Definitions Flashcards
Aletory
A term that describes the fact that both parties of a contract may NOT receive the same value.
Decelerations page
The insuring agreement of any insurance policy.
HO3
Homeowner’s Insurance
HO6
Condominium Insurance
ACV
Actual Cash Value, replacement cost minus depreciation
HO4
Renter’s Insurance
Open Peril
all perils except those specifically excluded
PAP value basis for damages
Actual cash value
CPL policy
Comprehensive personal liability (not avail through PAPs)
CPL exclusions
Intentional acts e.g. slander, defamation, libel
HO5
Highest level of building and personal property coverage (HO3 + HO15-no longer avail)
PAP
Personal auto policy
Inland marine insurance
Covers goods in transit
aka Personal Property Floater
Statement of Financial Position
Assets (cash, invested, use) = Liabilities + Net Worth
Cash Flow Statement
Inflows and Outflows
Dividend Scale
BOD updates annually to determine how much money can be paid to policy owners
General account
Holds cash value for traditional whole life policy
Mortality cost
cost of insuring a person, which increases at an accelerating rate
Modified endowment contract
MEC is an insurance contract that fails the ‘7-pay test’ and has too much premium paid, and subjects loans and withdrawals to taxes and penalty; all single premium contracts are MECs.
Life insurance
Provides a death benefit to beneficiaries for people who ‘die too soon’ (pays when dead)
Annuity
Provides a lifetime stream of income in case you ‘live too long’ (pays while alive)
NAIC
National association of insurance commissioners
Regulation XXX
NAIC law to ensure insurance company solvency by requiring higher reserves for term premium guarantees for more than 5-years
1035 Exchange
cash value policy can be exchanged for another policy, annuity or LTC
MOOP
maximum out-of-pocket (health insurance)
SPIA
single premium immediate annuity
Qualified annuities
payment made with pre-tax dollars inside a qualified plan
Non-qualified annuity
payment made with after-tax dollars outside of qualified plan
Contestable clause
2 year period after policy issue when the insurance company can contest the policy
Suicide clause
1-2 year period after policy issue when the insurance company can contest the policy if death by suicide; need only return cumulative premiums less debt
1035 Exchange
- Life insurance -> life policy, annuity or LTC
- Endowment -> endowment, annuity, or LTC
- Annuity -> annuity or LTC
Morbidity
measure of the rate of disability
Mortality
measure of the rate of death
Participating policies
Policies on which dividends are paid
Automatic payment loan
APL protects a coverage lapse due to non-payment if adequate cash value
Irrevocable beneficiary designation
Owner must get permission from beneficiary to do anyting other than stop premiums
Per stripes (sounds like burpees)
Stated share to PRIMARY beneficiaries, then stated shares that would go to predeceased heirs remains within their family unit divided among SECONDARY beneficiaries
Per capita
100% to surviving PRIMARY beneficiaries
Per capita by generation
Stated share to PRIMARY beneficiaries, then any portion that would go to predeceased heirs divided equally among all SECONDARY beneficiaries
LI ‘cash’ dividend option
The client can handle and invest or spend the money
LI ‘paid-up additions’ dividend option
Allows for the purchase of additional net cost whole life insurance. It can be added each year, regardless of the insured’s health or occupation.
LI ‘reduced premium’ dividend option
Decreases out-of-pocket expenses
LI ‘accumulate at interest’ dividend option
Allows for professional management of money, and a minimum rate is guaranteed, but interest is taxable (other dividend options do not increase tax liability)
LI ‘one-year term’ dividend option
Provides the opportunity to obtain inexpensive insurance that is equal to the guaranteed cash value. It is added to each year, regardless of health or occupation, and it usually is used in addition to another option.
LI riders - disability of waiver
The company agrees to waive the entire premium or the monthly charges, whichever applies, if the policy owner becomes totally disabled
LI riders - accidental death
If the death of the insured is caused by an accident, and death is within 90 days of the accident, an additional sum equal to the amount of the rider will be paid
LI riders - guaranteed isurability
The policy owner may purchase additional specified amounts of insurance at stated intervals without providing evidence of insurability.
LI policy replacement advantages: term with term
advantages least complex alternative; if alternative policy is more cost effective, consider replacement
LI policy replacement advantages: term with cash value
advantages normally can be done through term’s conversion clause; tax deferral on savings; answers the need for forced savings; answers the need for insurance past an age when term would become too expensive to continue
LI policy replacement advantages: cash value with cash value
no advantages, unless alternative policy has better coverage or is less expensive
LI policy replacement advantages: cash value with term
advantages reduces outlay in the short term; may better answer policy owner’s needs
Annuitization payout optins: straigth life income
The proceeds are paid to a beneficiary on
the basis of life expectancy.
Annuitization payout options: Life income with period certain:
The beneficiary is paid a life income for as long as they live, with a minimum number of payments guaranteed.
Annutization payout options: Life income with refund
A beneficiary is paid a life income for as long as they live; if the original proceeds are not paid out when the beneficiary dies, the remainder is paid to a contingent
beneficiary.
Annuitization payout options: Joint and survivor income
It provides income to two payees, with payments continuing to the survivor after the death of the first payee.
Capitation
Capitation assures that primary care physicians are paid a fixed fee for every health care plan subscriber who names that physician as their primary care physician.
Copayment
Most managed care plans have a fixed fee for each visit to a health care provider’s office.
HMO
- Health maintenance organization; both funding and service provider; subscriber can use only the physicians and hospitals that are a part of the HMO network.
- Very little out-of-pocket costs other than small copays.
- Pays PCPs on a capitation basis - ‘gatekeeper’
- Specialists or any further care must be approved by and referred through the PCP
PPO
- A Preferred Provider Organization is a group of providers (including generalists, specialists, hospitals, clinics, etc.) that have agreed to be part of the plan;
- a PPO does not require the insured to choose a PCP nor does it require a referral to utilize a specialist
- encourages in-network participation through high out of network coinsurance
POS
- A Point Of Service plan is a hybrid between an HMO and a PPO.
- choose PCP and get referrals to specialists
- purpose of a POS plan is to provide financial incentives for an individual to use the lowest-cost providers, while still maintaining a full range of choices for each person
- The POS plan has more restrictions than a PPO but is not as restrictive as an HMO
EPO
- Exclusive Provider Organization
- similar to an HMO, but it is funded through an insurance company
- health care conducted by contracted providers. Only care received from contracted providers is covered.
PSN
Provider Service Networks: small health care plans typically are a cooperative effort between physicians and hospitals.
PCP
Primary Care Physician
HIP
Health insurance provisions
HI Managed care plans (pre-payment plan)
HMO, PPO, PHO, POS, PSN, EPO
All control cost of healthcare through mechanisms
HI Indemnity plans (fee for service; post-payment plan)
Total choice of providers without payment discrimination
HIP Supplemental coverage
Dental, vision or accident; available at extra premiums
HIP MOOP
‘Maximum out of pocket’ expense
For approved charges only typically includes deductibles, copayments and coinsurance
HIP Coinsurance
Splitting of costs between an insurance company and insured up to MOOP
HIP Copayments
Fixed payment for each visit
Applied to deductiblees and MOOP
HIP Nonembedded deductible
Family deductible must be met before transition to coinsurance
HIP Embedded deductible
Individual deductible must be met before transition to coinsurance (insurance co. participates sooner)
HIP Deductible
Initial amount insured must pay befrore plan begins to pay
HIP Coordination of benefits clause
Enforece concept of indemnity so insured does not collect more than 100% of cost
HIP Utilization review
Includes pre-certification and case management
HIP Preexisting condition
PPACA eliminated in most situation
PPACA
Patient Protection and Affordable Care Act
HIP Exclusions
IF not excluded than eligible for reimbursement
HIP Internal limits
Cost containment mechanism in section “What’s not covered”
HIP covered charges
Listed as ‘covered charges’ or ‘exclusions’ (best)
Disability definition - any occupation
strictest definition; unable to perform any gainful occupation
Disability definition - own occ
most liberal; unable to perform principal duties of own occ
Disability definition - modified own occ
unable to perform any gainful occ reasonably fitted by education, training, experience or prior economic status
Disability definition - split definition
unable to perform own occ for a time, then shifts to modified own occ
Disability definition - loss of income
defines disability as a percentage of lost income
Disability probation period
the period of time during which the individual policy must be in force before the insured is covered for
specified perils or illnesses.
Disability elimination period
the period of time after the disability occurs and before benefit payments begin.
Disability social insurance rider
a way of reducing the premium by requiring the insured to apply for Social Security disability benefits and reducing the benefits paid by amounts received
Medicare
A federal social insurance program available to everyone who is eligible for Social Security benefits
Medicaid
A combined state and federal program that is a form of welfare, and the single biggest payer of long-term care costs
LTC insurance ADLs as defined in HIPAA
bathing, continenace, dressing, eating, toileting, tranferring
LTC skilled nursing care
24-hour availability of a nurse under doctor supervision
LTC imtermediate care
less intensive nursing or rehab
LTC custodial care
assitance with ADLs but not medical
LTC respite care
allows the primary care-giver a vacation
