NC Life Insurance Practice Exam Vocabulary

A comprehensive set of vocabulary flashcards covering the North Carolina Life Insurance Practice Exam, including policy types, contract provisions, and legal requirements.

Signed acceptance

What an agent must obtain from a policy owner whenever a policy is changed or when a rated policy is issued.

Contract of insurance

The term used for transferring risk from an individual to an insurance company.

Incomplete application

If accepted by an insurer, the insurer is still obligated to honor the contract and pay benefits if a loss occurs.

Rates factors

The specific elements used to determine insurance rates, including gender, age, health, occupation, and avocations.

Race

A factor that cannot be used under any circumstances to determine insurance rates.

Representations

Statements made on insurance applications that are considered to be true to the best of the applicant's knowledge.

Insurable interest

A requirement that must exist at the time of application, such as a corporation's interest in a key employee.

Conditional receipt

The document that serves as proof of premium payment at the time of application.

Statement of Continued Good Health

A document required when the initial premium is not submitted with the application.

COD application

An application where coverage begins only at delivery and upon payment of the initial premium.

Bilateral contract

A contract that involves an enforceable promise in exchange for consideration.

Unilateral contract

A contract in which only one party, the insurer, makes a legally enforceable promise.

Insuring clause

The part of the policy that identifies the specific peril and the insurer's promise to pay.

Entire Contract Provision

A provision stating that the policy, the application, and any attached riders constitute the complete agreement.

Surrender charge

Also known as a rear-end load in Universal Life policies, typically occurring when a policy is discontinued early.

Target premium

The projected premium in a Universal Life policy needed to cover insurance costs and build cash value.

Universal Life

An insurance type characterized by flexibility, allowing policyholders to skip premiums if cash value covers the monthly costs.

Waiver of monthly deduction

A feature that waives the cost of insurance if the policyholder becomes disabled.

Corridor

In Universal Life, the specific difference between the cash value and the death benefit.

Option A

A Universal Life death benefit option which equals the face amount.

Option B

A Universal Life death benefit option which equals the face amount plus the cash value.

Evidence of insurability

The requirement needed to increase the face amount of a Universal Life policy.

Modified life

A policy where premiums increase only once during the life of the policy.

Graded premium whole life

A policy where premiums increase for a specific period and then remain level.

Term rider

A policy addition that provides temporary extra death benefits at the lowest cost.

APL (Automatic Premium Loan)

A provision where the face amount remains unchanged even if the loan is used to pay premiums.

Policyowner

The individual with the rights to assign the policy, take loans, or change beneficiaries.

Endowment policy maturity

If the insured survives to the maturity age, the insured receives the proceeds; if they die before, the beneficiary receives them.

Insured's estate

The entity that receives proceeds if the primary beneficiary dies and no contingent beneficiary is named.

Refund Life Annuity

An annuity that guarantees income for life and the full return of the contract value.

Joint Life policy

A policy that pays benefits upon the first death of the insured individuals.

Last Survivor policy

A policy that pays benefits only upon the death of the last insured individual.

Installment Refund Annuity

An annuity that continues payments to a beneficiary after the annuitant's death until the full value is returned.

Variable Annuity

An annuity characterized by underlying equity investments.

Joint Life Annuity

An annuity providing the highest monthly income which stops when either annuitant dies.

Incontestable clause

A provision with a maximum period of $2$ years during which the insurer can challenge statements on the application.

PAR

A term most commonly referring to a participating policy.

Misrepresentation

Acts such as not disclosing surgery that can lead to a claim being denied if the insured dies within $6$ months.

Broker

A person who represents the insured in a controversy and must renew their license every $2$ years.

Agent

A person who solicits insurance on behalf of an insurer.

Replacement Free Look

A period of $30$ days given to a policyowner to review a replacement policy.

Group Term Tax Status

The first $50,000$ of group term insurance is provided tax-free.