ID Life & Health flashcards

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

Idaho Department of Insurance

The state agency that regulates Idaho insurers and producers under Idaho Code Title 41, headed by a Director who issues licenses, reviews policy forms, and enforces unfair trade practice rules.

Idaho producer continuing education

Idaho licensed producers must complete 24 approved continuing education credit hours every two years, including at least 3 hours of ethics, in order to renew the license.

Rebating

Offering money, gifts, or anything of value not stated in the policy as an inducement to buy insurance; an unfair trade practice that can lead to fines or license suspension.

Insurable interest

A financial or love-and-affection relationship that makes the insured's continued life valuable to the policyowner; it must exist when the policy is issued, not at death.

Aleatory contract

A contract in which the values exchanged are unequal because performance depends on an uncertain event; the insured may pay small premiums and receive a large death benefit.

Adverse selection

The tendency for people with the greatest health or risk problems to buy or keep insurance, raising claims cost; insurers counter it with underwriting, waiting periods, and exclusions.

Conditional receipt

A receipt that gives interim life insurance coverage from the date of the application or medical exam, provided the proposed insured meets the insurer's underwriting requirements.

Medical Information Bureau

A membership database of coded medical and lifestyle information reported by member insurers; it flags discrepancies for underwriters but is never the sole basis for denying coverage.

Standard risk classification

An applicant whose health and habits are average for their age; insurers charge standard rates, while better risks earn preferred rates and poorer risks are substandard or declined.

Decreasing term insurance

Term insurance whose face amount declines on a schedule while the premium stays level; it is commonly used to match a declining mortgage or loan balance.

Universal life option B

A universal life death benefit option under which the benefit equals the specified amount plus accumulated cash value, so it increases over time and costs more in mortality charges.

Variable life insurance

Permanent life insurance whose cash value is invested in separate-account subaccounts chosen by the owner; it is a security, so producers need a securities license and must deliver a prospectus.

Modified whole life

Whole life insurance with lower premiums in the first years that step up to a higher level premium later, with cash value accumulating slowly during the early years.

Incontestability clause

A provision stating that after a life policy has been in force two years during the insured's life, the insurer generally cannot void it for misstatements on the application.

Nonforfeiture options

Choices available when a whole life owner stops paying premiums: cash surrender, reduced paid-up insurance for a smaller face amount, or extended term coverage for the existing face amount.

Automatic premium loan

A provision allowing the insurer to use available cash value to pay an unpaid premium at the end of the grace period, preventing lapse and increasing any outstanding loan.

Accelerated death benefit rider

A rider that pays part of the death benefit early, usually when the insured is diagnosed with a terminal illness; the amount paid reduces the final death benefit.

Exclusion ratio

The fraction of each annuitized payment that is a tax-free return of the owner's investment, computed as investment in the contract divided by expected return; the remainder is taxable.

Annuitization

The process of converting an annuity's accumulated value into a guaranteed stream of periodic income payments; once the payout option is chosen it usually cannot be reversed.

1035 exchange

A tax-deferred transfer of a life insurance policy, endowment, or annuity into a new annuity or life policy, so that existing gain is not currently taxed.

Coinsurance

The percentage of covered expenses the insured pays after the deductible, such as 20 percent, while the insurer pays the remainder until the out-of-pocket maximum is reached.

Out-of-pocket maximum

The most an insured pays during a plan year for covered in-network care, including deductible, coinsurance, and copayments but usually excluding premiums; the plan pays 100 percent above it.

Guaranteed renewable policy

A health policy the insurer must renew up to a stated age while premiums are paid; premiums may increase only for an entire class, never because of one person's health.

Coordination of benefits

Rules that set payment order when a person is covered by two group health plans; the primary plan pays its benefits first and the secondary plan considers the remainder.

Health policy grace period

The time after a premium due date before health coverage lapses; uniform provisions require 7 days for weekly premiums, 10 days for monthly, and 31 days for other modes.

Preauthorization

Advance approval from the insurer required for certain services such as hospitalization or advanced imaging; without it, non-emergency claims may be reduced or denied.

Residual disability

A disability income benefit that pays a portion of the monthly amount when the insured returns to work at reduced income, usually tied to the percentage of lost earnings.

Own occupation definition

The disability definition under which an insured is totally disabled if unable to perform the duties of the occupation held before disability, even if working elsewhere.

ADL benefit trigger

The long-term care benefit trigger that pays when the insured cannot perform at least 2 of 6 activities of daily living without help or has a cognitive impairment.

Medicare Part A

Hospital insurance that covers inpatient hospital stays, skilled nursing care after a hospital stay, hospice, and some home health; it is premium-free with 40 work quarters.

Modified endowment contract

A life insurance policy that fails the 7-pay test for overfunding; distributions and loans are taxed income-first, with a 10 percent penalty before age 59 and a half.

Health savings account

A tax-favored account paired with a qualifying high-deductible health plan; contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are untaxed.