Module 1, Lesson 4 Flashcards
Actuary
An expert in financial risk management and the mathematics and modeling of insurance, annuities, and financial instruments.
Premium Rate
The amount an insurer charges per unit of insurance coverage.
Adequate
The company will have enough money to pay policy benefits.
Equitable
Each policyowner pays a premium that reflects the degree of risk he presents to the insurer.
Death Benefit
The insurance benefit paid when the insured person dies.
Surrender Benefit
The amount of the cash value that a policyowner is entitled to receive upon surrender of the policy.
Cost of Benefits
The value of the benefits guaranteed by the insurer. For purposes of pricing an insurance product, the cost of benefits equals all of the insurer’s potential payments of benefit obligations to customers multiplied by the expected probability that each benefit will be payable.
Mortality Rate
The rate at which death occurs among a specified group of people during a specified period, typically one year.
Mortality Tables
A chart that displays the number of people in a large group who are likely to die at certain ages.
Surrender
A transaction in which the owner of a cash value life insurance contract elects to terminate the contract prior to its maturity and receive the cash surrender value.
Lapse Rates
The annual percentage of policies that do not remain in force because the policyowner stops paying premiums.
Block of Policies
A group of policies issued to insureds who are all the same age, the same sex, and in the same risk classification.
Cost of Benefits Calculation
With a $100,000 face amount, Amanda’s policy has 100 coverage units ($100,000 ÷ $1,000). Because Amanda will pay $2.50 for each coverage unit, her annual premium amount is $250 (100 units × $2.50).
Interest
A payment for the use of money.
Principal
The sum of money originally invested, loaned, or borrowed.
