IA Life & Health key terms

A financial or close-family stake in another person's continued life or health, so that the policyholder would suffer real economic or personal loss if that person died. It must exist when the application is signed.

The tendency of people who expect to need coverage most-those in poor health or facing high risk-to buy or keep insurance in greater numbers than low-risk applicants, which pushes claim costs above what the insurer assumed when setting rates.

A condition that raises either the chance a loss will occur or how large the loss will be, such as a dangerous job, heavy drinking, poor health, or a dishonest claimant.

A statistical rule that the more similar, independent exposure units an insurer covers, the more closely actual losses will match the expected losses used to price its products.

A policy written by the insurer and offered on a take-it-or-leave-it basis, with no negotiation over wording; because the insured had no say in drafting, ambiguities are usually read in the insured's favor.

The rule that the insurer and the applicant each must deal honestly, disclosing facts that would affect the other's decision, so the contract is not built on concealment or misrepresentation.

A statement on an application that the applicant believes to be true to the best of their knowledge. It is not a guarantee, and the insurer generally must show it was material and untrue to void the policy.

Restoring an insured to roughly the same financial position held before a loss, no better and no worse. Health benefits typically follow this principle, while life insurance instead pays a stated face amount.

Two linked doctrines: a waiver is the voluntary giving up of a known right, and estoppel stops a party from later denying conduct that another party reasonably relied on and was harmed by.

The stated amount of life insurance the insurer will pay on the insured's death, before reductions for policy loans, unpaid premiums, or outstanding interest.

The savings element inside a permanent life policy that grows over time and belongs to the owner, who may borrow against it, withdraw it, or receive it on surrender.

The number of days after a premium due date during which the policy remains in force; if the insured dies in that window, any unpaid premium is subtracted from the death benefit.

Bringing a lapsed policy back into force by paying owed premiums with interest and proving insurability, which may restart the contestable and suicide periods from the new date.

A policy provision stating that after the contract has been in force for a stated period, commonly two years, the insurer cannot deny a claim or cancel coverage because of misstatements in the application.

Guaranteed choices offered to a permanent policy owner who stops paying premiums: take the cash surrender value, accept a smaller paid-up policy, or keep term coverage for a limited time.

Money the owner borrows from the insurer using the policy's cash value as security; interest accrues, and any unpaid balance is deducted from the death benefit or surrender value.

The owner's written choice of who receives the death benefit, naming a primary beneficiary and usually a contingent beneficiary, and stating whether the owner keeps the right to change them.

A receipt given when an application and the first premium are submitted, providing coverage only if the insurer would have approved the risk, sometimes backdated to the application or medical exam date.

A right to examine a newly delivered policy and return it within a stated number of days for a full premium refund, with no surrender charges and no questions asked.

A contract, usually funded with a lump sum or periodic payments, that pays out a stream of income, often for life, in exchange for the money accumulated.

The amount the insured must pay out of pocket toward covered expenses during a benefit period before the insurer begins paying its share of the claim.

The share of covered costs the insured pays after meeting the deductible, usually a percentage, while the insurer pays the remainder up to any out-of-pocket cap.

A fixed dollar amount the insured pays for a particular service, such as a set charge for an office visit or a prescription, often collected at the point of service.

A yearly ceiling on the deductibles, coinsurance, and copayments an insured pays for covered care; once reached, the insurer generally pays 100 percent of covered benefits.

A health problem that was diagnosed, treated, or had symptoms before the person's coverage started, which a policy may exclude or delay covering unless state or federal rules forbid it.

Rules that determine which plan pays first when a person is covered by two or more health plans, so providers are not paid twice for the same service.

The waiting time, counted in days or months after disability or illness begins, that must pass before benefits start, found in disability income and long-term care policies.

A partial disability benefit that pays when the insured goes back to work but earns less than before, typically calculated as a percentage of the lost income rather than the full benefit.

A disability standard that pays a benefit when the insured cannot perform the main duties of the specific occupation held before becoming disabled, even if other work is available.

A renewability provision under which the insurer must keep the policy in force as long as premiums are paid, and may raise rates only for an entire class of policyholders, not one individual.

Coverage that pays for services such as nursing home care, assisted living, or home health care when a person needs help with daily activities because of age, illness, or disability.

The state agency, led by the Insurance Commissioner, that licenses insurers and producers, examines company finances, investigates complaints, and enforces Iowa's insurance statutes and rules.

The license the Iowa Insurance Division grants an insurer that allows it to transact insurance business in the state; it can be suspended or revoked for violations.

The state-issued credential a person must hold before soliciting, negotiating, or selling insurance in Iowa, obtained by meeting education, exam, and background requirements.

An insurer's formal notice to the state that a licensed producer is authorized to represent it, which must be filed when the relationship begins and kept current.

A producer's obligation to handle money belonging to clients or insurers honestly, keep it separate from personal funds, and account for it promptly instead of spending it.

Offering something of value that is not stated in the policy, such as cash, gifts, or a share of the commission, to persuade a buyer to purchase insurance; an illegal unfair trade practice.

Persuading a policyholder to drop or replace existing coverage by making misleading or incomplete comparisons, so the producer can sell a different policy.

Selling a new life policy or annuity that replaces coverage the buyer already owns; Iowa rules require a comparison, disclosure notice, and records so the buyer understands the change.

A statutory pool funded by member insurers that pays covered claims, up to set limits, to Iowa residents when a life or health insurer becomes insolvent and cannot pay.