Core life and health insurance policy terms and state licensing exam vocabulary.
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- What is life insurance?
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A contract where an insurance company pays a designated beneficiary a sum of money upon the death of the insured person.- What is health insurance?
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Coverage that pays for medical expenses, including hospitalization, doctor visits, preventive care, and prescription drugs.- Define beneficiary in insurance.
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The person or entity designated to receive the death benefit or other policy proceeds.- What is the difference between the policy owner and the insured?
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The policy owner is the person who owns and controls the policy; the insured is the person whose life is covered.- Define premium.
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The regular payment made by the policyholder to keep an insurance policy in force.- What is underwriting?
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The process of evaluating an applicant's risk to determine whether to issue a policy and at what rate.- What is risk classification in underwriting?
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The assignment of an applicant to a risk category (Standard, Preferred, or Substandard) based on health and lifestyle factors.- What does APS stand for?
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Attending Physician Statement, a detailed report from an applicant's doctor used during underwriting.- Define the contestability period.
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A period, usually two years from policy issue, during which an insurer can deny a claim due to material misstatement on the application.- What is a grace period?
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A specified time period, usually 30 days, during which a premium can be paid after the due date without the policy lapsing.- What is policy reinstatement?
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The process of restoring a lapsed policy to active status by paying overdue premiums and any applicable interest.- Define surrender value.
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The amount of money a policyholder receives if they voluntarily terminate a policy before maturity.- What is cash value?
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The portion of permanent life insurance premiums that accumulates as a savings component and can be borrowed against or withdrawn.- Define term life insurance.
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Life insurance coverage for a specified period, typically 10, 20, or 30 years, with no cash value component.- What is whole life insurance?
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A permanent life insurance policy that provides lifetime coverage with guaranteed premiums, guaranteed death benefit, and accumulating cash value.
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