Definition Phrase

Question 1

Facultative Reinsurance V. Treaty Reinsurance

Answer 1

Facultative: Transferring risk from one insurance company to another on a policy-by-policy basis. Treaty: Transferring risk from one insurance company to another under a blanket agreement.

Question 2

Life Annuity With Period Certain

Answer 2

A Life Annuity that guarantees to provide income payments for a minimum period of time or life. Payments will continue to a beneficiary should the annuitant die during the specified period.

Question 3

General Account v. Separate Account

Answer 3

General Account: Contains the regulated, or guaranteed, funds of an insurance company. Separate Account: Contains the investments of an insurance company. These investments have no guaranteed rate of return and are regulated by the SEC and NASD.

Question 4

Accidental Death Benefit

Answer 4

An extra cost rider that requires the insurance company to pay an additional benefit in the event that the insured dies within 90 days of an accident as a direct result of the accident.

Question 5

Free Lock Provision

Answer 5

A policy provision required by state law that establishes a set number of days (usually 10) for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as refund provision, unconditional refund provision, return provision, exchange provision, or right to examine.

Question 6

Policy Payment Methods

Answer 6

Continuous Premium: Insurance or an annuity that is paid for continuously throughout the duration of the policy. Requires the smallest payments amounts and grows cash value the slowest.

Question 7

Policy Payment Methods

Answer 7

Limited Pay: Insurance or an annuity that is paid for over a specified period of time after which no further premium payments are required during the duration of the policy. Known as Life Paid Up or x-Pay Life policies.