Risk and Insurance review Video

Misrepresentation

• False statement not effecting underwritting

• No material no effect

• Mailing adress error

Material Misrepresentation

• False statement of concealment that is important to the issuance of a policy and effects policy issue

  • Health statements, Driving record, drug and alcohol a use, hazardous activities

  • Severity is determined by Materiality

  • Is false when the facts fail to correspond with its assertions or stipulations

Aleatory

Valid and unequal exchange of value

Three categories of insurable interest

Blood

Marriage

Business

Application and Field Underwritting

• Printed booklet stating all aspects of AIDS /HIV and a list of counseling services must be provided prior to testing

• It is legal to decline if they have aids

Contract Delivery and producer responsibilities

• Person insured

• Coverage amount

• Effective date

• Policy provision

• Beneficiaries

• Premium and premium mode

• Ownership rights

• Exclusions and riders

Premiums paid with the application

• applicants consideration consists of two items - completed application and premium payment

• Policy issue is not provided until both elements are complete

• Trial application: app submitted without premium

  • approved when premium paid

• Agent must complete statement of continued good health and collect premium prior to delivery. In this case the delivery date will be effective date of coverage

Replacing Health insurance

Pre existing illness may not be covered

Waiting period or elimination period: period where no benefit is paid, the longer the period the cheaper the price

Probationary period: One time event at policy issue usually 30 days which illness is not covered , but accidents are covered

Types of Health Insurance Providers

• Commercial Companies

• HMOS

• PPOS

• Blue cross/blue shield

• Employer sponsored plans

• Government

Payments

• Traditional fee for service

• Service provider based on UCR

• Managed car

Blue cross /Blue shield

• Blue cross: Hospital benefits

• Blue shield= Physcicians

HMO

• Preventative care

• Pre paid Premium

• Employees/Members

• Small co pay 10

• Health care premium with pre paid premium

• Most are closed panal

  • Doctors who are employees

  • Primary care physician or gatekeepeer

  • HMO facility

PPO

• Contractual agreement with hospital or doctors

• No direct treatment directly: instead the hospital and doctor does

• Discounted price

• Employees will pay lower deductibles

• Can go out of network but will be more expensive

• No gatekeeper

Three types of Health insurance

1) Disability income: Income if becoming disabled

2) Medical expense insurance: Pays hospital and doctor bills

3) Long term Care: Nursing home or senior care

Presumptive Disability

• A type of total and permanent disability based on loss of sight, hearing, speech, and loss of limb use

• Paid despite and the fact that insured is still working

Partial Disability

The inability to perform some but not all of your daily duties

Follows a period of total disability

• Add a rider

• Pays 50% of total disability benefit

• Pays up to six months

Residual Disability

• Another for of partial disability, based on a percentage of lost income

• Fluctuates monthly and may exceed 50%

Recurrent Disability

• If the same disability reappears within 6 months after supposed recovery disability is considered a recurrence or continuation of original disability

Elimination period

Period preceding eat disability during which benefits are not paid similar to deductible

Disability Income Tax considerations

Individual policies:

• Premium is non deductible

• Benefit is received tax free

Group Policies

• Non Contributory

• Employer payed premium

• benefit taxable to employee

Contributory

• Employee pays all or part of premium

• Premium is deductible to employer, not to employee

• benefit is taxable to employee, but only the portion that is based on employer

Guaranteed Insurability

• Allows insured to purchase additional amounts of disability income insurance at future dates, without being required to take a physical exam or provide evidence of insurability

  • Automatic increase provision

  • Future dates are policy anniversary dates’

  • Limited to specific age

  • No medical exam

  • Added coverage based on attained age must prove income increase

  • Added premium

  • Similar to G/I rider for life insurance

  • May also be referred to as additional purchase or future increase option

Accidenta; death and dismemberment rider

• Accidental loss only

• Pay a death benefit or dismemberment benefit (capital sum) for accidental loss only

• Complete and total severance of limb at or above wrist or ankle

• Includes hands, feet, and irrevocable loss of sight

• Dismemberment is 50% principal sum per loss

• Death must occur within 90 days

• Two capital losses = Principal Sum

  • Premium is not deductible, benefit is tax-free

  • Least Expensive death benefit due limited nature

Business Disability Insurance

Business Overhead Expense: pays for the usual and customary business expenses if a business owner becomes disabled

• Does not pay owner an income or salary

• Pays for rent , mortgage , utilities , phone employee salaries

• Premiums are taxed deductible

• Small employers

Key Employee

Compensates business due to disability of key employee

• Who is the key employee?

  • Provides funds of offset loss or hire a replacement

  • Third party contract

  • Premiums are not deductible

Disability

• Use disability to buy out interest of disabled partner

  • May be lump sum or periodic

  • Similar to Buy ell for life insurance

Workers Compensation

• Mandatory Employer sponsored plan

• Coverage provided for insuries and illensses on the job

Provides four benefits

• Unlimited medical benefits

• Survivor income replacement

• Disability Benefits

• Rehabilitation

Basic Plan

First Dollar coverage no deductible

Three Sections":

• Daily room and board

• Miscellaneous / Ancillary Expenses

Surgical expense coverage -added premium

Optional+ Physicisan Expense

Hospital Expense Plan

• Daily room and board

• Specific dollar amount for specific number of days

• Example $250 per day for 100 days

• Additional / Excess expenses paid by insurer

Miscellaneous/ Ancillary Expense

• Listed as a multiple of the DBR above

• USed for Miscellaneous expenses (eg: x rays, dressings, nursing, therpay, lab test, anesthesia, ambulance

• Additional/excess expenses paid by the insured

Surgical Expense Coverage

• Added premium

• Schedule: Most common operation , maximum payable per surgery

• Relative value units

• FEE schedule

Optional Physician Expense

• Outpatien benefit doctrs office

• Stated dollar amount

MAJOR MEDICAL

effect cost

• Deductible

• Higher deductibles lower the policy cost

• Eliminating small, unnecessary claims

• Co-Insurance: After the deductible is paid, the insured pays 20%

• Stop loss: Once out-of-pocket expenses reach a certain dollar amount, the insurer pays 100%

Coverage for dependent Children

• Covered at moment of birth

• Can remain on family plan until age 19, 23 ful time college student

• Handicapped can remain

• In 2010 the federal patient protection act and affordable care act increased age until 26

Group insurance

• Two party contract between employeer and insurer

• Employee must

  • be in covered classification

  • Satisfy any probationary periods

  • Be full time employee

Cobra Act

• Federal Law which is applicable when employees leave the employement of a company that has 20 plus employees

• Employee is responsible for payment

• Qualifying Events

Medicare and group Insurance

Medicare secondary rul;es

• If employee is 65 plus and is covered by both a group pl;an and Medicare

• Group plan is primary and medicare is secondary if 20 plus employees

• Medicare is primary - Group Plan is secondary if less than 20 employees

If an individual is being treated for end-stage renal disease, the group plan will be primary for the first 30 months

• After 30 months medicare becomes primary

Health Insurance Portability and Accountability act

Portability:

• if employeee was covered by a previous health plan woth no gap in coverage of 63 dayds or more, employee can use time covered under previous plan

Pre existing Condition Exclusion

• Can only be excluded under new plan if treatemnt or advice was provided within six months of enrollement into new group

Patient protection and affordable care act

• Statue highlights

• State based insurance exchanges with subsidies avaliable for uninsured and self employeed

• Subsidies for low income people who want to buy insurance

• Decrease in medicare spending

• Expansion of medicaid requirements

• Insurer cant deny coverage for pre existing conditions

• Prevent medicare fraud

Medical/Health savings account

• Tax deductible for employers and employes

• Growth is tax differed

• Carry over from year to year

• Earnings and qualified withdraws are tax fee

MSA: 15 % tax penalty

HSA 20% tax penalty

Medicaid

Aid for needy or indgentfanm

• Aid to families with needs

• Public assistance

• Based on need not age

• Spend down assets to qualify

Hospital, doctor , lab x rayhs , early diagnosis under age 21 ,

Social Security

• Olde age survivor

• Medicare/ medical physician benefits over 65

• Retirement. Benefit for those aged 65

• Lump sums. Death benefit

• Disability death. Benefit

• Survivors benefits

PPAC 10 essenrtial benefiters

• Ambulatory: Care provided without being admitted

• Emergency Services: Care for that condiion that uf not treated immediarely could result in serious death

• Hospitilization coverga

• Maternity and orbn

• M ental health

• Drugs

• Rehab

• Blood work

• Welklness

• Pediatrric

Meta Levels

Percentage of actuarual value of expected health benefits

0 Bronze” 60% paid by insurer

• Sliver 70%

• Gold 80%

• Platinum: 90%

Primary insurance amount

Math calculated, FICA contibutions

Based on contribution

Blackout period

• Pertains to certain survivor benefits

• Children recieve until 18

• Period following childrens survivor benefits and before social security are payable

Medicare parts A and B

A is for hospital Insurance

• Automatic age 65 if FICA qualified

B is for supplimental medical insurance

• Doctors charges

Medicare Part A

Hospital Insurance

• Covered Services

• Inpatient Hospitalization

• Skilled Nursing Care

• Home Health

• Hospice Care

• Blood

Does not pay for

• Surgeons fees

• Outpatient drugs and more

Medicare Part B

Medical Insurance

• Medical Expenses

• Clinical Labatory Services

• Home HEalth Care

• Outpatient Hospital care

• Blood

Medicare Part C - Medicare Advantage Plan

• 2003: Medicare Modernization Act: Program again now called Medicare advantage

  • Expanded benefits through private CArriers as alternative ti Medicare A and B

  • Must be enrolled a and b

  • No evidence of insurability required enrollement

Medicare Part D

• Prescription Drug Plan

• Helps covere drugs

• Late enrollment fee: Permanently added to your Medicare drug coverage

Medicare Supplement

• Plan A is called the CORE benefit’(365 additional days of hospital confinement at 100% coverage

• Plan B-L include the CORE, plus additional benefits

• Plan A is the least expensive

Long term care benefits

• Assisted Living Care

• Respite Care - Provide Breaks

• Hospice Care

• Adult Day care

• Does not pay hospital benefits

Entire Contract:

• Policy owner is entitled to the policy

• Mandatory Provisions

• Photocopy Of original application

• Protects policy owner

Consideration clause

An exchange of values must occur between Policyowner and insurer for a lawful contract to be made

Free Look

Upon Delivery and after review , Policyowner has the right to return policy for any reason and receive a full of premium

Typically 10 Days after delivery

Also referred to as right to examine

Insuring Clause

First Page or face page and propvided summary of contract

• Promise to pay

• Outline and scope of coverage

• Also Known as Insuring agreement r

• Death benefit and more

Unpaid Premiums

• When policyholders has claim during Grace Period

• Premium Owed is simply Subtracted from DB

Reinstatement Period

• Lapsed policy

• 3 to five years after lapse

• Proof of insurability After 45 days coverage is automatic

Churning

using existing life insurance cash value to buy new policy for sole purpose of commission for agent