Alabama Life and Health Insurance Examination Review

Comprehensive practice flashcards defining core vocabulary, legal doctrines, policy provisions, and state-specific regulations for Alabama Life and Health Insurance.

Required Provision 4 (Reinstatement)

The provision specifying that when an applicant submits for reinstatement of a health policy and receives a conditional receipt, the insurer has within 45 days of the application date to approve or deny coverage.

Insurance Premium

The money paid to an insurance company in exchange for the benefits provided under the policy.

Long-Term Care (LTC) Renewability

The legal standard requiring a Long-Term Care policy to have a minimum renewability level of guaranteed renewable.

Activities of Daily Living (ADLs)

The basic daily self-care tasks, of which a Long-Term Care insured must be unable to perform a minimum of 2 in order to receive policy benefits.

Revocable Beneficiary

A beneficiary designation that the policyowner retains the full right to change without the beneficiary's consent.

Disability Income Rider

A policy addition that typically pays an insured's premiums for as long as the insured remains totally and completely disabled.

Noncancellable Renewal Provision

A policy provision ensuring that both the coverage and the premium rate are fully guaranteed by the insurer.

Viatical Settlement Agreement

A transaction in which a life insurance policyowner transfers ownership rights to a third party in exchange for a percentage of the death benefit.

Medicare Part B

The portion of Medicare for which eligible participants are required to pay monthly premium payments.

Change of Occupation Provision

A health insurance provision allowing the insurer to adjust benefits if the insured changes to a more hazardous career.

Long-Term Care Policy

A policy designed to provide coverage for extended residence and care in a nursing home facility.

Waiver of Premium Provision

A provision allowing a policy to remain active and in force without premium payments when the insured is totally and permanently disabled.

Proof of Loss

Formal written documentation of a claim that an injured or ill insured must file with the insurance company within 90 days of the loss.

Premium Payment Mode

The frequency of premium payments; paying more frequently than annually results in a higher total dollar outlay for coverage during that year.

Guaranteed Issue (Medicare Supplement)

The rule guaranteeing that an individual cannot be rated or denied coverage if applying for a Medicare Supplement within 6 months of enrolling in Medicare Part B.

Irrevocable Beneficiary

A beneficiary designation that cannot be removed or altered without the beneficiary's consent, and whose permission is required before the policyowner can borrow against policy loan values.

Required Provision 3 (Grace Period)

The mandatory provision requiring a minimum grace period of 31 days for policies with modes other than weekly (7 days) or monthly (10 days).

Foreign Nonadmitted Company

An insurance company that is domiciled in another state and has not received an operating license to conduct insurance business in Alabama.

Medicare Supplement Policy

A policy sold to individuals enrolled in Medicare to pay excess hospital and medical expenses that Medicare does not cover, without duplicating Medicare benefits.

Notice of Claim Provision

A mandatory provision requiring the insured to notify the insurer of a claim within 20 days of the loss.

Settlement Options

The various contract options available for paying out life insurance policy proceeds in forms other than a single lump-sum payment.

Estate as Beneficiary

A beneficiary arrangement where life insurance policy proceeds are distributed according to state law upon the insured's death.

Continuing Education Law (Alabama)

The statutory requirement that a licensed Alabama insurance producer must complete and report 24 classroom hours every two years.

Preferred Provider Organization (PPO)

A healthcare provider network that typically compensates medical providers under a negotiated fee-for-service arrangement.

Foreign Company

An insurer that is licensed to do business in Alabama but incorporated under the laws of another state.

Domestic Company

An insurer that is incorporated, organized, and licensed under the laws of the State of Alabama.

Conditional Contract

A contract classification indicating that certain conditions and events must occur before the insurance company is obligated to pay a claim.

Keogh Plan

A qualified tax-deferred retirement plan designed specifically for self-employed sole proprietors and their employees.

Representations

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge, but not guaranteed.

Fixed Period Option

A life insurance settlement option where proceeds are paid over a set timeframe until the principal amount gradually decreases to zero.

Admitted Company

An insurance company that has received a certificate of authority and license to solicit insurance in a specific state.

Expressed Authority

The specific powers and authority explicitly granted to a producer in the written agency agreement with the insurer.

IRA Withdrawal Penalty Threshold

The age milestone of $59\frac{1}{2}$ years at which an IRA owner may begin taking distributions without incurring an early withdrawal tax penalty.

Doctrine of Reasonable Expectations

The legal principle stating that policy conditions and exclusions must be clear and plain so the insured receives the reasonable coverage expected without surprise hidden exclusions.

Rebating

The unlawful practice of offering something of value to an insurance applicant as an incentive or inducement to buy an insurance policy.

Conditional Receipt

A receipt provided upon payment of the initial premium stating that coverage takes effect on the date of the receipt or medical exam, provided the policy is issued as applied for.

Concealment

The intentional withholding of material facts on an insurance application that should have been disclosed to the insurer.

Capitation

An HMO payment mechanism whereby medical providers are paid a fixed monthly fee for each enrolled member regardless of the volume of services delivered.

Substandard Risk

A risk classification assigned to applicants with above-average hazards or health impairments, requiring the highest premium payment.

Defined Benefit Plan

A qualified retirement plan that promises to pay a specified, predetermined retirement benefit amount to the employee upon retirement.

Alabama Life and Disability Insurance Guaranty Association

A statutory association that satisfies claims and policy obligations of insolvent insurance companies by levying assessments on other admitted insurers in Alabama.

Vesting

An employee's guaranteed non-forfeitable legal right to the employer's contributions in a retirement plan if employment terminates prior to retirement.

Medicaid

A state and federal welfare assistance program that finances medical healthcare services for needy individuals.

Blackout Period

The specific span of time during which a surviving spouse does not qualify for Social Security survivor or retirement benefits.

Medical Information Bureau (MIB)

A non-profit information bureau that assists member insurance companies during underwriting by reporting applicant insurability information upon written authorization.

Survivorship Life Policy

A joint life insurance policy covering two lives that pays the death proceeds to the beneficiary only after the second insured dies.

Reinsurance

A business agreement where a primary insurer cedes a portion of its underwritten insurance risk to a second insurance company.

Morbidity Experience

The statistical rate and expected number of an insurance company's health policyholders who will suffer sickness or disability.

Accidental Death Rider

A policy rider that pays an additional death benefit if the insured dies from accidental causes within 90 days of the injury.

Non-Participating Policy

An insurance policy issued by a stock insurance company that does not pay policy dividends to policyholders.

Business Overhead Expense (BOE) Insurance

A disability policy that reimburses ongoing operational business overhead costs (such as rent and utilities) when a business owner becomes disabled.

Corridor Deductible

A deductible expense that the insured must pay after basic first-dollar benefits are exhausted before major medical benefits begin.

Stop-Loss Limit

A major medical provision specifying an out-of-pocket maximum, after which the insurer pays $100\%$ of all remaining covered medical expenses.

Principle of Indemnity

The fundamental insurance principle establishing that an insured should be restored to the approximate financial status held prior to a loss without profiting.

Aleatory Contract

A contract in which the monetary values exchanged between the parties are unequal, such as receiving a large benefit payout following a single premium payment.

Extended Term Option

The automatic nonforfeiture option that uses accumulated cash value to purchase term insurance with a face amount equal to the original policy.

Principal Sum

The full stated policy amount paid under an Accidental Death & Dismemberment (AD&D) contract for accidental loss of life or the loss of two primary limbs.

Adverse Selection

The tendency of individuals with a higher-than-average likelihood of suffering a loss to purchase or maintain insurance policies.

Disability Buy-Sell Insurance

A business disability contract that provides a lump-sum cash benefit to buy out the equity interest of a disabled business owner or partner.