Question: 401k plan

Answer: A qualified retirement plan in which theemployee can set aside a portion of their incomewith pre-tax dollars.

Question: Absolute Assignment

Answer: A permanent and irrevocable transferof rights and/or benefits by the policy owner.

Question: Collateral Assignment

Answer: A temporary and/or revocable transferof benefits by the policy owner.

Question: Accelerated Death Benefit

Answer: Policy provision that allows full or partialpayment of the policy's death benefit before theinsured's death if he/she is terminally ill.

Question: Accidental Death Benefit

Answer: An extra cost rider that requires the insurancecompany to pay an additional benefit in the eventthat the insured dies within 90 days of anaccident as a direct result of the accident.

Question: Accumulate at Interest

Answer: The Dividend Option where the policy ownerleaves the dividends with the insurer to investand earn interest.

Question: Adhesion

Answer: Since the insurer created all the documents ofthe contract, any ambiguities in the contract willbe settled in favor of the insured. Since theinsurer wrote the contract they are stuck with it.

Question: Adverse Selection

Answer: The tendency for less favorable risks to seek orcontinue insurance to a greater extent than morefavorable risks.

Question: Agency Agreement or Agency Contract

Answer: A legal document containing the terms of theagreement between the agent and the insurancecompany. It clearly defines what an agent canand cannot do, and how he/she will becompensated.

Question: Agent Authorities

Answer: Expressed: Power or authority specificallygranted in writing to an agent by the insurancecompany in their Agency Agreement. Apparent:Power or authority that the public reasonablyassumes an agent has based upon his/heractions. Implied: Power or authority that is notexpressly granted by the company but that anagent can assume or that are implied he/she hasin order to transact insurance business.

Question: Agent/Producer

Answer: Anyone who sells or aids in the selling ofinsurance. Legally represents the company.

Question: Agent's Report

Answer: A written report from the agent submitted to theinsurer along with the application disclosing whatthe agent knows, observed, or learned about theproposed insured's risks.

Question: Aleatory

Answer: Unequal exchange of value. One party mayobtain a far greater value than the other underthe contract.

Question: Annual Renewable Term

Answer: A Term Life Insurance contract which gives thepolicy owner the option to renew the policy eachyear without showing proof of insurability.Premiums increase at each renewal.

Question: Annuitant

Answer: The person that buys an annuity; may or may notbe an annuity's policy owner.

Question: Annuity

Answer: A contract/policy that guarantees to pay incomefor a specified period of time or for the life of theannuitant. Designed to prevent people fromoutliving their savings.

Question: Appointment

Answer: Authorization of an agent/producer by an insurerto represent the company.

Question: Blackout Period

Answer: The period of time between the youngest childturning 16 and the widow(er) reaching retirementage during which no Social Security SurvivorBenefits are paid to the surviving spouse.

Question: Buy-Sell Agreement

Answer: Business use of Life Insurance where partners ina business buy life insurance on each other.They agree that when one of them dies thesurvivors have the right to purchase thedeceased partner's share of the business. Thedeath benefit from the insurance is used tofinance the purchase.

Question: Cash Nonforfeiture Option

Answer: Policyowner receives a lump-sum payment ofthe current cash value of the policy uponsurrender of the policy. The policy cannot bereinstated.

Question: Cash Settlement Option

Answer: Upon maturity of an insurance policy thebeneficiary receives a lump-sum payment of theentire policy proceeds due.

Question: Cash Value

Answer: That part of an insurance policy that is the equityamount legally available to the policy owner. Thecash value accumulates throughout the durationof the policy. Also known as living benefit orpolicy savings.

Question: Commissioner

Answer: Public official in charge of the state's departmentof insurance. Charged with regulating theinsurance industry in his/her state by enforcingthe insurance laws.

Question: Conditional

Answer: Certain conditions must be met in order for policyto pay-out.

Question: Conditional Receipt

Answer: An interim insuring agreement under which theinsurance company agrees to start coverage onthe later of either the date of application or thedate of the medical exam IF the proposedinsured is found to be insurable on that date.

Question: Consideration

Answer: A necessary element of a contract; something ofvalue exchanged for the transfer of risk.Insured's consideration is payment of premiumsand truthful statements on the application.Insurer's consideration is promises contained inthe contract.

Question: Contingent Beneficiary

Answer: An alternate beneficiary designated to receivethe policy proceeds in the event that the primarybeneficiary dies before the insured.

Question: Contributory Plan

Answer: Group insurance plan under whichthe employees contribute to the payment ofpremiums.

Question: Noncontributory Plan

Answer: A group insuranceplan in which the employer pays all thepremiums for the policy.

Question: Convertible Term

Answer: Term insurance that specifically permits"conversion" of the policy into permanentprotection without proof of insurability.

Question: Decreasing Term

Answer: Term life insurance in which the face amount ofthe policy decreases over time in scheduledsteps. Most often used to cover a debt obligation(mortgage).

Question: Dividends

Answer: Distributions paid out by insurance companies.Stock insurers pay dividends (portion of profit) tostockholders and they are taxable. Mutualinsurers pay dividends (return of unneededpremiums) to policyowners and they are nottaxable. Dividends are never guaranteed.

Question: Equity Indexed Annuity

Answer: The annuity that has a guaranteed minimuminterest rate and allows the annuitant to investmoney in an index (i.e.: S&P 500). Theinvestments grow as the index grows.

Question: Estoppel

Answer: Legally preventing someone from asserting or reasserting a known right that they have previouslywaived.

Question: Extended Term Insurance

Answer: Nonforfeiture option where cash value is used tomake a single premium payment on a TermInsurance Policy of the same face amount as theoriginal policy. Original policy can be reinstated.Not available on rated policies.

Question: Face Amount

Answer: Amount payable in the event of death of theinsured. Also called face value, death benefit,policy proceeds, coverage, stated amount,indemnity amount or proceeds to the beneficiary.

Question: Facultative Reinsurance

Answer: Transferring risk from one insurancecompany to another on a policy-by-policy basis.

Question: Treaty Reinsurance

Answer: Transferring risk from one insurancecompany to another under a blanket agreement.

Question: Fair Credit Reporting Act

Answer: A federal law that protects consumers in regardto their credit history. Establishes guidelines forhow companies can access consumers' creditreports and what types of disclosures andnotifications are required.

Question: Financial Needs Approach

Answer: In determining how much life insurance isneeded the needs of the surviving family are thefocus. Using needs analysis worksheets, anamount is determined to meet the needs of thesurviving family regardless of the earnings of theinsured.

Question: Fixed Amount Annuity

Answer: A Life Annuity that guarantees a fixed dollarpayment at regular intervals during the lifetime ofthe annuitant.

Question: Fixed Amount Settlement Option

Answer: Upon maturity of an insurance policy thebeneficiary receives periodic payments of a setdollar amount from the policy proceeds.