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Accurate underwriting depends heavily on an application that is complete and representative of the potential risks. This chapter focuses on the producer's first major role as a field underwriter: completing the application and delivering the policy. This section discusses the specific steps of the application process, which includes completing the form itself, collecting the premium, and delivering the policy. In general, this chapter helps you build a foundation of insurance concepts that make it easier for you to master the rest of the material in this course.
| Term | Definition |
|---|---|
| Adverse selection | Tendency of individuals with higher probability of loss to purchase insurance more often than those who present a lower risk |
| Death benefit | The amount paid upon the death of the insured in a life insurance policy |
| Cash value | Equity amount accumulated in permanent life insurance |
| Estate | A person's net worth |
| Illustrations | Presentation or depiction of nonguaranteed elements of a life insurance policy |
| Life insurance | Coverage on human lives |
| Liquidation | Selling assets in order to raise capital |
| Lump-sum | Payment of the entire benefit in one sum |
| Minor | A person under legal age |
| Solvency | Ability to meet financial obligations (e.g., an insurance company maintains enough assets to pay claims) |
Terms to Know