LOMA 281 Questions and Answers Verified
by Experts
cash dividend option Correct Ans-A policy dividend option under which the insurance
company sends the policyowner a check in the amount of the policy dividend that was declared.
cash payment nonforfeiture option Correct Ans-A cash value life insurance policy
nonforfeiture option under which the policyowner discontinues premium payments and receives
the policy's cash surrender value in a lump-sum payment.
cash surrender value Correct Ans-The amount of the cash value that a policyowner is entitled
to receive upon surrender of the policy.
cash value Correct Ans-The savings element of a cash value life insurance policy, which
represents the policyowner's ownership interest in the policy.
cash value life insurance Correct Ans-Life insurance that provides insurance coverage
throughout the insured's lifetime and provides a savings element, known as the cash value.
Sometimes known as permanent life insurance.
,certificate of authority Correct Ans-A document that grants an insurer the right to conduct an
insurance business and sell insurance products in the jurisdiction that grants the certificate. Also
known as a license.
certificate of insurance Correct Ans-A document that describes the coverage that the group
insurance contract provides and a group insured's rights under the contract.
children's insurance rider Correct Ans-A supplemental life insurance policy benefit that
provides term life insurance coverage on the insured's children.
class designation Correct Ans-A beneficiary designation that identifies a certain group of
persons, rather than naming each person.
closed contract Correct Ans-A contract for which only those terms and conditions that are
printed in—or attached to—the contract are considered to be part of the contract.
cognitive impairment Correct Ans-In long-term care (LTC) insurance underwriting, a mental
incapacity that prevents a person from performing activities of daily living (ADLs) or from
living safely. See also activities of daily living.
,coinsurance Correct Ans-An expense participation requirement imposed by many medical
expense plans; the requirement generally is a specified percentage of all allowable expenses that
remain after the insured has paid the deductible and that must be paid by the insured.
collateral assignment Correct Ans-A temporary assignment of the monetary value of a life
insurance policy as collateral—or security—for a loan. Contrast with absolute assignment.
community-property state Correct Ans-A U.S. state in which, by law, each spouse is entitled to
an equal share of the income earned by the other and, under most circumstances, to an equal
share of the property acquired by the other during the marriage.
commutative contract Correct Ans-A contract under which the parties specify in advance the
values that they will exchange; moreover, the parties generally exchange items or services that
they think are of relatively equal value.
compound interest Correct Ans-Interest on both the principal and the accrued interest.
, compounding Correct Ans-Calculating an interest amount on both the principal and the
accrued interest.
conditional promise Correct Ans-A promise to perform a stated act if a specified, uncertain
event occurs; if the event does not occur, the promise will not be performed.
consideration Correct Ans-A requirement for the formation of a valid contract that is met
when each party gives or promises something that is of value to the other party.
consolidation Correct Ans-The combining of financial services institutions primarily through
mergers and acquisitions. Consolidation results in fewer traditional financial services institutions.
consumer-driven health plan Correct Ans-An employer-sponsored health benefit plan that
gives individuals the freedom to choose health care providers and benefits, but also requires
them to assume the financial risk for their choices.
contingent beneficiary Correct Ans-The party named to receive the policy proceeds if the
primary beneficiary should die before the insured. Sometimes referred to as a secondary
beneficiary or successor beneficiary.
by Experts
cash dividend option Correct Ans-A policy dividend option under which the insurance
company sends the policyowner a check in the amount of the policy dividend that was declared.
cash payment nonforfeiture option Correct Ans-A cash value life insurance policy
nonforfeiture option under which the policyowner discontinues premium payments and receives
the policy's cash surrender value in a lump-sum payment.
cash surrender value Correct Ans-The amount of the cash value that a policyowner is entitled
to receive upon surrender of the policy.
cash value Correct Ans-The savings element of a cash value life insurance policy, which
represents the policyowner's ownership interest in the policy.
cash value life insurance Correct Ans-Life insurance that provides insurance coverage
throughout the insured's lifetime and provides a savings element, known as the cash value.
Sometimes known as permanent life insurance.
,certificate of authority Correct Ans-A document that grants an insurer the right to conduct an
insurance business and sell insurance products in the jurisdiction that grants the certificate. Also
known as a license.
certificate of insurance Correct Ans-A document that describes the coverage that the group
insurance contract provides and a group insured's rights under the contract.
children's insurance rider Correct Ans-A supplemental life insurance policy benefit that
provides term life insurance coverage on the insured's children.
class designation Correct Ans-A beneficiary designation that identifies a certain group of
persons, rather than naming each person.
closed contract Correct Ans-A contract for which only those terms and conditions that are
printed in—or attached to—the contract are considered to be part of the contract.
cognitive impairment Correct Ans-In long-term care (LTC) insurance underwriting, a mental
incapacity that prevents a person from performing activities of daily living (ADLs) or from
living safely. See also activities of daily living.
,coinsurance Correct Ans-An expense participation requirement imposed by many medical
expense plans; the requirement generally is a specified percentage of all allowable expenses that
remain after the insured has paid the deductible and that must be paid by the insured.
collateral assignment Correct Ans-A temporary assignment of the monetary value of a life
insurance policy as collateral—or security—for a loan. Contrast with absolute assignment.
community-property state Correct Ans-A U.S. state in which, by law, each spouse is entitled to
an equal share of the income earned by the other and, under most circumstances, to an equal
share of the property acquired by the other during the marriage.
commutative contract Correct Ans-A contract under which the parties specify in advance the
values that they will exchange; moreover, the parties generally exchange items or services that
they think are of relatively equal value.
compound interest Correct Ans-Interest on both the principal and the accrued interest.
, compounding Correct Ans-Calculating an interest amount on both the principal and the
accrued interest.
conditional promise Correct Ans-A promise to perform a stated act if a specified, uncertain
event occurs; if the event does not occur, the promise will not be performed.
consideration Correct Ans-A requirement for the formation of a valid contract that is met
when each party gives or promises something that is of value to the other party.
consolidation Correct Ans-The combining of financial services institutions primarily through
mergers and acquisitions. Consolidation results in fewer traditional financial services institutions.
consumer-driven health plan Correct Ans-An employer-sponsored health benefit plan that
gives individuals the freedom to choose health care providers and benefits, but also requires
them to assume the financial risk for their choices.
contingent beneficiary Correct Ans-The party named to receive the policy proceeds if the
primary beneficiary should die before the insured. Sometimes referred to as a secondary
beneficiary or successor beneficiary.
