CIC Life & Health flashcards

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

Level premium term

A term life policy whose premium remains constant for the coverage period. Death benefit is paid only if death occurs during the term, and no cash value accumulates.

Universal life cost of insurance

The monthly charge deducted from a universal life account value for the death benefit. It rises as the insured ages and can erode cash value until the policy lapses.

Annuity accumulation units

Units that measure the value of an annuity account during the deferral period. Their number grows with contributions and their value fluctuates with separate account performance.

Joint and survivor annuity

A payout option that continues income as long as either of two named annuitants is alive. It produces smaller payments than a single life annuity for the same premium.

Incontestability clause

A provision stating that after two years from issue the insurer cannot contest the policy for misrepresentation on the application, except for fraud or nonpayment.

Policy grace period

A period, typically 30 or 31 days after the premium due date, during which coverage remains in force. A claim paid in this period may have the overdue premium deducted.

Variable life separate account

An investment account holding variable life cash value apart from the insurer's general assets. The owner bears investment risk, and the product is sold as a security.

Entity-purchase buy-sell

A business continuation plan in which the business owns and is beneficiary of policies on each owner and uses proceeds to buy a deceased owner's interest.

Cross-purchase buy-sell

A plan in which each owner buys policies on the other owners and purchases a deceased owner's interest directly. Surviving owners receive a stepped-up basis.

Key person insurance

Coverage owned by a business on an essential employee. The business is beneficiary, premiums are not deductible, and proceeds are received income-tax free.

Section 79 imputed income

The tax rule requiring employees to report the value of employer-paid group term life coverage exceeding $50,000 as taxable income each year.

Split-dollar plan

An arrangement dividing premium cost and death benefit between an employer and an employee. The employee's share of the economic benefit is taxable annually.

Executive bonus arrangement

An employer pays premiums on a life policy owned by the employee. The premium is deductible to the business and reported as taxable income to the employee.

Business continuation valuation

The method in a buy-sell agreement for setting the purchase price, such as a fixed amount, a formula, or an independent appraisal, reviewed periodically.

Out-of-pocket maximum

The annual cap on deductibles, coinsurance, and copayments an insured pays for covered in-network services before the health plan pays 100 percent.

Coordination of benefits

Rules determining payment order when an insured has two health plans. The primary plan pays first and the secondary pays the remaining allowable balance.

COBRA continuation

A federal requirement that employers with 20 or more employees offer continued group health coverage for 18 months after termination, and up to 36 months for dependents.

Own-occupation disability

A disability definition that pays benefits when the insured cannot perform the duties of their own occupation, even if they could work elsewhere. It costs more.

Disability elimination period

The waiting period, often 90 days for long-term coverage, that must pass after disability begins before benefits are payable. Longer periods reduce premium.

HSA eligibility requirements

To contribute to a health savings account, an individual must be covered by a qualifying high-deductible health plan, have no disqualifying coverage, and not be enrolled in Medicare.

Workers compensation exclusivity

The rule making workers compensation the sole remedy for work-related injury. Employees receive medical and wage benefits regardless of fault and generally cannot sue the employer.

Medicare Part B

The portion of Medicare covering physician services, outpatient care, and durable medical equipment. It requires a monthly premium and is optional for eligible enrollees.

Property coinsurance clause

A commercial property provision requiring insurance equal to a stated percentage of value. Carrying less reduces the loss payment proportionally.

Business income waiting period

The short period, commonly 72 hours, after a covered loss during which business income loss is not paid. It functions like a deductible for time-element coverage.

CGL Coverage A

The commercial general liability coverage that pays sums the insured becomes legally obligated to pay for bodily injury or property damage caused by an occurrence.

Claims-made coverage trigger

A liability policy form that responds to claims first made or reported during the policy period, subject to a retroactive date, rather than to when injury occurred.

HO-3 special form

A homeowners form covering the dwelling and other structures on an open-peril basis while personal property is insured for named perils only.

Personal auto collision coverage

Physical damage coverage paying for damage to the insured vehicle from collision or overturn, regardless of fault, after the deductible is applied.

Reinsurance

An arrangement in which an insurer transfers part of its risk to another insurer, protecting surplus and capacity. The original insurer remains liable to the policyholder.

Agency retention ratio

A measure of book persistency: policies in force at year-end minus new policies written, divided by policies in force at the start of the year.

Commercial auto symbol 1

A covered auto designation meaning any auto, including owned, hired, and non-owned vehicles, subject to the policy's other terms and exclusions.

Underwriting function

The insurer operation that selects, classifies, and prices risks according to company guidelines, determining whether a submission is accepted, modified, or declined.