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Life & Health Terms
Terms in this set (335)
A type of policy assignment under which the assignee (person to whom the policy is assigned) receives full control over the policy and also full rights to its benefits. Also called permanent assignment
Accelerated Benefits Rider/Option
A life insurance rider that allows for the early payment of some
portion of the policy's face amount should the insured suffer from a terminal illness or injury
One party's agreement to the offer of another party. With an insurance contract, acceptance usually takes place when the policy is issued
An unforeseen, unexpected and unintended event that results in bodily injury
Accident and Health Insurance
An insurance policy under which benefits are payable in case of illness or accident. Also called health insurance.
Accidental Death and Dismemberment (AD&D)
A policy that provides payment if the insured dies
from an accident, accidentally severs a limb or accidentally and permanently loses eyesight.
Accidental Death Benefit Rider
A life insurance policy rider that provides for an additional death benefit if the insured dies by reason of accident. Sometimes called a "double indemnity" rider
Accumulation at Interest
A dividend option that leaves the policy dividends with the insurance company to invest and earn interest.
With an annuity, it is the period of time, usually before retirement and withdrawals, that the annuitant is paying premium that accumulates interest tax-deferred.
Activities of Daily Living (ADLs)
A long-term care policy will use these activities (bathing, dressing, eating, mobility, etc.) as a guide to assess dependency
Mathematician hired by an insurance company to apply probabilities and statistical analysis to risks and premiums
A serious and life threatening condition which requires immediate and proper medical attention
Adjustable Life Insurance
A policy that allows changes or adjustments to the policy face amount, the amount of premium, the period of protection and the type of coverage (term or whole life).
An insurance company representative who seeks to determine the extent of the company's liability when a claim is submitted. Also called claims adjuster
The tendency of insureds who present a higher probability of loss to purchase or renew insurance more often than those who present a lower probability of loss. Insurance companies
review this as "anti-selection"; i.e., not in the best interests of the company
A person licensed by the state insurance authority to sell insurance products. An agent represents the insurance company in all transactions
One party's offer is accepted by another party. Both parties agree to the terms of the contract
A contract condition where one party may obtain greater value under the agreement than the other party. An insurance contract has this "chance" or possibly unequal element
An insurance company organized and incorporated outside the United States, that is, organized under laws of a foreign nation
Performed on an outpatient basis
Annually Renewable Term (ART)
A type of term insurance that provides coverage for one year, then automatically renews at the end of the policy year for another year without evidence of insurability
A person whose life is measured for the annuity contract. Typically, the annuitant will receive monthly income payments for his or her life
A contract offered by the life insurance industry that provides stipulated payments at regular intervals (usually monthly) for (1) the lifetime of the annuitant or (2) a specified length of
A definition of total disability that requires the insured to be unable to perform any occupation they would be reasonably suited to do based on education, training or work experience in order to receive disability income benefits from the policy
The person applying for the insurance policy who could also be the insured and/or policyowner
A form supplied by the insurance company that is completed by the agent (and possibly a medical examiner) while questioning the applicant. The agent and applicant sign it. It is then submitted to the underwriting department for review. If a policy is issued, the application is attached to the policy
The legal transfer of a policyowner's rights in an insurance policy to another party
The current or present age of the insured
Automatic Premium Loan Provision
A stipulation that authorizes the insurance company to pay any defaulted premium from the cash value of a life policy. The insurance company will treat this as a policy
A limitation or exclusion of coverage for private aircraft. Fare-paying passengers and commercial crewmembers do not have this exclusion in their life policies
Basic Hospital Expense
A health insurance policy that only covers room and board if the insured stays overnight in a hospital and the iscellaneous expenses (such as, testing, x-rays, lab work etc.) that occur
because of that stay. It provides first dollar benefits by the insurer, but low coverage limits
Basic Medical Expense
A health insurance policy that only covers outpatient physician services and procedures. It provides first dollar benefits by the insurer, but low coverage limits
Basic Surgical Expense
A health insurance policy that only covers surgeries, surgeons and anesthesiologists. It provides first dollar benefits by the insurer, but low coverage limits
The recipient of a life or accident policy payable upon the death of the insured
A period of time when Social Security survivor benefits are not available to the surviving spouse and/or children
A policy that covers a number of insureds exposed to the same hazards or risks, such as members of an athletic team or campers
Service organization that geographically provides protection against the cost of hospitalization. Blue Cross pays benefits directly to the participating hospitals
Service organization that geographically provides protection against the cost of surgeries and other medical care. Blue Shield pays benefits directly to the participating medical providers
Person licensed by the state insurance authority to sell insurance products. A broker represents the client and places business among various insurance companies
Business Continuation Plan
An arrangement among business partners or owners that provides for the continuation of the business in the event of death or disability of one of the owners
Business Health Insurance
A policy purchased and owned by a business to indemnify the business in case of disability or sickness of a key employee
Business Overhead Expense Insurance
Specialized use of disability income insurance that pays
routine, necessary overhead expenses of a business if the business owner becomes disabled
A type of business continuation plan that gives a remaining business owner the predetermined legal right to purchase a deceased owner's interest at a predetermined price. Proceeds to purchase the deceased owner's interest come from a life insurance policy
A employee benefit plan that allows employees to select among various group programs and insurance plans that best meet their specific needs. Also called a flexible benefit pla
A renewability provision with a health insurance contract that allows the insurance company, at its option, to terminate or renew the policy.
The benefit provided for accidental dismemberment or accidental blindness
A method of payment for health services in which the medical provider is paid a fixed amount for each patient without regard to the actual number or nature of services provided. This is a common payment method for an HMO's primary care physicians
Another term for insurer or insurance company
Cash Refund Annuity
An annuity settlement option that offers an additional guarantee to pay a beneficiary if not all premiums were returned to the annuitant as income payments
Cash Surrender Option
A nonforfeiture option that allows the policyowner to receive the cash value when surrendering or giving up their permanent life insurance
Cash Surrender Value
The amount of equity (cash value) available if the policyowner surrenders their permanent life insurance
The amount of equity (ownership) or cash accumulation in a permanent life insurance policy.
Catastrophe (Catastrophic) Insurance
A health policy that provides substantial benefits if the insured
has a prolonged, serious and expensive disability or illness
Certificate of Creditable Coverage
Documentation issued by a group health care plan to an employee for presentation to a new group plan to verify previous coverage especially for a preexisting condition
Certificate of Insurance
Issued by group contracts (typically employer groups) that summarizes coverage to insured employees. Sometimes called group certificate
A treatable but incurable illness, such as arthritis or high blood pressure
A request for payment of a loss which may be covered by the insurance contract
A beneficiary designation that does not specify beneficiaries by name, but rather by a group or class. For example, a policyowner names "All my children" as beneficiaries to the life
A premium calculation for a group or class of persons with similar risks
Under major medical expense insurance, the company insures a percentage of the potential loss and the policyowner pays the remaining percentage. For example, 80/20 means that the company pays 80% of the loss (after the deductible has been met) and the policyowner pays 20% of the loss. Also called percentage participation
A type of policy assignment under which the assignee (person to whom the policy is assigned) receives partial control over the policy and also partial rights to its benefits. This is used by policyowners to secure a loan. Also called temporary assignment
Commercial Health Insurers
Private health insurance companies offering traditional reimbursement policies such as major medical expense insurance
A percentage of premium paid by the insurance company to the agent (producer) as compensation for selling an insurance policy
Common Disaster Provision
A policy condition designed to protect the contingent beneficiary or provide an alternative beneficiary in the event that both the insured and primary beneficiary die as a result
of a common accident
A requirement that both parties understand the contract and agree to it in order for the contract to be enforceable. A policyowner must be of legal age
Comprehensive Major Medical Expense
A type of traditional medical expense insurance designed to
reimburse the policyowner for out-of-pocket medical expenses. It characterized by typically low deductibles ($100-$500), coinsurance and stop loss limits
The deliberate withholding of information in order to financially gain, such as obtaining an insurance policy or receiving payment on a claim under false pretense
A contract that is in force only if certain obligations are met or events have occurred
Given to potential policyowners at time of application and initial premium payment. It allows for the earliest possible coverage if the policy is approved subject to underwriting
and any other stated conditions on the receipt
A health insurance provision that allows renewability if certain stated conditions are met by the insured, such as full-time employment to age 65
Another term for policy provisions or terms
Written approval or permission to be insured by another party
Exchange of values between parties to complete a contract. With an insurance contract, premium is paid by the policyowner, and the insurer promises to pay according to the policy
The part of the insurance contract that sets forth the amount, renewal and frequency of premium payments by the policyowner
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
A law that extends group health insurance coverage for terminated employees and dependents for up to 18 or 36 months.
Consumer-Driven Health Plan
A type of health benefit plan in which the insureds select their health care providers, manage their health expenses and assume more control in protecting their health
A period of time, usually the first two years the policy is in force, in which the insurance company can contest a claim based on misstatements or omissions on the application
The recipient of a life or accident policy payable upon the death of the insured and no primary beneficiary is named or alive. Also called secondary (second) or tertiary (third)
An agreement (offer and acceptance) between two parties that have the legal capacity to do so and have exchanged valuable consideration.
A group insurance policy were the policyowner (an employer) and insureds (employees) share the cost of the plan. Generally, insurance companies will require 75% or more of all eligible employees to participate.
A term life policy that may be exchanged to a permanent life policy without evidence of insurability.
Coordination of Benefits Provision
It prevents duplication of benefits with multiple group health
insurance coverage. It limits coverage to 100% of the expenses covered and designates the order of benefits payable by the group carriers
A set amount of money that a managed care plan member must pay at the time the member see a medical provider
With supplemental major medical expense, it is an amount that is paid by the policyowner after the insurer first pays the basic plan portion when covered expenses are submitted.
Cost of Living Rider (COLA—cost of living adjustment)
A rider that automatically increases the benefit of a policy (typically linked to the CPI—consumer price index) to offset the effects of inflation
An initial offer that is not accepted, but negotiated by the second party. With insurance, the alternate offer usually involves additional premium to be paid for the coverage requested
Credit Accident and Health Insurance
A policy that will pay an outstanding debt if the insured
becomes totally disabled
Credit Life Insurance
A policy that will pay the outstanding loan balance of a debt if the insured dies
Critical Illness Insurance
A supplemental health policy that pays a lump sum in the event the insured is diagnosed with a critical illness such as cancer, heart attack or stroke. The benefit can be used to pay for medical care, daily living expenses or any other costs associated with the critical illness
A status of limited eligibility under Social Security that provides only death benefits.
A level of care assisting someone with the activities of daily living. The caregiver does not need medical training, but a doctor orders the care. Sometimes called personal or residential care
Customary and Reasonable Expense
Medical expenses that are paid by the insurance company that do not specify a set dollar amount, but instead bases payment upon similar charges for a like service in
the same geographic area. Charges in excess can be denied. Sometimes called usual, customary and
reasonable (UCR) expense
Life insurance policy proceeds paid to the beneficiary upon death of the insured
Decreasing Term Insurance
A type of term life insurance usually sold in connection with a debt or loan to protect the lender in case the borrower (insured) dies before the loan is repaid. The face amount of
the policy is tied to the loan and is reduced as the debt is paid off. At the expiration of the term, the face
amount is zero.
The amount of loss paid by the policyowner before the health insurance policy pays the claim.
An annuity contract that will not pay income benefits until a later date (usually when the annuitant reaches retirement age)
A physical or mental impairment caused by sickness or accident that limits a persons ability to work
Disability Buy-Sell Agreement
A type of business continuation plan that gives a remaining business owner the predetermined legal right to purchase a disabled owner's interest at a predetermined price.
Proceeds to purchase the disabled owner's interest come from a disability income policy
Disability Income Insurance
A type of health insurance policy that replaces the insured's income if he or she becomes disabled and unable to work. Sometimes called loss of income insurance
A policyowner's share of divisible surplus (profit after expenses have been met shared equitably by policyowners) paid by a participating policy. Sometimes called policy dividends
Participating policyowners have choices with regard to policy dividends: cash, reduction of future premiums, additional paid-up insurance, accumulate with interest
Extra money resulting from the insurance company's savings in mortality, interest earnings and/or reductions in operational expenses which can be divided equitably among the company's policyholders or stockholders
Do Not Call List
Consumers who have registered their private telephone numbers with a national registry in an attempt to stop most telemarketing calls. Exemptions include a business (such as an insurance company) that has as established relationship with the consumer.
An insurance company organized and incorporated in a state and selling policies to residents of that state
Dread Disease Policy
A health insurance policy that provides coverage only for a specified named illness, such as a cancer policy. Sometimes called a limited risk policy
The date the insurance policy begins or goes into effect
The time during which employees enroll in the group insurance plan without providing evidence of insurability. This is after an employer probationary period has been met
With a disability income policy, it's the period of time beginning with the insured's disability and the start of disability income benefits paid. It's a waiting period to receive policy benefits
Employee Retirement Income Security Act (ERISA)
This federal law protects the interest of employees (and beneficiaries) in employer sponsored benefit plans.
An attachment or rider to a policy that alters coverage (restricts or increases) . The terms of the endorsement take precedent over the policy
A type of permanent life insurance that provides for a death benefit if the insured dies during the term (endowment period) or pays the proceeds at the end of the term as a living benefit
A policy provision that states the application, policy and any attached riders constitutes the entire contract between the insurance company and policyowner.
A type of fixed or guaranteed annuity that offers excess interest based on the insurance company's investment of premium compared to a stock index, such as the S&P 500 index
Evidence of Insurability
A health insurance rider that takes away coverage that the policy would normally provide because of a preexisting condition.
A list of conditions not covered by the policy. With health insurance, it could be a preexisting condition; with life insurance, it could be a hobby or the insured's occupation
Extended Term Insurance
A nonforfeiture option that allows the policyowner to use the cash values of a lapsed permanent policy, as a net premium, to purchase term insurance with the same amount of
protection as the lapsed policy offered
The principal sum of the insurance contract. Also called the death benefit of a life insurance policy.
Fair Credit Reporting Act
Federal law protecting consumers when their credit rating is examined with an insurance application. The law requires disclosure of the credit inspection
Federal Insurance Contributions Act (FICA)
Mandatory payroll tax to the Social Security program
made by employers and employees to fund present and future Social Security benefits.
A payment system were the medical provider is paid at the time the service is rendered.
A person, in a position of trust, who has a responsibility for someone else's money. For example: A producer is acting as a fiduciary when receiving a premium check from a client. The producer has the responsibility to submit the premium check to the insurance company as soon as possible
First Dollar Coverage
A health insurance policy that does not have a deductible. The company pays first when a claim is submitted.
Fixed Amount Settlement
A life insurance settlement option that pays the policy proceeds in periodic installments of a fixed dollar amount (as opposed to a lump sum settlement).
A type of annuity that guarantees the interest rate on annuity premiums and the amount of annuity payments received. It does not guarantee, though, to keep pace with inflation.
Fixed Period/Time Settlement
A life insurance settlement option that pays the policy proceeds in periodic installments for a stated number of payments (as opposed to a lump sum settlement).
A premium method that allows the amount and timing to vary upon the policyholder's discretion.
Flexible Spending Account (FSA)
A plan that allows employees to pick from a selection of qualified fringe benefits. The participating employee then pays into the FSA through payroll deductions. Disbursements from the FSA are made to pay for unreimbursed medical and dental expenses, deductibles and copayments.
An insurance company organized and incorporated in a state and selling policies to residents of other states
The deliberate attempt to deceive another for financial gain
A provision that gives the policyholder the right to review the policy for a stated number of days, usually 10, and receive a full refund if the policy is returned to the insurance company
status of eligibility under Social Security that provides for complete benefits
An arrangement were a primary care physician coordinates all health care for the HMO member
The insurance company's account for investing policyholder premiums in safe and conservative investments
Social insurance programs, such as Medicare and Medicaid, provided by the federal or state government
A period of time after the due date of a premium were the policy remains in force
The amount paid by a policyowner that was calculated by an actuary using three factors—(1) risk plus (2) company operating expenses (also called the "loading" factor) minus (3)
Policy that covers persons with a common affiliation of interest, such as an employer group, under one master policy
An option or rider that allows the policyowner to purchase additional coverage without evidence of insurability
A health contract that allows the policyowner to continue the policy for a substantial period of time by paying the premium. Continued coverage is guaranteed; however, the
premium rate can change for classes of insureds
A broad group of policies offering protection against loss of income due to disability, and medical expenses due to sickness and accident. In Illinois, also called accident/health insurance
Health Insurance Portability and Accountability Act (HIPAA)
A federal law that allows credit for coverage of a preexisting condition when changing from one group plan to another group plan
Health Maintenance Organization (HMO)
An organization that provides health services to individuals,
typically employees, known as members. The HMO contracts with a select group of doctors and other medical practitioners to provide services to members at agreed-upon costs, prepaid on behalf of the member.
Health Reimbursement Account (HRA)
An arrangement were the employer reimburses an employee
for health expenses not covered by the group health insurance plan, such as deductibles or coinsurance
amounts. The employer determines how much it will pay for medical expenses and shifts the allocated dollars to the employee. The employee decides how much will be spent from the account
Health Savings Account (HSA)
A tax advantaged savings plan that covers current and future medical expenses. In order to establish this account, the participant must have a high-deductible health insurance
policy and not be covered by any other health insurance plan
Home Health Care
killed or unskilled care taking place in the individual's home, usually on a parttime basis.
A limited type of health insurance that pays the insured a stipulated amount if confined overnight to a hospital regardless of actual hospital expenses
An annuity contract that pays income benefits after a single premium is received
An attachment to a health insurance policy that excludes coverage for a preexisting condition for a specific person for a specific period of time
A period of time, usually after the first two years the policy has been in force, in which the insurance company cannot deny a claim or void the policy based on misstatements or omissions on the application.
Increasing Term Insurance
A type of term life insurance in which the death benefit increases over the policy's term. It is usually purchased as a cost of living rider to a whole life policy.
A fundamental insurance concept in which the insured should not profit, but be restored in whole or in part, by payment, repair or replacement. The insurer indemnifies the insured
Indexed Whole Life
A type of whole life insurance whose death benefit increases according to the rate of inflation, usually tied to the Consumer Price Index (CPI).
Policies sold to individuals as opposed to group coverage. Sometimes called personal insurance.
Individual Retirement Account (IRA)
A personal tax-advantaged savings account in which eligible individuals can contribute up to a certain amount each year
A person who has been admitted to a hospital or skilled nursing facility
The insurance company's assessment of an individual's risk profile.
The possibility of financial loss that can be protected by purchasing an insurance policy. With life insurance, a policyowner must have insurable interest in the life of the insured
A contractual means of transferring risk of loss to another party (the insurance company) who agrees, for consideration, to indemnify or pay a specified amount for covered losses suffered by the insured
Laws, statutes and regulations that govern the business of insurance in a specific state
The party to the insurance contract whom the company has agreed to indemnify
The party to the insurance contract who indemnifies the insured. Also called insurance company or carrier
A policy provision that defines the scope and limits of coverage. It's the insurance company's promise to pay according to the policy
A life insurance settlement option that pays the interest on policy proceeds (as opposed to a lump sum settlement) being invested by the insurance company. The death benefit will be paid out at some later specified date
Interest Sensitive Whole Life
A type of whole life insurance whose premiums vary based upon the insurer's investment experience, mortality risk and expense assumptions
Intermediate Nursing Care
A level of health care that is prescribed by a physician but usually performed by skilled medical personnel, such as a Registered Nurse (RN)
Premiums invested by the insurance company earning interest, income or gains; the return from investing.
The recipient of a life or accident policy whose interest in the policy cannot be revoked or cancelled without written consent
Joint and Survivor Annuity
A contract offered by the life insurance industry that provides stipulated payments at regular intervals to two or more annuitants as long as one of them lives (survives).
Joint Life Policy
An insurance contract covering two or more lives that pays policy proceeds upon the death of the first insured. Then the policy is terminated
Life insurance written on the life of a child. A competent party must own the policy, usually the parent or legal guardian
Type of qualified retirement plan for the self-employed and their employees
Key Person Insurance
A life or health policy covering a valuable employee whose absence would financially hurt the business. The key person is the insured and the business is the policyowner. Also
called key employee insurance
Key Person Disability Insurance
A health insurance contract that pays the key person a salary
continuation in the event of disability or pays the employer if the key person becomes disabled. In the second situation, the employer is the policyowner and the key person is the insured
Termination of a policy due to nonpayment of premium. With permanent life insurance, nonforfeiture values could be used to keep some type of coverage in place
Law of Large Numbers
A mathematical principle of probability stating that actual losses in a given category of insurance will come closer to a predictable number as the number of units (policies issued)
increases. A prediction must be made from actuarial experience or statistical analysis of the number of
losses to be expected in a group of exposures; however, the larger the sample, the more accurate the
A premium that remains unchanged, fixed, constant or guaranteed for the life of the policy
Level Term Insurance
A type of term life insurance in which the death benefit remains constant over
the policy's term
Certification by the state's Division of Insurance that allows an individual to solicit insurance applications.
A contract offered by the life insurance industry that provides stipulated payments at regular intervals (usually monthly) for the life of the annuitant with no refund provisions once the
annuitant dies. Also called straight life income annuity or straight life annuity
The average duration of the life remaining for a number of persons of the same age, according to a mortality table; the statistical probability of a person reaching a given age
Life Income Settlement
A life insurance settlement option that uses the policy proceeds to purchase an immediate annuity for the beneficiary
A policy that will pay a stated amount to a beneficiary upon death of the insured
A financial transaction in which a policyowner possesses an unneeded or unwanted life insurance policy. The policyowner can sell the policy to a third party (not a life insurance company) for a fair market value (typically more than the cash value offered by the issuing life insurance company).
The third party purchaser becomes the new owner/beneficiary of the policy
Lifetime Maximum Benefit
With medical expense insurance, it is the maximum benefit that the insurer will pay out over the length of the policy's duration
Limited Pay Life
A form of whole life insurance were premiums are paid for a specified number of years or to a specified age of the insured
Restricted benefit policies as to named illnesses, accidents only, travel insurance, etc.
A factor used to compute gross premium. It pays for the insurance company's operating expenses
The amount that can be borrowed from a permanent life insurance policy; usually a stated percentage of the cash value
Long Term Care
A broad range of continuing services (both medical and personal assistance) for individuals who aren't expected to get better.
Long Term Care Policy
A type of health insurance that provides stated benefits for long-term care services typically taking place in a nursing home or home health care
A basic economic principle of insurance whereby a large group of insureds contribute a small amount (premium) to cover the possibility of large losses of a few. Also known as risk pooling.
Payment of the entire amount of proceeds from an insurance policy as opposed to a settlement option which pays the proceeds over time
Major Medical Expense
A health insurance policy that offers broad coverage and high benefits for hospitalization, surgeries and physician services subject to deductibles and coinsurance.
System of delivering health care and health care services by selected providers, programs of ongoing quality control and utilization review, and financial incentives for members to use
these selected providers and procedures.
Issued to an employer under a group plan. It contains all insuring clauses and employee benefits. Individual insured employees receive a certificate of insurance summarizing coverage
Substantial and important information that could influence an outcome or action. For example: Statements on an application may be considered material; therefore, affecting the company's decision to issue the policy or not.
Date upon which life insurance proceeds become payable to the beneficiary, typically at death of the insured
The life insurance policy proceeds or death benefit. The face amount can be decreased because of outstanding policy loans
Maximum Out of Pocket
Annual cost paid by a policyowner or member for deductibles, coinsurance or copayments.
State and federal government sponsored health care program for low income individuals who are age 65 or older, blind or disabled, or families with dependents
Medical Expense Insurance
A broad category of health insurance that reimburses the insured for outof- pocket medical expenses due to physician care, hospitalization, surgeries, etc.
Medical Information Bureau (MIB)
Nonprofit organization that collects medical data for life and
health insurance applicants for member insurance companies
Medical Savings Account (MSA)
An account in which individuals contribute to pay for medical care or insurance. It was replaced by the HSA
Federal government sponsored health care program for individuals age 65 or older
Medicare Part A
Compulsory hospitalization insurance funded by all workers through FICA (Federal Insurance Contributions Act) taxation. It provides coverage for inpatient care
Medicare Part B
Voluntary coverage for supplementary medical insurance to pay some of the costs of physician and medical services on an outpatient basis. The Medicare beneficiary pays a monthly
Medicare Part C
Program that offers a variety of Medicare managed care choices
Medicare Part D
Prescription drug benefit program offered to Medicare beneficiaries who pay a monthly premium and an annual deductible to share the cost of prescription drugs with Medicare.
Medicare Supplement Policy (Medigap Policy)
Health insurance policy offered by commercial health
insurers to fill the gaps (including deductibles and coinsurance) in Medicare coverage
Anyone (employee or dependent) covered by a managed care plan. Another term for insured
With health insurance, charges other than room and board for a hospital stay. For example: x-ray, testing, laboratory fees, etc. Sometimes called ancillary expenses
On the part of the insurance company or its agent, a deliberate false representation of the policy, including terms and benefits. On the part of the applicant, a deliberate false representation of the health or other condition of the insured
Misstatement of Age or Gender provision
A condition that states if the insured misstated (intentionally
or unintentionally) age or gender the insurance company will adjust the benefit payable to what the premiums paid should have purchase
Modified Endowment Contract
A federal tax law that limits high amounts of premium into
a cash value life insurance policy. If the policy is paid-up within the first seven years, distributions of cash value will most likely be subject to tax and penalties. This is meant to discourage the use of life insurance as an investment or tax shelter
The incidence or extent of illness, injury, or disability in a defined population
The incidence or extent of death in a defined population
A listing of mortality experience of individuals by age. It permits an actuary to calculate how long a male or female of a given age group may be expected to live
Mortgage Insurance (Mortgage Protection Insurance)
The use of life insurance, usually decreasing term, to pay off a debt (mortgage) at the insured homeowner's death
An insurance company owned by policyholders
National Association of Insurance Commissioners (NAIC)
An association of state insurance commissioners (also known as directors) active in insurance regulation and recommendation of insurance legislation
Calculated by an actuary using two factors—(1) risk minus (2) investment income. Loading is not a factor.
With managed care plans, a selected group of physicians, clinics, hospitals, etc
Noncancelable and Guaranteed Renewable
A health insurance contract that guarantees the continuation,
for a substantial period of time, and the premium
A group insurance policy were the policyowner (the employer) pays the entire premium for employees' benefits. The plan must insure 100% of all eligible employees
Privileges to protect the cash value of a lapsed permanent life policy.
Benefits accorded by law the a policyowner will not forfeit (give up) cash value.
A policy that does not allow the policyholder to share in the company's divisible surplus
Nonqualified Retirement Plan
A retirement plan that has not been approved by the IRS; therefore, does not receive favorable tax treatment.
Notice of Claim
A policy provision that describes the policyowner's responsibility and obligation to notify the insurer upon suffering a loss within a reasonable amount of time, usually 20 days
One party proposes something of value to another party. With an insurance contract, an offer is usually made by the applicant by signing an application, paying the first premium and if necessary submitting to a physical examination. Or, the offer could be made by the insurance company if no
premium is paid with the signed application
Old Age, Survivors, Disability and Hospital Insurance (OASDI)
The federal program commonly called Social Security that provides benefits for retirement, death or disability. The hospital benefits are provided by Medicare and Medicaid.
A period of time when eligible individuals (usually employees) can apply, enroll in or transfer between available programs without proof of insurability
A health insurance provision that gives the insurance company the right to terminate coverage at the policy anniversary, usually an annual premium due date
Ordinary Life Insurance
Policies sold in multiples of $1,000 that provide coverage for the life of the insured or a specified period of time.
The age of the insured when the policy was purchased
A term rider that covers a family member other than the insured and is attached the insured's "base" policy.
Outline of Coverage
Informational material describing the policy's features and benefits. In Illinois, an outline of coverage must be given at time of solicitation for long-term care insurance and Medicare
An excessive amount of insurance that would cover more than the actual loss or more than incurred expenses
A definition of total disability that requires the insured to be unable to perform the duties of his or her own occupation in order to receive disability income benefits.
A person who has received health care services without being admitted to a hospital or skilled nursing facility.
A dividend option that purchases additional life insurance with the policy dividends at the insured's attained age
An illness or injury that prevents an insured from performing one or more of the important duties of their job, but not all of the occupational duties.
A policy that allows the policyholder to share in the company's divisible surplus.
An attachment to a juvenile policy that waives future premiums if the policyowner dies or becomes disabled until the juvenile reaches the age of majority.
Period Certain Annuity
A contract offered by the life insurance industry that guarantees a definite minimum number of payments.
Permanent Life Insurance
A type of ordinary life insurance that guarantees coverage for life and has cash value.
Point of Service Plan
A type of health maintenance organization (HMO) that allows the member to use in-network or out-of-network services; thus giving members freedom of choice
The insurance contract and all attached riders or endorsements
The insurance company must allow the policyowner to borrow money using the policy's cash value as collateral to secure the loan. This is one of the nonforfeiture options
Another term for policy conditions or terms
The net amount payable upon death of the insured to the beneficiary
The person who has the legal and ownership rights in a life insurance policy
A document that briefly describes the coverages, benefits, limitations, exclusions and costs. In Illinois, a life insurance policy summary must be before or with policy delivery
An illness or medical condition that existed before a policy's effective date.
Preferred Provider Organization
An organization of health care providers that agree to provide
health care services at a predetermined negotiated fee
A person who, according to an insurance company's underwriting standards, is entitled to a lower premium rate due to an indication of longevity or unimpaired life; such as excellent physical condition or low risk occupation
The cost of insurance; the payment necessary to keep an insurance policy in force.
The frequency of premium payments. Insurance companies usually offer a monthly, quarterly, semiannually or annual premium mode
A physical condition which presumes, for disability income benefits, that the insured is disabled regardless of the ability to work or not. A typical presumptive disability is blindness.
A method of health care to possibly prevent illnesses before they occur. This is accomplished through routine physical examinations and immunizations (a set of shots given to children at different ages to help keep them from getting dangerous childhood diseases).
The recipient of a life or accident policy payable upon the death of the insured. Also called the first beneficiary
Primary Care Physician (PCP)
In a health maintenance organization (HMO) gatekeeper system, the physician that has been selected by the member to coordinate all the member's health care.
Primary Insurance Amount (PIA)
A Social Security calculation to determine the amount of the
The benefit provided for accidental death
A commercial insurer not associated with the federal or state government
A specified number of days (Illinois is 30) after the policy's effective date that coverage is not available for sickness, though accidents are covered
A person licensed by the state insurance authority to sell insurance products. A general term that applies to insurance agent or insurance broker.
Proof of Loss
A mandatory health insurance provision that states the insured must provide a completed claim form signed by the attending physician to the insurer within 90 days of the loss.
The person whose life is to be insured by the life insurance policy
Stipulations and conditions in the policy that state the insurance company's and policyowner's rights and obligations.
A retirement plan that has been approved by the IRS; therefore, receives favorable tax treatment.
A premium classification given to a proposed insured
A person who, according to an insurance company's underwriting standards, is considered a higher than average risk.
Reasonable and Customary Charge
The cost for a health care service paid by the insurer that is
calculated based on an average of the going rates of an identical or very similar service in a defined geographic area. Also called usual customary and reasonable charge (UCR).
An illegal act of returning part of the commission or premium, or offering anything of value (other than the promises contained in the policy) to a person as an inducement to buy insurance
Recurrent Disability Provision
A disability income policy provision that specifies after a period of time if the same disabling condition reoccurs, the stated benefit will be paid without an elimination period.
The reoccurrence will be treated as a continuation of the prior claim.
Reduced Paid Up Insurance
A nonforfeiture option that allows the policyowner to use the cash values of a lapsed permanent policy, as a net premium, to purchase another whole life policy with a reduced face
amount, but permanent protection.
A contract offered by the life insurance industry that provides stipulated payments at regular intervals (usually monthly) for the life of the annuitant with an additional provision that states
if the annuitant dies before all premiums are returned the remaining premiums will be paid to a beneficiary.
The payments of a health insurance policy based on actual medical expenses incurred, as opposed to a stated amount
The act of putting a lapsed policy back in force by providing evidence of insurability and paying past due premiums
A term life policy that may be renewed for the same specified number of years without evidence of insurability
The purchase of a new policy and letting an existing policy become terminated or surrendered. Illinois insurance law has strict disclosure requirements an agent must follow
A statement that one believes to be materially and substantially to be true
Funds required by law that are held by the insurance company to help fulfill future claims; reserved money
Provision of room, board and custodial care to the elderly
Residual Disability Benefit
Disability income payment based on the proportion of missing employer income
A policy benefit meant to provide a primary caregiver with a short term rest period. Typically found in long-term care policies
The recipient of a life or accident policy whose interest in the policy can be revoked or cancelled by the policyowner
An attachment or endorsement whose significance takes precedence over the policy. The supplemental agreement could expand and add coverage, or exclude and waive coverage
Uncertainty of loss
The responsibility of the underwriter to determine which risks are insurable and acceptable to the insurance company
A list of medical services, usually surgical procedures, at a specified amount payable
The investment choice offered by life insurers for variable contracts. Since the policyowner assumes the premium investment risk, these accounts are separate from the insurer's general account.
Provider of health coverage by contracting with a group of doctors, clinics and hospitals to provide health services to subscribers, also known as members, who pay premium in advance of services needed.
The policy benefit or claim paid by the insurance company
Various methods by which the beneficiary of a life insurance policy can receive the policy proceeds usually determined by the policyowner.
A life insurance policy or annuity that is paid in full with one premium at the beginning of the contract.
Skilled Nursing Care
A level of health care that is prescribed and performed by skilled medical personnel, such as a Registered Nurse (RN) or physician
A term used to describe state and/or federal government insurance programs.
The federal program that is formally called Old Age, Survivors and Disability Income Insurance, but commonly known as Social Security. It provides benefits for retirement,
death or disability
Special Risk Class
Applicants who cannot qualify for standard insurance rates due to existing health impairments. Policies are issued with rated-up premiums or exclusions riders.
A person who, according to an insurance company's underwriting standards, is considered an average risk.
Step Rate Premium
A premium that increases typically each year for the life of the policy
An insurance company owned by stockholders
Stop Loss Provision
In major medical expense policies, a stated dollar limit to the policyowner's maximum out-of-pocket expenses. Once this limit is reached for the policy year, the insurer pays 100%
of remaining expenses
Another name for the policyowner under a Blue Cross or Blue Shield plan.
A person who, according to an insurance company's underwriting standards, is considered a higher risk due to medical history, occupation or dangerous habits
A provision in a life insurance policy that states if the insured commits suicide within the first two years (Illinois insurance law) of the effective date, the policy is void. The company will
usually return premiums to the beneficiary
Supplementary Major Medical Policy
A type of traditional medical expense insurance designed to
reimburse the policyowner for out-of-pocket medical expenses. It is bundled with a basic expense plan and characterized by the company initially paying a set dollar amount toward claims submitted. Then the policyowner pays a typically low deductible ($100-$500), coinsurance and stop loss limits.
To give up a permanent life insurance policy
Survivorship Life Policy
An insurance contract covering two or more lives that pays policy proceeds upon the death of the second or last insured. Then the policy is terminated
Term Life Insurance
A policy that provides protection only for a stated number of years. If the insured dies within that period of time, a beneficiary will receive the proceeds. If the insured is alive at the end of that period of time, the policy has no value
Third Par;ty Insurance
A policy owned by someone other than the insured
Time Limit on Certain Defenses
A limit to the period of time that the company has to deny a claim after the policy has been in force for a set number of years, usually two years.
An illness or injury that prevents an insured from working his own occupation or any occupation.
An insurance company employee who has been trained to evaluate prospective applicants for insurance policies
The process through which the underwriter evaluates risk and determines premium category.
Uniform Simultaneous Death Act
A model law that states if the insured and sole beneficiary die at the same time (that is, it cannot be determined which person lived longer), it is presumed that the insured
outlived the beneficiary. Common disaster provision
An insurance contract provision that states only one party to the contract, the insurance company, makes an enforceable promise
A person rejected by the underwriters because risk factors
A flexible premium life policy that generally pays greater interest on cash value growth than a traditional whole life policy. Premiums are deposited into a cash value fund and monthly deductions from this fund pay for annually renewal term coverage and company expenses.
A common practice with managed care health plans that determines the appropriateness and cost effectiveness of a health care procedure
An insurance policy that pays a stated amount if the loss occurs, as opposed to a reimbursement contract.
A type of annuity that does not guarantee the interest rate on annuity premiums or the amount of annuity payments received. It allows, though, for the possibility of annuity payments to keep pace with inflation
Life products, such as variable annuities, variable life and variable universal life insurance, that allow the policyowner to assume the premium investment risk with the possibility of
greater cash values and the chance to keep pace with inflation. These contracts are regulated as both insurance and securities products; therefore require dually licensing procedures for the producer.
Variable Life Insurance
A type of permanent life insurance that guarantees coverage for life and a minimum death benefit, but no guarantee to the cash value. The death benefit and cash value will
fluctuate according to the performance of the separate accounts.
Variable Universal Life
A flexible premium life policy that combines aspects of both
variable life and universal life insurance.
A written sales agreement between a viatical settlement provider and a terminally ill policyowner/insured. The policyowner sells the policy for an amount less than the death benefit, but more than the cash value, to the viatical settlement provider who becomes the owner and irrevocable
With group insurance, it's a period of time before the employee becomes eligible for coverage. With disability income insurance, it's another name for elimination period.
To give up a right or privilege
Waiver of Premium
A rider or provision whereby the insurer gives up the right to receive premium yet keeps the policy in force after the insured has been totally disabled for a specified period of time.
A statement that one guarantees to be materially and substantially true
Whole Life Insurance
A permanent life policy that guarantees the death benefit, premium and cash values. Also called straight whole life insurance.
Mandatory insurance purchased by almost all employers to cover an employee's injury, disability, death or medical expenses due to occupational causes.
Worksite Insurance Plans
A voluntary plan offered by an employer that allows employees to pick and choose among various types of insurance coverages, such as medical expense, dental, vision, life, disability income, critical illness and long-term care.
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