LOMA 281 Exam 2025 Questions
and Answers
401(k) plan - ✔✔In the United States, a type of retirement plan that allows employees
to make contributions on a pre-tax basis.
absolute assignment - ✔✔An assignment of a life insurance policy under which the
policyowner transfers all policy ownership rights to the assignee. Contrast with
collateral assignment.
accelerated death benefit - ✔✔A supplemental life insurance policy benefit which
provides that a policyowner may elect to receive all or part of the policy's death benefit
before the insured's death if certain conditions are met. Also known as a living benefit.
accidental death and dismemberment (AD&D) benefit - ✔✔A supplemental life
insurance policy benefit that provides an accidental death benefit and provides a
dismemberment benefit payable to the insured if an accident causes the insured to lose
any two limbs or the sight in both eyes.
accidental death benefit - ✔✔A supplemental life insurance policy benefit that provides
a death benefit in addition to the policy's basic death benefit if the insured dies as a
result of an accident.
accumulation at interest dividend option - ✔✔A policy dividend option under which
the policy dividends are left on deposit with the insurer to accumulate at interest.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,accumulation period - ✔✔The period between the contract owner's purchase of a
deferred annuity and the beginning of the payout period.
accumulation value - ✔✔During a deferred annuity's accumulation period, the amount
paid for the deferred annuity, plus the investment earnings, minus the amount of any
withdrawals and fees.
actively-at-work provision - ✔✔A group insurance policy provision which states that,
in order to be eligible for coverage, an employee must be actively at work—rather than
ill or on leave—on the day the insurance coverage is to take effect.
activities of daily living (ADLs) - ✔✔The activities of eating, bathing, dressing,
continence, toileting, or transferring into or out of a bed, chair, or wheelchair.
actuary - ✔✔An expert in financial risk management and the mathematics and
modeling of insurance, annuities, and financial instruments.
additional term insurance dividend option - ✔✔A policy dividend option under which
the insurer uses each policy dividend as a net single premium to purchase one-year
term insurance on the insured's life.
Affordable Care Act (ACA) - ✔✔In the U.S., a law that requires insurance companies to
accept all applicants for medical expense coverage and restricts insurers from basing
premium rates on preexisting conditions.
aleatory contract - ✔✔A contract under which one party provides something of value to
another party in exchange for a conditional promise.
annuitant - ✔✔The person whose lifetime is used to determine the amount of benefits
payable under an annuity contract.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,annuity - ✔✔A financial product under which an insurer promises to make a series of
periodic payments to a named person or entity in exchange for a premium or series of
premiums.
annuity contract - ✔✔A contract under which an insurer promises to make a series of
periodic payments to a named individual in exchange for a premium or a series of
premiums.
annuity period - ✔✔The time span between each of the payments in the series of
periodic income payments .
antiselection - ✔✔The tendency of individuals who believe they have a greater-than-
average likelihood of loss to seek insurance protection to a greater extent than do other
individuals.
asset - ✔✔An item of value that a company owns. Examples of assets include cash,
buildings, and investments.
assignee - ✔✔The party to whom life insurance property rights are transferred.
assignment - ✔✔An agreement under which an insurance policyowner transfers some
or all of his ownership rights in the policy to another party.
assignment provision - ✔✔A life insurance policy provision which describes the roles of
the insurer and the policyowner when the policy is assigned.
assignor - ✔✔The policyowner who makes an assignment of a life insurance policy.
attained age - ✔✔The age an insured has reached (attained) on a specified date.
attained age conversion - ✔✔A conversion of a term life insurance policy to a cash value
life insurance policy in which the premium rate for the cash value policy is based on the
insured's age at the time the policy is converted. Contrast with original age conversion.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, automatic dividend option - ✔✔A specified policy dividend option that the insurer will
apply if a policyowner does not choose an option.
automatic nonforfeiture benefit - ✔✔A specific nonforfeiture benefit that becomes
effective automatically when a renewal premium for a cash value life insurance policy
is not paid by the end of the grace period and the policyowner has not elected another
nonforfeiture option.
automatic premium loan option - ✔✔A cash value life insurance policy nonforfeiture
option under which the insurer will automatically pay an overdue premium for the
policyowner by making a loan against the policy's cash value as long as the cash value
equals or exceeds the amount of the premium due.
back-end sales charge - ✔✔An amount charged to an annuity contract owner when
money is withdrawn from a contract. Also known as surrender charge.
bargaining contract - ✔✔A contract in which both parties, as equals, set the terms and
conditions of the contract.
benefit period - ✔✔The time during which the insurer agrees to pay income benefits to
the insured under a disability income or long-term care insurance policy.
benefit schedule - ✔✔A schedule included in a group life insurance policy that defines
the amount of life insurance the policy provides for each insured.
benefit trigger - ✔✔A long-term care insurance policy requirement specifying the
conditions that establish an insured's eligibility to receive long-term care benefits.
bilateral contract - ✔✔A contract in which both parties make legally enforceable
promises when they enter into the contract.
block of policies - ✔✔A group of policies issued to insureds who are all the same age,
the same sex, and in the same risk classification.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
and Answers
401(k) plan - ✔✔In the United States, a type of retirement plan that allows employees
to make contributions on a pre-tax basis.
absolute assignment - ✔✔An assignment of a life insurance policy under which the
policyowner transfers all policy ownership rights to the assignee. Contrast with
collateral assignment.
accelerated death benefit - ✔✔A supplemental life insurance policy benefit which
provides that a policyowner may elect to receive all or part of the policy's death benefit
before the insured's death if certain conditions are met. Also known as a living benefit.
accidental death and dismemberment (AD&D) benefit - ✔✔A supplemental life
insurance policy benefit that provides an accidental death benefit and provides a
dismemberment benefit payable to the insured if an accident causes the insured to lose
any two limbs or the sight in both eyes.
accidental death benefit - ✔✔A supplemental life insurance policy benefit that provides
a death benefit in addition to the policy's basic death benefit if the insured dies as a
result of an accident.
accumulation at interest dividend option - ✔✔A policy dividend option under which
the policy dividends are left on deposit with the insurer to accumulate at interest.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,accumulation period - ✔✔The period between the contract owner's purchase of a
deferred annuity and the beginning of the payout period.
accumulation value - ✔✔During a deferred annuity's accumulation period, the amount
paid for the deferred annuity, plus the investment earnings, minus the amount of any
withdrawals and fees.
actively-at-work provision - ✔✔A group insurance policy provision which states that,
in order to be eligible for coverage, an employee must be actively at work—rather than
ill or on leave—on the day the insurance coverage is to take effect.
activities of daily living (ADLs) - ✔✔The activities of eating, bathing, dressing,
continence, toileting, or transferring into or out of a bed, chair, or wheelchair.
actuary - ✔✔An expert in financial risk management and the mathematics and
modeling of insurance, annuities, and financial instruments.
additional term insurance dividend option - ✔✔A policy dividend option under which
the insurer uses each policy dividend as a net single premium to purchase one-year
term insurance on the insured's life.
Affordable Care Act (ACA) - ✔✔In the U.S., a law that requires insurance companies to
accept all applicants for medical expense coverage and restricts insurers from basing
premium rates on preexisting conditions.
aleatory contract - ✔✔A contract under which one party provides something of value to
another party in exchange for a conditional promise.
annuitant - ✔✔The person whose lifetime is used to determine the amount of benefits
payable under an annuity contract.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,annuity - ✔✔A financial product under which an insurer promises to make a series of
periodic payments to a named person or entity in exchange for a premium or series of
premiums.
annuity contract - ✔✔A contract under which an insurer promises to make a series of
periodic payments to a named individual in exchange for a premium or a series of
premiums.
annuity period - ✔✔The time span between each of the payments in the series of
periodic income payments .
antiselection - ✔✔The tendency of individuals who believe they have a greater-than-
average likelihood of loss to seek insurance protection to a greater extent than do other
individuals.
asset - ✔✔An item of value that a company owns. Examples of assets include cash,
buildings, and investments.
assignee - ✔✔The party to whom life insurance property rights are transferred.
assignment - ✔✔An agreement under which an insurance policyowner transfers some
or all of his ownership rights in the policy to another party.
assignment provision - ✔✔A life insurance policy provision which describes the roles of
the insurer and the policyowner when the policy is assigned.
assignor - ✔✔The policyowner who makes an assignment of a life insurance policy.
attained age - ✔✔The age an insured has reached (attained) on a specified date.
attained age conversion - ✔✔A conversion of a term life insurance policy to a cash value
life insurance policy in which the premium rate for the cash value policy is based on the
insured's age at the time the policy is converted. Contrast with original age conversion.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, automatic dividend option - ✔✔A specified policy dividend option that the insurer will
apply if a policyowner does not choose an option.
automatic nonforfeiture benefit - ✔✔A specific nonforfeiture benefit that becomes
effective automatically when a renewal premium for a cash value life insurance policy
is not paid by the end of the grace period and the policyowner has not elected another
nonforfeiture option.
automatic premium loan option - ✔✔A cash value life insurance policy nonforfeiture
option under which the insurer will automatically pay an overdue premium for the
policyowner by making a loan against the policy's cash value as long as the cash value
equals or exceeds the amount of the premium due.
back-end sales charge - ✔✔An amount charged to an annuity contract owner when
money is withdrawn from a contract. Also known as surrender charge.
bargaining contract - ✔✔A contract in which both parties, as equals, set the terms and
conditions of the contract.
benefit period - ✔✔The time during which the insurer agrees to pay income benefits to
the insured under a disability income or long-term care insurance policy.
benefit schedule - ✔✔A schedule included in a group life insurance policy that defines
the amount of life insurance the policy provides for each insured.
benefit trigger - ✔✔A long-term care insurance policy requirement specifying the
conditions that establish an insured's eligibility to receive long-term care benefits.
bilateral contract - ✔✔A contract in which both parties make legally enforceable
promises when they enter into the contract.
block of policies - ✔✔A group of policies issued to insureds who are all the same age,
the same sex, and in the same risk classification.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
