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PE PA Insurance Exam Review for exam 2
Terms in this set (102)
written complaints maintained least 4 years General time period retention 7 years execution record)
Long Term Care benefits
$40 $300 per day with benefit periods ranging from one year to life. Benefits may be paid on a(n): Reimbursement Basis (reimburses the insured for actual LTC expenses incurred up to the policy's daily dollar Indemnity Basis (pays the insured the policy's full daily dollar amount regardless of actual LTC expenses incurred)
Home Health Care is care in a person's home (nursing care; speech, physical and occupational therapy; home health aide; and help for home- makers and chore workers) Adult Day Care at a facility on less than a 24-hour basis . Respite Care is assistance given to a primary health care giver to mini- mize stress (providing substitute or relief patient care)
Long Term Care Options
Care under Long Term Care Policy
Skilled Care (nursing care, professional therapy, Intermediate Care (intermittent or not continuous care) Custodial Care (assistance in performing daily living activities such as bathing, eating, dressing and other daily routines)
Gatekeeper Provision Long Term Care Policy
determines eligibility benefits. unable to perform a specific number of Activities of Daily Living (ADL). include bathing, continence, dressing, toileting, feeding, and transferring. chronically Chronically ill means the insured is unable to perform at least two ADLs least 90 days substantial supervision due to cognitive impairment.
Medicare, Employer Group Health Plan (EGHP)
Secondary for covered individuals Primary after 30 months for covered individuals with kidney failure Medicaid provides medical assistance to the needy that are not covered by health insurance. Individuals receiving Supplemental Security Income due to disability Other individuals whose income, less deductions and medical bills, is within certain (low dollar) limits
Medicare Supplement Coverage
special six-month open enrollment period exists No one may be excluded unless disabled Insurers may not charge higher premiums because of health Insurers may exclude coverage for preexisting conditions
Long Term Care Partnership Policy
Pennsylvanians the opportunity to provide for their long term care needs while helping to conserve taxpayer resources. Prior to its introduction, individuals were faced with the dilemma of having to first liquidate personal assets before being eligible for state medical assistance (Medicaid) to pay for long term care.
Hospice Care under Medicare - Part A
doctors' services, nursing services, medical appliances, drugs, home health aide and homemaker ser- vices, medical social services, respite care and counseling for the manage- ment of a terminal illness. Hospice Care is provided for: Two 90-day periods and one 30-day period for individuals that are certified as terminally ill at the beginning of each benefit period. Hospice care can be extended indefinitely if required.
Home Health Care of Medicare - Part A
intermittent care physical, occupational speech therapy, medical supplies equipment This is provided for home confinement includes: 100 % approved cost of home health visits % of approved durable medical equipment Custodial care and/or private duty nursing are not covered.
Medicare - Part A (Hospital Insurance)
provides medical coverage based upon a benefit period. A benefit period begins when an individual enters a hospital skilled care facility. Hospital Insurance - Part A includes the following 4 primary coverages Inpatient Hospital Care Inpatient Care at a Skilled Nursing Facility Home Health Care Hospice Care
Hospital Insurance- Part A Criteria
premium age 65 to individuals receiving monthly Social Security benefits. provided before age 65 to: Individuals receiving Social Security disability for 24 months Certain government employees if disabled for 29 months Family members, under certain conditions Individuals in need of dialysis or a kidney transplant
Dental Scheduled Plans
provide coverage based upon a specified maximum scheduled amount for each dental procedure pays amounts below usual, pa ys on a first dollar basis with no deductible and/or coinsurance provision customary and reasonable dental charges, causing employees to bear a cost of the procedure
Dental Nonscheduled Plans
pays on a usual, customary and reasonable basis. A flat annual deductible is applicable to covered dental expenses with specific procedures subject to coinsurance . diagnostic/preventive care (teeth cleanings/oral exams) provisions. Nonscheduled plans pay for: basic services (fillings, extractions) major services (crowns, dentures, orthodontics)
Dental Combination Plan
combines scheduled and nonscheduled plans.
(teeth cleaning/fluoride treatments)
(Fillings and crowns
(extractions & related surgical treatment)
root canal treatment
(treatment of gum disease)
(bridgework or dentures)
braces and appliances
Unpaid Premium Provision
Uniform Optional Provision insurance company to deduct any unpaid premium from any claim amounts due the insured.
Relation of Earnings Provision
Uniform Optional Provision insurance company the right to reduce the loss of disability income under a disability income policy to an amount not less than $200 monthly if it is found at the time of the loss, the benefits payable from all valid policies on the life of the insured would exceed the amount of the insured's monthly earnings immediately preceding the loss. previous two-year average could be used, if greater. premium due if benefits are reduced under this provision
Insurance With Another Insurer Provision
Uniform Optional Provision Expense Incurred Basis prorates the total loss equal to the policies' pro- portionate share of the total loss. Other Than Expense Incurred Basis allows for a reduction of benefits the policy, if it is discovered that the insured has other coverage with another insurer.
Renewability Clauses Noncancellable
provision requires the policy be renewed to at least age 60 and provides that the insurer cannot cancel the policy or increase the premium rate.
Renewability Clauses Guaranteed Renewable
provision requires policy be renewed to age 65, and provides the insurer cannot cancel policy, except for nonpayment of premium. The insurer reserves the right to change the premiums, but only on a class basis.
Renewability Clauses Conditionally renewable
the insured has a limited right to renew the policy until age 65, or some later age, based upon a condition such as continued employ- Premiums may be raised; the benefit period is generally limited to two years.
Renewability Clauses Renewable
at the option of the insurer provision allows the insurer the right to renew coverage.
Renewability Clauses Nonrenewable (cancelable)
means the insurer may nonrenew or cancel the policy by giving advance notice to the insured.
Time period for an insured to notify the insurer of a claim Individal healthcare
Time period for an insurer to forward claim forms to the insured individul health care
Time period for the insured to file proof of loss with the insurer ind healthcare
Conformity with State Statutes Provision
Uniform Optional Provision that provides that in the event any policy provision conflicts with state laws, the policy will be amended to conform to the minimum state requirements.
Legal Action Provision
Uniform Mandatory Provision legal action against the insurer prior to 60 days after written proof of loss has been furnished. It further prevents any legal action against the company after 3 years from the date written proof of loss is required to be furnished.
Notice of Claim Provision
requires that written notice of claim be given to the insurance company within 20 days after the occurrence of any loss covered by the policy.
Claim Forms Provision
requires the insurance company to furnish claim forms within 10 days after being giving notice of claim.
Proof of Loss Provision
requires that written proof of loss be furnished to the insurer within 90 days after the termination of the period for which the insurer is liable. A proof of loss is a formal written demand for pay- ment of amounts due the insured.
Underwriting Criteria health
Age Sex Build Physical condition Personal history .Occupation .Avocation (rock climbing, scuba diving)
Time Limit on Certain Defenses Pxoxision Provision
Uniform Mandatory Pro- vision It states that after 3 years from the date of issue no misstatements, except for fraudulent misstatements, made by the applicant in the application may be used to void the policy, or to deny a claim for loss commencing after the expiration of the 3-year period.
Specific (Dread) Disease Insurance
covers specific diseases (cancer, heart attack, etc.)
Critical illness Insurance
Critical pays a ollaramount if the insured is diagnosed with a wide range of conditions. (cancer, heart attack, stroke, kidney failure).
Hospital Indemnity (Income) Insurance
pays weekly or monthly in-come benefits if the insured is hospitalized.
Credit Disability Insurance
pays a creditor the insured's monthly credit payment when disabled.
Health insurance princples
Disability Income Insurance MedicalExpense ! nsurance Dental Expense Insuranse .Long Term Care Insurance
medical advice or treat- ment was recommended by a physician within a five-year period preceding the effective date of coverage.
underwriting functions performed by the produeer the field.
Home Office Underwriter
the insurance company employee that reviews the application from the field underwriter, collects other infor- mation and makes the final decision on the acceptability of the applicant.
Annuities Certain Fixed Period Installment
guarantees an annuitant income for a fixed period the balance paid to a bencficiary if the annuitant dies prior to the prescribed time period.
Annuities Certain Fixed Installment
guarantees an annuitant income for as long as the acc umulated value of the annuity lasts, with the balance paid to a beneficiary if the annuitant dies prior to the funds being liquidated.
Joint and Survivor Annuity
commonly used in retirement situa- trons to provide income to a husband and wife death of the first annuitant, the periodic payment can continue the survivor, but at a reduced amount of /h or % of the initial periodic payment amount
Joint Life Annuity
provides income to two or more lives, but ceases the death of the first annuitant
insurance policy permits the insured the right to make changes in policy type. In most instances, this involves the converting of term insurance to permanent insurance
Provision Absolute Assignment
the complete transfer of all ownership rights and "incidents of ownership" in the policy. Commonly used for estate planning or in divorce settlements
Collateral assignment provison
not a complete transfer of the ownership rights since the owner maintains "incidents of ownership". Commonly assigned to a creditor to secure a loan
life insurance policy prohibits the in company from denying a claim for any reason, other than nonpayment of premium, after the policy has been in effect for two years
Accidental Death Rider
additional amount of insurance if death is result of an accident (double indemnity). Exclusions death resulting from illegal activities, war, and suicide.
Guaranteed Insurability Rider
requires the insurance company: 1) to offer and guarantee to issue, insurance equal to the face amount of the policy without evidence of insurability; and 2) to base policy premiums the insured's attained age at the election of the option.
Cas of Living ( COL ) Rider
provides increases in face amount based upon some index, such as the Consumer Price Index (CPI).
.Return of Premium Rider
provides that at the death of the insured, the beneficiary will receive the face amount of the policy plus all premiums paid during the policy period.
Accelerated (living) Benefits Rider
permits an insured to utilize the proceeds that would normally be paid at death to fund certain terminal or long term illnesses while the insured is living available if the insured's life expectancy is 1 year or less When this option is exercised the death benefit is reduced -Benefits are usually limitedto 50 % ofthe policy sface amount
Waiver of Premium Rider
future premium payments if the insured becomes disabled (subject to a 6-month waiting period).
Disability Income Rider
is pays a monthly disability income usually $10 per $1,000 of the policy face amount.
.Waiver of Cost of Insurance
similar to the Waiver of Premium Rider but is added to nontraditional flexible policies (UL). This rider waives the of the premium required to build cash value. part of the premium for the cost of insurance, but does not waive the part
Dividend Options Paid-Up Additions
the option whereby the policy's annual di diyidend is used to additional insurance is the same type as the policy and provides an additiona buy additional insurance.at the insured's current attained age. The paid-up death benefit that is added to the face amount of the policy.
Dividend Options Accumulate at Interest
is the option whereby the policy's annual dividend is retained by the insurance and interest is credited at a specified rate.
Dividend Options Paid-Up Option
permits the owner the option of applying dividends to pay up the policy prior to the original paid-up.period.
Dividend One-Year Term Option
permits the owner the option of applying dividends to purchase 1-year term insurance in either of the following forms: as a net singl premium to purchase as much 1-year term insurance protection as it will buy; or term insurance equal to the cash value in the policy with any remaining dividend value being applied to another dividend option.
Nonforfeiture Cash Surrender Option
permits the owner to stop paving premiums and sur- render the policy for its.cash.value. In addition to surrendering the policy for its cash value (and having no life insurance), the insured may borrow cash value. Any amount borrowed reduces the death benefit and is subject to loan interest that is charged by the insurer.
Nonforfeiture Options Paid-Up Life Option
permits the to stop paying preimims and to use the cash value of the policy to purchase.a reduced paid-up policy. If this option is elected, cash values will continue to accrue, although at a slower rate.
Nonforfeiture Extended Term Option
permits the owner to stop paying the premiums and to use the cash value of the policy to buy a single premium level term life policy at the policy's face amount for specified period, at the end of which, coverage terminates.
various methods life insurance policy proceeds may be distributed at the death of the insured, at maturity or at surrender of the policy for its cash value.
protects the beneficiary or contingent beneficiaries in two areas: Beneficiaries cannot assign, or use as collateral, proceeds due under a settlement option until actually received Creditors are prohibited from attaching life insurance proceeds to the extent permitted by law
Level fixed premium The death benefit may not decrease below the guaranteed minimum which the initial face amount. Individuals selling variable life policies must also secure a securities license
savings account ioined into one policy. The insured chooses: term insurance and a separate A-Level death benefit B-Increasing death benefit premium payment period time period the death benefit will be in force Each premium payment will have mortality charges deducted from the the insured's current age. The premium based upon
insurance provides the insured with flexibility in coverage amounts and premium payments. policyowner may: Increase or decrease the premiums Increase or decrease the face amount Extend or shorten the protection period Extend or shorten the premium payment period
Variable Universal Life
combination of Variable Life and Universal Life insurance. Option A, the policy's face amount is guaranteed at a level amount and its cash value fluctuates with no guaranteed value Under Option B, both the policy's face amount and cash value fluctuate with guaranteed values.
Term life Renewable Feature
enables the insured to renew the policy at the end of every term without evidence of insurability. The insured only has to pay the premium to renew for another term period.
Term life Convertible Feature
permits the insured the option to convert his term policy to a level premium permanent policy without evidence of insurability
Replacement life insurance
any transaction where new insurance/annuities are to be purchased, Lapsed, forfeited, surrendered or assigned to a replacing insurer or otherwise terminated Converted to reduced paid-up insurance, or continued as extended term insurance under nonforfeiture benefits, dividend cash values or other policy cash values Reissued with a reduction in the cash value Pledged as collateral or subject to borrowing over a period of time for amounts in which the aggregate exceeds 25 % ormore of its loan value
Interest-Adiusted Net Cost Method
parisons Interest-Adiusted permit purchasers of life insurance policies. The interest-adjusted net cost method: the ability to make developed NAIC "like-kind" com- Calculates a Net Payment Index policy's cash flows for the policy on 10 and (gross premiums, and a Net Surrender Cost Index from the dividends projected &cash value 20-ycar basis
Life Insurance Receipts: Conditional Receints (Insurability Type)
Receints (Insurability Type) provide coverage the date the re- ceipt is issued by the agent if the applicant is subsequently found to be insur able. If an agent collects an initial premium and issues a receipt May 1, and the company issues the policy on May 10th, the policy will have an effective date of May 1.
Life Insurance Receipts: Conditional Receipts (Approval Type)
provide coverage when the policy is issued. If an agent collects an initial premium on May 1, and the policy is approved and issued on May 10th, coverage will only be effective on and after May 10th.
presented to the applicant at the time of application and it must set forth that the: insured's protection not considered an contract of insurance Amount of coverage and benefits provided, including cash values at 5, 10 and 20 years, and at age mium charges by policy and rider Dividends are not guaranteed, and if an illustration is included, the projections must include dividend illustrations at 10 & 20 years per $1,000 of face amount
Traditional insurance Participating Insurance
Participating higher premiums than nonparticipating insurance and pays dividends at the end of the policy year
Traditional life insurance Nonparticipating Insurance
has lower premiums than participating and does not pay dividends.
insurance companies charge to reflect its pure risk exposure for death at various ages. Whole Life, mortality charges included nontraditional interest sensitive contract, such Universal Life, mortality charges: illustrate its current and guaranteed maximum mortality costs included in the policy premium, however, a ledger statement will (unbundled) maximum mortality charge as indicated upon the insurer's experience may not exceed the guaranteed may fluctuate over time depending in the insurance policy
Nontraditional (flexible type) Life Insurance Policies
are flexible and premium payment coverage policies were introduced in the late 1970's to offset high inflation that made traditional permanent policies less attractive. Nontraditional policies typically unbundle policy elements (illustrate mor tality costs and savings separately) Nontraditional policies (Universal Life) generally have higher cash values that traditional policies (Whole Life).
Traditional (fixed type) Life Insurance Policies Permanent insurance
values ( i.e. , cash value , extended has level premiums, a lifetime death benefit, and term , and paid - up Whole Life is an example of a permanent policy
Traditional (fixed type) Life Insurance Policies Temporary insurance
term insurance and provides coverage has fixed premiums (that may be for a specific term level, decreasing or increasing) period. Term policies have no miums are substantially less than permanent insurance. nonforfeiture values, consequently, pre-
Term Insurance characteristics:
Temporary protection for a stated period of time (1, 5, 10 or 20 yrs) Pemiums maybe level, dereaing or inereasing Coverage may be level, decreasing or increasing No nonforfeiture values
(cash value, paid-up life, extended term)
type of misrepresentation refers to the applicant's failure to divulge facts.
that would affect the insurer in writing coverage), the insurer may void cov- erage. Note that misrepresentations that are not material (simple or nonmaterial misrepresentations) will not affect a claim.
requires certain facts to be affirmed or true at policy inception (e.g, sprinkler system, security system)
continued during the policy will remain in effect and continued Warranty requires certain facts to be term (e.g., sprinkler and security during the entire policy period). systems promised and
found in most sales contracts (e.g., product is legal, merchantable, and fit for public use).
Contracts of Adhesion
are contracts that are drawn up by one party (the insurance company) and presented to a second insured) be "adhered to" or rejected Because the second party (the insured) has no the condition of the contract, any ambiguous opportunity to alter or change found in favor of the second party, provisions in the policy are
third party that caused the a legal process that permits an insurer to pay a claim. insurer to subrogate against the third party.A subrogation clause is found in most property, casualty and accident and health.
Waiver is a voluntary relinquishment known right. Insurers may waive their rights under a policy.
prohibits or stops an insurer from citing its standard policy defenses.
Principle of Indemnity
Principle of Indemnity is the concept of "making one whole" by re- storing or reimbursing one to the extent of his/her loss. Most accident and health policies function under this principle
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