LA Life & Health flashcards

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

Commissioner of Insurance

Louisiana's chief insurance regulator, elected statewide to a four-year term, who heads the Department of Insurance and enforces the state's insurance laws and licensing requirements.

Producer license renewal

A Louisiana producer license renews every two years and requires 24 hours of approved continuing education per term, including at least three hours of ethics instruction.

Fiduciary handling of premiums

Premiums a producer collects are held in trust; they may not be commingled with personal funds or used for personal expenses, and misuse can result in license action.

Appointment notice to Commissioner

The insurer must file notice of a producer's appointment with the Louisiana Commissioner within 30 days after the producer submits the first application for coverage.

Adverse selection

The tendency for individuals with higher-than-average risk to seek or keep insurance more readily than low-risk individuals, which insurers counter through underwriting, exclusions, and waiting periods.

Insurable interest

A financial or emotional stake in the continued life or health of the insured that must exist when the policy is issued for the contract to be valid.

Aleatory contract

A contract in which the amounts exchanged by the parties are unequal and depend on chance; the insured may pay premiums for years and receive nothing, or receive a large claim.

Waiver and estoppel

Waiver is the voluntary surrender of a known right; estoppel prevents the insurer from later asserting that right if the other party relied on the waiver to their detriment.

Human life value approach

Calculates the amount of life insurance needed as the present value of the income the insured would have earned and given to dependents in future years.

Term life insurance

Provides death protection for a stated period with no cash value; level, decreasing, increasing, renewable, and convertible forms exist and expire without payout if the insured survives.

Participating policy dividends

A return of divisible surplus from a mutual insurer that is not taxable as income; options include cash, premium reduction, accumulation at interest, paid-up additions, and one-year term.

Three premium factors

Mortality (expected death claims), interest (earnings assumed on reserves), and expense (operating costs) determine a life premium; more frequent payment modes raise the total annual cost.

Modified whole life

Whole life in which premiums are lower during an initial period and step up to a higher level thereafter, while the death benefit and lifetime coverage remain level.

Universal life option A

A level death benefit equal to the face amount; the pure amount at risk decreases as cash value grows, so the cost of insurance charged is lower.

Modified endowment contract

A life policy that fails the 7-pay test; withdrawals and policy loans are taxed income-first, and a 10% penalty applies to taxable amounts before age 59 1/2.

Variable life insurance

Cash value is held in a separate account and invested in subaccounts chosen by the owner, who bears the investment risk; selling it requires a securities license.

Incontestability clause

After a life policy has been in force two years, the insurer cannot rescind it or deny a claim because of misstatements on the application, except for unpaid premium.

Extended term option

A nonforfeiture option that uses the cash value to buy term coverage equal to the original face amount for as long a period as that value will purchase.

Reduced paid-up option

A nonforfeiture option that converts the cash value into a smaller whole life policy that stays in force for life with no further premiums due.

Guaranteed insurability rider

Allows the insured to buy additional coverage at specified ages or events without proving insurability, at standard rates for the attained age.

Exclusion ratio

The share of each annuity payment that is a tax-free return of the annuitant's cost basis, found by dividing the investment in the contract by the expected return.

Surrender charge

A declining fee charged when a deferred annuity is surrendered or withdrawn above the free amount during the early contract years, intended to recover sales costs.

Fixed annuity

Guarantees a minimum interest rate and a stated dollar benefit; the insurer bears the investment risk and the reserves are held in the general account.

Indexed annuity cap and floor

The cap sets the maximum interest credited for a period, while the floor guarantees a minimum credit, often zero, so index performance cannot reduce contract value.

Conditionally renewable policy

The insured may renew to a stated age only if conditions set by the insurer are met; the insurer can raise premiums by class but cannot single out an individual.

Elimination period

The waiting period after a covered loss or disability begins before benefits are payable; it works like a time deductible and a longer one lowers the premium.

Coordination of benefits

Rules that decide which health plan pays first so combined payments do not exceed the cost of care; the primary plan pays and the secondary pays the balance.

Preexisting condition limitation

Excludes or limits coverage for a condition diagnosed or treated before the effective date, usually during a look-back period plus a waiting period after issue.

Own occupation disability

A disability definition that pays benefits when the insured cannot perform the duties of their own specific occupation, even if able to work elsewhere; more expensive.

Medicare Part A

Hospital insurance covering inpatient care, skilled nursing after a hospital stay, hospice, and some home health; premium-free for workers with 40 quarters of coverage.

Long-term care triggers

Benefits become payable when the insured cannot perform two of six activities of daily living without help, or has a severe cognitive impairment.

COBRA continuation

Federal law letting group health coverage continue after a qualifying event: 18 months for job loss, 29 with disability, and 36 for dependents after death or divorce.