NJ Life & Health key terms

A requirement that the person buying life insurance have a financial or emotional stake in the continued life of the insured, such as a spouse, business partner, or creditor, at the time the policy is applied for.

A chart showing the rate of death expected at each age in a population; insurers combine it with assumed interest to calculate premiums for life insurance and annuity products.

The pattern in which people at higher risk of loss are more eager to buy or keep insurance than lower-risk people, which makes careful underwriting and accurate applications essential.

A membership bureau that keeps coded medical and lifestyle information reported by insurers; underwriters may review it when an application shows inconsistencies, and consumers can request their own file.

A person licensed by the state to sell, solicit, or negotiate insurance for an appointed insurer, and who must follow licensing, disclosure, and conduct rules.

A producer's or insurer's legal duty to hold money belonging to others in trust, keep accurate records, and put the client's or insurer's interests ahead of personal gain.

Coverage that pays a death benefit only if the insured dies within a stated period; it builds no cash value and typically costs less than permanent insurance for the same face amount.

Permanent coverage with a level premium, a guaranteed death benefit, and cash value that grows tax deferred; it stays in force as long as required premiums are paid or cash value covers them.

Flexible permanent coverage with a separately tracked cash value credited interest; the owner may change premium and death benefit amounts, but monthly cost-of-insurance and expense charges keep reducing the value.

Permanent insurance whose cash value is invested in separate accounts chosen by the owner, so the death benefit and cash value may rise or fall with market results.

One policy insuring two people, usually spouses, that pays when the second insured dies; it is commonly bought to provide funds for estate settlement costs.

A clause providing that after the policy has been in force for a stated period, usually two years, the insurer generally cannot cancel it or deny a claim because of inaccurate answers on the application.

A provision that limits what the insurer pays if the insured dies by suicide within a stated period, typically two years, after which the full death benefit is payable.

The days after a premium due date during which a policy remains in force even though payment is late; a death during that time is paid with the overdue premium subtracted.

Restoring a lapsed policy by proving insurability and paying the overdue premiums plus interest, generally allowed only within a limited number of years after the lapse.

Choices available for the cash value when a permanent policy is surrendered or lapses: cash surrender, reduced paid-up insurance, or extended term insurance.

A rider that cancels premium payments while the insured is totally disabled for a waiting period, keeping the policy and its values in force.

A set number of days after delivery during which the policyowner may return the policy for a full refund of premium, no questions asked.

A contract that turns premiums into a stream of income payments, often guaranteed for life, and is used mainly to protect against the risk of outliving one's savings.

The years before a deferred annuity begins paying income, during which premiums earn interest or investment results and early withdrawals may trigger surrender charges.

The conversion of an annuity's accumulated value into scheduled income payments, after which the payment terms chosen generally cannot be altered.

The share of each annuity payment that is a tax-free return of the after-tax money paid into the contract; it applies until the investment in the contract is recovered.

An annuity in which the insurer guarantees the interest credited and the amount of each payment, so the owner bears no investment risk and receives a predictable income.

An annuity whose value follows separate-account investments selected by the owner; income varies with performance, the owner carries the risk, and a securities license is needed to sell it.

The amount a member must pay toward covered medical care each year before the health plan starts paying its share of the bill.

The percentage of covered charges the insured and the plan each pay after the deductible is satisfied, for example a plan paying 80 percent and the member paying 20 percent.

The most a member pays in a year for deductibles, copayments, and coinsurance on covered in-network care; after that the plan pays covered costs in full.

A health plan that contracts with a defined provider network and generally covers care only from those providers, often requiring a primary care physician to coordinate treatment.

A health plan that pays the largest share for in-network providers but still pays something for out-of-network care, and usually lets members see specialists without a referral.

A medical condition diagnosed or treated before new health coverage begins; under current federal rules, major medical plans generally cannot exclude it or charge more because of it.

A health policy clause stating that after a set period, usually two years, the insurer cannot use misstatements on the application to deny a claim, except for fraud.

A health policy the insurer must renew at the insured's option as long as premiums are paid, though the insurer may increase premiums for an entire class of policyholders.

A health policy in which the insurer cannot cancel the coverage or raise the premium while premiums are paid, giving the insured a fixed rate for the policy term.

The right to change from group coverage to an individual policy, usually within a set number of days after group coverage ends, without proving insurability.

The New Jersey agency that licenses insurers and producers, reviews policy forms and rates, handles consumer complaints, and enforces state insurance statutes and regulations.

The insurer's written notice to the state that a licensed producer is authorized to represent it; a producer may not sell a company's products without a current appointment.

Credit hours a New Jersey licensed producer must complete during each license renewal period, including required ethics hours, to keep the license active.

The act of surrendering or lapsing existing life insurance or an annuity to buy new coverage; New Jersey requires a written comparison and notice so the buyer sees any disadvantages.

Convincing a policyholder to drop or replace coverage through misleading or incomplete comparisons of policies; a prohibited unfair trade practice that can cost a producer his or her license.

A private, state-chartered entity funded by member insurers that pays certain claims of policyholders of insolvent life and health insurers, within statutory limits.