CA Life & Health flashcards
CA 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.
- California Insurance Commissioner
- Elected statewide official serving a four-year term who heads the California Department of Insurance, enforces the Insurance Code, issues producer licenses, and may fine, suspend, or revoke licenses.
- Continuing education requirement
- California life agents must complete 24 hours of approved continuing education every two-year license term, including at least 3 hours of ethics, before the license can be renewed.
- Fiduciary duty of producer
- Premiums and funds a producer collects for an insurer or client must be held in trust and never commingled with personal funds; misuse is both a licensing violation and a breach of trust.
- Rebating
- Offering a buyer any inducement not stated in the policy, such as cash, gifts, or paying part of the premium, to encourage the purchase of insurance; it is illegal in California.
- Twisting
- Misrepresenting the terms of a policy or using misleading comparisons to induce a policyholder to lapse, surrender, or replace existing coverage, which is a prohibited unfair trade practice.
- Free look period (life)
- California law gives the policyowner 10 days after delivery of an individual life insurance policy to return it for a full refund of premium paid.
- Guaranty association coverage limits
- California's life and health guaranty association pays up to $250,000 for a life death benefit, $100,000 for cash surrender value, $250,000 for annuity present value, and $100,000 for health benefits.
- Pure versus speculative risk
- Pure risk presents only the chance of loss and is insurable. Speculative risk presents the chance of either gain or loss and is not insurable.
- Insurable interest (life)
- A financial or emotional interest in the continued life of the insured that must exist when the application is signed, or the life insurance contract is not legally enforceable.
- Adhesion contract
- An insurance policy drafted by the insurer and offered to the applicant on a take-it-or-leave-it basis; ambiguous wording is generally construed against the insurer.
- Adverse selection
- The tendency of people with greater-than-average risk to buy or keep insurance; insurers control it through underwriting, exclusions, waiting periods, and risk classification.
- Reinsurance
- The transfer of risk from a primary or ceding insurer to a reinsurer; the retention is the portion of risk the ceding insurer keeps for its own account.
- Incontestability clause
- After a life policy has been in force for two years from issue, the insurer cannot contest the validity of the contract except for nonpayment of premium.
- Nonforfeiture options
- When a whole life policy is surrendered or lapses, the owner may take the cash surrender value, reduced paid-up insurance of a smaller face amount, or extended term insurance.
- Waiver of premium rider
- A rider that waives premium payments while the insured is totally disabled, typically after a waiting period, keeping the policy and its cash value in force.
- Universal life insurance
- Permanent coverage with flexible premiums and an adjustable death benefit; the cash value grows at a current interest rate while mortality and expense charges are deducted monthly.
- Variable life insurance
- A permanent policy whose cash value is invested in separate-account subaccounts and fluctuates with market performance; it is a security requiring a life license, FINRA registration, and a prospectus.
- Modified endowment contract
- A life policy that fails the seven-pay test; loans and distributions are taxed gains-first and a 10% penalty applies to amounts taken before age 59 1/2.
- Per stirpes beneficiary
- A designation that splits a deceased beneficiary's share among that beneficiary's descendants; per capita instead divides the proceeds equally among living named beneficiaries.
- Settlement options
- The ways an insurer may pay a death benefit: lump sum, interest only, fixed period, fixed amount, life income, or life income with a guaranteed period.
- Exclusion ratio
- The percentage of each annuity payment that is a tax-free return of the investment in the contract, calculated as basis divided by expected return; the rest is taxable.
- Indexed annuity
- A fixed-type annuity that credits interest based on an external market index, subject to a participation rate, a cap on gains, and a floor that protects against negative returns.
- Variable annuity
- A security-based annuity whose contract values are held in separate accounts and fluctuate with subaccount performance; a prospectus must be delivered and the producer must hold a FINRA registration.
- Annuitization
- The payout phase of an annuity in which the accumulated value is converted into a scheduled income stream payable for life, for a set period, or a combination of both.
- Surrender charge
- A fee charged for withdrawing more than the permitted free-withdrawal amount during the early contract years; it typically grades down annually until it disappears.
- Joint and survivor annuity
- A payout option that continues income as long as either of two named annuitants is alive, often with a reduced payment after the first annuitant dies.
- Coinsurance
- The share of covered expenses, stated as a percentage, that the insured pays after the deductible is satisfied, while the insurer pays the remaining percentage.
- HMO gatekeeper model
- An HMO arrangement requiring each member to choose a primary care physician who coordinates all care and must authorize referrals before the member sees a specialist.
- COBRA continuation
- A federal law letting qualified beneficiaries of employers with 20 or more employees keep group health coverage for 18 months, 29 months if disability occurs, or 36 months for dependents.
- Own-occupation definition
- A disability policy standard that pays benefits when the insured cannot perform the duties of their own specific occupation, usually for a limited period after disability begins.
- Medicare Part A
- Hospital insurance covering inpatient hospital stays, skilled nursing care following a hospital stay, hospice, and some home health; it is premium-free for people with 40 quarters of covered work.
- Long-term care benefit trigger
- Long-term care benefits become payable when the insured cannot perform two of six activities of daily living without help, or has a severe cognitive impairment.