Life and Health Insurance Concepts
Pure Risk
insurable
Contract of Adhesion
insurer drafts the contract and it is non negotiable
Disability income insurance
insures individual against economic death
conditional recepit
issued when premium is paid with the application and makes coverage effective of the date of application
Warranties
guarantee material facts in the application
Preadmission Certification
helps insurer determine whether hospitalization is necessary, the length of stay, and what major services are planned
Adverse selection
A high-risk person benefits more from insurance, so is more likely to purchase it.
Medical Information Bureau (MIB)
A service organization that collects medical data on life and health insurance applicants for member insurance companies.
Part 3 life insurance application
Agent's report. contains the agent's information of potential clients financial status, habits, and character of the proposed insured
Elements of a Legal Contract acronym
CLOAC
Hazard
Increases the chance of loss
components of premiums
Mortality/morbidity Interest Expenses
Classifications of Risk
Preferred Standard Substandard Declined
risk management methods acronym
STARR
STARR
Sharing Transfer Avoidance Reduction Retention
ambulatory
ability to move about on your own power
elimination period
amount of time that lapses after a disabling event before the insurance company begins to pay benefits (longer time period)
Tort Law
civil wrongs recognized by law as grounds for lawsuit
Part 2 life insurance application
collects applicants medical history
Part 1 of a life insurance application
collects personal and general information about applicant
CLOAC
consideration legal purpose offer acceptance competent parties
Peril
direct cause of loss
presumptive disability
less detrimental disability like loss of limbs or hearing
first collar coverage
medical expense coverage that starts paying from the beginning expenses related to a given sickenss or illness
Speculative Risk
non insurable
Unilateral contract
only one party makes a promise in the contract
Waver of Premium rider
pays premium while disabled. usually 3-6 months
probationary period
period of time that lapses before insurance will cover a sickness (shorter time period)
Three types of hazards
physical, moral, morale
Fair Credit Reporting Act
protects an individual's right to privacy and access to a credit report
AD&D
pure accident coverage that may pay some medical benefits
Indemnity
restores an insured to the approximate condition existing before loss
restoration of used benefits
restores the maximum if you go for a stated period of time without receiving benefits
cost of living adjustment rider
rider used to prevent current benefits from decreasing due to CPI
The Privacy Act of 1974
states no agency shall disclose any record which is contained by any means of communication without written permisison
Human Life value approach
takes into consideration of the loss of future earnings if the insured dies
Needs analysis approach
takes into consideration the financial needs of the survivors
Insurable Interest
the person will suffer the financial consequences of death, illness, accident, or injury
aleatory
unequal exchange of values
Mortality Tables
used to predict future losses from death/illness
Third-party ownership
when the owner and insured are two different parties
