ND Life & Health key terms

North Dakota's elected statewide insurance regulator, who heads the Insurance Department. The Commissioner licenses insurers and producers, reviews policy forms and rates, investigates consumer complaints, and enforces the state's insurance laws.

The license the North Dakota Insurance Department issues to an insurer authorizing it to transact insurance business in the state. Transacting insurance without one is illegal.

An insurer's notice filed with the North Dakota Insurance Department authorizing a licensed producer to sell insurance on that insurer's behalf. A producer may not submit business for an insurer that has not appointed them.

A statutory entity funded by member insurers that pays covered claims of policyholders of insolvent life and health insurers, up to limits set in state law, such as $300,000 in life death benefits and $100,000 in cash surrender value.

An unfair trade practice in which a producer induces a policyholder to drop, surrender, or replace existing coverage by misrepresenting the old policy or by making an incomplete or misleading comparison.

Offering a prospect anything of value that is not stated in the policy, such as part of the producer's commission, gifts, or special favors, to persuade them to buy. It is an illegal unfair trade practice in North Dakota.

The purchase of new life insurance or an annuity that replaces existing coverage. North Dakota requires a written replacement notice comparing the old and new contracts, signed by the applicant, and bars sales built on incomplete comparisons.

Ongoing coursework a licensed North Dakota producer must complete to renew a license, generally 24 credit hours every two years and including a required ethics component.

A legitimate financial or emotional stake in another person's continued life, such as a family relationship or a business debt. It must exist when the policy is applied for, or the contract is not valid.

Coverage that lasts for a set number of years and pays a death benefit only if the insured dies during that period. It builds no cash value, so it usually costs less than permanent insurance.

Permanent insurance with a level premium payable for life or to a stated age, a guaranteed death benefit, and cash value that grows on a guaranteed schedule. Participating policies may also pay dividends.

Permanent coverage that separates the death benefit from the cash value. Premiums are flexible, the death benefit can often be adjusted, and the cash value earns interest at a rate the insurer declares.

Permanent insurance whose cash value is invested in separate-account subaccounts chosen by the owner. Because the owner bears the investment risk, the death benefit and cash value can rise or fall.

A contract in which the insurer guarantees the interest rate credited during accumulation and the payout amounts during annuitization. The insurer, rather than the owner, carries the investment risk.

An annuity whose cash value is invested in separate-account subaccounts, so the owner bears the investment risk. Selling one requires both a life insurance license and a securities registration.

The point at which accumulated annuity funds are converted into a stream of income payments, either for a set period or for life, using one of the payout options in the contract.

The choices a whole life owner has when a policy lapses with cash value: take the cash surrender value, a reduced paid-up policy for a smaller face amount, or extended term insurance for the existing face amount.

Money the owner borrows from the insurer using a whole life policy's cash value as collateral. Interest accrues, and any unpaid balance plus interest is subtracted from the death benefit or surrender value.

A rider that lets the insured collect part of the death benefit early, usually after diagnosis of a terminal illness or another qualifying condition. The amount paid reduces the death benefit otherwise payable.

A life policy that fails the seven-pay test because it was funded too quickly. It loses favorable tax treatment: loans and withdrawals are taxed as income first and may face a 10% penalty before age 59½.

A tax-free exchange of an existing life insurance policy, annuity, or qualified long-term care contract for a new one of like kind under Internal Revenue Code Section 1035. Funds must move directly between insurers.

The amount the insured must pay out of pocket for covered services each plan year before the health plan begins paying its share. Deductibles generally do not apply to preventive care.

The share of covered costs, usually a percentage, that the insured pays after meeting the deductible. A common split is 80/20, meaning the insurer pays 80% and the member pays 20%.

The most the insured pays in a plan year for covered in-network care, including deductibles, coinsurance, and copayments. Once it is reached, the plan pays 100% of covered benefits for the rest of the year.

A managed care plan that generally covers care only from its own network and requires members to choose a primary care physician who coordinates care and provides referrals to specialists.

A managed care plan that contracts with a network of providers at negotiated rates. Members may use in-network providers for lower cost sharing or go out of network at higher cost, usually without referrals.

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

A private health plan approved by Medicare that delivers Part A and Part B benefits, often with drug coverage and extra services, instead of original Medicare. Enrollees generally must use the plan's network.

A joint federal-state program that pays medical costs for people with limited income and resources, administered in North Dakota under state and federal rules. North Dakota expanded eligibility to low-income adults under the Affordable Care Act.

A disability income policy standard under which the insured is totally disabled if unable to perform the duties of their own specific occupation, usually for a limited period, regardless of other work available.

A state-approved arrangement in which a qualifying long-term care policy provides dollar-for-dollar Medicaid asset protection, so each dollar of benefits paid lets the policyholder keep an equal amount of assets when applying for Medicaid.

A set number of days after a policy is delivered during which the owner may return it for a full premium refund. North Dakota requires this right on individual life insurance and annuity contracts.

A 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, except for fraud or nonpayment of premium.

A period after a premium due date during which the policy stays in force even though the premium has not been paid. If the insured dies within the grace period, the overdue premium is deducted from the benefit.

The right to restore a lapsed policy by paying overdue premiums with interest and providing evidence of insurability, usually within a set number of years. The insurer may apply a new contestability period.

A provision limiting the insurer's liability if the insured dies by suicide within a stated period, commonly two years from issue. The insurer typically returns premiums paid rather than paying the death benefit.

A provision allowing the insurer to adjust the death benefit, rather than void the policy, when the insured's age or sex was misstated on the application, so the benefit equals what the premium would have purchased at the correct age.

A provision that lets the insurer pay an overdue premium from the policy's cash value as a loan, keeping coverage in force when the owner does not pay by the end of the grace period.

A membership organization that stores coded medical and lifestyle information reported by insurers. Underwriters may check it when reviewing an application, and a consumer can request a copy and dispute errors.

Prohibited insurer conduct in handling claims, such as misrepresenting policy provisions, unreasonable delay, failing to investigate, or offering far less than the claim is worth. North Dakota insurance law forbids these acts.