Xcel Texas Pre-licensing Education - Life and
Health Insurance Glossary Correctly Verified
Absolute assignment - Answer Policy assignment under which the assignee (person to whom the policy
is assigned) receives full control over the policy and also full rights to its benefits. Generally, when a
policy is assigned to secure a debt, the owner retains all rights in the policy in excess of the debt, even
though the assignment is absolute in form. (See assignment)
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.
Acceptance (See offer and acceptance) - Answer
Accidental bodily injury provision - Answer Disability income or accident policy provision that requires
that the injury be accidental in order for benefits to be payable.
Accidental death and dismemberment (AD&D) - Answer Insurance providing payment if the insured's
death results from an accident, if the insured accidentally severs a limb above the wrist or ankle joints,
or totally and irreversibly loses eyesight.
Accidental death benefit rider - Answer A life insurance policy rider providing for payment of an
additional benefit when death occurs by accidental means.
Accidental dismemberment - Answer Often defined as "the severance of limbs at or above the wrists or
ankle joints, or the entire irrevocable loss of sight." Loss of use in itself may or not be considered
dismemberment.
Accidental means provision - Answer Unforeseen, unexpected, unintended cause of an accident.
Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim
to be payable.
Accident and health insurance - Answer 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.
,Accumulation unit - Answer Premiums an annuitant pays into annuities are credited as accumulation
units. At the end of the accumulation period, accumulation units are converted to annuity units.
Acquired immune deficiency syndrome (AIDS) - Answer A life-threatening condition brought on by the
human immunodeficiency virus; insurers must adhere to strict underwriting and claims guidelines in
regard to AIDS risks and AIDS-related conditions.
Acute illness - Answer A serious condition, such as pneumonia, from which the body can fully recover
with proper medical attention.
Adhesion - Answer 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.
Adjustable life insurance - Answer Combines features of both term and whole life coverage with the
length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be
increased or decreased to fit the specific needs. Such adjustments are not retroactive and apply only to
the future.
Administrative-services-only (ASO) Plan - Answer Arrangement under which an insurance company or an
independent organization, for a fee, handles the administration of claims, benefits, and other
administrative functions for a self-insured group.
Admitted insurer - Answer An insurance company that has met the legal and financial requirements for
operation within a given state.
Adult day care - Answer 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.
Adverse selection - Answer Selection "against the company." Tendency of less favorable insurance risks
to seek or continue insurance to a greater extent than others. Also, tendency of policy owners to take
advantage of favorable options in insurance contracts.
,Advertising Code - Answer Rules established by the National Association of Insurance Commissioners
(NAIC) to regulate insurance advertising.
Agency - Answer Situation wherein one party (an agent) has the power to act for another (the principal)
i n dealing with third parties.
Agent - Answer 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.
Agent's report - Answer The section of an insurance application where the agent reports personal
observations about the applicant.
Aleatory - Answer Feature of insurance contracts in that there is an element of chance for both parties
and that the dollar given by the policyholder (premiums) and the insurer (benefits) may not be equal.
Alien Insurer - Answer Company incorporated or organized under the laws of any foreign nation,
providence, or territory.
Ambulatory surgery - Answer Surgery performed on an outpatient basis.
Amount at risk - Answer 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.
Annually renewable term (ART) - Answer A form of renewable term insurance that provides coverage for
one year and allows the policy owner to renew coverage each year without evidence of insurability. Also
called yearly renewable term (YRT).
Annuitant - Answer One to whom an annuity is payable, or a person upon the continuance of whose life
further payment depends.
, Annuity - Answer A contract that provides a stipulated sum payable at certain regular intervals during
the lifetime of one or more persons, or payable for a specified period only.
Annuity unit - Answer The number of annuity units denotes the share of the funds an annuitant will
receive from a variable annuity account after the accumulation period ends and benefits begin. A
formula is used to convert accumulation units to annuity units.
Any occupation - Answer A definition of total disability that requires that for disability income benefits
to be payable, the insured must be unable to perform any job for which the insured is "reasonably
suited by reason of education, training, or experience."
Apparent authority - Answer The authority an agent appears to have, based on the principal's (the
insurer's) actions, words, deeds, or because of circumstances the principal (the insurer) created.
Application - Answer Form supplied by the insurance company, usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant. It is signed by the
applicant and is part of the insurance policy if it is issued. It gives information to the home office
underwriting department, so it may consider whether an insurance policy will be issued and, if so, in
what classification and at what premium rate.
Appointment - Answer Authorization or certification of an agent to act for or represent an insurance
company.
Approval receipt - Answer Rarely used today, a type of conditional receipt that provides that coverage is
effective as of the date the application is approved (before the policy is delivered).
Assessment mutual insurer - Answer An insurance company characterized by member-insureds who are
assessed an individual portion of each loss that occurs. No premium payment is payable in advance.
Assignee Person (including corporation, partnership, or other organization) to whom a right or rights
under a policy are transferred by means of an assignment. - Answer
Assignment provision (health contracts) - Answer Commercial health policy provision that allows the
policy owner to assign benefit payments from the insurer directly to the health care provider.
Health Insurance Glossary Correctly Verified
Absolute assignment - Answer Policy assignment under which the assignee (person to whom the policy
is assigned) receives full control over the policy and also full rights to its benefits. Generally, when a
policy is assigned to secure a debt, the owner retains all rights in the policy in excess of the debt, even
though the assignment is absolute in form. (See assignment)
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.
Acceptance (See offer and acceptance) - Answer
Accidental bodily injury provision - Answer Disability income or accident policy provision that requires
that the injury be accidental in order for benefits to be payable.
Accidental death and dismemberment (AD&D) - Answer Insurance providing payment if the insured's
death results from an accident, if the insured accidentally severs a limb above the wrist or ankle joints,
or totally and irreversibly loses eyesight.
Accidental death benefit rider - Answer A life insurance policy rider providing for payment of an
additional benefit when death occurs by accidental means.
Accidental dismemberment - Answer Often defined as "the severance of limbs at or above the wrists or
ankle joints, or the entire irrevocable loss of sight." Loss of use in itself may or not be considered
dismemberment.
Accidental means provision - Answer Unforeseen, unexpected, unintended cause of an accident.
Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim
to be payable.
Accident and health insurance - Answer 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.
,Accumulation unit - Answer Premiums an annuitant pays into annuities are credited as accumulation
units. At the end of the accumulation period, accumulation units are converted to annuity units.
Acquired immune deficiency syndrome (AIDS) - Answer A life-threatening condition brought on by the
human immunodeficiency virus; insurers must adhere to strict underwriting and claims guidelines in
regard to AIDS risks and AIDS-related conditions.
Acute illness - Answer A serious condition, such as pneumonia, from which the body can fully recover
with proper medical attention.
Adhesion - Answer 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.
Adjustable life insurance - Answer Combines features of both term and whole life coverage with the
length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be
increased or decreased to fit the specific needs. Such adjustments are not retroactive and apply only to
the future.
Administrative-services-only (ASO) Plan - Answer Arrangement under which an insurance company or an
independent organization, for a fee, handles the administration of claims, benefits, and other
administrative functions for a self-insured group.
Admitted insurer - Answer An insurance company that has met the legal and financial requirements for
operation within a given state.
Adult day care - Answer 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.
Adverse selection - Answer Selection "against the company." Tendency of less favorable insurance risks
to seek or continue insurance to a greater extent than others. Also, tendency of policy owners to take
advantage of favorable options in insurance contracts.
,Advertising Code - Answer Rules established by the National Association of Insurance Commissioners
(NAIC) to regulate insurance advertising.
Agency - Answer Situation wherein one party (an agent) has the power to act for another (the principal)
i n dealing with third parties.
Agent - Answer 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.
Agent's report - Answer The section of an insurance application where the agent reports personal
observations about the applicant.
Aleatory - Answer Feature of insurance contracts in that there is an element of chance for both parties
and that the dollar given by the policyholder (premiums) and the insurer (benefits) may not be equal.
Alien Insurer - Answer Company incorporated or organized under the laws of any foreign nation,
providence, or territory.
Ambulatory surgery - Answer Surgery performed on an outpatient basis.
Amount at risk - Answer 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.
Annually renewable term (ART) - Answer A form of renewable term insurance that provides coverage for
one year and allows the policy owner to renew coverage each year without evidence of insurability. Also
called yearly renewable term (YRT).
Annuitant - Answer One to whom an annuity is payable, or a person upon the continuance of whose life
further payment depends.
, Annuity - Answer A contract that provides a stipulated sum payable at certain regular intervals during
the lifetime of one or more persons, or payable for a specified period only.
Annuity unit - Answer The number of annuity units denotes the share of the funds an annuitant will
receive from a variable annuity account after the accumulation period ends and benefits begin. A
formula is used to convert accumulation units to annuity units.
Any occupation - Answer A definition of total disability that requires that for disability income benefits
to be payable, the insured must be unable to perform any job for which the insured is "reasonably
suited by reason of education, training, or experience."
Apparent authority - Answer The authority an agent appears to have, based on the principal's (the
insurer's) actions, words, deeds, or because of circumstances the principal (the insurer) created.
Application - Answer Form supplied by the insurance company, usually filled in by the agent and medical
examiner (if applicable) on the basis of information received from the applicant. It is signed by the
applicant and is part of the insurance policy if it is issued. It gives information to the home office
underwriting department, so it may consider whether an insurance policy will be issued and, if so, in
what classification and at what premium rate.
Appointment - Answer Authorization or certification of an agent to act for or represent an insurance
company.
Approval receipt - Answer Rarely used today, a type of conditional receipt that provides that coverage is
effective as of the date the application is approved (before the policy is delivered).
Assessment mutual insurer - Answer An insurance company characterized by member-insureds who are
assessed an individual portion of each loss that occurs. No premium payment is payable in advance.
Assignee Person (including corporation, partnership, or other organization) to whom a right or rights
under a policy are transferred by means of an assignment. - Answer
Assignment provision (health contracts) - Answer Commercial health policy provision that allows the
policy owner to assign benefit payments from the insurer directly to the health care provider.
