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242 Cards in this Set

  • Front
  • Back
1033Waiver
A legal document granted by state insurance departments
that allows those who have been convicted of a felony
involving dishonesty or breach of trust to legally sell
insurance.
12b-1 Fee
Annual fee charged to cover general expenses of no-load
mutual funds; considered an operational expense.
24-Hour Coverage
A health insurance program offered in some states that
combines occupational (workers' compensation) and
non-occupational coverage in a single package; generally
purchased from either a health or a casualty insurance
producer.
401(k) Plan
A CODA plan that allows employees to place a set
percentage of their wages in a retirement account; 401(k)
plan participants may utilize a number of advantages under
this plan, such as tax-deductible contributions, the ability to
freely borrow from the plan's earnings without penalties,
and, in some cases, matching contributions from employers.
403(b) Plan
A CODA plan designed for employees of non-profit
organizations (such as schools, churches, and hospitals) that
functions much like a 401(k) plan.
Abandonment Clause
A property insurance provision that protects the insured’s
ability to receive a full settlement amount in the event that
covered property is beyond repair, or its repair costs are
more than the property’s total value; when this clause is
invoked by the insured, the insurer pays the full settlement
amount and retains right of salvage (if applicable) after the
insured abandons the property. Also referred to as an
abandonment condition.
Abandonment Condition
A property insurance provision that protects the insured’s
ability to receive a full settlement amount in the event that
covered property is beyond repair, or its repair costs are
more than the property’s total value; when this clause is
invoked by the insured, the insurer pays the full settlement
amount and retains right of salvage (if applicable) after the
insured abandons the property. Also referred to as an
abandonment clause.
Absolute Assignment
A transaction in which a policyowner (assignor) transfers
all legal rights under an insurance policy to another
(assignee); the assignor is typically left with no way to
recover the surrendered rights; also known as complete
assignment or permanent assignment.
Absolute Liability
Liability assumed by a party involved in a dangerous
activity; for example, a company that uses explosives
assumes absolute liability for any damages related to the use of those explosives.
Accelerated Benefit Rider
A life insurance policy rider which, under certain
circumstances, allows a policyowner to to receive some or
all of a policy’s death benefit while still living; also referred
to as a living benefits option.
Accelerated Benefits
Life insurance death benefit funds distributed on a tax-free
basis while the insured is still living, generally available
only if the insured has limited life expectancy; distributions
are not considered a policy loan, since they do not have to
be repaid, and the value of the policy decreases with each
accelerated benefit payment.
Accident
Any unexpected event that results in a loss and is outside
the control of all parties involved.
Accident-Only Insurance
Insurance that only offers coverage to individuals and
groups who are traveling on a bus, airplane, train, or rental
vehicle; also known as "travel accident" insurance.
Accidental Bodily Injury
A provision found in some disability income policies that
requires benefits be paid only if an injury is unanticipated
or accidental; this provision is less restrictive than the
accidental means provision, in that insureds can still receive
benefits if they are injured or suffer illness while
performing dangerous activities, as long as they did not
voluntarily wish to be harmed or expect injury to occur.
Accidental Death
The unexpected end of a person's life, with no other
contributing cause, within 90 days of a triggering event,
such as a car accident.
Accidental Death and Dismemberment Coverage (AD&D)
Insurance policy or rider added to life or health policy that
pays a lump sum to the insured or his beneficiaries if the
insured dies in an accident or suffers dismemberment of
limbs or eyesight in an accident; AD&D is typically
included in group insurance plans.
Accidental Death Rider
A life insurance policy endorsement that provides for the
payment of a multiple death benefit (usually double the
policy's face value) in the event that an insured dies within
90 days of an accident deemed to be the sole cause of death;
also known as a double indemnity rider.
Accidental Means
A provision found in some types of disability income
policies that requires benefits be paid only in the event of
"accidental means" (i.e. circumstances that could not have
been reasonably foreseen by the insured); for example,
injuries or illnesses related to actions taken by the insured
(such as jaywalking) or activities engaged in by the insured
(such as playing tackle football) would not be covered.
Accidental Results
A provision found in some disability income policies which
stipulates that only the loss must be unintentional (and not
the cause of loss) in order for the insured to receive
benefits.
Accounts Receivable Coverage Form
A business owner policy floater that covers monies
uncollectible from customers because of damage to an
insured’s accounts receivable records.
Accredited Investor
An individual or entity that meets one of the requirements
of Regulation D, Rule 501; high income investors.
Accumulation Period
The first stage of an annuity's life cycle during which funds
are contributed, or paid into, the annuity; an annuity
contract may be terminated during the accumulation period,
but not after the policy is annuitized; also referred to as the
accumulation phase.
Accumulation Phase
The first stage of an annuity's life cycle during which funds
are contributed, or paid into, the annuity; an annuity
contract may be terminated during the accumulation phase,
but not after the policy is annuitized; also referred to as the
accumulation period.
Accumulation Units
Term used to describe funds deposited into a variable
annuity; the value of an accumulation unit is calculated in
much the same way the value of shares in a mutual fund is
determined, using the current dollar value of the separate
account (the investment portfolio) and the total number of
accumulation units that have been distributed to other
annuitants invested in the same account.
Activities of Daily Living (ADL)
Actions taken by a person such as eating, dressing, bathing,
toileting, and mobility; ADLs are defined and used by
healthcare professionals to determine an individual's ability
to function independently and how much assistance is
required by an applicant for long-term care insurance.
Actual Cash Value
The cost to replace property at its value at the time of loss;
actual cash value is calculated by subtracting depreciation
from the item's replacement cost.
Actuaries
Business professionals who deal with the financial impacts
of risks and uncertainties; their assessments of data and
statistics help form the basis for premium rates of insurance
policies.
Addition
Single-premium insurance policies of same policy type.
Additional Coverage
Supplementary protection that is automatically provided (at
no additional cost) above and beyond the major coverage
categories, in many cases increasing the value of a property
insurance policy; additional coverages provide protection against perils such as debris removal and credit
card/identify theft.
Additional Insured
The secondary business or individual with a stake in an
insurance contract; additional insureds are only found in
commercial insurance contracts.
AdditionalMonthly Benefit (AMB)
A short-term rider providing additional benefits to a
disabled insured during the first 6 or 12 months of a claim.
Adhesion
The notion that the insured agrees to and complies with the
terms of the insurance policy as written.
Adjustable Life Policy
A life insurance policy that allows a policyowner to modify
certain features of the contract without purchasing a new
policy, such as the policy's premium amount; premium
payment mode; face amount; or maturity date.
Adjustable Premium Life Insurance
A highly customizable life insurance policy with varying
terms, payment schedules, premium amounts, face values,
and payout amounts; also known as "flexible life
insurance."
Adjusted Gross Income (AGI)
All income earned by an individual, minus any tax
deductions; this includes wages, capital gains, income from
retirement accounts, and any other sources of income.
Administrative Capability
The idea that the employer is responsible for ensuring that
the administration of a group insurance plan is conducted in
a legal, objective and confidential manner.
Administrator
The person responsible for overseeing the securities
industry in each state pursuant to the Uniform Securities
Act.
Admitted Insurer
An insurer that meets the state's legal requirements for
conducting insurance business; also referred to as an
authorized insurer.
Advantage Plan
Insurance plan offered under Medicare: Part C; the four
types of advantage plan are private fee-for-service, specialty,
managed care (HMO), and preferred provider organization
(PPO) plans.
Adverse Selection
The tendency of people with a higher risk for loss to apply
for or continue insurance coverage to a greater extent than
those with a lower risk for loss.
Advertisement
Communication that is directed to the public at large; the
creator of the ad has no control over who will view it.
Advertising Injury
Harm done to an individual or company's reputation
through deceptive or misleading advertising practices.
Adviser’s Disclosure Brochure (FormADV)
The uniform two-part form used by investment advisers to
register with both the SEC and state securities authorities.
Affiliation Period
A period of time that must pass before health care insurance
coverage provided by an HMO becomes effective.
Affirmatory Warranty
A statement regarding a fact as it exists at the time the
contract is formed.
After-Tax Dollars
Money that has already been subject to taxation.
After market
A market in which resales of securities occur.
Age of Majority
The age at which an individual is legally considered an
adult with all the rights and responsibilities of adulthood.
Agency
A relationship in which one person (the agent) is granted
the authority to act on behalf of another person (the
principal).
Agency Cross Transactions
A prohibited transaction that occurs when an investment
adviser sells or purchases a security from its own account to
a client without notifying the client in writing and obtaining
the client's consent before completing the transaction.
Agent
Insurance: An official representative of an insurance
provider who acts on the provider's behalf in selling and
servicing insurance contracts. Securities: An official
representative of a broker dealer who acts on the broker
dealer's behalf in selling and servicing securities; also
referred to as registered representative.
Aggregate Claim Amount
A formula used by insurers to calculate premium rates; the
aggregate claim amount is calculated by multiplying the
claim frequency rate by the average dollar amount per
claim.
Aggregate or Aggregate Limit
The total amount that an insurer will pay for all losses
incurred within the policy period.
Aggregate Stop-Loss Coverage
An insurance contract in which the employer’s liability for
claims is limited by the group's combined amount.
Agreed Value
A value mutually approved by the insurer and insured when
a property insurance policy is established; these are often
used when insuring irreplacable property under a valued
policy.
Airworthiness Certificate
.
An official document issued by a representative of the FAA
after an inspection finds that the aircraft is safe for normal
operation; aircraft lacking a valid airworthiness certificate
are typically excluded from aviation insurance policies
Aleatory
.
The idea that the performance of an insurance contract
depends upon an unpredictable event that may or may not
occur, meaning that either the insurer or insured may
receive unequal value for his contribution depending on the
extend of a loss; for example, a policyholder who pays
premiums but never submits a claim
Alien Insurer
An insurance provider domiciled outside the United States.
All-Cause Deductible
A deductible which applies to expenses incurred for any
number of accidents or illnesses occurring during a calendar
year; an all-cause deductible only needs to be met once
during the year regardless of how many losses are incurred.
All-or-Nothing
When an insured is paid a benefit only if the Social Security
application is denied. If the insured is eligible for Social
Security benefits, then the private policy pays nothing.
All-Risk Insurance
A property insurance form that covers all physical loss or
damage to covered buildings and personal property except
when caused by those perils specifically limited or excluded;
also known as "special coverage" or a "special cause of loss
form."
Alteration
A deceptive act involving unlawfully signing the name of
another person or organization on an official document; also
known as "forgery."
Ambulatory Outpatient Care
Any medical procedure where diagnostic testing and
treatment is provided without a hospital stay.
American with Disabilities Act (ADA)
A federal act that states, among other things, that employers
with 15 or more employees cannot discriminate based on a
person’s disability.
Annual Open Enrollment
The time during which eligible employees can join the
group health plan – usually without evidence of insurability.
Annual Renewable Term (ART)
A term life insurance renewability option where the policy
is renewed for a term of one year, and premiums are
recalculated along with each annual renewal.
Annual Total Return
Annual return of a fund includes the effects of reinvested
distribution and any appreciation in share price, less any
sales charges and other fund expenses.
Annual Total Return
.
Appreciation in share price minus sales charges and other
fund expenses
Annuitant
The owner of an annuity.
Annuitization
The conversion of annuity funds into periodic income
payments.
Annuitize
Term used to describe when an annuity matures, and the
annuity period begins.
Annuity
A contract issued by an insurance provider that guarantees a
stream of income for a set period of time.
Annuity Phase
The period of time in which an annuity's accumulated
monies are paid to the policyowner; the second major stage
of an annuity's life cycle.
Annuity Units
Term used to describe accumulation units that have been
converted upon maturation of an annuity; the provider
calculates how long the annuitant is expected to live after
the annuity matures, spreads the annuity units out over that
period, and provides the annuitant with a dollar amount
equal to scheduled annuity units each pay period.
Any Occupation
Term used to describe any job befitting the education,
experience, and training of the insured; an "any occupation"
disability income policy pays benefits to an insured who
has suffered an injury or illness and subsequently cannot
obtain a job befitting the insured's qualifications.
Apparent Authority
.
The authority an agent appears to possess in the eyes of the
insured due to specific actions he undertakes, regardless of
whether that authority actually exists; for example, if an
agent is not allowed to collect premiums and immediately
bind coverage, but does so anyway, the insurance company
would likely be held responsible for those policies.
Applicant
An individual who requests an insurance policy.
Applicant Control
A provision of an insurance policy which allows for a third
party to own a policy covering someone else( a parent
purchasing a life insurance policy for her child, for
example); also known as an "ownership clause."
Application
A statement of information provided by someone seeking
insurance, enabling insurance companies to assess the
acceptability of an applicant’s risk.
Appoint
The act of a state insurance department authorizing an
insurance agent to conduct business in that state.
Appraisal
A condition found in some property insurance policies that
establishes procedures for either party to request an
independent assessor if the insurer and insured cannot agree
on an appropriate settlement amount; when an appraisal
occurs, both parties hire and pay for the services of their
own assessors (known as appraisers) who in turn appoint an
umpire to consult in determining a binding settlement amount.
Arbitrage
The buying or selling of stock in different exchanges to
exploit differences in price between the exchanges.
Arbitration
A condition found in property insurance policies that
establishes procedures to settle a dispute between two
parties; the arbitration process is similar to that of appraisal
with the disagreeing parties hiring two appraisers and an
umpire to render a final decision.
Assessable Stock
A class of stock in which the issuing company is allowed to
demand payment from the holder for the balance of the par
value; no longer in existence in the United States.
Asset
An item of value owned by an individual or corporation;
includes property, inventory, equipment, accounts
receivable, and cash.
Asset Based Fee
Annual fee charged to manage an investor's account,
calculated based on the size and complexity of the portfolio;
may be charged in lieu of 12b-1 fees.
Assigned Risk Insurance Pool
A state-operated program that assists consumers with
excessively high risk factors in obtaining insurance to
comply with state laws.
Assignee
The party who receiving the rights of an assignor.
Assignment
The transfer of a insurance policy's benefits directly back to
the insurer, which relieves the insured of the responsibility
to first pay costs out-of-pocket before receiving
reimbursement from the insurer.
Assignment Condition
A provision found in some insurance policies which states
that the policy is non-transferable without the written
consent of the insurer, except in the case of the insured's
death (whereby the policy automatically transfers to a legal
representative of the insured); also known as the "transfer
of rights or duties under this policy" condition.
Assignor
The party who transfers all of the legal rights of an
insurance policy to another party (the assignee).
Assisted Living Facility
A residential facility that provides limited medical care to
residents who require intermittent care.
Associated Person
Any person registered with the SEC and directly or
indirectly controlled by a FINRA member firm.
Assumed Interest Rate
Interest rate assumed by an insurance company when it
issues a policy based on the performance of the securities in
which assets are invested.
Assumed Liability Coverage
Insurance designed to protect a business that is
contractually obligated to assume responsibility for specific
liability risks; also known as "contractual liability
coverage."
Assumption of Risk
The claim by an insurer that the insured is aware of a
dangerous activity, and is therefore fully liable for any
injury or loss related to that activity.
Attained Age
The age of a policyowner on the date that a term life
insurance policy is renewed.
Attending Physician’s Statement (APS)
A written statement from an insurance applicant's personal
physician, or any medical facility that has treated or is
currently treating the applicant; this statement provides
information about specific medical conditions disclosed in
the insurance application or discovered during a physical
examination.
Attractive Nuisance
Any object or feature on a policyholder's insured property
that represents an inherent danger and is likely to attract
children, such as a trampoline or a swimming pool.
Authorized Insurers
Insurers that meet the state's legal requirements for
conducting insurance business; also called admitted
insurers.
Authorized Shares
The number of shares of common stock a corporation is
allowed to sell; specified in the original charter when a
corporation is formed. These may be issued shares,
unissued shares, treasury stock, or outstanding stock.
Auto
A motor vehicle, trailer, or semi-trailer that is subject to
motor vehicle laws and designed for travel on public roads.
Automatic Enrollment
If an individual is eligible for Social Security benefits, she
is automatically enrolled in Medicare Part A at no charge,
meaning that she doesn't have to apply to be eligible for
benefits.
Automatic Premium Loan (APL) Provision
A condition found in life insurance contracts which
authorizes the insurer to deduct money from the policy's
cash value amount to pay the policy premium, which is then
treated as a policy loan on which the insurer charges
interest; the APL provision must usually be requested by the
insured at the time of application, because most insurers do
not permit this provision to be added ocne the policy is
issued.
Automatic Sprinkler System
Any automatic fire protective or extinguishing system and
its components (including but not limited to sprinklers,
ducts, pipes, tanks, pumps, and private fire protection mains), and automatic system-supplied hydrants, standpipes, and outlines.
Automatically Convertible Policy
A type of interim term policy that is written to
automatically convert to permanent coverage on the date
specified in the policy.
Automobile Insurance
Protects against financial losses resulting from theft or
accidents involving the policyholder's vehicle.
Aviation Exclusion
An exclusion found in life insurance policies that denies
coverage to an insured who dies as a result of military, crop
dusting, student, or test pilot aviation activities; this
exclusion does not apply if the insured is a fare-paying
passenger on a commercial airline.
Back-End Load Funds
Mutual funds that have no sales charges when shares are
purchased, but charge fees on a declining basis each year
instead; also referred to as deferred-load funds.
Backdating Records
Prohibited practice of changing transaction dates to gain a
tax or other advantage.
Backing Away
Prohibited practice of committing to a bid or offer price on
a security and then failing to buy or sell a minimum
quantity of that security when a qualified party attempts to
complete the transaction.
Bail Out Provision
A condition found in annuities that allows annuitants to
surrender a policy without a surrender charge if the interest
rate drops to a specified level during a specified time
period.
Bailee
A person or business with temporary possession of an
insured's property; for example, an auto mechanic becomes
a bailee when an insured drops off his car for repair.
Bailee Exposure
Liability arising from taking another person's vehicle into
the custody or care of a bailee.
Bailees’ Policy
An inland marine insurance endorsement that covers
movable property in a bailee's possession, regardless of
location; bailees' policies always use nonfiled forms, and do
not contain descriptions of the property covered under the
policy.
Balance of Payments
The flow of money between the United States and other
countries.
Bank Secrecy Act (BSA)
Federal act that requires financial institutions, including
banks and brokerage firms, to track transactions which have
a high degree of usefulness in criminal, tax, and regulatory
investigations and proceedings; also requires institutions to
report suspicious activity (e.g. transactions involving
$10,000 in cash or transfer of at least $3,000 in funds).
Basic Cause of Loss Form
The most limited form of property insurance; coverage is
provided only for eleven named perils.
Basic Illustration
An illustration that shows the influence of both guaranteed
and non-guaranteed elements of a life insurance policy.
Basic Medical Expense Insurance
A type of health policy that provides limited benefits for
medical, hospital, and surgical costs without requiring the
insured to pay a deductible or other fee before coverage
begins; also known as "first-dollar coverage."
Bear Market
A general decline in the stock market over time.
Beneficiary
The person designated by a policyowner to receive the
proceeds of a life insurance policy’s benefits upon the death
of the insured.
Beneficiary Provision
Names the insured’s beneficiaries and sets forth rules
regarding benefits distribution.
Benefit Payable
The face value of a life insurance policy; remains constant
over the life of the policy.
Benefit Period
The maximum length of time that benefits are paid to an
insured under an insurance policy.
Benefit Schedule
A description of the covered health services HMOs or PPOs
provide to a subscriber (insured).
Beta
A measure of the risk factor of a security as compared to the
market. Higher beta implies higher risk.
Bid Price
Highest available price at which securities are sold in an
exchange market.
Bilateral Contract
A contract that exists between two parties - the insurer and
insured; also known as a "two-party contract."
Bind
The authority of an agent to begin coverage before an
insurance policy has become a formal contract.
Binder
A temporary written or oral contract issued to enforce an
insurance agreement before the policy can be properly
processed and issued; a binder is subject to premium
payment and all policy terms.
Binding Receipt
A receipt of insurance purchase that provides automatic
coverage for a set period of up to 60 days, starting the day
application for insurance is made; coverage remains in
force until the insurer approves the application or the coverage period expires, whichever occurs sooner.
Black Out Period
.
Term used to describe the time period that begins when a
deceased individual's surviving children stop collecting
Social Security benefits, and ends when the surviving
spouse is eligible to begin collecting retirement benefits
Blanket Health Policy
.
Health insurance that provides limited health benefits for
groups whose membership constantly fluctuates, such as
students; blanket health policies typically include a
combination of hospital, medical, and surgical benefits
Blanket Insurance
A single property insurance policy that covers a group of
items (such as a house and its contents), or multiple
properties (such as a house and an office building) owned
by the same person.
Blue-Sky Laws
1) State laws that make it mandatory for issuers of
securities to register their offerings with the state before
those securities can be sold to the state's residents; majority
include provisions regarding fraudulent activities and the
licensing/registration of people selling securities; 2)
General term used to refer to state securities laws.
Bodily Injury
Term used to describe physical injuries (including death) of
another person, along with associated expenses and
financial losses.
BOE Insurance
Insurance designed to protect a business in the event that
the owner is incapacitated and cannot pay overhead
expenses; this type of policy covers such expenses as
rent/mortgage payments, utilities, equipment leases, and
employee salaries, but does not owe the owner any
replacement income or compensation.
Bond
Legal obligation by a government entity or issuing
company to repay principal amount of a loan issued to bond
investors, plus interest, on the maturity date.
Bondholder
An investor who has loaned money to a company or
government in the form of a bond.
Boycott
Prohibited practice of attempting to constrain competition
by organizing a campaign to deter consumers from doing
business with a competitor or other company.
Breach of Legal Duty Owed
Term used to describe a liable party's actions (of lack of
actions) that in some way violate the legal responsibility to
an injured party.
Breakdown
A direct physical loss of covered equipment requiring repair
or replacement due to any of the following: malfunction of
pressure or vacuum equipment; electrical malfunction; mechanical failure; or explosions of steam boilers, engines,
or turbines.
Breakpoint
Sales charge discount for persons who make significant
investments in a single fund.
Broad Cause of Loss Form
A form of property insurance that provides coverage against
all the perils listed under the basic cause of loss form, as
well as several additional perils; the broad cause of loss
form also includes coverage for loss due to falling objects;
glass breakage; water damage; weight of ice, sleet or snow;
and collapse.
Broad Theft Coverage
An endorsement that can be purchased for an additional
premium that adds theft coverage to a dwelling insurance
policy.
Brochure
Written statement of material information about an
investment adviser's background and practices; the USA
requires investment advisers to provide these to prospective
clients.
Broker
A licensed person or group compensated to monitor and
review various insurance options for the benefit of the
insured
Broker Dealer
A person or firm buying and selling securities on behalf of
itself (dealer) or others (broker).
Broker Dealer
Firm that engages in the buying and selling of securities on
behalf of itself (dealer) or others (broker).
Broker/Agent
Any individual, corporation or legal entity engaged in
securities transactions on behalf of others.
Brokerage and Research Services
Executing trades of securities for clients and/or analyzing,
advising, and reporting to clients regarding securities,
economic, market and financial trends; does not include the
practice of authoring articles contained in mass market
publications.
Builders Risk Coverage Form
A commercial property insurance form that covers
buildings while they are still under construction, or being
remodeled or renovated.
Builders Risk Reporting Form
An endorsement attached to a builders risk coverage form
that requires the builder to report, in writing, the building’s
value each month so coverage amounts may be adjusted;
penalties may be assessed if the builder fails to file these
reports.
Building
A relatively permanent, enclosed structure over a plot of
land; a building is tangible property that can be seen and
touched.
Bull Market
A period during which investing activity increases.
Burden of Proof
The responsbility to prove a specific legal position in a
court of law.
Burglary
The act of taking property unlawfully from the premises of
another person by identifiable forcible entry or exit, and
accomplished through use of tools, chemicals, explosives,
or electricity.
Business Continuation Agreement
An agreement that provides for the continuation of a
business should the sole proprietor die; otherwise the
business would legally cease to exist.
Business Continuation Plan
Any plan utilized by business owners as a way to protect
the business in the event that the owner or another key
employee becomes disabled due to a serious injury or
illness; examples of business continuation plans include
buy-sell agreements, BOE insurance, disability buyout
insurance, and key person disability insurance.
Business Cycle
Repeated economic cycle consisting of four stages:
expansion, peak, contraction, and trough.
Business Floater
An inland marine insurance endorsement designed to
protect business owners from loss due to destruction or
theft of property required to conduct regular operations.
Business Income Form
A commercial property insurance form that covers loss of
business income and liability for operating expenses (such
as payroll) during the period of restoration, subject to
standard conditions and limitations.
Business Income from Dependent Properties Form
A commercial property insurance form that provides
benefits in the event that a dependent property (for example,
a business's manufacturer or primary retail store) is
impaired, causing a loss of income for the primary business.
Business Income with Extra Expense Form
A commercial property insurance form that combines
income and extra expense coverage into a single form; for
example, a business that shuts down its storefront but
continues to process online sales would take advantage of
this form.
Business Liability Coverage
Insurance designed to protect a business in the event of
legal liability due to bodily injuries, property damage, and
personal/advertising injuries.
Business Owner Policy (BOP)
A multiline policy that combines commonly required
coverages into a single package for small businesses; BOPs
typically include property, business interruption, crime,
vehicle, liability, and flood insurance.
Buy-Sell Agreement
An agreement used to fund a business continuation
agreement; a buy-sell agreement typically entails transfer of
ownership to another entity, or the surviving partners of the
business buying out the deceased's shares of the company
from the heirs.
Buyer’s Guide
A standard publication delivered to consumers by an
insurance provider or producer that explains the general
concepts of insurance.
Cafeteria Plan
A group health insurance plan that offers a wider range of
coverage options than a traditional major medical policy;
employees can choose the benefits that best suit their
specific needs, and fund the plan with pre-tax income.
Call Option
Option giving an investor the right to buy shares of a
security at a set price within a specified time period.
Camera and Musical Instrument Dealers’ Coverage Form
A dealers' policy that covers any damage to an insured's
cameras or musical equipment, as well as those owned by
others and in the care, custody, or control of the insured.
Cancellation
Term used to describe when either the insurer or insured
terminates an insurance policy before the end of its term.
Capital
Financial assets.
Capital Conservation
An approach to purchasing life insurance which allows the
insured to preserve the principal investment after death; the
insurer only pays interest earned on the principal to
beneficiaries, leaving the principal intact to be dispersed as
the insured sees fit.
Capital Gain
Increased value of an investment that makes it worth more
than the purchase priced; realized at the time the investment
is sold.
Capital Liquidation
A life insurance payout method that combines the principal
and earned interest; upon the insured's death, this combined
amount is dispersed to beneficiaries in fixed periodic
payments.
Capital Sum
The amount paid to an insured or beneficiary (the face
value of the policy) as a result of the insured's death, or the
insured's loss of use of multiple primary body parts.
Capitalization
Raising money for growth or startup of a company,
typically via the sale of stocks and/or bonds.
Capitation
A method of payment in which an insurer prepays a fixed
amount to a physician or hospital for each person in a particular plan, regardless of the frequency or type of
service actually provided; if services provided by the
physician exceed the amount paid by the insurer, the
physician incurs the loss.
Captive Insurance Company
A stock insurance company that is owned by another
company to which it provides insurance.
Cargo
Property being transported by a vessel, whether that
property is owned by the vessel or a third party.
Carryover Provision
Allows medical expenses incurred during the last three
months of a calendar year to be carried over to the next year
to meet next year's deductible requirements.
Cash Account
An account requiring the investor to deposit the full
purchase price of securities rather than buying on credit.
Cash Compensation
Any discount, concession, fee, service fee, commission,
asset-based sales charge, loan, override or cash employee
benefit received in connection with the sale and distribution
of investment company securities.
Cash or Deferred Arrangement (CODA) Plan
An employee benefit plan that allows employees to
postpone a portion of their present salary in order to save
for retirement; a popular example is the 401(k) plan, a
salary reduction arrangement based on a specific section of
the tax code.
Cash Surrender
Occurs when a life insurance or annuity policyholder
voluntarily terminates the contract before maturity; the
insured pays ordinary income tax on any earnings above the
original premium paid.
Cash Surrender Value
The amount that an insurer pays to a life insurance policy or
annuity owner in the event that the policy or annuity is
voluntarily terminated before maturity or the insured event
occurs; the cash surrender value is the savings component
of most permanent life insurance products.
Cash Value
The accumulated value that an insurance provider will pay
the policyownerupon surrender of a life insurance policy; a
policy's cash value is generated by placing a portion of the
policyowner's premium into the insurer's general account
for investment purposes.
Cash Value Insurance
Life insurance policies intended to provide coverage for the
insured's entire life; also known as "whole life insurance" or
"permanent insurance."
Casualty Insurance
Insurance that protects an individual from incurring loss
due to legal liability caused by actions toward others; also
known as "liability insurance."
Cease and Desist Order
Order given by the courts or a government administrative
agency to halt prohibited activities.
Ceding Company
An insurance company insured by a reinsurer.
Centers forMedicare andMedicaid Services (CMS)
Formerly called the Health Care Financing Administration
(HCFA). The CMS falls under the umbrella of the
Department of Health and Human Services (DHHS).
Medicare is financed by a portion of the payroll taxes paid
by workers and employers. It also is financed in part by
monthly premiums deducted from Social Security checks.
Certificate of Coverage
A legal document that serves as proof that an insurance
policy has been issued; contains a general summary of the
policy’s coverage.
Certificate of Creditable Coverage
A document issued by a health insurer to an individual
whose membership in a group health plan is terminated;
this document certifies that the individual, as well as any
dependents covered under the terminated group plan,
maintained continuous coverage for the applicable period
and is entitled to continued coverage provided under
HIPAA.
Certificate of Deposit (CD)
Savings certificate with a maturity date of one month to five
years; insured by FDIC up to $250,000.
Certificate of Insurance
The certificate of coverage that each group member covered
under a group insurance plan receives from the master
policyowner.
Chinese Wall
Information barrier to prevent unauthorized distribution of
nonpublic information; also referred to as a firewall.
Chronically Ill
Term assigned to an individual who has been certified by a
doctor or other licensed healthcare worker within the
previous 12 months as unable to perform certain basic
activities for 90 days, or who requires substantial
supervision due to severe cognitive impairment.
Churning
Insurance: Prohibited practice of generating additional
commissions by encouraging a customer to replace a life
insurance policy with a new one through use of
misrepresentations and false statements. Securities:
Prohibited practice of excessive trading designed to
generate commissions without regard to the benefit of the
Civil Rights Act of 1964
A federal law that was amended to require that women
affected by pregnancy, childbirth, or related medical
conditions be treated the same in terms of employment and
employment-related purposes as other people who are in
similar positions but affected differently.
Claim
A formal request or demand for payment by an insured
based on an occurrence or event covered under an in-force
insurance policy.
Claim Settlement
The resolution of the insured's request for payment
associated with an unforeseen event covered under an
in-force insurance policy.
Claimant
Term used to describe the injured party involved in an
insurance claim.
Claims Adjuster
A professional who investigates losses reported by insureds;
a claims adjuster's analysis helps determine whether losses
are covered by the insurance policy and how much
compensation should be issued to cover the loss.
Claims Options
The variety of choices available to an insured for the
method of benefit payments upon submitting a claim.
Claims Reserves
Premium reserve funds that have been assigned to a claim
but not yet paid; also known as "loss reserves."
Claims Tail
Term used to describe claims submitted after a policy
expires.
Claims-Made Basis
Term used to describe an insurance policy that only pay for
losses when a claim is made, and not when the event
occurs.
Claims-Made Form
An insurance policy under which coverage is based on
when the claim is made, not when the damage or injury
occurred.
Class A Shares
Mutual funds with front-end sales loads.
Class B Shares
Mutual funds with back-end or deferred- load funds.
Class C Shares
Mutual funds that do not use the services of an underwriter
and do not charge sales charges; also referred to as no-load
funds; expenses are funded with 12b-1 Asset-Based fees.
Class Designation
A manner of designating a group of people to equally share
in the benefits of a policy; for example, a parent may name
the beneficiary of her estate as “all my children” instead of
listing each of them by name.
Class Rating
A method of premium calculation in which an underwriter
consults a manual containing pre-determined premium rates
for each category of risk; also known as "manual rating."
Clearing Agency
Self-regulatory organization that intermediates payment and
delivery in securities transactions or compiles comparison
data with regards to such transactions.
Closed-End Management Company
An investment company that offers a fixed number of
non-redeemable shares on a secondary market; share prices
are determined by supply and demand rather than net asset
value.
Closed-Panel HMO
A type of HMO that limits the number of health providers it
works with in order to manage costs; to receive services,
the HMO's subscribers must use the closed-panel providers
to receive covered health care services.
Co-Insurance Penalty
A charge assessed to property insurance policyholders who
fail to purchase enough insurance to cover the property; the
minimum amount of coverage (usually 80% of the
property's value) is specified in the policy, and an insured
who fails to purchase coverage at this minimum value does
not receive full benefits if a claim is submitted.
Co-Pay
A flat fee that an insured must pay when receiving health
care services; co-pays are utilized by insurance providers to
share the cost of medical expenses.
Code of Arbitration Procedure
Process governing the resolution of disputes in the financial
industry.
Code of Procedure
FINRA’s disciplinary regulations for handling complaints
that members have violated the Conduct Rules.
Coercion
The practice of forcing another party to behave
involuntarily by use of threats, rewards, or other actions;
considered an unfair trade practice by most state insurance
codes.
Coinsurance
The insured's shared amount of medical expenses, based on
established ratios above the deductible amount; for example,
coinsurance may require the insured to pay 20% of all
medical bills.
Collapse
The abrupt falling down or caving in of a building or a part
of a building, to the degree that the property cannot be
occupied for its intended purpose.
Collateral
Item of value pledged as security against a debt; may be
subject to seizure upon default of a loan.
Collateral Assignment
An assignment of rights under an insurance policy for
collateral purposes; also known as a "temporary" or
"partial" assignment.
Collision Coverage
Pays to repair or replace an insured's vehicle when involved
in an accident; offered under the "Part D" section of
automobile insurance.
Combination Annuity
An annuity where premiums are invested in both the
insurance company's general funds and a separate
growth-oriented account.
Combination Plan
Applies coinsurance rates by the insurer's fee structure, or
the doctor or dentist's fee structure, one for routine
treatments and another for nonroutine treatments.
Combined Ratio
The sum of the loss ratio and the expense ratio; a ratio
below 100% indicates an insurer is profiting, while ratios
above 100% indicate that an insurer is losing money.
Combined Single Limit
A stated limit of liability amount available for one
occurrence or accident; for example, $200,000 to cover all
damage claims arising from an automobile accident.
Commercial (Health Service Providers)
Insurers that write health insurance policies to reimburse
the insured for medical care according to policy terms.
Commercial Articles Coverage Form
An inland marine insurance endorsement that protects the
owners of commercial cameras, musical instruments, and
similar equipment in the care, custody, or control of an
insured.
Commercial Line Insurance
Insurance designed to protect a business; examples include
commercial property and workers' compensation insurance.
Commercial Package Policy (CPP)
A customized multiline insurance policy that contains two
or more elements of insurance coverage combined into a
single package.
Commercial Property Floater Risks
An inland marine insurance endorsement that encompasses
the 11 filed coverage forms and several nonfiled forms,
which fall into four general categories; equipment floaters,
business floaters, dealers policies, and bailees policies.
Commercial Property Insurance
Protects business owners' buildings and inventory against
damage from fire, theft, and weather; usually combines
property and casualty coverage.
Commingling Funds
Mixing personal funds with the insured’s or the insurance
company’s funds.
Commingling Shares
Mixing shares belonging to a customer with those
belonging to an investment firm.
Common Disaster Clause
A provision found in life insurance policies that sets forth
the presumption that in the case of a common accident
(disaster) in which both the primary beneficiary and the
insured die, the insured is always assumed to have survived
the beneficiary.