NJ 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 financial or emotional stake in the continued life of the insured that must exist when the policy is issued; without it the life insurance contract is void.

Human life value approach

A method of sizing life insurance needs that calculates the present value of the insured's expected future earnings after subtracting personal living expenses.

Gross premium factors

The three elements used to price life insurance: mortality cost for expected death claims, interest earnings assumed on reserves, and expense loading for operating costs.

Policy reserve

Money an insurer must hold for future obligations; under a level premium the reserve grows in early years because premiums exceed the mortality cost of that period.

Mutual insurer dividends

Distributions of divisible surplus to policyholders of a mutual insurer, treated as a return of premium and generally not taxable until they exceed total premiums paid.

Term life insurance

Coverage that provides death protection for a specified number of years and pays only if the insured dies while the term is in force; it builds no cash value.

Convertible term

A term policy feature letting the owner exchange coverage for a permanent policy without proving insurability, usually before a stated age or policy year.

Universal life option A

A level death benefit design in which the cash value is included in the face amount, so the net amount at risk decreases as cash value grows.

Variable life insurance

Permanent coverage whose cash value is invested in separate account subaccounts; the owner bears investment risk and the producer also needs a securities registration.

Survivorship life insurance

A second-to-die policy that pays the death benefit only after both insureds have died, commonly used to fund estate taxes and final settlement costs.

Incontestability clause

A provision stating that after two years from issue the insurer cannot contest the policy for misrepresentation on the application; nonpayment of premium is still actionable.

Nonforfeiture options

Guaranteed choices available when a whole life policy is surrendered or lapses: cash surrender value, reduced paid-up insurance, or extended term insurance for a limited period.

Waiver of premium rider

A rider that waives premiums during total disability continuing past an elimination period, usually six months, and typically runs until the insured reaches age 65.

Extended term option

A nonforfeiture choice that uses net cash value to buy term coverage at the full face amount for whatever period the money will purchase, with no further premiums due.

Accelerated death benefit

A provision allowing the owner to receive part of the death benefit early upon diagnosis of a terminal or qualifying chronic illness, with the remaining benefit reduced accordingly.

Exclusion ratio

The share of each annuity payment treated as a tax-free return of the contract's investment basis, computed as investment in the contract divided by expected total return.

Immediate annuity

An annuity bought with one lump sum that begins income payments within a single payment interval, with no accumulation period and no cash value buildup.

Accumulation units

Units credited to a variable annuity during the accumulation period whose value rises and falls with the investment performance of the separate account subaccounts.

Straight life income

An annuity payout guaranteeing income for life that stops at death with nothing refunded to survivors, producing the largest payment of any life income option.

Morbidity rate

The rate of sickness and injury in a population, used by health insurers to project expected claims and set premiums rather than relying on life insurance mortality tables.

Coinsurance

The percentage of covered expenses remaining after the deductible that the insured must pay, such as 20% of the allowed charge in an 80/20 plan.

HMO gatekeeper

A primary care physician in a health maintenance organization who coordinates member care and must authorize referrals before a specialist visit is covered.

HSA eligibility

A tax-advantaged account open only to people enrolled in a qualifying high-deductible health plan; contributions roll over and unused funds remain with the owner.

Guaranteed renewable

A renewability provision under which the insurer must renew the policy and cannot cancel an individual or single them out for a rate increase, though class rates may rise.

Coordination of benefits

Rules that establish which plan pays first when a person is covered by more than one health plan; the primary plan pays before the secondary plan.

COBRA continuation

Federal law requiring group health plans of 20 or more employees to allow continued coverage after a qualifying event, generally for up to 18 months.

Preexisting condition limit

A policy period during which benefits for a condition treated before coverage began may be excluded, with duration strictly limited for group plans by federal portability rules.

NJ Department of Banking and Insurance

The New Jersey agency that licenses producers, reviews and approves policy forms and rates, and enforces insurance law including the Insurance Fraud Prevention Act.

NJ free look period

A newly delivered New Jersey life insurance policy may be returned within 10 days for a full premium refund, with the contract treated as void from the start.

Notice regarding replacement

A New Jersey disclosure signed when new life insurance will replace existing coverage, comparing the old and new policies for the applicant before issuance.

Twisting

Misrepresenting an existing policy to persuade a policyholder to lapse, surrender, or replace it; a prohibited unfair trade practice under New Jersey insurance law.

NJ guaranty association

The New Jersey Life and Health Insurance Guaranty Association pays covered claims of policyholders of insolvent member insurers, up to limits such as $300,000 of death benefit.