LOMA 281 ACTUAL Questions and
CORRECT Answers
401(k) plan - CORRECT ANSWER - In the United States, a type of retirement plan that
allows employees to make contributions on a pre-tax basis.
absolute assignment - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER -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 - CORRECT ANSWER - 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 - CORRECT ANSWER - A policy dividend
option under which the policy dividends are left on deposit with the insurer to accumulate at
interest.
accumulation period - CORRECT ANSWER - The period between the contract owner's
purchase of a deferred annuity and the beginning of the payout period.
accumulation value - CORRECT ANSWER - 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 - CORRECT ANSWER - 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) - CORRECT ANSWER - The activities of eating, bathing,
dressing, continence, toileting, or transferring into or out of a bed, chair, or wheelchair.
actuary - CORRECT ANSWER - An expert in financial risk management and the
mathematics and modeling of insurance, annuities, and financial instruments.
additional term insurance dividend option - CORRECT ANSWER - 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) - CORRECT ANSWER - 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 - CORRECT ANSWER - A contract under which one party provides
something of value to another party in exchange for a conditional promise.
annuitant - CORRECT ANSWER - The person whose lifetime is used to determine the
amount of benefits payable under an annuity contract.
annuity - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - The time span between each of the payments in
the series of periodic income payments .
antiselection - CORRECT ANSWER - 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 - CORRECT ANSWER - An item of value that a company owns. Examples of assets
include cash, buildings, and investments.
assignee - CORRECT ANSWER - The party to whom life insurance property rights are
transferred.
assignment - CORRECT ANSWER - An agreement under which an insurance policyowner
transfers some or all of his ownership rights in the policy to another party.
assignment provision - CORRECT ANSWER - A life insurance policy provision which
describes the roles of the insurer and the policyowner when the policy is assigned.
assignor - CORRECT ANSWER - The policyowner who makes an assignment of a life
insurance policy.
attained age - CORRECT ANSWER - The age an insured has reached (attained) on a
specified date.
attained age conversion - CORRECT ANSWER - 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.
, automatic dividend option - CORRECT ANSWER - A specified policy dividend option
that the insurer will apply if a policyowner does not choose an option.
automatic nonforfeiture benefit - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - An amount charged to an annuity contract
owner when money is withdrawn from a contract. Also known as surrender charge.
bargaining contract - CORRECT ANSWER - A contract in which both parties, as equals,
set the terms and conditions of the contract.
benefit period - CORRECT ANSWER - 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 - CORRECT ANSWER - A schedule included in a group life insurance
policy that defines the amount of life insurance the policy provides for each insured.
benefit trigger - CORRECT ANSWER - A long-term care insurance policy requirement
specifying the conditions that establish an insured's eligibility to receive long-term care benefits.
bilateral contract - CORRECT ANSWER - A contract in which both parties make legally
enforceable promises when they enter into the contract.
CORRECT Answers
401(k) plan - CORRECT ANSWER - In the United States, a type of retirement plan that
allows employees to make contributions on a pre-tax basis.
absolute assignment - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER -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 - CORRECT ANSWER - 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 - CORRECT ANSWER - A policy dividend
option under which the policy dividends are left on deposit with the insurer to accumulate at
interest.
accumulation period - CORRECT ANSWER - The period between the contract owner's
purchase of a deferred annuity and the beginning of the payout period.
accumulation value - CORRECT ANSWER - 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 - CORRECT ANSWER - 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) - CORRECT ANSWER - The activities of eating, bathing,
dressing, continence, toileting, or transferring into or out of a bed, chair, or wheelchair.
actuary - CORRECT ANSWER - An expert in financial risk management and the
mathematics and modeling of insurance, annuities, and financial instruments.
additional term insurance dividend option - CORRECT ANSWER - 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) - CORRECT ANSWER - 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 - CORRECT ANSWER - A contract under which one party provides
something of value to another party in exchange for a conditional promise.
annuitant - CORRECT ANSWER - The person whose lifetime is used to determine the
amount of benefits payable under an annuity contract.
annuity - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - The time span between each of the payments in
the series of periodic income payments .
antiselection - CORRECT ANSWER - 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 - CORRECT ANSWER - An item of value that a company owns. Examples of assets
include cash, buildings, and investments.
assignee - CORRECT ANSWER - The party to whom life insurance property rights are
transferred.
assignment - CORRECT ANSWER - An agreement under which an insurance policyowner
transfers some or all of his ownership rights in the policy to another party.
assignment provision - CORRECT ANSWER - A life insurance policy provision which
describes the roles of the insurer and the policyowner when the policy is assigned.
assignor - CORRECT ANSWER - The policyowner who makes an assignment of a life
insurance policy.
attained age - CORRECT ANSWER - The age an insured has reached (attained) on a
specified date.
attained age conversion - CORRECT ANSWER - 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.
, automatic dividend option - CORRECT ANSWER - A specified policy dividend option
that the insurer will apply if a policyowner does not choose an option.
automatic nonforfeiture benefit - CORRECT ANSWER - 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - An amount charged to an annuity contract
owner when money is withdrawn from a contract. Also known as surrender charge.
bargaining contract - CORRECT ANSWER - A contract in which both parties, as equals,
set the terms and conditions of the contract.
benefit period - CORRECT ANSWER - 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 - CORRECT ANSWER - A schedule included in a group life insurance
policy that defines the amount of life insurance the policy provides for each insured.
benefit trigger - CORRECT ANSWER - A long-term care insurance policy requirement
specifying the conditions that establish an insured's eligibility to receive long-term care benefits.
bilateral contract - CORRECT ANSWER - A contract in which both parties make legally
enforceable promises when they enter into the contract.
