#401(k) PlanA common employer-sponsored qualified retirement plan governed by federal tax and retirement-plan rules.›
#7-Pay TestThe federal test used to determine whether a life insurance policy becomes a Modified Endowment Contract.›
AAccelerated Death Benefit RiderA rider allowing access to part of the death benefit while the insured is living when qualifying conditions are met.›
AAccidental Death RiderA rider providing an additional benefit when death results from a qualifying accident under the policy terms.›
AAccumulation at Interest OptionA dividend option that leaves dividends with the insurer to accumulate with interest under policy terms.›
AAdjustable Life InsurancePermanent life insurance allowing certain policy elements to be adjusted within contractual limits.›
AAdministrative RemedyAn enforcement action available to the insurance regulator, such as an order, penalty, suspension, or revocation when authorized by law.›
AAdverse SelectionThe tendency of higher-risk individuals to be more likely to seek or retain insurance.›
AAleatory ContractA contract in which the values exchanged may be unequal because performance depends on an uncertain event.›
AAnnual Renewable TermTerm insurance that renews each year, commonly with premiums that increase as the insured ages.›
AAnnuityA contract designed primarily to accumulate funds and/or provide periodic income, helping address the risk of outliving income.›
AApparent AuthorityAuthority a third party reasonably believes a producer has because of the insurer’s conduct.›
AApplicant SignatureThe applicant’s signature on an insurance application, used to attest to the information and authorizations contained in the application.›
AApplicationThe document containing information used by the insurer to evaluate a proposed insured and requested coverage.›
AAttending Physician StatementA report from an applicant’s or insured’s physician used as a medical underwriting information source.›
AAutomatic Premium LoanA policy provision that can use available cash value to pay an overdue premium and help prevent lapse.›
BBeneficiary DesignationThe policyowner’s identification of the person or entity entitled to receive policy proceeds when the insured dies.›
BBinding ReceiptA receipt that can provide temporary coverage according to its stated terms; it differs from a conditional receipt.›
BBusiness ContinuationPlanning intended to help a business continue operations after the death or loss of an owner or key person.›
BBuy-Sell AgreementAn agreement establishing how ownership interests will be transferred upon death or another triggering event; life insurance can provide funding.›
CCash Dividend OptionA dividend option under which the policyowner receives an available policy dividend in cash.›
CCash SurrenderA nonforfeiture option in which the policyowner terminates the policy and receives available cash value, subject to policy terms.›
CCease and Desist OrderAn administrative order directing a person or organization to stop conduct that the regulator determines violates applicable insurance law.›
CCertificate of InsuranceA document provided to a covered group member describing coverage under the master policy.›
CChurningAn improper practice of replacing or using values from existing insurance primarily to generate new sales or commissions without a legitimate benefit to the…›
CCommissioner of InsuranceThe Massachusetts insurance regulator with authority granted by law to investigate, examine, regulate, issue orders, and take administrative action.›
CConditional ReceiptA premium receipt under which coverage may become effective only if specified conditions are satisfied.›
CConsiderationSomething of value exchanged by the parties to a contract; in life insurance this includes the application and premium on the applicant side and…›
CConsumer ReportA report containing consumer information that may be used in underwriting subject to applicable law.›
CContingent BeneficiaryA beneficiary who receives policy proceeds if the primary beneficiary cannot receive them.›
CContinuing EducationOngoing education required for license maintenance according to current Massachusetts requirements.›
CContract of AdhesionA contract drafted by one party and accepted by the other substantially as written.›
CControlled BusinessInsurance written primarily on the producer’s own interests or closely connected persons beyond permitted limits; restrictions are intended to prevent misuse of a producer…›
CConversion PrivilegeThe right to convert qualifying group life coverage to an individual policy without new evidence of insurability if the conversion requirements are met timely.›
CConvertibilityA term policy feature allowing conversion to permanent insurance according to policy terms without new evidence of insurability.›
CCredit Life InsuranceLife insurance designed to cover a debtor’s outstanding obligation according to policy terms.›
CCross-Purchase PlanA buy-sell funding arrangement in which owners purchase life insurance on one another and use proceeds to buy the deceased owner’s interest.›
DDeath BenefitThe amount payable under a life insurance policy upon the insured’s death, subject to policy terms.›
DDecreasing TermTerm insurance with a death benefit that declines over time, often used for declining obligations.›
DDeferred AnnuityAn annuity designed to begin income payments at a future date after an accumulation period.›
DDependent CoverageGroup life coverage that may be provided for eligible spouses or children according to plan terms and applicable law.›
DDisclosure RequirementA requirement to provide specified information to an applicant or policyowner so the person can understand material facts about an insurance transaction.›
DDividendA distribution that may be paid on a participating policy; it is generally treated as a return of premium up to the policyowner’s basis.›
EEligibility PeriodThe time or conditions an employee must satisfy before becoming eligible for group coverage.›
EEntire Contract ProvisionA provision stating that the policy and attached application or other incorporated documents together constitute the complete insurance contract.›
EEntity Purchase PlanA buy-sell funding arrangement in which the business owns policies on owners and uses proceeds to redeem the deceased owner’s interest.›
EEstate LiquidityCash available to meet estate-related expenses or obligations without forcing immediate sale of illiquid assets.›
EEstoppelA legal principle preventing a party from asserting a right when prior conduct caused another party to reasonably rely on that conduct.›
EEvidence of InsurabilityInformation used by an insurer to determine whether an applicant or insured meets underwriting requirements.›
EExisting InsurerThe insurer whose existing policy may be replaced or otherwise affected by a replacement transaction.›
EExtended Term InsuranceA nonforfeiture option using cash value to purchase term insurance for the original face amount for a limited period.›
FFace AmountThe stated amount of life insurance shown on the policy, subject to policy provisions, riders, loans, and other adjustments.›
FFair Credit Reporting ActA federal law governing consumer-report information and related notice and disclosure responsibilities.›
FFalse AdvertisingAn unfair insurance practice involving materially false, deceptive, or misleading statements in advertising or sales communications.›
FFiduciary DutyA duty to handle money or property entrusted by another person with honesty, care, and loyalty to the person whose funds are being handled.›
FField UnderwritingThe producer’s role in gathering accurate information, observing relevant facts, and helping the insurer evaluate an application.›
FFinancial UnderwritingEvaluation of whether the amount and purpose of requested coverage are financially reasonable.›
FFixed Amount SettlementA settlement option that pays a stated amount periodically until proceeds are exhausted.›
FFixed AnnuityAn annuity providing contractual guarantees backed by the insurer, with the insurer bearing the investment risk associated with the general account.›
FFlat Extra PremiumAn additional fixed premium charge used for certain extra hazards or substandard risks.›
FFloorA contract feature that can establish a minimum credited rate for an index-linked calculation.›
FFraternal Benefit SocietyA special type of member-based organization that may provide insurance benefits and can be tested as a state-specific insurance organization concept.›
FFree-Look PeriodA period after policy delivery during which the policyowner can review the contract and return it according to applicable rules.›
GGroup Life InsuranceLife insurance issued to cover eligible members of a defined group under a master policy.›
GGroup Term Life InsuranceTerm life insurance provided under a group plan, often through an employer.›
GGuaranteed Insurability RiderA rider allowing the insured to purchase additional coverage at specified times or events without new evidence of insurability, subject to contract terms.›
GGuaranty AssociationA statutory protection system for eligible policyholders when a member insurer becomes insolvent, subject to legal limits and conditions.›
IIncontestability ProvisionA policy provision that limits the insurer’s ability to contest coverage after a stated period, subject to applicable exceptions.›
IIndemnityThe principle of restoring an insured to approximately the financial position held before a covered loss without allowing profit from the loss.›
IIndexed AnnuityAn annuity that credits interest based in part on changes in a market index, subject to contract formulas such as caps, floors, participation rates,…›
IIndexed Universal LifeUniversal life insurance that credits interest using a formula linked to a market index, subject to contract features such as caps, floors, spreads, and…›
IInitial PremiumThe first premium submitted in connection with an insurance application or policy issue.›
IInsurable InterestA recognized financial or personal interest in the continued life of the insured; for life insurance it generally must exist when the policy is…›
IInsurance FraudIntentional deception or misrepresentation in connection with insurance that can result in enforcement or other legal consequences.›
IInsurance ProducerA person who sells, solicits, or negotiates insurance and must hold the appropriate license and line of authority unless an exemption applies.›
IInsurer AppointmentThe insurer-producer relationship established according to applicable appointment procedures; it is separate from the producer license itself.›
IInterest Only SettlementA settlement option in which the insurer retains principal and pays interest to the beneficiary.›
IIrrevocable BeneficiaryA beneficiary with stronger vested rights whose consent is generally required for certain policy changes.›
JJoint and SurvivorAn annuity payout option that continues income while either of two covered annuitants remains alive, according to contract terms.›
KKey Person InsuranceLife insurance used by a business to protect against the financial loss associated with the death of a key employee; the business typically owns…›
LLapseTermination of a policy because required premiums or policy values are insufficient to keep it in force.›
LLaw of Large NumbersThe principle that allows insurers to predict total losses more accurately by observing a large group of similar exposures.›
LLicense RenewalThe process of maintaining an active producer license according to current Massachusetts renewal requirements.›
LLicense RevocationA regulatory action that withdraws a producer’s license and authority to act under that license, subject to applicable law and procedures.›
LLicense SuspensionA regulatory action that temporarily removes a producer’s authority to act under a license for the period or conditions specified by the regulator.›
LLife OnlyAn annuity payout option that provides income for the annuitant’s lifetime without a minimum guaranteed payment period.›
LLife with Period CertainAn annuity payout option providing lifetime income with a guaranteed minimum payment period.›
LLimited Pay LifePermanent life insurance with premiums scheduled to be paid for a shorter stated period while coverage can continue for life.›
MMarket ConductThe regulatory review of insurer and producer business practices affecting consumers and compliance.›
MMassachusetts Division of InsuranceThe Massachusetts state agency that administers and enforces insurance laws, licensing requirements, insurer regulation, market-conduct rules, and consumer-protection standards.›
MMaturityThe point at which a life insurance policy reaches its contractual maturity and any maturity benefit becomes payable under the policy terms.›
MMaturity DateThe date specified in a policy on which the contract reaches maturity if the insured is still living, subject to the policy terms.›
MMIBAn industry information source used by insurers as part of underwriting; it is not a consumer credit report.›
MMisstatement of Age or Sex ProvisionA provision that generally adjusts benefits to the amount the premium would have purchased at the correct age or sex.›
MModified Endowment ContractA life insurance policy that fails the federal 7-pay test and receives different tax treatment for distributions.›
NNoncontributory PlanA group insurance plan in which the employer pays the full cost of covered employees’ insurance.›
NNonforfeiture OptionA choice that allows a policyowner to preserve some policy value after stopping premium payments on a cash-value policy.›
NNonqualified AnnuityAn annuity funded outside a qualified retirement plan, generally with after-tax money.›
NNonqualified PlanA retirement or executive benefit arrangement that does not receive the same qualification treatment as a qualified retirement plan.›
OOffer and AcceptanceThe contract element in which one party makes an offer and the other accepts it.›
OOne-Year Term Dividend OptionA dividend option that uses a dividend to purchase one-year term insurance, subject to the policy provisions.›
PPaid-Up AdditionsA dividend option that uses policy dividends to purchase small amounts of additional fully paid permanent life insurance.›
PParticipation RateThe percentage of index change used in an index-linked interest-crediting formula.›
PParticipation RequirementA plan rule describing the level of eligible employee participation needed for group coverage.›
PPayor Benefit RiderA rider commonly used on juvenile policies that can waive premiums if the payor dies or becomes disabled as defined by the contract.›
PPermanent Life InsuranceLife insurance designed to remain in force for the insured’s lifetime when required premiums and policy conditions are met; many permanent policies also build…›
PPolicy DeliveryThe process of delivering the issued policy and completing any required delivery-related steps.›
PPolicy Effective DateThe date on which insurance coverage becomes effective according to policy, underwriting, premium, and delivery requirements.›
PPolicy LoanA loan available from the cash value of a qualifying life insurance policy; outstanding loans and interest reduce available proceeds.›
PPolicyownerThe person or entity that owns the policy and controls ownership rights subject to policy terms.›
PPolicyowner BasisThe policyowner’s investment in the contract used in determining tax treatment of certain distributions.›
PPolicyowner RightsContractual rights held by the policyowner, such as naming beneficiaries, assigning ownership rights, borrowing against available cash value, or changing permitted policy options.›
PPreferred RiskA risk classification for applicants expected to have more favorable mortality than standard risks.›
PPremiumThe amount paid to an insurer to keep insurance coverage in force according to the policy terms.›
PPremium ModeThe frequency at which policy premiums are scheduled to be paid, such as monthly, quarterly, semiannually, or annually.›
PPrivacyThe obligation to protect personal and underwriting information from improper disclosure or use.›
PProbationary PeriodA waiting period that may apply before an employee becomes eligible for group insurance benefits.›
PProducer LicenseA state authorization allowing a person to engage in specified insurance activities within approved lines of authority.›
PProducer ResponsibilityThe duty of the producer to complete applications accurately, provide required disclosures, and follow applicable replacement and delivery procedures.›
PPure RiskA situation in which only loss or no loss can occur; it is the type of risk insurance is primarily designed to cover.›
QQualified AnnuityAn annuity funded within a qualified retirement arrangement and subject to the tax rules of that arrangement.›
QQualified Retirement PlanAn employer retirement plan operating under federal tax and retirement-plan rules and meeting applicable qualification requirements.›
RRebatingProviding an inducement or value not permitted by applicable insurance law to influence the purchase of insurance.›
RReduced Paid-Up InsuranceA nonforfeiture option using cash value to purchase a reduced amount of fully paid permanent insurance.›
RRenewabilityA policy feature allowing term coverage to continue for another term according to policy conditions.›
RReplacementA transaction in which a new policy is purchased and an existing policy is lapsed, surrendered, forfeited, assigned, or otherwise affected as defined by…›
RReplacement NoticeA required notice used in a replacement transaction to disclose that existing life insurance or annuity coverage may be replaced and to explain relevant…›
RRepresentationA statement on an insurance application believed to be true to the best of the applicant’s knowledge.›
RRetained ProceedsLife insurance proceeds left with the insurer under a settlement arrangement; interest paid on retained proceeds can be taxable.›
RRevocable BeneficiaryA beneficiary designation that the policyowner can generally change without the beneficiary’s consent.›
RRiderAn amendment or additional provision attached to an insurance policy that modifies or adds coverage.›
RRisk ClassificationThe underwriting category assigned to an applicant based on the evaluated level of risk.›
RRoth IRAAn individual retirement account funded with after-tax contributions that can provide qualified tax-free distributions.›
SSeparate AccountAn investment account used by variable insurance products whose value can fluctuate separately from the insurer’s general account.›
SSettlement OptionA method for paying life insurance proceeds to a beneficiary rather than only as a lump sum.›
SStandard RiskA risk classification for applicants who fit the insurer’s normal underwriting expectations.›
SStatement of Good HealthA statement that may be required at policy delivery to confirm no material health change has occurred since application.›
SStraight Life InsuranceA traditional whole life policy with level premiums payable for life and permanent death-benefit protection.›
SSubstandard RatingAn underwriting adjustment used when an applicant presents higher-than-standard risk.›
SSubstandard RiskA risk classification for applicants presenting higher-than-standard risk and who may be rated or charged a higher premium.›
SSuicide ClauseA policy provision limiting the death benefit for suicide during an initial exclusion period, generally providing for return of premiums under policy terms.›
TTable RatingA method of charging an increased premium for a substandard risk according to a rating table.›
TTax-DeferredA tax treatment under which taxation of earnings is postponed until a later taxable event or distribution.›
TTerm Life InsuranceLife insurance that provides death protection for a stated period and generally does not build cash value.›
TTraditional IRAAn individual retirement account that may allow deductible contributions depending on eligibility, with taxable distributions generally occurring later.›
TTwistingAn unfair sales practice involving misleading comparisons or misrepresentations used to induce a policyowner to replace existing insurance with new coverage.›
UUnderwritingThe process of evaluating risk, determining acceptability, and assigning the appropriate premium class.›
UUnfair Claims PracticeA prohibited or improper claim-handling practice inconsistent with reasonable standards for prompt investigation and settlement.›
UUnfair DiscriminationImproperly treating similarly situated insurance applicants or insureds differently on a basis prohibited by applicable insurance law.›
UUnfair Trade PracticeA prohibited unfair or deceptive insurance practice, such as misrepresentation, false advertising, improper discrimination, or prohibited rebating.›
UUnilateral ContractA contract in which only one party, the insurer, makes the legally enforceable promise to perform.›
UUniversal Life InsurancePermanent life insurance designed with flexible premiums and an adjustable death benefit, subject to policy requirements and sufficient policy value.›
VValued ContractA contract that pays a stated amount rather than measuring the exact financial amount of loss; life insurance is generally a valued contract.›
VVariable AnnuityAn annuity using separate accounts in which values can fluctuate and the contract owner bears investment risk.›
VVariable Life InsurancePermanent life insurance that uses separate accounts, causing cash values to fluctuate and placing investment risk on the policyowner.›
VVariable Universal LifeLife insurance combining universal life flexibility with variable separate-account investment options; the policyowner generally bears investment risk.›
VVestingThe process by which a participant gains nonforfeitable ownership rights in retirement-plan benefits according to plan rules.›
WWaiver of Premium RiderA rider that can waive required premiums when qualifying disability conditions are met under the contract.›
WWarrantyA statement or promise required to be literally true when treated as a warranty; insurance applications more commonly use representations rather than warranties.›
WWhole Life InsurancePermanent life insurance with level premiums, a guaranteed death benefit subject to policy terms, and cash value accumulation.›