NV Life & Health key terms

A duty requiring an insurance producer to act in the client's best interest when handling someone else's money or policy decisions, keeping client funds separate and accounting for every dollar received or paid out.

Inducing a policyholder to drop an existing policy through misleading or incomplete comparisons, usually to sell a replacement policy. It is an unfair trade practice that can lead to fines or license suspension.

Offering a client part of the producer's commission, or any valuable inducement not stated in the policy, to persuade them to buy. Most states, including Nevada, treat rebating as an illegal unfair trade practice.

A written authorization from an insurer that allows a licensed producer to act as its agent and sell its products. The insurer files the appointment with the state, and a producer cannot solicit without one.

A financial or love-and-affection stake in another person's continued life that justifies insuring them. It must exist when the policy is applied for, or the contract is void.

A chance of loss with no possibility of gain, such as fire, illness, or premature death. Insurance is designed to handle pure risk, not speculative risk like gambling or investing.

The tendency of people with the greatest chance of loss to seek insurance most eagerly. Insurers control it through underwriting, exclusions, waiting periods, and risk-based pricing so premiums remain adequate.

An agreement in which the dollar amounts exchanged by the parties are unequal and depend on chance. The policyholder pays small premiums but may receive a large benefit if a covered loss occurs.

The frequency with which a policyholder pays premiums: annually, semiannually, quarterly, or monthly. More frequent payments usually cost slightly more overall because of lost interest and added billing expenses.

A statistical chart showing how many people in a defined group are expected to die each year at each age. Insurers combine it with interest and expense assumptions to calculate life insurance premiums.

The savings portion of a permanent life policy that builds over time and belongs to the owner if the policy is surrendered. It also backs policy loans and nonforfeiture options.

A return of divisible surplus paid to owners of participating, usually mutual, policies. It is not guaranteed, is generally treated as a return of premium, and may be taken in cash or used to buy more coverage.

Coverage that pays a death benefit only if the insured dies during a set number of years. It builds no cash value, so it provides the most protection per premium dollar but expires without refund.

Permanent coverage with level premiums payable for life or to a stated age, guaranteed cash value, and a death benefit that stays in force as long as required premiums are paid.

Flexible permanent coverage that separates the death benefit from the cash value. The owner chooses premium amounts within limits, and monthly mortality and expense charges are deducted from the account.

A permanent policy whose cash value and death benefit fluctuate with the performance of separate account investments the owner selects. It carries market risk and must be sold with a prospectus.

A right, usually lasting 10 to 30 days after policy delivery, to return a new policy for a full refund of premiums paid. It gives buyers time to review the contract and change their mind.

A set number of days after the premium due date during which the policy stays in force, commonly 31 days for life and 10 days for health. A claim during that time is reduced by the overdue premium.

A provision stating that after the policy has been in force for about two years, the insurer cannot void coverage or deny a claim because of a misstatement on the application.

Choices given to the owner of a cash value policy who stops paying premiums: cash surrender, reduced paid-up insurance, or extended term insurance. They preserve the equity already built in the policy.

A rider that suspends premium payments while the insured is totally disabled, typically after a waiting period of about six months, while the policy and its benefits stay fully in force.

A provision letting a terminally or chronically ill insured collect part or all of the death benefit early. The payout is discounted, and any remaining amount goes to the beneficiary later.

A contract that turns a lump sum or a series of payments into income, usually for retirement. The insurer invests the money and promises to pay it back with interest over time.

The point at which an annuity's accumulated value is converted into a stream of periodic income payments. Once chosen the decision is usually irrevocable, and payments depend on the option selected.

An annuity whose value is held in separate accounts and varies with investment performance. Because the owner bears the investment risk, it is a security and requires a securities license to sell.

A fee charged for withdrawing money or cashing out an annuity or permanent policy in its early years. It is a declining percentage of account value that eventually disappears.

The amount a covered person must pay out of pocket for covered services each year before the insurer begins to pay. Choosing a higher deductible generally lowers the premium.

The percentage of covered medical costs, after the deductible is met, that the insured and the insurer each pay. In an 80/20 plan the insurer pays 80 percent and the member pays 20 percent.

A yearly cap on what a covered person pays in deductibles, copayments, and coinsurance for essential benefits. Once it is reached, the plan pays 100 percent of covered costs.

A managed care plan that provides services through a network of contracted doctors and requires members to choose a primary care physician who coordinates care and refers them to specialists.

A managed care plan that pays more when members use in-network providers and still gives partial benefits for out-of-network care, without requiring referrals to see specialists.

The waiting time, counted in days of disability, that must pass after a disability begins before disability income benefits become payable. A longer elimination period lowers the premium.

A definition of total disability that pays benefits when the insured cannot perform the duties of their own specific occupation, even if they are able to work in some other job.

Benefits paid when the insured returns to work but earns less, or is less productive, because of a covered illness or injury. The payment is a percentage of the income lost.

A method of setting group insurance premiums based on the group's own past claims and cost history, rather than only on average rates for similar groups.

A life policy funded with more premium than federal limits allow, which loses favorable tax treatment. Loans and withdrawals are then taxed as income first and may face a penalty before age 59½.

A tax-free transfer of cash value from one life insurance policy or annuity to another of the same or a more long-term type, permitted under Section 1035 of the Internal Revenue Code.

The fraction of each annuity payment that represents a tax-free return of the owner's after-tax investment. The remainder of the payment is taxable interest and is reported as income.

Employer-paid group term life coverage up to $50,000 of death benefit is free of federal income tax to the employee. Coverage above that amount creates taxable imputed income.

Life insurance proceeds paid to a named beneficiary because of the insured's death are generally free of federal income tax. Interest paid on delayed settlements, however, is taxable.