Flashcards

Your policy’s share of the company’s operating costs; fees for medical examinations and inspection reports, underwriting, printing costs, commissions, advertising, agency expenses, premium taxes, salaries, rent, etc. Such costs are important in determining dividends and premium rates.

In insurance, exposure is a measure of the potential risk faced by an insurance company as a result of their normal business operations—namely, selling insurance policies. When an insurer sells a policy, they must cover insured losses that fall within the terms and conditions of coverage.

Express authority in insurance refers to the explicit powers and permissions granted to an agent (producer) through a written agreement. It outlines the agent’s scope of authority and activities they are authorized to undertake on behalf of the insurer.

The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies, and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.

Misstating an insurance company’s financial position is an unfair trade practice.

False or deceptive advertising is an unfair trade practice.

An arrangement through your employer that lets a person pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. The money put into an FSA is in pre-tax dollars. It is up to the employer if the money in an FSA must be used that year. The employer may choose to allow an individual an additional 2 ½ months to spend the money after the year’s end or allow a carryforward amount that varies by year.

A foreign insurer is one whose home office is in another state. The foreign 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 drug list.

Insurance fraud occurs when an insurance company, agent, adjuster, or consumer commits a deliberate deception in order to obtain an illegitimate gain. It can occur during the process of buying, using, selling, or underwriting insurance.

A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.

The time during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the grace period or the insured dies.

The Gramm-Leach-Bliley Act seeks to protect consumer financial privacy. Its provisions limit when a financial institution may disclose a consumer’s nonpublic personal information to nonaffiliated third parties.

A health plan offered by an employer or employee organization that provides health coverage to employees and their families.

A health insurance policy that must be issued no matter the applicant’s health.

A policy that must be renewed, up to a certain age or date, so long as the premium is paid. Rates may only be changed by class.

Established at the state level to support insurers and protect consumers in the event of insurer insolvency. Guaranty Associations are funded through assessments charged to admitted insurers.

A hazard is something that increases the risk. Hazards may be physical, moral, or morale hazards.

A policy that will pay for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage. The term health insurance also includes all senior health products.

Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the arrangement. Health Reimbursement Arrangements are sometimes called Health Reimbursement Accounts.

A type of savings account that lets a person set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, a person may be able to lower their out-of-pocket health care costs. HSA funds generally may not be used to pay premiums. A person may contribute to an HSA only if they have an HSA-eligible plan (sometimes called a High Deductible Health Plan (HDHP)) — generally a health plan (including a Marketplace plan) that only covers preventive services before the deductible. An HSA may earn interest or other earnings, which are not taxable. Banks, credit unions, and other financial institutions offer HSAs.

A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but the insured will pay more health care costs themself before the insurance company starts to pay its share (also called the deductible). A high deductible plan can be combined with a health savings account (HSA), for a person to pay for certain medical expenses with money set aside tax-free in an HAS. HDHPs are commonly called an HSA-eligible plan.

The Health Insurance Portability and Accountability Act (HIPAA) lays out three rules for protecting patient health information, namely: the privacy rule, the security rule, and the breach notification rule.

An individual’s status once they have had 18 months of continuous creditable health coverage. To be HIPAA (Health Insurance Portability and Accountability Act) eligible, at least the last day of the creditable coverage must have been under a group health plan; the individual also must have used up any COBRA or state continuation coverage; they must not be eligible for Medicare or Medicaid; they must not have other health insurance; and they must apply for individual health insurance within 63 days of losing the prior creditable coverage. When an individual is buying individual health insurance, HIPAA eligibility gives a person greater protections than they would otherwise have under state law.

Skilled or unskilled care provided in an individual’s home, typically on a part-time basis.

Services to provide comfort and support for persons in the last stages of a terminal illness and their families.

Care in a hospital that usually doesn’t require an overnight stay.

An impairment rider, also known as an exclusion rider, is an attachment to an insurance policy that excludes or limits coverage for a specific health condition or pre-existing medical condition.

Implied authority refers to the actions of an agent (producer) that may extend beyond the rights and powers explicitly provided in the agency contract.

Indemnity is the process by which loss responsibility is explicitly transferred within a contractual relationship. Without this, there’s no way for an insurance policy to establish that accountability – meaning there would be no way to enforce its provided protections.

Insurance is a legal agreement between two parties – the insurer and the insured, also known as insurance coverage or insurance policy. The insurer provides financial coverage for the losses of the insured that s/he may bear under certain circumstances.

The laws that govern the business of insurance in a state.

The person or organization covered by an insurance policy.

The insurance company.

The insuring clause is found on the first page of the policy, the face of the policy. It is the insurer’s legally enforceable promise to pay. The insuring clause includes the parties to the contract, the policy effective date, and the coverage.

Coverage that is offered to an employee (and often his or her family) by an employer.

In general, a group health plan that covers employees of an employer that has 51 or more employees. In some states, large groups are defined as 101 or more.

The law of large numbers is a statistical concept that calculates the average number of events or risks in a sample or population to predict something. The larger the population is calculated, the more accurate the predictions. In the field of insurance, the Law of Large Numbers is used to predict the risk of loss or claims of some participants so that the premium can be calculated appropriately.

For an insurance policy to be a legal contract it must include four elements. C – O – A – L. L stands for legal purpose and capacity. The policy must be purchased for a legal purpose and the owner must be the age of majority in the state and of sound mind.

The amount of policy reserves (cash on hand) required under state insurance laws.

Required for an insurance producer (agent) to legally engage in the business of insurance in a state. Issued for a period of time, states will require a fee and many require continuing education to be completed to renew a license.

A cap on the total lifetime benefits you may get from an insurance company. An insurance company may impose a total lifetime dollar limit on benefits (like a $1 million lifetime cap) or limits on specific benefits (like a $200,000 lifetime cap on organ transplants or one gastric bypass per lifetime) or a combination of the two. After a lifetime limit is reached, the insurance plan will no longer pay for covered services.

Coverage for individuals who require assistance with activities of daily living in homes or a nursing facility. Many states require additional training before an agent (producer) can sell long-term care products.

Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living such as dressing or bathing. Long-term care services can be provided at home, in the community, in assisted living, or nursing homes. Individuals may need long-term care services at any age. Medicare and most health insurance plans don’t pay for long-term care.

The long-term disability income policy provides benefits, often a portion of lost income, lasting for an extended time as defined in the insurance policy.

The amount an insurance company pays on a claim.

Managed care is a healthcare delivery system organized to manage cost, utilization, and quality. Managed care may be offered by prepaid health plans, often health maintenance organizations (HMOs). HMOs provide care through a network of providers within a fixed budget. Managed care may also be offered through preferred provider organizations (PPOs). Hallmarks of managed care include provider networks, provider oversight, prescription drug tiers, and utilization management.

Shorthand for the “Health Insurance Marketplace®,” a shopping and enrollment service for medical insurance created by the Affordable Care Act in 2010. In most states, the federal government runs the Marketplace (sometimes known as the “exchange”) for individuals and families. On the web, it’s found at HealthCare.gov. Some states run their Marketplaces on different websites.

A significant misstatement on an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.