Alabama Department of Insurance Producer Examination Study Guide

Flashcards covering key insurance concepts, policy types, legal provisions, and examination details as outlined by the Alabama Department of Insurance.

Domestic Company

An insurance company incorporated in the same state in which it is conducting business.

Foreign Company

An insurance company incorporated in another state or U.S. territory rather than the one in which it is doing business.

Alien Company

An insurance company incorporated in a country outside of the United States.

Admitted Company

An insurance company authorized to conduct business in a state, also known as an authorized company.

Nonadmitted Company

An insurance company that has not been authorized to conduct business in a specific state.

Law of Large Numbers

A statistical principle used in insurance to help predict the frequency and severity of losses within a large group of similar exposure units.

Law of Agency

The legal framework that defines the relationship and powers of producers acting on behalf of an insurance company.

Conditional Receipt

A receipt provided to an applicant when the initial premium is paid at the time of application, specifying when coverage begins based on underwriting approval.

Joint Life Policy

A traditional life insurance policy that covers two or more lives and pays the death benefit upon the death of the first insured.

Survivorship Life Policy

A life insurance policy covering two or more lives that pays the death benefit only upon the death of the last insured.

Variable Universal Life

A flexible feature life policy that includes both the characteristics of universal life insurance and the investment options found in variable life insurance.

Incontestable Clause

A policy provision that prevents the insurance company from voiding a policy due to misstatements in the application after it has been in force for a specific period.

Free Look

A provision that allows the policyowner a specified number of days to review a new policy and return it for a full premium refund if they are not satisfied.

Viatical Settlement

An agreement where a life insurance policyowner sells their policy to a third party for a percentage of the death benefit, usually when the insured is terminally ill.

Accelerated (Living) Benefit Options

Policy provisions that allow an insured person to access a portion of their life insurance death benefit while still alive if they meet certain criteria, such as a terminal illness.

Nonforfeiture Options

The choices available to a policyowner for the use of the cash value in a permanent life insurance policy if the policy is surrendered or the premiums are no longer paid.

Settlement Options

The different methods by which a life insurance death benefit or annuity proceeds can be distributed to the beneficiary or owner.

Waiver of Premium Rider

A policy rider that relieves the insured from paying premiums if they become totally disabled for a specific amount of time.

OASDI

The acronym for Social Security, standing for Old-Age, Survivors, and Disability Insurance.

Medicare Supplement Policies (MSP)

Private insurance policies designed to cover the gaps in coverage left by original Medicare.

COBRA

The Consolidated Omnibus Budget Reconciliation Act, which addresses the portability and continuation of group health insurance coverage.

HIPAA

The Health Insurance Portability and Accountability Act, which sets standards for health insurance portability and required provisions.

Insurance Commissioner

The Alabama official responsible for powers, duties, investigations, and hearings regarding the administration of insurance laws.

Domestic Abuse Protection Act

An Alabama-specific insurance law intended to protect individuals from discrimination or adverse actions by insurers based on their status as a victim of domestic abuse.

Combined L&H Exam Maximum Time

$180$ minutes allowed to complete the examination.

Minimum Passing Score (L&H Exam)

A minimum of $105$ correct questions out of $150$.