MA Life & Health flashcards

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

McCarran-Ferguson Act

The 1945 federal law that delegates primary insurance regulation to the states, so long as the states regulate the business, and exempts insurance from most federal antitrust law.

Twisting

An unfair trade practice in which a producer uses misrepresentation or incomplete comparison to persuade a policyholder to lapse or replace existing coverage.

Commingling

An illegal practice in which a producer deposits collected premiums into a personal account instead of a trust account, violating fiduciary duties.

Fiduciary duty of producers

Producers hold premiums in a fiduciary capacity, must keep them in a separate trust account, and may not use the funds for personal purposes.

Guaranty association limits

Model state guaranty associations typically cover up to $300,000 of death benefit, $100,000 of net cash surrender value, and $250,000 of annuity present value per owner per insurer.

Insurable interest

A financial or love-and-affection relationship in which the applicant benefits from the insured's continued life; for life insurance it must exist at application.

Aleatory contract

A contract in which the amounts exchanged by the parties are unequal and performance depends on an uncertain event, as with insurance.

Law of large numbers

A statistical principle holding that as an insurer pools more similar exposure units, actual losses become more predictable relative to expected losses.

Contract of adhesion

A contract drafted by one party, the insurer, and offered on a take-it-or-leave-it basis, so ambiguities are interpreted against the drafter.

Conditional receipt

A receipt that makes coverage effective on the date of application or medical exam, whichever is later, if the applicant proves insurable under the insurer's rules.

Incontestability clause

A provision barring the insurer from contesting the policy for material misrepresentation after it has been in force for a stated period, usually two years.

Human life value approach

A method of calculating life insurance need that measures the present value of the insured's future earnings after subtracting personal consumption and taxes.

Suicide clause

A provision limiting the insurer's liability to a refund of premiums if the insured dies by suicide within the first two years of the policy.

Entire contract clause

A provision stating that the policy and the attached application are the whole agreement, so no outside document can alter the contract.

Extended term option

A nonforfeiture option that uses the policy's cash value to buy term insurance for the original face amount for the longest period the value will purchase.

Automatic premium loan

A provision that lets the insurer advance unpaid premiums from the policy's cash value to prevent a lapse when the value is sufficient.

Per stirpes

A beneficiary distribution in which a deceased heir's share passes to that heir's descendants, so benefits are divided by family branch rather than equally by head.

Misstatement of age provision

A policy provision that adjusts the death benefit or premium to the amount the insurer would have charged or paid for the insured's correct age.

Exclusion ratio

The percentage of each annuity payment that is a nontaxable return of the owner's after-tax contributions, found by dividing investment in the contract by expected return.

Surrender charge

A fee an annuity issuer imposes for withdrawing money beyond any free-withdrawal allowance during the early contract years.

Joint and survivor annuity

A payout option that continues income to the surviving annuitant after the first annuitant dies, usually at a reduced amount such as two-thirds of the original.

Section 1035 exchange

A tax-free replacement of an existing life insurance policy or annuity contract with another annuity or life policy, permitted under federal tax law.

Straight life annuity

A payout option that provides the largest income for life but stops at the annuitant's death, leaving nothing to a beneficiary.

Coordination of benefits

Rules determining which of two health plans pays first; for dependent children, the plan of the parent whose birthday comes earlier in the year is primary.

COBRA election period

A qualified beneficiary has 60 days after the qualifying event or the coverage notice, whichever is later, to elect continuation coverage under federal COBRA rules.

Out-of-pocket maximum

The annual limit on covered in-network costs a member pays, after which the health plan pays 100 percent of covered expenses for the rest of the year.

Medicare Part A

Hospital insurance that covers inpatient hospital stays, skilled nursing facility care following a hospital stay, hospice care, and some home health services.

Essential health benefits

The ten benefit categories ACA-compliant major medical plans must cover, including hospitalization, prescription drugs, maternity care, preventive services, and mental health care.

Own-occupation definition

A disability definition that pays benefits when the insured cannot perform the material duties of their own specific occupation, often limited to a stated number of years.

Elimination period

The waiting period, commonly 30 to 90 days after a disability begins, that must pass before disability income benefits become payable.

ADL benefit trigger

Long-term care benefits are typically triggered when the insured cannot perform at least two of six activities of daily living for at least 90 days.

Residual disability benefit

A partial disability benefit that pays a reduced amount proportional to the income lost when the insured returns to work at reduced earnings or hours.