ME Life & Health flashcards
ME Life & Health · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- McCarran-Ferguson Act
- Federal law confirming that states primarily regulate insurance and granting a limited antitrust exemption for insurance business regulated by the states.
- Twisting
- Illegal practice of inducing a policyholder to lapse or replace coverage through misleading or incomplete comparisons, often to earn new commissions.
- Rebating
- Offering a prospect anything of value not stated in the policy as an inducement to buy insurance; generally illegal for licensed producers.
- Maine CE requirement
- Maine resident insurance producers generally must complete 24 continuing education hours every two years, including at least 3 hours of ethics.
- Producer appointment
- Insurer authorization for a licensed producer to act as its agent; the insurer files the appointment and is responsible for the producer's acts within scope.
- Nonresident reciprocity
- A producer licensed in good standing in a home state may obtain a nonresident Maine license without duplicating prelicensing education, usually through the national registry.
- Insurable interest
- A financial or love-and-affection relationship such that a person benefits from another's continued life or suffers loss from that person's death.
- Adverse selection
- Tendency of persons with higher-than-average risk to seek insurance, requiring underwriters to classify risks and set premiums accordingly.
- Utmost good faith
- Principle requiring both insurer and applicant to disclose material facts honestly; concealment or material misrepresentation can affect the contract.
- Conditional receipt
- Gives temporary life insurance from the date of application or medical exam only if the proposed insured is insurable under the insurer's rules.
- MEC
- Modified endowment contract; a life policy failing the seven-pay test, causing distributions to be taxed like annuities with penalties before age 59½.
- Revocable beneficiary
- Beneficiary who may be changed by the policyowner without that beneficiary's consent; the owner retains full rights to name or remove beneficiaries.
- Term life insurance
- Provides a death benefit for a stated period and has no cash value; if the insured survives, coverage ends unless renewed or converted.
- Universal life insurance
- Permanent policy with flexible premiums and adjustable death benefit; cash value earns current interest and is reduced by cost of insurance and expenses.
- Variable life insurance
- Permanent policy whose cash value is invested in separate-account subaccounts; it is a security requiring a prospectus and securities license.
- Incontestability clause
- After the policy has been in force generally two years, the insurer cannot contest the contract for material misrepresentation in the application.
- Extended term option
- Nonforfeiture option using cash value to buy a term policy for the original face amount for a limited period, with no further premiums due.
- Waiver of premium rider
- Waives premiums if the insured becomes totally disabled, usually after a waiting period, while keeping the policy and its benefits in force.
- Exclusion ratio
- Formula determining the tax-free portion of each annuity payment for nonqualified annuities by dividing investment in the contract by expected return.
- Immediate annuity
- Annuity purchased with a single premium and payments begin soon, often within one month or one year, used to convert savings into income.
- Variable annuity
- Annuity with cash value in separate-account investments; payments fluctuate with performance, and sale requires a securities license and prospectus.
- Roth IRA
- Individual retirement account funded with after-tax dollars; qualified distributions are tax-free after age 59½ and a five-year holding period.
- 1035 exchange
- Tax-free exchange of a life insurance policy, annuity, or qualified long-term care contract for a like-kind contract, preserving tax deferral.
- Required minimum distribution
- Minimum amount that must be withdrawn annually from most traditional retirement accounts after the required beginning age; failure triggers a tax penalty.
- Health maintenance organization
- Managed-care plan providing care through a network and often requiring a primary care physician and referrals for specialists; preventive care is typically emphasized.
- Coordination of benefits
- Rules determining which health plan pays first when a person has coverage under more than one plan, preventing duplicate payment beyond covered expenses.
- Out-of-pocket maximum
- Annual cap on covered in-network coinsurance, copayments, and deductibles that an enrollee pays; the plan pays covered benefits after the cap.
- Medicare Part A
- Hospital insurance covering inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice, and some home health care.
- Medigap open enrollment
- Six-month period starting when a person age 65 or older enrolls in Medicare Part B, when insurers must sell Medigap without medical underwriting.
- COBRA continuation
- Federal law allowing qualified beneficiaries to continue group health coverage after a qualifying event, generally for 18, 29, or 36 months at their own cost.
- Elimination period
- Waiting period after disability or long-term care benefit trigger before benefits begin; longer elimination periods usually reduce premium.
- Activities of daily living
- Basic self-care tasks used as long-term care benefit triggers: bathing, dressing, transferring, toileting, eating, and continence.