Flashcards
One of the four elements required to have a legal contract. Acceptance is often made by the underwriter after reviewing the applicant’s application. The underwriter may make a counter-offer, in which case acceptance is made by the applicant.
Insurance policies are contracts of adhesion. This means that if there is a lawsuit related to ambiguity in the contract it will always be decided in the interest of the insured, the insurer must stick to that interpretation. If they had wanted it interpreted otherwise they should have been more clear.
An admitted insurer can legally do business in a state. The insurance company must meet the state’s legal and financial requirements to be an authorized insurer.
Adverse selection occurs when only bad risks sign up for life insurance. Group policies have participation percentages to prevent adverse selection.
The Affordable Care Act was enacted in March 2010. The law has 3 primary goals: make affordable health insurance available to more people, expand Medicaid to cover all adults with income below 138% of the federal poverty level (not all states have expanded their Medicaid programs), and support innovative medical care delivery methods designed to lower the costs of health care.
An insurance company representative licensed by the state who solicits and negotiates contracts of insurance, and provides service to the policyholder for the insurer. An agent can be an independent agent who represents at least two insurance companies or a direct writer who represents and sells policies for one company only. Agents are also referred to as insurance producers.
Insurance contracts are aleatory, the outcome depends upon chance.
An alien insurer is one whose home office is in another country, but that is doing business in this state.
Apparent authority is the appearance of power on behalf of the insurer through the actions or use of identifying materials by the agent (producer), such as company advertising material. This type of authority occurs when a principal permits an agent to act on its behalf without either expressed or implied authority.
A statement of information made by a person applying for life insurance. It helps the life insurance company assess the acceptability of risk. Statements made on the application are used to decide on an applicant’s underwriting classification and premium rates.
The authorization for an agent (producer) to act for or represent an insurance company. An agent must have a minimum of one appointment but may have as many as they wish.
An authorized insurer can legally do business in this state.
Avoidance is a risk management tactic whereby the risk of loss is prevented in its entirety by not engaging in activities that present the risk.
A boycott is a concerted refusal to deal or a group action designed to pressure another party into doing something by withholding or enlisting others to withhold patronage or services from the target. It can be a method of shutting a competitor out of a market or preventing entry of a new firm into a market. Boycott is an unfair method of competition that is prohibited under state law.
A policy that may be canceled by the insurer during the policy period.
Coercion is an unfair trade practice that occurs when a producer applies physical or mental force or threat of force to persuade another to buy insurance.
The percentage of costs of a covered health care service the insured pays (20%, for example) after the deductible has been met.
The head of the state’s Department of Insurance. The Commissioner may also be referred to as the Director or Superintendent depending upon the state. The Commissioner’s job is to supervise the insurance business in a state and administer that state’s insurance laws.
To be legally valid a contract must be entered into by competent parties. This means that the parties understand the contract that they are agreeing to.
Concealment is failure to disclose a material fact.
Concurrent review evaluates medical necessity decisions during hospitalization.
Consideration is an exchange of value. Consideration for the insured is the premiums paid plus the answers to the questions on the application. Consideration for the insurer is the insurer’s promise to pay. Consideration does not have to be equal.
The consideration clause is the part of the insurance contract that sets forth the initial premium payment and renewal premiums as well as the frequency of the premiums due.
A federal law that may allow an individual to temporarily keep health coverage after their employment ends, they lose coverage as a dependent of the covered employee, or another qualifying event. When a person chooses COBRA coverage, they pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee.
In most cases, an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.
Life insurance is a contract of adhesion, where one party (the insurer) states the provisions of the contract while the other party (the insured) is not involved in its drafting, but whose participation is in either agreeing with it or declining it.
The ability, in some states, to switch from job-based coverage to an individual policy when a person loses eligibility for job-based coverage. Family members not covered under a job-based policy may also be able to convert to an individual policy if they lose dependent status (for example, after a divorce).
Helps to reinforce the principle of indemnity when a person has more than one health insurance policy. One policy will be primary coverage, and the other will be excess (secondary). Ensures that there is nonduplication of coverage.
A fixed amount ($20, for example) a person pays for a covered health care service after they have paid the deductible. Copayments can vary for different services within the same plan, like drugs, lab tests, and visits to specialists.
Credit disability insurance protects the balance of a debt. If the borrower becomes unable to work due to illness or injury the policy helps pay off loan payments.
Health insurance coverage under any of the following: a group health plan; individual health insurance; student health insurance; Medicare; Medicaid; CHAMPUS and TRICARE; the Federal Employees Health Benefits Program; Indian Health Service; the Peace Corps; Public Health Plan (any plan established or maintained by a State, the U.S. government, a foreign country); Children’s Health Insurance Program (CHIP); or, a state health insurance high-risk pool. When a person has prior creditable coverage, it reduces the length of a pre-existing condition exclusion period under new job-based coverage.
The amount the insured pays for covered health care services before the insurance plan starts to pay. After the deductible, there is usually a copayment or coinsurance for covered services. The insurance company pays the rest. Many plans pay for certain services, like an annual exam or disease management programs, before the deductible has been met. All Marketplace health plans pay the full cost of certain preventive benefits before the deductible applies. Some plans have separate deductibles for certain services, like prescription drugs. Family plans often have both an individual deductible, which applies to each person, and a family deductible, which applies to all family members.
Defamation is being false or maliciously critical of an insurer’s financial condition.
Benefits that help pay for the cost of visits to a dentist for basic or preventive services, like teeth cleaning, X-rays, and fillings.
A child or other individual for whom a parent, relative, or other person may claim a personal exemption tax deduction. Under the Affordable Care Act, individuals may be able to claim a premium tax credit to help cover the cost of coverage for themselves and their dependents.
Insurance coverage for family members of the policyholder, such as spouses, children, or partners.
Insurance sold directly to the insured by an insurance company through its own employees by mail or over the counter
A limit in a range of major life activities. This includes activities like seeing, hearing, walking, and tasks like thinking and working. Different policies have different disability standards.
Insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of an illness, sickness, or accident. It may include critical illness or accidental death benefits. Policies are available as short-term or long-term coverage.
A domestic insurer is one whose home office is in this state. The domestic insurer is doing business in this state.
A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a formulary.
The date on which an insurance policy becomes effective.
There are four elements required to have a legal contract: C – O – A – L. Consideration, offer, acceptance, and legal purpose and capacity.
Not all risks are insurable. Pure risk involves no chance of gain. Pure risk is insurable. Speculative risk, like gambling, involves a chance of gain or chance of loss. Speculative risk is not insurable.
The elimination period, or waiting period, is the amount of time that a person is unable to work before the coverage kicks in. The elimination period begins when the person meets the policy’s definition of totally disabled. The longer the elimination period, the lower the premium.
The entire contract is admissible in court. The entire contract includes the policy and anything else attached at issue, such as the application and any riders. The entire contract clause protects both the insurer and the insured. No changes may be made to the policy after issuance unless both parties agree to the change.
A type of professional liability insurance that protects an insurance producer from claims arising from services provided (or those not provided). E&O does not cover criminal acts.
A set of 10 categories of services health insurance plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services. All plans must offer dental coverage for children. Dental benefits for adults are optional. Specific services may vary based on each state’s requirements.
Health care services that a health insurance plan doesn’t pay for or cover.
An exclusion is an event (peril, accident, occupation, avocation) that an insurance policy will not cover.