Primerica Insurance Terminology

Front 1

401 K Plan

Back 1

A qualified retirement plan in which the
employee can set aside a portion of their income
with pre-tax dollars.

Front 2

Absolute Assignment v. Collateral
Assignment

Back 2

Absolute: A permanent and irrevocable transfer
of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer
of benefits by the policyowner.

Front 3

Accelerated Death Benefit

Back 3

Policy provision that allows full or partial
payment of the policy's death benefit before the
insured's death if he/she is terminally ill.

Front 4

Accidental Death Benefit

Back 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.

Front 5

Accumulate at Interest

Back 5

The Dividend Option where the policyowner
leaves the dividends with the insurer to invest
and earn interest.

Front 6

Adhesion

Back 6

Since the insurer created all the documents of
the contract, any ambiguities in the contract will
be settled in favor of the insured. Since the
insurer wrote the contract they are stuck with it.

Front 7

Adverse Selection

Back 7

The tendency for less favorable risks to seek or
continue insurance to a greater extent than more
favorable risks.

Front 8

Agency Agreement or Agency Contract

Back 8

A legal document containing the terms of the
agreement between the agent and the insurance
company. It clearly defines what an agent can
and cannot do, and how he/she will be
compensated.

Front 9

Agent Authorities

Back 9

Expressed: Power or authority specifically
granted in writing to an agent by the insurance
company in their Agency Agreement. Apparent:
Power or authority that the public reasonably
assumes an agent has based upon his/her
actions. Implied: Power or authority that is not
expressly granted by the company but that an
agent can assume or that are implied he/she has
in order to transact insurance business.

Front 10

Agent/Producer

Back 10

Anyone who sells or aids in the selling of
insurance. Legally represents the company

Front 11

Agent's Report

Back 11

A written report from the agent submitted to the
insurer along with the application disclosing what
the agent knows, observed, or learned about the
proposed insured's risks.

Front 12

Aleatory

Back 12

Unequal exchange of value. One party may
obtain a far greater value than the other under
the contract.

Front 13

Annual Renewable Term

Back 13

A Term Life Insurance contract which gives the
policyowner the option to renew the policy each
year without showing proof of insurability.
Premiums increase at each renewal.

Front 14

Annuitant

Back 14

The person that buys an annuity; may or may not
be an annuity's policyowner.

Front 15

Annuity

Back 15

A contract/policy that guarantees to pay income
for a specified period of time or for the life of the
annuitant. Designed to prevent people from
outliving their savings

Front 16

Appointment

Back 16

Authorization of an agent/producer by an insurer
to represent the company

Front 17

Blackout Period

Back 17

The period of time between the youngest child
turning 16 and the widow(er) reaching retirement
age during which no Social Security Survivor
Benefits are paid to the surviving spouse.

Front 18

Buy-Sell Agreement

Back 18

Business use of Life Insurance where partners in
a business buy life insurance on each other.
They agree that when one of them dies the
survivors have the right to purchase the
deceased partner's share of the business. The
death benefit from the insurance is used to
finance the purchase.

Front 19

Cash Nonforfeiture Option

Back 19

Policyowner receives a lump-sum payment of
the current cash value of the policy upon
surrender of the policy. The policy cannot be
reinstated.

Front 20

Cash Settlement Option

Back 20

Upon maturity of an insurance policy the
beneficiary receives a lump-sum payment of the
entire policy proceeds due.

Front 21

Cash Value

Back 21

That part of an insurance policy that is the equity
amount legally available to the policyowner. The
cash value accumulates throughout the duration
of the policy. Also known as living benefit or
policy savings.

Front 22

Commissioner

Back 22

Public official in charge of the state's department
of insurance. Charged with regulating the
insurance industry in his/her state by enforcing
the insurance laws

Front 23

Conditional

Back 23

Certain conditions must be met in order for policy
to pay-out.

Front 24

Conditional Receipt

Back 24

An interim insuring agreement under which the
insurance company agrees to start coverage on
the later of either the date of application or the
date of the medical exam IF the proposed
insured is found to be insurable on that date.

Front 25

Consideration

Back 25

A necessary element of a contract; something of
value exchanged for the transfer of risk.
Insured's consideration is payment of premiums
and truthful statements on the application.
Insurer's consideration is promises contained in
the contract.

Front 26

Contingent Beneficiary

Back 26

An alternate beneficiary designated to receive
the policy proceeds in the event that the primary
beneficiary dies before the insured.

Front 27

Contributory Plan

Back 27

Contributory: Group insurance plan under which
the employees contribute to the payment of
premiums.

Front 28

Noncontributory Plan

Back 28

Noncontributory: A group insurance
plan in which the employer pays all the
premiums for the policy.

Front 29

Convertible Term

Back 29

Term insurance that specifically permits
"conversion" of the policy into permanent
protection without proof of insurability.

Front 30

Decreasing Term

Back 30

Term life insurance in which the face amount of
the policy decreases over time in scheduled
steps. Most often used to cover a debt obligation
(mortgage).

Front 31

Dividends

Back 31

Distributions paid out by insurance companies.
Stock insurers pay dividends (portion of profit) to
stockholders and they are taxable. Mutual
insurers pay dividends (return of unneeded
premiums) to policyowners and they are not
taxable. Dividends are never guaranteed.

Front 32

Equity Indexed Annuity

Back 32

The annuity that has a guaranteed minimum
interest rate and allows the annuitant to invest
money in an index (i.e.: S&P 500). The
investments grow as the index grows.

Front 33

Estoppel

Back 33

Legally preventing someone from asserting or re-
asserting a known right that they have previously
waived

Front 34

Extended Term Insurance

Back 34

Nonforfeiture option where cash value is used to
make a single premium payment on a Term
Insurance Policy of the same face amount as the
original policy. Original policy can be reinstated.
Not available on rated policies.

Front 35

Face Amount

Back 35

Amount payable in the event of death of the
insured. Also called face value, death benefit,
policy proceeds, coverage, stated amount,
indemnity amount or proceeds to the beneficiary.

Front 36

Facultative Reinsurance

Back 36

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

Front 37

Treaty
Reinsurance

Back 37

Treaty: Transferring risk from one insurance
company to another under a blanket agreement.

Front 38

Fair Credit Reporting Act

Back 38

A federal law that protects consumers in regard
to their credit history. Establishes guidelines for
how companies can access consumers' credit
reports and what types of disclosures and
notifications are required

Front 39

Financial Needs Approach

Back 39

In determining how much life insurance is
needed the needs of the surviving family are the
focus. Using needs analysis worksheets, an
amount is determined to meet the needs of the
surviving family regardless of the earnings of the
insured.

Front 40

Fixed Amount Annuity

Back 40

A Life Annuity that guarantees a fixed dollar
payment at regular intervals during the lifetime of
the annuitant.

Front 41

Fixed Amount Settlement Option

Back 41

Upon maturity of an insurance policy the
beneficiary receives periodic payments of a set
dollar amount from the policy proceeds.

Front 42

Fixed Period Settlement Option

Back 42

Upon maturity of an insurance policy, the
beneficiary receives income from the policy
proceeds for a stated period of time.

Front 43

Free Look Provision

Back 43

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.

Front 44

General Account

Back 44

General Account: Contains the regulated, or
guaranteed, funds of an insurance company.

Front 45

Separate Account

Back 45

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.

Front 46

Grace Period

Back 46

A prescribed period of time during which the
policy stays in force without the payment of
premiums. Mandated by state law and is usually
30 or 31 days.

Front 47

Graded Premium Policy

Back 47

Premiums for the policy increase regularly for 5
to 20 years and then level off. Death benefit
remains level.

Front 48

Group Insurance

Back 48

An insurance policy that covers multiple people
(who have a common interest). A Master Policy
is issued to the policyowner and individual
insureds receive Certificates of Insurance.

Front 49

Guaranteed Insurability Rider

Back 49

Optional rider that enables the policyowner to
purchase additional amounts of coverage at pre-
determined times without proof of insurability.

Front 50

Guaranty Association

Back 50

A state mandated association of all insurance
companies designed to protect consumers from
impaired or insolvent companies

Front 51

Hazard

Back 51

Anything that increases the likelihood that a loss
will occur (Faulty wiring).

Front 52

Human Life Value Approach

Back 52

In determining how much life insurance is
needed the worker's annual earnings are
multiplied by the number of years remaining until
he/she retires. From the resulting figure taxes
and expenses are subtracted

Front 53

Immediate Annuity

Back 53

Immediate: A Life Annuity contract where the
first pay-out is made within 12 months after it is
purchased. Can only be purchased with a single
premium/lump-sum payment.

Front 54

Deferred Annuity

Back 54

Deferred: A Life
Annuity contract where the first pay-out is made
12 months after it is purchased. Can be
purchased with either a single premium or with
continuous premium payments.

Front 55

Incontestable Clause

Back 55

A state mandated provision that limits the
amount of time that an insurer can rescind a
policy or contest a claim due to
misrepresentation or concealment

Front 56

Indemnify

Back 56

To make financially whole again; restore to the
condition enjoyed before a loss was suffered; to
replace what was lost. Insurance is not
designed for parties to profit from a loss.

Front 57

Individual Retirement Account (IRA)

Back 57

A qualified retirement plan for any individual with
earned income

Front 58

Insurable Interest

Back 58

A financial interest in the life of another person.
In a position to loose something of value if the
insured should die.

Front 59

Insurer/Principal

Back 59

The insurance company; underwrites the policy
and assumes the risk.

Front 60

Insuring Clause

Back 60

The heart of an insurance policy. It contains the
company's promise to the policyowner and
describes the coverage provided and the policy
limits.

Front 61

Hazard

Back 61

Anything that increases the likelihood that a loss
will occur (Faulty wiring).

Front 62

Human Life Value Approach

Back 62

In determining how much life insurance is
needed the worker's annual earnings are
multiplied by the number of years remaining until
he/she retires. From the resulting figure taxes
and expenses are subtracted

Front 63

Immediate Annuity

Back 63

Immediate: A Life Annuity contract where the
first pay-out is made within 12 months after it is
purchased. Can only be purchased with a single
premium/lump-sum payment.

Front 64

Deferred Annuity

Back 64

Deferred: A Life
Annuity contract where the first pay-out is made
12 months after it is purchased. Can be
purchased with either a single premium or with
continuous premium payments.

Front 65

Incontestable Clause

Back 65

A state mandated provision that limits the
amount of time that an insurer can rescind a
policy or contest a claim due to
misrepresentation or concealment

Front 66

Indemnify

Back 66

To make financially whole again; restore to the
condition enjoyed before a loss was suffered; to
replace what was lost. Insurance is not
designed for parties to profit from a loss.

Front 67

Individual Retirement Account (IRA)

Back 67

A qualified retirement plan for any individual with
earned income

Front 68

Insurable Interest

Back 68

A financial interest in the life of another person.
In a position to loose something of value if the
insured should die.

Front 69

Insurer/Principal

Back 69

The insurance company; underwrites the policy
and assumes the risk.

Front 70

Insuring Clause

Back 70

The heart of an insurance policy. It contains the
company's promise to the policyowner and
describes the coverage provided and the policy
limits.

Front 71

401 K Plan

Back 71

A qualified retirement plan in which the
employee can set aside a portion of their income
with pre-tax dollars.

Front 72

Absolute Assignment v. Collateral
Assignment

Back 72

Absolute: A permanent and irrevocable transfer
of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer
of benefits by the policyowner.

Front 73

Accelerated Death Benefit

Back 73

Policy provision that allows full or partial
payment of the policy's death benefit before the
insured's death if he/she is terminally ill.

Front 74

Accidental Death Benefit

Back 74

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.

Front 75

Accumulate at Interest

Back 75

The Dividend Option where the policyowner
leaves the dividends with the insurer to invest
and earn interest.

Front 76

Adhesion

Back 76

Since the insurer created all the documents of
the contract, any ambiguities in the contract will
be settled in favor of the insured. Since the
insurer wrote the contract they are stuck with it.

Front 77

Adverse Selection

Back 77

The tendency for less favorable risks to seek or
continue insurance to a greater extent than more
favorable risks.

Front 78

Agency Agreement or Agency Contract

Back 78

A legal document containing the terms of the
agreement between the agent and the insurance
company. It clearly defines what an agent can
and cannot do, and how he/she will be
compensated.

Front 79

Agent Authorities

Back 79

Expressed: Power or authority specifically
granted in writing to an agent by the insurance
company in their Agency Agreement. Apparent:
Power or authority that the public reasonably
assumes an agent has based upon his/her
actions. Implied: Power or authority that is not
expressly granted by the company but that an
agent can assume or that are implied he/she has
in order to transact insurance business.

Front 80

Agent/Producer

Back 80

Anyone who sells or aids in the selling of
insurance. Legally represents the company

Front 81

Interest Settlement Option

Back 81

Upon maturity of an insurance policy the
beneficiary receives periodic payments of the
interest earned from the company's investment
of the policy proceed

Front 82

Joint and Survivor Annuity

Back 82

An annuity that makes payments to two or more
annuitants throughout their lifetimes. Payments
normally reduce at the death of each annuitant
and stop altogether upon the death of the last
annuitant.

Front 83

Keogh Plan (HR10)

Back 83

A qualified retirement plan for self-employed
people and their eligible employees.
Contributions are tax deductible and interest
earned is deferred until withdrawn.

Front 84

Lapsed Policy

Back 84

A policy that is no longer in force due to unpaid
premiums. Also known as forfeit, surrender,
cancel or terminate.

Front 85

Law of Agency

Back 85

The actions of an agent/producer within the
scope of the authority granted to him/her by the
insurer become the actions of the company

Front 86

Law of Large Numbers

Back 86

States that larger numbers of similar risks
grouped together become more accurately
predictable.

Front 87

Level Term Insurance

Back 87

Term insurance where the face value of policy
remains the same from the date the policy is
issued until the date the policy expires.

Front 88

License

Back 88

Documentation issued by a state's department of
insurance to an individual verifying that he/she is
qualified to engage in the insurance business.

Front 89

Life Annuity With Period Certain

Back 89

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.

Front 90

Life Annuity/Straight Life Annuity

Back 90

Upon maturity of an Annuity Contract the
annuitant elects to receive fixed periodic
payments for the rest of his/her life

Front 91

Life Income Settlement Option

Back 91

Upon maturity of an insurance policy, the policy
proceeds are used to purchase an immediate
Life Annuity payable in periodic payments to the
beneficiary for the rest of his/her life.

Front 92

Medical Information Bureau

Back 92

An organization that stores information from
insurance companies and makes it available to
other companies during the underwriting
process. Its purpose is to help prevent fraud and
concealment by insurance applicants.

Front 93

Modified Endowment Contract (MEC)

Back 93

Any cash value policy that builds cash value
faster than a Seven-Pay Whole Life Contract and
therefore loses the tax advantages of life
insurance.

Front 94

Modified Life Policy

Back 94

Whole Life Insurance with reduced premiums
during the initial years and higher premiums
during later years. Can be structured as Term
insurance during the initial years and changing to
Whole Life in the later years.

Front 95

Nonforfeiture Options

Back 95

Three options available by law to policyowners
that enable them to recover a policy's cash-value
upon surrender of that policy. (1) Cash (2)
Reduced Paid-Up Insurance (3) Extended Term
Insurance

Front 96

Non-qualified Retirement Plan

Back 96

A retirement plan that does not qualify for special
tax treatment by the IRS.

Front 97

Participating Company

Back 97

Also known as a Mutual Company. Returns
unused premium in the form of a policy dividend
to the policy owners.

Front 98

Payor Rider

Back 98

Optional rider that costs extra and will pay the
premiums of a Juvenile Policy if the owner dies
or becomes disabled.

Front 99

Peril

Back 99

The cause of a loss (Fire)

Front 100

Policy Loan Provision

Back 100

Describes the conditions by which a policyowner
can borrow from the policy's cash value.

Front 101

Policy Owner

Back 101

The person in an insurance contract that has all
the rights contained in the policy; designated on
the application and may or may not be the
insured.

Front 102

Policy Payment Methods

Back 102

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. 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. Single Premium: Insurance or an annuity that is
paid for with a single lump-sum payment. No further
premium payments are required during the duration of the
policy. Requires the largest payment amount of any type
of policy. Grows cash value the fastest

Front 103

Proof of Insurability

Back 103

A statement about or evidence of a person's
physical and/or mental health, personal
character, occupation, living habits, etc. Used by
the insurance company in assessing whether to
accept the person's risk.

Front 104

Qualified Retirement Plan

Back 104

A retirement plan that meets certain federal
requirements and therefore qualifies for special
tax treatment. Plans must be (1) for the
exclusive benefit of employees, (2) in writing, (3)
nondiscriminatory, (4) either defined benefits or
defined contributions, and (5) permanent.

Front 105

Rebating

Back 105

Anything of value given by an agent to a client as
an inducement to buy insurance.

Front 106

Reduced Paid-up Insurance

Back 106

Nonforfeiture option where cash value is used to
make a single premium payment to purchase as
much of the same type of insurance as possible.
Face amount of the new policy would be less
than the original policy but no further premium
payments would be necessary. Policy can be
reinstated

Front 107

Reinstatement Clause

Back 107

Contained in the policy this clause described
how a policy can be restored to its original
condition. It states the conditions, period of time
and necessary steps to reinstate a policy.

Front 108

Reinsurance

Back 108

The sharing of risk between insurance
companies. One insurance company sells part
of its risk to another insurance company

Front 109

Renewable Term

Back 109

Term insurance where at the end of the specified
term the policyowner has the right to continue
the policy for another term without proof of
insurability. Premiums will be determined by the
new attained age.

Front 110

Replacement

Back 110

The exchange of one policy for another.
Replacement regulations must be followed.

Front 111

Representations

Back 111

Statements made by an applicant or an insured
that are true to the best of his or her knowledge
and belief.

Front 112

Revocable Beneficiary

Back 112

Revocable: A beneficiary named by the policy
owner that can be changed by the policyowner at
his/her discretion.

Front 113

Irrevocable
Beneficiary

Back 113

Irrevocable: A beneficiary
named by the policy owner that can not be
changed by the policyowner at his/her discretion.
Changing this beneficiary requires the
permission of the beneficiary.

Front 114

Riders

Back 114

Optional coverages that can be added to policies
that provide additional benefits or protections.
Vary from policy to policy and company to
company. Also known as addendums, additions,
amendments, or additional policy benefits.

Front 115

Standard Risk:

Back 115

A normal or average risk; no
special conditions are required in the policy.

Front 116

Substandard Risk (high risk)

Back 116

requires special
conditions to be included in the policy or issued a
rated policy.

Front 117

Preferred Risk

Back 117

Less risky than the
normal or average risk. Usually issued policies
on a discounted basis.

Front 118

Roth IRA

Back 118

A non-tax deductible individual retirement
account which grows tax free after 5 years.

Front 119

Settlement Options: The five ways that the proceeds of a policy can
be paid upon maturity.

Back 119

(1) Cash (2) Interest Only
(3) Fixed Period (4) Fixed Amount (5) Life
Income

Front 120

Speculative Risk

Back 120

The possibility of experiencing either a loss or a
gain. Gambling is an example of speculative
risk.

Front 121

Spendthrift Clause

Back 121

State legislation that protects the rights of
policyowners and beneficiaries from creditors.
Death benefits cannot be attached by creditors
of the policyowner.

Front 122

Stock Insurer

Back 122

An insurance company publicly owned and
controlled by its stockholders who elect a board
of directors to manage it.

Front 123

Tax Sheltered Annuity (403B)

Back 123

A qualified retirement program for employees of
non-profit organizations. Contributions are made
through a salary reduction program.

Front 124

Third Party Ownership

Back 124

When a person(s) other than the insured
purchases the insurance policy.

Front 125

Twisting

Back 125

Knowingly making misleading statements or
making fraudulent comparisons in order to
induce a client to drop a policy with an existing
insurer and start a new one with a different
company

Front 126

Underwriting

Back 126

The process by which an insurer evaluates,
classifies and ultimately either accepts or rejects
risks.

Front 127

Uniform Simultaneous Death Act

Back 127

It directs that in life insurance if the insured and
the primary beneficiary die at the same time the
policy benefits are payable as if the insured
outlived the beneficiary.

Front 128

Unilateral

Back 128

One-sided promise. Only one party makes a
legally enforceable promise. The insurance
company promises to pay the policy proceeds at
some future date or event.

Front 129

Universal Life Insurance (UL)

Back 129

An "interest sensitive" flexible premium life
insurance policy. A combination of ART and
cash value. Has two death benefit options (A &
B) and develops cash value.

Front 130

Variable Annuity

Back 130

The product is invested in a separate account
and has no guaranteed rate of growth. The
annuity promises to pay a fixed number of
annuity units to the annuitant for the rest of
his/her life. The value of the annuity units varies
depending on the performance of the
investments of the separate account.

Front 131

Variable Life Insurance (VL)

Back 131

Whole Life Insurance with fixed premiums. Cash
value is invested in "separate accounts". A
minimum death benefit is guaranteed but could
increase if the investments do well.

Front 132

Variable Universal Life Insurance (VUL)

Back 132

A Life Insurance policy that combines the
flexibility of Universal Life with the investment of
the cash values in separate accounts from
Variable Life.

Front 133

Waiver of Premium Rider

Back 133

Optional rider that requires an insurer to assume
payment of premiums should the insured
become totally disabled for six months for the
duration of the disability.

Front 134

Warranty

Back 134

Statements made that are guaranteed to be
absolutely true. Statements made by the insurer
must be warranties.

Front 135

Whole Life Insurance

Back 135

Type of insurance where level coverage lasts
until death or age 100 and then the policy
matures and pays out either the face amount or
the cash value. Also known as straight life,
ordinary life, fixed, rigid or permanent.