OH Life & Health key terms

Giving any part of a producer's commission or other valuable consideration to a client as an inducement to buy insurance; most states prohibit it as an unfair trade practice.

An unfair trade practice in which a producer uses misrepresentation or incomplete comparisons to persuade a policyholder to drop one policy and replace it with another.

A requirement that the person buying life insurance has a financial or emotional stake in the continued life of the insured, so the policy is not a wager on someone's death.

An insurance policy drafted by the insurer, with the applicant having little or no ability to negotiate the wording; ambiguities are generally resolved in favor of the insured.

An agreement in which the amounts exchanged by the parties are unequal and depend on chance; the insured may pay modest premiums and receive a large benefit, or receive nothing.

A doctrine holding that an insurer who voluntarily gives up a known right cannot later enforce that right against a person who reasonably relied on the insurer's conduct to their own detriment.

A receipt issued when an application and initial premium are submitted; coverage starts on the receipt date only if the proposed insured turns out to meet the insurer's underwriting standards.

The underwriting process of grouping applicants by expected mortality or morbidity based on health, occupation, hobbies and similar factors, so each policyholder pays a premium matching their risk level.

A beneficiary whose right to the policy proceeds cannot be changed or cancelled by the policyowner without that beneficiary's written consent.

Coverage for a set number of years that pays a death benefit only if the insured dies during that period; it builds no cash value and may include renewal or conversion rights.

Permanent coverage with level premiums payable for life or to a stated age; it guarantees a death benefit and builds cash value the owner can borrow against or surrender.

Flexible permanent coverage that separates the death benefit from the cash value; the owner may vary premium payments and, within limits, the death benefit, while the insurer deducts monthly costs.

Permanent coverage whose cash value and, in some designs, death benefit rise or fall with the investment performance of separate accounts chosen by the owner, who bears the investment risk.

The savings portion of a permanent life policy that grows over time, belongs to the policyowner, and can be reached through a loan, withdrawal, or surrender of the policy.

Guaranteed choices, usually cash surrender, reduced paid-up insurance, or extended term insurance, that give a policyowner value from a permanent policy when premiums stop and it lapses.

A nonforfeiture option that uses the policy's net cash value to purchase term coverage for the full face amount for as long as that money will buy, with no further premiums due.

Money borrowed from the insurer using a permanent policy's cash value as collateral; interest accrues, and any unpaid balance plus interest is subtracted from the death benefit.

A provision allowing the insurer to advance an unpaid premium from the policy's cash value so the coverage stays in force after the grace period ends.

A set number of days after a premium due date, commonly 31 for life insurance, during which the policy remains in force and the insured may pay without a lapse.

A provision stating that after the policy has been in force for a stated period, usually two years, the insurer cannot void coverage for misstatements on the application, except for nonpayment of premium.

A rider that cancels premium payments while the insured is totally disabled, as the policy defines it, and keeps the coverage in force throughout that disability.

The choices a beneficiary has for receiving policy proceeds, such as a lump sum, fixed period, fixed amount, or interest only, instead of one single payment.

A contract in which an insurer accepts premiums and in return makes periodic payments to an annuitant, typically to provide retirement income that cannot be outlived.

The point at which an annuity's accumulated value is converted into a stream of income payments, after which the owner generally can no longer take the money as a lump sum.

A fee the insurer deducts from an annuity's value when the owner withdraws more than the allowed free amount during the early contract years, used to recover sales costs.

A life policy that fails the seven-pay test by taking in more premium than allowed during the first seven years; loans and withdrawals are taxed income-first and may face a 10% penalty before age 59½.

A tax-free transfer of cash value from one life insurance policy or annuity contract to another of like kind, allowed under Section 1035 of the Internal Revenue Code.

Life insurance proceeds paid to a beneficiary because the insured died are generally free of federal income tax, although they may be counted in the insured's taxable estate.

The amount an insured must pay out of pocket for covered services, usually within a year, before the health plan begins paying its share of the cost.

The percentage of covered medical costs the insured pays after satisfying the deductible, with the insurer paying the rest up to any out-of-pocket maximum.

A health condition diagnosed or treated before coverage begins; group plans may limit benefits for a period unless the person has qualifying prior creditable coverage.

A policy the insurer must keep renewing at the owner's option as long as premiums are paid, though the insurer may raise premiums for an entire class of policyholders, not one individual.

The waiting time, measured in days or weeks after a disability or illness begins, that must pass before benefits become payable under a disability income or long-term care policy.

A disability definition that pays benefits when the insured cannot perform the main duties of their own specific occupation, even if they could work in another field; often limited to a set period.

A provision that pays a partial benefit when the insured returns to work but still earns less than before the disability, usually in proportion to the income lost.

A federal law allowing employees and covered dependents to continue group health coverage for a limited time after a qualifying event such as job loss, paying the full cost themselves.

Rules that determine which of two health plans pays first when a person is covered by both, so combined payments never exceed the actual charges.

A private plan approved by Medicare that delivers Part A and Part B benefits, often with drug coverage and extra services, in place of original Medicare for people who enroll.

A private supplemental policy sold to people enrolled in original Medicare that helps pay costs Medicare leaves to the patient, such as copayments, coinsurance and deductibles.

Coverage that pays for custodial or skilled services such as nursing home care, home care, or assisted living when the insured cannot perform activities of daily living.