IN Life & Health key terms

An insurance company that has been licensed by a state's insurance department to sell policies in that state and is subject to its solvency and market-conduct rules.

The formal license a state insurance department issues to an insurer, granting it legal permission to transact specified lines of insurance business within that state.

A non-admitted carrier that may write coverage when licensed insurers will not, but it is not backed by the state guaranty association and faces fewer rate rules.

A statutory pool, funded by admitted insurers in a state, that pays claims of policyholders when a member insurer becomes insolvent, up to limits set by law.

Offering a prospective buyer part of the agent's commission or any other valuable inducement not stated in the policy in order to make a sale; prohibited in most states.

Inducing a policyholder to drop existing coverage through misleading or incomplete comparisons, typically to sell a replacement policy; an unfair trade practice in most states.

A financial or close-family interest in the continued life of the insured that must exist when a life policy is issued for the contract to be valid.

The insurer's process of gathering and evaluating information about an applicant to decide whether to issue coverage and at what premium class.

The tendency of people with higher-than-average risk to buy or keep insurance more eagerly than low-risk people, which is why insurers screen applicants.

The added risk that comes from a person's dishonest or careless behavior, such as an insured who is tempted to cause a loss to collect benefits.

The principle that insurance should restore the insured to roughly the same financial position as before a loss rather than create a profit from it.

An insurance agreement in which the amounts exchanged by the parties are unequal and depend on chance, so a small premium can buy a large benefit.

The principle that both insurer and applicant must deal honestly and disclose all material facts, because the insurer relies on the applicant's answers.

A receipt given when an application and initial premium are submitted; it provides limited interim coverage only if the insurer would have approved the risk.

A method of setting a life insurance amount by estimating the present value of the insured's future earnings that dependents would lose at death.

The number of deaths occurring in a defined group during a year, usually expressed per thousand lives, used to price life insurance.

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

Permanent coverage with a level premium payable for life or to a set age, a guaranteed death benefit, and a cash value that grows on a guaranteed schedule.

Permanent coverage that separates the death benefit from the cash account, letting the owner vary premium payments and adjust the benefit within limits.

Permanent coverage whose cash value is invested in separate accounts chosen by the owner, so values move with market results and the product is a security.

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

A set number of days after a premium due date during which the policy stays in force; a death during this time still pays, with the unpaid premium deducted.

The right to restore a lapsed policy by paying overdue premiums with interest and providing proof of insurability, usually within a stated window.

Choices that let a whole life owner keep some value if the policy lapses, such as cash surrender, reduced paid-up insurance, or extended term insurance.

A rider that cancels premium payments while the insured meets the policy's definition of total disability, keeping the coverage in force.

A provision allowing part of the death benefit to be paid early when the insured is diagnosed with a terminal illness or meets other stated conditions.

A contract, usually issued by a life insurer, that accumulates money and then pays it out as a series of income payments, often for life.

An annuity bought with a single lump sum in which income payments begin within one payment interval, such as a month, with no accumulation phase.

The share of each annuity payment that is treated as a tax-free return of the owner's own investment, with the remainder taxed as ordinary income.

Rules that decide which of two health plans pays first when a person is covered by more than one, so total payments do not exceed the expense.

A health problem for which the person received diagnosis or treatment before coverage started, which a plan may exclude or delay covering for a set period.

A health policy clause that bars the insurer from denying a claim after the policy has been in force a set period, except for fraud or nonpayment of premium.

Coverage that replaces a portion of the insured's earned income, usually as a monthly benefit, when illness or injury prevents working.

A standard that treats the insured as disabled if unable to perform the duties of the occupation held at the time of disability, even if able to work elsewhere.

A benefit paid when the insured can still work but has lost income because of illness or injury, usually a percentage of the lost earnings.

The maximum length of time a health or disability policy will pay benefits for a covered condition or disability.

Coverage that pays for custodial and personal care, such as nursing home or home care, when a person cannot perform daily activities or has cognitive impairment.

Everyday tasks such as bathing, dressing, eating, transferring, and toileting; losing the ability to do a set number of them can trigger long-term care benefits.

A private policy designed to pay some of the costs that original Medicare does not, such as deductibles, coinsurance, and certain copayments.