Insurance Concepts Overview

Insurance Concepts and Terms

• Approval Receipt: A conditional receipt indicating coverage starts on the application approval date, prior to policy delivery.
• Assessment Mutual Insurer: Insurers where members are assessed individual shares of losses; lacks advance premium payment.
• Assignee: Entity to whom policy rights are transferred through assignment.
• Assignment Provision (Health Contracts): Permits policy owners to assign benefit payments directly to healthcare providers.
• Assignor: The individual or entity transferring rights under an insurance policy.
• Attained Age: The age of the insured as it pertains to insurance calculations.
• Authority: Actions an agent is permitted to perform on behalf of an insurer, defined in their contract.
• Authorized Company: Insurance company legally allowed to operate in specific states.
• Automatic Premium Loan Provision: Allows an insurer to cover defaulted premiums automatically using a policy loan.

Health and Life Insurance Policies

• Average Indexed Monthly Earnings (AIME): Calculated figure used for determining Social Security benefits.
• Average Monthly Wage (AMW): Historical average wage base for computing Social Security benefits.
• Aviation Exclusion: Policy exclusion for deaths or disabilities resulting from non-fare-paying aviation activities.
• Backdating: Policy practice making coverage effective earlier than the current date.
• Basic Medical Expense Policy: Provides initial benefits for limited health care services with low coverage limits.
• Death Rate: Mortality statistic indicating the proportion of deaths per age group within a year.
• Debit Insurer: Often referred to as a home service insurer; focuses on providing insurance directly to consumers.
• Decreasing Term Insurance: Term life policy where the face value decreases while premiums remain stable.

Insurance Provisions and Plans

• Deductible: The amount an insured must pay before benefits kick in.
• Deferred Annuity: Postpones annuity payment until a specified future date.
• Defined Benefit Plan: Pension plan where benefits are calculated based on a specific formula.
• Defined Contribution Plan: Retirement plan where contributions are determined by a set formula affecting eventual benefits.
• Delayed Disability Provision: Allows time after an accident for a disability to manifest and still qualify for benefits.
• Dental Insurance: Group health insurance covering dental maintenance and procedures.
• Dependency Period: Time frame post-breadwinner's death until the youngest child reaches maturity.
• Disability Buy-Sell Agreement: Business co-owners' agreement ensuring shared ownership transfer in case of disability.
• Entire Contract Provision: Clause ensuring the policy and application encompass the entire agreement.

Investment and Liability Coverage

• Equity Indexed Annuity: A fixed annuity with guaranteed minimum interest and additional gains based on equity market performance.
• Errors and Omissions Insurance: Liability insurance for insurance producers against claims of inadequate service.
• Exclusion Ratio: Used to calculate tax-exempt portions of annuity income.
• Exclusion Rider: Waives liability for claims related to pre-existing conditions.
• Long-Term Care Policy: Health insurance covering extended care for individuals needing assistance with daily activities.
• Lump Sum Payment: A complete payment method for insurance proceeds unless otherwise opted by the policy owner.

Employee, Retirement and Tax Plans

• Major Medical Expense Policy: Health insurance offering comprehensive benefits with deductibles and coinsurance.
• Managed Care: Healthcare systems with selected providers and cost-control measures.
• Master Contract: Issued to employers under group insurance, outlining employee benefits.
• Maturity Value: Benefits payable at policy maturity, equivalent to the policy face amount.
• Revocable Beneficiary: A beneficiary whose designation can be altered by the policy owner at any time.
• Risk Pooling: Principle where many contribute to cover losses experienced by a few.

Retirement Accounts and Employee Benefits

• Rollover IRA: A retirement account created by transferring funds from an existing IRA or retirement plan.
• Savings Incentive Match Plan for Employees (SIMPLE): A retirement savings plan targeted at small employers.
• Salary Continuation Plan: Provides continued income based on the employee's salary during retirement or disability.
• Salary Reduction: A retirement plan option allowing employees to defer pretax income to reduce taxable income.

General Concepts in Insurance

• Exclusion: Specific hazards listed in a policy that are not covered for benefits.
• Estoppel: Legal principle preventing denial of actions that have caused other parties to act detrimentally.

This overview encapsulates key terms and concepts in insurance, guiding understanding and retention of the intricacies involved in various policies, provisions, and insurance practices.