XCEL TEXAS PRE-LICENSING
EDUCATION - LIFE AND HEALTH
INSURANCE GLOSSARY EXAM
QUESTIONS WITH COMPLETE
ANSWERS
Conversion factor - ANSWER-A stated dollar-per-point amount used to determine
benefit amounts paid for the cost of a procedure under a health insurance plan.
Conversion privilege - ANSWER-Allows the policy owner, before an original
insurance policy expires, to elect to have a new policy issued that will continue the
insurance coverage. Conversion may be effected at attained age (premiums based
on the age attained at time of conversion) or at original age (premiums based on age
at time of original issue).
Convertible term - ANSWER-Contract that may be converted to a permanent form of
insurance without medical examination.
Coordination of benefits (COB) provision - ANSWER-Designed to prevent duplication
of group insurance benefits. Limits benefits from multiple group health insurance
policies in a particular case to % of the expenses covered and designates the order
in which the multiple carriers are to pay benefits.
Corridor deductible - ANSWER-In superimposed maor medical plans, a deductible
amount between the benefits paid by the basic plan and the beginning of the major
medical benefits.
Cost of Living (COL) rider - ANSWER-A rider available with some policies that
provides for a n automatic increase in benefits (typically tied to the Consumer Price
Index), offsetting the effects of inflation.
Coverage requirements - ANSWER-Standards of coverage that prevent retirement
plans from discriminating in favor of highly compensated employees. A plan must
pass a n IRS coverage test to be considered qualified.
Credit accident and health insurance - ANSWER-If the insured debtor becomes
totally disabled due to an accident or sickness, the policy premiums are paid during
the period of disability or the loan is paid off. May be individual or group policy.
Credit life insurance - ANSWER-Usually written as decreasing term on a relatively
small decreasing balance installment loan that may reflect direct borrowing or a
balance due for merchandise purchased. If borrower dies, benefits pay balance due.
May be individual or group policy.
,Credit report - ANSWER-A summary of an insurance applicant's credit history, made
by a n independent organization that has investigated the applicant's credit standing.
Cross-purchase plan - ANSWER-An agreement that provides that upon a business
owner's death, surviving owners will purchase the deceased's interest, often with
funds from life insurance policies owned by each principal on the lives of all other
principals.
Currently insured - ANSWER-Under Social Security, a status of limited eligibility that
provides only death benefits.
Custodial care - ANSWER-Level of health or medical care given to meet daily
personal needs, such as dressing, bathing, getting out of bed, and so on. Though it
does not require medical training, it must be administered under a physician's order.
Death rate - ANSWER-Proportion of persons in each age group who die within a
year; usually expressed as so many deaths per thousand persons. (See expected
mortality)
Debit insurer - ANSWER-(See home service insurer)
Decreasing term insurance - ANSWER-Term life insurance on which the face value
slowly decreases in scheduled steps from the date the policy comes into force to the
date the policy expires, while the premium remains level. The intervals between
decreases are usually monthly or annually.
Deductible - ANSWER-Amount of expense or loss to be paid by the insured before a
health insurance policy starts paying benefits.
Deferred annuity - ANSWER-Provides for postponement of the commencement of
an annuity until after a specified period or until the annuitant attains a specified age.
May be purchased either on single-premium or flexible premium basis.
Deferred compensation plan - ANSWER-The deferral of an employee's
compensation to some future age or date. These plans are frequently used to
provide fringe benefits, such as retirement income, to selected personnel.
Defined benefit plan - ANSWER-A pension plan under which benefits are determined
by a specific benefit formula.
Defined contribution plan - ANSWER-A tax-qualified retirement plan in which annual
contributions are determined by a formula set forth in the plan. Benefits paid to a
participant vary with the amount of contributions made on the participant's behalf and
the length of service under the plan.
Delayed disability provision - ANSWER-A disability income policy provision that
allows a certain amount of time after an accident for a disability to result, and the
insured remains eligible for benefits.
,Dental insurance - ANSWER-A relatively new form of health insurance coverage
typically offered on a group basis, it covers the costs of normal dental maintenance
as well as oral surgery and root canal therapy.
Dependency period - ANSWER-Period following the death of the breadwinner up
until the youngest child reaches maturity.
Deposit term - ANSWER-Has modest endowment feature. Normally is sold for -year
terms with a higher first-year premium than for subsequent years. If policy lapses,
insured forfeits the "deposit" and receives no refund.
Disability buy-sell agreement - ANSWER-An agreement between business co-
owners that provides that shares owned by any one of them who becomes disabled
shall be sold to and purchased by the other co-owners or by the business using
funds from disability income insurance.
Disability income insurance - ANSWER-A type of health insurance coverage, it
provides for the payment of regular, periodic income should the insured become
disabled from illness or injury.
Disability income rider - ANSWER-Typically a rider to a life insurance policy, it
provides benefits in the form of income in the event the insured becomes totally
disabled.
Disability - ANSWER-Physical or mental impairment making a person incapable of
performing one or more duties of that person's occupation.
Discrimination - ANSWER-In insurance, the act of treating certain groups of people
unfairly in the sale and/or pricing of policies; treating any of a given class of risk
differently from other like risks. Discrimination is expressly prohibited in most state
insurance codes.
Dividend - ANSWER-Policy owner's share in the divisible surplus of a company
issuing insurance on the participating plan.
Dividend options - ANSWER-The different ways in which the insured under a
participating life insurance policy may elect to receive surplus earnings (in cash, as a
reduction of premium, as additional paid-up insurance, left on deposit at interest, or
as additional term insurance).
Domestic insurer - ANSWER-Company within the state in which it is chartered and in
which its home office is located.
Dread disease policy - ANSWER-(See limited risk policy)
Elimination period - ANSWER-Duration of time between the beginning of an
insured's disability and the commencement of the period for which benefits are
payable.
, Employee benefit plans - ANSWER-Plans through which employers offer employees
benefits such as coverage for medical expenses, disability, retirement, and death.
Endowment - ANSWER-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.
Endowment period - ANSWER-Period specified in an endowment policy during
which, if the insured dies, the beneficiary receives a death benefit. If the insured is
still living at the end of the endowment period, the insured receives the endowment
as a living benefit.
Enhanced whole life - ANSWER-A whole life insurance policy issued by a mutual
insurer, in which policy dividends are used to provide extra death benefits or to
reduce future premiums.
Enrollment period - ANSWER-Period during which new employees can sign up for
coverage under a group insurance plan.
Entire contract provision - ANSWER-An insurance policy provision stating that the
application and policy contain all provisions and constitute the entire contract.
Entity plan - ANSWER-An agreement in which a business assumes the obligation of
purchasing a deceased owner's interest in the business, thereby proportionately
increasing the interests of surviving owners.
Equity indexed annuity - ANSWER-A fixed deferred annuity that offers the traditional
guaranteed minimum interest rate and an excess interest feature that is based on
the performance of an external equities market index.
Errors and omissions insurance - ANSWER-Professional liability insurance that
protects an insurance producer against claims arising from service the producer
rendered or failed to render.
Estate - ANSWER-Most commonly, the quantity of wealth or property at an
individual's death.
Estate tax - ANSWER-Federal tax imposed on the value of property transferred by
an individual at death.
Estoppel - ANSWER-Legal impediment to denying the consequences of one's
actions or deeds if they lead to detrimental actions by another.
Evidence of insurability - ANSWER-Any statement or proof regarding a person's
physical condition, occupation, and so forth, affecting acceptance of the applicant for
insurance.
Examiner - ANSWER-Physician authorized by the medical director of an insurance
company to make medical examinations. Also, person assigned by a state insurance
company to audit the affairs of an insurance company.
EDUCATION - LIFE AND HEALTH
INSURANCE GLOSSARY EXAM
QUESTIONS WITH COMPLETE
ANSWERS
Conversion factor - ANSWER-A stated dollar-per-point amount used to determine
benefit amounts paid for the cost of a procedure under a health insurance plan.
Conversion privilege - ANSWER-Allows the policy owner, before an original
insurance policy expires, to elect to have a new policy issued that will continue the
insurance coverage. Conversion may be effected at attained age (premiums based
on the age attained at time of conversion) or at original age (premiums based on age
at time of original issue).
Convertible term - ANSWER-Contract that may be converted to a permanent form of
insurance without medical examination.
Coordination of benefits (COB) provision - ANSWER-Designed to prevent duplication
of group insurance benefits. Limits benefits from multiple group health insurance
policies in a particular case to % of the expenses covered and designates the order
in which the multiple carriers are to pay benefits.
Corridor deductible - ANSWER-In superimposed maor medical plans, a deductible
amount between the benefits paid by the basic plan and the beginning of the major
medical benefits.
Cost of Living (COL) rider - ANSWER-A rider available with some policies that
provides for a n automatic increase in benefits (typically tied to the Consumer Price
Index), offsetting the effects of inflation.
Coverage requirements - ANSWER-Standards of coverage that prevent retirement
plans from discriminating in favor of highly compensated employees. A plan must
pass a n IRS coverage test to be considered qualified.
Credit accident and health insurance - ANSWER-If the insured debtor becomes
totally disabled due to an accident or sickness, the policy premiums are paid during
the period of disability or the loan is paid off. May be individual or group policy.
Credit life insurance - ANSWER-Usually written as decreasing term on a relatively
small decreasing balance installment loan that may reflect direct borrowing or a
balance due for merchandise purchased. If borrower dies, benefits pay balance due.
May be individual or group policy.
,Credit report - ANSWER-A summary of an insurance applicant's credit history, made
by a n independent organization that has investigated the applicant's credit standing.
Cross-purchase plan - ANSWER-An agreement that provides that upon a business
owner's death, surviving owners will purchase the deceased's interest, often with
funds from life insurance policies owned by each principal on the lives of all other
principals.
Currently insured - ANSWER-Under Social Security, a status of limited eligibility that
provides only death benefits.
Custodial care - ANSWER-Level of health or medical care given to meet daily
personal needs, such as dressing, bathing, getting out of bed, and so on. Though it
does not require medical training, it must be administered under a physician's order.
Death rate - ANSWER-Proportion of persons in each age group who die within a
year; usually expressed as so many deaths per thousand persons. (See expected
mortality)
Debit insurer - ANSWER-(See home service insurer)
Decreasing term insurance - ANSWER-Term life insurance on which the face value
slowly decreases in scheduled steps from the date the policy comes into force to the
date the policy expires, while the premium remains level. The intervals between
decreases are usually monthly or annually.
Deductible - ANSWER-Amount of expense or loss to be paid by the insured before a
health insurance policy starts paying benefits.
Deferred annuity - ANSWER-Provides for postponement of the commencement of
an annuity until after a specified period or until the annuitant attains a specified age.
May be purchased either on single-premium or flexible premium basis.
Deferred compensation plan - ANSWER-The deferral of an employee's
compensation to some future age or date. These plans are frequently used to
provide fringe benefits, such as retirement income, to selected personnel.
Defined benefit plan - ANSWER-A pension plan under which benefits are determined
by a specific benefit formula.
Defined contribution plan - ANSWER-A tax-qualified retirement plan in which annual
contributions are determined by a formula set forth in the plan. Benefits paid to a
participant vary with the amount of contributions made on the participant's behalf and
the length of service under the plan.
Delayed disability provision - ANSWER-A disability income policy provision that
allows a certain amount of time after an accident for a disability to result, and the
insured remains eligible for benefits.
,Dental insurance - ANSWER-A relatively new form of health insurance coverage
typically offered on a group basis, it covers the costs of normal dental maintenance
as well as oral surgery and root canal therapy.
Dependency period - ANSWER-Period following the death of the breadwinner up
until the youngest child reaches maturity.
Deposit term - ANSWER-Has modest endowment feature. Normally is sold for -year
terms with a higher first-year premium than for subsequent years. If policy lapses,
insured forfeits the "deposit" and receives no refund.
Disability buy-sell agreement - ANSWER-An agreement between business co-
owners that provides that shares owned by any one of them who becomes disabled
shall be sold to and purchased by the other co-owners or by the business using
funds from disability income insurance.
Disability income insurance - ANSWER-A type of health insurance coverage, it
provides for the payment of regular, periodic income should the insured become
disabled from illness or injury.
Disability income rider - ANSWER-Typically a rider to a life insurance policy, it
provides benefits in the form of income in the event the insured becomes totally
disabled.
Disability - ANSWER-Physical or mental impairment making a person incapable of
performing one or more duties of that person's occupation.
Discrimination - ANSWER-In insurance, the act of treating certain groups of people
unfairly in the sale and/or pricing of policies; treating any of a given class of risk
differently from other like risks. Discrimination is expressly prohibited in most state
insurance codes.
Dividend - ANSWER-Policy owner's share in the divisible surplus of a company
issuing insurance on the participating plan.
Dividend options - ANSWER-The different ways in which the insured under a
participating life insurance policy may elect to receive surplus earnings (in cash, as a
reduction of premium, as additional paid-up insurance, left on deposit at interest, or
as additional term insurance).
Domestic insurer - ANSWER-Company within the state in which it is chartered and in
which its home office is located.
Dread disease policy - ANSWER-(See limited risk policy)
Elimination period - ANSWER-Duration of time between the beginning of an
insured's disability and the commencement of the period for which benefits are
payable.
, Employee benefit plans - ANSWER-Plans through which employers offer employees
benefits such as coverage for medical expenses, disability, retirement, and death.
Endowment - ANSWER-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.
Endowment period - ANSWER-Period specified in an endowment policy during
which, if the insured dies, the beneficiary receives a death benefit. If the insured is
still living at the end of the endowment period, the insured receives the endowment
as a living benefit.
Enhanced whole life - ANSWER-A whole life insurance policy issued by a mutual
insurer, in which policy dividends are used to provide extra death benefits or to
reduce future premiums.
Enrollment period - ANSWER-Period during which new employees can sign up for
coverage under a group insurance plan.
Entire contract provision - ANSWER-An insurance policy provision stating that the
application and policy contain all provisions and constitute the entire contract.
Entity plan - ANSWER-An agreement in which a business assumes the obligation of
purchasing a deceased owner's interest in the business, thereby proportionately
increasing the interests of surviving owners.
Equity indexed annuity - ANSWER-A fixed deferred annuity that offers the traditional
guaranteed minimum interest rate and an excess interest feature that is based on
the performance of an external equities market index.
Errors and omissions insurance - ANSWER-Professional liability insurance that
protects an insurance producer against claims arising from service the producer
rendered or failed to render.
Estate - ANSWER-Most commonly, the quantity of wealth or property at an
individual's death.
Estate tax - ANSWER-Federal tax imposed on the value of property transferred by
an individual at death.
Estoppel - ANSWER-Legal impediment to denying the consequences of one's
actions or deeds if they lead to detrimental actions by another.
Evidence of insurability - ANSWER-Any statement or proof regarding a person's
physical condition, occupation, and so forth, affecting acceptance of the applicant for
insurance.
Examiner - ANSWER-Physician authorized by the medical director of an insurance
company to make medical examinations. Also, person assigned by a state insurance
company to audit the affairs of an insurance company.
