Washington Life/Health Insurance Exam
/Questions & Expertly Verified Answers, 2025 /
2026.
Terms in this set (303)
policy owner usually, but not always the person covered by the policy
beneficiary the person who is paid when a claim is
submitted
agent/producer acts as a legal representative of
the insurance company
broker representative of the Insured, not the insurance company
risk The chance or uncertainty of loss
Pure risk the chance of experiencing a loss (without the possibility
of gain). Only downside, no upside.
Speculative risk s the chance of loss one accepts in the hope of realizing a
gain
Risk avoidance staying away from risky activities altogether
Risk reduction reduce the chance of something bad happening
Risk shifting Get someone else to accept the risk
Buying insurance transfer a portion of your risk to the Insurer
the individual or business that opts not to buy insurance
Risk Retention
retains the entire risk
,Indemnification an insurance concept that states that some portions of the
insurance industry prefer that we be made only whole after
a loss rather than coming out ahead (Only getting back
what you are owed, not getting more
than what you had to start with)
Subrogation the transfer to the Insurer of the Insured's rights to recover
damages from a responsible third party
Peril the cause of loss
Law of Large numbers the mathematical concept that makes it easier to predict
losses if we have a large number of Insureds
Insurable losses are... Economic, Predictable, Accidental, Measurable, Non-
Catastrophic
non-participating Stock companies that exist for the sole purpose of
companies generating profits for their stockholders
participating companies A company owned by its policy holders where the profits are
distributed among policy holders
Social Security act a guarantee that government would never again allow
workers (and their families) to become
destitute
OASDI (Social Security) Old Age, Survivors, and Disability Insurance...Federal
Government law
FICA Federal Insurance Contributions Act or FICA,
payroll taxes levied on employees, employers,
and the self-employed.
Not covered by social payroll taxes levied on employees, employers, and the
security self-employed.
,FICA Fully Insured (Worked for 10 years) payroll taxes levied on
employees, employers, and the self-employed.
Retirement Benefits;
Disability Income Benefits; and Survivor
Benefits.
Currently Insured Worked less than ten years. Only eligeable for
Survivor Benefits
Average Indexed Monthly Averages earnings over time period. Either way, the more a
Earnings worker has paid into Social Security, the more the worker
(or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount Full retirement benefit someone is entitled to at age
(PIA). 65 (some cases, 66-67)
elimination period the person must be
(Disability) disabled for 5 months before starting to receive
Disability
Benefits
underwriting the selection and classification of risks.
actuary A person who tracks the lifespan and chance of illness or
accident based on specific factors
Mortality table predict the age at which people in a given group are likely
to die (Used by life insurers)
Morbidity table predict how often people in a given group are likely to get
sick or have an
accident. (Used by health insurers)
field underwriters Insurance agents
declined risks Applicants who are too risky are declined
, Adverse selection the tendency for high risk people to be more likely to
apply for insurance than low risk people.
Premium = Risk + Expenses - Interest
Premium mode how frequently an Insured will pay the premium
Accelerated Death Benefit requires the Insurer to pay out part of the death benefit
Rider (usually 50%) if the Insured has a diagnosis of a
particular illness likely to cause death within 12
months
Viatical Settlements sell the policy to an investment company that will continue to
make the premium payments and collect the death benefit
when the Insured dies. The Insured will sell only if an
investment company will pay more than the current cash
surrender value.
Group Policies share these Reduced Cost;
three characteristics Reduced Adverse Selection; and Fixed
Benefits.
Adverse selection people who need
insurance the most are the ones most likely to buy it and
buy more of it causing more loss claims
experience rating looks at the claims history for this
particular group. Experience rating puts
the burden for high premiums (and the
credit for low ones) squarely on the
shoulders of the group, because of the
particular group's past claims history
/Questions & Expertly Verified Answers, 2025 /
2026.
Terms in this set (303)
policy owner usually, but not always the person covered by the policy
beneficiary the person who is paid when a claim is
submitted
agent/producer acts as a legal representative of
the insurance company
broker representative of the Insured, not the insurance company
risk The chance or uncertainty of loss
Pure risk the chance of experiencing a loss (without the possibility
of gain). Only downside, no upside.
Speculative risk s the chance of loss one accepts in the hope of realizing a
gain
Risk avoidance staying away from risky activities altogether
Risk reduction reduce the chance of something bad happening
Risk shifting Get someone else to accept the risk
Buying insurance transfer a portion of your risk to the Insurer
the individual or business that opts not to buy insurance
Risk Retention
retains the entire risk
,Indemnification an insurance concept that states that some portions of the
insurance industry prefer that we be made only whole after
a loss rather than coming out ahead (Only getting back
what you are owed, not getting more
than what you had to start with)
Subrogation the transfer to the Insurer of the Insured's rights to recover
damages from a responsible third party
Peril the cause of loss
Law of Large numbers the mathematical concept that makes it easier to predict
losses if we have a large number of Insureds
Insurable losses are... Economic, Predictable, Accidental, Measurable, Non-
Catastrophic
non-participating Stock companies that exist for the sole purpose of
companies generating profits for their stockholders
participating companies A company owned by its policy holders where the profits are
distributed among policy holders
Social Security act a guarantee that government would never again allow
workers (and their families) to become
destitute
OASDI (Social Security) Old Age, Survivors, and Disability Insurance...Federal
Government law
FICA Federal Insurance Contributions Act or FICA,
payroll taxes levied on employees, employers,
and the self-employed.
Not covered by social payroll taxes levied on employees, employers, and the
security self-employed.
,FICA Fully Insured (Worked for 10 years) payroll taxes levied on
employees, employers, and the self-employed.
Retirement Benefits;
Disability Income Benefits; and Survivor
Benefits.
Currently Insured Worked less than ten years. Only eligeable for
Survivor Benefits
Average Indexed Monthly Averages earnings over time period. Either way, the more a
Earnings worker has paid into Social Security, the more the worker
(or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount Full retirement benefit someone is entitled to at age
(PIA). 65 (some cases, 66-67)
elimination period the person must be
(Disability) disabled for 5 months before starting to receive
Disability
Benefits
underwriting the selection and classification of risks.
actuary A person who tracks the lifespan and chance of illness or
accident based on specific factors
Mortality table predict the age at which people in a given group are likely
to die (Used by life insurers)
Morbidity table predict how often people in a given group are likely to get
sick or have an
accident. (Used by health insurers)
field underwriters Insurance agents
declined risks Applicants who are too risky are declined
, Adverse selection the tendency for high risk people to be more likely to
apply for insurance than low risk people.
Premium = Risk + Expenses - Interest
Premium mode how frequently an Insured will pay the premium
Accelerated Death Benefit requires the Insurer to pay out part of the death benefit
Rider (usually 50%) if the Insured has a diagnosis of a
particular illness likely to cause death within 12
months
Viatical Settlements sell the policy to an investment company that will continue to
make the premium payments and collect the death benefit
when the Insured dies. The Insured will sell only if an
investment company will pay more than the current cash
surrender value.
Group Policies share these Reduced Cost;
three characteristics Reduced Adverse Selection; and Fixed
Benefits.
Adverse selection people who need
insurance the most are the ones most likely to buy it and
buy more of it causing more loss claims
experience rating looks at the claims history for this
particular group. Experience rating puts
the burden for high premiums (and the
credit for low ones) squarely on the
shoulders of the group, because of the
particular group's past claims history
