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