Insurance Life & Health

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Exam Preparation for Life & Health State Exam

Applicant

A person making application for him/herself or another to be insured under an insurance contract. The applicant may be the insured, owner or both.

Non Participating policies

Insurance policies which do not pay dividends to policy holders.

Participating policies

Policies that have the ability to pay annual dividends to policyholders out of surplus funds in excess of the insurers's required minimum surplus to insureds. Dividends are not guaranteed.

Cash value

Money accumelated in a permanent policy which the policyowner may borrow as a policy loan or receive in the policy is surrendered. Upon Maturity or endowment the cash value is paid to the policyowner. Some financual authers suggest that cash value may be a source of supplemental income.

Policyowner

The individual who has the ownership rights in a policy. The policyowner and insured are usually the same, but not necessarily. Any changes made to a policy must be approved by the policyowner in writing with his/her signature.

Straight Life Annuity

The payout option that will guarantee an annuity payment for the remainder of an individual's life. This option typically provides the largest monthly payment.

One-Year Term (Fifth Dividend)

Dividend Options
Purchase a single premium, 1-year term policy, normally for an amount equal to the cash value. Premiums are calculated at the insured's attained age; (fifth dividend option)

One-Year Term (Fifth Dividend)

Dividend Options
Purchase a single premium, 1-year term policy, normally for an amount equal to the cash value. Premiums are calculated at the insured's attained age; (fifth dividend option)

Cash Dividend

the policyowner receives the declared dividends on or around a policy anniversary, however, the cash surrender of the complete policy is not a dividend option.

Paid-up Option

pays off policy more quickly than scheduled. If the company's investment performance declines, premiums may have to be resumed.

Acceleration of Endowment

reduces the time period for the policy to endow.

Paid-up Additions

purchases single premuim, additional permanent benefits at the insured's attained age. The additional insurance is added to the face amount and generates cash value and dividends as if the paid-up addition benefit was part of the orginal policy.

Premium Reduction

dividends are applied toward the next premium due. The same could be accomplished if the policyowner received the dividends in cash and remmitted the full premium. If the declared dividends equal or exceed the premium, the premium payment may be suspended.

Extended term

(Nonforfeiture Option Guarantted Values) present cash value is used to buy a single premuim term policy of the same face amount for as long a period as it will buy. This option provides the most protection and is sometime referred to as the Automatic Option.

Variable Annuity

Annuity payments fluctate according to the investment experience of the separate account(s) the contract owner has designated as his/her investment choices. Payments are made in terms of unites rather than dollars. Contract owner bares the investment risk and recieves the return minus and charges assesed by insurer. Both an insurance and a securities license (Finance INDUSTRY Regulatory Authority - FINRA) are required.

Nonforfeiture of Fixed and Equity -Indexed Annuties

Fixed and Equity-Indexed Annuities place requirements upon the insurer to absorb 100% of the managemnt and investment risk associated with the obligations guaranteed in the contract. The cotract owner assumes no market risk with respect to the account values, there is no potential for losing any principle. The insurer must pay any excess interest above the guaranteed minimum interest rates specified in the contract.

Fixed (Guaranteed) Annuity

annuitization of benefits is level fixed amount, and the deest during accumulation period is fixed guaranteed rate. A 20 - year projected schedule of cash availability must be shown for each anniversary.

Equity - Indexed Annuity

An annuty prodect with renwal interest rates that are linked to a stock related (equity) index, such as the Standard & Poors 500 Index. Contract owner enjoys safetyrincipal and some guaranteed minimum returns (usually 3%)m as well as some of the gains in the stock market. The contract owner is obligated to remain in the cotract for some minumum period of time, such as possible 5 years.

Market-Value (Adjusted) Annuity

a single premium deferred annuity that allows the owner to lock in a guaranteed interest rate over a specified maturity period anywhare between 3-10 yrs. penalties for surrender are based upon current interest rates at the time of surrender

Single Premium Immediate Annuity (SPIA)

a sigle premium (LUMP SUM) is put into an account from whicch the annitant may immediately begin drawing benefits (within a year of the issue date).

Single Premium Deferred Annuity (SPDA)

An investor makes a lump-sum payment to an insurance company selling the annuity. Earnings are tax deferred and proceeds are taxed only when distributions are taken. The IRS tax penalty for withdrawals before age 59½ is 10%.

Flexible Premium Deferred Annuity (FPDA)

flexible contributions may
be made as often and in whatever amount the contract owner desires; however,
most insurers do set a minimum, benefits begin more than 1 year from the date
of purchase. Deferred annuities are normally purchased to defer taxes on growth
and accumulation, such as a retirement fund.

Accumulation (Pay-in) Period

the period of time from the first deposit
to the selection of a settlement option is considered the accumulation period,
during which taxes are deferred.

Annuity (Pay-out/Liquidation) Period

starts at the receipt of the first periodic payment, and continues on a regular basis.

Temporary Annuity

annuity benefit payments are received
for a specified period of time, or until death of the annuitant; whichever occurs first.

Life Income (pure or Straight life) Annuity

annuity is payable for as long as the annuitant lives, and upon death all payments cease (pays more monthly income than any other options).

Life income Period Certain (fixed period)

annuity is payable for life, or for a specified period, whichever occurs last. If annuitant lives beyond the period, benefits continue for life

Life Income with Refund (Fixed Amount or Cash Refund)

annuity is payable for the lifetime of annuitant. Upon his/her death, if an annuitant has not received and amount equal to the total of all payments made into the annuity, the balance is refunded to the beneficiary either lump sum or in installments, sometimes referred to as the installment refund.

Fix Amount (Level Benefit)

pays an amount as stated by the annuitant for as long as the principal and interest will pay the set or level benefit.

Life Income Joint & Survivor (last to die)

anaable to 2 or more annuitants while both are living. Upon the death of the first annuitant, survivor benefits continue, normally reduced to 2/3 or 1/2 for the survivor's income until the survivor dies. Joint and 2/3 life annuity is considered a full annuity for the married couple.

Joint Life (first to die)

annuity is payable to 2 or more annuitants while both are living. Upon the death of the first annuitant the benefits stop.

Attained Age

An age that a person or an insured has attained on a given date. For life insurance purposes, the age is based on either the nearest birthday of the last birthday, depending upon the practices of the insurance company involved.

Paid-up Addtions

purchases single premuim, additional permanent benefits at the insured's attained age. The additinal insurance is added to the face amount and generates cash value and difidends as if the paid-up additional benefit was part of the original policy.

Paid-up Option

pays off policy more quickly than scheduled. if the company's investment performance declines, premuims may have to be resumed.

Acceleration of Endowment

reduces the time period for the policy to endow.

Reduced Paid-up

present cash value is used to buy a single premium,
permanent paid-up policy of a reduced face amount, the longest period of coverage provided by a nonforfeiture option

Probationary Period

This is a period of time before coverage goes into effect for specific conditions(Preexisting Conditions).

Subrogation

the legal process by which an insurer seeks recovery of the amount paid to the insured from a third party responsible for having caused the loss. Subrogation transfers an insured's legal right of recovery to the insurer that has paid a clain, and also prevents the insured from collecting twice for the same loss, helps insurers maintain lower insurance rates, holds third party accountable for the loss.

Stop loss

a provision that requires the policyholder to pay all costs up to a certain amount, after which the insurance company pays 100 percent of the remaining expenses, as long as they are covered in the policy.

HIPPA (Health Insurance Portability and Accountability Act of 1997)

was designed to provide coverate for people with preexisting conditions. Guarantees the continuation of health benefits to individuals who have benn covered for 12 months immediately preceeding a change of employment and who chose to participate in the new employers group health plan.

Indemnity Provider (Reimbursement)

pay benefits to the insured for expenses incurred.

Service Provider

pay benefits to the providers of health care rather than to the insured. This includes Blue Cross and Blue Sheild, Health Maintinencance Organizations (HMO), Preferred Provider Organizations (PPO) and Point of Service plans (POS's)

Self-Insured Providers (Self Funded)

consist of employers who pay claims out of their own funds instead of funding claims through an insurer.

Legal Action

cannot take legal action against the insurer until after 60 days but done within 3 years

Elimination Period

A type of "deductible" found in disability income policies which refers to the period of time that must expire after the onset of an accident or illness before benefits are payable under the policy.

Social Security (the Old Age and Survivors Disability and Health Insurace OASDHI)

for disability, 20 or 40 quarters of social sercurity coverage is condisered fully insured, and satifying the wating period.

Coinsurance

A type of cost-sharing between the insurance provider and the policyholder. After the deductible has been met, the insurance provider pays a certain percentage of the bill, and the policyholder pays the remaining percentage.

Out of Pocket Limits (Stop Loss)

is a dollar amount beyond which the insured no longer participates in the payment of expenses and the insurer than pays 100% up to the policy limits.

1035 Tax Free Exchange

a 1035 exchange is actually the assignment bby the original insurer to the replacing insurer.

provides that no gain or loss will be recognized on certain exchages of contracts relating to the same insured: When on life insurance policy is exchanged for another life insurace policy, an endowment or annuity contract (whole life for a Universal life).

Peril

Specific cause of loss

Incontestability

clause stating that once a policy is in effect for two years, company cannot deny payment of a claim or cancel due to fraud

Supplementary Major Medical Policy

A Major Medical policy that is written to pay over and above any Basic plan.
2. A Corridor Deductible is used between the Basic Plan (when the limits of
coverage are exhausted) and the start of coverage under the Supplemental Major
Medical policy. The Corridor Deductible is the specified expense the insured
must personally incur before the supplemental benefits begin.

Endodontics

Treatment of diagnosis of disease of internal structure of teeth, pulp, & periapical tissues (root canal)

Orthodontics

the branch of dentistry dealing with the prevention or correction of irregularities of the teeth

Periodontics

the branch of dentistry dealing with diseases of the gums and other structures around the teeth

Prosthodontics

the branch of dentistry dealing with the replacement of teeth and related mouth or jaw structures by artificial devices Dentures and Bridgework

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