life and disability Flashcards
Stock companies that exist for the sole purpose of generating profits for their stockholders
non-participating companies
401 K
Portion of pre-tax salaries into investment accounts where it grows tax deferred. Employers match and investment choice is directed by employees
403 B
Public schools and non profits. Pre-tax contributions and tax deferred growth
absolute assignment
owner transfers the owners entire interest in the policy to the assignee
accelerated death benefit rider
requires the insurer to pay out part of the death benefit (~50%) if insured has a diagnosis of a particular illness likely to cause death in 12 months
accident only policies
helps pay the health care costs that result from an accident
accumulate at interest dividend
The dividends are left in a sales account to accumulate interest at a set amount specified in the policy. Dividends are not taxable, but interest is
actuary
person who tracks lifespan and chance of illness or accident based on specific factors
additional children coverage
covered from the moment of birth until 31 days, adopted children treated like newborns
additional insured term rider
whole life to insured, convertible life term riders on family members or business partners
Additional Paid up insurance dividend/Paid up additions option
Dividends used as a single net premium payment on a miniature paid up whole life policy. Automatic dividend option when no other is selected
AD&D (accidental death/dismemberment) Rider
Accidental loss of life, limb or vision. Lump sum only when medical problems (not sickness) is direct result of accident. Death within 90 days, value policy not indemnity.
AD&D specifications
1 hand, foot, or eye, =100% of capital sum. 2 hands, feet, or eyes=full pay out
Adjustable life
Components of policy is adjustable to meet needs of policy holder. Proof of insurance is required if increase in benefit is wanted
Adult disabled children
covered entire lives as long as they are incapable of taking care of themselves. proof of disability required 31 days after 18th birthday
Adverse selection
tendency that high risk people are more likely to apply for insurance than low risk people are
Agent/ producer
Will be you, acting as a legal representative for insurance company
Agent responsibilities
Explain the underwriting process to the applicant and
provide disclosures as required by law.
* If the agent makes a mistake on the agent’s portion
of the application, the agent should correct the change
and sign or initial the correction.
* Make certain that premium checks are filled out correctly,
signed, and made payable to the company, not to the agent.
* If an agent collects a premium check while out of the office, the agent should give the client a temporary hand-written receipt and then mail or a deliver an official receipt.
* Many companies require the agent to deliver a policy in
person. The reason for this is to explain the terms of the
policy and, if a policy is rated, to explain the reason why.
* Unless a conditional receipt is used, the agent should explain that the Insured will not be covered until the policy is delivered, no matter how many good faith delivery
attempts are made by the agent.
agreement
Offer + acceptance
Aleatory
agreements where the payouts to the insured depend on an uncertain event or outcome
annually renewable term
term after the level term policy where you can extend coverage without proof of insurance. premium goes up each year, max age is 65
Reentry term
two premium levels for renewal for people who can prove insurability and for people who can’t
annual stop loss limit
a measure that limits the max amount for which insurance can be responsible for in a stated time period
annuity (period) certain options
added to a straight life or joint and survivor annuity means the insurance company must continue making payments after the death of the annuitant or annuitants
assignment
having payments go directly from health care companies to the providers with the permission of the insured
assignment clause
the procedure where the transfer is accomplished
automatic premium loan rider
if policy owner doesnt pay the premium and grace period expires, the company will automatically make a loan against cash value to pay premium
average indexed monthly earnings
average earnings over time
aviation exclusion rider
excludes coverage for death while flying
Base/basic medical plans
Medical, hospital, surgical. No deductible and only covers most basic of health care needs
basic hospital policy
pays for every expense in hospital except doctors and surgeons. Daily benefit rate/dollar amount includes all except room and board
basic medical policy
non-surgical services of physicians for the treatment of accident or illness
basic surgical policy
covers the cost of surgery, including surgeons anesthesioligists, and post op care
beneficiary
person who is paid when claim is submitted
blanket policies
medical expense coverage designed to pay injuries or death associated with accidents only
Blue cross/shield
local self governing insurance providers
Covers hospital bills with Coss, doctor bills with Shield.
Fee for service plan
emphasize reduced costs through negotiation
Broker
representative of the insured, not the insurance company
buying insurance
transfer of a portion of your risk to the insurer
Buy-sell agreement/Business continuation plan
the business has the right to buy the share of the company from the deceased owners estate at an agreed upon price
cancelable policy
may be cancelled at anytime without having a reason. refund of the unearned portion of previously paid premiums is required
cancellation provision
the insured has the right to cancel the policy at any time without affecting any pending claims
cash out
taking the money nullifies the 3 year right of reinstatement privileges
cash dividend option
the company sending policy owner a check with the dividend value on the anniversary date
WHOLE LIFE POLICIES
Cash settlement option
lump sum check
cash value options
borrowing against the cash value, using a living trust, or surrendering and terminating the policy
cash value taxation
growth of money is tax deferred. if the policy lapses or is surrendered, money after that point is taxed as well as any cash value that exceeds premiums paid
DEATH BENEFIT IS ALWAYS TAX FREE
Certificate of insurance
identification card and booklet explaining the coverage
change of occupation provision
insured must notify company when occupation changes. if not reported and insured makes a claim, the company will adjust the benefits based on the already paid premium
claim form provision
the company must provide claim forms to the insured within 15 days of receiving the notification loss
COBRA
continued group coverage for former employees for specified period of time.
doesnt apply if you were fired for gross misconduct
Coinsurance
the company and the insured will share the payment of covered expenses after the deductible
collateral assignment
when a policy is transferred to a creditor and the creditor names itself as the beneficiary
combination policy
a hybrid of permanent and temporary coverage
common disaster clause
if both the insured and the beneficiary die in result of the same accident, unless the beneficiary outlives the insured by 60 days, no one gets any money
community rating
combines claims history over a class of groups that are similare in nature and may even be in a similar geographical area
comprehencive major medical plan
combination of base plan with a major medical policy
concealment
intentional nondisclosure of material facts
conditionally renewable
right to terminate policy in case of “trigger event”
conditional receipt
policy will be in effect on date of application or medical exam, whichever is later.
consideration clause
states that insured must give the premium and fill out application to be considered
consumer credit report
done without knowledge or consent of insured, 7 year time limit on financial report (10 year for bankruptcy)
consumer directed health plan
high deductible policy
pre tax advantage, plus a pre funded savings account you can use to cover the deductibles and use later on in retirement
consumer inspection report
background report, client can contact company and make corrections or request corrective investigation
contestable clause
AFTER first 2 years
incontestable if: it was an honest mistake, and if youre a life or group health insurer fraud
contingent secondary beneficiary
the one who will receive the death benefit if the primary beneficiary is no longer living at the time of the insureds death
continuous premium whole life
the default premium
contract of adhesion
non negotiable contract (take it or leave it)
contributory plan
all or part of the cost of coverage must be paid by individual group members
Conversion privilege from group to individual
New policy face value cant exceed old one
31 day grace period (60 if employees werent notified )
If insured dies during grace period death benefit still paid
term life is converted to whole life
Conversion (whole life)
proof of insurability from whole life to term life
convertible term
can turn term into whole wo proving insurability. Premium goes up
Coordination of benefits clause
if family has 2 group policies, each family member is deemed to have only one promary policy. the other spouses policy will be secondary
copay
flat dollar amount insured pays out of pocket each time service is rendered
copy of the application provision
info in the application is represenation. insurer must attach copy to group policy
cost of living rider
cost of policy may go up but so will the face value (if cost of living goes up so does the face value. Basically an increasing term policy)
critical illness policy
pays its benefit when you show youve contracted the disease. paid to you as you wish
cross purchase plans
the partners own the life insurance policies on each other
currently insured
worked less than 10 years, only eligible for survivor benefits
Declined risks
applicants who are to risky to insure
decreasing term (mortgage protection insurance)
face value decreases over time. typically used to pay off mortgage
deffered annuity
postponed payouts
deferred compensation plan
postponed payouts
deferred compensation plan
employer pays the employee in the furure for work done today
in retirement, the employee can surrender the policy and take cash value when hes in a lower tax bracket
difined benefit pension plans
guaranteed specific retirement benefit paid for by employer
defined contribution pension plans
employer contributes a specific amount each year to the plan. employee responsible for choosing the investment from choices provided
disability income insurance
