XCEL TEXAS PRE-LICENSING EDUCATION - LIFE AND

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XCEL TEXAS PRE-LICENSING EDUCATION - LIFE AND

HEALTH INSURANCE INSURANCE GLOSSARY EXAM

QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -99 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Binding receipt

Answer:

Given by a company upon an applicant's first premium payment. The policy, if approved, becomes effective from the date of the receipt.

Question 2: Broker

Answer:

Licensed insurance representative who does not represent a specific company, but places business among various companies. Legally, the broker is usually regarded as a representative of the insured rather than the company.

Question 3: Backdating

Answer:

The practice of making a policy effective at an earlier date than the present.

Question 4: Close corporation

Answer:

A corporation owned by a small group of stockholders, each of whom usually has a voice in operating the business.

Question 5: The section of an insurance application where the agent reports personal observations about the applicant.

Answer:

Aleatory

Question 6: Continuing care

Answer:

Type of health or medical care designed to provide a benefit for elderly individuals who live in a retirement community; addresses fulltime needs, both social and medical. Also known as residential care.

Question 7: Cash refund annuity

Answer:

Provides that, upon the death of an annuitant before payments totaling the purchase price have been made, the excess of the amount paid by the purchaser over the total annuity payments received will be paid in one sum to designated beneficiaries.

Question 8: Accelerated benefits rider

Answer:

A life insurance rider that allows for the early payment of some portion of the policies face amount should the insured suffers from a terminal illness or injury.

Question 9: Basic medical expense policy

Answer:

Health insurance policy that provides "first dollar" benefits for specified (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits.

Question 10: Class designation

Answer:

A beneficiary designation. Rather than specifying one or more beneficiaries by name, the policy owner designates a class or group of beneficiaries. For example, "my children." Question 11: A life insurance policy is a contract of adhesion because buyers must adhere to the terms of the contract already in existence. They have no opportunity to negotiate terms, rates, values, and so on.

Answer:

Adjustable life insurance

Question 12: Buy-sell agreement

Answer:

Agreement that a deceased business owner's interest will be sold and purchased at a predetermined price or at a price according to a predetermined formula.

Question 13: Cash surrender value

Answer:

Amount available to the owner when a life insurance policy is surrendered to the company. During the early policy years, the cash value is the reserve less a "surrender charge"; in later policy years, it usually equals or closely approximates the reserve value at time of surrender.Question 14: Anyone not a duly licensed broker who solicits insurance or aids in placing risks, delivering policies, or collecting premiums on behalf of an insurance company.

Answer:

Agent's report

Question 15: Contestable period

Answer:

Period during which the company may contest a claim on a policy because of misleading or incomplete information in the application.

Question 16: Case management

Answer:

The professional arrangement and coordination of health services through assessment, service plan development, and monitoring.Question 17: Under which benefits are payable in case of disease, accidental injury, or accidental death. Also called health insurance, personal health insurance, and sickness and accident insurance.

Answer:

Accumulation unit Question 18: Type of care (usually custodial) designed for individuals who require assistance with various activities of daily living, while their primary caregivers are absent. Offered in care centers.

Answer:

Adverse selection

Question 19: Difference between the face amount of the policy and the reserve or policy value at a given time. In other words, the dollar amount over what the policy owner has contributed of cash value toward payment of the policyowner's own claim. Because the cash value increases every year, the net amount at risk naturally decreases until it finally reaches zero when the cash value or reserve become the face amount.

Answer:

Annually renewable term (ART)

Question 20: Cafeteria plan

Answer:

Employee benefit arrangements in which employees can select from a range of benefits.

Question 21: Blackout period

Answer:

Period following the death of a family breadwinner during which no Social Security benefits are available to the surviving spouse.

Question 22: Average Monthly Wage (AMW)

Answer:

The average wage base for computing virtually all Social Security benefits prior to.

Question 23: Consideration clause

Answer:

The part of an insurance contract setting forth the amount of initial and renewal premiums and frequency of future payments. ,

Question 24: Benefit

Answer:

May be either money or a right to the policy owner upon the happening of the conditions set out in the policy.

Question 25: Churning

Answer:

The practice by which policy values in an existing life insurance policy or annuity contract are used to purchase another policy or contract with that same insurer for the purpose of earning additional premiums or commissions without an objectively reasonable basis for believing that the new policy will result in an actual and demonstrable benefit.