Peril
A cause of loss
Disability insurance covers two specific perils:
1) Accidental Injury
2) Sickness
Accidental Injury
Injury that is unintentional and unforeseen
Health insurance
Sometimes called
1) Disability Insurance
2) Accident & Sickness Insurance
3) Accident & Health insurance
Sickness
Sickness or disease which first manifests itself after the effective date of the insurance policy
5 Types of disability (or health) insurance
1. Disability Income Insurance
2. Accidental Death and Dismemberment (AD&D) Insurance
3. Medical Expense Insurance
4. Dental Insurance
5. Long Term Care Insurance
Disability Income
Replaces your lost wages (net earnings) if you should become disabled. This type of policy will cover your loss of income only if you are totally disabled as defined in the policy
Accidental Death and Dismemberment (AD&D) Insurance
A form of Accidental Death Benefit rider.
Medical Expense
This is what people think of as health insurance--it's actually a medical expense plan. Insurance that covers your doctor and hospital bills.
2 types of plans:
1) Service plans: HMOs, PPOs.
2) Reimbursement plans (Indemnity plans)
Dental Expense
Insurance that is usually sold on a group basis due to adverse selection. Dental coverage may be integrated into a Medical Expense, i.e. the deductible in the plan can be satisfied with either medical or dental expenses.
Long Term Care Insurance
Insurance that is sold by private insurance companies to cover the cost of convalescent nursing home care, or home health care. This type of coverage is not provided in any other type of policy
Total disability
The insured is unable to perform his own job for the first two years and any job they are suited for based upon their
education, training or experience thereafter
Medicaid
A public assistance welfare type program for people with little or no assets or income. Participants do not have to be 65 to get Medicaid
Individual Policies
Usually require very strict underwriting due to adverse selection. Individual coverage often costs more than group and offers less coverage. Often contain probationary periods (pre-existing condition clauses) designed to protect the insurer.
Cancelable
The insurer may cancel at any time with proper advance notice and a return of unearned premium due, if any
Group health policies
Cheaper to buy since the cost of administration is lower (one policy may cover many insureds), and usually better than that provided by individual policies. upon termination of employment, group coverage is "convertible" to individual coverage without evi
Limited Policies
Limited for two reasons:
1) Limited coverage amounts (dollar amounts) stated in the policy
2) Limited covered perils - lots of exclusives - also specified in the policy what perils are covered
These types of policies do not follow the Principle of Indemni
Accidental Death and Dismemberment (AD&D)
Covers accidents only. AD&D policies may be written separately or may be added to a life or health policy by means of a rider. Consists of two parts:
1) The Principal Sum
2) The Capital Sum
Principal Sum
Pays for death and severe dismemberment only (such as the loss of two limbs in the same accident
Capital Sum
Pays for dismemberment (such as the loss of limb). The capital sum is usually written to be 50% of the principal sum. Although AD&D policies will cover accidental loss of eyesight, they do not cover loss of hearing
AD&D exclusions
The primary exclusion is being under the influence of alcohol or narcotics at the time of the accident. In addition, AD&D policies do not cover occupational or military related accidents and do not cover loss of digits, such as fingers and toes. Loss of a
Travel Accident
Will cover you while flying on a regularly scheduled commercial flight, but not on private planes. Coverage is usually written to cover one specific trip only. This coverage is also commonly available to some credit card holders for a small monthly fee
Specified (Dread) Disease
These policies cover a specific catastrophic illness, such as cancer. This type of policy will pay in addition to any other
coverage for cancer you may have (such as Medical Expense). These policies will not pay all of your medical expenses. Coverage is s
Hospital Confinement Indemnity
Coverage is limited to a certain amount for each day you are hospitalized, regardless of the cause. Coverage is in addition to any other coverage you may have
Credit Disability
This is a type of disability insurance sold by a lender that will cover the payment of a debt or other type of installment loan if the insured becomes disabled. Coverage is limited to the amount of the loan and decreases as the loan amortizes
Blanket Disability
Insurance written on schools, sports teams, and church camps in order to prevent lawsuits. The policy "blankets" all participants, so they do NOT have to be issued certificates of insurance
Prescription Drugs
Coverage offered as an optional coverage on a health insurance policy for medication
Vision Care
Usually not offered as a benefit. When it is, it often covers an annual eye exam and eyeglasses once every two years
Impairment Riders
Exclusions in health insurance are sometimes referred to as _________ ___________
Exclusions from Coverage
Things that are never covered. This relates to any type of health insurance. Insurers can exclude anything they want by issuing an impairment rider--even beyond the look back, even back as far as when you were a baby
Pre-existing Condition Clause
Also known as a Pre-existing Condition Exclusion
A clause that allows for a period of time when you do NOT have coverage. If the pre-existing condition reoccurs during the probationary period, there is no coverage and will never be during that probationar
Pre-existing Condition
Any condition, physical or mental, regardless of the cause of the condition for which medical advice, diagnosis, care or treatment that was recommended or received prior to the enrollment date (pregnancy is no longer a pre-existing condition) Pre-existing
Look back period
Usually 6 months prior to new health insurance contract
Replacement
A producer recommends that a client switch carriers, but fails to mention the new probationary period. By doing this, they could
be liable for uncovered claims under the Doctrine of Errors and Omissions
Common health insurance exclusions
intentionally self-inflicted injuries, injuries sustained by war or act of war, elective cosmetic surgery, treatment in government hospitals or facilities and participation in criminal activity
Worker's Compensation
Need Property & Casualty or Fire & Casualty license to sell. One the job or occupational health insurance. Eligibility is determined by the state NOT the insurance company. mandated by state law if an employer has one or more employees
Non-occupational health insurance policies
they cover you off the job only
Hazard
Increases the chance of loss
MIB
Created by life insurance companies to keep track of people's medical conditions
Rider
An amendment attached to the policy contract that modifies the conditions of the policy by decreasing (or expanding) its benefits or excluding certain conditions from coverage
Conditional Receipt
Makes the coverage effective on the date of application if the company finds the applicant to have been insurable on that date. Some Conditional Receipts make coverage effective on the date of application or on the date of the medical exam, whichever is l
Binding Receipt
provides unconditional coverage; givers a person immediate coverage without any conditions
Front-line underwriter
Once it is approved and issued, the producer usually will personally deliver the policy to the insured. This enables the producer to thoroughly explain all coverage provisions, exclusions and riders to the insured. Sometimes, the company will mail the pol
2 things required for a policy to go into effect
1) Premium has to have been paid
2) Policy has to have been issued
Collect on Delivery (COD) submittal application
Upon policy delivery, you will have to collect the first premium and have the client sign a Statement of Continued Good Health, ascertaining that their health has not changed since the original application was completed. Upon obtaining this statement and
Underwriting Criteria
The completed application, the Producer's Report within the application, Consumer Investigative Reports, medical questionnaires and physical exams and information supplied by the Medical Information Bureau (MIB)
MIB procedures require this
1. A written notice to the applicant that the insurance company may report health findings to the MIB.
2. Authorization by the applicant for the MIB to disclose information to member companies.
3. Disclosure to the applicant of information contained in MI
HIV consent form
No one may require the performance of an HIV-related test without first receiving the specific written informed consent of the applicant. No one may disclose that information, except to the applicant or to persons to whom disclosure is authorized in writi
Participation requirements
75% of the eligible employees enroll in a contributory group. 100% of the eligible employees must enroll In a non-contributory group
Loss ratio
The amount the insurers pay out in claims per year as a percentage of the amount of premiums they collect; dividing losses by total premiums received
Waiting Period
Also called the Elimination Period. Period of time that you have to wait until you are eligible for benefits ; mostly for Disability Income and Long Term Care policies
HIPAA
The 1996 Federal Health Insurance Portability and Accountability Act. A federal law protecting the privacy of patient-specific health care information and providing the patient with control over how this information is used and distributed.
portability
Individuals that terminate employment who were previously insured for at least 18 months on a group health insurance plan must be offered an individual health insurance policy without any pre-existing condition exclusions.
HIPAA credit for previous periods of creditable coverage
group health policies must give credit for previous periods of creditable coverage when an employee moves from one group to another, as long as coverage was continuous with
no break in coverage greater than 63 days. This means that if you had already sati
HIPAA probationary period/pre-existing condition
limits the probationary period for new enrollees in group policies to a maximum of 12 months and defines a pre-existing condition as medical advice, diagnosis, care or treatment that occurred within six months of enrollment