Life Insurance policy
Nonrenewal
termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or replacement policy
Field underwriter
the agent is usually the one who has solicited the potential insured.
Death benefit
the amount paid upeon the death of the insured in a life insurance policy
policyowner
the person entitled to exercise the rights and privilieges in the policy
Underwriting
the risk selection and classification process
Alien Insureer
incorporated outside the United States
Health Insurance Portability and Accountability Act (HIPAA)
is a federal law that protects health information
Sickness
is definied as either a sickness or disease contracted after the policy has been in force at least 30 days.
Part 2- Medical Information
medical background, present health, and medical visits in recent years. medical status of living relatives, and causes of death of deceased relatives
Foreign insurer
operating in a state other than the one they are incorporated in
Mutual Companies
owned by the policyowners and issue participating policies
Premium
the money paid to the insurance copany for the insurance policy
FSA
exempt from federal income taxes, Social Security (FICA) taxes and, in most cases, state income taxes, saving 1/3 or more in taxes
Consumer Reports
include written and/or oral information rearding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
Insurable interest
insurable interest must exist between the policyowner and the insured at the time of the application; however once a life insurance policy has been issued, the insurer must pay the policy benefit, whether or not an insurable interest exists.
Domicile
location of incorporation
Agents report
provides the agents personal observations concerning the proposal insured
Comprehensive Coverage
Health insurance that provides coverage for most types of medical expenses
Investigative Consumer Report
Information is obtained through an investigation and interviews with associates, friends and neighbors of hte consumer.
NAIC
National Association of Insurance Commisioners, an Organization composed of insurance commisioners from all 50 states, the district of columbia and the 4 US territories, formed to resolve insurance regulatroy issues
hospital indemnity
Provides a specific amount on a daily, weekly, or monthly basis while the insured is confined to a hospital
Insurer-
The company who issues an insurance policy
4 essential elements of Legal Contract
1. Agreement-offer and acceptance 2. COnsideration 3. Competent parties 4. Legal purpose
Deductible
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits
PArt 1- General Information Part2- Medical Information
What 2 parts make up a life insurance application?
Agreement, COnsideration, Competent Parties, Legal Purpose
What are the 4 required elements of an insurance contract?
Irrevocable beneficiary
a beneficiary who has a vested interest in the policy and therefore, the policyowner may not exercise certain rights without the consent of the beneficiary
Flexible Spending Account (FSA)
a form of cafeteria plan benefit funded by salary reduction and employer contributions.
Elimination period
a waiting period that is imposed on the insured from the onset of disability until benefit payments commence
Part 1- General Information
name, age, address, birth date, gender, income, marital status, and occupation. Identifies type of policy applied for and amount of coverage
Substandard risk
not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits.
tax exempt
not subject to taxation
Intermediate care
occasional nursing or rehab care provided for stable conditions that require daily medical assisstance ona less frequent basis than skilled nursing care.
lapse
policy termination due to nonpayment of premium
Insurance policy
a contract between a policyowner (and/or insured) and an insurance company which agees to pay the insured or the beneficiary for loss caused by specific events
Aget/Producer
a legal representative of an insurane company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer
Stranger-originated life insurance (STOLI)
a life insurance arrangement in which a person with no relationship to the insued purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies.
Guaranteed renewable
a policy that is written on a noncancellable basis with the right to renew guaranteed
Replacement
a practice of terminating an existing policy or letting it lapse and obtaining a nw one.
Policy summary
a written statement describing the features and elements of the policy being issued. Must include name and address of agent, full name and home office or administrative office adress fo the insurer, and generi name of the basic policy and each rider.
Riders
added to the basic insurance policy to add, modify or delete policy provisions
Contract
agreement between two or more parties enforceable by law.
Warranty
an absolutely true statement upon which the validity of the unsrance policy depends
Investor-owned life insurance (IOLI)
another name for a STOLI, where a third-party investor who has no insurable interst in the insured initiates a transaction designed to transfer the policy ownership rights to someone with no insurable interest in the insured and who hopes to make a profit upon the death of the insured or annuitant.
Life insurance
coverage of human lives
Special Risk policy
covers only the specific hazard or risk identified in the policy
Skilled care
daily nursing and rehab care that canonly be provided by medical personnel, under the direction of a physician.
Injury
defined using either the accidental bodily injury definiteion, or the accidental means definition.
Limited Risk Policy
defines the specific risk in which accidental death or dismemberment benefits will be paid.
Respite care
designed to provide relief to the family caregiver, and can include a service such as someone coming ot the home while the caregiver takes a nap or goes out for a while.
Disability income insurance
designed to replace lost income in the event of this contingency, and is vital component of a comprehensive insurance program.
Point-of-service plan
do not have to be locked into one plan or make a choice between the two plans. A different choice can be made every time a need arises for medical services
Fair Credit Reporting Act
established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used.
Health Maintenance Act of 1973
forced employers with more than 25 employees to offer the HMO as an alternative to their regular health plans.
Dividends
generated when the premiums and the earnings combined exceed the actual costs of providing coverage, creating a surplus.
PPO
group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced cost
Preferred Risks
individuals who meet certain requirements and qualify for lower premiums than the standard risk. Superior physical condition, lifestyle, and habits.
unilateral contract
only one of the parties to the contract is legally bound to do anything
Stock Copanies
owned by the stockholders who provide the capital necessary to establish and operate the insurance company who share in any profits or losses.
Contract of Adhension
prepared by one of the parties (insurere) and accepted or rejected by the other party (insured).
Long term care policies
provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility
Home convalescent care
provided in the insured's home under a planned program established by his or her attending physician.
Residential Care
provided while the insured resides in a retirement community or a residential care facility for th eelderly (RCFE).
Basic Medical expense coverage
provides coverage for nonsurgical servies a physician provides.
Presumptive disability
provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.
Medical Information Bureau (MIB)
receives adverse medical information from insurance companies maintains confidential medical impairment information on individuals.
Benefit period
refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period has been satisfied.
Probation period
refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period, but is in addition to it; often 10-30days
Consolidated Omnibuc Budget Reconsciliaton Act of 1985 (COBRA)
requires any emplloyer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.
Conditional contract
requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations
Underwriting
risk selection and classification process
Application
starting point and basic source of information used by the company in the risk selection process
material misrepresentation
statement that, if discovered would alter the underwriting decision of the insurance company
Representations
statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true
Taxable
subject to taxation
Cancellation
termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy
The higher the premium
the higher the risk
Aleatory contracts
there is an exchange of unequal amounts or values
Cafeteria Plan
type of employee benefit plan that allows insureds to chooose between different types of benefits
misrepresentation
untrue statements on the application
Supplementary Major Medical Policies
used to supplement the coverag payable under a basic medical expense policy
Conditional receipt
used when the applicant submits a prepaid application.
Underwriting
whena group policy is written every elgibile member of the group must be covered regardless of physical condition, age, sex or occupation
At the time of application
When must insurable interest exist in life insurance?
Lump sum
a payout method that pays the beneficiary the entire benefit in one payment
Applicant or proposed insured
a person implying for insurance
Beneficiary
a person who receives the benefits of aninsurance policy
Basic Surgical expense coverage
pay for the costs of surgeons' fees, anesthesiologist, and the operating room when it is not covered as a misc medical item
Insured
person covered by the insurance policy; may or may not be the policyowner
Standard Risks
persons who according to a company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions.
sickness
an illness, which first manifests itself while the policy is in force
Accidental Bodily injury
an unforeseen and unintended injury that resulted from an accident rather than a sickness
Custodial Care
care for meeting personal needs such as assistance in eating, dressing, or bathing which can be provided by nonmedical personnel, such as relatives or home health care workers.
Home health care
care provided by a skilled nursing or other professional services in one's home.
Adult day care
care provided for functionaly impaired adults on less than a 24-hour basis.
Adverse Selection
insuring of risks that are more prone to losses than the average risk
