Health and Life 333

Variable Universal Life

* a hybrid of Universal and Variable Life Ins *Provides PO with flexible Premiums and an adjustable death benefit * the death benefit generally cannot decrease below the face value

Adjustable Life

* a hybrid of term and permanent life ins.

Joint Life

* a single policy designed to insure two or more lives * can be term or permanent * most common form is Joint Whole Life *usually offers a discount compared to two separate policies

Annually Renewable Term (ART)

* the purest form of term insurance *Premium increases annually

Survivorship Life

*AKA "second-to-die" or "last survivor" policy *Death benefit pays on second or last death

Interest Sensitive Whole Life

*AKA Current Assumption Life *this is a fixed premium whole life policy that provides a guaranteed death benefit to age 100 *the cash value of these policies are credited with nongaurenteed current interest rates similar to mutual funds. *has a guaranteed minimum interest rate

Accumulation Period

*AKA pay-in-period *is the period of time over which the annuitant makes payments (premiums) to fund an annuity *during this time the payment also earn interest on a tax deferred basis

Annuity Period

*AKA... payout-period...liquidation period...or the annuitization period * the time period where the annuity is converted to income

Straight Whole Life

*Continuous Premium Whole Life *Premiums are level *P. Owner pays from date of issue to death or 100 *Lowest premiums in terms of Whole Life Ins.

Universal Life Insurance

*Flexible Premium Adjustable Life *policies that have the flexibility to increase of decrease the amount premium *premium payments can be skipped without the policy lapsing as long as there is enough cash value to cover the payments

Increasing Term

*Premium remains level *Death Benefit increases annually

Decreasing Term

*Premium remains level *Death benefit decreases annually *Non-renewable *commonly used to insure debts (mortgages)

Limited-Pay Life

*Premiums are only paid for a specific time period but coverage is for life (or 100) *Examples: 20-pay life, pay for 20 yrs or LP-65, pay until age 65

Single Premium Whole Life (SPWL)

*a whole life policy where the premium is paid in one lump-sum *generates immediate cash

Nonforfeiture Value

*another term for 'Cash Value" *Usually doesn't accumulate until year 3 *Grows tax deferred *loan payments may be deferred for up to 6 months

Level Term Insurance

*most common type of Temp protection purchased *the word 'level' refers to the death benefit which does not change throughout the life of the policy

Whole Life Insurance

*provides lifetime protection

Whole Life Insurance

*provides lifetime protection *builds cash value, which can be borrowed against *

2 types of Annuity Funding

1. Level-fixed installments 2. Flexible-amount and frequency of funding can vary

3 types of Whole Life Policies:

1. Straight Whole Life 2. Limited-Pay Whole Life 3. Single Premium Whole Life

2 premium options for Universal Life

1. minimum premium 2. target premium

With in how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will take place?

3 days

Permanent Life insurance

A general term used to describe policies that build cash value and remain in effect for the insured's entire life (or until the age of 100)

Permanent Life insurance

A general term used to describe policies that build cash value and remain in effect for the insured's entire life (or until the age of 100) The most common type is Whole Life Insurance.

Agent/Producer

A legal representative of an insurance company. A person who acts for another person or entity known as the principal with regard to contractual arrangement with third parties. An agent can be held personally liable for breech of contract if he/she violates the agency contract.

Basic Medical Expense Policies

AKA Basic Physicians' Nonsurgical Expense Coverage. Provides coverage for nonsurgical physician services No deductible but has certain limits on amount of coverage

Consideration

Both parties to a contract must provide some value, or consideration, in order for the contract to be valid

Term Policies

DO NOT DEVELOP CASH VALUES

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name of the and address of the consumer reporting agency?

Fair Credit Reporting Act of 1971

Endow

Give or bequeath an income or property to (a person or institution): "he endowed the church with lands"

Major Medical Policies

Has a deductible. Most have blanket limits, like per person per life limits

Uniform Individual Accident and Sickness Policy Provisions Law

Has been adopted in all states. this law established standard provisions that are to be included in ALL individual health insurance policies

Basic Surgical Expense Policies

Provide coverage for surgical services These contract have a surgical schedule which list type of surgeries covered and limits for pay-out

Reinsurance is a contract under which one insurance company (the reinsurer)

Reinsurance is a contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities.

Term Insurance: 3 Special Features

Renewable, Convertible or Renewable and Convertible (R&C)

Substanddard Rating

Results in a higher premium because the insured will be a higher risk client the rating is based on, physical condition, personal or family history of disease, occupation, habits or hobbies

which of the following types of risks will result in the highest premium?

Substandard Risks

Term Insurance

Temporary protection; term insurance (also known as Pure Ins)provides coverage for specific period of time. Term polices provide the most coverage for the lowest amount of money.

Insurance Transfers

The risk of loss from an individual or business entity to an insurance company. Without an insurance mechanism the cost of a loss would be placed solely on the individual who suffered the loss.

An agent and an applicant fill out and sign an application for life insurance. The applicant chooses to hold off on paying the initial premium. When will the coverage begin?

When the agent deliver the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

stockholders

Who owns stock companies?

Adjustable Life modifiers

With an Adjustable Life Ins Policy a P. Owner can: 1. increase or decrease the premium or premium paying period 2. In or De the face amount 3. Change the period of protection" 4. A PO can convert from term to whole life 5. Changes usually require proof of insureabiity

Comprehensive Major Medical Policies

a combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits and coinsurance

Insurance Policy

a contract between a policy-owner (and/or insured) and an insurance company. under said contract the insurance company agrees to pay the insured or the beneficiary for loss caused by specific events.

Agent / Agency Contract

a contract held between an insurer and an agent/producer. it outlines the duties and responsibilities to the principal. An agent can be held personally liable for breech of contract if he/she violates the agency contract.

Annuity

a contract that provides income for a specified period of years or for life.

Life insurance

a coverage upon a person's life, and granting, purchasing or disposing of annuities.

Applicant/ Proposed Insured

a person who requests insurance

Free Look Provision

allows the policy owner 10 days to look over the policy and if dissatisfied, return it for a full refund.

Renewable Provision

allows the policy owner the right to renew without evidence of insurability

Endowment

almost identical to whole life except Endowment policies matures at an earlier age (before 100) They also have mush higher premiums than whole life because the cash value needs a accumulate faster

Inspection reports may be obtained by an insurance company from

an independent investigating firm

Riders

are added to a policy to modify provisions that already exist

misrepresentations

are consider fraud when they are intentional and material

Representations

are statements made by an applicant which are believed to be true but are not guaranteed.

supplementary Major Medical Policies

are used to supplement coverage payable under a basic medical expense policy. After the basic policy pay the supplement policy kicks in.

Variable Annuity Units are determined..

at the time of the first payout

Basic Hospital Expense Policies

cover hospital room and board, and misc hospital expenses such as lab and x-rays charges, medicines, use of operating room. There is usually no deductible but there is a a set pet day pay-out limit

Provisions

define the characteristics of an insurance contract and are fairly universal from one policy to the next

Convertible Provision

entitles the policy owner convert a term policy to a permanent policy without evidence of insurability.

Death Benefit

face amount/ face value/ coverage the amount paid when a claim is issued against a policy

3 basic types of medical expense insurance

hospital, surgical and medical. Also known as first-dollar coverage

Pure Death Protection

if a person dies the beneficiary gets paid the death benefit

material misrepresentations

is a statement that if discover would alter the underwriting decision

Warranty

is an absolutely true statement

Underwriting

is the risk selection and classification process a review of an application to determine eligibility and price

Level Term Policies

maintain a "level" death benefit or "face amount" throughout the term of insurance. Premiums also remain the same or fixed. they do not build cash value

Per Capita

means "by the Head" and evenly distributes benefits among the living names beneficiaries

Per Stirpes

means "by the bloodline" and distributes between living beneficiaries and their heirs if needed

options

offer insurers and insureds ways to invest or distribute a sum of money available in a life policy

Insurance is the transfer of

risk

Insuring Clause Provision

sets forth the basic agreement between the insurer and the insured. Usually stated on the policy face page

Entire Contract Provision

stipulates that the policy and a copy of the application, along with any riders or amendments, constitute the entire contact. Both parties have to agree to changes once the policy is in effect

insurance policies ensure that after a loss proceeds will go to the beneficiary

the beneficiary

Insurer (principal)

the company that issues a policy of insurance

stop-loss limit

the dollar amount beyond which the insured no longer participates in the sharing of expenses. The insurance company pays 100%

Application

the initial document used to obtain and provide information for underwriting

Estoppel

the legal consequence of a waiver It is the legal process that can be used to prevent a party from re-asserting a right or privilege after that right or privilege had been waived.

minimum premium

the minimum premium needed to keep a policy in force for the current year

Premium

the money paid to the insurance company for the policy of insurance.

Collateral Assignment

the partial transfer of ownership rights, usually done to secure a loan or some other transaction

Insured

the person covered by the of insurance who may or may not be the applicant or policy owner.

Policyowner

the person who is entitled to exercise the rights and privileges in the policy and who may or may not be insured.

Beneficiary

the person who receives the benefits form a policy of insurance

Annuitant

the person who receives the benefits or payments from an annuity. An Annuitant must be a natural person. The Annuitant is not necessarily the contract owner

target premium

the recommended amount that should be paid on a policy in order to cover the cost of insurance protection and keep the policy in force throughout its lifetime

Absolute Assignment

the transfer of all ownership rights from one person (or entity) to another

Assignment

the transfer of ownerships rights from one person to another

Waiver

the voluntary abandonment of a known or legal right or advantage

Grace Period - Health Insurance

usually, 7 days for weekly premiums, 10 days for monthly premiums and 31 days for all other modes. Coverage remains in force during grace periods.

when is a misrepresentation considered fraud?

when it is material and intentional.