PA Life & Health key terms

The state agency that licenses insurers and producers, examines insurer finances and market conduct, reviews policy forms and rates, and handles consumer complaints about insurance transactions in Pennsylvania.

A license issued by the Pennsylvania Insurance Department that authorizes an insurance company to transact specified lines of insurance business in the state.

An insurance company authorized by the Pennsylvania Insurance Department to do business in the state and therefore subject to its solvency, rate, and market conduct regulation.

An insurer not admitted in Pennsylvania that may sell coverage for risks admitted insurers decline, but only through a specially licensed surplus lines producer after a diligent search of the admitted market.

The credential the Pennsylvania Insurance Department issues to individuals or agencies authorizing them to solicit, negotiate, or sell insurance, obtained by passing an exam and meeting prelicensing and background requirements.

An insurer's written authorization filed with the Pennsylvania Insurance Department that allows a licensed producer to act as its agent for specified lines of business.

A producer's duty to hold premiums and other funds belonging to insurers or clients in a trust capacity and account for them properly rather than commingling or misusing the money.

Mixing client or insurer funds with a producer's personal or business operating money, an improper practice that violates the producer's fiduciary duty under Pennsylvania law.

Inducing a policyholder to lapse, surrender, or replace coverage through misleading or incomplete comparisons of policies, a prohibited unfair trade practice in Pennsylvania.

Repeatedly replacing or rewriting a policyholder's coverage mainly to generate new commissions, generally to the policyholder's disadvantage, and treated as an unfair trade practice.

Prohibited business conduct such as misrepresentation, rebating, twisting, and unfair claim settlement, defined in Pennsylvania statute and subject to department penalties.

Offering a client part of the producer's commission or any inducement not stated in the policy as an incentive to buy insurance, which Pennsylvania law prohibits.

The ongoing credit hours a licensed Pennsylvania producer must complete during each renewal period, including specified ethics hours, to keep the license in force.

A review by the Pennsylvania Insurance Department of an insurer's or producer's sales, underwriting, claims, and complaint practices to verify compliance with state law.

A statutory entity funded by admitted insurers that pays covered claims of policyholders of an insolvent member insurer, subject to statutory limits and exclusions.

The condition in which an insurer's liabilities exceed its assets or it cannot meet obligations as they come due, triggering state regulatory action and guaranty association protection.

The uncertainty or chance of financial loss; in insurance, the person or property exposed to a peril that a policy may cover.

The specific cause of a possible loss, such as fire, accident, illness, or death, as distinguished from the broader uncertainty of risk itself.

A condition that increases either the chance a peril will occur or the severity of the resulting loss, such as poor health or careless habits.

A risk condition arising from a person's dishonest or dishonorable character or behavior, such as intentionally causing a loss to collect benefits.

The tendency of people with greater-than-average risk to seek or keep insurance more actively than low-risk people, which insurers counter through underwriting and policy design.

A financial or personal stake in the person or property insured such that loss or damage would cause a genuine economic or emotional loss to the policyholder.

The statistical principle that as the number of similar exposure units increases, actual loss experience becomes more predictable and closer to the expected average.

The principle that insurance restores the insured to approximately the same financial position held before a loss, without allowing profit from the loss.

Insurance bought by an insurer from another insurer to spread unusually large or numerous losses and to protect its surplus and capacity to write business.

The portion of a risk or loss an insurer keeps for its own account rather than transferring to a reinsurer.

The process of evaluating an applicant's risk characteristics, classifying them, and deciding whether and on what terms to issue coverage and at what premium.

Grouping applicants with similar expected loss characteristics into rating classes so each class pays a premium reflecting its anticipated claims experience.

The amount a policyholder pays, typically monthly, quarterly, or annually, in exchange for an insurer's promise to provide the coverage described in the policy.

The stated death benefit of a life insurance policy payable to the beneficiary upon the insured's death, before adjustments such as loans or unpaid premiums.

The savings or equity component that builds in permanent life insurance, which the owner may borrow against or receive upon surrender during the insured's lifetime.

Permanent life coverage with level premiums guaranteed for life, a guaranteed cash value accumulation, and a death benefit that generally remains in force as long as premiums are paid.

Life coverage that provides a death benefit only if the insured dies within a stated period, with no cash value, typically offering the most protection per premium dollar.

The person, trust, or estate named in a life policy to receive the death proceeds when the insured dies.

The person or entity designated to receive policy proceeds if the primary beneficiary dies before the insured or otherwise cannot collect.

An advance from an insurer to a permanent policy owner, secured by the policy's cash value, which reduces the death benefit or cash value if not repaid.

A period after a premium due date, commonly 30 or 31 days, during which coverage stays in force even though the premium has not yet been paid.

Termination of coverage because the required premium was not paid within the grace period and the policy has no cash value or other provision keeping it in force.

A permanent life policy right allowing an owner who stops paying premiums to convert the accumulated cash value into reduced paid-up coverage, extended term coverage, or cash surrender.

Buying a new life policy while surrendering, lapsing, or converting existing coverage, a transaction requiring disclosure notices and comparison of benefits and costs.

A contract in which an insurer receives premiums and later makes periodic income payments, used mainly to distribute retirement funds over a chosen period.

The phase of an annuity before income payments begin, during which premiums and any interest or investment earnings build the contract's value.

A fee an insurer imposes when a policyholder withdraws funds, cashes out an annuity, or cancels certain coverage in the early policy years, usually declining over time.

Rules determining which of two or more health plans pays first when a person is covered by multiple plans, so total payments do not exceed the covered expense.

The amount an insured must pay out of pocket for covered services before an accident and health policy begins paying benefits, unless the expense is exempted.

A cost-sharing arrangement in which the insured and insurer split covered health expenses by a stated percentage after the deductible is satisfied.

The cap on an insured's yearly cost sharing, after which the health plan pays covered expenses at the stated benefit level.

A period beginning when a policy is issued during which benefits are not yet payable, often used for disability or specified conditions.

The period of time a disability income policyholder must be disabled before disability benefits begin, functioning like a time deductible.

A specific condition, treatment, cause, or circumstance listed in a health policy for which no benefits are payable.

A medical condition for which a person received diagnosis, care, or treatment before obtaining coverage, which may limit or delay benefits as permitted by law.

Federal law that restricts group health plans from denying coverage or charging more based on health status and sets privacy and portability standards for health information.

The process by which an insurer or its contractor evaluates the medical necessity, appropriateness, and efficiency of health care services before, during, or after treatment.

A system that arranges health care delivery to control cost and quality through provider networks, primary care coordination, and review of services.

A health plan that offers better benefits or lower cost sharing when members use hospitals and physicians in its contracted network and allows use of outside providers at higher cost.

A statement from a health insurer showing services claimed, the amount allowed, what the plan paid, and what the member may owe the provider.

The formal process a policyholder may use to appeal a Pennsylvania insurer's adverse decision on a claim or on authorization of services.