NV Life & Health flashcards

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

Certificate of authority

A license issued by a state insurance department that authorizes an insurer to transact insurance business in that state; without it the insurer is unauthorized.

Twisting

An illegal practice of misrepresenting a policy's terms to induce a policyholder to lapse or surrender existing coverage, typically to sell a replacement policy.

Rebating

Offering any inducement not stated in the policy, such as cash or commission sharing, to persuade a buyer to purchase insurance; prohibited in most states.

State guaranty association

A state organization that pays covered claims up to statutory limits when an admitted insurer becomes insolvent; it does not protect against market losses.

Law of large numbers

A principle stating that the larger the number of similar exposure units, the more closely actual losses will match predicted losses, enabling accurate rate setting.

Utmost good faith

A contract principle requiring both parties to disclose all material facts honestly; concealment or material misrepresentation can give the insurer grounds to rescind.

Aleatory contract

An agreement in which the dollar amounts exchanged by the parties are unequal and depend on an uncertain future event such as death or disability.

Waiver and estoppel

Waiver is the voluntary surrender of a known right; estoppel prevents the party from later asserting that right if another relied on the waiver to their detriment.

Conditional receipt

A receipt giving coverage from the application date, provided the proposed insured meets the insurer's underwriting requirements; otherwise coverage starts when the policy is issued.

Mortality versus morbidity

Mortality measures the frequency of death at each age and drives life insurance premiums; morbidity measures the incidence of illness or injury and drives health insurance premiums.

Section 1035 exchange

A tax-free replacement of a life insurance, annuity, or qualified long-term care contract with a like-kind contract under Internal Revenue Code Section 1035.

Premium payment modes

The frequency of premium payment: annual, semiannual, quarterly, or monthly. More frequent payments mean higher total annual cost because of lost interest and added expense.

Universal life insurance

Permanent coverage with flexible premiums and an adjustable death benefit; the cash value earns interest and monthly cost-of-insurance charges are deducted from it.

Variable life insurance

Permanent coverage whose cash value and death benefit fluctuate with separate-account investments chosen by the owner; sold only with a securities license and prospectus.

Modified whole life

Whole life insurance with lower premiums in the early years and higher premiums later, while still providing lifetime coverage and guaranteed cash value.

Incontestability clause

A provision stating that after the policy has been in force for two years, the insurer cannot contest the validity of the contract except for nonpayment of premium.

Nonforfeiture options

Guaranteed choices for a lapsed cash-value policy: cash surrender, reduced paid-up insurance, or extended term insurance; they protect the policyowner's accumulated value.

Extended term option

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

Waiver of premium rider

A rider that pays the policy's premiums if the insured becomes totally disabled, typically after a waiting period, keeping the coverage in force.

Exclusion ratio

The portion of each annuity payment treated as a tax-free return of the investment in the contract; it is excluded from gross income during annuitization.

Deferred annuity

An annuity funded over time with benefits beginning at a later date; during accumulation the cash value grows tax-deferred and surrender charges may apply.

Life income with period certain

A settlement option paying income for life but guaranteeing payments for a minimum stated period to a beneficiary if the annuitant dies early.

Required minimum distributions

Mandatory annual withdrawals from qualified retirement accounts beginning at the required beginning age; failure to withdraw triggers a steep excise tax on the shortfall.

Coinsurance

The percentage of covered medical costs the insured pays after meeting the deductible, until the out-of-pocket maximum is reached; the insurer pays the rest.

Health maintenance organization

A prepaid managed care plan in which members must use network providers and a primary care physician who coordinates care and authorizes referrals to specialists.

Metal tiers

ACA marketplace categories - bronze, silver, gold, and platinum - that rank plans by actuarial value, the share of covered costs the plan pays on average.

Own-occupation definition

A disability policy standard that pays benefits when the insured cannot perform the material duties of their own specific occupation, even if able to work elsewhere.

COBRA continuation

A federal law allowing employees and dependents to keep group health coverage after a qualifying event, at their own expense, for limited statutory periods.

Elimination period

The waiting period after a disability or illness begins before benefits become payable; it functions like a deductible measured in time.

Death benefit taxation

Life insurance proceeds paid to a named beneficiary are generally received free of federal income tax, though they may be subject to federal estate tax.

Modified endowment contract

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

Table I cost

The imputed income employees recognize on employer-provided group term life insurance coverage exceeding 50,000 dollars, based on the IRS Table I rate.