Vocabulary Flashcards
Adverse Selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risk who present lower probability
Aleatory
A contract in which participating parties exchange unequal amount. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of loss.
Apparent authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
Basic hospital expense insurance
Coverage that provides benefits for room, board and miscellaneous hospital expenses for a certain number of days during a hospital stay.
Basic medical expense insurance
Coverage for doctors visits, x-rays, lab tests, and emergency room visits; benefits, however, are limited to specified dollar amounts.
Buyer’s Guide
A booklet that describes insurance policies and concepts and provides GENERAL information to help an applicant make an informed decision.
Capital amount
A percentage of the principal amount of a policy paid to the insured if they suffered the loss of an appendage.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
The law that provides for the continuation of group health care benefits for the insured for up to 18 months if they terminate employment or are no longer eligible, and for the insured’s dependents for up to 36 months in cases of loss of eligibility due to death of the insured, divorce, or attainment of limiting age.
Coinsurance
An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses
Coinsurance clause
A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance.
Commissioner
The chief executive and administrative officer of the insurance department
Comprehensive policy
A plan that provides a package of health care services, including preventive care, routine physicals, immunization, outpatient services and hospitalization.
Comprehensive major medical
A combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits and Coinsurance.
Consideration
The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss.
Consideration clause
A part of the insurance contract that states that both parties must give something of value for the transfer of risk, and specifies the condition of the exchange.
Consumer report
A written and or oral statement regarding a consumer’s credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
Coordination of benefits
A provision that helps determine the primary provider in situations where an insured is covered by more than one policy, thus avoiding claims overpayments.
Custodial care
Care that is rendered to help and insured complete their activities of daily living.
Director
The chief executive and administrative officer of the insurance department
Dread (specified) disease policy
A policy with a high maximum limit that covers certain diseases names in the contract (such as polio and meningitis)
Dual choice
A federal requirement that employers who have 25 or more employees, who are within the service area of a qualified HMO, who pay minimum wage, and offer a health plan, must offer HMO coverage as well as an indemnity plan.
Elimination period
A WAITING PERIOD that is imposed on the insured from the onset of disability until benefit payment begins.
Endodontics
An area of dentistry that deals with diagnosis, prevention and treatment of dental pulp within natural teeth at the root canal.
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived
Excess charge
The difference between the Medicare approved amount for service or supply and the actual charge.
Exposure
A unit of measurement used to determine rates charged for insurance coverage
Express authority
the authority granted to an event by means of the agent’s written contract.
Fair credit reporting act
A federal law that establishes procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used.
Fiduciary
An agent or broker who handles insurers’ funds in a trust capacity
Flexible spending account (FSA)
A salary reduction cafeteria plan that uses employee funds to provide various toes of health care benefits.
Fraternal benefit societies
Life or health insurance companies formed to provide insurance for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government
Gatekeeper model
A model of HMO and PPO Organizations that uses the insured’s primary care physician (the gatekeeper) as the initial contact for the patient for medical care and for referrals.
Hazard, moral
The effect of a person’s reputation, character, living habits etc. on their insurability.
Hazard, Morale
The effect a person’s life indifference concerning loss has on the risk to be insured.
Health maintenance organization (HMO)
A prepaid medical service plan in which specified medical service providers contract with the HMO to provide services. The focus of the HMO is preventive medicine.
Health reimbursement accounts (HRA)
Plans that allow employers to set aside funds for reimbursing employers for qualified medical expenses.
Health savings account (HSA)
Plans designed to help individuals save for qualified health expenses
Home health services
A covered expense under part A of Medicare in which a licensed home health agency provides home health care to am insured.
