ID Life & Health key terms

An insurance company that holds a certificate of authority from the Idaho Department of Insurance and must follow state solvency, rate, and policy-form rules in exchange for legal permission to sell coverage there.

The license the Idaho Department of Insurance issues to an insurer authorizing it to transact specified lines of insurance in the state; selling insurance without one is unlawful.

The credential the Idaho Department of Insurance grants to an individual or business that sells, solicits, or negotiates insurance; it must be renewed and can be suspended or revoked for cause.

A producer's duty to hold money collected from clients in trust and pass it promptly to the insurer or insured; mixing those funds with personal money is prohibited.

Giving a buyer part of the producer's commission or anything else of value as an inducement to buy insurance, an unfair trade practice that Idaho law prohibits.

Using misrepresentation or incomplete comparisons to persuade a policyholder to drop, surrender, or replace existing coverage, an unfair practice because the replacement may harm the client.

A financial or love-and-affection stake in another person's continued life that must exist when life insurance is applied for; without it, the contract is void.

The principle that insurance should restore the insured to about the same financial position as before a loss and never produce a profit; life insurance is not treated as indemnity.

An agreement in which the values exchanged by the parties are unequal and depend on chance, so one party may receive much more or much less than it paid.

The mutual duty of the applicant and insurer to disclose material facts honestly; concealment or a material misrepresentation can allow the insurer to rescind the contract.

A receipt showing the initial premium was paid and stating that coverage starts when the application is complete and the insurer would have approved it.

The powers of the person who owns a life policy, which may differ from the insured: naming beneficiaries, borrowing cash value, assigning the contract, surrendering it, or changing the owner.

A beneficiary distribution method that passes a deceased beneficiary's share to that beneficiary's own descendants, keeping each family branch's portion intact rather than pooling it.

The person or entity named to receive the death benefit if the primary beneficiary dies before the insured or disclaims the proceeds.

Coverage that lasts a stated number of years and builds no cash value; it pays a death benefit only if the insured dies during the term and is usually the least expensive form.

Permanent coverage with level premiums, guaranteed cash value, and a death benefit payable whenever the insured dies, provided required premiums are paid.

Flexible permanent coverage that separates the death benefit from the cash value; the owner may adjust premiums and benefits, but inadequate funding can cause the policy to lapse.

Permanent coverage whose cash value is invested in subaccounts the owner selects, so values and sometimes the death benefit rise and fall with market performance and the owner bears the investment risk.

Guaranteed choices for an owner who stops paying premiums on permanent coverage: take the cash surrender value, reduced paid-up insurance, or extended term insurance.

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

A rider that keeps coverage in force without further premium payments while the insured is totally disabled as the rider defines, typically after a waiting period.

A provision that lets the insured collect part of the death benefit early upon diagnosis of a terminal or qualifying illness, with the balance paid to beneficiaries at death.

Money borrowed from a permanent policy's cash value at an interest rate set by the contract; unpaid loan balances and interest reduce the death benefit or surrender value.

A contract that converts premiums into a stream of income, either for life or a fixed period, mainly protecting against the risk of outliving retirement savings.

The point when an annuity's accumulated value is converted into regular income payments that continue for a chosen number of years or for life.

A fee taken from an annuity's or cash value policy's account value when the owner withdraws more than allowed in the early contract years, used to recover sales costs.

The amount an insured pays out of pocket for covered services during a benefit period before the health plan begins paying its share of the cost.

The share of covered medical costs, calculated as a percentage after the deductible is met, that the insured pays while the insurer pays the remainder.

A health condition diagnosed or treated before a new policy's effective date, which a plan may limit or exclude only as federal and state rules allow.

Rules that determine which of two or more health plans pays first when a person has overlapping coverage, so combined payments never exceed the actual cost of care.

The waiting time after a disability or long-term care event begins before benefits are payable, often 30 to 90 days; a longer period lowers the premium.

A disability test that pays benefits when the insured cannot perform the duties of the occupation held when disability began, broader and usually costlier than any-occupation coverage.

Basic self-care tasks such as bathing, dressing, eating, toileting, transferring, and continence; needing help with a specified number usually triggers long-term care benefits.

A managed care plan that serves members through a provider network, generally requires a primary care physician and referrals, and usually pays nothing for non-emergency out-of-network care.

Private supplemental insurance that helps pay Original Medicare's copayments, coinsurance, and deductibles, sold in standardized plan letters with guaranteed-issue rights in certain situations.

A life policy that fails the seven-pay funding test and loses favorable tax treatment, so loans and withdrawals are taxed as income first and may face a penalty before age 59½.

A tax-free transfer of cash value from one life policy or annuity to another of like kind under federal tax law, when the exchange meets the required conditions.

Life insurance proceeds paid because of the insured's death are generally free of federal income tax to the beneficiary, though interest paid with them and any estate tax may be taxable.