MO Life & Health flashcards

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

Missouri Department of Commerce and Insurance

The state agency, headed by the Director of Insurance, that licenses Missouri producers and insurers, enforces insurance statutes, and examines insurer financial condition.

Missouri free look period

Missouri requires individual life insurance policies to give the owner at least 10 days after delivery to return the policy for a full premium refund.

Missouri continuing education

Missouri life and health producers renew every two years and must complete 16 hours of approved continuing education per term, including at least 3 hours of ethics.

Missouri life grace period

Missouri individual life policies must allow a grace period of at least 30 days after a missed premium due date, during which the coverage remains in force.

Missouri guaranty association limits

Missouri's life and health guaranty association pays covered claims of insolvent insurers up to $300,000 in death benefits, $100,000 in cash surrender value, and $100,000 in health benefits.

Missouri temporary producer license

A license issued for up to 180 days to a designated individual, such as when a licensed producer dies or becomes disabled, allowing the insurance business to continue.

Missouri replacement notice

A producer selling a policy that replaces existing life insurance or an annuity must give the applicant a signed comparison notice disclosing the proposed replacement.

Rebating

Offering anything of value not stated in the policy, such as cash or commissions, as an inducement to buy insurance; a prohibited unfair trade practice in Missouri.

Insurable interest

A financial or love-and-affection interest in the continued life of an insured that must exist when a life policy is issued; without it the contract is unenforceable.

Principle of indemnity

The insured is restored to approximately the same financial position held before a loss and never better; life insurance is an exception because a human life has no measurable value.

Pure risk

A situation offering only the chance of loss or no loss, with no possibility of gain; only pure risks are insurable, unlike speculative risks.

Adverse selection

The tendency for people with greater-than-average risk to buy or keep insurance, controlled by insurers through underwriting, risk classification, exclusions, and policy limits.

Utmost good faith

The doctrine that both parties must disclose all material facts; insurers rely on the applicant's representations, and material misrepresentation or concealment can void the contract.

Aleatory contract

A contract in which the dollar amounts exchanged by the parties are unequal and depend on an uncertain event; insurance is aleatory, while most contracts are commutative.

Reinsurance

An arrangement in which a primary insurer cedes part of its risk to another insurer to limit its exposure; the ceding insurer remains fully liable to the policyowner.

Entire contract provision

States that the policy, the attached application, and any riders form the whole agreement; no agent may change it, and only an insurer officer may modify it in writing.

Incontestability clause

After a policy has been in force two years during the insured's lifetime, the insurer cannot deny a claim or rescind coverage because of misstatements in the application.

Misstatement of age provision

If the insured's age was misstated, the insurer adjusts the death benefit to the amount the premium actually paid would have purchased at the correct age.

Nonforfeiture options

Guaranteed choices available when a cash-value policy lapses: cash surrender, reduced paid-up insurance, or extended term insurance for the net cash value.

Automatic premium loan

A provision authorizing the insurer to use available cash value to pay an overdue premium, keeping the policy in force and creating a policy loan.

Waiver of premium rider

Waives premiums after a total disability lasting typically six months, keeping the policy in force; the death benefit and cash value continue as if premiums were paid.

Guaranteed insurability rider

Lets the insured buy specified amounts of additional coverage at stated ages or events without providing evidence of insurability, paying the insurer's standard rates.

Modified endowment contract

A life policy that fails the seven-pay test; loans and withdrawals are taxed income-first and before age 59 1/2 may incur a 10% federal penalty.

Per stirpes

A beneficiary designation under which a deceased beneficiary's share passes to that beneficiary's own heirs rather than to the remaining named beneficiaries.

Guaranteed renewable policy

The insured may renew the policy to a stated age, but the insurer may raise premiums for all policies in the same class, not for one individual insured.

Noncancellable policy

The insurer cannot cancel the policy or increase the premium before a stated age, provided the insured pays premiums on time.

Elimination period

The waiting period after a disability or illness begins before benefits become payable; a longer elimination period results in a lower premium.

Residual disability

Pays a benefit proportional to income lost when the insured returns to work but earns less; it does not require complete inability to perform any work.

Coordination of benefits

Rules determining the order in which two health plans pay so combined payments never exceed the actual expense; the primary plan pays first.

Time limit on certain defenses

After two years from issue, the insurer generally cannot contest an individual health policy for misstatements, except for fraud or nonpayment of premium.

Long-term care benefit triggers

Benefits begin when the insured cannot perform two of six activities of daily living without help, or has a severe cognitive impairment requiring substantial supervision.

Pre-existing condition

An illness or injury diagnosed or treated during a look-back period before coverage began; the length of any exclusion period is limited by federal and state rules.