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Attending Physician Statement (APS):

, these are used when the application or medical examiner's report reveals conditions or situations, past or present, about which more information is desired. Because of Physician/Patient confidentiality, the applicant must sign an authorization, which allows the physician to release information to the insurance company underwriter.

The probationary period for new employees is ___________________.

1 to 6 months

terminated employee may convert to an individual plan of insurance without proof of insurability is within ____________ days after termination.

31 DAYS

trial application.

An application submitted without an initial premium

Family Servicemembers' Group Life Insurance Coverage (FSGLI)

a component of the Servicemembers' Group Life Insurance (SGLI) program. FSGLI provides coverage for spouses and children of Servicemembers insured under SGLI. Non-military spouses are covered automatically for $100,000 or the amount of the member's coverage, whichever is less. Premiums for spouse coverage are based on the spouse's age and amount of coverage. Dependent children are covered for $10,000 each at no cost to the member.

Adverse Selection:

the tendency of a disproportionate number of poor risks to seek or buy insurance or maintain existing insurance in force (i.e., the selection against the insurance company). Sound underwriting reduces adverse selection.

Declined Risk: Declined risk describes an individual whose application for coverage was rejected by an insurance company

Declined Risk: Declined risk describes an individual whose application for coverage was rejected by an insurance company

Most employers will establish benefit schedules according to the following:

Earnings Employment position Flat benefit

risk classification

Once all the information about a given applicant has been reviewed, the underwriter seeks to classify the applicant's risk to the insurer.

Types of Risk Classifications

Preferred risk, standard risk, or substandard risk

Conditional Receipt:

a form customarily required to be signed by the agent and given to the prospective owner at the time a new application is completed. The issuing of a receipt is subject to individual company rules. Most require that the agent collect an initial premium and, in turn, grant some level of limited coverage under special conditions before issuing the policy. Without a valid conditional receipt, no coverage is in force until the policy is issued, delivered, and accepted with the initial premium paid.

Franchise Insurance:

a life or health insurance plan for covering groups of persons with individual policies uniform in provisions, although perhaps different in benefits. Solicitation usually takes place in an employer's business with the employer's consent. Franchise insurance is generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance.

Conversion Privilege:

allows a policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at the time of conversion) or at original age (premiums based on the age of the insured at the time of original issue). Conversion is a common privilege for term life insurance and all group insurance. The insured does not have to prove insurability (good health) when converting a policy.

Noncontributory Plan:

an employee benefit plan under which the employer bears the full cost of the employees' benefits; in most states, the plan must cover 100% of eligible employees. The employees do not contribute to the cost of the plan.

Special Class:

describes an applicant who cannot qualify for a standard policy, but may secure one with a rider waiving the payment for a loss involving certain existing health impairments. They may be required to pay a higher premium or to accept a policy of a type other than the one for which he has applied.

Contributory Plan:

group insurance plan issued to an employer under which both the employer and employees contribute to the cost of the plan. Generally, 75% of the eligible employees must be insured in most states. The employees must contribute to the cost of the plan.

Credit Policies:

help the insured pay off a loan in the event they are disabled due to an accident or sickness or in the event they die. If the insured becomes disabled, the policy provides for monthly benefit payments equal to the monthly loan payments due. If the insured dies, the policy will pay a lump sum to the creditor to pay off the loan. Credit policies typically cannot exceed the amount of the loan, as that is the limit of the creditor's insurable interest in the insured(s).

Servicemembers' Group Life Insurance (SGLI)

is provided up to $400,000 (in $50,000 increments) for full-time members of the armed services. The coverage provided is group term life insurance, and all active members are covered unless they choose otherwise.

Persistency:

is the percentage of policies an insurer has in force after a specified period of time. Persistency is negatively impacted by policies replaced by other insurers, canceled by the policy owner, or laps due to nonpayment. Companies with higher persistency are more stable and profitable than those with lower persistency. Generally speaking, companies aim for 80% persistency after three-years and 60% after five years. Meaning, 60% of the policies written five years ago should still be active.

Master policy:

issued to the employer under a group plan; contains all the insuring clauses defining employee benefits. Individual employees participating in the group plan receive individual certificates that outline highlights of the coverage.

Binding Receipt (Unconditional Receipt):

one of the types of receipts given by an insurance company upon the completion of an insurance application if the initial premium is collected with the application. Insurance becomes effective on the receipt date and continues for a specified period of time or until the insurer declines the application.

Blanket Health Policies:

t health policies are issued to cover a group who may be exposed to the same risks, but the composition of the group (the individuals within the group) are continually changing. A blanket health plan may be issued to an airline or a bus company to cover its passengers or to a school to cover its students. No certificates of coverage are issued in a blanket health plan, as compared to group insurance.

Rated Policy (Rating Up):

the basis for an additional charge to the standard premium because the person insured is classified as a higher -than-average risk. The above standard rates usually result from impaired health or hazardous occupations.

Age Change:

the date halfway between birthdays when the applicant's age changes to the next higher age. With some insurers, the age is based upon the applicant's age at his nearest birthday. In others, it is based upon the age of his last birthday.

Backdating:

the practice of making the effective date of a policy earlier than the application date. Backdating is used to make the issue age lower than an applicant's real age in order to get a lower premium. State laws usually limit the time to which policies can be backdated to six months. Backdating is not allowed in variable contracts due to the nature of the investment.