MN Life & Health flashcards

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

Insurable interest

A relationship in which the policy owner would suffer genuine financial or emotional loss from the insured's death; it must exist when the policy is issued.

Whole life insurance

Permanent coverage with level premiums, guaranteed cash value, and a guaranteed death benefit that stays in force until the insured dies or the policy matures.

Universal life option A

A death benefit option paying a level face amount; the pure insurance amount at risk decreases as the cash value grows over the policy's life.

Modified endowment contract

A life policy failing the 7-pay test; loans and withdrawals are taxed gains-first and may trigger a 10 percent penalty before age 59½.

Incontestability clause

After a policy has been in force two years, the insurer cannot deny coverage or rescind for material misstatements on the application, absent fraud or nonpayment.

Nonforfeiture options

Guaranteed choices when a whole life policy lapses with cash value: take cash surrender, reduced paid-up insurance, or extended term coverage for the same face amount.

Automatic premium loan

A provision using available cash value to pay an overdue premium at the end of the grace period, preventing lapse without the owner requesting a loan.

Misstatement of age provision

If the insurer discovers the insured's age or sex was reported incorrectly, the death benefit is adjusted to the amount the actual premium would have purchased.

Waiver of premium rider

Waives premiums while the insured is totally disabled beyond the waiting period, usually six months, and often refunds premiums paid during that waiting period.

Guaranteed insurability rider

Lets the owner buy specified amounts of additional coverage on option dates without providing evidence of insurability, regardless of health changes.

Accelerated death benefit rider

Advances part of the face amount when the insured is terminally ill, typically with a 12-month prognosis; the advance and charges reduce the final death benefit.

Child term rider

Provides level term coverage on insured children, usually convertible to permanent coverage at specified ages or milestones without proof of insurability.

Exclusion ratio

The tax-free portion of each annuity payment, calculated as investment in the contract divided by expected total return; it applies only after annuitization.

Joint and survivor annuity

Pays income for two lives and continues to the survivor, usually at a reduced amount such as two-thirds; it produces smaller payments than a life-only option.

Indexed annuity cap and floor

The cap is the highest index credit the contract can earn in a period; the floor is the minimum, often zero, protecting against index losses.

Accumulation period

The phase before annuitization during which premiums build cash value through interest credits or subaccount performance; nonqualified withdrawals here are taxed gains-first.

Out-of-pocket maximum

The most a member pays in covered cost sharing during a benefit year; after it is met, the plan pays 100 percent of covered in-network expenses.

Health maintenance organization

A managed care plan requiring a primary care physician who coordinates care and authorizes referrals; non-emergency care outside the network is generally not covered.

COBRA continuation

Federal law letting qualified beneficiaries keep group coverage after a qualifying event, typically 18 months for job loss and up to 36 months in other cases.

Coordination of benefits

Rules determining which of two plans pays first when a person is covered twice, preventing duplicate payment and typically applying the birthday rule to children.

Own occupation disability

The insured is disabled if unable to perform the material duties of their own specific occupation, even if able to work elsewhere; the most favorable definition.

Elimination period

The waiting period, often 30 to 180 days, between the start of disability and when benefit payments begin; a longer period reduces the premium.

Residual disability benefit

Pays a reduced benefit proportional to income lost when the insured returns to work part time or at lower pay after a disability.

Activities of daily living

Six basic self-care tasks including bathing, dressing, eating, toileting, transferring, and continence; long-term care policies typically require inability to perform two.

Grace period health insurance

A period after the premium due date, commonly 7 days for individual and 31 days for group coverage, during which the policy stays in force.

Concurrent utilization review

Review of an ongoing hospital stay to confirm medical necessity, allowing the insurer to limit or deny payment for days it deems unnecessary.

Reinstatement provision

Allows a lapsed health policy to be restored within a stated period, often 45 days, on payment of the overdue premium plus evidence of insurability.

External review

An independent review of a denied claim by a party outside the insurer, available after exhausting internal appeals for medical-necessity disputes.

Twisting

Inducing a policyholder to drop existing coverage through misleading comparisons or incomplete statements; it is an unfair trade practice subject to penalties.

Rebating

Offering an inducement not stated in the policy, such as cash or gifts, to persuade a buyer to purchase insurance; prohibited as unfair discrimination.

Fiduciary duty to premiums

A producer holding premium funds acts as a fiduciary, must keep those funds separate from personal money, and must remit them promptly to the insurer.

Minnesota Department of Commerce

The state agency that licenses Minnesota insurance producers, examines insurers, and enforces insurance statutes through the commissioner's orders and penalties.