defined contribution plan Correct Answer is An employee benefit plan under which each participant's benefits are based solely upon the contributions made to the participants account. The amount of the contributions will determine the future benefit at retirement Dependent rider Correct Answer is A rider that maybe added to a life insurance policy specifically to provide coverage for dependents of the primary insured. Dependence riders may cover a spouse or children or dependents parents. A family rider may cover the primary insured spouse and children (natural and adopted) Disclosure statement Fair credit reporting act Correct Answer is A federal law passed in 1970 that provides an insurer with the right to receive additional information with regard to applicants for insurance coverage. This law permits and sure to conduct a consumer report on applicants and proposed insureds. An applicant for insurance must be informed of the purpose of the report. If coverage is declined due to information in the report, the insurer must provide the name and address of the reporting agency so that the applicant may secure a copy of the information in the report Family income policy Correct Answer is A policy that combines a whole life policy with a decreasing term rider in order to provide a death benefit together with monthly income payments to the beneficiary. Monthly income payments are made only from the date of death until maturity date of the contract. Then the lump sum part of the whole life coverage is paid Family maintenance policy Correct Answer is A policy that combines a whole life policy and a level term rider. It's provides for the payment of a monthly income during a stated period of years once the insured dies. The monthly income is payable from the date of death to the end of the preselected period. The payment of the face amount of the policy is payable at the end of the preselected period. Family policy Correct Answer is A policy covering the entire family. Whole life insurance covers the primary insured, breadwinner, with varying amounts of level term on the best of the family Fiduciary responsibility Correct Answer is Producers possess this responsibility since they handled the monies of the public. Producer must account for all premiums collected or they have failed to uphold this duty. Anyone who possesses this duty must act with a high degree of trust Fixed annuity Correct Answer is And annuity contract that pays a predetermined amount of income every month to An annuitant. The insurer bears the investment risk in a fixed annuity Fixed period Correct Answer is A settlement option under a life insurance policy that pays the beneficiary an amount of monthly income for a specified period of time rather than a lump sum settlement Foreign ensurer Correct Answer is And insurer conducting business in a state other than the state in which it was organized or chartered. This classification of insurer is licensed to conduct business in a particular state but its principal office is situated in another state Fraternal association Correct Answer is An organizations that markets life and health insurance product solely to its members Free-look period Correct Answer is All life insurance policies must include at least a 10 day free look- period in a life insurance contract. It begins when the policy is delivered by the producer. It's during this period the policy owner decides to return the contract to the insurer, he/she will receive a full premium refund. A mail order or direct response insurer must include a free look period of at least 30 days General agent Correct Answer is Given supervisory authority over the agents under his or her jurisdiction. Usually performs the following functions: selecting, writing and servicing the insurance business in force of his or her territory. Generally, signs contracts with agents to sell and service the insurer's policy and contracts. Usually not an employee of the life insurance company but self employed like an independent agents Grace period Correct Answer is A specified period of time after a premium payment is due, during which the protection of the policy continues even though the payments for the renewal premium has not yet been received Guaranty fund Correct Answer is Each state has a life and health insurance guaranty fund that is designed to protect policy owners against the insolvency of an insurer. In order for the fund to be operated all the insurers licensed to sell life and health insurance must participate Guideline premium Correct Answer is The maximum premium that can be paid into Universal Life Policies and still have the benefit to qualify as life insurance under federal tax laws. If the guideline premium is paid on a regular basis there may be little margin for any additional premium payments into a Universal Life Insurance policy account Hazard Correct Answer is A condition present that increases the chance of a possible loss. Three primary types: physical hazards (faulty wiring in the building), moral hazards (dishonest or criminal activities), and morale hazards (leaving keys in the ignition, carelessness) Immediate annuity Correct Answer is Pays a monthly income commencing one, three, six, or 12 months after purchase. This type of contract must be funded with a lump sum or single premium Implied authority Correct Answer is Authority granted to a producer by an insurer that is not specifically identified in the agency agreement Incontestable clause Correct Answer is A provision of life insurance policies that states once the policy has been in force for two years, during the lifetime of the insured, the insurance company may not challenge the validity of the policy. Over the years, case law has established precedence that the incontestable clause applies to cases of fraud Increasing term insurance rider Correct Answer is Characterized by an increasing amount of term life coverage each year. Ttwo primary types: return of premium rider and a return of cash value rider Indexed contracts Correct Answer is Contracts where the policyholder can share in a percentage of the growth of an indexed investment (a mutual fund tied to the Standard and Poors index is an example). The principle or benefit is guaranteed and in many cases, a minimum interest is guaranteed. These products are not considered securities Individual insurance Correct Answer is A policy which affords protection for policyholder. Sometimes it is called personal insurance Individual retirement account Correct Answer is A retirement type plan that allows individuals to receive tax deferral of interest while providing some with tax deductibility of contributions. An age based penalties may apply to those who receive premature distributions prior to age 59 1/2. the amount withdrawn must be reported as ordinary income in the year received Inspection report Correct Answer is AV equipment contains general information regarding the health, habits, finances, and reputation of an applicant. Developed by a firm that specializes in rendering this type of service Installment refund annuity Correct Answer is The same as a cash refund annuity, except that money is refunded in installment payments and the insurer makes payments to the designated beneficiary until the total of payments made to the annuitant and the beneficiary equals the consideration paid Insurable interest Correct Answer is Relationship between parties that justify one owning Life insurance on the other. People are said to have an unlimited insurable interest in their own life. An insurable interest may exist in the life of another person if there is a chance of a financial or emotional loss at that person's death. The insurable interest could be Long-term care rider Correct Answer is attached to a life insurance policy and allows for the payment of a percentage of the death benefit if an individual is not terminally ill but requires long term care Market value adjusted annuity Correct Answer is type of annuity that shifts some but not all of the investment risk from the insurer to the policy owner since the annuity account value will fluctuate as market interest rates fluctuate. A single premium deferred annuity that allows the contract owner to lock in a guaranteed interest rate over a specified maturity period. These annuity contracts pass along more risk to the policy owner Maturity date Correct Answer is the date on which a policy becomes payable due to death or the insured or as a result of a n insured's living to the end of a specified period (age 100). In WL insurance, the CV is designed to equal the face amount at maturity Maturity value Correct Answer is the amount paid under a WL insurance contract if the insured reaches the age of the mortality table on which the contract was based. If an endowment contract, it is the CV amount at the end of the endowment period Minimum premium Correct Answer is also known as the Minimum Continuation Premium, is the premium lower than the target premium. Used in UL policies to skip premiums or pay lower premiums. Two constraints are placed on the minimum premium amount: that it is above the insurance company's cost to process the payment and that there is enough CV in the policy account to pay mortality and expense charges Misprepresentation Correct Answer is a false statement that an applicant makes on an application for an insurance policy. An omission (concealment) of a material fact can also be construed as this. Material if the insurer, having known the true facts, would have declined the application as applied for by the applicant. Statements made by an applicant or the owner are considered representations and not warranties Misstatement of age Correct Answer is a provision in a life insurance policy that states that if the age of the insured is understated on the application and the insurer later learns of the error, it will adjust the death benefit lower. The premium will remain the same. If the age has been overstated the insurer will adjust the benefit higher. If the insurer discovers the error at the time of death it will adjust the proceeds payable Modified endowment contract Correct Answer is a WL policy that fails to satisfy a seven pay test. When a policy owner over funds the contract attempting to use the policy as a short term investment vehicle, the policy will be designated for tax purposes as a MEC. This means that any cash distributions from the contract will be subject to taxation. And if the withdrawal is made prior to age 59.5, the policy owner will be subject to an age based penalty of 10% Modified life policy Correct Answer is a WL plan that is characterized by a lower premium during the initial years of the contract to make it more affordable for the policy owner. The premium then increases after this introductory period and remains level for the life of the contract Moral hazards Correct Answer is habits, morals, or financial practices of an insured that increase the posiblity or extent of a loss Mortality Correct Answer is the measure of the probability of surviving or dying at each age. Rates usually reflect the actual experience of an insurance company with its insureds, adjusted for expected future changes. Rates may differ from company depending on the risks each company accepts Mortality table Correct Answer is statistical table that indicates the probability of death and survival at each age up to age 100. Informs us of the "death rate" at any particular age from 0 through 100 Mortgage redemption plan Correct Answer is another name for a decreasing term life insurance policy. This type of plan is used to provide funds to a survivor in order to pay off a debt. Also called mortgage protection coverage or reducing term insurance Mutual insurance company Correct Answer is a life insurance company owned and controlled by its policy holders. Issue participating policies which may pay dividends to policy holders Natural person Correct Answer is a human being; when a corporation owns an annuity it must list a natural person as the annuitant. if it lists a non-living entity, it will lose the benefit of tax deferral. Net amount at risk Correct Answer is the difference between the face amount of a policy and the reserve Non-contributory plan Correct Answer is a group of employee benefit plan under which the employer pays for the full cost of the benefits for his employees. and "employer pay all" plan Non-forfeiture factorr Correct Answer is an actuarial figure, indicated in the policy's table of loan and surrender value that is used to calculate the non-forfeiture values of the policy Non-forfeiture values Correct Answer is benefits required by law to be made available to the policy owner in the event that he surrenders the policy by discontinuing premium payments . These values state that the owner will not forfeit or lose all that he has invested in the policy. Also referred to as nonforfeiture options, include surrender for cash, extend term insurance and reduced paid-up insurance Non-medical life insurance Correct Answer is insurance that is used w/o requiring the applicant to submit to a medical examination. The insurer relies on the applicant's answers to the questions regarding his physical condition, personal references and inspection reports. However, the insurance company retains the right to require a medical examination if an investigation indicates a need for one Non-participating insurance Correct Answer is a type of life insurance policy issued by a stock insurer. An insurance contract that does not pay dividends to the policyholders Non-qualified annuity Correct Answer is a classification of annuity whose description is based upon the fact that interest or earnings paid into the contract are tax deferred and the contributions to the contract are not tax deductible Non-qualified distribution Correct Answer is the same as premature distribution Non-qualified plan Correct Answer is a type of retirement plan that permits tax deferral of interest but contributions are not tax deductible. The reason for the latter is due to the fact that he employer sponsoring the plan may legally discriminate and provide the plan for specific employees only such as hight paid executives Ordinary income Correct Answer is when gains in a life insurance policy are realized upon surrender, they are taxed as ordinary income and not capital gains. Whenever interest or earnings are realized in any policy, they are taxed as ordinary income Ordinary life insurance Correct Answer is insurance policies of $1,000 or multiples thereof that provide coverage for the entire life of the policyholder and for which the premiums are payable premature distribution. Penalties will be assessed and amounts withdrawn will be subject to taxation with the exception of death, disability, and other qualified events Premium Correct Answer is the initial payment and subsequent periodic payments required to keep a policy in force Primary beneficiary Correct Answer is the first person entitled to policy proceeds upon the death of the insured. Proceeds are paid income tax free Principal Correct Answer is one of the parties in an agency relationship. The other is the agent who acts on behalf of the principal. This relationship may be applied to the insurance business where a producer (agent) represents the insurer (the principal) Proceeds Correct Answer is the net amount of money that is payable by the insurer upon the death of an insured or when the policy matures. This is also called the policy's face amount, coverage amount, coverage limit or death benefit Producer Correct Answer is this is a licensed insurance agent. May also be referred to as an agent or field underwriter Public adjuster Correct Answer is an individual who determines or settles losses to commercial or personal property on behalf of a client/insured Qualified annuity Correct Answer is characterized by tax deferral of interest and contributions that are tax deductible Qualified distribution Correct Answer is a distribution of funds from a qualified plan, MEC, or annuity that is not subject to a penalty or taxation Qualified plan Correct Answer is a retirement plan vehicle that receives favorable tax treatment. Contributions to the plan are tax deductible while earnings credited are tax deferred. In order to be classified as a qualified plan according to IRS guidelines, the plan must be in writing, must be communicated to all employees, cannot discriminate against any employees and much provide survivor benefits Qualified versus non-qualified Correct Answer is deals with income taxation of contributions to various plans. Qualified plans cannot discriminate, must comply w/ specific IRS codes and regulations, and contributions are deductible from income taxes in the year they are made. Non- qualified plans can discriminate, do not need to be filed with the IRS and contributions are not tax deductible. Some plans will only be Qualified (401(k) and Medical Savings Accounts), some only Non-Qualified (deferred compensation), and some can be either depending on how they are set up (Individual Retirement Accounts and annuities) Rated Correct Answer is a method under which an insurer may issue a policy for a substandard risk by increasing the premium based on the increased risk involved Readjustment Income Correct Answer is in life insurance needs, the amount of income needed after the death or disability of a wage earner to allow the family unit to adjust to the new standard of living (may be lower or higher) Readjustment period Correct Answer is the period following the death of disability of a wage earner, which the family needs to adjust to the new standard of living. Generally will be less than one year, however it can extend for several years in the case of disability and/or emotional acceptance by family members Rebating Correct Answer is paying, offering, or giving anything of value not specified in the policy to any person as an inducement to apply for or renew an insurance policy. Rebating is illegal in most States Reduced paid-up insurance Correct Answer is a non-forfeiture option in a policy used when the contract is surrendered that provides for the continuation of the insurance at a reduced face amount Reinstatement Correct Answer is the resumption of coverage under a policy that has lapsed. Before an insurer allows this, the insured must prove insurability and all back premiums must be paid. All statements on the reinstatement application are contestable for another 2 years Reinsurrance Correct Answer is the underwriting by one insurance company (reinsurer) of part or all of an individual risk written by another insurer (ceding company). The transfer of risk from one insurer to another. Facultative reinsurance occurs when the ceding company presents a risk to the reinsurer and the latter decides whether to accept or declined the risk on a case by case basis. Automatic or treaty reinsurance involves an arrangement already in place where a reinsurer will automatically assume its portion of the risk if it has been accepted by the ceding insurer Renewable term life insurance Correct Answer is insurance that may be renewed at the end of the policy term without evidence of insurability. The premium increases at the end of each term and is based on the attained age of the insured at the time of renewal Renewal Correct Answer is the continuance of coverage under a policy beyond the initial period Replacement Correct Answer is a legal activity where a producer convinces a prospective client to lapse or surrender a life or health policy and purchase a new one. Producers must provide a "Notice Regarding Replacement" to the consumer when this activity may occur. The producer must notify the insurer that a replacement is occurring as well Reserve Correct Answer is the combined funds required by law that are set aside by an insurer to assure the payment of future claims Revocable beneficiary Correct Answer is the designated beneficiary may be changed at the owner's request w/o the consent of the beneficiary Rider Correct Answer is an additional attachment to a policy. Riders may provide an additional benefit (benefit rider) or restrict coverage (impairment rider). Benefit riders generally require an additional premium such as the waiver of premium rider, accidental death benefit rider, payor rider, guaranteed insurability rider or the accelerated benefits rider Risk avoidance Correct Answer is a type of risk management where an exposure is eliminated. The exposure to loss produced by a specific activity may be eliminated by avoiding the activity. Ex, if an individual does not wish to lose money in the stock market, he or she should not invest Risk financing Correct Answer is a general description of techniques or methods used to provide funds to pay for losses due to unexpected and fortuitous events Risk reduction Correct Answer is a method of risk management that attempts to reduce the severity of a possible loss but does not eliminate the possibility of that loss Correct Answer is a tax benefit one receives when interest is not taxable in the year credited. Involves postponing taxes to a future tax year because of an anticipated lower tax bracket, or for current use of funds. Tax deferral is legal while tax evasion is illegal Tax exempt Correct Answer is the same as tax free or non-taxable. For instance, dividends paid on a life insurance policy are tax free or tax exempt Tax sheltered annuity Correct Answer is a type of qualified plan that receives tax deferral through a salary reduction. Those eligible for this type of plan include educational employees, clergymen and women, employees of a non-profit organization and employees of charitable organizations. Also referred to as a tax deferred annuity Temporary license Correct Answer is an insurance license that may be issued to a survivor of a deceased producer for a specified period of time. Allows the income stream of renewals to continue until the holder disposes of the business or decides to secure a producer license. Generally these licenses are issued for a period of 180 days. They usually do not permit the holder to write new coverage but to only receive renewal commissions based upon business already in existence Term life insurance Correct Answer is temporary life insurance that is generally designed to afford coverage for a limited number of years. The policy includes no cash value and can be described as pure protection Testimonials Correct Answer is statements made by an individual or organization promoting the insurance products marketed by an insurer. Such statements must be true and represent the current opinion of the person making them. Also promote the insurer as well Total disability Correct Answer is an illness or injury that prevents an insured from continuously performing the duties pertaining to his/her occupation or form engaging in any other type of work for remuneration Trust Correct Answer is a legal document, instrument, or agreement where ownership of property is transferred and management of property is given to a named trustee for the intent expressed in the trust agreement Twisting Correct Answer is an illegal sales practice involving a producer illegally or unfairly inducing to lapse his/her present insurance policy and purchase another. Not the same as replacement, replacement is a legal activity Unfair trade or sales practices Correct Answer is all States have regulations prohibiting these activities. Also called unfair marketing practices, such activities are illegal and subject the individual engaging in to monetary fines and /or imprisonment. These include but aren't limited to: rebating, twisting, misrepresentation, defamation, coercion and boycott, larceny and perjury Uniform simultaneous death act Correct Answer is a state law which mandates that if the insured and the beneficiary die in the same accident, and it cannot be determined which died first, it will be assumed that the beneficiary dies first, and the death proceeds will then pass to the contingent beneficiary Unilateral Correct Answer is insurance policies are unilateral in nature since they are one sided. This means that the insurer draws up the language of the contract and the policy owner doesn't Underwriting Correct Answer is the analysis of info pertaining to an applicant that was obtained from various sources and the determination of whether or not the insurance should be issued as requested, offered at ta higher premium, or delined Variable annuity Correct Answer is and annuity that invests funds in the stock market. Once income commences, the monthly account will vary based on investment performance. The contract owner bears the investment risk Vesting provision Correct Answer is a pension plan participant's right to receive benefits from employer contributions to a plan even if the participant is no longer an employee of that employer. All employe contributions made to a plan are fully vested at the time they are made. Employer contributions are vested according to a schedule contained in the plan Viatical settlement Correct Answer is a transaction where the owner of a life insurance policy decides to sell the contract to a viatical settlement company (VSP: viatical settlement provider). This company buys the contract for a percentage of the face amount from the policy owner. The provider or company then changes the name of the beneficiary to itself since it is the new owner of the contract. When the insured dies, the provider receives the death benefit. The amount paid to the policy owner is a percentage of the face amount of the contract (85% of the face amount). The owner is allowed to accelerate a portion of the death benefit while he is still alive when they have been diagnosed with a terminal illness. A viatical settlement is one of three ways in which to accelerate benefits. The other two include an accelerated benefit rider and a long-term care rider added to a life insurance policy VIator Correct Answer is another name for the policy owner of a life insurance contract in a viatical settlement Waiver Correct Answer is to voluntarily relinquish or abandon a known right under an insurance contract. A legal principle that protects the consumer if an insurer waives its rights under an insurance contract. An common type of waiver occurs when an insurer fails to enforce a policy provision Waiver of premium Correct Answer is a benefit rider available to be included in a life insurance policy that waives the payment of premiums after the policy owner has been totally disabled for a specific period of time (6 months). Once the policy owner has been disabled for 6 consecutive months, any premium paid during that time will be refunded by the insurer retroactively. Future premiums will be waived on a month to month basis until the disabled party returns to work. Proof of disability from a medical professional is required War clause Correct Answer is a clause in the exclusive provision of a life insurance policy that limits an insurer's liability if death is caused as a result of war Warranties and representations Correct Answer is most State laws specify that all statements by the applicant on the application are considered to be representations and not warranties. A warranty must be absolutely and literally true. A breach of warranty may be sufficient to void the policy whether or not the warranty is material and whether or not such a breach of warranty had contributed to the loss. A representation need only be substantially true to the best of the applicant's knowledge. Generally, a representation is considered to be fraudulent if it relates to a situation that would be material to the risk and that the applicant made w/ fraudulent intent