MT 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

Federal law that gives states primary authority to regulate insurance and exempts insurance from most federal antitrust laws when state regulation exists.

Fiduciary premium handling

Producers must hold insurer and client premiums in a fiduciary capacity, keep separate records, and avoid commingling premiums with personal or business funds.

Twisting

An unfair trade practice in which a producer misrepresents a policy to induce a client to lapse or replace existing coverage to the client's detriment.

Peril versus hazard

A peril is the cause of a loss, such as fire or illness; a hazard is a condition that increases the chance or severity of that loss.

Insurable interest

A financial or legal interest in a person or property that supports insurance because the policyholder would suffer a measurable loss from damage or death.

Indemnity principle

Insurance restores the insured to approximately the same financial position as before a loss, without allowing profit from the loss.

Human life value

A life insurance needs method that estimates the present value of an insured's future earnings and services to dependents, then sets coverage near that amount.

Gross premium components

The gross premium equals expected mortality or morbidity cost plus operating expenses plus a reserve or profit margin, adjusted for interest earnings assumptions.

Conditional receipt

A receipt giving temporary coverage from the date of application or medical exam, provided the proposed insured meets the insurer's underwriting requirements.

Incontestability clause

After a policy has been in force for two years, the insurer generally cannot contest the policy for material misstatements on the application, except fraud or nonpayment.

Extended term option

A nonforfeiture option that uses a surrendered whole life policy's cash value to buy term coverage for the same face amount for a limited period.

Per stirpes distribution

A beneficiary designation that divides proceeds among surviving heirs by family branch, so a deceased child's share passes to that child's descendants.

Waiver of premium rider

After a waiting period, this rider waives premiums while the insured is totally disabled, keeping the policy and its values in force.

Guaranteed insurability rider

A rider allowing the insured to buy additional coverage at stated ages or events without proving insurability, usually at standard rates.

Accelerated death benefit

A rider or provision that pays part of the death benefit early when the insured is diagnosed with a terminal or qualifying chronic illness.

Exclusion ratio

For annuitized nonqualified annuities, the ratio of investment in the contract to expected total payments determines the tax-free portion of each annuity payment.

Surrender charge

A fee deducted when an annuity owner withdraws more than the permitted free amount during early contract years, designed to recover sales costs.

Joint and survivor annuity

An annuity payout that continues income for two annuitants, often spouses, and continues to the survivor after the first annuitant dies.

Guaranteed renewable policy

The insurer must renew the health policy at each premium due date, but it may increase premiums for the entire class of policyholders, not individuals.

Coordination of benefits

Rules that prevent duplicate payment when a person has two health plans by designating a primary plan and limiting secondary plan payments.

Preexisting condition exclusion

A health plan provision that limits or delays coverage for a medical condition diagnosed or treated before the policy's effective date, subject to federal rules.

Inside limit

A cap on payment for a specified health service or category, such as a daily hospital room limit, separate from or in addition to the policy's overall maximum.

Own-occupation definition

A disability income definition that pays benefits when the insured cannot perform the material duties of their own occupation, even if working elsewhere.

Residual disability benefit

A partial disability benefit that pays a proportionate amount when the insured returns to work but earns less because of the disabling condition.

Long-term care ADL trigger

Long-term care benefits commonly begin when the insured cannot perform a set number of activities of daily living or has cognitive impairment.

COBRA continuation

Federal law letting qualifying employees and dependents continue group health coverage after a qualifying event, generally at 102 percent of the premium.

Actively at work provision

A group insurance eligibility rule requiring an employee to be performing normal job duties on the effective date for coverage to begin.

Conversion privilege

A group life or health policy right allowing a departing insured to convert group coverage to an individual policy without proving insurability.

MEC tax treatment

A modified endowment contract loses favorable tax treatment; loans and withdrawals are taxed first from gain and may incur a 10 percent penalty before age 59½.

Group term over $50,000

Employer-paid group term life coverage above $50,000 creates imputed taxable income to the employee, based on IRS Table I rates.

HSA tax advantage

Health savings account contributions are tax-deductible, account growth is tax-deferred, and qualified medical withdrawals are tax-free when paired with a high-deductible health plan.

Disability benefit taxation

Disability income benefits are taxable to the recipient if the employer paid the premiums; benefits are tax-free if the employee paid premiums with after-tax dollars.