LA Life & Health key terms

A license issued by the Louisiana Department of Insurance that gives an insurer legal permission to transact insurance business in the state. An insurer may not sell coverage without one.

The state-issued credential an individual must hold before soliciting, negotiating, or selling insurance, or receiving commissions. Louisiana requires prelicensing education, a passing exam score, and continuing education to keep it active.

An unfair trade practice in which a producer induces a policyholder to drop existing coverage by making misleading or incomplete comparisons, usually in order to sell a replacement policy.

Mixing policyholder premiums or insurer funds with a producer's own money. Premiums are held in a fiduciary capacity and must be kept in a separate trust or premium account.

A financial stake in the continued life or health of the insured, so the buyer would suffer a real economic loss if that person died. It must exist when the application is made.

The principle that insurance restores the insured to roughly the same financial position held before a loss, without allowing a profit. Health insurance follows it closely; life insurance does not.

The requirement that both applicant and insurer deal honestly and disclose all material facts, because the insurer relies on the applicant's answers rather than inspecting the risk itself.

A contract in which the values exchanged are unequal and depend on chance, so the insured may pay premiums for years and never collect, or collect far more than was paid.

Waiver is the voluntary giving up of a known right. Estoppel prevents a party from later asserting that right when another party relied on the waiver to their own detriment.

The three elements used to price life insurance: mortality (expected deaths), interest (earnings assumed on reserves), and expense (the insurer's operating costs and producer commissions).

A pricing method in which the insured pays the same premium amount each year for the life of the policy, so the early years overpay to cover the rising cost of insurance later.

The savings or reserve portion of a permanent life policy that builds over time and belongs to the policyowner, reachable through surrender, policy loans, or nonforfeiture options.

Temporary coverage written for a stated number of years that pays a death benefit only if the insured dies during that period, and that builds no cash value.

Permanent coverage that stays in force for the insured's entire life, with level premiums and guaranteed cash value, and that endows at the maturity age stated in the contract.

Flexible permanent coverage that separates the death benefit from the cash account. The owner may vary premium payments and sometimes the death benefit, as long as the account covers the cost of insurance.

A life policy funded so heavily in the early years that it loses favorable tax treatment; loans and withdrawals are taxed as income first and may carry a penalty before age 59 1/2.

A tax-free exchange under Internal Revenue Code Section 1035 that lets an owner move a life policy into another life policy or annuity, or one annuity into another, without recognizing gain.

The span, typically 30 or 31 days after a premium due date, during which the policy stays in force; if the insured dies in that window, the unpaid premium is deducted from the benefit.

A provision stating that once the policy has been in force for two years, the insurer can no longer void coverage for misstatements on the application, apart from limited exceptions such as fraud.

Restoring a lapsed policy to its original status by paying overdue premiums with interest and supplying proof of insurability; a fresh contestability period generally applies to the restored policy.

The choices available when a permanent policy with cash value is surrendered: cash surrender, reduced paid-up insurance, or extended term insurance.

The ways a beneficiary may receive the death benefit, including lump sum, interest only, fixed period, fixed amount, and life income, chosen by the owner or by the beneficiary.

A rider letting the policyowner collect part of the death benefit early after a diagnosis of terminal illness or another qualifying condition, with the remaining benefit reduced accordingly.

A beneficiary whose designation cannot be changed. Their written consent is required before the owner may take loans, surrender the policy, or name a different beneficiary.

A beneficiary designation method under which a deceased beneficiary's share passes down to that person's own descendants, rather than being divided only among the surviving beneficiaries.

The phase of an annuity during which deposits are paid in and interest or investment earnings build up, before any income payments to the annuitant begin.

The point at which an annuity's accumulated value is converted into a stream of periodic income payments, either for a set number of years or for life.

A fee an insurer keeps when a policy or annuity is cashed out during its early years, typically shrinking on a set schedule until it disappears.

The portion of each annuity payment that represents a return of the annuitant's already-taxed contributions. That share is free of income tax; the remainder is taxed as ordinary income.

The amount the insured must pay out of pocket for covered services during a benefit period before the health plan begins paying its share of the bill.

The percentage of covered expenses, commonly 20%, that the insured pays after the deductible is satisfied, while the insurer pays the remaining share.

The yearly ceiling on the insured's deductibles, coinsurance, and copays. Once it is reached, the plan generally pays 100% of covered expenses for the rest of the year.

A medical condition diagnosed or treated before a new health policy takes effect, which may be subject to a waiting period before benefits apply; group plans face strict limits on such exclusions.

The waiting period after a disability or long-term care event begins before benefits become payable. It works much like a time-based deductible.

A disability income benefit that pays when the insured has returned to work but earns less than before the disability, usually shown as a percentage of lost income.

A disability policy standard that pays benefits when the insured cannot perform the main duties of their own specific occupation, even if they could work in some other field.

Privately sold supplemental coverage designed to pay some of the cost sharing that Original Medicare leaves with the beneficiary, such as deductibles, coinsurance, and copays.

Coverage that pays for custodial or skilled care in a nursing home, assisted living facility, or the insured's home when the person cannot perform a set number of activities of daily living or has cognitive impairment.

A federal law that lets employees and their dependents keep group health coverage for a limited time after a qualifying event such as termination or divorce, paying the full premium themselves.

The insured's right to convert group term life or group health coverage into an individual policy without proving insurability when the group coverage ends.