MA Life & Health key terms

An insurance company that has been granted a license by a state's insurance department to sell policies in that state and must follow all of its solvency, rate, and policy-form rules.

A license issued by a state insurance regulator that gives an insurer legal permission to transact specific lines of insurance business within that state.

A non-admitted insurer allowed to write coverage for risks that admitted carriers in the state decline or cannot cover; it is not bound by state rate and form filing rules.

The legal obligation of a producer or insurer to hold money belonging to clients or insurers in a trust capacity and never mix those funds with personal or business funds.

Offering a client part of the producer's commission, or anything else of value not stated in the policy, as an inducement to buy insurance; illegal in most states.

Using misleading or incomplete comparisons to persuade a policyholder to drop existing coverage and buy a different policy, a practice prohibited as an unfair trade practice.

A state-mandated pool funded by insurers that pays claims, up to statutory limits, for policyholders of an insurer that becomes insolvent.

A financial or emotional stake in the continuation of another person's life that justifies buying insurance on that person; it must exist when the policy is applied for.

The principle that insurance restores a policyholder to roughly the same financial position as before a loss, without allowing a profit from the loss.

The mutual duty of applicant and insurer to disclose all material facts truthfully, because the insurer relies on the applicant's answers to decide whether and how to insure.

A policy drafted by the insurer with little or no input from the buyer, so courts generally resolve ambiguous wording in favor of the policyholder.

Waiver is giving up a known contractual right; estoppel prevents the party that gave it up from later enforcing that right if the other party relied on the waiver.

A characteristic or behavior of an insured, such as dishonesty or carelessness, that increases the chance of a loss or the size of a claim.

A method of sizing life insurance need by calculating the present value of the income the insured would have earned and contributed to dependents over a remaining working lifetime.

A receipt given when an application and initial premium are submitted; coverage begins on the date of the receipt only if the proposed insured meets the insurer's underwriting requirements.

Buying a new life policy that replaces existing coverage, which triggers mandatory disclosure and comparison notices to protect the policyholder from unnecessary or harmful replacement.

A policy provision stating that after the policy has been in force for a set period, usually two years, the insurer can no longer void the contract for misstatements on the application.

A period, commonly 30 or 31 days after the premium due date, during which a policy stays in force even though the premium has not been paid.

Restoring a lapsed life policy by proving continuing insurability, paying overdue premiums with interest, and sometimes repaying a policy loan.

Choices guaranteed by a whole life policy that let the owner take the accumulated value as cash, reduced paid-up insurance, or extended term insurance after the policy lapses.

A provision that uses available cash value to pay an overdue premium at the end of the grace period so the policy does not lapse.

A rider that suspends premium payments while the insured is totally disabled for a specified period, generally six months, keeping the policy in force.

A rider allowing the policy owner to collect part of the death benefit early when the insured is diagnosed with a terminal illness or meets other stated conditions.

The ways a beneficiary may receive policy proceeds, such as a lump sum, fixed-period installments, fixed-amount installments, or a life income.

The point at which accumulated annuity funds are converted into a stream of periodic income payments, after which the contract's payout terms generally cannot be changed.

The share of each annuity payment that is a tax-free return of the owner's cost basis rather than taxable earnings; it applies to non-qualified annuity payouts.

A fee charged by an insurer when a policy or annuity is cashed out during early contract years, designed to recover acquisition costs.

A tax-deferred transfer of cash value from one life policy or annuity to another under Section 1035 of the Internal Revenue Code, avoiding current taxation.

An annuity whose cash value is invested in subaccounts the owner selects, so value and income fluctuate with market performance; the owner bears the investment risk.

Rules that determine which health plan pays first when a person is covered by more than one plan, so combined benefits do not exceed the cost of care.

A health condition for which the insured received diagnosis or treatment before coverage began; its treatment may be limited or excluded for a stated period.

The maximum out-of-pocket amount a policyholder pays for covered expenses in a period, after which the insurer pays 100 percent of covered charges.

A managed care plan that provides care through a network of contracted providers, usually requires a primary care physician to coordinate care, and often pays little for out-of-network treatment.

A private supplemental policy sold to Medicare enrollees to help pay Medicare's deductibles, coinsurance, and other cost-sharing gaps.

A disability standard that pays benefits when the insured cannot perform the material duties of their own specific occupation, generally the strictest and most favorable definition for the claimant.

The waiting period, often measured in days of disability, that must pass after a disability begins before benefits become payable; it works like a time deductible.

Basic self-care tasks such as bathing, dressing, eating, toileting, transferring, and continence; inability to perform a set number triggers long-term care benefits.

A disability provision that pays a reduced benefit when the insured returns to work but still earns less or cannot perform all prior duties, based on the income lost.