Life Insurance Study Notes

These flashcards cover key vocabulary and concepts relevant to life insurance and regulations as outlined in the lecture notes.

Risk

Uncertainty or chance of loss.

Insurable Interest

A valid legal purpose requiring that the person buying insurance must face financial loss.

Reinsurance

Agreement where companies share risks between one another.

Law of Large Numbers

The assumption that as the number of insured units increases, the predictability of loss improves.

Indemnity Principle

The insured should be restored to the same financial condition as prior to the loss.

Admitted Insurer

An insurer that has been approved and licensed by the insurance department.

Non-Admitted Insurer

An insurer that is not licensed to transact business in a particular state.

Morbidity Units

Measures related to the incidence of disease or injury.

Mortality Units

Measures related to the incidence of death.

Fiduciary Responsibility

The trust to collect and receive premiums for behalf of the insurer.

Underwriter

A person or entity that evaluates and assumes the risk of an insurance application.

Apparent Authority

Authority that is not formally granted but is assumed by clients based on the producer's actions.

Field Underwriter

A producer who directly interacts with applicants and assesses risks.

Grace Period

The time allowed after the due date to pay premiums without penalties.

Contestability Period

The time frame in which the insurer can challenge statements made on an application.

Rider

An addition or amendment to an insurance policy that changes its terms or coverage.

Premium

The amount paid for an insurance policy.

Annuity

A financial product that provides a stream of income, typically for retirement.

Whole Life Insurance

A type of permanent life insurance policy that remains in effect for the insured's whole life and has a cash value component.

Term Insurance

A type of insurance that provides coverage for a specific period of time.

Accidental Death Rider

A rider that pays double the face amount if the insured dies from an accident.

Tax Sheltered Annuities

Retirement plans that grow tax-deferred, typically for employees of non-profit organizations.

Universal Life Insurance

A flexible premium, adjustable life insurance policy that includes a cash value component.

Viatical Settlement

A financial transaction where a terminally ill policy owner sells their policy for a percentage of the face value.