Health Insurance

Alice has a major medical policy with a $500 deductible and an 80/20 coinsurance provision. If she receives a hospital bill for $7500 of covered expenses, how much of that bill will she have to pay?

$1900 Of the $7,500 total expenses, Alice pays a $500 deductible. The basis for the insurer's payment is therefore $7,000. The insurer pays 80% of that amount, or $5,600. The coinsurance amount Alice pays is $1,400 plus the $500 deductible Alice pays a total of $1,900

Life and Disability Guaranty Association Limit (WA)

$500,000

Change of Beneficiary Provision

(required) applies to death benefit policies. policyowner has the right to change beneficiaries only if he or she has been designated revocable. If the insured has named an irrevocable beneficiary, then the insured needs the written permission of the irrevocable beneficiary

intermediate nursing care

- Provided by nurses under the supervision of a physician

Time of Payment of Claims

- Provides for immediate payment of the claim after the insurer receives notification and proof of loss.

Washington Free Look

10 Days

Revocation

15 Days (no less than 10 after hearing)

Notice of Appointment

15 Days after Contract Date (or first app) , Insurer must notify commissioner of appointment

Temporary Producer's License

180 Days

Continuing Education

24 hours with 3 Dedicated to ethics

Commissioner Bond

25,000

Suspension

3 Days Notice for temporary; 12 Month Max; Fines up to 1,000

Temporary Suspension

3 days notice required to temporarily suspend a license if emergency action is needed

Appointment Termination

30 Days

Time to Notify of Address Change

30 Days

Late Renewal Fees

30 Days = 50%; to 60 days = 100%; to 12 Months = 200%

Long-term care free look period

30 days

individual life insurance policy Grace Period

30 days

Group Life grace period

31 Days

Commissioner Term

4 Years

Premium Grace Period

7 Days for weekly, 10 days for monthly, and 31 days for all other policies

Policy Max Annual Fixed Interest Rate

8%

Dread Disease Policy

A Health policy, for certain specified diseases only, such as cancer. Such policies do not follow the Principle of Indemnity in that they pay in addition to any other coverage the insured has. It does not provide comprehensive coverage, nor does it cover multiple diseases. A person cannot obtain coverage if she has already been diagnosed with the disease.

Point Of Service Plan

A Point-of-Service plan (POS), sometimes referred to as a gatekeeper PPO, affords in-network managed care as well as out-of-network care that is not supervised. Out-of-network care will increase the individual's out-of-pocket costs due to higher coinsurance levels. All out-of-network care is on a fee-for-service basis

PPO

A Preferred Provider organization, members pay for services as they are provided at rates that have been discounted in advance for the PPO. Physicians offering their services through a PPO are in private practice and operate on a fee-for-service basis but with discounts for their members that are negotiated in advance. PPO's are not insurers and thus, do not offer Health Care Coverage

Business Disability Insurance

A business purchases this on its key employees to protect it from loss when the employee becomes disabled. The 3 types of plans are business overhead expense policies, key-person disability insurance, and disability buyout insurance

Treaty insurance

A contract agreement between a ceding insurer and reinsurer to underwrite certain classes of risks. Underwriting is done for a class or classes of risks as opposed to on an individual basis.

Indemnity

A contract based on the principle of indemnity attempts to return the insured to his original financial position; For instance, a medical expense policy paying $50 a day for each day the insured is hospitalized pays benefits on indemnity

Optionally Renewable

A contract of Health insurance in which the insurer reserves the unrestricted right to terminate coverage at any anniversary or, in some cases, at any premium due date, but does not have the right to terminate coverage between such dates. Renewal is at the discretion of the insurer.

Recurrent Disability Provision

A disability income policy provision that specifies the period of time during which the reoccurrence of a disability is considered a continuation of a prior disability. Disabled individuals are encouraged to return to work on a part-time basis. If they become disabled again with the same disability, there is generally no second elimination period. AD&D policies generally do not pay benefits for illness. Social Security requires a waiting period before the start of benefits. Also, with most disability income policies, partial disability, when available, pays benefits only after a period of full disability.

Coverage of Loss Exclusions

A disability policy may not exclude coverage for a loss caused by a preexisting condition for more than 12 months after policy issue when the application did not seek prior disclosure of the preexisting conditions

Workers Compensation

A form of insurance paid by the employer providing cash benefits (medical care costs and disability income) to workers injured or disabled and death in the course of employment. Laws are designed to encourage the injured to return to work. They are based upon the principle that the employer should compensate the injured employee for work-related injuries, regardless of fault

Direct Response

A large volume of insurance is sold through direct-writing companies that do not use agents, but instead employ their own salespersons

Continuing Education

A licensed producer may not sell, solicit, or negotiate long term care insurance unless that person has completed education specific to long-term care coverage. Continuing education is required every 24 months. A minimum of four hours must specifically cover topics related to long-term care insurance, long-term services, and if applicable, qualified state long-term care insurance partnership programs. Training records showing completion of educational requirements must be made available by March 31 every year. Satisfactory completion of similar training requirements in another state satisfy these continuing education requirements. Education may not include training that is issuer or company product specific, or that includes any sales or marketing information materials, or training other than those required by state or federal law

claim forms provision

A mandatory health insurance contract provision that requires the insurer, within 15 days of being notified of a loss, to provide to the insured any forms needed to file a claim. If the insurer does not receive claim forms within 15 days of being notified of a loss, the insured may submit a written statement describing how the loss occurred, the nature of the loss, and the medical expenses incurred.

community rating

A method for setting premium rates for health insurance plans under which all policy holders are charged the same premium for the same coverage based on the average cost of providing health care. it does not take into consideration the difference in risk among insureds.

Mutual Insurance Company

A mutual company is an incorporated entity owned by its policyowners. It does not have capital stock, charges a fixed premium, and must maintain the same reserves as a stock company. It is common for mutual companies to sell participating policies in which the policyowners share the insurer's divisible surplus in the form of policy dividends

Excess and Surplus Lines

A name given to insurance for which there is no market through the original producer or that is not available through authorized carriers in the state where the risk arises or is located.

Consideration Clause

A part of the insurance contract that states that both parties must give something of value for the transfer of risk, and specifies the conditions of the exchange. This relates directly to the premium as such, describes the amount and frequency of premium payments

Peril

A peril is the cause of a loss such as a fire, flood, theft and earthquake that can cause a loss of life to property and people

disability income elimination period

A period of days following the start of a disability during which benefits are not payable. Elimination periods range from 1 week to 1 year, the longer the elimination period, the smaller the premium

Medicare

A program added to the Social Security system in 1965 that provides hospitalization insurance for the elderly and permits older Americans to purchase inexpensive coverage for doctor fees and other health expenses.

Short-Term Disability Insurance

A provision to pay benefits to a covered disabled person as long as he or she remains disabled, up to a specified period not exceeding 2 years.

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. Typical for group

probationary period

A specific time frame (typically one to six months) during which a new hire needs to wait before they can enroll in group benefits.

Greatest Need for Income

A surviving family has the greatest need for income when the children are growing up. When a covered worker dies, a surviving spouse with small children usually will be eligible for social security benefits. However, Social Security Cannot (nor was it designed to) meet all of the needs of the family when the breadwinner dies

Blanket Health Insurance

A type of individual accident insurance

Investigative reports and the consumer

AKA inspection report, A consumer may make a written request for complete disclosure of the nature and scope of an investigative report regarding her credit history. The disclosure must be made within 5 days. Consumers have the right to view the information contained in any investigative reports that have been ordered in conjunction with an application for life or health insurance. The consumer's request must be in writing, and the disclosure must be made in writing within 5 days after receipt of the consumer's request.

Accident-only policies

Accident-only policies specifically exclude disease and sickness while paying for disability, death, or dismemberment due to accidental injuries.

Suitability considerations

Addressing the needs, objectives, and circumstances of a client of a prospect to then recommend appropriate products

Credit Report Notice to Applicant

All applicants must be informed that reports regarding their credit history are being ordered by an insurer. The Notice to Applicant must be given to the consumer no later than 3 days after the report has been requested.

Insurance Courses

All courses must be approved by the Washington Insurance Department before study begins to apply course credits toward continuing education requirements

Initiation of Disability Coverage

All disability insurance policies that provide coverage for a child of the insured must provide newborn children, from the moment of birth (and adopted children), with the same health insurance benefits that apply to any child. Injury and sickness benefits must include the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities

Long-Term Policy Return Period

All long-term care policies must allow policyholders to return the policy within 30 days of delivery for a full refund of the premium if they are not satisfied with the policy for any reason

illegal rebate

All of the following would be considered an illegal rebate: premium rebate or discount; shares of stock or other securities; any special advisory board contract or other agreement promising profits, special returns, or special dividends; any goods worth more than $25; or anything else of value not provided for in the contract

Representations

All statements made by an applicant in an application for life insurance are considered to be representations. Most states require that life insurance policies contain a provision that all statements made in the application be deemed representations, not warranties. A representation is a statement made by the applicant that she believes to be true. A warranty is a statement made by the applicant that is guaranteed to be true A representation that is determined to be false, but not material, would not void an insurance contract

Relation of Earnings to Insurance provision

Allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

Primary Insurance Amount (PIA)

Amount equal to a covered worker's full Social Security retirement benefit or disability benefit. The Social Security Survivor Benefit is the amount of income that may be expected from the Primary Insurance Amount (PIA) of the insured.

Deductible

Amount you must pay before you begin receiving any benefits from your insurance company

Accidental Disability and Death Rider

An AD&D rider can be added to some individual disability income policies. Because Steve was disabled in an accident that resulted in blindness, he is entitled to the capital sum, which in this case is paid in a lump sum of $10,000. This benefit will not be paid for a disability resulting from illness, nor would workers' compensation generally pay a lump-sum benefit

Lifetime Reserve

An additional 60 days of coverage on top of the 90 day benefit period Medicare provides for hospitalization. A patient who is hospitalized for longer than 90 days can into the 60-day reserve. This reserve is a one-time benefit; it is not replenished with a new benefit period. Tapping into the reserve will require a higher co-payment from the patient. If a patient is hospitalized beyond the 60th lifetime reserve day, thus exhausting the reserve, they will then be responsible for the charges.

Exclusive Agent

An agent that represents only one company. Compensated by commission, these agents represent the company as a whole, not the insured

Substandard Risk

An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium.

Attorneys

An attorney who adjusts insurance losses occasionally, as an activity incidental to their professional practice, does not need an insurance license. An attorney's license to practice law is sufficient for such incidental activity

Social Security Disability Benefits

An eligible applicant for social security disability benefits must enjoy a fully insured status and be unable to engage in gainful work for at least 5 months before the start of the benefits, and with a disability that is expected to last at least 12 months or result in the loss of sight or death To be considered currently insured, and therefore eligible for disability benefits, a worker must have earned a minimum of 6 credits in the last 13 quarters.

Employee Group

An employee group must contain at least 2 employees

Cost-of-living adjustment (COLA)

An increase in benefits tied to the changes in the Consumer Price Index. In Social Security, this adjustment does not affect individual disability policies

Preferred Risk

An insurance classification for applicants who have a lower expectation of incurring loss, and who, therefore, are covered at a reduced rate and are a lower risk than a standard

Alien Insurer

An insurance company that is incorporated outside the United States.

Fiduciary

An insurance producer acts in a fiduciary capacity when holding premiums or money collected from a policyholder that is to be paid to an insurance company. That is, a person in a position of financial trust to both the insurance buyer and the insurer. As such, the producer must remit all premiums and other insurance proceeds to the insurer promptly and maintain records of all funds received. Producers are prohibited from misappropriating or converting such funds to their own use or illegally withholding them. Producers who convert or misappropriate these funds to their own use are guilty of theft or grand theft, and can be punished as provided by law

Standard Risk

An insured that meets the average health and life expectancy anticipated by the insurer for a person of that age and gender.

cancelability

An insurer may cancel a cancelable policy at any time and for any reason. Clearly, this type of policy is most advantageous to the insurer, not the insured

certificate of authority

An insurer may not transact insurance business in Washington unless authorized by the Commissioner through a certificate of authority

Conditionally Renewable Policy

An insurer may refuse to renew the policy up to a given age/date, and as the result of the insured retirement, but not refuse a renewal as the result of the insured's deteriorating health

Group Life Proceeds

An insurer must pay the proceeds under a group life insurance policy within 30 days after receiving proof of death

canceling a policy

An insurer that cancels, denies, or refuses to renew a policy and is required to give a reason must give the actual reason in clear and simple language, so that the insured does not have to engage in research to understand the reason for the action

Foreign Insurer

An insurer that is incorporated in another state, formed under the laws of the US, another territory, or DC.

Maintenance of Records

Annuity Insurers and producers must maintain consumer records for 5 years

Goods

Any Goods worth more than $100 are considered rebate

State Conflict

Any standard health insurance policy provision that is in conflict with a state statute is automatically amended to conform to the state statute. In accordance with state regulation of the insurance industry, any health insurance policy provision that conflicts with state law is automatically amended to conform to the statute

Basic Medical Expense Policies

Basic medical expense policies are often referred to as first-dollar insurance coverage because they provide for the payment of all losses up to the specified limit without any use of deductibles

Expenses Incurred

Benefits payable for expenses incurred are prorated in cases where the company accepted the risk without being notified of other existing coverage. This limits overinsurance and is known as the insurance with other insurers provision

Blanket Accident and Sickness

Blanket Accident and Sickness insurance includes policies issued to special groups such as common carriers and educational institutions. The policies are not issued on an individual basis. Covered individuals do not have to complete applications and do not receive certificates of insurance. They are oft issued in educational institutions.

Over-Borrowing

Borrowing more than 25% of the loan value of a life insurance policy to purchase a new policy is considered a replacement

Custodial Care

Care that is rendered to help an insured complete his/her activities of daily living such as bathing, dressing, getting out of bed, and taking the Browns to the Superbowl. It is given under a doctor's order

Medicare Advantage Plans (Plan C)

Commonly called Plan C, these plans provide Medicare benefits to eligible people, but they differ in that they are administered by private providers rather than by the government. Common supplemental benefits include vision, hearing, dental, general checkups, and health and wellness programs. it is illegal to sell a Medicare Supplement policy to someone on Plan C

COBRA

Consolidated Omnibus Budget Reconciliation Act 1985; law to provide terminated employees or those who lose insurance coverage because of reduced work to be able to buy group insurance for themselves and their families for a limited amount of time. An eligible employee is entitled to coverage that is identical to his previous plan. Under COBRA rules, his coverage will be terminated if he obtains insurance elsewhere. To be insured under 2 policies would violate the prohibition on gain without loss and will result in overinsurance. The actual coverage will be the same as his original plan, but the premium may be increased up to 102% of the previous rate. Coverage will end if the entire plan is terminated. Coverage may be continued for up to 18 months for both a qualified beneficiary and a terminated employee

Producer's Report

Contains information regarding the producer's personal knowledge of the applicant, such as financial status, habits, and character

skilled nursing care

Continuous 24 hour care provided by licensed medical professionals under the direct supervision of a physician To be eligible for Medicare's skilled nursing facility care benefit, the claimant must have a physician certify that skilled care is required; enter a Medicare-certified skilled nursing care facility; and spend at least 3 days in a hospital. Admittance to the facility must be within 30 days of discharge from a hospital; a doctor must certify that skilled nursing is required; and the services must be provided by a Medicare-certified skilled nursing care facility

Blanket Health Insurance

Cover a group of individuals who are exposed to the same risks, e.g. volunteer fire department. Individuals within the group are changing constantly

Newborns

Coverage for a newborn child must be no less than 3 weeks. Coverage starts from the moment of birth

Basic Hospital Expense Insurance

Coverage that provides benefits for room, board and hospital expenses for a certain number of days during a hospital stay. Physician's services are not covered

Preventative dental care

Dental insurance generally promotes preventative care, and toward that objective it usually costs the cover of routine cleanings in full; requires the insured to cover more of the cost for treatment of dental disease than the cost of preventative care; cover up to 2 routine exams per year, once every 6 months. Most dental policies cover the cost of any dental disease, through the coverage provided for treatment care may be less (on a percentage of cost basis) than the coverage provided for routine care

Dental plans

Dental plans encourage insureds to take advantage of preventive services, which are available at relatively little to no cost under the plans. These preventive services can eliminate the need for major dental work. Therefore, when major dental treatment becomes necessary, most plans cover less than half the cost.

Partial Disability income benefits

Disability benefits for partial disability (inability to perform 1 or more important job duties) typically are payable to eligible insureds for a maximum of 3 to 6 months

Limiting coverage for Disability Insurance

Disability insurance policies cannot limit coverage for congenital defects of a covered dependent child

Nonqualified Withdrawals

Distributions from an Health Savings ACcount for expenses other than qualified medical expenses are subject to income tax and a 20% penalty tax unless the account beneficiary has died, become disabled, or is age 65 or older

Vision Policies

Do not cover injury to or disease of the eyes. Vision coverage is intended to help defray the costs of eye exams, corrective lenses, frames, contacts, or other corrective items

Underwriting

During an underwriter process, an insurer may order a credit report, contact the MIB, order a consumer report to provide details on applicants reputation, character, and habits

Moral Hazard

EG Excessive dieting; Moral Hazards are habits or lifestyles of applicants that could pose additional risk for the insurer. These hazards are evaluated carefully when underwriting health insurance policies

Health Insurance Exclusions

Elective cosmetic surgery, injuries covered by worker's compensation, and injuries sustained in the process of committing a felony are all excluded in health insurance

License Renewal

Every 2 Years; $55 Fee

Commissioner Exam

Every 5 Years

Agent Authority Types

Express; Apparent; Implied

Fair Credit Reporting Act

FCRA protects an individual's privacy during the course of a credit check. If any consumer report is used to deny insurance coverage or charge higher rates, the insurer must furnish to the applicant the name of the reporting agency conducting the investigation. Any insurance company that fails to do so is liable to the consumer for actual and punitive damages

Flexible Spending Accounts aka "Cafeteria Plans"

Flexible spending accounts, also known as cafeteria plans, are funded by employee contributions on a pretax basis. Approved benefits and withdrawals are tax-free to employees and must be used within a specific time period or else be forfeited.

Own-occupation policy

From the insured's prospective, qualifying for disability benefits would be the least restrictive under an own occupation policy, which requires that the insured be unable to work at his own occupation because of a disabling sickness or injury from any cause. Such a policy is more expensive and difficult to qualify for. An any occupation policy requires that the insured be unable to work at any job which they are qualified; Social Security requires that the insured be unable to perform any gainful employment; and workers' compensation provides benefits only if the individual is disabled because of an employment-related injury or illness.

Fiduciary Capacity

Funds held by an insurance producer in a fiduciary capacity cannot be converted to an individuals or a firm's own use.

Part B of Medicare

Government-subsidized voluntary insurance for physician services and outpatient services. An individual who chooses not enroll may do so during an annual open enrollment period. Applicants can choose to enroll in part B of medicare during the open enrollment period of each year, from Jan 1 through March 31. Coverage then begins the following July 1

Coordination of Benefits provision

Group Health policies often include a COB provision that avoids duplicate coverage. Under a COB, when a person is covered by more than 1 group health policy, the insurer who covers the person as an employee or member is considered the primary insurer. The insurer that covers the person as a dependent is the secondary insurer. The primary insurer pays claims first. The secondary insurer pays the amount of the claim remaining, up to 100%

HMO Supplemental Health Care

HMOs may, at their option, provide vision, dental, home health care, substance abuse care, and certain services for a fee. Outpatient care is a basic health care service required by law

Accident Risks

Health Insurance Policies cover accidents during the 10-day waiting period

Commercial insurer

Health insurance may be written by a number of commercial insurers, including life insurance companies, casualty insurance companies, and monoline companies that specialize in 1 or more types of medical expense and disability income insurance. Commercial insurance companies function on the reimbursement approach. A policyowner obtains medical treatment from whatever sources she feels is most appropriate and, per the terms of her policy, submits her charges to her insurer for reimbursement

Change of Occupation provision

If Insured changes to: more hazardous job - benefits reduced; less hazardous job - premiums reduce+excess pro-rata unearned premium returned

Group Long Term Care

If a company establishes a tax-qualified, long-term care insurance plan for its employees, the premiums paid are considered a necessary business expense for tax purposes so the company can take a deduction for the premiums it pays. The employees exclude from their income any employer-paid premium contributions by labeling amounts received for personal injury and sickness

Disability Income Policy for Key Employees

If a company pays the premiums on a disability income policy covering a key employee, the company cannot deduct the premium if the monthly benefit is payable to the corporation. The benefits received from the policy are not taxed

Medicare Supplement Replacement

If a medicare supplement policy replaces another medicare supplement policy that has been in effect for at least 3 months, the replacing policy may not have a pre existing conditions exclusions

Missing Initial Premium

If an applicant does not pay the initial premium when applying for the policy, the agent may require them to sign a statement attesting to their continued good health before delivering the policy. The agent will then submit the premium with the signed statement to the insurance company. The signed statement is required to ensure that the applicant has remained in reasonably good health from the date they signed the application until they received the policy

Conditional Receipt

If an applicant qualifies for coverage, she is immediately insured at the time of application upon paying an initial premium and receiving a conditional receipt

Disability Policies and Social Security

If an insured is disabled to the point of not being able to do any work of any kind that will last longer than 12 months or end in death or total blindness, the insured is eligible for both Social Security benefits AND policy benefits. If the policy contains a percent-of-earnings provisions, the insured's benefits will be reduced by the social security benefits.

Issuance

If the initial premium was paid with the application, the applicant satisfies all of the conditions of the conditional receipt, and the policy is eventually issued as applied for, coverage takes effect just as if the policy had already been issued. It is nor necessary for the policy to be legally delivered to the applicant for coverage to take effect

Major Medical and Comprehensive Medical Coinsurance Provisions

In Major Medical and Comprehensive medical expense policies, a coinsurance provision provides for percentage participation by the insured. For example, a 75/25 coinsurance provision means the insurance company will cover 75% of the allowable medical expenses, and the insured pays the remaining 25%. Coinsurance provisions apply after any required deductible has been paid.

Deliverance

In addition to the Buyers' Guide, the outline of coverage must be delivered to an applicant or insured with or before the delivery of a life insurance policy, whether by producer or a direct response insurer.

Agency

In an insurance transaction, licensed agents legally represent the insurer

Agent Representation

In an insurance transaction, the licensed agent legally represents the insurer

Principal/Producer

In insurance, the insurer is the principal and the producer is the agent. An agency relationship is created by the consent of both the agent and the principal

Selling Annuities

In order to sell annuities, producers must complete a one-time 4 hour annuity course

Finding a Substandard Risk

In the event an applicant is found to be a substandard risk, the conditional receipt in turn becomes null and void. The applicant would be offered a substandard policy, but no coverage would be effective until the substandard policy was delivered and explained and the additional premium was paid. If the applicant were to die before the policy is issued, the insurer would continue underwriting the applicant. If the insurer determines she would have issued the policy had the applicant still been living, the conditional receipt is valid and the named beneficiary would receive the policy proceeds

Entire Contract

Includes the application, policy riders, waivers, and any other attached papers. Does not include the buyers guide or riders

Key Person Disability Insurance

Indemnifies the business for the loss of services of a key employee due to disability

Earnings and Insurance

Insurance companies require that there be a relationship between earnings and insurance. The benefit for coverage purchased that is in excess of earned income will be reduced, and any excess premium will be refunded to the insured

Adhesion

Insurance contracts are contracts of adhesion, meaning that they are prepared by one party, the insurer. They are not negotiated contracts. In effect, the applicant adheres to the terms of the contract when she accepts it.

Unilateral Contract

Insurance contracts are unilateral contracts because only one party - the insurer - makes any kind of enforceable promises. The insurer promises to pay benefits if and when certain events, such as death or disability, occur. The insured's act of paying the premium is given in exchange for this promise. However, the insured is not obligated to make these payments and can let the policy lapse.

disability buyout insurance

Insurance that provides a healthy partner the cash to buyout a partner who becomes ill

Legal Action provision

Insured can seek legal action against Insurer for denial of claim only after 60 days and up to 3 yrs. after providing proof of loss.

Discriminatory Pricing

Insurers may discriminate against poor risks by rating or declining them, particularly for poor health

Claims Investigation

Insurers must complete their investigations of claims within 30 days after being notified of a claim

Advertising Group Health Insurance

It is not necessary to include a comprehensive description of the product in a solicitation notice, point out the need for coverage in advertising materials, or address an individual's actual needs in group solicitation materials. It is illegal and unethical to distort, play down, or minimize any exclusions or limitations regarding coverage

Errors and Omissions Liability

Lets say that during the selling of a replacement health policy, the producer tells an applicant that the new policy will cover expenses ordinarily paid by medicare. The producer selling the replacement policy has engaged in misrepresentation, which is illegal. Health Policies exclude coverage for benefits that are covered by Medicare. The producer has exposed himself to errors and omissions liability as well as possible license suspension or revocation.

License Expiration

Licenses, appointments, and affiliations will be terminated after 60 days of expiration. 12 months after expiration/renewal, all prelicense requirement will become necessary for renewal

Major Risk Factors

Lifestyle, occupation, physical conditions

Accident-only policies

Limited policies that provide coverage for death, dismemberment, disability or hospital and medical care resulting from an accident.

Limited Risk

Limited risk policies provide coverage for specific kinds of accidents or illnesses A person who purchases an accident during that specific trip. That risk is limited to the trip

Exclusions

Loss not covered by the policy

Duties of the Commissioner

Making regulations to help enact the provisions of the Washington Insurance Code; issuing certificate of authority to transact insurance business in Washington, and conduct hearings. As in most states, Washington insurance laws are written and enacted by the legislature, and administered by a state agency. As the chief of the Washington insurance department, the Commissioner enforces and administers the insurance code.

Mass Marketing

Mass Marketing insurance takes advantage of large group situations, selling through direct mail, newspapers, radio, and television. It is an acceptable means of marketing insurance, through there is usually little client contact with an agent or broker

Major Medical Deductibles

May be integrated, flat, or corridor, but not decreasing

Medicaid

Medicaid is a health care program that assists low-income families or individuals in paying for long-term medical and custodial care costs. Medicaid is a joint program, funded primarily by the federal government and run at the state level, where coverage may vary.

Medicare Part A

Medicare Part A is available when an individual turns 65 and is automatically provided when he applies for Social Security benefits. Medicare part B pays 80% of medical expenses after the insured pays the deductible Medicare Part A (Medicare Hospital Insurance) helps cover inpatient care in acute care hospitals, critical access hospitals, and skilled nursing facilities. It also covers hospice care and some home healthcare services.

Medicare Plan A

Medicare Plan A supplement policy does not provide coverage for the Medicare Part A deductible. All other answer choices are included in the core benefits that all Medicare supplement policies must provide, including Medicare Plan A supplement policies.

Medicare Supplement Policies

Medicare supplement policies must offer certain minimum benefits. For example, they must offer coverage of Medicare part A- eligible expenses for hospitalization not covered by medicare from 61 days through 90 in any Medicare benefit period

Cost of Living Adjustment Rider

Monthly or weekly benefits payable under a disability income policy can be tied to changes in the Consumer Price Index through a cost of living adjustment rider

Exclusions

Most health insurance policies typically exclude losses due to war and acts of war, self-inflicted injuries, military service, and overseas residence. Being injured while vacationing in a state other than one's state of residence is not something that would be excluded

Small Group Health Plan

Must have 1 to 50 employees

Discrimination

No person or insurer may refuse to issue or renew insurance to anyone or charge different rates because of race, color, religion, national origin, or sex. However, it is permissible to charge different rates to different individuals when the rates can be justified through valid actuarial tables. Age may be considered a valid justification for charging individuals different rates

Marital Status

Not a risk factor

ACA alternatives

Obamacare, patient protection, healthcare reform

Insurable Risk

One of the criteria for an insurable risk is that it not be catastrophic. A principle of insurance holds that only a small portion of a given group will experience loss at any one time. Risks that would adversely affect large numbers of people or large amounts of property, such as wars, are typically not insurable. Similarly, insurers would not issue a policy for $1 trillion on a single life. That one death would create a catastrophic; loss to the company Must be assessable (measurable), accidental, affordable, calculable, similar, and non-catastrophic

Prescription Drug Plan (PDP)

PDP Stands for prescription drug plan. Medicare part D makes a prescription drug coverage available to people covered by Medicare Part A and Part B

Business Overhead Expense

Pays the business if the small business owner gets disabled; Its purpose is to pay overhead expenses to keep the business in business; premiums are tax deductible with benefits being taxable

Notice of Claim provision

Policy owner must notify Insurer of loss either in writing, in person or by phone w/in 20 days. The insurer must provide a claims form to the insured within 15 days of receiving a notice of claim. Failure to do so means that the insured may meet the time requirement for a proof of loss by giving the insurer a written statement verifying the loss

Methods to reduce hospital care costs

Preauthorization and limits on length of stay, outpatient benefit utilization, second surgical opinions.

New Employee Waiting Period

Prior to the ACA, according to HIPAA, a newly hired worker was not subject to a waiting period for pre-existing conditions if she has less than 63 days between jobs with no health insurance coverage. HIPAA required a new employee to provide the employer (and insurer) with a letter of creditable coverage, attesting to the fact there were no more than 63 days between prior coverage and new coverage. The purpose was to eliminate pre-existing condition exclusions. Upon the passing of the Patient Protection and Affordable Care Act PPACA, health plans can no longer carry exclusions for pre-existing conditions

Commissioner Inquiries

Producers must reply 15 days to commissioner inquiries

Social Insurance

Programs in which eligibility is based on prior contributions to government, usually in the form of payroll taxes. Includes Social Security, Medicare, Medicaid, and worker's compensation

nonforfeiture benefits

Provides benefits if the insured lapses the policy; most common benefits are: 1) a return of premium - policyholder receives cash, which is a percentage of the total premiums paid (excluding interest) after the policy lapses or death occurs 2) shortened benefit period

long-term care insurance

Provides payment for extended nursing care due to accidents, illness, or old age. Long term insurance often includes the option for a non-forfeiture benefits Cannot exclude or limit coverage by type of illness, treatment, medical condition, or accident. They exclude war or acts of war, alcohol or drug abuse, self-inflicted injuries, treatment provided at no cost to the insured, and mental illness and nervous disorders for which there is no demonstrable organic cause. Dementia, Alzheimer's and other organic-based MI's are covered Three levels are: Custodial, intermediate, and, skilled

Business Overhead Expense

Provides the funds to cover the overhead expenses of a business when the owner becomes disabled. The benefits include expenses such as office rent, utilities, and employee labor. However, the owner cannot collect for loss of income under this policy.

Fair Trade Practices

Rebating, defamation of an insurer, and misrepresentation are considered unfair trade practices. The replacement of life insurance is not illegal or unfair in itself, unless it is done repeatedly and without justification. Then it can become twisting, which is illegal.

home health care

Refers to services provided by a licensed home health agency such as nursing, therapy, personal care, or housekeeping services in patient's own home. These services must be prescribed by the person's attending physician as part of a written plan of care. Disability insurers must make benefits for home health care available under group insurance policies

Medical Expense insurance

Reimburses insured for expenses incurred for medical and hospital care and related services. In contrast, the purpose of disability income insurance is to provide periodic payments to an insured who cannot work because of a disability. Long-term care insurance pays for rehabilitative or recuperative care needed after a long illness. Workers' compensation insurance pays for care related to an injury, disability, or illness incurred on the job

Facultative Reinsurance

Reinsurance of individual loss exposures in which the primary insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or reject any loss exposures submitted.

Replacement Records

Replacing insurer must keep copies of replacement notice records for at least 3 years

Captive Agent

Represents one company

Self-Employed Deductions

Self-employed individuals can take an income tax deduction for all amounts paid for medical care, including insurance premiums, provided they have shown a net profit for the year and are not covered or eligible to be covered under a group plan

HIPAA

Sets the requirements that must be met for long-term care insurance to be qualified and take advantage of income tax benefits. The organization was established to create national standards to protect individuals medical records and personal information. They enforce regulations that require health care providers, insurers, and producers to respect the privacy of the insured's prescription drug info, health info, and medical info. This protects individuals from getting denied coverage due to health conditions. Coverage can be denied for individuals who have had their most recent coverage canceled for nonpayments of premiums or fraud

Multiple Employer Trust (MET)

Several small groups of individual employers and unions that need life and health insurance but do not qualify for true group insurance band together under state trust laws to purchase insurance at a more favorable rate.

Hospital alternatives

Skilled nursing, home health care, and rehabilitative and intermediate nursing facilities all can be less expensive alternatives to hospitals

Policy Revision

Smith and Jones insurance has totally revised its individual health insurance policy. Tamika likes the coverage she already has and is concerned about the changes. She contacts the producer who sold her the policy who tells he that he policy will not be affected by the change because: Under the entire contract provision of her policy, no changes can be made to the policy after is has been issued. Therefore, her policy will be unaffected.

Payroll Tax

Social Security benefits are funded by a payroll tax called a FIC. A disabled worker's spouse who is caring for unmarried minor children and children under 18 (19 if in high school) are also eligible

Return of Premium provision

Some individual disability income policies include a partial refund of premiums if no claims are made after a certain period of time. The termination of Social Security benefits will not result in a lump-sum benefit payment. Monthly benefits begin when a policy's elimination period ends

Special Questionnaires

Special questionnaires are used to obtain additional information when an extra hazard or risk may be involved. A medical report, if required, is completed by a physician or paramedic, not by the agent. An unfavorable credit report can be used to reject an applicant. Investigators interview individuals who are personally acquainted with the insurance applicant.

Disclosure notification

State laws require disclosure forms to be given in advance to applicants.

Health Savings Account (HSA)

Tax-sheltered savings account similar to an IRA but created primarily to pay for medical expenses where earnings grow tax-deferred, distributions are tax-free for qualified medical expenses, and enrollment in a high-deductible health insurance plan is required. HSAs are medical savings accounts that provide tax advantages to taxpayers when they enroll in a high-deductible health plan. Contributions are tax deductible, earnings grow tax deferred, and distributions are tax-free when used for qualified medical expenses. Individuals are ineligible to establish an HSA if they have other comprehensive medical expense coverage such as Medicare

insurable risk

The 6 characteristics of risk are calculable, affordable, non-catastrophic, homogenous, accidental, and measurable

HIPAA Pre-Existing Conditions

The HIPAA created various mandated benefits for pregnant women, ensured the portability of group insurance coverage, and enforced the privacy of individuals health information. HIPAA did not eliminate pre-existing conditions, however it placed limitations on how long they could be enforced. The ACA eliminated pre-existing conditions

Family Members and Group Life

The amount of insurance on the life of any one family member cannot exceed 50% of the insurance on the life of the group member.

Life and Disability Guaranty Associations

The association requires membership insurers who issue life and health insurance contracts as well as supplemental contracts. It does not cover the portion of a variable life or annuity contract that is not guaranteed by the insurer, the portion of any policy whose risk is borne by the policyholder, any insurance or reinsurance contract assumed by a liquidating insurer, any policy issued by a nonprofit hospital service corporation, any contract issued by a fraternal society, and any plan issued by a health care service contractor

apparent authority

The authority an agent is believed by third parties to have because of the behavior of the principal. By supplying the agent with business cards, sample policies, and rate books, the insurance company has given the impression that it supports his words and actions

Compensation Disclosure

The compensation disclosure must be retained by the insurance producer for 5 years

Disability Buyout Policy

The disability buyout policy is used to fund buy-sell agreements between partners or stockholders in a closely held corporation should a partner or stockholder become disabled If a business entity is the purchaser, policyowner, beneficiary, and premium payer of disability insurance covering the lives of its businessowners, the premiums are nondeductible. HOWEVER The proceeds are exempt from regularly calculated income tax

Function of Insurance

The function of insurance is to safeguard against financial loss by having the losses of a few paid by the contributions of many who are exposed to the same risk

Suicide Liability

The insurer may limit its liability in the event of suicide within 2 years from date of issue

Health Care False Claim Act

The legislature passed this act in an attempt to eliminate the unjustifiable costs of fraudulent claims. Under the Act, it is illegal for anyone to make or present to a health care payer a claim for health care payment if they know that the claim is false or that it falsely represents the goods or services that were medically necessary. Anyone who violates the act is guilty of a felony.

Medical Reimbursement Benefit

The medical reimbursement benefit is a percentage of the income benefit specified in the policy. It is only paid for injuries and in lieu of other benefits under the policy.

Health insurance coverage access act

The purpose of this act is to foster health insurance coverage for people who generally are considered uninsurable or who are underinsured. Anyone whose health insurance coverage is involuntarily terminated for any reason other than a failure to pay the premium may apply for coverage under the act

Changing Carriers

The replacing insurer must notify the other existing insurer within 3 days of application

favorable terms and rates

The safer the occupation, the lower the rates. The safest occupations provide more liberal definitions of disability.

Medicare Open Enrollment

There is a period of open enrollment when the person is at least age 65 and has enrolled in medicare part b within the last 6 months

Miscellaneous Expense

This benefit covers hospital "extras" such as x-rays, lab fees, and use of the operating room. It does not cover a surgeon's fees, which would be covered under a surgical expense policy

Competent Parties

To be enforceable, a life insurance contract must be entered into by competent parties. In general, an applicant will be presumed to be competent unless proven otherwise. However, applicants who are under the influence of alcohol or drugs when signing the contract are not presumed to be competent.

Legal Enforceability

To be legally enforceable, a contract must have a legal purpose. This means that the goal of the contract and the reason the parties enter into the agreement must be legal. A contract wherein Jake agrees to kill Sue's spouse in exchange for half of the insurance proceeds would be unenforceable in court because the contract does not have a legal purpose. Also, a contract must be made with a definite, unqualified offer by one party and the acceptance of the exact terms by the other party. If someone did not know that he was signing a life insurance application, the offer and contract will be invalid

Qualifying event

Under COBRA, an event, such as termination for reasons other than gross misconduct, bankruptcy of the employer, divorce of covered employee from covered employees spouse, reduction of work hours that allows employees to continue their group health-care coverage for a specified period of time.

Proof of Loss

Under a health insurance policy, the insured has 90 days from the date of the loss to file a proof of loss with the insurer. Failure to file this within 90 days does not invalidate a claim as long as the proof of loss is furnished as soon as reasonably possible. With the exception of the absence of legal capacity, a proof of loss is required no later than 1 year from the date of loss An individual may take legal action to recover on an accident and health insurance policy no sooner than 60 days after a written proof of loss is provided

Selling Insurance Without a License

Up to $25,000 Fine

Illustration Rules

Washington Life insurance policy illustration rules do not apply to life insurance policies with death benefits equal to or less than 10,000

Misstatements

When a policy has been in effect for 2 years, the insurer may not void the policy or deny a claim on the basis of a misstatement on the application, in the absence of fraud

First Premium

When the producer delivers the policy, the first premium must be collected, if it was not given when the application was being completed. The producer must also get a signed statement of good health, which attests that the applicant's health is the same as when he applied for the policy

Independent Ratings Agencies

While not all firms rate the same companies or use the same criteria, the main indicators of financial strength are the insurer's loss experience, reserves, investment performance, management, and operating expenses

Surplus Lines

With Surplus Lines, the coverage must be placed with a non-admitted insurer due to atypical underwriting conditions, needs of more coverage than admitted insurer(s) will assume, or requirements of forms or rates that are not filed in that state.

Surplus Line Affidavit Notice

Within 60 Days after Transaction

Elimination period

a deductible measured in time rather than dollars; used both in disability and long-term care. This is the period of time an insured must pay out-of-pocket for care before the policy will begin to pay benefits. An elimination period is considered a time deductible

Reinstatement

a policy that has lapsed may be reinstated. However, to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date. Losses due to accidental injury are covered immediately upon reinstatement of the policy.

Unpaid Premium Provision

addresses any premiums the insured may not have paid at the time of the claim. insurer can deduct the amount owed from the total benefit it owes the insured

Social Security Rider

aka the Social Insurance substitute rider, provides for the payment of additional income when the insured is eligible for social insurance benefits but those benefits have not yet begun, have been denied, or have begun in an amount less than the benefit amount of the rider.

Primary insurance amount

an amount equal to the worker's full retirement benefit at the full retirement age or disability benefit. PIA is calculated using the percentage of the person's income over their working years

Apparent Authroity

an authority that a prudent person assumes the agent has. Based on their actions, the prospective client assumes that he has the authority to represent and transact business on the behalf of this particular insurance company. In other words, the agents authority to represent the insurance company is "apparent" to the prospect. Apparent authority is from the client's prospective

First Party Claimant

an individual, corporation, or other legal entity that has a primary right to payment under an insurance policy or contract resulting from a loss covered by the policy. May bring an action to recover the damages and other costs sustained if a claim for payment of benefits has been unreasonably denied by the insurer

stop-loss provision

an insurance clause that caps or sets a maximum that the insured has to pay during any calendar year

domesticated insurer

an insurance company formed under home state's law.

Insurance With Other Insurers Provision

benefits payable for expenses incurred are prorated if the insurer accepted the risk without being notified of other existing coverage for the same risk. The insurer is only liable to pay pro rata benefits in proportion to the amount of insurance with the insurer as it relates to the total amount of insurance under all policies.

Long Term Care (LTC) policies

can limit or exclude benefits which are also provided under Medicare or other governmental programs, except Medicaid. Furthermore, a LTC policy may not duplicate benefits available through Medicare To be considered a qualified contract, LTC must follow NAIC's LTC regulations, which addresses the following: policy replacement, conversion, marketing standards, prohibitions on limits and exclusions, and policy renewability among other things. These regulations do not address premium changes

Supplementary major medical

coordinated with a basic plan and is designed to pick up coverage where the basic plan leaves off. It covers expenses not included under a basic plan and provides coverage for expenses that exceed the basic plan's dollar limits

Room and Board

covered under hospital expense. The rest of the choices are covered under the surgical expense policy

comprehensive medical expense insurance

covers room and board, surgical fees, and miscellaneous hospital expenses up to a dollar limit.

Percent-of-Earnings

determines the benefit using a percentage of the insured's pre-disability earnings and takes into account other sources of disability income

Client Service Representative

does not need a license to solicit insurance

distribution system

eg direct response, independent agencies, direct writing. Insurance is distributed through many different channels, including direct response, direct writing, independent agencies, and exclusive agencies. Claims handling is a function of the insurance company

Risk Retention Group

formed to provide only liability insurance to its policyholders. The policyholders must be in the same industry, and they may operate in multiple states. The state where the group is headquartered issues the laws, rules, and regulations

Group life Benefits

group life benefits may be reduced to 1,000 upon attainment of age 65

Health Reimbursement Account (HRA)

high-deductible health accounts set up by employers through tax-deductible contributions on behalf of their employees. Employees may use the funds in the HRA to pay for deductibles, co-payments, and their coinsurance amounts

Service Providers

include HMOs, PPOs, and Blue Cross/ Blue Shield organizations. They are characterized by providing their members with health care services. In contrast, commercial insurers reimburse their policyowners for health care costs.

80 / 20 co-insurance provision

insurance pays 80 % patient pays 20 %

Per Cause Deductible

insured must satisfy a deductible for each individual accident or illness

USA Patriot Act

law passed due to 9/11 attacks; sought to prevent further terrorist attacks by allowing greater government access to electronic communications and other information; criticized by some as violating civil liberties

individual health and accident policies

must contain change of beneficiary, proof of loss, and time limit on certain defenses provisions. A change of occupation provision is optional Requires an entire contract provision, a physical examination and autopsy provision, and a grace period provision. a reinstatement provision is required as well, thus allowing the insured to pay an overdue premium. If a policyowner sends a lapsed policy's overdue premium to the insurer and the insurer does not formally decline acceptance of the premium within 45 days after the premium is mailed, acceptance of the premium is automatically granted Optional provisions include unpaid premium provision, change of occupation provisions, and misstatement of age provision.

Individual medical expense insurance

protects an individual or family for covered medical expenses because of sickness or injury such as nursing care at home, custodial care in a convalescent facility, and treatment for drug and alcohol abuse

Coinsurance Provisions for Major Medical/comprehensive expense policies

provides for percentage participation by the insured. For example, a 75/25 coinsurance provision means the insurance company will cover 75% of the allowable medical expenses, and the insured pays the remaining 25%. Coinsurance provisions apply after any required deductible has been paid

No Loss / No Gain

requires that when health insurance is replaced, ongoing claims under the former policy must continue to be paid under the new policy, thereby overriding any preexisting conditions exclusions, and receive ongoing treatments without suffer to coverage or care

The insuring Clause

the insuring clause identifies the insurer and insured, specifies benefits, and includes the insurer's promise to pay benefits for specific kinds of losses. The statement generally appears on the first page of a health insurance policy and specifies conditions under which benefits will be paid

Benefit Period

the maximum length of time during which a benefit is paid. The longer the period, the higher the policy

Treaty Reinsurance

the primary insurer has agreed to cede insurance to the reinsurer, and the reinsurer has agreed to accept the business

Mortality

the state of being subject to death; Those employed in hazardous occupations pose a greater risk to an insurer, as do those who engage in dangerous and hazardous habits (smoking), hobbies (skydiving), and occupations (skydiving instructor who smokes a pack a day).

Minimum Essential Coverage

workers comp, disability income, accident-only