HI Life & Health key terms

The state agency within Hawaii's Department of Commerce and Consumer Affairs that licenses insurers and producers, reviews policy forms and rates, examines company finances, investigates consumer complaints, and enforces the state's insurance code.

A license issued by the Hawaii Insurance Division that authorizes an insurer to transact insurance business in the state. An insurer that operates without one is violating state law.

Hawaii law requiring employers with twenty or more employees to provide qualifying health coverage to eligible employees who work at least twenty hours per week, with the worker's share of the premium capped by statute.

A state-required benefit that replaces part of the wages of eligible Hawaii workers who cannot work because of a non-work-related illness or injury, funded by employer and employee contributions and administered by the employer or an insurer.

A statutory pool of member insurers that pays covered claims, up to legal limits, to Hawaii policyholders and beneficiaries when a member life or health insurer becomes insolvent. It is not a state agency and does not cover every product.

A financial stake, or a close family relationship, in the continued life and health of the person insured. In life insurance it must exist when the policy is applied for, or the contract is void.

The principle that an insurance payment should restore the insured to roughly the same financial position held before the loss, no better and no worse. It limits health benefits to actual expense but does not cap life insurance.

The tendency of people at higher-than-average risk to buy or keep coverage while lower-risk people drop it, which pushes up costs. Insurers counter it with underwriting, waiting periods, and exclusions.

The specific event or cause that produces a loss, such as a fire, an accident, a heart attack, or a death. Policies name the perils they cover and exclude the rest.

A condition that makes a loss more likely to happen or more severe if it does, such as smoking, poor health, icy roads, or careless record-keeping. Insurers rate or decline risks that carry extra hazards.

The death benefit stated on the first page of a life insurance policy, payable to the beneficiary when the insured dies while the contract is in force. It excludes dividends and extra amounts provided by riders.

The savings or reserve portion of a permanent life policy that grows over the years and can be borrowed against, surrendered, or used under a nonforfeiture option. Term insurance has none.

A receipt issued when the first premium accompanies the application. It may provide coverage from the application or medical exam date, but only if the proposed insured turns out to be insurable under the insurer's rules.

Buying a new life policy or annuity to take the place of existing coverage. Hawaii rules require the producer to give the buyer a disclosure notice and to notify the insurer whose coverage is being replaced.

The policyowner's written choice of who receives the death benefit, usually naming a primary beneficiary plus one or more contingent beneficiaries who are paid if the primary dies first.

Coverage that lasts for a stated number of years and pays only if the insured dies during that period. It builds no cash value and is usually the lowest-cost way to buy a large death benefit.

Permanent coverage that stays in force until the insured's death as long as premiums are paid, featuring a level premium and a guaranteed cash value that grows every year.

A flexible permanent policy that separates the death benefit from the cash account. The owner may vary premiums and, within limits, the death benefit, while the insurer deducts monthly mortality and expense charges.

A permanent policy whose cash value and, in some designs, death benefit rise and fall with the investment results of separate accounts chosen by the owner. It is a security and is sold with a prospectus.

One master policy covering many people who share an eligible relationship, such as the employees of one employer. Amounts typically follow a schedule or salary, and individuals usually do not submit medical evidence.

A policyholder's right to return a newly delivered policy within a set number of days, commonly ten, and receive a full premium refund without giving a reason. The period starts on delivery.

After a policy has been in force for a set period, usually two years, the insurer can no longer cancel the contract or deny a claim because of inaccurate statements on the application, except for nonpayment of premium or, in many states, fraud.

The time allowed after a premium due date, usually thirty or thirty-one days, during which the policy remains in force. A death during this period is covered, but the unpaid premium is subtracted from the benefit.

Restoring a lapsed policy by paying the overdue premiums with interest and proving the insured is still insurable. The insurer may impose a new contestable period and a new suicide exclusion period.

The choices available when a whole life owner stops paying premiums: take the cash surrender value, accept a smaller paid-up policy for life, or keep the original face amount for a limited number of years.

A rider that pays the policy's premiums for the owner if the insured becomes totally disabled for a stated waiting period, keeping the coverage and cash value growth intact while the disability lasts.

The point at which an annuity's accumulated money is converted into a scheduled series of income payments that continue for a chosen period or for life. Once started, the decision generally cannot be reversed.

A contract that guarantees a minimum interest rate during accumulation and a set payment amount during payout. The insurer bears the investment risk, and the contract is not a security.

An annuity whose value and payments depend on the performance of underlying investment portfolios held in a separate account. The owner bears the investment risk, and the product is sold with a prospectus.

The share of each annuity payment treated as a tax-free return of the owner's after-tax contributions, calculated by dividing the investment in the contract by the expected total payout.

A prepaid managed-care plan that provides care through its own network, usually with a primary care physician acting as gatekeeper. Non-emergency care received outside the network is generally not covered.

A managed-care plan that contracts with a network of providers at negotiated rates but still pays part of the cost of out-of-network care. Members may generally see specialists without a referral.

The percentage of covered medical expenses the insured pays after the deductible is met, for example twenty percent while the plan pays eighty percent, until the out-of-pocket maximum is reached.

The most an insured must pay in a plan year for covered care in the form of deductibles, copays, and coinsurance. After that limit is reached, the plan generally pays one hundred percent of covered expenses.

A health problem for which the person received a diagnosis, advice, or treatment before new coverage started. Group plans may limit benefits for a waiting period, with credit given for prior continuous coverage.

The waiting time, counted in days of disability or in dollars of expense, that must pass after a loss before disability or long-term care benefits begin. A longer period means a lower premium.

A policy the insurer must renew at the insured's option while premiums are paid, though the insurer may raise rates for an entire class of policyholders. The insurer cannot single out one person for an increase.

The strongest renewal promise in health insurance: the insurer cannot cancel the policy or raise the premium and must renew it to a stated age, as long as premiums are paid on time.

The right of a person losing group coverage, such as on termination of employment, to convert it to an individual policy without proving insurability, usually within a stated number of days after coverage ends.

A health policy clause allowing the insurer to reduce benefits if the insured moves to a more hazardous occupation than the one stated in the application, or to increase benefits if the new occupation is safer.