NH Life & Health flashcards

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

Insurance Commissioner

The state official who heads the New Hampshire Insurance Department and enforces insurance laws through licensing, examinations, hearings, fines, and cease-and-desist orders.

Fiduciary duty

Producers who collect premiums on an insurer's behalf must hold that money in trust and may not commingle it with personal or agency funds.

Rebating

Giving or offering a prospect anything of value not stated in the policy, such as part of the producer's commission; it is a prohibited unfair trade practice.

Twisting

Misrepresenting an existing policy to persuade a policyholder to lapse or replace it, an unfair trade practice prohibited in every state.

Pure risk

A situation offering only the chance of loss or no loss, with no possibility of gain; pure risk is the only type considered insurable.

Adverse selection

The tendency of people who most expect to suffer a loss to buy insurance eagerly; underwriting, exclusions, and waiting periods are designed to control it.

Aleatory contract

An insurance contract in which the values exchanged are unequal and depend on chance, because one party may receive far more than it paid.

Insurable interest

A financial or love-and-affection relationship that makes one person benefit from another's continued life; it must exist at policy issue, not at death.

Conditional receipt

Provides interim coverage from the date of application or medical examination, whichever is later, if the insurer would have approved the risk as applied for.

Mode of premium payment

The frequency of premium payments; annual mode costs the least because of lower billing expense and less lost interest, while monthly mode costs the most.

Term life insurance

Pays a death benefit only if the insured dies within a specified period; it builds no cash value, so it provides the most protection per premium dollar.

Variable life insurance

Permanent coverage whose cash value is invested in a separate account; the owner bears the investment risk and the sale requires both insurance and securities licenses.

Modified endowment contract

A life policy that fails the seven-pay test; loans and withdrawals are taxed as income first and face a 10 percent penalty before age 59 and one-half.

Incontestability clause

Prevents the insurer, after the policy has been in force two years, from denying a claim or rescinding coverage because of a misstatement on the application.

Reinstatement provision

Lets a lapsed policy be restored, usually within three years, by proving insurability and paying overdue premiums with interest; a new contestable period may begin.

Extended term option

A nonforfeiture option that uses the net cash value as a single premium to continue the full face amount as term insurance for a limited period.

Waiver of premium rider

Waives premiums while the insured is totally disabled beyond a waiting period, usually six months, keeping the policy and its values intact.

Exclusion ratio

The tax-free fraction of each annuity payment, calculated by dividing the investment in the contract by the expected total return over the payout.

Straight life annuity

Pays income for as long as the annuitant lives and stops at death with nothing to survivors; it yields the largest payment of the life income options.

1035 exchange

A tax-free transfer of funds from a life insurance policy or annuity into a new annuity or life policy, under the Internal Revenue Code.

Coinsurance

The share of covered expenses the insured pays after the deductible, commonly 20 percent, while the insurer pays the balance up to the out-of-pocket maximum.

HMO gatekeeper

A primary care physician in a health maintenance organization who manages care and must authorize specialist referrals; non-emergency out-of-network care is generally not covered.

Essential health benefits

Ten benefit categories, including hospitalization, prescription drugs, maternity care, and mental health, that ACA-compliant individual and small group plans must cover.

Health policy grace period

The time allowed to pay an overdue premium without lapse: 7 days for weekly mode, 10 days for monthly, and 31 days for all other modes.

Time limit on certain defenses

After two years, the insurer cannot contest an individual health policy for misrepresentation or deny a claim because a condition began before coverage.

Coordination of benefits

Rules that decide which plan pays first when a person has two health plans, ensuring combined payments never exceed the actual expenses.

Own occupation disability

A disability definition that pays when the insured cannot perform the duties of the occupation held before disability, even if able to work elsewhere.

Elimination period

The waiting period, stated in days of disability, that must pass after a disability starts before disability income benefits become payable.

Residual disability

A partial benefit paid when the insured returns to work at reduced earnings, usually in proportion to the income lost compared with pre-disability income.

COBRA continuation

Requires employers with 20 or more employees to offer continued group health coverage after events such as termination, typically for 18 months.

Certificate of coverage

The booklet or document given to each participant in a group plan that summarizes benefits, exclusions, and provisions of the employer's master policy.

Group conversion privilege

Allows a person leaving a group life or health plan to buy an individual policy without evidence of insurability, if applied for within the stated time.