Alaska Life & Health key terms

A license issued by the Alaska Division of Insurance that authorizes a person to solicit, negotiate, or sell insurance in the state. Alaska requires a prelicensing course, a passing exam score, a background check, and payment of licensing fees.

The written authorization an insurer files with the Alaska Division of Insurance giving a licensed producer authority to represent that insurer and sell its products. A producer may hold appointments with several insurers but must be appointed before soliciting business.

A producer's legal obligation to hold money received from clients or insurers, such as premiums, in a trust capacity and to account for and remit those funds promptly. Commingling premium money with personal funds is prohibited.

A financial, blood, or legal relationship such that one person benefits from another's continued life or suffers a loss from that person's death. It must exist when a life policy is purchased, or the contract is void.

An insurance contract in which the amounts exchanged by the parties are unequal and depend on chance. A small premium may buy a large benefit, or the insured may pay premiums and receive nothing.

The principle that both parties to an insurance contract must deal honestly and disclose material facts. Insurers rely on the applicant's truthful answers, and concealment or material misrepresentation can void coverage.

The tendency of people with greater-than-average risk of loss to seek or keep insurance more actively than low-risk people. Insurers counter it through underwriting, waiting periods, and policy exclusions.

A receipt given when an application and initial premium are submitted, providing temporary coverage that takes effect only if the proposed insured meets the insurer's underwriting requirements on the date specified in the receipt.

A membership organization that stores coded medical and lifestyle information reported by participating insurers. Underwriters may use it as an alert to investigate further, but it cannot be the sole basis for declining an application.

A beneficiary distribution method in which a deceased beneficiary's share passes to that beneficiary's own descendants, preserving the family branch's portion of the death benefit.

A beneficiary whose right to the policy proceeds the policyowner may change or cancel at any time without that beneficiary's consent. Most consumer life insurance policies name revocable beneficiaries.

Coverage that pays a death benefit only if the insured dies during a stated period. It builds no cash value, provides no permanent protection, and generally offers the lowest premium per dollar of coverage.

Permanent coverage with level premiums, a guaranteed death benefit, and a guaranteed cash value that grows over time. The policy stays in force as long as required premiums are paid.

Permanent, flexible-premium coverage in which the insurer credits interest to a cash value account and deducts monthly cost of insurance and expense charges. The owner may adjust premium payments and the death benefit within limits.

A period after policy delivery during which the owner may cancel the policy and receive a full premium refund. Alaska law sets the minimum length for individual life policies, and the policy must state it.

A provision stating that after the policy has been in force for a set period, generally two years, the insurer cannot rescind coverage or deny a claim because of misstatements in the application; nonpayment of premium may still be contested.

Choices available when a cash-value life policy lapses, allowing the owner to receive the accumulated value instead of losing it: typically cash surrender, reduced paid-up insurance, or extended term insurance.

A rider that waives premiums due while the insured is totally disabled, usually after a waiting period, keeping the policy in force without further payment during the disability.

A rider that lets the policyowner receive part of the death benefit early when the insured is diagnosed with a terminal or other qualifying illness, with the remaining benefit reduced accordingly.

A contract with an insurer that accumulates money and then pays it out over time, usually for retirement. It is designed to liquidate principal rather than create an estate and may be fixed, indexed, or variable.

The process of converting an annuity's accumulated value into a stream of regular payments, which may last for a set number of years or for life and may continue to a survivor.

A fee an insurer deducts when an annuity or cash-value life policy is cashed out during the early years of the contract, typically declining to zero over a schedule of years.

A life policy that fails the seven-pay test because it is funded too quickly. It loses favorable tax treatment: loans, withdrawals, and surrenders are taxed as income first and may carry a 10% penalty before age 59 and a half.

A tax-free transfer of cash value from one life insurance policy or annuity contract to another under Internal Revenue Code Section 1035, deferring gain so it is not currently taxed.

A business arrangement in which co-owners or the business entity agrees to buy a departing owner's share at death, disability, or retirement. Life insurance is often purchased to fund the purchase.

Coverage issued to an employer or other group under one master policy, insuring eligible members and usually providing term protection. Individual evidence of insurability is often waived for eligible members who enroll during the enrollment period.

A group insurance plan in which the employer or sponsor pays the entire premium and covered members pay nothing. Typically all eligible members must be covered, and participation requirements are stricter.

The amount the insured must pay out of pocket for covered services each year before the health plan begins paying. Deductibles are usually higher on plans that charge lower premiums.

The share of covered costs, stated as a percentage, that the insured pays after the deductible is met. A common arrangement is 80/20, meaning the insurer pays 80% and the insured pays 20%.

A reimbursement benchmark based on the prevailing charges for a procedure in a geographic area. Charges above the URC limit may not be paid in full by the health plan.

The waiting period, measured in days of disability, that must pass after a disability or long-term care need begins before benefits start to be paid.

A definition of disability that treats a person as disabled if unable to perform the duties of their own occupation, even if other work is available. It favors claimants more than an any-occupation definition.

Basic self-care tasks such as bathing, dressing, eating, toileting, transferring, and continence. Long-term care policies commonly begin paying benefits when the insured cannot perform a set number of ADLs.

The federal health insurance program for people age 65 and older and for certain disabled individuals, divided into Part A hospital coverage, Part B medical coverage, Part C Medicare Advantage, and Part D drug coverage.

A joint federal-state program that pays medical and long-term care costs for low-income people. It is the primary payer of nursing home care for those who qualify financially.

Rules that determine the order in which two or more health plans pay when a person is covered by more than one, preventing total payments from exceeding the actual cost of care.