WI Life & Health flashcards

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

Wisconsin Commissioner of Insurance

The appointed state official who heads the Wisconsin Office of the Commissioner of Insurance and enforces insurance laws, licenses producers, examines insurers, and issues regulations.

Producer appointment

An insurer's authorization for a licensed producer to act as its agent; insurers file appointments with the state and are responsible for producers acting for them.

Continuing education requirement

Wisconsin resident producers generally complete 24 continuing education hours every two-year license term, including at least 3 hours of ethics instruction.

Pure risk

A situation with only the chance of loss or no loss and no chance of gain; it is the type of risk that insurance is designed to transfer.

Insurable interest

A financial or legal relationship in which a person benefits from another's continued life or suffers loss at that person's death; life insurance requires it at application and consent.

Adverse selection

The tendency of higher-risk individuals to seek or retain insurance more than lower-risk individuals; underwriting, exclusions, and pricing help control this tendency.

Human life value

The present value of a person's expected future earnings after personal consumption; it estimates the economic loss survivors face and helps set life insurance amounts.

Level premium

A premium that stays constant over the policy period; early premiums exceed current mortality cost and build a reserve to fund higher later mortality costs.

Premium mode

The frequency of premium payment, such as annual, semiannual, quarterly, or monthly; more frequent payments generally cost more because of lost interest and added expense.

Term life insurance

Temporary life insurance providing death protection for a stated period with no guaranteed cash value; it may be renewable, convertible, level, decreasing, or increasing.

Universal life insurance

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

Variable life insurance

Permanent life insurance whose cash value is invested in separate-account subaccounts and fluctuates with market performance; it requires a securities license and generally guarantees a minimum death benefit.

Incontestability clause

A life insurance provision stating that after typically two years from issue, the insurer generally cannot contest the policy for material misrepresentation, except for nonpayment of premium.

Grace period

A period after a premium due date, commonly 30 days for life insurance, during which coverage remains in force; the premium may be deducted from a claim.

Automatic premium loan

A life policy option that automatically borrows from available cash value to pay an unpaid premium, preventing lapse while creating a policy loan with interest.

Waiver of premium rider

A rider that waives premiums after the insured becomes totally disabled for a specified period, keeping the policy and its cash value in force.

Exclusion ratio

The portion of each annuitized payment that is a tax-free return of the investment in the contract, calculated as investment in the contract divided by expected return.

Deferred annuity

An annuity that accumulates funds before annuitization or withdrawal; it may be fixed, variable, or indexed and often has surrender charges during early years.

Joint and survivor annuity

An annuity payout that continues as long as either of two named annuitants is alive, often at a reduced amount after the first death.

Coordination of benefits

A claims rule for insureds covered by multiple health plans; the primary plan pays first and the secondary plan pays up to allowable costs without duplicating benefits.

Guaranteed renewable

A health policy renewal clause under which the insurer must renew the policy while premiums are paid but may raise premiums by class, not because of individual claims.

Out-of-pocket maximum

The set dollar limit on covered in-network costs a health plan member pays for the year, including deductibles, coinsurance, and copays; covered benefits then pay 100%.

Own-occupation disability

A disability income definition that pays benefits when the insured cannot perform the material duties of their own occupation, even if working in another occupation.

Elimination period

The waiting period after a disability begins before disability income benefits become payable; a longer elimination period generally lowers the policy premium.

Long-term care benefit trigger

LTC insurance generally pays when the insured cannot perform at least two of six activities of daily living for a specified period or has a cognitive impairment.

Master group policy

The single health insurance contract issued to an employer or group sponsor; covered employees receive certificates describing their benefits under that contract.

COBRA continuation

Federal law allowing qualified beneficiaries to continue group health coverage after a qualifying event, generally for 18 months after termination or reduced hours.

Death benefit tax treatment

Life insurance proceeds paid because of the insured's death are generally income-tax-free to the beneficiary but may be included in the insured's estate if ownership rights are retained.

Modified endowment contract

A life policy that fails the seven-pay test; distributions are taxed as income first and may incur a 10% penalty before age 59½, with exceptions.

Group term imputed income

Employer-paid group term life insurance coverage above $50,000 creates taxable imputed income for the employee, calculated using IRS Table I rates.

Buy-sell agreement

A business agreement requiring a departing owner's interest to be sold at a set price or formula; life insurance often funds the purchase at death.

Key person insurance

Life or disability insurance owned by a business on an essential employee, designed to reimburse the business for losses caused by that person's death or disability.