Activities of daily living (ADLs)

— a person's essential activities that include bathing, dressing, eating, transferring, toileting, continence

Assignment —

transfer of rights of policy ownership

Consideration —

something of value that each party gives to the other (binding force in any contract)

Indemnity —

a principle of reimbursement on which insurance is based; in the event of loss, an insurer reimburses the insureds or beneficiaries for the loss

Lump sum —

payment of the entire benefit in one sum

Minor —

a person under legal age

NAIC —

National Association of Insurance Commissioners, an organization composed of insurance Commissioners from all states and jurisdictions formed to resolve insurance regulatory issues

Principal —

the face value of the policy; the original amount invested before the earnings

Entire contract =

policy + copy of application + any riders or amendments

The insuring clause (or insuring agreement)

sets forth the basic agreement between the insurer and the insured. It states the insurer’s promise to pay the death benefit upon the insured’s death.

free-look period starts when the policyowner receives the policy,

state of Florida, life insurance policies must have a 14-day free-look period.

consideration,

Both parties to a contract must provide some value

Absolute Assignment

involves transferring all rights of ownership to another person or entity. This is a permanent and total transfer of all the policy rights. The new policyowner does not need to have an insurable interest in the insured.

Collateral Assignment

involves a transfer of partial rights to another person. It is usually done in order to secure a loan or some other transaction

primary beneficiary

has first claim to the policy proceeds following the death of the insured

contingent beneficiary

has second claim in the event that the primary beneficiary dies before the insured.

revocable

The policyowner, without the consent or knowledge of the beneficiary, may change a

irrevocable

designation may not be changed without the written consent of the beneficiary.

Uniform Simultaneous Death Law

insured and the primary beneficiary died in the same accident and there is no sufficient evidence to show who died first, the policy proceeds are to be distributed as if the primary beneficiary died first.

Common Disaster Clause

Modes

premiums are due, how often they are to be paid (monthly, quarterly, semiannually, or annually) and to whom.

Exclusions

are the types of risks the policy will not cover. Aviation=for noncommercial pilots, War or Military Service Hazardous Occupations or Hobbies= skydiving or auto racing

waiver of premium rider

waives the premium for the policy if the insured becomes totally disabled.

waiver of monthly deductions rider

pays all monthly deductions while the insured is disabled, after a 6-month waiting period.

disability income rider,

event of disability the insurer will waive the policy premiums and pay a monthly income to the insured.

payor benefit rider

he insurer will waive the premiums until the minor reaches a certain age, such as 21

Family Term =

Spouse Term + Children's Term

Accelerated benefit =

early payment of part of death benefit to the insured from the insurer for qualifying medical expenses.