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Insurance Exam > Vocab > Flashcards

Vocab Flashcards

1
Q

Group contract

A

between an insurer and the employer

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2
Q

Keogh plan

A

a retirement plan for those who are self employed

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3
Q

Illustration

A

a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years

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4
Q

Equity indexed annuity

A

has a fixed minimum interest rate and the chance to get a higher rate of return like that of the stock market

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5
Q

Joint life policy

A

covers multiple lives and pays out when the first insurer dies

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6
Q

Exclusion ratio

A

the formula used to determine the amount of annuity distribution which is taxable

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7
Q

Coordination of benefits

A

a provision which would prevent a family from collecting for the same loss twice in a group plan

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8
Q

Profile sharing plan

A

a plan that gives employees a share in the profits of the company
- each EE receives a percentage of those profits based on the company’s earnings

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9
Q

Speculative risk

A

a risk situation that includes a chance of loss and a potential for gain
- speculative risks are non-insurable

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10
Q

Premium

A

the amount that the insured pays the insurer for the coverage period

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11
Q

The Law of Numbers

A

states the more similar risks the insurance company combines together the better they can guess approximately how many losses they will have in a given time period

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12
Q

The Doctrine of Utmost Good Faith

A

allows each party to rely on the representations made by the other party

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13
Q

Tax Sheltered Annuity (TSA or 403-B)

A

a qualified plan created for public school EEs and non-profits

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14
Q

Respite care

A

if a daughter needs a break from caring for her father her father may have coverage in his Long Term Care policy that would pay for a caregiver to come in to give her a break

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15
Q

Hospice care

A

an individual who needs terminal ill care would find this coverage provided in their Long Term Care policy

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16
Q

COBRA

A

The Consolidated Omnibus Reconciliation Act
- requires groups with 20+ EEs to offer a health insurance continuation to EEs and DEPs who become ineligible for coverage due to a QLE

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17
Q

Elimination period

A

the waiting period included in disability income policies

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18
Q

Waiting period

A

the period of time (30, 60, 90, 180 days) the insured is not eligible for benefits once they become disabled

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19
Q

Implied authority

A

an EE working for “x” insurance company doing things necessary to transact insurance that are not specified in his contract

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20
Q

ERISA

A

The Employees Retirement Income Security Act

- states that fiduciary pension plans were created for the benefit of plan participants and beneficiaries

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21
Q

Vesting

A

ownership of employer contributions

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22
Q

Foreign insurer

A

ex. an insurance company based in Utah that is selling in CA

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23
Q

Solvent insurer

A

an insurance company that has enough reserves to pay for all its liabilities

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24
Q

State insurance guarantee fund

A

provides protection to policyholders whose insurer becomes insolvent (financially impaired)
- fund only covers member insurers (licensed insurance companies)

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25
Q

Primary insurer (ceding insurer)

A

the insurance company that purchases REINSURANCE

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26
Q

Waiver of premium rider

A

will be waive the insured’s premium if the insured becomes disabled

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27
Q

Disability income rider

A

when added to a life policy - will pay a replacement of the insured’s lost income if they become disabled

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28
Q

Accidental death benefit rider

A

pays double the face amount if the insured dies in an accident
- also known as double indemnity

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29
Q

Extended term

A

a non-forteiture option that provides a new term life insurance policy with the same face amount of coverage as the original policy
- not a settlement option

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30
Q

Conversion feature

A

allows an EE to go from group coverage to an individual policy

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31
Q

Family policy

A

provides life insurance for an entire family and allows the children to convert from term to whole life coverage without a physical exam

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32
Q

Hospital confinement policy

A

pays a set amount per day if the insured is confined in the hospital

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33
Q

Corridor deductible

A

applies in a major medical policy between the basic and excess coverage

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34
Q

Major medical policies

A

include a deductible, coinsurance, and a stop loss

- first dollar coverage is NOT a feature

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35
Q

Capitation fee

A

a ‘per head’ fee that is paid to doctors that treat subscribers of HMOs
- not a feature of Major medical

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36
Q

Stop loss

A

the maximum the insured would have to pay of the coinsurance

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37
Q

Coinsurance

A

a feature of major medical insurance

  • a sharing of the loss after the deductible has been satisfied
  • usually expressed as a percentage sharing of the loss between the insurer and the insured, with the insurer paying the larger percentage (i.e. 90/10)
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38
Q

Co-payment

A

are included in HMO and PPO plans and are a fixed amount the subscriber must pay when they go to the doctor

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39
Q

Gatekeeper

A

a.k.a PCP - cannot be a specialist, they must be a general practice doctor

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40
Q

Open enrollment period

A

the time where an EE can enroll without any restrictions

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41
Q

Non-contributory group plan

A

a group contract where the ER pays 100% of the premium

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42
Q

Multiple employer trust

A

a trust that small employers join to purchase health insurance

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43
Q

Medicare part C

A

does NOT cover prescription drugs

44
Q

Medicare part D

A

covers prescription drugs

45
Q

Medicare part A

A

provides coverage for hospital services and is free for those eligible once they reach age 65

46
Q

Medicare part B

A

optional; if an eligible individual enrolls they must pay a monthly premium for the coverage
- provides coverage for doctor services

47
Q

Specified disease policy

A

policy that covers only certain dread diseases such as cancer insurance

48
Q

Preferred risks

A

receive the lowest premium charges as they pose the lowest risk to the insurer

49
Q

Insurance binder

A

always creates immediate coverage

- the main difference between a binder and a conditional receipt

50
Q

Incontestability clause

A

states that after a life insurance policy has been in effect for 2 years, it becomes totally incontestable
- very restrictive for the insurer and prevents them from contesting a claim for any reason after 2 years

51
Q

Replacement

A

when you replace your customer’s current policy with a new one and is NOT illegal
- cannot be a worse policy or higher premium

52
Q

Captive insurer

A

an insurer created by a corporation to insure its own risks

53
Q

Occupational disability income policy

A

provides coverage on and off the job

54
Q

Workers compensation policy

A

law requires the employer to be responsible for employee injury on the job regardless of fault

55
Q

Entire contract clause

A

states the application is part of the contract if attached when issued

56
Q

Deductible

A

payed by the insured

- the higher the deductible, the lower the premium

57
Q

Absolute assignment

A

a permanent transfer of ownership rights

58
Q

Alien insurer

A

an insurance company that is based in Canada and doing business in CA

59
Q

Doctrine of utmost good faith

A

states that all parties to the contract can rely upon the statement of the other party

60
Q

Concealment

A

when party fails to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision

61
Q

Key person life insurance

A

used by a business to protect themselves in case a valued employee dies
- the death benefit would be paid to the company to hire and train a replacement

62
Q

Contributory group policy

A

the premium is shared between the employer and employee

- the employee contributes toward the premiums

63
Q

Underwriting division

A

selects which risks the insurer will take on

64
Q

Morbidity table

A

contains statistical data relating to the probability of a sickness or disability occurring

65
Q

Probationary period

A

a period of time that excludes coverage for prior medical conditions that begins when a health insurance policy is brand new
- also known as pre-existing condition exclusion

66
Q

“Nolo contendere”

A

latin for no contest

- under the CIC if an applicant enters a plea of ‘nolo contendere’ they will be convicted

67
Q

Spendthrift clause

A

protects the policy proceeds from the creditors of the beneficiary
- will not apply if the proceeds are paid out in a lump sum

68
Q

Domestic insurer

A

an insurer organized in CA and selling in CA

69
Q

ERISA

A

the Federal Law that is designed to protect group plan participants, establish pension equality and mandate strict reporting and discloser requirements
- will also protect their beneficiaries

70
Q

HMOs and PPOs

A

referred to as service providers since the doctors and hospitals get paid directly for those services provided

71
Q

Miscellaneous insurance

A

ex. a movie company that is concerned about the financial loss they would incur in case of the illness of one of their staring actors

72
Q

HICAP

A

Health Insurance Counseling and Advocacy Program

  • provides free counseling to seniors on health insurance related issues
  • does NOT sell insurance
73
Q

Insurance policy

A

the written instrument in which the insurance contract is set forth

74
Q

Defined contribution plan

A

a plan in which employers make specific contributions to an EE’s retirement account

75
Q

Demutualization

A

the process whereby a mutual insurer becomes a stock company

76
Q

Loss exposure

A

any situation that presents the possibility of a loss

77
Q

Rate

A

the cost per exposure unit

78
Q

Non-guaranteed elements

A

life insurance illustrations showing premiums, values , credits or charges that are not determined at issue

79
Q

Stock insurer

A

an insurance company which is owned by individuals who purchase shares of stock in the company, share in profits in proportion to shares owned, and vote for a board of director

80
Q

Misstatement of age provision

A

if the insured lies about their age in order to obtain a lower premium, at death the insurer will pay less than the face amoutn

81
Q

Automatic premium loan

A

a rider that can be added to a cash value life insurance policy n case the insured forgets to pay their premium
- takes effect at the end of the grace period

82
Q

Binding receipt

A

provides a limited amount of coverage right away

83
Q

Conditional receipt

A

there is no coverage under a conditional receipt until all conditions are satisfied

84
Q

ROTH IRA

A

has both non-deductible contributions and non-taxable distributions

85
Q

Defined contribution

A

a qualified plan where the employer contributes a specified amount

86
Q

Annual renewable term life insurance

A

has a level face amount, but an increasing premiums

87
Q

Family life insurance policy

A

consists of whole life on one spouse and level, convertible term on the other spouse and children

88
Q

Whole life insurance

A

also known as “continuous premium” whole life insurance

89
Q

Variable life

A

a life insurance policy that allows the policy owner to “self-direct” cash values into different sub-accounts

90
Q

Guaranteed insurability rider

A

allows the insured to adjust benefits upwards at specified future option dates

91
Q

Indexed whole life policy

A

the rate of return paid on the cash value of this policy will keep up with the rate of inflation

92
Q

Variable annuity

A

if you need to multiply the value of an accumulation unit by the number of units owned in the separate account, you have a variable annuity

93
Q

Premium

A

the amount that is exchanged for coverage

94
Q

Hazard

A

something that increases the risk

95
Q

Executed

A

a policy is considered to be “executed” when coverage is bound

96
Q

Guaranteed renewal health insurance policies

A

must offer renewal and cannot change in any way, EXCEPT rates by “class” only

97
Q

Promise

A

a representation as to the future, unless it is merely a statement of an expectation or belief

98
Q

“Stop-loss” feature

A

on a major medical expense policy, a “stop-loss” feature limits out-of-pocket expenses

99
Q

Extended term

A

a life insurance non-forfeiture provision, not a rider or settlement option

100
Q

Social security offset rider

A

on a disability income policy, this rider will pay the difference between what social security pays and the insured’s actual loss of earned income

101
Q

Principle of indemnity

A

most closely associated with insurable interest

102
Q

“Prohibited” person

A

a person whose activities affect interstate commerce and who knowingly, with the intent to deceive, makes any false material statement of financial report to any insurance regulator for the purpose of influencing their actions

103
Q

Family and Medical Leave Act

A

provides certain EEs with up to 12 weeks of unpaid, job-protected leave per year for the birth and care of a newborn child, the adoption of a child, to care for an immediate family member (CH, parent, SP) with a serious health condition; or to take medical leave when the employee is unable to work due to a serious health condition

104
Q

Mutual insurer

A

owned soley by its policyholders

105
Q

Mortality table

A
  • contains statistical data related to the probability of death

Insurance Exam (2 decks)

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