2-15 Insurance License Florida
Credit Life Insurance
A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor.
In order to qualify for Social Security disability benefits, the disabled worker must be unable to perform ....
Any substantial, gainful work
AMW
Average Monthly Wage
AIME
Average indexed monthly earnings
Risk Avoidance
Avoiding as many risks as possible. (Never flying, never driving, never investing)
Guaranteed Insurability Rider
Permits Insured to buy specific amounts of additional insurance at specified intervals (usually 3 years) without evidence of insurability
In health insurance underwriting when classifying wrist, the three most important factors are....
Physical condition, moral hazard, occupation
Social security death benefits
Social Security pays the spouse or children of deceased worker a one time lump sum death benefit equal to three times the workers PIA with a Of $255
Spouse's benefit
Social security, full benefit is ½ of the retired worker's full benefit, if eligible for both your own and your spouse's you get yours first, if the spousal benefit is higher you'll get the higher benefit
Master Contract
the contract given to the policyowner of a group contact and verifies that coverage is provided
Florida law requires _______% participation by eligible employees in noncontributory group life insurance plans.
100%
Insurance Producer
A person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance
Policyholder
A person who buys an insurance plan; the insured, subscriber, or guarantor.
Roth IRA
A personal savings plan; contributions are not tax-deductible; earnings are tax-free
Per stripes
"by way of" or "by branches". Distribution where a beneficiary's share of the policy's proceeds will be passed down to the beneficiary's living child or children in equal shares should the named beneficiary predecease the insured.
Endowment Premiums
- Are always the most expensive and build cash values the fastest. - Could be considered investment policies rather than insurance
Florida Life and Health Guaranty Associations liability cannot exceed _________ in cash values, or _________ for all benefits including cash values with respect to one life.
$100,000 - $300,000
The 2015 taxable wage base for FICA taxes is....
$118,500
401(k) plan contributions are limited to ________ in 2012.
$17,000
Industrial life policies that total __________ or more in face value can be converted into an ordinary life policy without evidence of insurability.
$3,000
Adverse Selection
A high-risk person benefits more from insurance, so is more likely to purchase it.
Paul v. Virginia
(1869) This decision declared that the privileges and immunities clause of the US Constitution guarantees citizens visiting, working, or conducting business in another state the same freedoms and legal protections that would be afforded to citizens of that state ... STATE WINS
Social Security
(FDR) 1935, guaranteed retirement payments for enrolled workers beginning at age 65; set up federal-state system of unemployment insurance and care for dependent mothers and children, the handicapped, and public health
Career Agency System
(GA) - Build sales staffs and agents are treated as employees. They are recruited and trained. A principal of the company supervises agents.
IRA Plan
(Individual Retirement Account) retirement plan that is not company sponsored where employees contribute a percentage of their pay, up to a specified limit, in any investment plan of their choice
Jumping Juvenile Policy
(Junior Estate Builder) When the child reaches age 21, coverage increases to five times the face amount, premiums remain the same and no evidence of insurability is required.
PPOs
(Preferred Provider Organization) Covers routine preventative care. My use in-network or out-of-network providers (at a higher cost to you). Usually have higher premiums.
Return of Premium Rider
(ROP) Upon death, death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Equity
(n.) the state or quality of being just, fair, or impartial; fair and equal treatment; something that is fair; the money value of a property above and beyond any mortgage or other claim
Endow
(v.) to furnish, equip, provide with funds or some other desirable thing or quality - Can provide a death benefit to the beneficiary or a living benefit to the policy owner
endow
(v.) to furnish, equip, provide with funds or some other desirable thing or quality FURNISH WITH AN INCOME
Skilled nursing care
- 24/7 for nursing and rehabilitative care and is the most expensive care that can be given o Only available by prescription through a doctor
contract exchange
- A life insurance policy can be exchange for another life insurance policy, endowment policy, or annuity contract - and endowment policy can be exchanged for an annuity contract - And annuity contract can be exchanged for another annuity contract
Franchise Life Insurance
- AKA Wholesale Insurance and provides each covered individual with their own policy - The employer acts merely as a "backer" or "sponsor" of the plan - Employer must collect premiums and deliver them to insurer. - Normally used by small groups who don't meet the states minimum numbers laws
Accelerated Death Benefits Provision
- Allows the policyowner to withdraw funds from their life insurance policy early, before death. If they are terminally Ill or dying soon
Cafeteria plans
- Also called Section 125 plans - Employee benefits are paid for on a pretax basis, which amounts for valuable savings
Funding Standards
- An employer must deposit enough money to cover the pension plans and administrative costs
Rollover IRA
- Any IRA whose funds have been distributed and reinvested in another IRA within 60 days of distribution - Funds must be transferred directly
Policy Dividends
- Are not taxable income as they are considered a return of premiums paid - Shareholders receive dividends in stock companies (taxable) - Mutual companies pay their dividends in form of return of excess premium (NOT taxable) - Participating policies usually have higher premiums. - Surrender values are the same for both
Hospital Expenses
- Basic room and board charges are taken care of - Cover hospital "extras" or miscellaneous charges as well o Drugs, x-rays, anesthesia, lab fees, dressings, and the use of the operation room and supplies o Does not cover physician services - All the information will be labeled out in how much they cover and on what
Deferred Annuities
- Can be funded through either the single premium payment or through periodic premium payments - Begin payout at sometime in the future
Immediate Annuities
- Can only be funded using the Single Premium payment method - First income payment is made one month from the date of annuity purchase - Typically designed to provide income immediately upon retirement o In exchange for a lump sum premium the company pays them a monthly income for the rest of their life.
Dividend Options
- Cash in Hand - Apply Dividends Against Premium Payments - Allow Dividends to Accumulate at Interest - Use Dividends to Buy Paid-up Additions - Use Dividends to Purchase One-Year Term Insurance
Education fund
- Covering educational expenses for family member. - *529 Plan (prepaid tuition plan) - *Coverdell education savings accounts: allows contributions of $2000 per year per chid until the child turns 18. (fund must be used by youngest child turns 30) Functions like a Roth IRA, not taxed. Has 10% penalty if withdraw past 30 years old. The beneficiary will not owe tax on the distributions if they are less than a beneficiary's qualified education expenses at an eligible institution.
Rights of Ownership
- Decision on choosing and changing the beneficiary - Decision on just how the death benefits will be disbursed to the beneficiary - Right to policy loans - Right to policy dividends and their disbursement method - Right to Assign ownership of the policy to someone else - The right to cancel the policy and select a no forfeiture option.
Continuing Care
- Designed for seniors while living in an ongoing or lifelong care retirement community and provides assistance with full time medical and social needs
Coverage Requirements
- Designed to prevent employee discrimination - Favoritism of company offers, highly compensated employees, and shareholders is strictly forbidden
Limited Risk Policies
- Designed to protect people against specific illnesses - Can be purchases for financial protection against very expensive illnesses (caner or heart disease)
Automatic Premium Loan Provision
- Enables the insurer to withdraw funds from the policy if any cash value has accumulated within the contract
Purpose of Disability Coverage
- Financial protection if disability strikes - Provides an income stream if an individual is unable to continue working for a period of time due to a disabling accident or illness - Must be at least 20% disabled
Attending Physician's Statement (APS)
- From a medical practitioner who treated the applicant for prior medical problem
Hospital Fixed Rate Policies
- Is getting more popular - It offers daily, weekly, or monthly protection - Based on the number of days an insured is hospitalized - Coverage can last a few months, yeas, or even a lifetime depending on contractual agreement
Group Term Life Insurance
- Least expensive - Based on experience rating of group during the previous year - Use the ART method o Flexibility for insurer of being able to raise premiums yearly o Allows insured members the right to renew coverage without having to provide evidence of insurability
Variable Annuities
- Payments fluctuate according to the value of an account invested primarily in common stocks - provides conservative to aggressive investments that are not guaranteed
Straight Life Income
- Pays the established amount for the lifetime of the annuitant - *The payout is directly related to the actuarial table on the life time. - An option if you want to start receiving payments from your annuity and avoid paying a penalty for early withdrawal
Stop Loss Feature
- Places a limit on the max out-of-pocket expenses an insured must incur for health care, above which the policy pays 100% of the remaining eligible expenses
Florida Life and Health Guaranty Association
- Purpose is to protect policyowners, insureds, beneficiaries, annuitants, payees, and assignees of life insurance - Must be residents of the state - They maintain three separate accounts: o The health insurance account o The life insurance account o The annuity account
Industrial Life Insurance
- Sold by home service insurers - Over the years has been used less - Mainly, to cover funeral expense
Cancelable Policies
- State they can be terminated at any time by the insurer - Insurer must provide written notification of contract cancelation 45 days in advance - Are allowed to increase premiums in a cancelable policy
War or Military Service
- Status clause excludes payment of proceeds if insured dies while in military. Results clause excludes payment if the insured dies as a result of declared war.
Pension Protection Act of 2006
- Strives to improve the pension system and expand opportunities to build retirement nest eggs - Beginning in 2010 anyone can convert funds from a 401(k) plan to a traditional or Roth IRA
Blanket Life Insurance
- Temporary coverage of a specific hazard for a specific group. - Airline companies covering the passengers while they are on the flight for a temporary time
Ordinary Life Insurance
- Term, Whole Life, Universal Life, Endowment, Universal life, and other interest sensitive cash value plans
Group Ordinary Plans
- Uses cash value life insurance plan - - Employees are allowed to own the cash portion of the policy
Workers Retirement Benefits
- at age 66 full retirement age 100% of PIA - 862 early retirement, permanently reduce benefits - after age 66 delayed retirement, slightly greater benefits
Qualified Withdrawals
- before 59.5 yrs of age, theres a 10% irs penalty - The distribution is used to purchase the first home - The owner dies or becomes disabled
Earnings test (retirement test)
- before reaching FRA - for every $2 earned above the annual limit of, $1 in benefits will be deducted. - at FRA - for every $3 earned above the annual limit, $1 in benefits will be deducted.
Nonforfeiture Options
- cash surrender value (CSV) - reduced paid-up insurance (RPU) - extended term insurance (ETI)
Extended Term Insurance
- does not allow the policy to continue to earn interest, increase cash value, or pay dividends. - Allows the face amount of the policy to remain the same for a specified period of time.
Facility of Payment provision
- found most often in industrial policies and grants the insurer permission to pay out benefits to any person appearing entitled. - if you can't get in contact with beneficiary for a certain amount of time - To pay for funeral expenses
Purpose of Underwriting
- guarding against adverse selection - ensuring adequate policyholders' surplus - enforcing underwriting guidelines
Uses of Annuities
- life income. - tax favored savings. - funding individual retirement accounts (IRA). - education funds.
Reduced Paid-Up Insurance
- the policyowner may request the cash value of the policy to be used to pay for itself. - It's the same type of insurance as the original policy except all riders, including those for disability and accidental death
Child's benefits
- unmarried and under age 18 - 50% of the workers PIA - disabled before age 22 - 50% benefit will continue indefinitely
Exclusions to Life Insurance
- war clause - aviation exclusion - felony commission - suicide
OASDI Benefits
-Monthly payments transferred into bank account (for security) -Benefits are tied to what recipient paid in to system during his/her work history -Benefits are funded from tax on employment (1/2 is paid by employer and 1/2 is paid employee, mutually funded)
Incontestable Clause
-addresses material misrepreresenations by applicant. - Insurance Co has 2 years to discover it - If found, the insurance co has to repay all premiums - If there's fraud, than the insurance co can return premiums any time
Adjustable Life Insurance
-combines term and whole life into a single plan -the policy can be converted from term to whole life or whole life to term -premiums and face amounts can be increased or decreased at the policyholder's request, subject to limitations as stated in the policy. Face amount increases may also be subject to proof of insurability -Changes do not have a retroactive effect on any policy provisions -depending on changes made, adjustable life can have cash value and other features of standard whole life -premium increases are added to the cash value of the policy
Catch-up Contributions
-for those aged 50 or older -additional $1,000 annually **Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch up provisions**
Life insurance is used in business as....
1. A funding medium 2. A form of Business interruptions insurance 3. As an employee benefit
3 primary methods used to regulate the business of insurance
1. Legislation 2. The court system 3. State insurance departments
Categories of Life Insurance
1. Ordinary Insurance 2. Limited Pay & Single Premium 3. Industrial Insurance 4. Group Insurance
Premium rates
1. Preferred rate - low premium 2. Standard rate - normal premium 3. Substandard rate - higher premium 4. Uninsurable - decline coverage all together
Florida law restricts an insurance company from charging a fixed interest rate higher than ________ annually.
10%
Florida law restricts an insurance company from charging a fixed rate higher than ____________ annually on policy loans.
10%
Whole Life Insurance Policy typically mature at age....
100 years old
In Florida, a child must be at least _______ years of age to sign a life insurance application.
15 years old
A __________ is the cause of a risk. A __________ is the source of danger.
1st - Peril 2nd - Hazard
If Fraud is Discovered after the contract has been in force for _______ years, it cannot be contested and any otherwise legitimate claims cannot be denied based on fraud, misrepresentation or concealment.
2 years
Under Medicare part A, A copayment for post hospital skilled nursing facility care earth applicable from the __________ to the __________ day of care.
21st to the 100th day
In a partnership entity Buy sell plans involving three partners, how many life insurance policies in total or purchase?
3 life insurance plans
HMO's must hold an Open enrollment period of not less than _________ days every 18 months.
30 days
Group life policies must contain a conversion provision which allows the covered individual ________ days to convert the Group coverage to an individual plan without evidence of insurability if they are employment is terminated.
31 days
The conversion period for group life insurance is ______ days.
31 days
For an Individual to be considered "fully" insured they must have ________ quarters of participating contribution.
40
assignment
The act of transferring to another all or part of one's rights arising under a contract.
The excise Penalty tax is imposed before the annuitant reaches the age of....
59 1/2 years old
close corporation cross purchase plan involving three owners, How many life insurance policy in total or purchased?
6 life insurance policies
OASDI = ___________ %, whereas Medicare = __________ %
6.20% and 1.45% = 7.65%
Each Medicare enrollee is given a one time only reserve of _________ days hospital stay in addition to the regular 90 days of benefits.
60 days
Medicare patients have a lifetime reserve of _________ days of hospital coverage.
60 days
Under Group long-term disability plans, benefit amounts are usually limited to approximately ________ of the Participants income.
60%
Florida law requires an additional lapse notice be sent for individual life contracts that have been enforced for at least one year and that covers persons ____________ years or older.
64 years or older
The designated time for an indexed annuity is ______ years?
7 years
Under the accelerated death benefits provision, usually up to _________ of the policy's face value can be withdrawn.
75%
After the Medicare Part B annual deductible is satisfied, part B will pay ___________% of covered expenses.
80%
Exclusion Ratio
= Contract Investment/Life expectancy - Considered 100% in variable annuities
adhesion contract
A "standard-form" contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms.
Fixed Period Option
A Life insurance Settlement option under which the beneficiary receives a regular income for a specified period of time, such as 10 years, at which time the principal and interest are depleted. The name speaks for itself.
Corridor Deductible
A Major Medical deductible that applies between benefits paid by the Basic plan and the start of the Major Medical benefits
Standard Risk
A person entitled to Life Insurance protection without extra rating or special restrictions.
Sole Proprietorship
A business owned by one person
Endowment policy
A cash value life policy for which premiums are paid for a limited number of years, such as to age 65. If the insured is alive at the end of this premium-paying period, she receives the face amount of the policy. If the insured dies before maturity of the policy, the beneficiary receives the proceeds. Generally the most expensive type of cash value life insurance, since the policy reaches maturity prior to age 100. Endowments are often purchased to supplement retirement or for children's educational purposes.
Universal Life Insurance
A combination of whole life insurance and term life insurance.
Joinder Agreement
A contract between a multiple employer welfare arrangement and an employer that spells out the relationship between the MEWA and the employer and specifies the coverages to which the employer has subscribed.
Valued Contract
A contract that pays a stated amount in the event of a loss
Valued Contract
A contract that pays a stated amount in the event of a loss. *Most insurance policies are NOT valued contracts unless they are endorsed.
Unilateral Contract
A contract that results when an offer can be accepted only by the offeree's performance.
nonqualified retirement plan
A corporate retirement plan that does not meet the standards set by The Employee Retirement Income Security Act of 1974. Contributions to a nonqualified plan are not tax deductible. Related item(s): qualified retirement plan.
prospect
A customer who meets the qualifying criteria.
Retirement Income Annuities
A deferred annuity with a decreasing term life insurance rider which provides a beneficiary with a death benefit and the annuity
Partial Disability
A disability from an illness or injury that prevents an insured person from performing one or more of the functions of his or her regular job.
Term Rider on the Insured
A family member can be added to the base policy for example a husband has a policy of $100,000 and he wants to take out a $10,000 policy on his wife instead of purchasing a separate policy for her he can add her coverage to his policy usually in the form of term insurance add on.
Affordable Care Act (ACA)
A federal law passed in 2010, which prohibits insurers from denying coverage to individuals with pre-existing conditions, sets minimum standards for health insurance policies, includes an individual mandate for individuals to have a health insurance policy, and expands Medicaid eligibility for many individuals and families.
Medicare
A federal program of health insurance for persons 65 years of age and older
Keogh Plan (HR-10)
A federally-approved, tax-deferred savings program for self-employed people, allowing them to set money aside for their retirement.
Workers Compensation
A form of insurance paid by the employer providing cash benefits to workers injured or disabled in the course of employment.
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage. Unethical
Variable Universal Life Insurance
A form of universal life insurance that allows the policyholder to make fund choices for the investment component but that has no guaranteed cash value and no guaranteed interest rate. - Separate accounts are composed of common stock, van, money market, and the other security investment options
limited pay life insurance
A form of whole life insurance characterized by premium payments only being made for a specified or limited number of years.
Inflation
A general and progressive increase in prices
Insuring Clause
A general statement that identifies the basic agreement between the insurance company and the insured, usually located on the first page of the policy.
Contributory
A group insurance plan that requires the employees to pay part of the premium and the employer pays the rest.
Fictitious group
A group of persons who have gathered together strictly for the purpose of obtaining insurance
Buy-Sell Agreement
A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived.
Assignment of proceeds
A legal instrument which authorizes payment of insurance funds for funeral expenses to a funeral home is:
Deposit Term Insurance
A level term insurance policy that has a much higher premium for the first year than for subsequent years.
Modified Endowment Contract (MEC)
A life insurance policy under which the amount a policy owner pays in during the first years exceeds the sum of net level premiums that would have been payable to provide paid-up future benefits in seven years.
Attorney-in-fact
A person given the authority to act on behalf of another under a power of attorney.
salary reduction SEP plan (SARSEP)
A nonqualified plan under which executives may defer compensation until termination of employment to reduce current income tax liability and save for retirement. Limited to $17,000 the same as a 401(k)
case management
A nursing care pattern; a case manager (an RN) (or CM) coordinates a person's care from admission through discharge and into the home setting
Flexible Premium
A policy feature that allows the policyholder to vary premium payments in the amount and/or timing.
Free Look Provision
A policy provision required by state law that establishes a set number of days (usually 10-14 days) 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.
Policy Settlement
A policy settlement must be provided upon approve of death and the termination of the policy. If the death policy provides for lump sum payout, the settlement payment must include interest from the date the written proof of death of the owner of the insurance policy is received. A table must be provided if the policy provides per installment payments. This table must include the amount and time of the payments.
Stock Insurance Company
A private insurance company owned and controlled by a group of stockholders whose investment in the company provides the safety margin necessary in issuance of guaranteed, fixed premium, nonparticipation policies. Purpose is making profit for stockholders.
Suicide Clause
A provision stating that if the insured dies by suicide during the first two years the policy is in force, the death benefit will equal the amount of the premium paid.
Presumptive Disability
A provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits. - blindness - deafness - loss of two or more limbs
Experience Rating
A rating plan that adjusts the premium for the current policy period to recognize the loss experience of the insured organization during past policy periods.
fiduciary relationship
A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.
Flexible Spending Account (FSA)
A salary reduction cafeteria plan that uses employee funds to provide various types of health care benefits.
Payment Provision
A specified or determinable settlement that is to be made if the underlying behaves in a specified way. And ensure can postpone payment of policies cash surrender value for a period of 6 months
Flat Deductible
A stated dollar amount that applies to a covered loss (e.g. $500). This deductible is applied per occurrence, per insured individual
What is a subscriber?
A subscriber is a person who makes a written offer to buy stock in a corporation not yet formed. Subscribers cannot revoke pre-incorporation offers to buy stock in a corporation not yet formed. This is an exception to the common law rule that offers can be revoked until acceptance. Such offers are irrevocable for six months.
Parol Evidence Rule
A substantive rule of contracts under which a court will not receive into evidence the parties' prior negotiations, prior agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of the parties' written contract.
Constructive Delivery
A symbolic delivery of property that cannot be physically delivered. At which the insurance releases control of the contract to another party.
Relative value scale
A system of assigning unit values to medical services based on an analysis of the skill and time required of the physician to perform them.
403(b) plan
A tax-deferred retirement plan for teachers, hospital workers, ministers, and some other public employees. For nonprofit organization
Conditional Contract
A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable.
Fixed Annuities
A type of annuity that provides a guaranteed fixed benefit amount, payable for the life of the annuitant
PPO (Preferred Provider Organization)
A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan's network. You are not required to have a PCP
Medical Expense Insurance
A type of insurance that pays benefits for medical, surgical, and hospital costs.
Simplified Employee Pension Plan (SEP)
A type of qualified retirement plan under which the employer contributes to an individual retirement account set up and maintained by the employee. The maximum that can be contributed is 25% of the employees annual compensation
Standard Risk
An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle.
The appearance of power on behalf of the insurer through the actions or use of identifying materials by the agent, such as company advertising material, is called _________ Authority.
APPARENT Authority
Risk Retention
Accepting the risk and confronting it if and when it occurs. (Self-insurance)
Fair Credit Reporting Act (FCRA)
Act that protects privacy of background information and ensures that information supplied is accurate.
ASO
Administrative Services Only
How are premiums determined?
Age, face amount, smokers, individual's physical condition, family history and job
Independent Agency System
Agents represent several insurers through signed contracts and are paid on commission or fee basis, not through salary.
Independent agents
Agents that sell the insurance products of several companies and work for themselves or other agents.
First dollar insurance
Aka basic medical expense insurance. Pays benefits up from without the patient having to first pay deductible.
First dollar insurance (Basic medical expense insurance)
Aka basic medical expense insurance. Pays benefits up from without the patient having to first pay deductible.
HIPAA Disclosures and Consent
All medical information obtained on an applicant during the underwriting process must remain confidential and the applicant's privacy must be protected. Before an insurer can share any medical information, the applicant must be notified of the treatment of the information, rights to maintain privacy, and an opportunity to refuse the dissemination of information.
Structured settlement
An arrangement by which the claim is paid in installments rather than in one lump sum settlement.
Automatic Premium Loan Rider
Allows the insurance company to deduct overdue premium from an insured's cash value by the end of the grace period if a payment is missed on a life policy.
policy riders- accelerated benefit rider
Allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness and expected to die within 1-2 years. Whatever amount is withdrawn in an accelerated death benefit will decrease the death benefit when death occurs.
Indemnity contracts
Also known as reimbursement contracts
Annual Renewable Term (ART)
Also known as yearly renewable term (YRT) policies
Loading
Amount added to net premiums to cover the company's operating expenses and contingencies.
Capital Sum
Amount provided for accidental dismemberment or loss of eyesight. Indemnities for loss of one member or sight of one eye are percentages of the capital sum.
Deductible
Amount you must pay before you begin receiving any benefits from your insurance company
Traditional IRA
An IRA for which you can deduct your contribution each year from your taxable income
Substandard Risk
An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium.
Constructive Delivery
An act equivalent to the actual, physical delivery of property that cannot be physically delivered because of difficulty or impossibility. For example, the transfer of a key to a safe constructively delivers the contents of the safe.
fact-finding
An agent should understand what their clients goals are long term and short term retirement etc.
Qualified Annuity
An annuity where the investor contributes pre-tax dollars. Upon retirement the distributions are taxed as ordinary income A 403(b) tax-sheltered annuity (TSA) plan is a retirement plan, offered by public schools and certain tax-exempt organizations. An individual may only obtain a 403(b) annuity under an employer's TSA plan
Viatical Settlement (usually 2 years)
An arrangement that allows someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds when and where they are most needed, before death. 50% of a $100,000 Policy = $50,000 cash 80% of a $100,000 policy = $80,000 cash
Lloyd's of London
An association of individuals and companies that underwrite insurance on their own accounts and provide specialized coverages.
Lloyd's of London
An association of individuals and companies that underwrite insurance on their own accounts and provide specialized coverages. Not an insurer
Loss Reserve
An estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported, but are not yet settled.
preexisting condition
An illness or disorder of a beneficiary that existed before the effective date of insurance coverage.
Medical Information Bureau (MIB)
An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes.
Field Underwriter
An insurance AGENT who conducts an initial policy solicitation and application. (The company's front line of underwriting)
Preferred Risk
An insurance classification for applicants who have a lower expectation of incurring loss, and who, therefore, are covered at a reduced rate.
Reinsurer
An insurance company assuming the risk
Assessment Mutual Company
An insurance company characterized by member-insureds who are assessed an individual portion of each loss that occurs. No premium payment is payable in advance. Not permitted in Florida
Domestic Insurer
An insurance company that conducts business in the state of incorporation.
Accidental Death and Dismemberment
An insurance policy provision that protects the insured if he or she suffers loss of sight or loss of limb(s) or death by accident
Insurable Interest
An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.
Conditional Receipt
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.
Prohibited Provisions
And insurance company can charge a policy loan fee up to temper set annual interest or an adjusted rate of interest with the maximum fee based on moodys monthly corporate bond index
Variable Annuity
Annuity that has a varying rate of return based on the mutual funds in which one has invested
Hazard
Any factor that gives rise to a peril.
Insurable Interest
Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.
Special agent
Are not usually licensed as they don't actually sell insurance they assist insurance companies as a field representatives
Reinsurance
Arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer. Limit the loss any one insurer would face should a very large claim become payable.
State Guaranty Associations are funded by insurance companies through:
Assessments
Collateral Assignment
Assignment of part of the proceeds of an insurance policy to a bank as collateral to settle the loan balance that may exist at the insured's death.
Implied Authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
FICA taxes
Based on the Federal Insurance Contributions Act; tax withheld from employees' paychecks and matched by employers for Social Security and Medicare.
Law of Large Numbers
Basic principle of insurance that the larger the number of individual risks combined into a group, the more certainty there is in predicting the amount of loss that will be incurred in any given period.
Risk Pooling
Basic principle of insurance whereby a large number contribute to cover the losses of a few. The risk is transferred from an individual to a group.
Final expense fund
Basic use for life insurance; reserve to cover costs of last illness, burial, legal and administrative expenses, miscellaneous outstanding bills, and so on. Also called cleanup fund.
Social security benefits
Benefits are eligible to begin after a waiting period of five consecutive months (150 days) and the person must remain disabled during that time. Benefits can be paid retroactively after 12 months minus the waiting period.
Premiums for business overhead expense insurance are tax deductible.
Benefits are taxable income
If the applicant were to die before the policy is issued, the company will pay the death benefit whether or not the policy would have been issued, subject to any limitations this is called a .....
Binding receipt
Accidental Means
Both the cause and the result of the accident must have been unintentional. Normally, the death cause by the accident must occur within 90 or 180 days of the incident
life insurance =
Building an estate
Multi-line insurers
Companies that write more that one line of insurance
If an applicant word to die before a policy is issued, The company will pay the death benefit, but only if the policy would have been issued. This is called a...
CONDITIONAL RECEIPT
Unilateral Contract
Can terminate the policy at any time and prohibits the insured from doing so unless premium payments are not being made
Equity
Cash value
Minimum Deposit Whole Life
Cash values begin immediately and are use to pay future premiums (partially or on full).
Bonds
Certificates of debt that carry a promise to buy back the bonds at a higher price
Advance premium assessment mutual
Charges a premium in advance, at the beginning of the policy period. Not permitted in Florida
internal replacement
Churning - illegal
Adjustable Life Insurance
Combines features of both term and whole life (permanent) coverage with the length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be increased or decreased to fit the specific needs. Such adjustments are not retroactive and apply only to the future.
Service insurers
Companies that offer prepayment plans for medical or hospital services, such as health maintenance organizations.
Periodic Premium
Continuous premiums paid into the contract. The most common example of a periodic premium is a flexible premium.
Insurability Conditional Receipt
Coverage is in effect at the time the receipt is given, if the applicant/insured is insurable. In a life insurance policy or an accident policy with a death benefit, if the applicant/insured dies before the policy is issued, the insurer will pay the claim if they would have provided coverage had the applicant/insured lived. In this case insurability is the condition that must be met.
Last Survivor Policy (Second-to-Die)
Covers two life's; benefit is paid upon the death of the last surviving insured
Joint Life Policies
Covers two or more people. Using some type of permanent insurance, it pays the death benefit when one of the insured's dies. Premiums are less than MPP's
In a buy sell agreement involving a close corporation, the parties to the agreement are the....
Deceased shareholders of state and either surviving shareholders or the corporation
Credit Life Insurance
Decreasing Term that pays the amounts due on a loan if the debtor dies before the load is paid off
Credit Life Insurance
Decreasing term insurance- A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor.
Money Purchase Plan
Defined contribution plan that uses a fixed percentage of employee earnings to defer compensation. It works well for organizations with relatively stable earnings from year to year because the percentage is fixed, and, once established, contributions must be made every year. The contribution limits are the same as for profit-sharing plans.
Policy Loan Provision
Describes the conditions by which a policyowner can borrow from the policy's cash value.
Underwriter duties
Develop relationships with agents and brokers Review applications and underwriting reports Analyze client records to understand degree of risk Understand available insurance products Evaluate past losses and possibility of future losses
Policy Dividends
Dividend options = cash in hand, dividends against premium payments, dividends to accumulate at interest, dividends to buy paid up additions, Dividends to purchase one year term insurance
In a salary continuation plan, premiums paid by the employer ...
Do not Receive favorable tax treatment by the IRS
Section 1035 (Policy Exchanges)
Due to the fact that life insurance, annuities and endowments are all similar in nature (though they have their differences), the IRS, under certain circumstances, allows for the exchange of one policy for another without taxation to the individual, as long as funds are not distributed to the individual in the process.
_________ is the legal enforcement of a _________.
ESTOPPEL is the legal enforcement of a WAIVER.
__________ authority spells out in contract form the activities that the agent has the power to perform on behalf of the insurer?
EXPRESS Authority
For an Individual to be considered "currently" insured, The individual must have six credits with in the last 13 quarters prior to death
Each credit equals $1,220 annual FICA taxed earnings
IRC Section 457 plan
Employee compensation is deferred to some future age or date
A salary continuation plan is set up between the employer and employees and is funded by the....
Employer
Health Reimbursement Account (HRA)
Employer-funded plan that reimburses employees only for eligible and substantiated health-care expenses.
Employer Benefits
Employers may offer employee benefits in the form of products or services that add extra value for employees beyond earned wages - plans must benefit at least 70% of all employees - at least 85% of all participating employees must not be key employees
Variable Annuities are based on ....
Equity investments, therefore Monetary benefits can change monthly
__________ is the method of establishing a premium for the group based on the groups previous claims experience.
Experience rating
Children's insurance rider
Extends a death benefit to the insured's child up to age 25
True or False Under the fixed period option, if the insurers earnings from the premium payments throughout the years are large enough to permit paying excess interest, the interest will be used to extend the payment., Not increase the scheduled payments
FALSE
True or False - it is absolutely necessary that the policy owner continue to have insurable interest in the insured until the insured dies.
FALSE
True or False - The policyholder always retains the right of Assignment
False
True or False? Using riders to decrease coverage will typically increase premium payments.
False
True or false And annuity must be funded through period Payments.
False
True or false Only a physician can complete and signed attending physicians statements
False
True or False Building cash value does not apply if a term policy is converted to a whole life policy.
False - they can be converted to start building a cash value
True or false There can be no more than 3 beneficiaries named in a life insurance policy.
False - you can have as many as you'd like
Special Use Policies
Family Plan Policies - designed to insure all family members under one policy. Coverage is sold in units. For example, a typical plan could insure the family breadwinner for $20,000. The coverage on the spouse and children is level term insurance in the form of a rider. The spouse's and children's coverage is usually convertible without evidence of insurability. family income policies- consists of both whole life and decreasing term insurance. This policy will provide monthly income to a beneficiary if death occurs during a specified period beginning after date of purchase.The family income portion of this type of coverage is supplied by a decreasing term policy. Income payments to the beneficiary begin when the insured dies, and continue for the period specified in the policy, which is usually 10, 15, or 20 years from the date of policy issue, and not from the date of the insured's death. Family Maintenance Policy - consists of both whole life and level term insurance, which provides income for a specific period beginning on the date of death of the insured. Provided the insured dies before a predetermined time, this policy provides income to a beneficiary for a stated number of years from the date the insured dies. Joint Life Policies- covers two or more people. Using some type of permanent insurance (as opposed to term), it pays the death benefit at the first insured's death. The survivors then have the option of purchasing a single individual policy without evidence of insurability. The premium for a joint life policy is less than the premium for separate, multiple policies. The ages of the insureds are "averaged" and a single premium is charged for each life Joint Life and Survivor Policies- also known as a "second to die" policy. This plan also covers two lives, but the benefit is paid upon the death of the last surviving insured. This type of coverage is sometimes referred to as a "survivorship life insurance policy" and normally will cover two lives. As with a joint life policy, the premium for a survivorship life policy is lower than the combined premium for separate life insurance policies Juvenile Insurance -insures the life of a minor. Application for insurance and ownership of the policy rests with an adult (which does not require the minor's consent) , such as a parent or guardian.
ERISA (Employee Retirement Income Security Act)
Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation
No person may sell variable annuities in Florida unless ....
First Duly licensed and is appointed as a life including variable annuity agent. A life including variable and nudity Asia is one representing and sure as to life insurance and annuity contracts
FIFO
First In, First Out. Rotation system that uses the oldest products first
occupational risk
Five classes of up to patient or wrist from AAA highest rating to lowest risk To AA, A, and C lowest rating to highest risk Non-cancel both policies are offered only to those presenting the higher ratings
Favorable tax treatment in U.S. Income tax system
For employer: 1. Can deduct cost of benefits as a cost of doing business for income tax purposes. 2. Same as salary For employee: 1. Employees in general are not taxed on the value of employer provided benefits. 2. Taxes most often on retirement benefits when received.
Variable Universal Life Insurance
Form of universal life insurance that gives the policyholder some choice in the investments made with the cash value accumulated by the policy. Also called flexible-premium variable life insurance.
noncontributory
Group life insurance plans are those in which the employer pays entire premium and the employee supplies no portion of the premium cost.
Group Whole Life
Group life insurance which offers permanent protection for insured members under the group.
No lapse guarantee rider
Guarantees a death benefit for life so the insured is covered even if premium payments lapse.
When a minor is The named beneficiary, the fiduciary responsibility lies with the....
Guardian
Housing Fund
Having enough money to cover the housing costs for the beneficiaries family for a specific amount of time
Nonoccupational Coverage
Health insurance coverage that pays benefits for sickness or injury occurring only while not on the job.
Occupational Coverage
Health insurance coverage that pays benefits for sickness or injury occurring only while on the job. Example: Workman's Compensation.
Individual contract
Health insurance purchased by an individual; usually includes dependents
PPO (Preferred Provider Organization)
Health insurance that makes it easier to see out-of-network doctors.
HMO (Health Maintenance Organization)
Health insurance that requires a PCP and wants you to use only in-network doctors
Medicare Supplement
Health plan that covers specific expenses not covered by Medicare.
Proper Solicitation
High professional standards that require an agent to identify himself properly as an agent soliciting insurance on behalf of an insurance company.
When a life insurance policy beneficiary ops to receive interest payments only, the insurance company can pay a _________ interest rate than the pre-established minimum rate.
Higher
Which of the following questions would NOT be a legitimate concern for an underwriter?
How much money does the proposed insured have in the bank
__________ Authority is established through verbalization and occurs when appropriate actions are taken to carry out the authority granted to fulfill the principals goals.
IMPLIED Authority
nontraditional life policies
INTEREST SENSITIVE: PREMIUMS VARY DEPENDING ON THE OWNERS ADJUSTABLE WHOLE LIFE :combines term and whole life in one plan and alowes the owner to stablish how much premium they want to pay. then the company selects a policy that meet those needs. UNIVERSAL LIFE:two part contract .renewable term & cash value.payments go straight to the cash value. owner picks an amount of ins or the death benefit equals the face amount . EQUITY INDEX: Based on the S&P500 offers the potential for cash value accumulation and basic interest guarantees. VARIABLE LIFE INS LIFE : Tied to the stock market ,offers no guarantreed cash values and the insured assumes all the investment.
1035 exchange
IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life, Annuity to Annuity, or Life to Annuity).
Grace Period Provision
If a policyowner fails to pay his or her life insurance policy's premium by the date stated in the contract, the policy's grace period will prevent the policy from lapsing. Typically, a life insurance policy grace period extends for either 30 or 31 days after the date in which the premium is normally due.
rejected business rule
If an agent turns in an application to his/her standard company and the company declines to issue the policy standard, the rejected business rule allows the agent to then go to another company to issue the policy.
Felony Commission
If death occurs while the insured is participating in or committing a felony, payment will be excluded
Hazardous Occupation or Hobby
If the insured dies as a result of a hazardous occupation or hobby, the insurer will not pay the claim.
Participation Rate
If the partition rate is 80% in the stock market moves up time for sack, the amount credited to the cash value is 8%. If the participation rate is 90% and the stock market moves up 10% the amount credited to the cash value is at 9%
Conditional Receipt
In Life and Health insurance, a Conditional Receipt provides that if premium accompanies the application, coverage shall be in force from the date of application (whether the policy has yet been issued or not) provided the insurance company would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information. Remember, there is never any coverage unless the premium has been paid!
Participation Rate
In a guarenteed annuity like an equity index annuity, the insurance co will keep a % of the index gain as a fee for the guarentee
Mandatory Second Opinions
In an effort to reduce unnecessary surgical operations, many health policies today contain a provision requiring the insured to obtain a second opinion before receiving elective surgery Under the mandatory second surgical opinion provision, an insured typically will pay more out-of-pocket expenses for surgeries for which only one opinion was obtained The mandatory second surgical option provision can help contain the cost of a group medical plan
Human Life Value Approach
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.
Policy Summary
In life insurance, document explaining the coverage purchased and the names of the insurer and agent.
Integrated Deductible
In superimposed major medical plans, a deductible amount between the benefits paid by the basic plan and those benefits paid by the major medical. All or part of the integrated deductible may be absorbed by the basic plan.
Options for divesting ...
In the event the business owner is no longer able to operate the business due to health reasons or even death the following options are.... 1. The Business can be sold to a willing buyer 2. The business can be liquidated of all assets 3. The business can be passed on to family members
A(n) _______ pays the amount of loss only thereby returning the insured to the same position they were in before the loss occurred.
Indemnity Contract
Point to Point Method
Indexing method that compares the values of the index at two distinct points, such as the end and beginning of the contract term, ignoring all the fluctuations in between. This can protect you against declines in the middle of the term, but it can be a drawback if the index increases throughout most of the term and then drops dramatically the last day.
Physical Hazard
Individual characteristics that increase the chance of peril. (Blindness or deafness)
Morale Hazard
Individual tendencies that arise from an attitude or state of mind causing indifference to loss. (Driving reckless with no fear of death)
Home service or Debt Insurance
Industrial insurance Insurance in small amounts (usually $1,000 to $2,000) with premiums collected weekly by the selling agent
Annuity Basics
Initial purpose of annuity is to provide income for life - When annuity is annuitized, pays out as long as the annuitant lives. - Annuitization point (when it starts paying out) - *Deferred annuities: starting annuity early in life saving for the future. - Annuity purchased either with a single premium or with periodic payments
ceding company
Insurance Company transferring risk
Southeastern Underwriters Association
Insurance IS commerce, and Congress can regulate insurance when it is interstate. Antitrust laws apply... FEDERAL GOV WINS
mutual insurance company
Insurance company characterized by having no capital stock; it is owned by it's policyowners and usually issues participating insurance. Participating companies because policyowners participate in policy dividends.
Reciprocal Insurance Company
Insurance company characterized by the fact it's policyholders insure the risks of other policyholders.
Definition of Insurance
Insurance is the pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected with the risk
whole life insurance
Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be.
First-Dollar Insurance Coverage
Insurance that pays all expenses generated by the insured activity
Broker represent __________; agents represent _________.
Insureds - insurers
Indexed Annuities
Interest rate tied to an index. Earn higher rate than fixed annuities, not as risky as variable annuities or mutual funds
Insurance Regulatory Information System (IRIS)
Introduced by the National Association of Insurance Commissioners in 1974 to identify insurance companies that might require further regulatory review.
defined contribution plan
Is a tax qualified retirement plan in which annual contributions are determined by the formula set forth in the plan. Benefits paid vary with the amount of contributions made and length of service
Term Insurance
Life insurance coverage for a specified period of time, less expensive than whole... usually 1,5,10 or 20 years or in terms of age until 50,60, or 70 years of age.
Statutory Law
Law passed by the U.S. Congress or state legislatures
Fair Credit Reporting Act
Law that grants consumers to the right to know who requests to view their credit report over the past year
Endowment Policies can be compared to ____________ Insurance.
Level term
Stranger-Originated Life Insurance (STOLI)
Life insurance arrangement in which a person with no relationship to the insured purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies.
Traditional Whole Life Insurance
Life insurance having a fixed face amount and level premiums payable for the insured's entire life
Fraternal Benefit Societies
Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.
Fraternal Benefit Societies
Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government., nonprofit
Stock and Mutual companies can both write ...
Life, health, property and casualty insurance policies
Annuities =
Liquidating an Estate
Elements of Insurable Risk
Loss must be: due to chance, definite and measurable, predictable, cannot be catastrophic, loss exposures to be insured must be large, loss exposures to be insured must be randomly selected.
Indeterminate Premium Whole Life
Lower premium rate initially (2-3 years) and adjusted (up or down) according to the insurers mortality, expense and investment projections.
Graded Premium Whole Life
Lower premiums for designated timeframe (typically 5-10 years); payments rise annually thereafter until leveling off
When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business as a ________________?
MIXED PLAN
MIB
Medical Information Bureau
Intermediate Nursing Care
Medical care leading to recovery which is received on an occasional basis as opposed to intense, daily care.
The most important key factors evaluated in the health insurance underwriting process are....
Medical history and occupation
Term life policy premiums are based on....
Mortality & Loading
Net Single Premium
Mortality - Interest = Net Premium
Term Life Insurance premiums are based on...
Mortality and loading
Endowment Policies
Most expensive type of life insurance Not permanent Does have a cash value Insured can borrow against it or take cash surrender Exactly the same as a Whole Life policy, except the policy matures at a predetermined age by the person buying the policy Level premium every year
Dependent Coverage
Most group life insurance policies cover the member's dependents, as long as the amount of coverage does not exceed 50% of the insured member's coverage.
Suicide Exclusion
Most states permit insurers to exclude death by suicide up to two years from the inception of the policy However, after two years, suicide is covered Insurance companies will refund premiums paid to the beneficiary
MEWAs
Multiple employer welfare arrangements
Demutualizing
Mutual company convert to stock company
Risk Retentio Group (RRG)
Mutual insurance company formed to insure people in the same business, occupation, or profession (pharmacy, dentist, engineers)
The National Association of Health Underwriters (NAHU)
NAHU is an organization of HEALTH insurance agents that is dedicated to supporting the health insurance industry and to advancing the quality of service provided by insurance professionals.
The National Association of Insurance & Financial Advisors (NAIFA)
NAIFA is an organization of LIFE insurance agents that is dedicated to supporting the life insurance industry and advancing the quality of service provided by insurance professionals.
Term Life Insurance
NO CASH VALUE
NAIC
National Association of Insurance Commissioners
NAIC
National Association of Insurance Commissioners, an organization composed of insurance commissioners from all 50 states, the District of Columbia and the 4 U.S territories, formed to resolve insurance regulatory issues.
Gross Premium
Net single premium + expenses
Policy lapse/expiration
No coverage at all
Fraternal benefit society
Non-profit benevolent organization that provides insurance to its members. Based on religious, national, or ethnic lines
Convalescent care expense
Nursing home, long term care
OPTION TO RENEW & OPTION TO CONVERT
OPTION TO RENEW: allows the owner to renew the policy without having to provide proof of insurability. OPTION TO CONVERT: Allows the owner to converet from term to whole life without having to provide proof of insuarability.
OSHA
Occupational Safety and Health Administration
Guaranteed Insurability Rider
Optional rider that enables the policyowner to purchase additional amounts of coverage at predetermined times without proof of insurability. - Options maybe exercise typically between ages 25 and 40 at 3 year intervals. - A disability income policy is the only type of health insurance policy to which a guaranteed insurability rider may be attached.
Service providers
Organization that provides health coverage by contracting with service providers to provide medical services to subscribers who pay in advance through premiums. HMOs PPOs
Single Premium Whole Life
Paid up for life with one large premium payment
The _______ prohibits making any additional verbal changes to a contract once it becomes a written document.
Parol Evidence Rule
dependency period
Period following the death of the breadwinner up until the youngest child reaches maturity of 18 years old
mutual insurers
Participating policies Owned by policyholders Vote for directors and trustees Directors and management have control Typically higher rates
In order for a retirement plan to be qualified, it must meet the following IRS requirements:
Participation, coverage, besting, funding and contributions.
Medical Indemnity plan
Pay a fixed amount per day of hospitalization. If the policy states a daily benefit of $200 and the hospital charges only 100 per day the policy will still pay the 200 per day benefit and the insured can use the extra hundred at his/her discretionary
Cost-of-living adjustment (COLA)
Pay adjustment given to eligible employees regardless of performance or organizational profitability; usually linked to inflation. - based on consumer price index (CPI)
Multiple Protection Policies
Pays 2x or 3x the normal amount if death occurs during a specified period - if not, benefactor gets normal payout
Multiple Protection Policies (MPP)
Pays a benefit of double or triple the face amount if death occurs during a specified period. Insureds are averaged and A single premium is charge for each life
Accelerated Benefit Rider
Pays a portion of the death benefit if the insured is diagnosed with a terminal illness.
Disability income policy
Pays an income benefit when the insured is unable to work due to illness or injury (even if injured on vacation). Benefits are paid weekly or monthly and determined as a flat benefit or a percentage of the insured's current earnings (normally 60% - 70%). The full income is not paid in order to reduce malingering.
Participating Life Insurance
Policy which pays a dividend to its owner based on financial success of the insurance company
Policyowner = employer
Policyholder = individual
Equity Index Universal Life Insurance
Policyholders to link accumulation values to an outside equity index, like the S&P 500 Minimum guaranteed fixed interest rate If the return on the index exceeds the policy's guaranteed rate of return, the cash value will reflect that of the index
Term funding
Premium increases over the years starts off low and then increases
"Consideration" refers to ....
Premium payments
Interest Sensitive Whole Life
Premiums vary to reflect the insurer's changing assumptions with regard to death investment and expense factors.
Medicare D
Prescription drug coverage
PIA
Primary Insurance Amount
Assessment insurance
Prohibited in Florida
Additional insured rider
Provides a death benefit on the lives of family members
Binding Receipt
Provides coverage as soon as premium is received (before approval) (usually not more than $100k)
Limited Risk Policies - dread disease
Provides coverage for specific kinds of accidents or illnesses, such as injuries received as a result of travel accidents or medical expenses stemming from a specified disease.
Medicare Part A (aka Hospital Insurance or HI)
Provides hospital insurance automatically @ age 65 (if FICA qualified) @ no fee but may have deductible & co-pay.
home health care
Provides nursing, therapy, personal care, or housekeeping services in patient's own home
Reinstatement Clause
Provides the conditions under which a lapsed policy may be reinstated, if approved by the insurance company.
Long term care rider
Provides up to 100% of the policy benefits if the insured qualifies for long-term care benefits as defined in the rider, such as the inability to perform 2 out of 6 activities of daily living. Any payout is an acceleration of the life insurance death benefit, meaning it will reduce the ultimate death benefit payable to the beneficiary. The amount of protection is determined at the time of policy purchase. Long-term care benefits are paid income tax free after the insured meets the qualifying requirements.
Policy Replacement
Purchasing a new life insurance policy or annuity contract to replace an existing policy or contract.
Approval Receipt
Rarely used today, a type of conditional receipt that provides that coverage is effective as of the date the application is approved (before the policy is delivered).
per capita method
Refers to the method in which policy proceeds are disbursed equally to each beneficiary named in the policy among the living primary beneficiaries - $150,000 / 3 = $50k each
Most term insurance policies are convertible
Renew or convert to cash value
Self insurance is a form of risk ....
Rentention
Consultants
Researchers and forecasters who provide information about colors and other trends that are occurring in the consumer marketplace.
Savings Incentive Match Plan for Employees (SIMPLE)
Retirement plan by which employees can contribute each year to a 401(k) plan or IRA.
Speculative Risk
Risk that involves chance of both loss and gain; not insurable
Pure Risk
Risk that involves the chance of loss only, there is no opportunity for gain; insurable
SEC
Securities and Exchange Commission
Field Underwriting
Selection of clients by the agent in accordance with company standards
AD&D Insurance
Short for "accidental death and disability", a form of life and income replacement insurance
insurance application
Signed statement of facts requested by an insurance company on the basis of which it decides whether or not to issue an insurance policy; it becomes part of the health insurance contract if a policy is issued - part 1 - GENERAL - part 2 - MEDICAL - part 3 - Agents Report
structured settlement annuity
Single premium deferred annuity contract issued by a life insurer on behalf of a defendant under which the plaintiff (the injured party) in a personal injury lawsuit receives periodic payments rather than a lump sum payment
Common Disaster Provision
Sometimes added to a policy and designed to provide an alternative beneficiary in the event that the insured as well as the original beneficiary dies as the result of a common accident.
Reinsurers
Specialized branch of the insurance industry because they insure insurers.
Peril
Specific event causing loss and giving rise to risk. (Fire is a peril to a burning building)
Employee Life Cycle
Starts in the recruitment and selection phase and includes: Onboarding and Orientation, Training and Development, Performance Management and Transition.
Spendthrift Clause
State legislation that protects the rights of policyowners and beneficiaries from creditors. Death benefits cannot be attached by creditors of the policyowner.
Workers' Compensation Laws
State statutes that establish an administrative process for compensating workers for injuries that arise in the course of their employment, regardless of fault. Governed by the individual states.
McCarran-Ferguson Act (1945)
Stipulates that insurance companies are to be regulated at the state level... state wins
Spendthrift Trust Clause
Stipulates that, to the extent permitted by law, policy proceeds shall not be subject to the claims of creditors of the beneficiary or policyowner.
Commercial Insurers
Stock and mutual companies; they both write life, health, property, and casualty insurance.
Mutualization
Stock company converts to a mutual company
USA Patriot Act (2001)
Strengthens the federal government's power to conduct surveillance, perform searches, and detain individuals in order to combat terrorism. Or money laundering
Solicitors
Such as telemarketers... They usually perform the first contact with prospective customers commonly known as cold calling
TRUE or FALSE - In a reciprocal insurer structure, each policyholder insures the risks of the other policyholder?
TRUE
TRUE or FALSE- Risk retention groups are a form of mutual insurer
TRUE
True or false Anyone under these age of 70 1/2 with earned income can open an IRA.
TRUE
When a TRUST is The named beneficiary, the fiduciary responsibility lies with the ....
TRUSTEE
Risk Reduction
Taking actions to reduce risk. (Installing a smoke alarm)
Health Savings Account (HSA)
Tax-sheltered savings account similar to an IRA but created primarily to pay for medical expenses. However if the funds are use for a different reason other than how they are taxable and subject to a 10% penalty tax Annual limit is - $3,350 or a family can make a higher contribution of $6,750
Death benefits paid under a life insurance policy to a named beneficiary is ...
Taxable
Moral Hazard
Tendencies that people may have that increase risk and the chance of loss. (Alcohol and drugs)
Group Life Insurance Programs consist of which two basic types of insurance plans?
Term life and whole life insurance
6.20% of FICA Tax is allocated to OASDI & 1.45% is allocated to Medicare for a total of 7.65%.
The 2014/2015 tax rate for self employed person is 15.30%
Supplemental medical insurance (SMI)
The Medicare program that pays for a portion of the costs of physicians' services, outpatient hospital services, and other related medical and health services for voluntarily insured and disabled individuals (CMS 2013)
TAMRA
The Technical & Miscellaneous Revenue Act- Tax Reform Act of 1984. This act restricts the payout of endowment policies.
Uniform Simultaneous Death Act (USDA)
The USDA provides for disposition of property in cases where persons who would otherwise take from each other die "simultaneously" (within 5 days). The effect is that the property of each person passes as if the other had predeceased him.
Cash Surrender Value
The accumulated, guaranteed cash value in a Whole Life or Endowment policy at any given point in time. Most contracts do not develop a cash value until after the 3rd year. On Whole Life, the cash value will equal the face amount of the policy at age 100. Synonymous with Cash Value.
Personal Producing General Agent (PPGA)
The agent supplies his own working space (home office) ... supervised by regional directors of the PPGA
retirement plan
The amount an employee contributes each pay period to a retirement plan Qualified or nonqualified plans
Earning schedules
The amount of life insurance and employee receives is based on their salary or earnings for example an employee could be provided with life insurance coverage equal to 11/2 times their salary
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
Express Authority
The authority granted to an agent by means of the agent's written contract.
Under the joint and for survivor option if one annuitant dies, the survivor Receives the rest of the principal. If the survivor dies, what happened to the balance?
The balances forfeit
ceding company
The company transferring the risk
Actuaries calculate
The cost of mortality (death) based on the Law of Large Numbers
Disabled workers benefits
The disabled workers is entitled to a monthly benefit equal to his/her PIA at the time the disability occurred. It's a disability occurred after age 63 and the worker has been receiving a reduced retirement benefit the disability benefit will be reduced to take into account the retirement benefits already received
Nonqualified withdrawals from a health savings account are subject to income taxes and a penalty of:
The earnings become taxable in non-qualified ways
Willful Violation
The employer either knew that what was being done constituted a violation of federal regulations or was aware that a hazardous condition existed and made no reasonable effort to eliminate it
Aleatory Contract
The exchange of value is unequal.
The principal
The insurer
Indexing method
The method for crediting excess interest to the annuity
Legal reserve
The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under the state insurance code.
Consideration Clause
The part of an insurance contract setting forth the amount of initial and renewal premiums and frequency of future payments.
Consideration Clause (Money)
The part of an insurance contract setting forth the amount of initial and renewal premiums and frequency of future payments.
Medicare Part B
The part of the Medicare program that pays for physician services, outpatient hospital services, durable medical equipment, and other services and supplies.
probationary period
The period of time between the effective date of a health insurance policy and the date coverage for all or certain conditions begins.
Blackout Period
The period of time between the youngest child turning 16 and the widow(er) reaching retirement age of 60 during which no Social Security Survivor Benefits are paid to the surviving spouse.
Policyowner
The person who has all the ownership rights under the policy, pays premiums, and accepts the policy when delivered.
Primary Beneficiary
The person who is named as first to receive benefits from a policy.
Secondary Beneficiary
The person who is named to receive benefits upon the death of the insured if the (primary) first-named beneficiary is no longer alive or does not collect all the benefits due to his/her own death.
Master Policy
The policy contract issued to the employer under a Group insurance plan. Remember, the employees covered by a group plan are considered to be insureds, but they only receive certificates.
Revocable beneficiaries
The policyowner may change a revocable beneficiary at any time. Without having to acquire the existing beneficiaries permission
Level Premium Funding
The policyowner pays more in the early years for protection to help cover the cost in later years, which allows the premiums to remain level throughout the life of the policy. The shorter the premium-paying period , the higher the premiums, and vice versa.
Backdating
The practice of making a policy effective at an earlier date than the present. Usually up to 6 months .. And must pay backdated insurance premiums
Risk Transfer
The practice of passing on the risk in question to another entity, such as an insurance company.
Medical cost management
The process of controlling how policyholders utilize their policies. (See mandatory second opinion, precertification, ambulatory surgery, and case management)
Conversion Privilege
The provision in a convertible issue that stipulates the conditions of the conversion feature, such as the conversion period and conversion ratio.
mortality
The relative incidence of death within a group
Fiduciary Responsibilities
The responsibilities a broker has to clients in an agency relationship includes placing the interest of the client first, full disclosure of all facts, material and other, and giving advice and opinions
Participation standards
The rules imposed on an employee to determine ERISA qualification The employee must be at least 21 years old and have completed one full year of service or if the plan provides hundred percent vesting upon participation, the employee is required to complete two years of service before enrolling.
Domiciliary State
The state in which the decedent's domicile (legal home) is located.
Preliminary Term for Interim Coverage
The system of coverage that is designed to allow the insured immediate coverage and yet allows the insured to differ premium payments is known as
Tertiary Beneficiary
The third in line to receive the benefits of a life insurance policy.
Premium Factors
The three primary factors considered when computing the basic premium for insurance: mortality, expense, and interest. Before secondary factors include benefits claims experience age and gender and occupation/hobbies
Transacting Insurance
The transaction of any of the following, in addition to other acts included under applicable provisions of the state code: solicitation or inducement, preliminary negotiations, affecting a con- tract of insurance, and transacting matters subsequent to effecting a contract of insurance and arising out of it.
Self insurers
These insurers do not transfer their share of a loss to an insurance company, but instead establish their own pool of reserves to cover losses that may arise.
Family Plan Policies
These are designed to insure all family members under one policy. Usually the family head is covered by permanent (whole life) insurance and the spouse/children are included on the same policy as level term life riders (family term riders) . The term coverage on the spouse and children are normally convertible to permanent coverage without evidence of insurability.
When a business is named as a beneficiary, this type of transaction is referred to as a .....
Third party policy
Flat Benefit
This type of schedule provides the same amount of life insurance all employees in an organization regardless of their earnings or position
employment position
This type of schedule so it's in employees life insurance amount according to their position with the company for example general staff may be provided with $30,000 of coverage managers with $50,000 and vice presidents was $100,000
Nonforfeiture Options
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
retirement options
Universal life, variable life, adjustable life or permit form of contract and can be used to actively as a base for producing retirement assistant income. Term life, on the other hand should not be relied upon as a retirement tool
Mutualization
Transformation of a stock insurer into a mutual insurer.
True or False a policy owner fails to designate a beneficiary, the proceeds of the policy go to the insured a state where they are no longer protected from creditors.
True
True or False Accelerated benefit provisions are standard in most individual and group life insurance policies.
True
True or False If a beneficiary opts to receive interest only payments while the insurance company holds the policy proceeds, the insurer is restricted from paying a lower interest rate than the pre-establish minimum rate.
True
True or False? The death benefit under an increasing term policy increases with time
True
True or False? If a policy is transferred under an absolute assignment, the assignee cannot change the beneficiary if the beneficiary had been originally designated as Irrevocable without the beneficiaries permission
True
True or False? The policyholder assumes the investment risk in variable insurance products.
True
True or False? Adjustable life policies combine term and permanent insurance with whole life insurance as the base policy.
True
True or false According to Florida law, there is no requirement for minimal participation in contributory group life insurance plans.
True
True or false HMO's operate almost exclusively through group enrollment plans.
True
True or false A life insurance policy cannot be contested by the policy beneficiaries
True
True or false A viatical settlement sales agent must be licensed as a life agent.
True
True or false All group insurance policies must be convertible
True
True or false Any death within the conversion period is covered.
True
True or false Every applicant must receive and sign a written notice letting them know that the MIB may be consulted for more information during the underwriting process.
True
True or false In a Roth IRA qualified withdrawal, earnings are distributed tax free
True
True or false Most policies contain revocable beneficiary designations.
True
True or false Under a group ordinary plan, the cash value can be retained by the employer.
True
True or false? Decreasing term polices fluctuate in face value
True
True or false? Level term policies do not fluctuate in face value.
True
Universal Life Insurance
UL policy's allow premium payments and face amounts to be adjusted up or down according to the policy owner's needs
A(n) __________ obligates one party (the insurer) in the contract.
Unilateral Contract
Custodial Care
Unskilled care given for the primary purpose of meeting personal needs, such as bathing and dressing
COBRA coverage
Up to 18 months for individuals and their spouses and dependents May extend for up to 36 months for spouses and dependents facing a loss of employer-provided coverage because of an employee's: Death Divorce Legal separation Other (termination, retirement, layoff)
Group Long term disability plans usually provide a benefit period of ....
Up to two years occasionally extending to the insureds retirement age
A(n) __________ pays a predetermined amount with no way to assess loss.
Valued Contract - set amount to be paid in contract
Policy Exclusions
WAR:policy wont pay if one dies do to a war. AVIATION:policy wont pay id one was to die in an aviation accident. HAZARDUS OCCUPATIONS:Wont pay if death is do to a dangerous job or a risky hobbie. COMMISSION OF A FELONY: policy wont pay id death ohappends during an ilegal activity
Payor Rider (Minor life Insurance)
When an adult insures a child, premiums will be waived until the child reaches 21, if the adult dies or is disabled
Reasonable and customary
When the fee charged by a provider falls within the parameters of the fee commonly charged for that particular service within a specific geographic area, it is said to be:l
Family Income Policies
Whole Life + Decreasing Term • This policy pays the beneficiary a monthly income for the balance of the family income coverage period. • The insurer must die prior to the time the selected family income coverage period ends. Starts when policy is issued.
Family Maintenance Policies
Whole Life + Level Term • The policy will pay the beneficiary a monthly income for a preselected number of years. • Must die prior to a selected date • The specified income period begins on the date of death.
Family Income Policies
Whole life and decreasing term insurance (begins date of purchase). Provides monthly income to a beneficiary if death occurs during a specified period after date of purchase. If the insured dies after the specified period, only the face value is paid to the beneficiary since the decreasing term insurance expired.
indexed whole life insurance
Whole life insurance under which the face amount increases with increases in the inflation rate as measured by some national price index, such as the CPI in the U.S.
Industrial Life Insurance
Whole life insurance with small face amounts
Juvenile Insurance
Written on the lives of children who are within specified age New born-15yrs old ... limits and generally under parental control.
profit-sharing plan
a benefit whereby employees may share in the profits of the business
Aleatory Contract
a contract where the values exchanged may not be equal but depend on an uncertain event
Mutual Insurer
a corporation owned by the policyholders
Waiver
a document that shows a person voluntarily gives up a right, claim or privilege
Investment Configuration
a fixed rate of return(which will not keep up with inflation) or a variable rate of return(which attempt to offset inflation but are not guaranteed).
Annuities
a fixed sum of money paid to someone each year, typically for the rest of their life.
Variable Life Insurance
a fixed-premium policy in which the death benefit and cash values vary according to the investment experience of a separate account maintained by the insurer
cold calling
a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects' needs or financial status
Decreasing Term Insurance
a form of term insurance in which the benefits that will be paid to the beneficiary are reduced over time and the premium remains constant
Ordinary Life Insurance
a level-premium policy that accumulates cash values and provides lifetime protection to age 121
CPI (Consumer Price Index)
a measure of the overall cost of the goods and services bought by a typical consumer
Needs Approach
a method of determining how much life insurance you need based on funds your family would require to maintain their lifestyle after your death
Risk Retention Group (RRG)
a mutual insurance company formed to insure people in the same business, occupation, or profession
Demutualization
a mutual insurer is converted into a stock insurer
PPOs
a network of providers where costs outside the network may be partially reimbursed and the patients primary care physician need not be a member
indemnity
a payment for damage or loss ... to restore you to what you had
whole life insurance
a permanent policy for which you pay a specified premium each year for the rest of your life
Fiduciary
a person who holds assets in trust for a beneficiary
Variable Insurance
a policy introduced in the 1970s that uses separate account(s) for the cash value accumulation. The separate accounts are normally mutual funds and a securities license is required to sell this policy.
Coinsurance
a provision under which both the insured and the insurer share the covered losses
Trustee
a representative who votes based on what he or she thinks is best for his or her constituency
qualified retirement plan
a retirement savings plan approved by the IRS that provides individuals with a tax benefit
Attending Physician's Statement
a statement about the applicant's medical conditions, diseases, and treatments obtained from the applicant's doctor
excise tax
a tax on the production, sale, or consumption of goods produced within a country
401(k) plan
a tax-deferred investment and savings plan that acts as a personal pension fund for employees
Stock Bonus Plan
a type of profit-sharing plan in which the employer rewards employees with company stock instead of cash
non-willful violation
a violation of probation that occurs beyond the offender's control, such as an offender who becomes seriously ill and is unable to complete community service hours within his or her period of supervision
Corporations
businesses that are owned by many investors who buy shares of stock
Partnerships
businesses with two or more owners
Group Paid Up Plans
a. Combines term life with whole life b. Death benefit is a total of the two plans c. At retirement or termination the employee is entitled to the cash value (paid-up) policy
Solvency
ability to meet all financial obligations
Absolute Assignment
all ownership rights in the policy are transferred to a new owner
OASDI (Old Age, Survivors, and Disability Insurance)
also known as Social Security
Elimination Period
amount of time that lapses after a disabling event before the insurance company begins to pay benefits
Elimination period
amount of time that lapses after a disabling event before the insurance company begins to pay benefits
Financial Services Modernization Act of 1999
an act that overturned the section of the Banking Act of 1933 that prohibited commercial banks from selling insurance or performing the functions of investment banks
Policy Riders
an addition added to an original policy that clears up or adds more protection -dental - vision Etc
Captive Agent
an insurance agent who represents only one insurance company and who is, in effect, an employee of that company ... also know as a CAREER AGENT
Alien Insurer
an insurer that is chartered by a foreign country, but is licensed to operate in the state
Coverdell Education Savings Account
an investment account through which individuals can save for education expenses on a tax-exempt basis. Maximum contribution $2000 a year per child
prospectus
an investment report to potential investors
Open-panel HMO
an organization in which private practice physicians are contracted by a health maintenance organization to deliver care in their own offices
Foreign Insurer
an out-of-state insurer that is chartered by another state, but licensed to operate in the state. For example a company that is incorporated in Georgia or Alabama or any other State than Florida is conducting business in Florida they are considered a foreign insurer
Life settlements
any financial transaction in which the owner of a life insurance policy sells a policy that is no longer needed to a third party for some form of compensation, usually cash - tax implications and advice should be sought from a qualified tax advisory - there are possible alternatives to the life insurance settlement - The transaction may affect creditors rights
other insureds
are persons or parties who are insured under the named insured's policy even though they are not specifically named in the policy
Residual Amount Benefit
based on the proportion of income actually lost due to partial disability, taking into account the fact that the insured is able to work and earn some income Can't be less than 25% income lost or insurance won't pay ... Usually 40%
Nonforfeiture Options
cash surrender value, reduced paid-up insurance, extended term insurance
Industrial Insurance
characterized by comparatively small issue amounts, such as $1,000, with premiums collected on a weekly or monthly basis by the agent at the policyowner's home. Quite often it is marketed and purchased as burial insurance.
Field Underwriting Duties
completing the application and collecting the premium (agent doesnt issue policy)
COLA
cost of living adjustment
Basic Medical Insurance
covers hospitalization and outpatient treatment
Tax Treatment of Proceeds
death benefits paid under a life insurance policy to a named beneficiary are generally free of federal income tax. However, interest paid by an insurance company on death benefit proceeds left with the company is taxable income. Dividends are usually tax free and interest earned is usually taxable.
Accidental Death Benefit Rider
doubles the face amount of life insurance if death occurs as a result of an accident
Aviation Exclusion
exclude aviation deaths other than as a fare-paying passenger on a regularly scheduled airline
Individual Uses For Life Insurance
final expense fund, housing fund, education fund, monthly income, emergency fund, coverdell educational savings accounts, income needs if disabled or ill and retirement income., liquidity
modified whole life insurance
guarantees a level premium for the first few policy years, with a higher guaranteed level premium thereafter
per capita
for each person; in relation to people taken individually.
modified whole life insurance
guarantees a level premium for the first few policy years, with a higher guaranteed level premium thereafter typically 5 years higher premiums thereafter
Limited Pay Whole Life
have level premiums that are limited to a certain period(less than life). The period can be of any duration. Ex: 20-pay life, pay premiums for 20 years and then you are fully covered until your 100.
HMO
health maintenance organization
High Deductible Health Plan (HDHP)
health plan that combines high deductible insurance and a funding option to pay for patients out of pocket expenses up to the deductible Minimum of $1,300 and a cap on out of pocket expenses of $6,550 A family HDHP has a minimum deductible of $2,600 and a cap of $13,100
Home Service Insurers
home service insurance is industrial insurance sold by home service or debit life insurance companies. Face amounts are small; usually $1,000 to $2,000 and premiums are paid weekly.
Actuaries
in charge of determining the company's premium "rates" Three primary factors that the amount is based on - 1. Mortality 2. Interest 3. Expenses
ambulatory surgery
includes outpatient, same-day, or short-stay surgery that does not require an overnight hospital stay
indemnity contracts
insurance company is only required to compensate for actual losses, up to the policy limits
Group Insurance
insurance that is purchased at group rates by an employer or corporation
Policy Effective Date
it identifies when the coverage is effective, but also it establishes the date by which future annual premiums must be paid. The policy will not be truly effective until it is delivered to the applicant, the first premium is paid, and a statement of continued good health is obtained.
As inflation increases
interest rates rise
Single Premium Whole Life
involves a large one-time-only premium payment at the beginning of the policy period and from that point on the policy is completely paid for. And the holder is insured for life
Blue Cross Blue Shield (BCBS)
is a commercial insurance carrier and covers nearly one-third of the people in the United States. • Blue Cross (BC) covers hospitalization. • Blue Shield (BS) covers physician benefits. Most patients have BCBS, which covers both hospitalization and physician benefits; however, there is the option of carrying only BC or BS. BCBS may be fee-for-service, managed care, a federal employee program (FEP), Medicare supplemental, or BC anywhere. The type of coverage is noted on the patient's insurance card.
Agency Law
is an area of law dealing with working relationships created between two parties. Usually the AGENT & the company the agent works for
Irrevocable Beneficiary
is one that cannot be changed without the beneficiary's consent
Principal Sum
is the stated amount payable as a death benefit death is due to an accident
Multiple Employer Welfare Association (MEWA)
its a method for small employers to band together with other similar groups to buy group insurance - must have common affiliation (ie chamber of commerce)
renal disease
kidney disease
LIFO
last in first out
unfair trade practice acts
laws that prohibit wholesalers and retailers from selling below cost Penalty is $200,000
Warranties and Representations
legal promises that certain facts are true
Variable Life Insurance
life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder
Life insurance is concerned with __________ an Estate, whereas annuities are concerned with ________ an Estate.
life insurance is concerned with CREATING an Estate, whereas annuities are concerned with LIQUIDATING an Estate.
Term Insurance
life insurance protection for a specified period of time; sometimes called temporary life insurance
nonparticipating policy
life insurance that does not provide policy dividends; also called a nonpar policy
Term Life Insurance
life insurance that pays a benefit in the event of the death of the insured during a specified term.
whole life insurance
life insurance that pays a benefit on the death of the insured and also accumulates a cash value.
Consumer Protection
measures to shield buyers of goods and services from unsafe products and unfair or illegal sales practices
Ratcheting
o Comparing the index value at the end of the contract year with the index value at the start of the contract ear (Annual reset)
Social Security rider
o Provides extra income when social insurance benefits are not being received by the insured o Must show that they have applied for social insurance benefits
Benefit period provision
o Short-term benefit period • Ranges from six months to a year o Long-term benefit period • More than a few years, such as 5, 10, or 20 years • Sometime will cover insured till age 65 o Benefit period depends on the policy
Elimination Period Provision
o Similar to a deductible o Time period is agreed upon o Shorter the elimination period, higher the premium
Aleatory Contract
of or pertaining to accidental causes; of luck or chance; unpredictable
Joint Life Policies
one policy that covers two or more people using some type of permanent insurance it pays the death benefit when one of the insureds dies.
Irrevocable Beneficiary
one that cannot be changed without the beneficiary's consent
lateral contract
only one party makes a legally enforceable promise
Dividends
payments of cash from a corporation to its stockholders
Variable Annuity
pays a lifetime income, but the income payments vary depending on common stock prices
Accidental Death Benefit Rider
pays a multiple of the death proceeds if the cause of death is a covered accidental event.
Increasing Term Insurance
pays an increasing death benefit and has increasing premium as the policyholder ages.
per capita
per person
Universal Life Insurance
permanent cash-value insurance that combines term insurance (death benefits) with a tax-sheltered savings/investment account that pays interest, usually at competitive money market rates
Reinstatement Provision
permits the insured to reinstate a lapsed policy
respite care
planned short-term care, usually for the purpose of relieving a full-time informal caregiver
Guaranteed renewable policies
policies that must be continued in force as long as the policyholder pays the required premium 60 or 65 years of age
Margin (or spread)
premium added to the index.... administrative fee
PCP
primary care physician
Roth IRA
private retirement plan that taxes income before it is saved, but which does not tax interest on that income when funds are used upon retirement
Unilateral Contract
promise in exchange for an act
State Guaranty Association
protect policy owners in the event of any insurance company going out of business, becoming insolvent, or the in ability to pay claims
Key Person Insurance
protects against the loss of a key employee or key executive by making the business the beneficiary if a key person dies. The business is the owner, premium payor, and beneficiary.
AD&D policy
provide financial support if the insured dies of is dismembered from an accident (form of limited risk policy)
Closed Panel HMO
providers are either HMO employees or belong to a group that has a contract with an HMO, requiring them to care for any and all members assigned to the provider by the HMO
Level Term Insurance
provides a level amount of protection for a specified period, after which the policy expires. Level premium and level death benefit
interim coverage
provides instantaneous coverage and is intended for people who plan on purchasing permanent life insurance coverage within a year.
insurance agent
represents the insurance company and sells insurance policies to individuals and businesses
What is COBRA?
requires most private employers to continue to make health benefits available to separated employees and their families for a time, generally 18 months after separation; the former employee must pay for the coverage
defined contribution plan
retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account They can be divided into 3 different types - 1. Profit sharing plans 2. Stock bonus plans 3. Money purchase plans
Parol Evidence Rule
rule that prohibits the introduction into evidence of oral or written statements made prior to or contemporaneously with the execution of a complete written contract, deed, or instrument, in the absence of clear proof of fraud, accident, or mistake causing the omission of the statement in question
Contract Law
set of laws that specify what constitutes a legally enforceable agreement
Stocks
shares of ownership in a company
Waiver of Premium Rider
should the owner be disabled and cant earn an income, after 6 months, all premiums will be paid by the insurer during the disability period; After 6 months, the premiums will be repaid - 90 days or 6 months in health policies
Eligible Groups
single-employer groups, multiple-employer groups, labor unions, trade associations, creditor/debtor groups and fraternal organizations.
annuity payment
some uniform amount received (or paid) over several periods, typically in exchange for a lump-sum at the beginning or end
Insurable Interest
something of value that, if lost, would cause you financial harm
Key Person Insurance
special form of business insurance designed to offset expenses entailed by the loss of key employees
Florida Life Insurance Solicitation Law
spells out the information and procedures required of agents and insurers when proposing life insurance to a prospective buyer.
Decreasing Term Insurance
term insurance in which the annual premium remains constant but the face amount of the policy declines each year
Liquidating
the act of converting something into cash
Corridor Deductible
the deductible between a basic and major medical policy
Group AD&D policies may be deducted by whom and under which deduction category?
the employer under business expenses
Contract of Adhesion
the insured must accept the entire contract with all of its terms and conditions
Precertification Review
the insured must obtain "permission" from the insurer before seeking nonlife-threatening hospital care
misstatement of age or sex clause
the insured's age or sex is misstated, the amount payable is the amount that the premiums paid would have purchased at the correct age and sex
Incontestable Clause
the insurer cannot contest the policy after it has been in force two years during the insured's lifetime -Not applicable in these 3 situations. 1. Impersonation 2. A lack of insurable interest 3. The intent to murder
Reinsurer
the insurer that accepts part or all of the insurance from the ceding company
Per Stirpes
the method of dividing an estate where a class or group takes the share which the deceased would have been entitled to, and not as so many individuals, i.e., by right of representations
Subscriber
the person who has been insured; an insurance policy holder HMO Contracts
Rebating
the practice of giving an individual a premium reduction or some other financial advantage not stated in the policy as an inducement to purchase the policy
Coinsurance
the sharing of expenses by the policyholder and the insurance company
Adverse Selection
the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction
Cliff Vesting
the worker must be 100% vested after 5 years of service
NAIC has no legal power.... T or F
true
Fixed Annuity
type of annuity that guarantees a certain rate of return .. guaranteed interest rate of 4% for the first two years the current interest rate is 5%
intangible
unable to be touched or grasped; not having physical presence
Reciprocal Insurers
unincorporated groups of people that provide insurance for one another through individual indemnity agreements
Multiple Employer Trust (MET)
used to market to employers who have a small number of employees. Might only provide a single type or a wide range of coverage METs maybe structure to provide a single type of insurance or a wide range of coverages.
Mass Marketing
using a single marketing strategy to reach all customers
Flat Amount Benefit
• A flat amount benefit is a set amount stated in the policy • This amount is usually 50% of the full disability benefit
Medicare Part C (Medicare Advantage)
•Replaces and covers expenses found in Part A and B •Medicare private fee-for-service plans (PFFS) •Medicare managed care plans (HMOs and PPOs) •Medicare specialty plans
Medicaid
A federal and state assistance program that pays for health care services for people who cannot afford them.
Producer
A person, company, or country that makes, grows, or supplies goods or commodities for sale
Reinsurers
Companies which sell insurance to insurers to reduce the insurer's exposure to loss.
Reciprocal Insurers
are unincorporated groups of individual members that provide insurance for other members through indemnity contracts. Each member acts as both insurer and insured and are managed by Attorney in Fact.
Adverse Selection
less favorable insurance risks (people in poor health) to seek or continue insurance to a greater extent than other risks. Tendency of policymakers to take advantage of favorable options in insurance contracts.
direct selling
marketing products to ultimate consumers through face-to-face sales presentations at home or in the workplace... The middleman is cut out
Securities and Exchange Commission (SEC)
monitors the stock market and enforces laws regulating the sale of stocks and bonds
Mutual Life Insurance Companies
owned by policyholders
Stockholders
people or entities that own stock in a corporation and therefore are its owners
FTC (Federal Trade Commission)
prevents the unfair, false, or deceptive advertising of consumer products and services