HI Life & Health flashcards

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

Hawaii Insurance Division

The state agency within Hawaii's Department of Commerce and Consumer Affairs that licenses insurers and producers, examines insurer operations, investigates consumer complaints, and enforces the state Insurance Code.

Hawaii Prepaid Health Care Act

Hawaii law requiring employers with 20 or more employees to provide health insurance to employees who work at least 20 hours per week; it is the nation's only state employer health mandate.

Producer fiduciary duty

Premiums collected by a Hawaii insurance producer are held in a fiduciary capacity and must be remitted to the insurer or insured without being commingled with the producer's own funds.

Hawaii continuing education

Hawaii resident producers must complete 24 credit hours of approved continuing education during each two-year license term, including a required ethics component, before the license renewal date.

Peril and hazard

A peril is the cause of a loss, such as fire or premature death, while a hazard is any condition, such as smoking or poor housekeeping, that increases the chance or severity of that loss.

Insurable interest

A financial or blood/marriage relationship in which the policyowner would suffer a loss from the insured's death; it must exist when the life insurance application is signed.

Aleatory contract

An insurance contract in which the dollar amounts exchanged by the parties are unequal and depend on chance, because one party may receive far more than the premium it paid.

Law of large numbers

The statistical principle that as the number of similar exposure units insured increases, actual loss experience becomes more predictable, allowing insurers to set accurate premium rates.

Conditional receipt

A receipt given with the application stating coverage begins on the date of application or the completed medical exam, whichever is later, if the applicant proves insurable under insurer rules.

Human life value

A life insurance needs approach that estimates the present value of the insured's future after-tax earnings available to dependents, after subtracting the insured's own personal consumption.

Modified endowment contract

A life insurance policy that fails the seven-pay test; loans and withdrawals are taxed income-first and may incur a 10 percent penalty if taken before age 59½.

Table rating

A substandard underwriting classification expressed as tables, where each table typically adds 25 percent to standard mortality cost, so Table 2 represents 50 percent extra mortality.

Variable universal life

Flexible-premium permanent life insurance whose cash value is invested in separate subaccounts; the owner bears investment risk and the sale requires both insurance and securities licenses.

Survivorship life insurance

A single policy insuring two people, commonly spouses, that pays the death benefit when the second insured dies and is often used to fund estate settlement costs.

Convertible term

A term policy feature allowing the insured to exchange term coverage for a permanent policy without evidence of insurability, usually before a deadline stated in the contract.

Indexed universal life

Universal life whose interest credit is tied to a market index; credit is limited by a cap and participation rate, and the policy guarantees a floor, typically zero percent.

Incontestability clause

Provision stating that after the policy has been in force two years, the insurer can no longer contest coverage based on application misstatements, except for nonpayment of premium.

Extended term option

A nonforfeiture option that uses a lapsed whole life policy's cash value to buy term insurance for the same face amount for whatever period that money will purchase.

Waiver of premium rider

A rider that pays the policy's premiums if the insured becomes totally disabled, usually after a six-month waiting period, keeping the policy and its values in force.

Accelerated death benefit

A provision or rider allowing a terminally or chronically ill insured to receive part of the death benefit early; the amount payable to beneficiaries at death is reduced accordingly.

Exclusion ratio

The fraction of each annuity payment that is a tax-free return of the annuitant's investment in the contract, computed as investment in the contract divided by expected return.

Straight life annuity

A life income payout that guarantees payments only as long as the annuitant lives, with nothing to survivors; it produces the largest periodic income of any life option.

Variable annuity

An annuity whose value is invested in separate account subaccounts; the annuitant bears the investment risk and income payments vary with the performance of the underlying portfolio.

Section 1035 exchange

A tax-free exchange under the Internal Revenue Code of an existing life insurance policy, annuity contract, or qualified long-term care policy for a similar contract.

COBRA continuation

Federal law entitling employees of employers with 20 or more workers to continue group health coverage after a qualifying event for up to 18 months, paying the full premium plus 2 percent.

HMO gatekeeper

A primary care physician in a health maintenance organization who must authorize referrals to specialists, keeping care inside the network and helping control plan costs.

Health savings account

A tax-favored account available only with a qualifying high-deductible health plan; contributions are deductible, roll over annually, and qualified medical withdrawals are tax-free.

Elimination period

The waiting period between the onset of a disability or illness and the start of benefit payments under a disability income or long-term care insurance policy.

Coordination of benefits

A provision that determines the order in which two or more health plans pay claims so that the insured does not recover more than 100 percent of covered expenses.

Birthday rule

A coordination of benefits rule for dependent children whose parents have separate coverage: the plan of the parent whose birthday falls earlier in the calendar year pays first.

Preexisting condition clause

A provision limiting or excluding coverage for a condition diagnosed or treated during a look-back period before the policy's effective date, for a stated exclusion period.

Noncancellable policy

A health insurance policy the insurer cannot cancel and cannot raise premiums on as long as premiums are paid; it is the strongest renewability provision for the insured.