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Long-Term Disability
(1) Usually, a disability having a duration longer than 90 days, but the exact duration being variable.
Presumptive Disability
physical condition which presumes, for benefit payment purposes, that the individual is disabled regardless of the individual�s actual ability to perform an occupation. Total and permanent blindness is an example.
Franchise Insurance
In life and health insurance, a plan covering groups of people with individual policies that are uniform in provisions a though they may differ in benefits. Usually used for groups too small to qualify for true group coverage.
Occupational Risk
A condition in an occupation that increases the possibility of accident, sickness, or death.
Net Premium
1) The amount of premium minus the commission.
Medicare Select Policy
A Medicare supplement policy or certificate that contains restricted network provisions conditioning the payment of benefits on the use of network providers.
Limited-Pay Life
A permanent life insurance policy on which premiums are paid for a specified number of years or to a specified age of the insured. Protection continues for the entire life of the insured.
Life Income Option
A settlement option that provides for payments during the entire life of the payee. There are four methods.
Free Look Provision
A policy provision that permits the proposed policyowner to review the policy for a specified number of days and, if desired, return it to the insurer for a full premium refund. Number of days varies, but commonly it is 10, 15 or 20. If the individual exercises the right to return the policy, the insurer is not liable for any claims that may arise during the free look period.
Keogh Act (HR-10) Plan
plan under the Self-Employed Individual�s Tax Retirement Act which permits a self-employed individual to establish a formal retirement plan and to obtain tax advantages similar to those available in qualified corporate pension plans.
Point-of-Service Plan
The plan allows a choice of whether to receive services from a participating or nonparticipating provider.
Long-Term Care (LTC) Insurance
A health insurance policy which provides daily benefits when the insured is confined to a nursing home.
Noncancellable Policies
A contract of health insurance that the insured has a right to continue in force by payment of premiums, as set forth in the contract, for a substantial period of time, also as set forth in the contract. During that period of time, the insurer has no right to make any change in any provision of the contract. The NAIC recommends that the term �cancellable� not be permitted to be used to designate any form that is not renewable to at least age 50 or for at least five years if issued after age 44. Note that this is in contrast to guaranteed renewable, on which the premium may be increased by classes. The premium for noncancellable policies must remain as stated in the policy at the time of issue.
Misrepresentation
On the part of an insurer or its agent, falsely representing the terms, benefits, or privileges of a policy. On the part of an applicant, falsely representing the health or other condition of the proposed insured.
Morale Hazard
Hazard arising out of an insured�s indifference to loss because of the existence of insurance. The attitude, �it�s insured, so why worry� is an example of a morale hazard.
Participating (Par)
1) Insurance that pays policy dividends. In other words, it entitles a policyowner to participate in allocations of the insurer�s surplus. In life insurance there are several options available for the use of such dividends.
Flexible Spending Account (FSA)
An employer-sponsored program that provides payment of health care costs or dependent care costs on a pre-tax basis.
Primary Insurance Amount (PIA
A Social Security calculation which serves as the principal element determining the amount of various Social Security benefits.
Insurable Risk
A risk which meets most of the following requisites:
Life Annuity Certain
An annuity under which the annuitant receives payments for a specified number of years or for his or her lifetime, whichever is longer. If the annuitant dies before all the guaranteed payments have been made, the beneficiary receives the payments for the rest of the certain period.
Open Panel Under a Health Maintenance Organization (HMO
refers to a wide range of medical care providers from whom members of the HMO may choose to seek care. Contrast with Closed Panel.
Implied Authority
Authority of an agent that the public may reasonably believe the agent to have. If the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so on a regular basis and the insurer accepts, the agent has implied authority to do so.
Other Insurance Clause
A provision found in many life and health insurance policies, stating the disposition of claims when any other insurance contract covers the same events as the policy in which the provision is contained.
Future Increase Option
An option which allows the insured to increase disability income benefits at predetermined times, specified in the policy, without evidence of insurability.
Industrial Life Insurance
One of the major classes of insurance. It is generally sold in amounts of less than $1,000 by agents who service insureds on debits. The premiums are collected weekly or monthly at the address of the insured.
National Association of Insurance Commissioners (NAIC
Originally National Convention of Insurance Commissioners. An association of state insurance commissioners formed for the purpose of exchanging information and of developing uniformity in the regulatory practices of the several states through drafting model legislation and regulations. The NAIC has no official power to enforce compliance with its recommendations.
Grace Period
period of time after the premium due date during which a policy remains in force without penalty even though the premium due has not been paid. Commonly 30 or 31 days in life insurance policies; seven, 10, or 31 days in various health insurance policies
Multiple Indemnity
some policies, an agreement that if the insured dies or is injured under certain conditions, the amount of the stated indemnity will increase by a stipulated amount, such as double or triple indemnity.
Preferred Provider Organization (PPO)
An organization of hospitals and physicians who provide, for a set fee, services to insurance company clients. These providers are listed as preferred and the insured may select from any number of hospitals and physicians without being limited as with an HMO. Covers 100%, with a minimal copayment for each office visit or hospital stay. Contrast with Health Maintenance Organization.
Multiple Protection
Insurance A combination of term and whole life insurance that pays some multiple of the face during the period of the term policy, becoming a regular whole life policy after the term policy expires. The multiple protection period is thus the period during which both the term and the whole life coverages are in effect.
Omnibus Budget Reconciliation Act
A federal law which extends the minimum COBRA continuation of group health care coverage from 18 to 29 months for qualified beneficiaries who are disabled at the time of qualification.
Fair Credit Reporting Act
Federal act that provides consumer protections in transactions, including insurance transactions, wherein the consumer�s credit rating is examined and may have either a positive or negative effect on the outcome of the transaction.
Hospital Insurance
Also identified as Part A of Medicare. HI provides inpatient hospital care, skilled nursing care home health and hospice care subject to a benefit period deductible and copayments for certain services.
Guaranteed Renewable
A contract that the insured has the right to continue in force by the timely payment of premiums for a substantial period of time, as set forth in the contract. During the guaranteed renewal period, the insurer may not change any provisions other than a change in the premium rate for classes of insured. A definition of the National Association of Insurance Commissioners (NAIC) specifies that the policy must be renewable to at least age 50 or, if issued after age 54, for at least five years.
Nonqualified Plan
A benefit type of plan, such as a retirement plan, which may be discriminatory, need not be filed with the IRS and does not provide a current tax deduction for contributions.
Lifetime Policy
(1) A policy guaranteed renewable or noncancellable to age 65 or later.
Presumption of Agency
A legally binding agency relationship when, in fact, no formal agency agreement is in effect. If an insurer acts to give the appearance of agency, perhaps by furnishing letterhead and applications before a person has been licensed and appointed, an agency relationship exists under the law and the insurer may be legally bound by the acts of a person acting as agent.
Family Plan Policy
An all-family plan, usually with permanent insurance on the father�s life, with mother and children automatically covered for lesser amounts �usually term� all paid by a single premium.
Optionally Renewable
A contract of health insurance in which an insurer reserves the unrestricted right to terminate coverage at any anniversary or, in some cases, at any premium due date. It may not do so in between.
Family Maintenance Policy
policy that pays an income to the beneficiary starting after the death of the insured and continuing for a stated period of time. At the end of the income period, the face amount of the policy is paid to the beneficiary.
Modified Fully-Insured Plan
An alternative to the conventional plan of paying premiums in advance to fund a group health insurance plan, which allows employers to reduce the total cost of providing health insurance by modifying the manner in which premiums are paid.
Participating Provider
A health care provider approved by Medicare to participate in the program and receive benefit payments directly from carriers or fiscal intermediaries.
Graded Premium
modified life insurance policy for which the initial premium is low, and then increases in steps over a period of time (usually five years), after which it becomes a level premium.
Key Person Disability Insurance
In health insurance, usually a salary continuation plan payable to a key employee in the event of his or her disability. In some cases, benefits may be payable to an employer who pays the premium.
Incontestable Clause
A clause in a health insurance policy providing that after the policy has been in force for a specified length of time (usually two years), the insurer may not contest the policy as to statements contained in the application except for fraudulent statements. Also states that after that time, no claim may be denied or reduced on the grounds that a condition, not excluded by name at the time of policy issue, existed prior to the effective date. Usually found in policies guaranteeing renewability. Other policies may use a variation entitled �Time limit on Certain Defenses.� Both are contained in the Uniform Policy Provisions.
Nonforfeiture Option
A legal provision whereby the life insurance policyowner may take the accumulated values in a policy as
Joint Life And Survivorship Annuity
An annuity under which payments are made to two annuitants with the survivor continuing to receive payments after the first annuitant dies.
Level Term Rider
A level amount of temporary insurance added to a permanent insurance policy.
Nonparticipating Policy
Insurance contracts on which no policy dividends are paid because there is no contractual provision for the policyowner to participate in the surplus.
Family Income Policy
A policy that pays an income up to some future date designated in the policy to the beneficiary after the death of the insured. The period of payment is measured from the date of the inception of the contract, and at the end of the income period the face amount of the policy is paid to the beneficiary. If the insured lives beyond the income period, only the face amount is payable in the event of the insured�s death.
Physical Hazard
Any hazard arising from the material, structural, or operational features of the risk itself apart from the persons owning or managing it.
Probationary Period
A period of time between the effective date of a health insurance policy and the date coverage begins for certain conditions. It occurs only once in the life of the policy.
Pro Rata Liability Clause
Provides that losses will be paid in the proportion that the amount of the policy bears to the entire amount of insurance on all policies covering the loss. This provides for insurance companies to appropriately share in the loss when more than one policy exists yet prevents the insured from collecting in total from several insurance companies and making a profit.
Home Service Insurance
variation in the industrial life concept, home service life insurance policies are usually modest in size, ranging from $10,000 to $15,000 in face value, and are typically sold on a monthly debit plan (automatic bank draft) or payments by mail
Medical Savings Accounts (MSA)
A system that provides incentives for employers to replace high cost, low-deductible health policies with affordable, high deductible catastrophic coverage for each employee. The premium savings would be used to fund a tax-preferred medical savings account that employees could use to pay for qualified medical care and expenses, including deductibles and coinsurance.
Health Maintenance Organization (HMO)
An organization that provides health services to individuals known as subscribers or members. The HMO generally contracts with a group of doctors and other medical practitioners to provide services at agreed-upon costs, prepaid on behalf of the members. Members must re y exclusively on the HMO for all their medical needs in order to qualify for payment.
Policy Summary
A document that summarizes the coverages, benefits, limitations, exclusions, costs and terms of a proposed life insurance policy. Cost and benefit information usually includes annual premiums, guaranteed amounts payable at death, guaranteed cash surrender values at the end of various years, life insurance cost indexes, and (if applicable) dividend information. In many jurisdictions Policy Summaries are required to be delivered to applicants in connection with any solicitation or replacement transaction.
Open Enrollment Period
A period during which members can elect to come under an alternate plan, usually without providing evidence of insurability.
Modified Life Policy
An ordinary life contract under which the premiums are modified so as to be lower than normal for the first three to five years and higher than normal after that. A special case is a level term policy, under which no part of the premium goes towards savings, that is automatically converted to a whole life policy at a designated time.
Multiple Employer Trust (MET
A legal arrangement whereby employers who are too small to qualify for group insurance can obtain it by joining together as members of a trust.
Purchasing Group (PG)
An entity that offers insurance to groups of similar businesses with similar exposures to risk. PGs are exempt from most state laws or regulations outside of the state where they are domiciled, and they cannot write workers compensation or personal lines insurance.
Health Savings Account (HSA)
A tax-advantaged custodial account or trust, created by the Medicare Act of 2003, that may be used to pay for qualified medical expenses. Contributions to an HSA are tax-deductible and distributions used to pay qualifiedmedical expenses are tax free.
Nonparticipating Provider
1) A provider who has not signed a contract with a health plan.
Permanent Life Insurance
A term loosely applied to life insurance policy forms other than group and term, usually cash value life insurance, such as endowments and whole or ordinary life policies.
Increasing Term Insurance
A term life insurance policy where the death benefit increases but the premium remains level for the policy term.
Nonrenewal
Termination of insurance coverage at an expiration date or anniversary date. This action may be taken by an insurer who refuses to renew, or by an insured who rejects a renewal offer.
Moral Hazard
A condition of morals or habits that increases the probability of loss from a peril. An extreme example would be an individual who previously burned his or her own property to collect the insurance.
Medicare Advantage
A Medicare program, formerly known as Medicare+Choice, that provides additional health plan options such as HMOs and PPOs as alternatives to the original Medicare fee-for-service plan.
Joint Life Annuity
An annuity under which payments are made to two annuitants for only as long as both live. When one dies, payments cease even if one remains living.
Payor Rider
A rider to a Juvenile Life policy providing that if the payor dies or becomes disabled before the insured juvenile reaches a certain age, the company waives the premiums and keeps the policy in full force.
Insurability
The condition of the proposed insured as to age, occupation, physical condition, medical history, moral fitness, financial condition and other factors that makes the individual an acceptable risk to an insurance company
Multiple Employer Welfare Arrangement (MEWA
joining together by small employers to provide health benefits for employees, often on a self-insured basis.
Medicare+Choice
Also known as Medicare Part C, it provides options to fill Medicare gaps that must usually be paid by a Medicare beneficiary.
Misstatement of Age
Clause In a life policy, provides that if misstatement of age is discovered after policy issue, the insurer may, if the insured is living, adjust the amount of future premiums and request payment of the additional premium the policyowner should have paid; or if the insured has died, the insurer may adjust the face amount of the policy to coincide with the amount of insurance the premium would have purchased had the correct age been known, and pay the death benefit claim on that basis.
Managed Health Care
A generic term referring to the oversight by some administrative body of the health care of individuals for the purpose of providing appropriate medical care while containing costs. Health Maintenance Organizations and Preferred Provider Organizations are both sometimes called managed health care systems. May also refer collectively to one or more of various elements of such a system, such as second surgical opinions, precertification, concurrent and retrospective reviews, and outpatient care.
Level Premium Insurance
That form of insurance for which the premium remains the same throughout the life of the contract. Most whole life insurance is paid for in this way. The amount of a level premium is higher than needed for the protection afforded in the early years of the contract but less than needed for protection in the later years. It is a method of leveling off the cost of insurance so as not to have it increase each year until it becomes inaffordable. See also Net Level Premium
Major Medical Insurance
A type of health insurance that provides benefits for most types of medical expenses incurred up to a high maximum limit or providing unlimited lifetime benefits. Such contracts may contain internal limits and a coinsurance or percentage participation provision and a deductible. Pays expenses incurred both in and out of the hospital.
Insuring Agreement (or Clause
That portion of an insurance contract which states the perils insured against, the persons and/or property covered, their locations, and the period of the contract.
Hospital Income or Indemnity Policy
A policy that pays a stated amount per week or month directly to the insured while the insured is hospitalized without reference to expenses actually incurred. It is intended to replace income lost when the insured is hospitalized.

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