AL Life & Health flashcards
AL Life & Health · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Certificate of authority
- A license issued by a state insurance department that authorizes an insurer to transact insurance business in that state; without it, the insurer is unauthorized.
- Alabama Department of Insurance
- The state agency that regulates insurers, producers, and insurance transactions in Alabama; its commissioner is appointed by the governor and enforces the Insurance Code.
- Rebating
- Offering cash, gifts, premium discounts, or other valuable inducements not stated in the policy to persuade a person to buy insurance; prohibited as an unfair trade practice.
- Twisting
- Misrepresenting or comparing a policy unfairly to induce a policyholder to lapse, surrender, or replace existing coverage; an illegal marketing practice.
- Adverse selection
- The tendency for people with higher-than-average risk to seek insurance more than low-risk people; insurers control it through underwriting, exclusions, and rating.
- Law of large numbers
- A statistical principle that predicted loss results become more reliable as the number of similar, independent exposure units increases; it underlies insurance pricing.
- Apparent authority
- Authority an agent appears to have because of the insurer's words or conduct, even if not expressly granted; the insurer may be bound by the agent's acts.
- Insurable interest
- A financial or legal interest in another person's life that supports buying life insurance; it must exist at the time of application.
- Human life value
- A method of estimating life insurance needs by calculating the present value of the insured's future earnings and contributions to dependents.
- Modified endowment contract
- A life insurance policy that fails the 7-pay test; loans and withdrawals are taxed like annuity distributions and may incur a 10% penalty before age 59½.
- Conditional receipt
- A receipt given when a premium is paid with an application; coverage may begin retroactively if the proposed insured meets the insurer's underwriting requirements.
- Per stirpes
- A beneficiary distribution method that gives a deceased beneficiary's share to that beneficiary's descendants rather than to the surviving primary beneficiaries.
- Irrevocable beneficiary
- A beneficiary whose right to policy proceeds cannot be changed or canceled by the policyowner without that beneficiary's written consent.
- Convertible term
- A term life insurance feature that allows the policyowner to exchange the term policy for a permanent policy without proving insurability, usually before a stated deadline.
- Universal life
- A permanent life insurance policy with flexible premiums and an adjustable death benefit; cash value earns interest and monthly mortality and expense charges are deducted.
- Incontestability clause
- A life insurance provision stating that after the policy has been in force for two years, the insurer cannot contest the policy for misrepresentation, except nonpayment of premium.
- Nonforfeiture options
- Choices available when a permanent life policy is surrendered or lapses: cash surrender value, reduced paid-up insurance, or extended term insurance.
- Waiver of premium rider
- A rider that waives premiums if the insured becomes totally disabled for a specified period, keeping the policy in force during the disability.
- Exclusion ratio
- The formula used to determine the tax-free portion of each nonqualified annuity payment by dividing the investment in the contract by the expected return.
- Annuitization
- The process of converting an annuity's accumulated value into a stream of income payments, typically for life or a set period.
- Transfer-for-value rule
- A tax rule that makes life insurance death benefits taxable to a buyer when a policy is sold for value, subject to exceptions such as transfers to the insured.
- 1035 exchange
- A tax-free exchange of an existing life insurance policy or annuity for a like-kind contract under Internal Revenue Code Section 1035.
- Coordination of benefits
- A health insurance provision that determines the order in which multiple plans pay claims and prevents total payments from exceeding the actual medical expense.
- Out-of-pocket maximum
- The most a health plan member pays in covered cost sharing during a benefit period before the plan pays 100% of covered expenses.
- Elimination period
- In disability income insurance, the waiting period after a disability begins before benefits are payable; it functions like a time deductible.
- Own-occupation disability
- A disability income definition that pays benefits when the insured cannot perform the duties of their own occupation, even if able to work elsewhere.
- COBRA
- A federal law requiring employers with 20 or more employees to offer continued group health coverage to qualified beneficiaries after certain events for limited periods.
- Active-at-work provision
- A group insurance eligibility rule stating that an employee must be actively working on the coverage effective date to be insured.
- Medigap open enrollment
- A six-month period beginning when a person is 65 and enrolled in Medicare Part B, during which Medigap insurers must sell a policy without medical underwriting.
- Activities of daily living
- Basic self-care tasks such as bathing, dressing, eating, toileting, transferring, and continence; inability to perform two or more can trigger long-term care benefits.
- Initial Enrollment Period
- A seven-month Medicare enrollment window for people turning 65: three months before the birthday month, the birthday month, and three months after.
- Medicare Part A
- The Medicare hospital insurance program covering inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice, and some home health services.