life lash cards

401k plan

A qualified retirement plan in which the employee can set side a portion of their income with pre-tax dollars

Absolute Assignment

A permanent and irrevocable transfer of rights and/ benefits by the policy owner

collateral assignment

A temporary and/or revocable transfer of benefits by the policyowner

accelerated death benefit

policy provision that allows full or partial payment of the policy’s death benefit before the insureds death if he/she is terminally ill.

accidental death benefit

an extra cost rider that requires the insurance company to pay an additional benefit in the event of that the insured dies within 90 days of the accident as a direct result of the accident

accumulate at interest

the dividend option where the policyowner leaves the dividends with the insurer to invest and earn interest

adhesion

sone the insurer created all the documents of the contract, any ambiguities in the contract will be settled in favor of the insured. since the insurer wrote the contract they are stuck with it.

adverse selection

the tendency for less favorable risks to seek or continue insurance to a greater extent than more favorable risk

agency agreement or agency contract

a legal document containing the terms of the agreement between the agent and the insurance company, it clearly defines what an agent can and cannot do, how he/she will be compensated

agent authorities

expressed: power or authority specifically granted in writing to an agent by the insurance company in their agency agreement, apparent; power or authority that the public reasonably assumes an agent has based upon his/her actions, implied; power or authority that is not expressly granted by the company but that an agent can assume or that are implied he/she in order to transact insurance business

agent/producer

anyone who sells or aids in the selling of insurance. legally represents the company

agents report

aa written report from the agent submitted to the insurer along with the application disclosing what the agent knows observed or learned about the proposed insureds risks

aleatory

unequal exchange of value. one party may obtain a far greater value than the other under the contract

annual renewable term

a term life insurance contract which gives the policy owner the option to renew the policy each year without showing proof of insurability. premiums increase at each renewal

annuitant

the person that buys an annuity; may or may not be an annuity’s policyowner

annuity

a contract/policy that guarantees to pay income for a specified period of time or for the life of the annuitant, designed to prevent people from outliving their savings.

appointment

authorization of an agent/producer by an insurer to represent the company.

blackout period

the period of time between the youngest child turning 16 and the widow(er) reaching retirement age during which no social survivor benefits are paid to the surviving spouse

buy-sell agrement

business use of life insurance where partners in a business buy life insurance on eachother. they agree when one of the dies the survivors have the right to purchase the deceased partners share of the business. the death benefit from the insurance is used to finance the purchase

cash nonforfeiture option

policyowner receives a lump-sum payment of the current cash value of the policy upon surrender of the policy. the policy cannot be reinstated.

cash settlement option

upon maturity of an insurance policy the beneficiary receives a lump-sum payment of the entire policy proceeds due.

cash value

that part of an insurance policy that is the equity amount legally available to the policyowner. the cash value accumulates throughout the duration of the policy. also known as living benefit or policy savings

commissioner

public official in charge of the states department of insurance. charged with regulating the insurance industry in his/her state by enforcing the insurance laws

conditional

certain conditions must be met in order for policy to pay-out

conditional receipt

an interim insuring agreement under which the insurance company agrees to start coverage on the later of either the date of application or the date of the medical exam IF the proposed insured is found to be insurable on that date.

consideration

a necessary element of a contact; something of value exchanged for the transfer of risk. insureds consideration is payment of premiums and truthful statements on the application. insurers consideration is promises cntained in the contract

contingent beneficiary

an alter mate beneficiary designated to receive the policy proceeds in the event that the primary beneficiary dies before the insured

contributory plan

group insurance plan under which the employees contribute to the payment of premiums

noncontributory plans

a group of insurance plan in which the employer pays all the premiums for the policy

convertible term

term insurance that specifically permits “conversion’ of the policy into permanent protection without proof of insurability

decreasing term

term life insurance in which the face amount of the policy decreases over time in scheduled steps. most often used to cover a debt obligation (mortgage)

dividends

distributions paid out by insurance companies stock insurers pay dividends (portion of profit) to stockholders and they are taxable. mutual insurers pay dividends (return of unneeded premiums) to policyowners and they are not taxable. dividends are never guaranteed

equity indexed annuity

the annuity that has a guaranteed minimum rate and allows the annuitant to invest money in a index(i.e; S&P 500). the investments grow as the index grows

estoppel

legally preventing someone from asserting or reasserting a known right that they have previously waived

extended term insurance

nonforfeiture option where cash value is used to make a single preimum payment on a term insurance policy of the same face amount as the original policy, orignal policy can be reinstaed

face amount

amount payable in the event of death of the insured. also called face value, death benefit, policy proceeds, coverage, stated amount, indemnity amount or proceeds to the beneficiary.

facultative reinsurance

transferring risk from one insurance company to another on a policy-by-policy basis

treaty reinsurance

transferring risk from one insurance company to another under a blanket agreement

fair credit reporting act

a federal law that protects consumers in regard to their credit history. establishes guidelines for companies can access consumers credit reports and what type of reports and what type of disclosures and notifications are required

financial needs approach

in determining how much life insurance is needed the needs of the surviving family are the focus. using needs analysis worksheets, an amount is determined to meet the needs of the surviving family regardless of the earnings of the insured

fixed amount annuity

a life annuity that guarantees a fixed dollar payment at regular intervals during the lifetime of the annuitant

fixed amount settlement option

upon maturity of an insurance policy the beneficiary receives periodic payments of a set dollar amount from the policy proceeds

fixed period settlement option

upon maturity of an insurance policy the beneficiary receives income from the policy proceeds for a stated period of time

free look provision

a policy provision required by state law that establishes a set number of days (usually 10) for the policy owner to review a newly issued policy. the policy owner may return the policy to the insurer during this time for any reason and receive a 100% refund. also known as refund provision, exchange provision, or right to examine

general account

contains the regulated, or guaranteed, funds of an insurance company.

seperate account

contains the investments of an insurance company. these investments have no guaranteed rate of return are regulated by the SEC and NASD

grace period

a prescribed period of time during which the policy stays in force without the payment of premiums. mandated by state law and is usually 30 or 31 days.

graded premium policy

premiums for the policy increase regularly for 5 to 20 years and then level off. death benefit remains level

group insurance

an insurance policy that covers multiple people (who have a common interest) a master policy is issued to the policy owner and individual insured receive certifications of insurance

guaranteed insurability rider

optional rider that enables the policyowner to purchase additional amounts of coverage at pre-determined times without proof insurability

guaranty association

a state mandated association of all insurance companies desinged to protect consumers from impaired or insolvent companies

hazard

anything that increases the likelihood that a loss will occur ( faulty writing)

human life value approach

in determining how much life insurance is needed the workers annual earnings are multiplied by the number of years remaining until he/she retires. from the resulting figure taxes and expenses are subtracted

immediate annuity

a life annuity contract where the first pay-out is made in the first 12 months after it is purchased. can only be purchased with a single premium/lump-sum payment

deferred annuity

a life annuity contract where the first pay-out is made 12 months after it is purchased with either a single premium or with continuous premium payments

incontestable clause

a state mandated provision that limits the amount of time that an insurer can rescind a policy or contest a claim due to misrepresentation or concealment

indemnify

to make financially whole again ; restore to the condition enjoyed before a loss was suffered; to replace what was lost. insurance is not designed for parties to profit from a loss

individual retirement account (IRA)

a qualified retirement plan for any indivdual with earned income

insurable intrest

a financial interest in the life f another person. in a position to loose something of value if the insured should die

insurer/principal

the insurance company; underwrites the policy and assume the risk

insurer clause

the heart of an insurance policy. it contains the companies promise to the policyowner and describes the coverage provided and the policy limits

interest settlement option

upon maturity of an insurance policy the beneficiary receives periodic payments of the interest earned from the companies investments of the policy

joint and survivor annuity

an annuity that makes payments to two or more annuitants throughout their lifetimes. payments normally reduce at the death of each annuitant and stop all together upon the death of the last annuitant

keogh plan (HR10)

a qualified retirement plan for self-employed people and their eligible employees. contributions are tax deductible and interest earned is deferred until withdrawn.

lapsed policy

a policy that is no longer in force due to unpaid premiums. also known as forfeit, surrender, cancel or terminate

law of agency

the actions of an agent/producer within the scope of the authority granted to him/her by the insurer become the actions of the company

law of large numbers

states that larger numbers of similar risks grouped together become more accurately predictable

level term insurance

term insurance where the face value of the policy remains the same from the date the policy is issued until the date the policy expires

license

documentation issued by a states department of insurance to an individual verifying that he/she is qualified to engage in the insurance business

life annuity with period certain

a life annuity that guarantees to provide income payments for minimum period of time or life. payments will continue to a beneficiary should the annuitant die during the specified period

life income settlement option

upon maturity of an insurance policy, the policy proceeds are used to purchase an immediate life annuity payable in periodic payments to the beneficiary for the rest of his/her life

life annuity/straight life annuity

upon maturity of annuity contract the annuitant elects to receive fixed periodic payments for the rest of his/her life

medical information bureau

an organization that stores information from insurance companies and makes it available to other companies during the under writing process. Its purpose is to help prevent fraud and concealment by insurance applicants

modified endowment contract(MEC)

any cash value policy that builds cash value faster that a seven-pay whole life contract and therefore loses the tax advantages of life insurance

modified life policy

whole life insurance with reduced premiums during the initial years and higher premiums during the later years. can be structured as term insurance during the initial years and changing to whole life in the later years

nonforfeiture options

these options avaliable by law to policyowners that enable them to recover a policys cash-value upon surrender of that policy (1) cash (2) reduced paid-up insurance (3) extended term insurance

non-qualified retirement plan

a retirement that does not qualify for special tax treatment by he IRS

participating company

also known as a mutal company, returns unused premiums in the form of a policy dividend to the policy owners

payor rider

optional rider that costs extra and will pay the premiums of a juvenile policy if the owner dies o becomes disabled

peril

the causes of a loss (fire)

policy loan provision

describes the conditions by which a policyowner can borrow from the policy’s cash value

policy owner

the person in an insurance contract that has all the rights contained in the policy; designated on the application and may or may not be the insured

policy payment methods

continuous premium; insurance or annuity that is paid for continuously

proof of insurability

a statement about or evidence of a persons physical and/or mental health, personal character, occupation, living habits etc; used by the insurance company in assessing whether to accept the persons risk