Arkansas Life & Health flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insurable interest

A legal right or relationship such that the policyowner benefits from the insured's continued life and would suffer financial loss from the insured's death.

Utmost good faith

Insurance doctrine requiring both insurer and applicant to deal honestly and disclose material facts; concealment or material misrepresentation can allow rescission or denial.

Adhesion contract

A contract drafted by one party, the insurer, and presented to the other on a take-it-or-leave-it basis; ambiguities are construed against the drafter.

Aleatory contract

An insurance contract in which the amounts exchanged by the parties are unequal and depend on an uncertain event, such as a covered loss.

Offer and acceptance

In insurance, the application usually is the offer and the policy issuance or conditional receipt can be acceptance; both are required for a valid contract.

Fiduciary duty

A producer's obligation to hold premiums and funds in trust for the insurer or insured, remit promptly, and avoid commingling or misuse.

Errors and omissions

Professional liability coverage that protects an insurance producer from claims arising from negligent acts, errors, or omissions in selling or servicing policies.

Apparent authority

Authority a producer appears to have because of the insurer's words or actions, even if not expressly granted; the insurer may be bound.

Cash value

The savings component of permanent life insurance that builds over time and is available through surrender, policy loan, or nonforfeiture options.

Universal life

Permanent life insurance with flexible premiums and an adjustable death benefit; cash value accumulates subject to interest and cost-of-insurance charges.

Variable life

Permanent life insurance whose cash value is invested in separate subaccounts; it is a security and requires both insurance and securities licensing.

Nonforfeiture options

Choices available when a permanent life policy is surrendered or lapses, including cash surrender, reduced paid-up insurance, and extended term insurance.

Waiver of premium

A rider that waives premiums while the insured is totally disabled, usually after a waiting period, keeping the policy in force.

Guaranteed insurability rider

A rider allowing the insured to buy additional coverage at specified ages or events without proving insurability, at stated rates.

Incontestability clause

A life insurance provision preventing the insurer from contesting the policy for misrepresentation after it has been in force for a stated period, commonly two years.

Annuity annuitization

The process of converting an annuity's accumulated value into a series of periodic income payments, often for life or a stated period.

Deductible

The amount the insured pays out of pocket for covered services before the health insurer begins paying its share, subject to policy terms.

Coinsurance

The percentage of covered health expenses the insured pays after the deductible; the insurer pays the remaining percentage up to the out-of-pocket maximum.

Out-of-pocket maximum

The cap on covered in-network costs an insured pays in a benefit period, after which the health plan pays covered expenses at the stated level.

HMO

A managed care plan that generally requires members to use network providers and obtain referrals for specialists, often with copayments and no deductible.

PPO

A managed care plan that contracts with network providers and pays more when members use them, while allowing out-of-network care at higher cost.

Coordination of benefits

Rules that determine which health plan pays first when an insured is covered by more than one plan, preventing duplicate payment.

Elimination period

The waiting period after a disability or long-term care event begins before benefits become payable under the policy.

COBRA

A federal law allowing qualified beneficiaries to continue group health coverage for a limited time after a qualifying event, usually at their own expense.

Arkansas Insurance Department

The state agency that regulates insurers, producers, and insurance transactions in Arkansas and enforces the Arkansas Insurance Code.

Arkansas producer license

Authority granted by the Arkansas Insurance Department to sell, solicit, or negotiate insurance; it must be renewed and kept current with continuing education.

Twisting

An unfair trade practice of inducing a policyholder to lapse or surrender coverage through misleading comparisons or false statements.

Rebating

An unfair trade practice of offering part of a producer's commission or an inducement not stated in the policy to persuade a buyer.

Free look period

A period after policy delivery during which the owner may return a life insurance policy for a refund, commonly at least ten days in Arkansas.

Arkansas guaranty association

A state entity that pays covered claims of policyholders of insolvent life and health insurers, up to statutory limits; it is not a sales guarantee.

Unfair claim settlement

Improper claims handling such as unreasonable delay, failure to investigate, or offering less than owed; regulated as an unfair trade practice.

Insurance fraud

Intentional deception to obtain insurance benefits or advantages, such as false claims or application misstatements; Arkansas law provides civil and criminal penalties.