CIC Life & Health key terms

A financial or legal stake in a person or property such that loss or damage would cause genuine hardship. For life insurance it must exist at application; for property it must exist at time of loss.

The person, entity, or trust named in a policy to receive death proceeds. Primary and contingent designations determine payment order, and the designation generally overrides a will.

Two methods for dividing proceeds among descendants. Per stirpes splits a deceased beneficiary's share among that beneficiary's heirs; per capita divides equally among surviving named beneficiaries only.

Guaranteed choices available when a cash-value policy lapses or is surrendered, letting the owner keep some value through reduced paid-up insurance, extended term insurance, or cash surrender.

The savings element inside permanent life insurance that grows tax-deferred and belongs to the policyowner. It supports loans, surrenders, and nonforfeiture options during the policy's life.

A borrowing of available cash value from the insurer, secured by the policy. Unpaid interest is added to the debt and reduces proceeds or surrender value if not repaid.

A stated period after a premium due date, commonly 31 days, during which coverage stays in force. A death during the grace period still pays, with overdue premium deducted.

A policy right letting an owner restore lapsed coverage by paying overdue premiums with interest and providing proof of insurability, usually within a set window such as three to five years.

A provision barring the insurer from contesting the policy for misrepresentation after it has been in force a stated period, typically two years from issue. Fraud and nonpayment are exceptions.

An optional provision that borrows from cash value to pay a premium not paid by the end of the grace period, preventing unintended lapse without action by the owner.

The ways an annuitant receives accumulated funds: life only, life with period certain, joint and survivor, or a fixed period or amount. Each choice trades income size against guarantees.

Two phases of an annuity. During accumulation, contributions grow tax-deferred; at annuitization, the accumulated value converts into a stream of periodic payments.

A fee charged for withdrawing more than a permitted free amount from a cash-value contract or annuity during early years, often declining over a schedule of seven to ten years.

The insurer's evaluation of risk to decide whether to accept an applicant and at what rate class. It weighs health, occupation, avocations, financial capacity, and prior insurance history.

A contract among business owners or with the business requiring a departing owner's interest to be purchased at a set price or formula, commonly funded with life or disability insurance.

Coverage bought by a business on an essential employee whose death or disability would cause financial loss. The business owns the policy, pays premiums, and receives proceeds.

Two buy-sell funding structures. In a cross-purchase, each owner buys insurance on the others and buys out personally; in an entity purchase, the business owns the policies and redeems the interest.

Disability coverage that reimburses a business for fixed operating costs such as rent, utilities, and payroll while the owner is disabled, usually for a limited benefit period.

An arrangement where an employer and employee share the cost and benefit of a life policy on the employee. The employer typically recovers its outlay from cash value or proceeds.

An employer-paid life insurance benefit for selected executives, often structured under tax rules that let the employer deduct the premium while the executive owns the policy and reports it as income.

Rules determining which of two or more health plans pays first when a person is covered twice, preventing total reimbursement from exceeding the actual expense.

Order-of-payment standards, including birthday rules for dependent children and Medicare secondary payer rules, that decide which plan pays first and which considers remaining balances.

The amount a member pays before benefits begin, and the annual cap on covered in-network cost sharing after which the plan pays most or all covered expenses.

The share of covered expenses split between insurer and insured after the deductible, commonly expressed as a percentage such as the plan paying 80 percent.

A benchmark of prevailing fees for a service in a geographic area, used by many plans to limit reimbursement. Charges above the benchmark may fall to the member.

Delivery systems such as HMO, PPO, and POS that use networks and care management to control cost. Network status determines whether referrals are needed and how claims are paid.

Coverage replacing part of earned income when illness or injury prevents work. Definitions of disability, elimination periods, and benefit periods shape how much and how long it pays.

Two disability definitions. Own-occupation pays when the insured cannot perform their own job; any-occupation pays only when unable to work in any job suited to their training.

The waiting time after a disability begins before benefits start, functioning like a deductible measured in days. Longer periods lower premium and shift early costs to the insured.

A federal right letting qualified beneficiaries keep group health coverage after a qualifying event, generally up to 18 months, by paying the full premium plus an administrative charge.

Federal standards for employer benefit plans covering reporting, disclosure, fiduciary duties, and claims procedures. They shape how group life and health plans are documented and administered.

Coverage issued to an employer or association covering a class of members under one master contract, with simplified underwriting, low cost, and coverage that usually ends with employment.

A group or individual policy right allowing the insured to change coverage, such as group term to individual permanent insurance, without new evidence of insurability within a stated window.

Incurred losses and loss adjustment expense divided by earned premium. Regulators and managers use it to judge pricing adequacy and profitability before other expenses.

The expense ratio compares underwriting expenses to written premium; adding it to the loss ratio gives the combined ratio, where a result above 100 indicates an underwriting loss.

Liabilities an insurer records for obligations already incurred, such as unpaid claims, unearned premium, and future policy benefits. They measure money owed, not cash on hand.

Insurance purchased by an insurer to transfer part of its risk to another carrier, supporting capacity and stability. Treaty and facultative forms allocate losses between ceding and assuming companies.