Life Insurance Agent Review 4/22/26

Day 1

Life Insurance

Transfer of risk to an insurer.

Pure Risk

A risk that only results in loss.

Speculative Risk

Involves both gain and loss.

Death

Considered a peril in insurance terms.

Hazard

Condition that increases risk.

Indemnity

Restoration to original condition after a loss.

Beneficiary

Receives death benefits from a life insurance policy.

Premiums

Payments made to an insurer for coverage.

Stock Insurer

An insurer owned by shareholders.

Mutual Insurer

An insurer owned by policyholders.

Dividends

Returns of excess premium to policyholders.

Insurable Interest

Financial loss if the insured dies.

Underwriting

Evaluating risk before issuing insurance.

Adverse Selection

High-risk individuals buying more insurance.

Representations

Statements made on insurance applications.

Concealment

Withholding information in an insurance application.

Conditional Receipt

Provides temporary coverage until approval.

Preferred Risk Classification

Insured with the lowest premium due to low risk.

Substandard Risk

Risk rated higher than average.

Term Insurance

Temporary life insurance without cash value.

Level Term

Same benefit for the entire term.

Decreasing Term

Benefit decreases over time, used for mortgages.

Increasing Term

Benefit increases over time.

Renewable Term

Allows renewal without proof of insurability.

Convertible Term

Allows conversion to permanent insurance.

Whole Life Insurance

Permanent insurance with a cash value component.

Cash Value

Savings component of a whole life insurance policy.

Policy Loans

Loans taken against the cash value of a policy.

Universal Life

Insurance with flexible premiums and death benefit.

Variable Life

Insurance with market risk and no guaranteed value.

Group Insurance

No individual underwriting required.

Contributory Group Plan

Cost shared between employer and employees.

Noncontributory Plan

Employer pays all premiums.

Grace Period

Prevents policy lapse due to late payment.

Free-Look Period

Allows full refund after policy delivery.

Reinstatement

Process to restore a lapsed policy.

Incontestability Period

Limits disputes after a specified time, usually 2 years.

Revocable Beneficiary

Can be changed by the policyholder.

Irrevocable Beneficiary

Requires consent to change.

Waiver of Premium Rider

Waives premiums if the insured is disabled.

Accidental Death Rider

Increases death benefit for accidental death.

Accelerated Death Benefit

Paid out during the insured's lifetime.

Rebating

Offering benefits not included in the policy.

Twisting

Misleading replacement of one policy with another.

Misrepresentation

False statements made in the application.

Entire Contract Clause

States that the policy and application are one contract.

Insuring Clause

Insurer's promise to pay under the policy.

Consideration in Insurance

Includes both premiums and statements.

Third-Party Ownership

Owner and insured are different individuals.

Full Refund Provision

Allows refund after delivery of the policy.

Grace Period Duration

Typically lasts for 30-31 days.

Policy Lapse

Occurs if premiums are not paid after grace period.

Reinstatement Requirements

Proof of insurability and payment needed.

Incontestability Clause Limit

Limits disputes after 2 years.

Assignment of a Policy

Transferring ownership rights.

Absolute Assignment

Permanent transfer of ownership.

Collateral Assignment

Temporary transfer for securing a loan.

Misstatement of Age Effect

Adjusts death benefit based on correct age.

Standard Exclusion

Usually includes suicide within the first 2 years.

Suicide Clause Period

Typically lasts for 2 years.

Cash Surrender Option

Ends policy for cash value.

Extended Term Insurance

Same face but limited time coverage.

Reduced Paid-Up Insurance

Lower face amount, permanent insurance.

Dividend Option: Reduction of Premium

Lowers next premium payment.

Accumulation at Interest

Earns interest with the insurer.

Paid-Up Additions

Buys additional coverage.

One-Year Term Dividend Option

Temporary extra coverage.

Fixed Period Settlement Option

Payments for a set time.

Fixed Amount Settlement Option

Payments of a fixed amount.

Interest-Only Settlement

Pays interest on principal, holds principal.

COLA Rider

Increases coverage with inflation.

Guaranteed Insurability Rider

Allows additional coverage without proof.

Accelerated Death Benefit Requirements

Requires a qualifying condition like terminal illness.

Endow

To have the cash value of a whole life policy reach the contractual face amount.

Nonforfeiture Values

benefits in a life insurance policy that the policy owner cannot lose.

COBRA permits

A terminated employee to continue coverage.

How long can a temporary license be issued?

90 DAYS.