Pre-Class Glossary

Question 1

Producer

Answer 1

Another name for a licensed agent (that’s soon to be you!). An agent “produces” new business for an insurance company that a customer “consumes.”

Question 2

Resident Producer

Answer 2

An agent who holds an insurance license in the state in which they live. (You will get your licensed for the state of PA!)

Question 3

Non-Resident Producer

Answer 3

An agent who is licensed in another state besides the state they live in known as their resident state.

Question 4

Annual Enrollment or Election Period (AEP)

Answer 4

the time of year that individuals across the country can sign up for, change, or disenroll from an insurance plan. The AEP runs from October 15 to December 7 each year

Question 5

Insurer

Answer 5

Any insurance company (EXs: Optum, United Healthcare)

Question 6

Insured

Answer 6

The person covered by an insurance policy. (Tip: the ending has an “ED” like the name of a person is “Ed.”)

Question 7

Deductible

Answer 7

The amount the insured pays for covered health care services before your insurance plan starts to pay. After you meet your deductible, you usually pay only a copayment or coinsurance.

Question 8

Coinsurance

Answer 8

The amount an insured must pay at all times to satisfy a claim after the insurance has paid.

Question 9

Beneficiary

Answer 9

The receiver of insurance policy benefits. In other words, the person who would receive the “pay out/benefits” from the insurance company. (EX: if a parent were to pass away, typically the child- “beneficiary”- receives life insurance money because the parent had a life insurance policy.)

Question 10

Assignment of Benefits

Answer 10

Tells insurance company what they must pay the doctor/hospital. What your insurance company will cover on a medical bill.

Question 11

Benefit Period

Answer 11

the time during which insured is receiving benefits.

Question 12

Premium Mode

Answer 12

How often an insured pays their premium, can be weekly, monthly, quarterly, etc.

Question 13

Appointments

Answer 13

When an insurance company aligns with an agent to sell their products. Appointments are filed with the State Department of Insurance.

Question 14

Right to Examine (Free Look)

Answer 14

The period of time a new insured has to return the policy for a full refund.

Question 15

Grace Period

Answer 15

The period of time an insured has to make a premium payment past their due date

Question 16

Coordination of Benefits

Answer 16

When 2 or more insurance coverages work together to ensure they do not duplicate benefits.

Question 17

Contributory

Answer 17

You pay part of the premiums.

Question 18

Non-Contributory

Answer 18

You pay none of the premium.

Question 19

Fully Contributory

Answer 19

You pay all the premium.

Question 20

Pre-Existing Conditions

Answer 20

An illness or disease you may have had prior to applying for new insurance coverage.

Question 21

Pre-Existing Condition Exclusion

Answer 21

When a pre-existing condition is not covered for a certain period of time on new insurance coverage.

Question 22

Adverse Selection

Answer 22

When an insurance company covers someone who has a lot of risk or pre-existing conditions.

Question 23

Health Maintenance Organization (HMO)

Answer 23

Health care plan stressing preventive health care. Persons generally enroll voluntarily by paying a fixed fee periodically. (EX preventative care is a yearly physical that comes as a standard part of your insurance plan but you must go to a doctor that is within your network).

Question 24

Preferred Provider Organizations (PPO)

Answer 24

A collection of providers that offer services at prearranged discount prices. You pay for each service, rather than the service being apart of your plan like an HMO. (EX a yearly physical at a set rate is not included in this plan but you are not required to get a physical.)

Question 25

Risk

Answer 25

The potential for loss (EX: The car you are driving each day – You take a risk driving it)

Question 26

Hazard

Answer 26

A condition or situation that creates or increases a chance of loss (EX: a patch of ice on the road while driving)

Question 27

Peril

Answer 27

Something that can cause a financial loss, (EX: the car (risk) sliding on the ice (hazard) and slamming into a tree (peril)).

Question 28

Loss

Answer 28

The unintentional decrease in the value of an asset due to peril (the injuries to the driver and damage to the car that will cost money to fix.)

Question 29

Indemnity

Answer 29

Insurance company paying money to treat injuries and repair damaged property (EX: the insurance company “indemnified” the driver by paying the car repair bill.)

Question 30

Insurable Interest

Answer 30

Having a vested interest in someone surviving (EX: a child has insurable interest in their parent, a business partner has insurable interest in another business partner, but people who are unrelated or uninterested in each other in any way do not.)

Question 31

Law of Large Numbers

Answer 31

Basic principle of insurance that the larger the number of individual risks combined into a group, the more certainty there is in predicting the degree or amount of loss that will be incurred in any given period.

Question 32

Morbidity

Answer 32

The expected amount of sickness in a large group.

Question 33

Mortality

Answer 33

The expected amount of death in a large group.

Question 34

Representation

Answer 34

Stating what you think is true on an insurance application.

Question 35

Misrepresentation

Answer 35

Lying on an application.

Question 36

Concealment

Answer 36

Purposefully hiding the truth on an application.

Question 37

Fraud

Answer 37

Intentionally lying or hiding the truth in order to cheat another party out of something that has economic value.

Question 38

Underwriter

Answer 38

An insurance company employee that signs and accepts liability under an insurance policy, thus guaranteeing payment in case loss or damage occurs.

Question 39

Medicare

Answer 39

Federally sponsored health insurance and medical program; administered under provisions of the Social Security Act.

Question 40

Medicaid

Answer 40

Provides medical care for the needy under joint federal-state participation.

Question 41

Stop-Loss (Out-of-Pocket Maximum)

Answer 41

The maximum amount an insured will pay before the insurance starts to pay everything 100%.

Question 42

Medicare Part A

Answer 42

Covers hospital charges.

Question 43

Medicare Part B

Answer 43

Cover’s doctor’s charges.

Question 44

Medicare Part C

Answer 44

An HMO or PPO type coverage, offered by private insurance companies.

Question 45

Medicare Part D

Answer 45

Drug Coverage.

Question 46

Medicare Supplements

Answer 46

Private Insurance plans that coordinate with Medicare Parts A & B to pay costs they don’t cover.

Question 47

Long-Term Care

Answer 47

Insurance for people who need assistance for activities of daily living, such as dressing, eating, bathing.

Question 48

Claims Experience

Answer 48

The number of, and how often, a person or group files claims.