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FLORIDA LIFE HEALTH AND ANNUITIES 2-15 450 Questions And Answers 2024/2025 ZoomWords - ANSWER A list of the important terms to be understood in preparing for the insurance exams Yearly Renewable Term Insurance (YRT) - ANSWER The same as annually renewable term (ARTs) Absolute assignment - ANSWER Ownership is assigned to another person permanently unless intentionally returned Accelerated benefits rider - ANSWER Providing death benefits ahead of time of death when insured is terminally ill Acceptance - ANSWER Offer has been made and accepted by the company, or by the client if counter-offer was made Accidental bodily injury provision - ANSWER Benefits payable when injured by accidental means Accidental death and dismemberment - ANSWER A plan specifically for accidental death or loss of body parts Accidental death benefit rider - ANSWER Twice (or three times) the benefit will be paid if the insured dies in an accident Accidental dismemberment - ANSWER Loss of a body part- state test actual loss not just loss of use Accidental means provision - ANSWER Benefit only paid when the insured was not in control of the accident Accidental results provision - ANSWER Benefit paid when accident occurred because of any means; it just happened! Accident and health insurance - ANSWER Coverage for an insured disabled by accident or illness Accumulation unit - ANSWER Purchased by premiums paid into variable annuity during the annuitants working years Acute illness - ANSWER The one category of serious illness where the patient can fully recover Adhesion - ANSWER Where all specifications of forms, brochures, and contracts are pre-approved by the state Adjustable life insurance - ANSWER A combination term and whole life policy where it is easy to change various factors Administration services only (ASO) - ANSWER Insurance company insists only with the paperwork for self-insureds Approval receipt - ANSWER A conditional receipt, which becomes effective only when approved by the insurer Assessment mutual insurer - ANSWER An insurer, which assesses other policyholders when a claim occurs Assignment - ANSWER A policy can be assigned to a different owner without approval from beneficiaries or the insurer Attained age - ANSWER When converting from a term to whole life policy and using the current age reached Authority - ANSWER Agent receives expressed (written), implied (business), apparent (what the company has provided) Authorized company - ANSWER see admitted company Automatic premium loan provision - ANSWER Premium received from cash value of a policy when client can't be found Average indexed monthly earnings (AIME) - ANSWER Used in the calculation of the Social Security PIA Average monthly wage (AMW) - ANSWER Used in calculating the AIME above enroute to obtaining the PIA Aviation exclusion - ANSWER Excluding the client from coverage while flying if the client is not a fare paying passenger (pilot) Backdating - ANSWER Using an earlier birth date as the policy effective date to save age - backwards up to 6months Basic medical expense policy - ANSWER Medical coverage known as first dollar - hospital, surgeon, non-surgeon, Beneficiary - ANSWER The person or persons receiving a benefit from the policy Benefit - ANSWER The amount determined ahead of time to compensate, or covering for a loss to the insured Benefit period - ANSWER The maximum amount of time that policy benefits will be paid Best's dating - ANSWER One of the rating companies who rate the insurance industry regarding strength and stability Binding receipt - ANSWER Conditionally coverage valid until the company declines the insured, or until policy is issued Blackout period - ANSWER From the time the youngest child own the family turns 16 until the spouse turns 60 Blanket policy - ANSWER An umbrella type of policy covering a group in motion - transportation company/public event Broker - ANSWER An independent insurance agent who represents the client and arranges coverage with a company Burial plan - ANSWER The same as debit policies, industrial insurance, and home service insurance; see home service Business continuation plan - ANSWER Using insurance as a means of coverage for an owner or employee of a business Business overhead expense insurance - ANSWER Covering for all aspects of a business except salary of the owner Buyer's guides - ANSWER Explaining to the client the insurance coverage provided before initial premium is accepted Buy-sell agreement - ANSWER A contract between partners in case one of the partners dies or is disabled Cafeteria plan - ANSWER A "pick and choose" health coverage plan available to groups Cancellable contract - ANSWER One that can be either canceled or the premium raised at any time on an individual client Commercial health insurer - ANSWER A commercial company using the reimbursement approach for policyholders Commissioner - ANSWER A state appointed or election position; member of the NAIC Commissioner's standard ordinary (CSO) - ANSWER A mortality table used by actuaries to establish policy premiums Common disaster provision - ANSWER Where two or more insured die as a result of the same accident Competent parties - ANSWER Person who are mentally and physically able to enter into financial agreements Comprehensive major medical insurance - ANSWER A stand-alone plan of health coverage; flat deductible Concealment - ANSWER Failing to disclose a known fact, which is material to the decision making process Conditional contract - ANSWER Temporary contract as long as a premium accompanies the application Conditional renewable contract - ANSWER A policy based on certain conditions occurring in order to continue in force Conditional receipt - ANSWER Guaranteeing to a new applicant a set amount if certain conditions are met Consideration clause - ANSWER How the client compensates the company in exchange for the insuring clause Consideration - ANSWER The application plus the initial premium Constructive delivery - ANSWER How the client knows they are covered; by telephone, mail, email Contestable period - ANSWER A period of time, usually 2 years, where the company can contest the application data Contingent beneficiary - ANSWER Beneficiaries on a 2nd and 3rd line contingent on someone being on a prior line Continuing Care - ANSWER Health care which tends to be long term and often in a residential care center Contract of agency - ANSWER A legal binding document between an agent and the insurance company Contributory plan - ANSWER An arrangement where group members are contributing some or all of the premium Conversion factor - ANSWER A dollars-per-point plan paid for a health care procedures Conversion privilege - ANSWER The right to convert to a new policy at the original age or at an attained age Convertible term - ANSWER A term policy that can be converted to a permanent one without a medical exam Coordination of benefits provision - ANSWER Found in group health plans coordinating benefits between companies Corridor deductible - ANSWER Found in a health policy between the basic plan and the major medical supplementary Cost-of-living rider - ANSWER A feature added to policies connecting the face amount to the CPI for inflation reasons Coverage requirements - ANSWER Uniform arrangements in plans in order to ensure nondiscriminitory policies Credit accident and health insurance - ANSWER Covering for mortgage or loan payments in case of disability Credit life insurance - ANSWER Covering for mortgage or loan payments in case of death Dividend - ANSWER A benefit received by a mutual company policy owner in order Dividend options - ANSWER The choices offered to a mutual company policy owner to reduce their cost Domestic insurer - ANSWER A company incorporated in, or whose home office is in the same state in question Dread disease policy - ANSWER Where policies are sold to cover specific illnesses Elimination period - ANSWER A time period selected by the applicant as a deductible and in days instead of dollars Employee benefit plans - ANSWER Where employers offer health and life coverage to their employees Endowment - ANSWER A savings plan paying a set benefit at a specified time, or death benefit if death is earlier Enhanced whole life - ANSWER Face amount and premium gradually decrease but dividends keep the death benefit level Enrollment period - ANSWER The window where group members can register with their company plan Entire contract provision - ANSWER The wording in all policies stating everything that matters is written in the policy Entity plan - ANSWER Where the company in a business arrangement purchases policies on each partner Equity indexed annuity - ANSWER A savings plan closer to fixed than variable, and hedging against inflation Errors and omissions insurance - ANSWER A contract purchased by agents in the financial industry covering for goofs Estate - ANSWER The amount of wealth and property determined art an individual's death Estate tax - ANSWER A federal tax levied on the wealth and property transferred by an individual upon their death Estoppel - ANSWER What a person or company is prevented from doing as a result of a waiver Evidence of insurability - ANSWER Proving to be physically, emotionally, or financially insurable. Examiner - ANSWER A physician authorized by a company to perform medical exams Excess interest - ANSWER The difference between guaranteed rates and actual payment rates of interest Exclusion ratio - ANSWER A method of determining the nontaxable amount when comparing principal to total value Exclusion rider - ANSWER An attachment to a policy excluding pre-existing conditions when benefits are paid Exclusions - ANSWER Specific conditions listed in the policy excluding pre-existing conditions when benefits are paid Exclusive provider organization - ANSWER When an HMO is sponsored by an insurance company to conduct business Expected mortality - ANSWER The likelihood of death at stated ages; mortality table; actuarial tables Experience rating - ANSWER The past experience of a group or individual when determining future claims expectations Express authority - ANSWER The authority provided by an agent's contract; written authority Extended term insurance - ANSWER One of the choices in the Armstrong investigation providing term insurance Government insurer - ANSWER Insurance program for the public; OASDI; Medicare; Medicaid Grace period - ANSWER IF the premium has not been paid; the days the policy is still in effect before the policy lapses Graded premium whole life - ANSWER The premium stair steps up to allow earlier entry at lower cost Gross premium - ANSWER Retail price of the policy Group credit insurance - ANSWER A group contract sold to a financial institution or car dealership to cover for loans Group insurance - ANSWER A contract sold to cover insurance needs for all members of the group Guaranteed insurability - ANSWER A featured allowing an insured to buy more coverage later without proving insurable Guaranteed renewable contract - ANSWER Allowing an insured to renew coverage later without proving insurable Guarantee association - ANSWER A state required membership for all companies in case a company becomes insolvent Hazard - ANSWER Defined as the occurrence of a situation that causes a tragedy; gives rise to a peril Health insurance - ANSWER Coverage for uninsured when disabled due to accident or sickness Health maintenance organization (HMO) - ANSWER Coverage stressing preventative healthcare and early treatment Home health care - ANSWER An optional feature including health coverage in the insured's residence Home service insurer - ANSWER Small life insurance policy for the purpose of burial; premiums collected weekly Hospital benefits - ANSWER Health coverage while the insured is confined to a hospital Hospital expense insurance - ANSWER Coverage for daily room and board and miscellaneous charges Hospital indemnity - ANSWER A plan, which pays a set number of dollars per day for hospital confinement Human life value - ANSWER The older of the two methods determining the amount of insurance needs Immediate annuity - ANSWER Funded with lump sum where payments start one payment interval from date of purchase Implied authority - ANSWER Provided to an agent for procedures and products commonly found in a business setting Incontestable clause - ANSWER The time where the company can no longer defend itself from fraud and concealment Increasing term insurance - ANSWER Face value increasing over time to hedge against inflation or increasing needs Indemnity approach - ANSWER A fixed payout covering for a health situation without regard to actual cost Independent agency system - ANSWER An agent represents the public and arranges coverage from a company Indexed whole life - ANSWER Face amount connected to the consumer price index (CPI) to hedge against inflation Individual insurance - ANSWER An ordinary policy purchased by one person from one agent Individual retirement account (IRA) - ANSWER A qualified savings account with favorable tax advantages Joint and last survivor policy - ANSWER A policy for two people where the benefit is paid after the second person dies Joint and survivor annuity - ANSWER An annuity covering two people which continues to pay after the first person dies Joint life policy - ANSWER A policy for two people where the benefit is paid to the second person after the first dies Juvenile insurance - ANSWER Purchased by an adult on the life of a child; the child does not sign the application Keogh plans - ANSWER Created in 1962 for small businesses. Only available to unincorporated businesses Key person insurance - ANSWER Covering the life of an employee whose efforts are essential to a small business Lapse - ANSWER When the insurance coverage stops as a result of nonpayment fo the premium Law of large numbers - ANSWER Concept where the actuarial tables function properly with large numbers of people Legal purpose - ANSWER The idea that the reason for policy is valid because the purpose for its creation is legal Legal reserves - ANSWER The amount of money set aside by the company to pay the claims that are coming next year Level term insurance - ANSWER The amount of insurance coverage is the same over the length of time of the policy License - ANSWER The permit to do business issued by the state after completing testing requirements Licensed insurer - ANSWER A company authorized, approved, certified, admitted to do business in that state Lien system - ANSWER A plan covering for a substandard risk with a lien against the proceeds Life annuity - ANSWER A savings plan which continues to pay out to the annuitant for their entire lifetime Life expectancy - ANSWER The actuarial tables which determine the likelihood of length of lifetime Life income settlement option - ANSWER Proceeds of an insurance policy used to purchase an annuity for the beneficiary Life insurance - ANSWER Covering for any and all financial aspects resulting from a death Limited pay life insurance - ANSWER Restricting the payment period to a set time shorter than full policy coverage Limited risk policies - ANSWER Restricting policy benefits to certain accidents or diseases Lloyds of London - ANSWER an 800 year old company that takes larger risks than others for a larger premium Loading - ANSWER The charge added to the net cost of the policy covering for expenses and contingencies Loan interest rate, maximum - ANSWER 10% or can be connected to Moody's Corporate Bond Index Loan value - ANSWER The cash value amount of a policy that can be taken as a loan Long-term care - ANSWER Insurance coverage, often for the elderly, for medical or frailty reasons Loss sharing - ANSWER Spreading risks over a large group of people to mimics loss to any one person Lump sum - ANSWER Payout of benefits in one single sum Major medical expense policy - ANSWER Coverage for potentially larger healthcare expenses; usually 80/20 or 75/25 Minimum premium plan (MPP) - ANSWER Filling in for those self-insured; catastrophic coverage Miscellaneous expenses - ANSWER Costs for the products used during hospital stay Misrepresentation - ANSWER Making unethical or untrue statements for the purpose of selling and insurance policy Misstatement of age or sex provision - ANSWER Altering the premium or benefits from and accidental clerical mistake Misuse of premium - ANSWER A polite way of saying "stealing" - using insurance premium for illegal reasons Modes of premium payment - ANSWER Premium payments made monthly, quarterly, semi-annually, annually Modified endowment contract - ANSWER An agreement losing its tax advantage; test to determine MEC: 7 pay test Modified whole life - ANSWER A policy allowing insureds to start with a lower premium for the first five years Money purchase plan - ANSWER One of the three defined contribution retirement plans Moral hazard - ANSWER A factor causing a peril; failing to follow the laws and rules of society Morale hazard - ANSWER A factor causing a peril; the excitement of one's lifestyle; increased risk Morbidity table - ANSWER The actuarial tables indicating risks at various ages based on health aspects of individuals Mortality table - ANSWER The actuarial tables indicating risks at various ages based on length of life of individuals Mortgage insurance - ANSWER A use of life insurance covering the remaining debt of a home mortgage Multiple employer trust - ANSWER Banding small employers together to purchase insurance at a better price Multiple employer welfare arrangement - ANSWER Trade unions getting together to purchase insurance at a better price Multiple protection policy - ANSWER Permanent and term policy combination is to reduce the cost to the policy owners Mutual insurer - ANSWER A not-for-profit company whose reason for being is to reduce the cost to the policy owners National Association of Health Underwriters - ANSWER Trade organization covering health insurance producers National Association of Insurance and Financial Advisors - ANSWER Trade group covering life insurance producers National Association of Insurance Commissioners - ANSWER Elected/appointed group, one from each state Natural group - ANSWER Group created for any normal reason other than buying insurance; employers, labor unions Needs approach - ANSWER One of the two methods used to determine insurance needs, asking lots of questions Net premium - ANSWER The gross premium minus any expenses for loading Non-admitted insurer - ANSWER A company not permitted to function in the state; may never have applied Non-cancelable contract - ANSWER The strongest of the five renewability arrangements; can't raise, can't cancel Non-contributory plan - ANSWER A contract completely paid for by the employer or owner of the policy Parol evidence rule - ANSWER When the policy arrives it takes over for anything and everything that was said verbally Par policies - ANSWER See participating (Participating- where the insured in a mutual company receives dividends (suprlus) to reduce their cost Partial disability - ANSWER Helping the employee returned to work by covering half-time earnings Participating physician - ANSWER One who accepts the Medicare payment amount without charging additionally Participating - ANSWER Where the insured in a mutual company receives dividends (surplus) to reduce their cost Participation standards - ANSWER The rules imposed on an employee to determine ERISA qualification Partnership - ANSWER An arrangement for two or more people working together for a common business cause Payor rider - ANSWER Adult who is buying a juvenile policy; if the adult is disabled, premium collection stops Per capita rule - ANSWER The standard beneficiary arrangement; named people are included if living when insured dies Peril - ANSWER The problem/tragedy caused by the hazards; a death, illness, car crash, tornado depending on policy Period certain annuity - ANSWER A savings plan that pays out for a lifetime or set length of time, whichever is greater Permanent flat extra premium - ANSWER An additional charge levied on the insured for greater specified risks Personal producing general agency - ANSWER Small agency where the general agent (GA) is also the producer Per stirpes rule - ANSWER Providing benefits to descendants of predeceased named beneficiaries Policy - ANSWER A life insurance or health insurance contract covering an individual or a group Policy loan - ANSWER Using the cash value in an existing policy as collateral for a loan from the company Policy owner (Policyholder) - ANSWER The individual who purchased the policy and is paying the premiums Policy provisions - ANSWER Stipulations in life and health contracts determine specific features and benefits Portability - ANSWER The guarantee of continued coverage when moving from one group policy to another Pre-certification - ANSWER Calling ahead to receive approved coverage for and illness or procedure Pre-existing condition - ANSWER A medical problem that is in existence before the policy coverage begins Preferred provider organization (PPO) - ANSWER A discounted arrangement for health coverage; includes a deductible Preferred risk - ANSWER Where categories of risk are more difficult to qualify than standard risks; lower premium Preliminary term insurance - ANSWER A policy for people whose income cycles other than monthly; 1 to 11 months Premium - ANSWER The payment amount required to keep a policy in force; single, limited pay, periodic payments Prescription drug coverage - ANSWER Additional coverage sometimes offered in group medical plans Presumtive disability benefit - ANSWER Assumed that the insured is disabled because of loss of limbs, sight, hearing Rating companies - ANSWER Companies that 'rate' insurance companies: A.M. Best, S&P, Moody's, Fitch Rating - ANSWER Charging an increased premium as a result of increased risk Reasonable and customary charge - ANSWER Based on geographical location of the provider Rebating - ANSWER Bribing the client to purchase insurance with the offer of additional financial benefits Re-current disability provision - ANSWER Coverage of medical conditions that again return Reduced paid-up insurance - ANSWER A permanent policy with the reduced face amount and no further premium Re-entry option - ANSWER Renewing the policy where it's necessary to again prove insurability Refund annuity - ANSWER A plan that guarantees at least the principal will be paid to annuitant or beneficiary Reimbursement approach - ANSWER Reimbursing the insured for their health care expenses Reinstatement - ANSWER Restarting a policy when the premium has not been paid for the length of time Reinsurance - ANSWER Where a second insurance company covers for a portion of the risk of the first company Relative value scale - ANSWER A system of points used in calculating the payments covering the surgeon Renewable option - ANSWER Methods used guaranteeing that policies can be renewed without proving insurability Renewable term - ANSWER Guaranteeing to renew a term policy without proving insurability Replacement - ANSWER Replacing one policy with another; legal or illegal depending on intent Representation - ANSWER The information provided by an applicant to the best of their knowledge Reserves - ANSWER The large tank of money set aside by the insurance company to pay the claims expected next year Residual disability benefit - ANSWER Coverage for the difference in earnings when unable to do original occupation Respite care - ANSWER Coverage provided by a policy paying benefits so the caregiver can have a break Results provision - ANSWER See accidental results provision (benefit paid when accident occurred because of any means; it just happened!) Revocable beneficiary - ANSWER Where the policy owner can rename the beneficiary label to someone else Rider - ANSWER An attachment or addition to a policy which rides along with the policy Risk - ANSWER Uncertainty regarding loss; levels of chance determined by underwriters when considering applicants Risk pooling - ANSWER Distributing risks within a large group to minimize loss to any one person Risk selection - ANSWER The classification system used by underwriters; established in advance; adhesion Rollover IRA - ANSWER An investment vehicle whereby the owner can move from one qualified vehicle to another Salary continuation plan - ANSWER Continuing compensation for an officer/owner of a company at their retirement Special risk policy - ANSWER Coverage for one person in an unusual situation; test pilots; dangerous occupation Specified disease insurance - ANSWER See limited risk policies (restricting policy benefits to certain accidents or diseases) Speculative risk - ANSWER Any situation where the person involved is hoping for gain; these risks are not insurable Spendthrift provision - ANSWER When a benefit is left with the company is it protected from suit until paid out Split-dollar life insurance - ANSWER A business policy; the company = cash value; employee = insurance amount Spousal IRA - ANSWER A provision stating the spouse has the right to a full value IRA even without an earned income Standard risk - ANSWER Persons who obtain insurance without being rated for special risks Stock bonus plan - ANSWER Providing stock as an end-of- year bonus to an employee instead of cash Stock insurers - ANSWER Insurance companies contracted like typical corporations; non-par companies Stock redemptions plan - ANSWER owners of a close corporation (small-company) purchase stock of the deceased owner Stop loss provision - ANSWER Stopping the out-of-pocket expense of an insured; does not include the deductible Straight life income annuity - ANSWER A savings plan that pays out only for the lifetime of the annuitant; no beneficiary Straight whole life insurance - ANSWER Policy where premium is paid for the whole lifetime of the insured Stranger originated life insurance - ANSWER Selling policies to seniors obtaining loans where the agent is the beneficiary Subscriber - ANSWER "Policy owner" of a service provider health care plan Substandard risk - ANSWER The category where the risk is greater due to physical reasons, occupation, hobby Successor beneficiary - ANSWER (Secondary beneficiary) if the primary is not living when the insured dies Suicide provision - ANSWER Premiums are returned if suicide committed prior to an established time like 1 or 2 years Supplementary major medical policy - ANSWER The part of a health plan which covers after the basic and deductible Surgical expense insurance - ANSWER Covering for the surgeon and anesthesiologist in health insurance Surgical schedule - ANSWER The sample of charges for various procedures that are covered Surety or Guaranty - ANSWER A promise to assume responsibility for a borrower's debt if that borrower defaults Surrender value - ANSWER The cash value of a life insurance policy that is available if the policy is surrendered Taxable wage base - ANSWER The maximum amount of earnings where the FICA taxes are paid Tax sheltered annuity - ANSWER Savings plan for nonprofit organizations (403b) Temporary flat extra premium - ANSWER Extra premium paid because of an increased risk which is temporary Temporary insurance agreement - ANSWER Also called a binding receipt Universal Life - ANSWER The second major type of a permanent policy; flexible; cash value plus ART Valued contract - ANSWER A contract establishing a specific benefit of a set amount known ahead of time Variable annuity - ANSWER An annuity savings account where the cash value is invested in mutual funds Variable life insurance - ANSWER A whole life insurance policy where the cash value is invested in mutual funds Variable universal life insurance - ANSWER A Universal Life policy where the cash value is invested in mutual funds Vesting - ANSWER The rights of employees to all or a portion of the retirement contribution of their company Viatical broker - ANSWER A licensed insurance agent permitted to solicit viatical settlement agreements Viatical provider - ANSWER A company that buys life insurance policies from the terminally ill Viatical settlement contract - ANSWER Where the terminally ill owner of a policy sells the policy for less than full value Viator - ANSWER There terminally ill person arranging for a viatical settlement contract with the viatical company Vision insurance - ANSWER Optician, optometrist, ophthalmologist coverage in a group plan Voidable contract - ANSWER An agreement where the insured can walk away from the contract; unilateral contract Void contract - ANSWER An agreement where the entire premium is returned because the contract was never legal Waiver - ANSWER An agreement waiving liability; giving up of a legal right Waiver of premium - ANSWER Company waives the right to collect if the insured is disabled from accident or sickness War clause - ANSWER The policy does not pay if the insured dies a war zone Warrantees - ANSWER Statements made which are absolutely true; exact Whole life insurance - ANSWER Permanent life insurance coverage for a "whole lifetime" Wholesale insurance - ANSWER Real individual policies with real medicals but done in a group; see franchise life Workers compensation insurance - ANSWER Benefits paid to workers for job-related injuries or disease Yearly Renewable Term Insurance (YRT) - ANSWER The same as annually renewable term (ARTs)