Accident and Health Insurance Basics (CH 7) Flashcards
Accident
A fortuitous event; unforeseen and unintended.
Binding Receipt
A rarely used type of receipt in which coverage begins at the moment of delivery and cannot be reversed, regardless of what the underwriter may discover at a later date.
Cancellation
The termination of a contract of insurance in force by the voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.
Capital Sum
The maximum amount payable in one sum in the event of accidental dismemberment. It is typically half of the face amount or principal sum.
Conditional Receipt
A provision that, if premium settlement accompanies the application, coverage shall be in force from the date of application (whether the policy has been issued or not), provided the insurance company would have issued the coverage on the basis of facts as revealed by the application and other usual sources of underwriting information. A physical does not have to be completed for the company to make this judgment.
Consideration Clause
A clause in a Life policy specifying the premium due for the insurance protection and the frequency of payment (also called mode).
Contract
A legal agreement between two parties for consideration, such as an insurance policy.
Death Benefit
The policy proceeds to be paid on the death of the insured.
Execution Clause
A statement in a life insurance policy that specifies the proof needed for payment of the proceeds.
Grace Period
A period of time after the premium due date during which a policy remains in force without penalty, even though the premium due has not been paid.
Hazard
Any factor tending to make a policy owner a less desirable risk for the insuring company. May be physical or moral (health, occupation, dangerous sports, criminality, or immortality).
Insuring Clause
The clause in a policy that specifies, in brief, the contract’s intent and benefits.
Malingering
The practice of feigning an illness or inability to work in order to collect insurance benefits.
Mandatory Standard Provisions
A set of statutory provisions required by most states to be included in every Health policy issued. Also called Uniform Policy provisions or Mandatory provisions. Created with the cooperation of the NAIC.
Peril
The cause of loss to a policyowner.
Pre-Existing Condition
A condition of health or physical condition that existed before the policy was issued.
Principal Sum
The full face amount payable in one sum in event of accidental death and severe accidental dismemberment.
Probationary Period
A period of time between the effective date of a Health policy and the date coverage begins for sickness.
Proof of Loss
A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy.
Reinstatement Clause
Provides the conditions under which a lapsed policy may be reinstated, if approved by the insurance company.
Renewability Clause
Define condition(s) in which the insurance company may or may not cancel a Health policy.
Time Limit on Certain Defenses
A Uniform Provision on Health Insurance policies specifying that, after a given number of years (usually two), no statements (except fraudulent misstatements) made in the application shall be used to deny a claim or void the policy and that no claim shall be denied or reduced on the grounds that a disease or physical condition not excluded at time of issue existed prior to effective date.
In a guaranteed renewable disability income contract, the insurance company reserves the right to change premiums after the policy is issued if:
The premium change applies to all insureds and a specific class or classes
If an individual filed a claim under 2 individual health insurance policies issued by the same insurer, the insurer might return
The premium amount for coverage, which would cause combined benefits to exceed a maximum benefit allowed.
Associations can be formed by employee groups and professional organizations. In order to qualify for health coverage most insurers require the association
have a minimum of 100 members. Association cannot be formed solely for the purpose of obtaining health insurance.
The Sonic Blast Speaker Company has 500 employees and has decided to self insure under the ERISA guidelines. Which of the following is the major reason for this action?
The company saves premium dollars and uses these savings to pay claims out of their own funds.
