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Nebraska State Life and Health
Insurance Exam Terms 100% Correct
Adverse Selection ✔✔Insuring of risks more prone to loss than the average
Agent/Producer ✔✔legal representative of an insurance company
Applicant/Proposed insured ✔✔a person applying for insurance
Hazard ✔✔Conditions that increase the probability of a loss
Moral ✔✔tendency toward increased risk (driving fast)
Morale ✔✔indifference towards risk (not locking the door)
Indemnity ✔✔restoring the insured to the condition that existed before loss
Insurance ✔✔Transfer of risk of loss from an individual to na insurer
Insurance Transaction ✔✔solicitation, negotiations or effectuation of a contract
Insured ✔✔Person covered by the insurance policy
Insurer ✔✔a company that issues an insurance policy
Law of Large Numbers ✔✔the larger the number of people with the same exposure to loss the more predictable the loss will be
Peril ✔✔the cause of loss
Policyowner ✔✔person who has the rights and privileges in he policy
Risk ✔✔uncertainty or chance of loss
Ownership ✔✔Stock (nonparticipating) Mutual (participating/dividends)
Concealment ✔✔Intentional withholding of material information
Fraud ✔✔Intentional act with the purpose of deceiving another party
Insurable Interest ✔✔Financial interest in the life of another person (only needed at inception of contract)
Solicitation of Insurance ✔✔Attempt to persuade a person to buy a policy
Underwriting ✔✔Risk Selection and classification
Advertisements ✔✔Must be truth and not misleading
Illustrations ✔✔Presentation of non guaranteed elements
Buyers Guide ✔✔generic information about insurance
Policy Summary ✔✔specific information about policy features and elements
3 Parts of Application ✔✔General Information, Medical Information, Agent's Report
Underwriting Sources ✔✔Application, Consumer Reports, MIB
Risk Classifications ✔✔Preferred, Standard, Substandard
Premium Factors ✔✔Mortality, Interest, Expense
Premium Payment Mode ✔✔Annual, Semi-annual, Quarterly, monthly. Higher the frequency the higher the payment
Conditional Receipt ✔✔When prem is given with the application, courageous is effective as of date of application
Statement of Good Health ✔✔Required if premium is paid at policy delivery.
Cash Value ✔✔Policy Savings element or living benefit
Face Amount ✔✔Amount of benefit stated in the policy
Permanent Insurance ✔✔Builds Cas Value and Remains in effect for the entire life of the insured
Term Insurance ✔✔Temporary Insurance
Key Features of Term Insurance ✔✔Pure Death Protection, Level Premiums, Renewable, Convertible
3 Types of Term Insurance ✔✔Level, Increasing, Decreasing
Key Features of Whole Life ✔✔Protection Until 100 years old, Level Premium, Cash Values and Lvings Benefits
3 Basic Types of Whole Life ✔✔Straight Life, Limited Payment, Single Premium
Adjustable Life Insurance ✔✔Term or Permanent, Policy owner can increase or decrease the premium the face amount of period of protection
Level Term Insurance ✔✔Face amount remains the same
Increasing Term Insurance ✔✔Face amount increases each year
Decreasing Term Insurance ✔✔Face amount decreases each year
Straight Whole Life ✔✔Premiums are paid until the insured's death or age 100
Limited Payment Whole Life ✔✔Premiums are paid up before age 100
Single Premium Whole Life ✔✔Policy is completely paid up after one premium
Universal Life Option A ✔✔Level Benefit Annually renewable term and cash amount
Beneficiary Designation ✔✔Succesion: Primary vs Contingent Change of Beneficiary Revocable vs Irrevocable
Entire Contract ✔✔Policy with riders and amendments plus copy of application
Exclusions ✔✔Perils and hazards not covered
Free Look ✔✔Period of time after issue to return the policy or a refund of premium
Grace Period ✔✔Time allowed for payment of premium after due date
Incontestability ✔✔After a specified period of time, the insurer cannot deny a claim based on misstatements on the application
Legal Action ✔✔Period of time for legal action after a loss
Misstatement of Age ✔✔Death benefit is adjusted according to the insured's correct age
Ownership ✔✔Policy owner's rights and privileges within the period
Payment of Premiums ✔✔Premiums must be paid in advance
Reinstatement ✔✔Lapsed policies can be restored within a specified period
Statements of Insured ✔✔Considered representations and not warranties
Time of Payment of Claims ✔✔Insurer is required to pay claims within a specified time period
Nonforfeiture Options ✔✔Guarantees built into a policy. 1 Cash Surrender Value 2. Extended Term 3 Reduced Paid Up
Dividend Options ✔✔Only in participating Policies, not guaranteed, not taxable 1 Cash Payment 2 Reduction of Premium 3 Accumulation at Interest 4. One Year Term 5 Paid up additions 6 Paid up Insurance
Annuitant ✔✔Natural person whose life expectancy is taken into consideration and who receives annuity payments
Annuitization Period ✔✔Pay out period. Income is paid to the annuitant
Annuity ✔✔Contract that provides income for a specified period of time or for life
Lump Sum ✔✔Single Payment
How Premium is Paid ✔✔Single Premium (Lump Sum) / Flexible Premium (Periodic Payments)
How Benefits are Available ✔✔Immediate (Within 1 yr) / Deferred (After 1 year)
Life Contingency Options ✔✔No guarantee that all the proceeds will be paid out
Annuities Certain ✔✔guarantee that all the proceeds will be paid out
Fixed Annuity ✔✔guranateed interest rate eve income payments in the general account
Variable Annuity ✔✔Interest rate and income payments are not guaranteed. Separate Account.Treated as securities
Uses of Annuities ✔✔Lump sum settlements. Qualified Retirement Plans, Education Funds
Earned Income ✔✔Salary wages, commisions
Qualified Plan ✔✔retirement plan that meets the irs guideline
Tax Deferred ✔✔withheld or postponed until a specified time in the future
Qualified Plan Requirements ✔✔Designed for benefit of employees. Formally written and communicated Nondiscriminatory. Permanent Vesting Requirement, IRS Approved
Traditional IRA ✔✔Earned Income, Pretax Requirements, Dollar amount limit for contributions, Age limit for contributions and distributions
Premiums ✔✔not tax deductible
Lump Sum Death Benefit ✔✔tax free
Death Benefit in installments ✔✔prinipal is tax free interest is taxable
Dividends ✔✔tax free return of unused premiums
Cash Value Accumulations ✔✔grow tax deferred, anything in excess of the premiums paid is taxable
Policy Loans ✔✔not taxable interest on outstanding loans
Surrenders ✔✔anything in excess of the premiums paid is taxable
Accidental Bodily Injury ✔✔unforeseen and unintended injury from accident
Coinsurance ✔✔Cost sharing by policy owner and insurer
Deductible ✔✔Amount of covered expenses paid by the policy-owner before the policy pays
Pre-existing Condition ✔✔Condition for which the insured received diagnosis or treatment prior to policy date
Sickness ✔✔Illness or disease that manifests itself while the policy is in force
Disability ✔✔Loss of income due to a disability
Hospital and Medical ✔✔Reimbursement benefits for a physician or hospital expenses
Long Term Care ✔✔Medically necessary services received in a nursing home or a person's own home
Common Policy Exclusions ✔✔War, Intentional self inflicted injuries, Elective Cosmetic Surgery, Coverage provided by govt plan, Criminal activity injury
Medical Expense Insurance ✔✔insurance that reimburses the policy-owner for hospital and medical costs
Open Panel ✔✔Physicians provide services to a health organization and its subscribers, but retain the right to treat nonmembers
Prepaid ✔✔Plans where providers are compensated regularly regardless of the services provided
Subscriber ✔✔An individual signed up for a prepaid plan
Basic Hospital/Medical/Surgical ✔✔Reimbursement insurance, first dollar coverage, limited coverage
Major Medical ✔✔Reimbursement insurance, deductibles and coinsurance, and Larger Benefit Limit
HMO ✔✔Preventive Care, Service Plan, prepared Basis, Limited service area and limited choice of providers, Gate-keeping
PPO ✔✔Indemnity Plan, Fee for Service, Open Panel, No primary care doctor
Disability Income Key Features ✔✔Replaces lost income, Individual/Group, Elimination Period
Disability Income Business Uses ✔✔Business overhead expense, Disability buyout, key- person/parterner
Group Health Key Features ✔✔Certificate of Insurance, Group Underwriting, Conversion to Individual Insurance without evidence of Insurability
Types of Group Health Insurance Plans ✔✔Individual Employer Groups, Associations, Multiple-Employer Trusts, MEWAs, Small Employer, Blanket Insurance, Contributory
COBRA ✔✔20 Employees, Extends Group Health Coverage to Terminated, Employees pay 102% of Prem, Limited period of coverage, Applies to health insurance only
Affordable Care Act ✔✔COverage till children are 26, No exlusions for pre-existing conditions, Qualified health plans, Essential Health Benefits
