Key Facts Flashcards
The transfer of PURE risk in consideration for a premium
insurance
The chance of loss without any chance of gain
Pure Risk
risk with the possibility for gan or loss and is NOT insurable
Speculative Risk
The Chance of loss
risk
a condition that could result in a loss
exposure
something that increases the chance of loss
hazard
The presence of a physical _______ increases the chance of a loss occuring.
hazard
a cause of loss, such as a fire
peril
To be insurable, losses myst be _______
calculable
the law of ________ allows insurers to predict claims more accurately
large numbers
The more people in the group, the more accurate the predictions are. (applies to groups of people, not individuals)
the law of large numbers
Most insurers buy ______ to protect themselves in the event of catastrophic loss.
resinsurance
True or False: Insurance laws are required to be uniform from one state to another.
False
A type of insurer that may pay dividends to its shareholders.
stock insurer
stock payouts from a stock insurer _____ guaranteed.
are not / may not be
An insurance company that s managed by an attorney-in-fact
reciprocal
An unincorporated association of individuals who insure each other
reciprocal insurer
The _______ offers insurance primarily based upon social needs, such as flood insurance and workers compensation, but does not offer insurance for the purpose of preventing fraud.
government
An insurance company who has their home office in another state
foreign
An insurer incorporated outside of the U.S. who sells insurance in the U.S.
Alien
A _____ may be personally liable when violating the producer’s contract.
producer
Represents the insurance company, not the insured.
producer
Own their own accounts and are not insurance company employees
independent producers
Producers have _____, ______, and ______ authority
express, implied, apparent
The authority a producer has that is written in his or her contract.
express
A producers binding authority (if any) is ______ (written dwn) in the producer’s contract with the ______ the producer represents
expressed / insurer
The authority no expressly (written) granted, but is actual authority the producer has to transact normal business activities
implied authority
Elements of a legal contract (COAL)
consideration, offer, acceptance, legal purpose and capacity
Offer and acceptance, or mutual agreement is required for a __________
valid contract
Advertising the availability of insurance is considered to be an offer. True/False
False
A specific and definite proposal to enter into a contract.
Offer
The consideration on a policy need not be ____
equal
A policy may not be ____ due to unequal consideration.
voided
under what clause must something of value be exchanged
consideration clause
Because insurance contracts are contracts of ____, policy ambiguities always favor the insured.
adhesion
Insurance policies are considered to be _____ contracts, in that only one party makes an enforceable promise to the insurer.
unilateral
States that the purpose of insurance is to restore the insured to the same position as before the loss occured.
principle of indemnity
States that all parties to an insurance transaction are honest
principle of utmost good faith
the truth to the best of one’s knowledge
representation
a sworn statement of truth, guaranteed to be true
warranty
a breach of warranty may ____ a contract
void
the failure to disclose a material fact
concealment
When an insurer voluntarily gives up the right to obtain information that they are entitled to
waiver
Insurance covers what two types of perils
accident and sickness
covers both on-and-off the job injuries (for those not covered by workers comp)
occupational coverage
covers off the job injuries only (for those covered by workers comp)
Non-occupational coverage
A policy that will pay the capital sum for loss of a limb, in addition to any medical insurance coverage that may apply.
AD&D
________ insurance will pay an insured’s car payments if the insured is sick or injured and cannot work.
credit disability
Policies that do not require individual applications, nor are certificates of insurance issued to those covered
blanket policies
a disability policy that may be written to cover passengers on a common carrier, an employee group, student group, debtor group or sports team.
blanket policy
True / False: Health insurance underwriters may discriminate based on an applicant’s health history.
True
An application must be ________ and will become a part of the policy when?
in writing / when issued
If an application is approved and a policy is issued, the producer must collect the _____ along with a statement of ____________
premium, statement of continued good health
Health insurance underwriters often order an ____________ report in order to determine an applicant’s current medical condition.
attending physician’s
Issuing a ________ starts coverage right away if all conditions have been satisfied.
conditional receipt
Mandatory provisions such as grace period protect the _______. Optional provisions, such as probationary periods, protect the _________
insured, insurance company
Except for fraud, health insurance policies are incontestable after they have been in force for ____
2 years
True or False; the probationary period is different from the time limit on certain defenses provision (incontestability)
True
The max. probationary period is usually ______ and the incontestability provision is usually _______
12 months / 2 years
Under this clause, the company may contest a claim for the first 2 years, but not thereafter unless i can prove fraud.
Incontestability clause
The incontestability clause protects whom?
insurance company
Insurance companies are reluctant to charge fraud since is requires _______ and is difficult to prove.
proof of intent
The time limit of certain defenses clause is another name for what?
The incontestability clause
If a reinstatement application is required, an _____ is reinstated when the company says or after ______, whichever comes first.
insured; 45 days
When an insured is reinstated, a ______ probationary period starts for ______ only
45 day, sickness
If no reinstatement application is required, an insured is reinstated effective when?
upon payment of the late premium to either the company or the producer.
Under what provision, if a claim is not paid immediately the claimant must wait how many days before filing a lawsuit for failure to pay?
legal actions, 60 days
Health insurers should pay individual claims as soon as possible, as specified in what provision?
Timely payment of claims
provision that allows the claims dept time to investigate. (Max time ____ days.)
timely payment of claims, 60
Claims may be denied if they occur after _______
policy expiration
Insurers do not have to pay _______ claims
unsubstantiated
After receipt of notice of a claim the insurer must do what?
Send out claim forms
If claims forms are not provided by the insurer within the time frame required, the insured can do what?
Submit proof of loss in writing
Which provision allows the insurer to change the benefit amount or premium should the insured change occupations during the coverage period?
change of occupation
Under the misstatement of age clause, is is the _____ that are adjusted, not the ______
benefits / premiums
Principle that prevents an insured from collecting more than they actually lost
principle of indemnity
A clause found in most disability income policies which requires insurers to share a claim proportionately
insurance with other insurers
If an insured pays the overdue premium on a lapsed health insurance policy and does not hear from the insurer, the insured is automatically reinstated in ________
45 days
What provision states that if an insured has a claim in the grace period, the insurer may subtract the overdue premium for the amount of the claim paid.
unpaid premium provision
under the unpaid premium provision, if an insured has a claim in the grace period, the insurer may subtract the overdue _______ from the amount of the claim paid.
premium
A cancellable health insurance policy may be canceled by whom?
The insurer or the insured
______ must be refunded to an insured who was canceled midterm.
unearned premium
a _____ refund is sent when the company cancels. A _____ refund is sent when the insured cancels.
pro-rata / short-rate
What effect will canceling have on an unpaid claim.
no effect
Which provision would allow an insurer to deny coverage if the insured became injured or died while committing a felony?
illegal occupations
a health insurance policy that can be non-renewed by the insurer at the end of any policy period
optionally renewable
a policy where the insurance company cannot change the coverage or the rates, but it does not have to offer renewal
noncancellable policy
With a noncancellable policy the insurance company does not have to offer renewal but it cannot change ____ or ____
rates / coverage
if a policy is _____ and ______ the company cannot change anything and it must offer renewal
noncancellable and guaranteed renewable
a policy where the insurance company cannot change the coverage, but it can change the rates by class (not individually)
guaranteed renewable
a guaranteed renewable policy is renewable at the option of the ______ (by paying the premium) up to a certain age (usually ____), but the insurer may change ____ by class.
insured, 65, rates
a policy that must be renewed if the insured meets the specified conditions
conditionally renewable
the typical definition of total disability on a disability income policy states that the insured is considered to be totally disabled if the insured cannot perform his or her own job for ________, and any job that the insured is suited to do thereafter.
2 years
Those collecting disability income insurance benefits may be required to take a physical exam every _____ at the _____ expense in order to prove they are still diabled.
6 months, insurers
Those who suffer from ____ disabilities, such as loss of eyesight, are not required to take a physical exam in order to prove they are still diabled.
presumptive
The primary purpose of ______ is replacement of lost wages, should the insured become disabled
disability income insurance
The most important factor to consider when writing disability income insurance is what?
The amount of wages that could be lost
On a disability income policy , a longer elimination (waiting) period will do what to the premium.
reduce
Like a deductible, but stated in terms of time rather than in dollars
waiting period
in disability the Waiting period starts when?
onset of disability
Short-term disability policies have ____ elimination and benefit periods than long-term disability
shorter
If a disability income policy has a 7 day elimination period and the insured is sick for 15 days, the insured would receive benefits for how many days.
8 days
The probationary period starts when?
When the policy is first issued.
a prior injury that reoccurs again. The elimination (waiting) period is _____
recurrent disability, waived
a disability that never goes a way
residual
Residual coverage pays the difference between what?
What you used to make and what you can make now.
If a disability policy contains an ______ means clause, there is no coverage if an insured is injured doing what?
something they meant to do
If a disability contains this clause, coverage applies as long as the injury was unintentional and unforseen.
accidental bodily injury clause
a rider on a disability income policy that allows the insured to purchase additional coverage at certain intervals, regardless of health.
guaranteed purchase option
a rider on a disability income policy that is designed to keep the policy limit up with the rate of inflation
cost of living
group disability income is written to cover a ____ of an employee’s gross earned income
percentage
GROUP disability income is written to cover only a percentage of an employee’s ________
percentage
INDIVIDUAL disability income is written to cover only a percentage of an insured’s ________
net (after tax) income
indemnifies the business for the loss of services of a key employee due to disability
key person
will cover the ongoing expenses of a self-employed person, such as rent or salaries, while the sole proprietor is disabled. _____ are tax deductible, but ______ are taxable
business overhead insurance ; premiums; benefits
a disability buy/sell policy could be structured to pay a monthly benefit to a coporation for up to ______ while waiting to see if a disabled person recovers. If not, then _____ is paid as a partnership buyout.
1 year, lump-sum
OASDHI stands for what
old age, survivors, disability and health insurance
acronym for social security
OASDHI
social security disability income benefits are ____ to obtain than benefits provided by private disability income insurers
harder
To have a fully insured status under social security for disability benefits, a worker must have contributed to social security for at least _____ quarter ( ___ years)
40 / 10
a disabled person must have what in order to be eligible for social security disability benefits
fully-insured status
The waiting period for social security disability benefits is ___
5 months
Social security disability benefits require that a disabled person cannot _____ and that the disability is expected to last _____ or ______
work ANY job; at least 1 year; result in death
Major medical insurance is considered to be a ______ plan
comprehensive
The purpose of _______ is to eliminate unnecessary treatment, thereby _____ premiums.
preadmission certification / lowering
Medical expense policies are required to cover the insured’s newborn child from _____
the moment of birth
On medical expense insurance, the scheduled benefit limit shows _____________.
The most that the insurer will pay
The term health care service organization (HCSO) may be used in place of the term _______
HMO - health maintenance organization
makes referrals, authorizes treatment, provides general care, and acts as the gatekeeper between members and their healthcare providers
HMO Primary Care Physician
Health care service organizations (HCSOs) stess _________
preventive care
HCSO’s pay reimbursements directly to the _____, not to the _____
provider / insured
When a doctor works in an independent group clinic on behalf of an HCSO is is known as what
a group practice model
HMO primary care physicians may include thos in family practice, pediatrics, obsterics, and gynecoogy, but not _____
internists
True / False; HMO’s usually dont cover adult hearing exams as a preventive care service
True
Except for ______, HMO must be provided in-network
emergencies
HMOs cover out-of-network emergency treatment without ________, although providers must ______ after the treatment has been rendered.
pre-authorization, notify the HMO
The term managed care includes medical services provided by HMO’s, PPOs and POS (point-of-service) plans, but does not include _______.
Indemnity plans
medical expense claims are often paid on a _______ basis
fee for service
______ policies often have a comprehensive calendar year deductible.
major medical expense
In utilization management, pre-certification is different than a concurrent review because ______ is done prior to treatment.
pre-certification
______ expense plans cover in-hospital only, with first dollar coverage. There is no ______ or ______ but coverage is subject to ______ (maximum) limits
Basic Medical, deductible, coinsurance, inside
_______ and _________ plans have deductibles and coinsurance requirements.
Major medical, comprehensive major medical (not basic)
The stop loss feature on a major medical policy applies after the insured ________.
pays the deductible
The stop loss feature, limits the amount of _______ the insured has to pay on a large claim
coinsurance
Medical expense policies are usually written as _______ which means the company can cancel at anytime as long as it gives _________
cancellable, advance notice
medical expense policies usually contain a _______ period that applies to pre-existing conditions, meaning they wont be covered if…. _____
probationary, they occur during this period
limits the total amount the family must pay during the year no matter how many family members become sick or injured
family deductible
assignment of benefits provision Facilitates claims handling by allowing the insurer to pay benefits directly to ______
the provider
When calculating how much the company will pay on a claim, always subtract the _______, first then apply the ______ percentage
deductible, coinsurance
PPO subscribers who go out of network for services will receive _______ benefits
reduced
To encourage an insured who is covered by POS plan to seek coverage in network, out of network coverage is often subject to _________ deductibles
higher deductibles
on medical expense plans a mandatory _________ requirement will result in fewer claims
second opinion
a carry-over deductible applies to claims that occur during _________ of the calendar year.
the last 3 months
the carry over from a carry over deductible carries over and applies to the next year’s ________
deductible
on noncontributory group plans ____ % of eligible employees must enroll.
100
On contributory group plans, usually ____ % of the eligible employees must enroll.
75
group participation requirements are designed to help prevent _____
adverse selection
a group insurance contract is between the _____ and the _______
employer, insurance company
In group insurance, the employer is issued a ______ policy and employees are issued individual ________
master policy, certificates of insurance
The state in which a group contract is ________ is generally held to have jurisdiction over all certificates of insurance issued under the contract.
delivered to the policyholder
Group underwriting takes into consideration the ______ of the group, the _____ of the group, and ______ factors.
age, health, persistency
Group coverage must be written for the benefit of _________ and cannot discriminate in favor of ________ workers
employees, highly paid
although there are strict regulatory requirements related to what an insurer can and cant do in regard to small group Insurance, an insurer ______ legally nonrenew or cancel a small group plan if the employer _______________.
can; stops paying the premium
offers group coverage employers in the same industry
METs (multiple employer trusts)
association group insurance has higher ________ than other types of group health insurance and is more subject to ________
administrative costs; adverse selection
dependents are elibible to enroll in a group plan when an employee _______
becomes eligible to enroll
