Insurance Exam Glossary
Master the terminology you need to pass your state insurance licensing exam. Simple definitions for complex concepts.
A policy provision that allows the insured to receive a portion of the death benefit early if diagnosed with a terminal illness.
A policy or rider that pays a benefit if the insured dies or loses a limb/eyesight due to an accident.
A professional who analyzes statistical data to calculate insurance risks and premiums.
A contract where one party (the insurer) sets the terms, and the other party (the insured) must take it or leave it.
A person who investigates insurance claims and recommends a settlement amount.
The tendency of individuals with higher risk of loss to purchase insurance more often than those with lower risk.
A licensed representative who sells insurance policies on behalf of an insurer.
A contract where the exchange of value is unequal and depends on an uncertain event.
An insurance company incorporated under the laws of a country other than the United States.
A financial product designed to provide a guaranteed income stream, typically for retirees.
The transfer of legal rights or ownership of a policy from one party to another.
The savings element of a permanent life insurance policy that builds up over time.
A formal request by a policyholder to an insurance company for coverage or compensation for a covered loss.
A cost-sharing provision where the insured and insurer share the cost of a covered claim after the deductible has been met.
The payment an agent receives from the insurance company for selling a policy, usually a percentage of the premium.
The intentional withholding of material facts by an applicant that could affect the validity of the policy.
A receipt given to an applicant when they pay the initial premium with the application.
A time period (usually 2 years) during which the insurer can challenge a claim due to material misrepresentations.
A fixed amount the insured pays for a specific service, such as a doctor's visit or prescription.
The amount paid to a beneficiary upon the death of the insured.
The amount the insured must pay out-of-pocket before the insurance company begins to pay for a covered loss.
A return of excess premiums to policyholders of mutual insurance companies.
An insurance company incorporated in the state where it is doing business.
The waiting period in a disability income policy before benefits begin.
A written document attached to an insurance policy that modifies the policy's coverage.
A legal principle that prevents a party from denying or alleging a fact because of their previous conduct.
Specific conditions or circumstances for which the policy will not provide benefits.
A person in a position of special trust and confidence, such as an agent handling premiums.
An insurance company incorporated in a US state other than the one where it is doing business.
A period during which a new policyowner can review the policy and return it for a full refund of the premium.
A provision preventing an insurer from disputing a policy's validity after it has been in force for a set period (usually 2 years).
The principle of restoring the insured to the same financial position they were in before the loss occurred.
A financial or emotional interest in the life or property insured.
The person or entity covered by the insurance policy.
Termination of a policy due to non-payment of premiums.
A statistical principle stating that as the number of exposure units increases, the actual loss experience will approach the expected loss experience.
Coverage that protects the insured against claims for bodily injury or property damage to others.
A false statement by an applicant that would have caused the insurer to reject the application or rate it differently.
A joint federal and state program helping low-income individuals pay for healthcare.
A federal health insurance program for people 65 or older and certain younger people with disabilities.
A risk factor arising from the character or dishonesty of the insured.
Carelessness or indifference to a loss because of the existence of insurance.
An insurance company owned by its policyholders.
The immediate specific event causing a loss.
The legal contract between the insurer and the insured detailing the coverage terms.
The person who has ownership rights in the policy.
A health plan that contracts with medical providers to create a network.
The amount of money an individual or business pays for an insurance policy.
The full face amount payable for accidental death under an AD&D policy.
The process of putting a lapsed policy back in force.
Insurance purchased by an insurance company from another insurance company to spread risk.
Term insurance that guarantees the policyowner the right to renew the coverage at the end of the term without proving insurability.
The process of cancelling an existing policy to purchase a new one.
An add-on provision to a basic insurance policy that provides additional benefits or amends the terms of the policy.
The uncertain potential for loss.
An insurance company owned by stockholders.
The insurer's right to pursue a third party that caused an insurance loss to the insured.
An applicant who does not meet standard underwriting requirements due to health, occupation, or high-risk habits.
A fee charged to a policyholder when they withdraw cash value early.
A period of time that must pass before coverage becomes effective or benefits are paid.
A rider that waives the policy premiums if the insured becomes totally disabled.
A statement guaranteed to be true.
Permanent life insurance that provides coverage for the insured's entire life.