Humana Life and Health Insurance Terms

Assignment by a policy owner of all control and omiership rights of an insurance policy.

Absolute Assignment

Provision in life insurance policies that allow the life insurance policy's death benefits to be used while the insured is still living (insured must be tenninally ill).

Accelerated Benefits

Bodily injury resulting from an accident.

Accidental Bodily Injury

1) A type of health insurance policy (2) A provision or rider attached to a life or disability income policy that pays either a specified amount if the insured dies. loses his/her sight. or loses a limb as the result of an accident.

Accidental Death and Dismemberment (AD&D)

An unforeseen and unexpected cause of an accident that results in an injury. The cause of the action and the result must be unintentional or there will be no coverage.

Accidental Means

The period during which the owner of a deferred annuity makes payments to build up assets.

Accumulation Stage

Everyday living functions and activities performed by individuals without assistance. These functions include walking. transferring, bathing, dressing, continence. and eating.

Activities of Daily Living (ADLs)

An insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance Finns' reserves, detemiines rates and rating methods, and delemiines other business and financial risks.

Actuary

Insurance policies are contracts of adhesion because the terms are written by the insurer and the insured simply "adheres." For this reason, vague or ambiguous provisions are often interpreted by courts in favor of the insured.

Adhesion

The agreed right of an insurance company to modify the insureds premium payments under certain conditions.

Adjustable Premium

An insurance company authorized and licensed to do business in a given state.

Admitted (Authorized) Company

The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all.

Adverse Selection

This involves minimum or maximum age limits for insuring of new applicants or for renewing policies.

Age Limits

Producers may function as agents, representing the insurance company. Agents are appointed by the insurer through a written agreement (contract) which outlines the agent's authority to represent the insurer.

Agent

The maximum dollar amount that can be collected from a policy, for any disability or period of disability.

Aggregate Amount

A contract in which the number of dollars to be given up by each party is not equal, insurance contracts are aleatory because the policyholder pays a premium and may collect nothing from the insurer or may collect a great deal more than the amount of the premium if a loss occurs.

Aleatory

An insurer organized and domiciled in a country other than the United States.

Alien Insurer

Term life insurance that may be renewed annually without evidence of insurability until some stated age

Annual Renewable Term

The person or persons who receives the payment from an annuity contract

Annuitant

The conversion of the account balance of an annuity contract to mcomc payments.

Annuitization

A life insurance product that pays periodic income benefits for a specific period of time or over the course of the annuitants lifetime.

Annuity

In certain types of annuities, a person who receives annuity contract payments if the annuity owner or annuitant dies while payments are stilldue.

Annuity Beneficiary

The person or entity that purchases an annuity and has all rights to the contract. Usually, but not always, the annuitant.

Annuity Contract Owner

The guarantee that if an annuity contract owner dies before annuitization, the beneficiary will receive the greater of the current cash value or the cost basis.

Annuity Death Benefits

The insurance company that issues the annuity.

Annuity Issuer

Legal document providing detailed information about variable annuity contracts.

Annuity Prospectus

Authority of an agent Ihat is created when the agent oversteps express or implied authority, and when inaction by the insurer does nothing to counter the public impression that such authority exists.

Apparent Authority

1) Transfer of rights in a policy to an individual or entity other than the policy owner 2) Under Medicare, agreement by the health care provider to accept Medicare's approved amounts as full payment.

Assignment

See Admitted Company.

Authorized Company

In life insurance, an optional provision that allows the insurer to use, automatically, whatever portion of the cash value is needed to pay premiums not paid by the end of the grace period.

Automatic Premium Loan Provision

See Relation of Earnings to Insurance

Average Earnings Clause

1) A person who may become eligible to receive, or is receiving, benefits under an insurance plan other than as an insured. (2) Any person enrolled in Medicare.

Beneficiary

Entitles the insured, who suffered a bodily injury, to collect up to a maximum established in the policy for all hospital and medical expenses incurred, without any limitation on individual types of medical expenses.

Blanket Policy

An independant, nonprofit membership association providing protection against the costs of hospital care in a limited geogra-phi-cal area. Provides coverage for hospital costs.

Blue Cross

An independant, nonprofit membership association providing protection against the costs of surgery and other items of medical care in a limited geographical area. Provides coverage for doctors' fees.

Blue Shield

An insurance producer, licensed by the state, who represents various insureds, and who is permitted to place general insurance coverages with any insurance company authorized to transact business in the state in which he/she is licensed.

Broker

A type of business disability income insurance designed to pay for continuing overhead while an owner is disabled.

Business Overhead Expense Insurance

A policy that may be terminated either by the insured or the insurance company by notification to the other party in accordance with the terms of the policy.

Cancellable Policy

This is am amount payable under accidental death and dismemberment coverage. It would be the amount payable for accidental loss of 1 limb.

Capital Sum

A system, under Health Maintenance Organization (HMO) forms of health benefits, whereby physicians receive a payment from the HMO for every member of the HMO without regard to actual services the physician provides.

Capitation

In an HMO, it is a nominal use charge the subscriber is required to pay for services in addition to the prepaid amounts (premiums). Under Medicare, any amount, other than deductibles that the recipient must pay.

Co-Payment (Co-pay)

For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses.

Coinsurance

Assignment of a life insurance policy as security for a loan or debt with the creditor to receive the proceeds or cash values to the extent of the interest assigned.

Collateral Assignment

An illegal practice that occurs when a producer mixes the insureds funds mth his/her own with the insurers funds.

Commingling

A company or concern engaged in the transportation of goods or persons for a fee.

Common Carrier

A provision that can be included in a life insurance contract providing that the primary beneficiary must outlive the insured for a specified period of time in order to receive the proceeds.

Common Disaster Provision

A policy designed to give the protection offered by both a basic and a major medical policy.

Comprehensive Major Medical Insurance

A plan of insurance under the supervision of a state or the Federal Government that requires protection for medical, hospital, surgical, and/or disability' benefits.

Compulsory Health Insurance

A receipt that provides that if the premium accompanies the application, the coverage is in force from the date of application (whether the policy has yet been issued or not), provided the insurer would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information.

Conditional Receipt

Requires confinement of the insured in a hospital, or in a sanitarium to be entitled to collect disability income benefits.

Confining Disability

The exchange of values on which a contract is based. In insurance, the consideration offered by the insured is the premium. The consideration offered by the insurer is the promise to pay in accordance with the terms of the contract.

Consideration

A provision in an insurance policy setting forth the conditions under which, or the period of time (2 years) during which the insurer may contest or void the policy. After that time has lapsed, the policy cannot be contested.

Contestable Clause

A secondary beneficiary designated to receive the proceeds of a policy if the primary beneficiary predeceases the insured, or dies in a common accident.

Contingent Beneficiary

The act of obtaining an insurance license to write coverage on the producer's own life, and/or on the lives the producer's relatives and business associates.

Controlled Business

The right granted the insured to change his/her coverage from a group policy to individual policy. If a member of a group has a qualifying event he/she is given an opportunity to secure an individual policy within a specified period thereafter, regardless of whether or not he/she is in good health at that time.

Conversion Privilege

A term policy that can be converted to permanent without proof of insurability.

Convertible Term Insurance

The method of determining which company pays as primary insurer and which company pays as secondary or excess insurer when a working couple or their dependants have a claim covered by more than one insurance contract.

Coordination of Benefits

A rider that may be attached to policies adjusting the benefits based upon a formula tied to inflationary trends.

Cost of Living Adjustment (COLA) Rider

Life insurance coverage on a borrower designed to repay the balance of a loan in the event tte borrower dies before the loan is repaid.

Credit Life Insurance

Care that is primarily for meeting personal needs such as help in the activities of daily living.

Custodial Care

Term insurance for which the initial amount gradually decreases until the expiration date of the policy, at which time it reaches zero.

Decreasing Term Insurance

The amount of loss or expense that must be paid by the insured before benefits become payable. The insurance company pays benefits only for the loss in excess of the amount specified in the deductible provision. There are various types of deductible provisions.

Deductible

Under insurance law an unfair trade practice involving false, maliciously critical or derogatory statements intended to injure a person engaged in the insurance business.

Defamation

An annuity on which payments to the annuitant are delayed until a specified future date.

Deferred Annuity

A nonqualified arrangement in which compensation is deferred until the employee retires.

Deferred Compensation Plan

A qualified retirement plan that offers predetermined benefits to plan participants.

Defined Benefit Plan

A qualified retirement plan that is based on contributions to the plan.

Defined Contribution Plan

The conversion insurance companies from mutual companies, owned by their policyholders, into publicly-traded stock companies.

Demutualization

Insurance companies that sell directly to the public using exclusive agents or their own employees, through the mail, or via Internet. Large insurers, whether predominately direct writers or agency companies, are increasingly using many different channels to sell insurance. In reinsurance, denotes reinsurers that deal directly with the insurance companies they reinsure without using a broker.

Direct Writers

A physical condition that makes an insured incapable of performing one or more duties of his/her occupation, or, in the case of total disability, that prevents him/her from performing any other type of work for remuneration.

Disability

Loss of arm or leg by severance above the wrist or ankle. It also includes the total and permanent loss of sight.

Dismemberment

The return of part of the premium paid for a participating policy.

Dividend

An insurer formed under the laws of the State in which the insurance is written.

Domestic Company

A clause for the payment of twice the regular benefit if an insured dies under certain specified circumstances (usually as the result of an accidental injury).

Double Indemnity

Gross, salary, wages, commissions, fees, etc. derived from active employment. This does not include non-earned income, such as income from investments, rents, an-nuities, insurance policies, etc.

Earned Income

The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until policy period expires.

Earned Premium

Federal legislation that protects employees by establishing minimum standards for private pension and welfare plans.

Employee Retirement Income Security Act/ ERISA

Written contract adding or removing coverage. Once attached, it overrides the original tenns of the contract.

Endorsement

A provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions, and endorsements.

Entire Contract Clause

Non-traditional fixed annuity. Equity indexed annuities are fixed annuities that offer a guarantee against loss of principal if held to term. With an equity indexed annuity, interest credited is linked to the upward movement of a designated index, such as the Standard and Poor's 500 (S&P 500). They are sold by licensed insurance agents and regulated by state insurance departments.

Equity Indexed Annuity

The legal principle that holds that anyone whose words or actions have caused a waiver of a right or privilege cannot later reclaim the waived right or privilege if a third party has relied on it.

Estoppel

See Exclusions

Exceptions

Provisions in the policy that eliminate coverage for specified losses or causes of loss.

Exclusions

A person named in a will to settle an estate.

Executor

The statement sent to a participant in a health plan listing services, amounts paid by the plan, and total amount billed to the patient

Explanation of Benefits (EOB)

Authority of an agent that is specifically granted by the insurer in the agency contract or agreement

Express Authority

In life insurance, a Nonforfeiture option under which the insured uses the policy's cash value accumulation to purchase term insurance in an amount equal to the original policy face amount.

Extended Term Option

A policy that pays an income up to some fiihu-e date designated in the policy to the beneficiary after the death of the insured. The period of payment is measured from the date of the inception of the contract, and at the end of the income period the face amount of the policy is paid to the beneficiary. If the insured lives beyond the income period, only the face amount is payable in the event of the insured's death.

Family Income Policy

A policy that pays an income to the beneficiary starting after the death of the insured and continuing for a stated period of time. At the end of the income period, the face amount of the policy is paid to the beneficiary.

Family Maintenance Policy

A person holding the funds or property of another in a position of trust, and who is obligated to act in a prudent and ethical manner. Examples are attorney, bank trustee, or executor of an estate.

Fiduciary

States where insurers must file rate changes with their regulators, but don't have to wait for approval to put them into effect.

File-And-Use States

An annuity that guarantees a specific rate of return. In the case of a deferred annuity, a minimum rate of interest is guaranteed during the savings phase. During the payment phase, a fixed amount of income, paid on a regular schedule. is guaranteed.

Fixed Annuity

A settlement option under which the beneficiary receives a regular income for a specified period of time.

Fixed Period Option

An annuity that allows the contract owner the option of whether to pay the annuity premiums following the establishment of the annuity.

Flexible Premium Annuity

Name given to an isurance company based in one state by the other states in which it does business.

Foreign Insurance Company

Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance company managers, employees, agents, and brokers for financial gain.

Fraud

A period of up to one month during which the purchaser of an annuity can cancel the contract with no penalty. Rules vary by state.

Free-Look Period

Under a Health Maintenance Organization (HMO) arrangement, a system requiring members of the HMO to select a primary care physician who in turn provides or authorizes all care for that particular member.

Gatekeeper System

An investment portfolio used by the insurer for investment of premiums and cash values affixed products. This portfolio generally consists of safe, conservative, guaranteed investments, such as real estate and mortgages.

General Account

A period of time after the inception of a disability during which benefits are not payable (commonly referred to as the waiting period). An elimination period must be satisfied for each seperate disability occurring

elimination Period