Life Insurance Terms ch 6 flashcards

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Accelerated Benefit (Option) Rider

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This rider allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness that’s certified by a physician and is expected to die within one to two years.

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Beneficiary

Back

This is the person (or entity) who’s designated in a life insurance policy to receive the death proceeds.

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Cash Value

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This is the equity or savings element of whole life insurance policies.

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Class Designation

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This is a beneficiary group designation (e.g., all of a person’s children), opposed to specifying one or more beneficiaries by name.

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Common Disaster Provision

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This is a provision of the Uniform Simultaneous Death Act, which ensures a policy owner that death benefits will be paid to the contingent beneficiary if both the insured and the primary beneficiary die within a short period of time of one another. It also states that the primary beneficiary must outlive the insured by a specified period in order to receive the proceeds.

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Contingent (Secondary) Beneficiary

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This is the beneficiary who’s second in line to receive death benefit proceeds if the primary beneficiary dies before the insured.

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Earned Premium

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This is the amount of premium that’s paid by the policy owner for policy coverage or insurance protection up to a specific point.

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Expense Factor

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Also referred to as the loading charge, this is a measure of what it costs an insurance company to continue to operate.

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Excess Interest

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In life insurance, this provision means that the cash value will increase faster than the guaranteed rate if the insurer earns a greater return than the guaranteed rate.

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Fixed Amount Installment Option

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This option pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.