This document defines various terms related to health insurance and disability insurance. It provides definitions for terms like HMO, experience rating, fraud, guaranteed renewable, exclusion rider, express authority, fully insured, hazard, disability income insurance, elimination period, presumptive disability benefit, noncancelable renewal provision, nonscheduled plan, offer, own occupation, nondisabling injury, notice of claims provision, partial disability, open-panel HMO, Medicare parts A, B, D, misstatement of age or sex provision, multiple employer trust, morbidity, National Association of Insurance Commissioners, Medical Information Bureau, major medical expense policy, Lloyd's of London, legal purpose, managed care organization, long-term care, limited policies, ins

1. Flash Cards for Ace Bank
Health

2. Health Maintenance Organization (HMO)
Health care management stressing preventive health care, early
diagnosis, and treatment on an out basis. Persons generally enroll
voluntarily by paying fixing a fixed fee periodically

3. Entire contract provision
An insurance policy provision stating the rules in which both the
Insurer and insured will follow and includes the policy, application, and
any attached riders

4. Experience rating
The method of establishing the premium for a group based on the
group’s previous claims experience

5. Fraud
An act of deceit; concealment or misrepresentation of a material fact

6. Guaranteed renewable
Insurance contract where the insurer may not cancel the contract as
long as premiums have been paid. The insurer is only entitled to an
increase of premiums if the increase applies to all insureds in the same
class

7. Exclusion rider
The insurer excludes a specified preexisting condition

8. Express authority
The specific authority given in writing to the gent in the contract of
agency

9. Fully insured
A status of complete eligibility where a worker has paid social security
taxes for at least 40 quarters of covered employment. Social Security
benefits include: death benefits, retirement benefits, disability
benefits, and Medicare benefits

10. Hazard
Any factor that gives rise to a peril; making the situation more
dangerous; increases the chance

11. Disability income insurance
Provides for the monthly payment of a portion of the insured’s income
should the insured become disabled

12. Elimination period
The period of time an insured must wait before receiving benefits from
a disability income policy or a long-term care policy. This is a
deductible of time as opposed to an amount of money

13. Presumptive disability benefit
Regardless if the insured is able to work, he is eligible for full disability
benefits if he has complete loss of speech, hearing, vision or the loss of
use of two or more limbs

14. Noncancelable renewal provision
The renewal provision is most favorable to the insured as the insurer
cannot cancel coverage (except for nonpayment of premium) nor
increase the premium

15. Nonscheduled plan
Pays on the basis of what is considered usual, customary, and
reasonable (UCR) in a certain geographic area and based on amount
physician in area usually charge for same or similar procedures

16. Offer
This element of a contract is either made by the applicant (when an
application is completed, and premium is submitted) or is made by the
insurance company (when no premium is submitted with the
application)

17. Own occupation
A definition of total disability. The insured must be unable to work at
his own occupation. It is easier for the insured to receive benefits
under policies using this definition

18. Nondisabling injury
Requires medical care, but does not result in loss of time from work

19. Notice of claims provision
Mandatory NAIC provision that describes the insured’ obligation to
provide notification of loss to the insurer within a reasonable period of
time

20. Partial disability
Illness or injury preventing insured from performing at least one or
more, but not all, of the insured’s occupational duties

21. Open-panel HMO
A network of physicians who work out of their own offices and
participate in the HMO on a part-time basis

22. Medicare Part A
Hospitalization insurance that provides specified in-hospital and related
benefits. Hospital admissions are subject to a deductible and possible
co=pays

23. Medicare Part D
Private insurance coverage for prescription drugs which is subject to
Medicare rules

24. Misstatement of age or sex provision
If the insured’s age or sex is misstated in an application for insurance,
the benefit payable is adjusted to what the premium paid should have
purchased

25. Multiple employer trust (MET)
Several small groups of individuals that need life and health insurance
but do not qualify for true group insurance, band together under state
trust laws to purchase insurance at a more favorable rate

26. Medicare Part B
Covers physicians and outpatient treatment, subject to a monthly
premium, annual deductible and coinsurance

27. Medicare supplement policy
Health insurance that provides coverage to fill the gaps in Medicare
coverage

28. Morbidity
The relative incidence of disability due to sickness or accident within a
given group

29. National Association of Insurance
Commissioners (NAIC)
Association of state insurance commissioners active in insurance
regulatory problems and in forming and recommending model
legislation and requirements

30. Medical Information Bureau (MIB)
A consumer reporting agency that operates a database of medical
information on individuals who have previous applied for life and
health insurance. Member insurers can access this data with the
consent of an applicant

31. Major medical expense policy
Health insurance policy that provides broad coverage for reasonable
and necessary medical expenses. Characterized by deductibles and
coinsurance cost sharing

32. Lloyd’s of London
An association of individuals and companies that underwrite insurance
of their own accounts and provide specialized coverages

33. Legal purpose
In contract law, the requirement that the object or, or reason for, the
contract must be legal

34. Medicare
Federal sponsored health insurance and medical program for persons
age 65 or older, or who have been receiving Social Security disability for
the past 24 months, or who have permanent kidney failure

35. Managed care organization
An organization or program that seeks to control costs through
utilization review and other methods

36. Long-term care
Refers to the broad range of medical and person services for individuals
(often the elderly) who need assistance with daily activities for an
extended period of time for chronic illnesses like arthritis, rheumatism,
and so forth

37. Limited policies
Restrict benefits to specified accidents or diseases, such as travel
policies, dread disease (cancer) policies, and so forth

38. Insuring clause
Found within the insurance policy representing the insurer’s promise to
pay under the conditions found in the policy; names the parties to the
contract and describes the general scope of coverage

39. Hospital indemnity
Pays a daily, weekly, or monthly cash benefit during hospital
confinement. This benefit is payable regardless of other insurance
benefits received

40. Law of large numbers
Basic principle of statistics, used by insurance actuaries, where the
larger the number of exposures to study, the more accurate the
prediction

41. Schedules benefit
List of cash allowances payable for various types of benefits which does
not reimburse the insured for actual expenses but pays what is listed

42. Key-person insurance
Protection of a business against financial loss caused by death or
disability of a vital member of the company

43. Residual disability benefit
While not totally disability, the policy will pay the insured a portion of
his lost income if he is not able to work as much or is forced to work at
a job that pays less

44. Principal sum
The amount under an AD&D policy that is payable as a death benefit if
death is due to an accident

45. Custodial care
Health or medical care designed to help an individual perform the
activities of daily living. Coverage for this type of care is only provided
by long-term care insurance

46. Prospective review
Insurer reviews all proposed nonemergency hospital admissions and
requires approval before admission

47. Disability buy-sell agreement
A business partner agrees to sell his share of the business to the other
partners if he becomes disabled. Funds for this purchase generally
come from a disability policy

48. Reinsurance
Insurance purchased by an insurance company from another insurance
company as a means of risk management or spreading the risk

49. Reasonable and customary charge
Charge for health care service consistent with the going rate of charge
in a given geographical area for identical or similar services

50. Proof of loss
A mandatory NAIC provision stating that the insured must submit a
completed claim form with documentation of loss to the insurer within
90 days of the date of loss

51. Utilization review
Managed care organizations may control hospitalization costs by these
methods: *Prospective review: Pre-approval before admission,
*Concurrent reviews: Continuing review during the period of
hospitalization

52. 90 days
In the proof of loss provision, the insured must submit written proof of
loss within this timeframe

53. Accidental means provision
Accident policies require that claims must result form an accident,
rather than illness. For example, a dismemberment policy will not pay
for amputation of a diseased limb

54. Any occupation
A definition of total disability. The insured must be unable to perform
any job for which he is “reasonably suited by reason of education,
training, or experience.” It is more difficult for the insured to collect
benefits under this definition

55. Buyer’s guides
Informational consumer guide- books that explain insurance policies
and insurance concepts; in many states, they are required to be given
to applicant when certain types of coverage are being considered

56. Unilateral
A unique characteristic of insurance, state insurers are required by law
to pay legitimate claims where the policyowner is not required by law
to pay a premium. Only the insurer makes a legally enforceable
promise.

57. Accidental death and dismemberment
(AD&D)
Insurance providing payment if the insured’s death results from an
accident or if the insured accidentally severs a limb above the wrist or
ankle joints or permanent blindness

58. Adverse selection
Selection against the company. Tendency of less favorable insurance
risks to seek or continue insurance to a greater extent than others.
Also, tendency of policyowners to take advantage of favorable options
in insurance contracts

59. Aleatory
Insurance premiums will always be unequal to the benefits received.
Benefits will usually be larger than the premium

60. Basic medical expense policy
Health insurance policy that provides first dollar coverage for specified
(and limited) health care, such as hospitalization, surgery, or physician
services. Characterized by limited benefit periods and relatively low
coverage limits

61. Blanket policy
Covers a number of individuals who are exposed to the same hazards,
such as members of an athletic team, company officials who are
passengers in the same company plane, and so forth

62. Agency
Situation wherein one party (an agent) has the power to act for
another (the principal) in dealing with third parties

63. Coinsurance
The insurer and insured share any expenses above the deductible
amount. This is applied after the insured has satisfied his deductible
requirement

64. Concealment
The intentional withholding of known information

65. Corridor deductible
In superimposed or comprehensive major medical plans, a deductible
amount is not required until the insurer has paid coverage under the
base plan. The deductible then creates what looks like a corridor
between the base plan and the major medical benefits

66. Capital sum
Maximum benefit payable for the accidental loss of vision in one eye or
both eyes, or the loss of a limb at or above the wrist or the ankle

67. Skilled nursing care
Medical care leading to recovery which is received on a daily basis

68. Domestic insurer
An insurer that is incorporated, organized, or domiciled in this state

69. Dental insurance
A scheduled benefit policy which specifies how much it will pay for
dental treatments, such as checkups, cleaning, fillings, crowns, and so
forth

70. Recurrent disability provision
A disability income policy provision that specifies the period of time
during which the reoccurrence of a disability is considered a
continuation of a prior disability

71. Disability
Physical or mental impairment making a person incapable of working

72. Deductible
Amount of expense or loss to be paid by the insured before a health
insurance policy starts paying benefits by the insured and helps reduce
the premium cost

73. Enrollment period
Period during which new employees can sign up for coverage under a
group insurance plan without proof of insurability

74. Business overhead expense (BOE) insurance
If a businessowner becomes disabled, this policy will not replace the
owner’s income, but will instead help pay the expenses of operating
the business such as rent, utilities, and wages

75. COBRA
Extends group health coverage to an employee who loses her job for
reasons other than gross misconduct. Coverage may also be extended
for family members who lose coverage for various reasons such as
death or divorce

76. Competent parties
The applicant must be sane, sober, and of legal age to enter a contract

77. Contributory plan
Group insurance plan issued to an employer under which both the
employer and employees contribute to the cost of the plan. Generally,
75% of the eligible employees must be insured

78. Credit accident and health insurance
In the event of total disability, this policy will pay loan or credit card
payments on behalf of the insured

79. Independent agency system
A system for marketing selling, and distributing insurance in which
independent brokers are not affiliated with any one insurer but
represent any number of insurers

80. Insurance
Transfers the risk of loss from insured to insurer through a legal
contract

81. Lapse
Termination of a policy upon the policyowner’s failure to pay the
premium by the end of the grace period

82. Intermediate nursing care
Medical car leading to recovery which is received on an occasional
basis as opposed to intense, daily care

83. Implied authority
Authority not specifically granted to the agent in the contract of
agency, but which common sense dictates the agent has. It enables the
agent to carry out routine responsibilities

84. Home health care
Care provided in an individual’s home, usually on a part-time basis

85. Health insurance
A broad description of insurance of offset the cost of accident or
illness. May be in the form of reimbursement or indemnity (cash)
policies

86. Indemnity approach
Payment based on a predetermined, fixed amount for the medical
services provided, regardless of the actual expenses incurred or
reimbursement received from other insurance

87. Total disability
Definition of disability where the insured is unable to work

88. Stop-loss provision
Limits the maximum out-of-pocket expense an insured must pay for
health care and once this threshold has been met, the health insurance
policy covers all expenses for the remainder of the year at 100%

89. Substandard risk
Person who is considered an under-average impaired insurance risk
and is charged a higher than standard premium

90. Underwriting
A department found within an insurance company that reviews
applications to evaluate risk and eliminates those that do not meet
standards

91. Respite care
Type of health or medical care designed to provide a short rest period
for a caregiver

92. Representation
A statement believed to be true to the best of one’s knowledge

93. Preexisting condition
An illness or medical condition that existed before a policy effective
date

94. Preferred, standard, substandard, or declined
The four risks are classified

95. Primary insurance amount (PIA)
Amount equal to a covered worker’s full Social Security retirement
benefit or disability benefit

96. Probationary period
A period of time between the issuance of a policy and the date
coverage begins (sickness is not covered during this time)

97. Peril
The cause (reason) for the loss (fire, wind, hail, and so forth)

98. Preferred provider organization (PPO)
Association of health care providers, such as doctors and hospitals,
who agree to provide health care to members of a particular group at a
discounted rate

99. Blackout period
Social Security pays a benefit to a surviving spouse left to care for a
child under the age of 16. That benefit stops when the child turns 16
and will not resume until the surviving spouse is a least 60

100. Assignment of benefits
The policyowner allows a health care provider to bill the insurer and
receive benefits on the policyowner’s behalf

101. Change of occupation provision
This provision is found in health insurance stating if the insured
changes to a more hazardous occupation, benefits are reduced; if
changing to a less hazardous occupation, premiums are reduced
(benefits are adjusted)

102. Hospital expense insurance
Coverage for hospital room and board as well as other expenses.
Often subject to daily and maximum limits

103. Impairment rider
Excludes coverage for a specific ailment or condition that otherwise
would be covered (e.g., previous back injury)