Glossary of insurance 2026 UPDATED ACTUAL Questions
and CORRECT Answers
Accident - An unplanned, unforeseen event which occurs suddenly and at an unspecified
place.
Accident Insurance A type of insurance that protects the insured against loss due to accidental bodily
injury.
Accidental Bodily Injury - Unplanned, unforeseen traumatic injury to the body.
Accidental Death and Dismemberment An insurance policy which pays a specified amount or a specified multiple of the
insured's benefit if the insured dies, loses sight, or loses two limbs due to an
accident.
Accidental Death Benefits - A policy rider that states that the cause of death will be analyzed to determine if
it complies with the policy description of accidental death.
Activities of Daily Living ADLs) – Activities individuals must do every day, such as moving about
(transferring), getting dressed, eating, or bathing.
Actual Charge - The amount a physician or supplier actually bills for a particular service or supply
Adhesion A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the
insured's only option is to accept or reject the contract. Any ambiguities in the
contract will be settled in favor of the insured.
, Admitted Insurer An insurance company authorized and licensed to transact insurance in a
particular state.
Adult Day Care A program for impaired adults that attempts to meet their health, social, and
functional needs in a setting away from their homes.
Adverse Selection The tendency of risks with higher probability of loss to purchase and maintain
insurance more often than the risks who present lower probability.
Agent An individual who is licensed to sell, negotiate, or effect insurance contracts on
behalf of an insurer.
Aleatory A contract in which participating parties exchange unequal amounts. Insurance
contracts are aleatory in that the amount the insured will pay in premiums is
unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer An insurance company that is incorporated outside the United States.
Alzheimer’s Disease A disease that causes the victim to become dysfunctional due to degeneration of
brain cells and severe memory loss.
Apparent Authority The appearance or the assumption of authority based on the actions, words, or
deeds of the principal or because of circumstances the principal created.
Approved Amount The amount Medicare determines to be reasonable for a service that is covered
under Part B of Medicare.
Assignment A claim to a provider or medical supplier to receive payments directly from
Medicare.
Attained Age - The age of the insured at a determined date.
Attending Physician’s Statement (APS) A statement usually obtained from the applicant's doctor.
Authorized Insurer An insurance company authorized and licensed to transact business in a particular
state.
Avoidance A method of dealing with risk (e.g., if a person who wants to avoid the risk of dying
in an airplane crash may choose never to fly in a plane).
Basic Hospital Expense Insurance Coverage that provides benefits for room, board and miscellaneous hospital
expenses for a certain number of days during a hospital stay.
and CORRECT Answers
Accident - An unplanned, unforeseen event which occurs suddenly and at an unspecified
place.
Accident Insurance A type of insurance that protects the insured against loss due to accidental bodily
injury.
Accidental Bodily Injury - Unplanned, unforeseen traumatic injury to the body.
Accidental Death and Dismemberment An insurance policy which pays a specified amount or a specified multiple of the
insured's benefit if the insured dies, loses sight, or loses two limbs due to an
accident.
Accidental Death Benefits - A policy rider that states that the cause of death will be analyzed to determine if
it complies with the policy description of accidental death.
Activities of Daily Living ADLs) – Activities individuals must do every day, such as moving about
(transferring), getting dressed, eating, or bathing.
Actual Charge - The amount a physician or supplier actually bills for a particular service or supply
Adhesion A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the
insured's only option is to accept or reject the contract. Any ambiguities in the
contract will be settled in favor of the insured.
, Admitted Insurer An insurance company authorized and licensed to transact insurance in a
particular state.
Adult Day Care A program for impaired adults that attempts to meet their health, social, and
functional needs in a setting away from their homes.
Adverse Selection The tendency of risks with higher probability of loss to purchase and maintain
insurance more often than the risks who present lower probability.
Agent An individual who is licensed to sell, negotiate, or effect insurance contracts on
behalf of an insurer.
Aleatory A contract in which participating parties exchange unequal amounts. Insurance
contracts are aleatory in that the amount the insured will pay in premiums is
unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer An insurance company that is incorporated outside the United States.
Alzheimer’s Disease A disease that causes the victim to become dysfunctional due to degeneration of
brain cells and severe memory loss.
Apparent Authority The appearance or the assumption of authority based on the actions, words, or
deeds of the principal or because of circumstances the principal created.
Approved Amount The amount Medicare determines to be reasonable for a service that is covered
under Part B of Medicare.
Assignment A claim to a provider or medical supplier to receive payments directly from
Medicare.
Attained Age - The age of the insured at a determined date.
Attending Physician’s Statement (APS) A statement usually obtained from the applicant's doctor.
Authorized Insurer An insurance company authorized and licensed to transact business in a particular
state.
Avoidance A method of dealing with risk (e.g., if a person who wants to avoid the risk of dying
in an airplane crash may choose never to fly in a plane).
Basic Hospital Expense Insurance Coverage that provides benefits for room, board and miscellaneous hospital
expenses for a certain number of days during a hospital stay.
