CPCU 553 Flashcards – Module 6
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[h] CPCU 553 – Module 6
[q] Term life insurance
[a] A temporary life insurance policy that meets insurance needs for a specific period of time.
[q] Permanent life insurance
[a] A type of life insurance policy designed to remain in force for the insured’s remaining life.
[q] Settlement options
[a] Various ways of paying life insurance death benefits to the beneficiary. These options include:
Lump sum payout.
Interest option.
Fixed period option.
Fixed amount option.
Life income options.
[q] Level term life insurance
[a] A type of temporary life insurance policy in which the death benefit remains constant for the duration of the policy.
[q] Decreasing term life insurance
[a] A type of temporary life insurance policy in which the death benefit decreases throughout the duration of the policy.
[q] Evidence of insurability
[a] A requirement by a life insurance company that the insured demonstrate they meet the insurer’s underwriting standards.
[q] Renewability provision
[a] A provision in a term life insurance policy that allows the insured to renew the policy without providing evidence of insurability.
[q] Convertibility provision
[a] A provision in a term life insurance policy that allows the insured to convert the policy to a permanent policy without evidence of insurability.
[q] Traditional whole life insurance
[a] A type of permanent life insurance protection that assumes the policy owner will pay level premiums for the remainder of their life.
[q] Nonforfeiture options
[a] Options in a life insurance policy as to how the cash value can be distributed to the policy owner if the policy is terminated.
[q] Net amount at risk
[a] The difference between the cash value of a life insurance policy and the policy’s death benefit.
[q] Cost of insurance
[a] The death rate at the insured’s attained age multiplied by the net amount at risk.
[q] Participating life insurance
[a] A life insurance policy that may pay a dividend (if declared by the insurance company).
[q] Universal life insurance
[a] A type of permanent life insurance that offers flexible premiums and death benefits.
[q] Universal life Option A death benefit
[a] A level death benefit offered with a universal life insurance policy. With this type of death benefit, the amount at risk decreases each year.
[q] Universal life Option B death benefit
[a] An increasing death benefit offered with a universal life insurance policy. With this type of death benefit, the amount at risk remains constant each year.
[q] Universal life Option C death benefit
[a] An increasing death benefit offered with a universal life insurance policy.
[q] Variable universal life insurance
[a] A type of permanent life insurance that incorporates premium flexibility of universal life coverage with the investment aspect of variable life insurance.
[q] Waiting period
[a] The period of time that must elapse after a disability occurs until benefits will be paid from a disability insurance policy. This period may be as short as seven days in the case of a short-term disability policy.
[q] Any occupation definition of disability
[a] The definition of disabled in a disability insurance policy that indicates the insured will only qualify for disability benefits if they are unable to perform the duties of any occupation. This is the most restrictive (harsh) definition of disability for the insured.
[q] Own occupation definition of disability
[a] The definition of disabled in a disability insurance policy that indicates the insured will only qualify for disability benefits if he or she is unable to perform the duties of his or her specific occupation.
[q] Non-cancelable disability insurance policy
[a] A disability insurance policy that cannot be canceled by the insurer. In addition, the insurer cannot change benefits, rates, or other policy features.
[q] Guaranteed renewable disability insurance policy
[a] A disability insurance policy that cannot be canceled by the insurer. However, the insurer can raise the policy premiums.
[q] Conditionally renewable disability insurance policy
[a] A disability insurance policy that can be canceled by the insurer if the renewal conditions have not been met.
[q] Waiver of premium disability insurance rider
[a] A rider in a disability insurance policy that excuses the disabled insured from paying premiums during a period of disability.
[q] Guaranteed insurability disability insurance rider
[a] A rider in a disability insurance policy that enables an insured to purchase an additional amount of insurance without providing evidence of insurability.
[q] Automatic Increase Rider (AIR) disability insurance rider
[a] A rider in a disability insurance policy that increases the insured’s monthly benefit to keep up with inflation.
[q] Residual disability rider
[a] A rider in a disability insurance policy that allows for partial payment of benefits when an insured suffers a reduction in income due to disability.
[q] Coordination-of-benefits provision
[a] A provision often containing in a group long-term disability insurance plan that defines how other plans’ disability income benefits affect benefits paid by the long-term disability plan.
[q] Social Security definition of disability
[a] To be disabled, the worker must be unable to engage in any substantial gainful activity because of a physical or mental impairment. The impairment must be expected to last for at least 12 months or result in death.
[q] Indemnity plan
[a] A type of healthcare plan that allows patients to choose their own medical service provider and reimburses the patient a certain percentage of the cost of medical services.
[q] Managed-care plans
[a] A type of healthcare plan that provides comprehensive services to members and encourages members to use medical care providers that belong to the plan.
[q] Health maintenance organization
[a] A type of managed care plan that contracts with medical service providers to provide comprehensive services to members. A primary care physician typically must pre-approve visits to specialists, and members must get pre-approval for certain services.
[q] Preferred provider organization
[a] A type of managed care plan that permits members to choose any medical service provider. Preferred providers can be used by a patient for a decreased cost and lower deductible.
[q] Exclusive provider organization
[a] A type of managed care plan that contracts with insurers to provide healthcare to plan members at a low premium. The organization charges insurers a fee and negotiates with healthcare providers.
[q] Point-of-service plan
[a] A type of managed care plan that combines the characteristics of an HMO and PPO. Has a network of preferred providers who often do not charge members for services.
[q] Affordable Care Act
[a] Healthcare legislation intended to reform private health insurance industry. Major provisions:
Insurers cannot decline insurance for people with pre-existing conditions.
Children up to age 26 can remain on parent’s health insurance plan.
Annual/lifetime dollar limits are not permitted on essential benefits.
Insurers may be required to pay for certain preventative services.
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