CT Life & Health key terms

An insurance company that holds a license from the state insurance department to sell insurance in that state and is subject to its solvency, rate, and market-conduct rules.

An insurer not licensed in the state, which may sell coverage there only through surplus lines producers when admitted carriers will not accept the risk; policyholders receive less state protection.

The state-issued authorization an individual or business must hold to solicit, negotiate, or sell insurance, obtained by passing a licensing examination and meeting background and education requirements.

Offering a prospect part of the producer's commission or anything of value not stated in the policy as an inducement to buy; it is an unfair trade practice and is prohibited.

A financial or love-and-affection interest that would be harmed by the death of the insured; it must exist when a life insurance application is made for the contract to be valid.

A situation that offers only the chance of loss or no loss, with no possibility of gain; dying too soon or becoming ill are pure risks that insurers are willing to cover.

The statistical principle that predicted loss results become more reliable as the number of similar exposure units increases, allowing insurers to set premiums from mortality and morbidity data.

A contract in which the amounts exchanged by the parties are unequal and depend on an uncertain event, as when a small premium buys a large death benefit.

An arrangement in which one insurer transfers part of its risk to another insurer to limit large losses and free up capacity; it does not change the original policyholder's contract.

A method of estimating how much life insurance to buy by calculating the present value of the income the insured would have earned and contributed to the family.

A method of setting a life insurance amount by adding the survivors' specific cash needs, such as final expenses, debts, income replacement, and education, then subtracting existing resources.

A chart showing the probability of death at each age for a defined population; insurers combine it with interest and expense assumptions to set life premiums and annuity payouts.

Temporary coverage for a set number of years with no cash value; it pays the face amount only if the insured dies during the term, and premiums increase at each renewal.

Permanent coverage that stays in force for the insured's lifetime, charges a level premium, and builds guaranteed cash value the owner can borrow against or receive on surrender.

Permanent coverage with flexible premiums and an adjustable death benefit; the insurer credits interest and deducts monthly cost-of-insurance and expense charges from the policy's cash value.

Permanent coverage whose cash value is invested in separate accounts chosen by the owner, so value and sometimes the death benefit rise and fall with market results; a securities license is required to sell it.

Coverage issued as one master policy to an employer or other eligible group, providing term-like benefits to members, usually with guaranteed acceptance and rates based on the group's overall risk.

A provision stating that after the policy has been in force for a set period, usually two years, the insurer cannot void the policy or deny a claim because of misstatements on the application.

A period, usually 30 or 31 days after the premium due date, during which the policy remains in force despite late payment; any premium due is deducted from a death benefit paid in that period.

Restoring a lapsed life policy by paying overdue premiums with interest and showing evidence of insurability, usually within a limited window; new contestability and suicide periods may apply.

The choices that preserve value in a whole life policy when the owner stops paying premiums: cash surrender, reduced paid-up insurance, or extended term insurance.

Money the owner borrows from a permanent policy's cash value at the interest rate stated in the contract; unpaid loan and interest are subtracted from the death benefit or surrender value.

A provision that uses available cash value to pay a premium still unpaid at the end of the grace period, preventing the policy from lapsing while sufficient value remains.

A rider that pays the policy's premiums if the insured becomes totally disabled for a stated waiting period, keeping the coverage and cash value intact without further out-of-pocket payments.

A provision allowing a terminally or chronically ill insured to receive part or all of the death benefit early; the amount advanced is subtracted from what beneficiaries receive at death.

A window after a policy is delivered, typically 10 days, during which the owner may cancel for a full premium refund for any reason; the buyer should review the contract in that time.

A contract that pays a stream of income, often for life, in exchange for premiums; it is designed to protect against outliving one's money rather than to pay a death benefit.

The phase of an annuity before income payments begin, when premiums are paid in and the account value grows through interest or investment returns, often subject to surrender charges.

The point at which an annuity's accumulated value is converted into a series of guaranteed income payments, using payout options such as life only or life with a period certain.

A fee charged for withdrawing money or canceling a contract during its early years, common in annuities and some life policies; it typically declines on a set schedule.

The calculation that determines what portion of each annuity payment is a tax-free return of the after-tax cost basis and what portion is taxable interest, based on expected return.

A tax-free transfer of cash value from one life insurance policy or annuity to another under Internal Revenue Code Section 1035, deferring gain as long as exchange rules are followed.

A life policy funded with more premium than the 7-pay test allows, so it loses favorable tax treatment: loans and withdrawals are taxed as income first and may incur a 10% penalty before age 59½.

The amount a health plan member must pay out of pocket for covered services each year before the insurer begins to pay, separate from any copayments the plan requires.

The share of covered medical costs the member pays after the deductible, expressed as a percentage, while the insurer pays the remainder up to any out-of-pocket maximum.

Rules that decide which of two or more health plans pays first when a person is covered by more than one, preventing combined payments from exceeding the actual cost of care.

A health condition diagnosed or treated before coverage began; federal and state rules limit how long a plan may exclude or delay coverage for such conditions.

The state agency that licenses insurers and producers, reviews policy forms and rates, examines financial condition, and enforces insurance law under the insurance commissioner.

A statutory entity that pays covered claims up to set limits when a Connecticut-licensed life or health insurer becomes insolvent, funded by assessments on member insurers rather than taxpayers.