South Carolina Insurance Exam Content Outlines

Comprehensive vocabulary flashcards covering the key terms, policy types, and legal concepts defined in the South Carolina Insurance content outlines for both Life/Health and Property/Casualty lines.

Ordinary whole life

A traditional whole life product that provides death benefit protection for the insured's entire life with level premiums and a growing cash value.

Universal life

An interest-sensitive, adjustable life insurance product that offers flexible premiums and a face amount that can be changed by the policy owner.

Joint life

A combination life insurance plan that covers two or more lives and pays the death benefit upon the occurrence of the first death.

Survivorship life

A combination life insurance plan, also known as 'second to die,' that covers two or more lives and pays the death benefit only upon the last death.

Waiver of premium

A policy rider that excuses the policy owner from paying premiums if the insured becomes totally disabled.

Incontestability

A policy provision that prevents the insurer from denying a claim based on statements in the application after the policy has been in force for a specific period (usually 2 years).

Modified Endowment Contract (MEC)

A life insurance policy that fails the 7-pay test and loses some of its tax advantages regarding distributions and loans.

Domestic insurer

An insurance company that is incorporated and formed under the laws of South Carolina.

Foreign insurer

An insurance company that is incorporated under the laws of another state within the United States.

Alien insurer

An insurance company that is incorporated under the laws of a country outside of the United States.

Admitted insurer

An insurance company that has received a certificate of authority from the South Carolina Department of Insurance to transact business in the state.

Contract of Adhesion

A unique aspect of insurance contracts where the insurer prepares the contract and the insured Must accept it 'as is,' with any ambiguities usually resolved in favor of the insured.

Aleatory contract

A contract type where the values exchanged are not equal; the premium paid is much less than the potential benefit received upon a loss.

Pure Risk

A type of risk that involves only the possibility of loss or no loss, with no chance for gain.

Speculative Risk

A type of risk that involves the possibility of gain or loss; typically not insurable.

Moral Hazard

A hazard arising from the character, tendencies, or dishonesty of the insured, such as filing a fraudulent claim.

Morale Hazard

A hazard resulting from the insured's indifference to loss or carelessness because insurance exists to cover the damage.

Physical Hazard

A tangible condition or structural feature of an item that increases the likelihood of a loss, such as faulty wiring.

Actual Cash Value (ACV)

A loss valuation method generally defined as replacement cost at the time of loss minus depreciation.

Indemnity

The principle that insurance should restore the insured to the same financial position held before the loss occurred, without the opportunity for profit.

Gramm-Leach-Bliley Act (GLBA)

Federal legislation that addresses the protection of consumer privacy and the handling of non-public personal information.

COBRA

A federal law that allows employees to continue their group health insurance coverage after a qualifying event for a limited period.

Rebating

An unfair trade practice involving the offering of any inducement to purchase insurance that is not specifically stated in the policy.

Defamation

An unfair trade practice involving the making of false or maliciously critical statements about the financial condition of an insurer.

Subrogation

The legal right of an insurer to seek recovery from a third party that caused a loss to the insured after the insurer has paid the claim.

Law of Large Numbers

A principle stating that the larger the number of similar exposure units, the more accurate the prediction of future losses will be.

STOLI/IOLI

Stranger-owned or Investor-owned life insurance, where a person with no insurable interest purchases a policy on the life of another.

Vicarious Liability

A legal concept where one party is held liable for the negligent actions of another, such as an employer for an employee.

HO-3 (Special Form)

A homeowners policy providing open-perils coverage on the dwelling and named-perils coverage on personal property.

HO-4 (Contents Broad Form)

A homeowners policy designed for tenants or renters to cover personal property on a named-perils basis.