Life and Health Insurance Exam
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1. Concept of insurance The transfer of risk from one party to another through a legal contract.
2. Law of Large Num- The larger the number of risks insured in the same risk pool; the more
bers predictable losses become.
3. Peril An immediate, specific event that causes a loss.
4. Loss An unintended, unforeseen reduction, or destruction of financial or eco-
nomic value.
5. Hazard Creates an increased possibility that a peril (a cause of a loss) will actually
occur.
6. Occurrence Is any event that causes a loss.
7. Risk Risk is defined as thepotential or uncertainty for loss.
8. Speculative risk A situation in which either profit or loss is possible, not insured.
9. Industrial life insur- Issues very small face amounts, such as $1,000 or $2,000. Premiums are
ance paid weekly and collected by debit agents. They were designed for burial
coverage.
10. Ordinary life insur- Life insurance of commercial companies not issued on the weekly premium
ance basis. It is made up of several types of individual life insurance, such as
temporary (term), permanent (whole).
11. Group life insurance Insurance written for members of a group, such as a place of employment,
association, or a union. Coverage is provided to the members of that group
under one master contract. The group is underwritten as a whole, not on
each individual member. One of the benefits of group life coverage is usually
there is no evidence of insurability required.
12. Term life insurance
, Life and Health Insurance Exam
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Life insurance that pays a death benefit if the policyholder dies within a
specific time period but has no remaining value at the end of this time.
13. Whole life insurance Sometimes called straight life insurance or ordinary life insurance; can
provide lifetime insurance coverage; in this case, fixed premiums are paid
for life; pays interest on the cash value portion with a guaranteed minimum
interest rate during life of the contract.
14. Joint survivor or last Cover the lives of two individuals and saves on premium costs by averaging
survivor life policies the ages of the two insureds. Joint Life Survivor or Last Survivor policies
only pay the death benefit upon the death of the last insured person. For
example, say B and M purchase a joint life survivor policy. If B were to die
first and then M died 10 years later, no benefits would be paid out from the
policy until M died. A Joint Life and Survivor policy covers two lives but only
pays benefits after the death of the last insured.
15. Family maintenance Pays a monthly income from the date of death of the insured to the end of
policy the preselected period.
16. Family income policy Combines Whole Life insurance with a Decreasing Term
Rider also written on the same person.
17. Adjustable life policy Whole life insurance policy, but you can change your policy as your needs
change. You can change your premium payments to increase or decrease
coverage.
18. Universal life insur- Incorporates flexible premiums and an adjustable death benefit. The invest-
ance policy ment gains from a Universal Life Policy usually go toward the cash value. The
policy owner can use the cash value to manipulate the flexible aspects of a
universal life insurance policy. A customer who wants a policy that gives them
the most options and the most control would be looking for a Universal Life
Policy. Universal policies use gains to fund the cash value and give the policy
owner options for flexible premiums and adjustable death benefits.
, Life and Health Insurance Exam
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19. Variable Life Insur- Life insurance in which the benefits are a function of the returns being
ance generated on the investments selected by the policyholder.
20. Equity index univer- Combines most of the features, benefits, and security of traditional life insur-
sal life insurance ance with the potential of earned interest based on the upward movement
of an equity index.
21. Cash value The equity amount or "savings" accumulation in a whole life policy.
22. Endowment policy Is a contract providing for payment of the face amount at the end of a fixed
period, at a specified age of the insured, or at the insured's death before
the end of the stated period.
23. Face amount plus Contract that promises to pay at the insured's death the face amount of the
cash value policy policy plus a sum equal to the policy's cash value.
24. Juvenile Insurance Written on the lives of children who are within specified age limits and
generally under parental control.
25. Non-medical life in- Typically does not require a medical exam and tends to be more expensive
surance than medically underwritten policies. The insurer will average out everyone's
risk and charge accordingly. Although insurers typically will not require a
medical exam, they will still inquire about the applicant's medical history and
lifestyle.
26. Target premium Is a suggested premium used in Universal Life policies. It does not guaran-
tee there will be adequate funds to maintain the policy to any time, especially
to life. It may give an indication of what will be needed (under conservative
estimates), to maintain the policy.
27. Accidental death Pays a multiple of the death proceeds if the cause of death is a covered
benefit rider accidental event.
28.
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1. Concept of insurance The transfer of risk from one party to another through a legal contract.
2. Law of Large Num- The larger the number of risks insured in the same risk pool; the more
bers predictable losses become.
3. Peril An immediate, specific event that causes a loss.
4. Loss An unintended, unforeseen reduction, or destruction of financial or eco-
nomic value.
5. Hazard Creates an increased possibility that a peril (a cause of a loss) will actually
occur.
6. Occurrence Is any event that causes a loss.
7. Risk Risk is defined as thepotential or uncertainty for loss.
8. Speculative risk A situation in which either profit or loss is possible, not insured.
9. Industrial life insur- Issues very small face amounts, such as $1,000 or $2,000. Premiums are
ance paid weekly and collected by debit agents. They were designed for burial
coverage.
10. Ordinary life insur- Life insurance of commercial companies not issued on the weekly premium
ance basis. It is made up of several types of individual life insurance, such as
temporary (term), permanent (whole).
11. Group life insurance Insurance written for members of a group, such as a place of employment,
association, or a union. Coverage is provided to the members of that group
under one master contract. The group is underwritten as a whole, not on
each individual member. One of the benefits of group life coverage is usually
there is no evidence of insurability required.
12. Term life insurance
, Life and Health Insurance Exam
Study online at https://quizlet.com/_d0tadf
Life insurance that pays a death benefit if the policyholder dies within a
specific time period but has no remaining value at the end of this time.
13. Whole life insurance Sometimes called straight life insurance or ordinary life insurance; can
provide lifetime insurance coverage; in this case, fixed premiums are paid
for life; pays interest on the cash value portion with a guaranteed minimum
interest rate during life of the contract.
14. Joint survivor or last Cover the lives of two individuals and saves on premium costs by averaging
survivor life policies the ages of the two insureds. Joint Life Survivor or Last Survivor policies
only pay the death benefit upon the death of the last insured person. For
example, say B and M purchase a joint life survivor policy. If B were to die
first and then M died 10 years later, no benefits would be paid out from the
policy until M died. A Joint Life and Survivor policy covers two lives but only
pays benefits after the death of the last insured.
15. Family maintenance Pays a monthly income from the date of death of the insured to the end of
policy the preselected period.
16. Family income policy Combines Whole Life insurance with a Decreasing Term
Rider also written on the same person.
17. Adjustable life policy Whole life insurance policy, but you can change your policy as your needs
change. You can change your premium payments to increase or decrease
coverage.
18. Universal life insur- Incorporates flexible premiums and an adjustable death benefit. The invest-
ance policy ment gains from a Universal Life Policy usually go toward the cash value. The
policy owner can use the cash value to manipulate the flexible aspects of a
universal life insurance policy. A customer who wants a policy that gives them
the most options and the most control would be looking for a Universal Life
Policy. Universal policies use gains to fund the cash value and give the policy
owner options for flexible premiums and adjustable death benefits.
, Life and Health Insurance Exam
Study online at https://quizlet.com/_d0tadf
19. Variable Life Insur- Life insurance in which the benefits are a function of the returns being
ance generated on the investments selected by the policyholder.
20. Equity index univer- Combines most of the features, benefits, and security of traditional life insur-
sal life insurance ance with the potential of earned interest based on the upward movement
of an equity index.
21. Cash value The equity amount or "savings" accumulation in a whole life policy.
22. Endowment policy Is a contract providing for payment of the face amount at the end of a fixed
period, at a specified age of the insured, or at the insured's death before
the end of the stated period.
23. Face amount plus Contract that promises to pay at the insured's death the face amount of the
cash value policy policy plus a sum equal to the policy's cash value.
24. Juvenile Insurance Written on the lives of children who are within specified age limits and
generally under parental control.
25. Non-medical life in- Typically does not require a medical exam and tends to be more expensive
surance than medically underwritten policies. The insurer will average out everyone's
risk and charge accordingly. Although insurers typically will not require a
medical exam, they will still inquire about the applicant's medical history and
lifestyle.
26. Target premium Is a suggested premium used in Universal Life policies. It does not guaran-
tee there will be adequate funds to maintain the policy to any time, especially
to life. It may give an indication of what will be needed (under conservative
estimates), to maintain the policy.
27. Accidental death Pays a multiple of the death proceeds if the cause of death is a covered
benefit rider accidental event.
28.
