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Chapter 8

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Chapter 8 Insuring Your Life and Health Agenda Review of learning goals Key chapter terms and definitions Basic insurance concepts Why buy life insurance? – PowerPoint PPT presentation

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Title: Chapter 8


1
Chapter 8 Insuring Your Life and Health
2
Agenda
  • Review of learning goals
  • Key chapter terms and definitions
  • Basic insurance concepts
  • Why buy life insurance?
  • How much life insurance is right for you?
  • What kind of policy is right for you?
  • Buying life insurance
  • Key features of life insurance policies
  • Health insurance
  • Long-term care insurance
  • Disability insurance
  • Summary
  • Internet links and on-line resources

Agenda
3
Chapter 8 - Learning Goals
  • LG 1 - Explain the concept of risk and the basics
    of insurance underwriting.
  • LG 2 - Discuss the primary reasons for life
    insurance and identify those who need coverage.
  • LG 3 - Calculate how much life insurance you
    need.
  • LG 4 - Differentiate among the various types of
    life insurance policies and describe their
    advantages and disadvantages.
  • LG 5 - Choose the best life insurance policy for
    your needs at the lowest cost.
  • LG 6 - Become familiar with the key features of
    life insurance policies.
  • LG 7 - Discuss why having adequate health
    insurance is important, and explain the basic
    coverage and policy provisions of health
    insurance plans.
  • LG 8 - Assess the need for and features of
    long-term care insurance and disability insurance.

Learning Goals
4
Key Chapter Terms and Definitions
  • Risk avoidance
  • Loss prevention
  • Loss control
  • Risk assumption
  • Insurance policy
  • Underwriting
  • Multiple-of-earnings method
  • Needs analysis method
  • Canada Pension survivors benefits
  • Term life insurance
  • Straight- or level-term policy
  • Decreasing-term policy
  • Renewability
  • Convertibility provision
  • Whole life insurance
  • Cash value
  • Nonforfeiture right
  • Universal life insurance
  • Group life insurance
  • Beneficiary
  • Policy loan
  • Accidental death or multiple indemnity clause
  • Disability clause
  • Guaranteed insurability or purchase option
  • Participating policy
  • Group health insurance
  • Workers compensation insurance
  • Medical reimbursement account
  • Deductible
  • Participating (coinsurance) clause
  • Internal limits
  • Coordination of benefits provision
  • Preexisting condition clause
  • Long-term care
  • Waiting (elimination) period
  • Guaranteed renewability
  • Optional renewability
  • Disability insurance

Terms
5
Basic Insurance ConceptsBasic Purposes of
Insurance
  • Protect you and your family from catastrophic
    losses caused by the
  • Loss or damage of important assets such as your
    car or your home (home and auto insurance)
  • Loss of your ability to earn income (short and
    long-term disability)
  • Unexpected expenses (critical illness insurance)

LG 1
6
Basic Insurance ConceptsInsurance Planning Needs
  • Most individuals and families must consider
    obtaining a wide-range of insurance products to
    manage household risk.
  • Auto Homeowners Insurance
  • Reimburses for damage or destruction to existing
    assets
  • Life Insurance
  • Replaces income lost due to premature death
  • Disability Insurance
  • Replaces income lost due to disability
  • Hospitalization Health Insurance
  • Covers medical costs from illness or accident

LG 1
7
Concept of Risk
  • Risk is defined as uncertainty with respect to
    economic loss.
  • Insurance planning is used to reduce the risk
    that losses will cause financial devastation.
  • Risk can be dealt with in the following ways

LG 1
8
The Concept of RiskRisk Avoidance
  • Not participating in activities that have the
    risk of loss.
  • Examplenot driving to avoid the risk of an auto
    accident.
  • Risk avoidance is not always practical or
    possible!

LG 1
9
The Concept of RiskLoss Prevention and Control
  • Prevention reduces the chance that a loss will
    occur.
  • Example Driving within the speed limit reduces
    the likelihood of an accident.
  • Control reduces the severity of a loss once it
    occurs.
  • Example Wearing a seat belt can minimize the
    effects of an accident.

LG 1
10
The Concept of RiskRisk Assumption
  • Is a strategy where you bear the risk of loss
    yourself.
  • Example When your calculator gets stolen, you
    bear the cost out of pocket.
  • Transferring Risk
  • Pay someone else to bear your risk of loss.
  • Example You transfer the risk to the insurance
    company when you buy an insurance policy.

LG 1
11
The Concept of RiskTransferring and Sharing Risk
  • Transferring Risk
  • Pay someone else to bear your risk of loss.
  • Example You transfer the risk to the insurance
    company when you buy an insurance policy.

LG 1
12
The Concept of RiskInsurance
  • A contract between you (the insured) and an
    insurance company (the insurer)
  • The insurer agrees to reimburse you for any
    losses you might suffer according to the
    contract.
  • Insurers combine the loss experience of large
    numbers of people and using the law of large
    numbers are able to actuarially estimate the loss
    experience for the group and charge appropriate
    premiums to each member of the group so that the
    overall losses are covered together with a profit
    margin for the insurer.
  • Insurance premiums are a function of the size of
    the estimated losses together with an estimation
    of the frequency of the claims.
  • The more probable the loss the higher the
    premium
  • The greater the average claim the higher the
    premium

LG 1
13
Underwriting
  • Process in which the insurance company decides
    whom to insure and the rate to be charged.
  • Company must guard against adverse selection, a
    disproportionate number of bad risks.

LG 1
14
Economics of Insurance
It is economically feasible for insurance
companies to assume risk because they
  • Combine the loss experiences of large numbers of
    people.
  • Calculate probability of frequency of occurrence
    and amount of loss using past experience.
  • Charge rates in proportion to level of risk.

LG 1
15
Why Buy Life Insurance?Benefits of Life Insurance
  • Provide financial security for those who depend
    on your income.
  • Prevent a decline in their standard of living.
  • Protection from creditors
  • Tax benefits
  • Vehicle for saving

LG 2
16
Benefits of Life InsuranceProtection for
Dependents
LG 2
17
Benefits of Life InsuranceProtection from
Creditors
  • Before death, cash value in life insurance
    policies usually protected against legal
    judgments and bankruptcy proceedings.
  • After death, possible to keep benefits out of
    estate and away from creditors.

LG 2
18
Benefits of Life InsuranceTax Benefits
  • Savings portion grows tax free unless withdrawn.
  • For taxpayers in higher income brackets, these
    relatively low returns become more attractive as
    income taxes take a greater bite from current
    income and short-term capital gains.
  • Proceeds not income taxable to beneficiaries.
  • Possible to avoid estate taxation on proceeds.

LG 2
19
Benefits of Life InsuranceVehicle for Savings
  • Provides a means of forced savings for those who
    would not do so otherwise.
  • Provides preservation of capital for those who
    desire a relatively safe, conservative
    investment.

LG 2
20
Do You Need Life Insurance?
  • Consider life insurance
  • If you have dependents who count on your
    financial support.
  • If you have debts you would like to clear, like a
    home mortgage.
  • You may not need life insurance
  • If no one depends on your support.
  • If you are a child.

LG 2
21
How Much Life Insurance is Right for You?
LG 3
22
Techniques for estimating life insurance needs
  • Multiple-of-Earnings Method
  • Multiply annual earnings by an arbitrary number
  • Needs Analysis Method
  • Estimate needs and examine available resources

LG 3
23
How Much Life Insurance is Right For You?
Step 1 Assess Familys Economic Needs
LG 3
  • Family income
  • Additional expenses
  • Special needs of dependents
  • Pay off debts
  • Liquidity

24
How Much Life Insurance is Right For You?
  • Savings and investments
  • Social Security benefits
  • Pension or retirement plans
  • Other life insurance
  • Income of surviving spouse or children
  • Real estate or other assets

Step 2 Evaluate Financial Resources
LG 3
25
How Much Life Insurance is Right For You?
  • This is the amount of life insurance needed to
    provide your family with the desired standard of
    living.

Step 3 Calculate the Difference
LG 3
26
What Kind of Policy Is Right for You?
1. Term insurance
LG 4
  • Benefit paid if insured dies during the policy
    period.
  • When time period over, no more protection unless
    renewed.
  • No savings component.

27
Types of Term Insurance
  • Straight term
  • Coverage remains the same while premiums
    increase.
  • Decreasing term
  • Premiums remain the same while coverage
    decreases.

LG 4
28
Important features to look for in term insurance
  • Renewability
  • Allows insured to renew policy without evidence
    of insurability.
  • Convertibility
  • Allows insured to convert to whole life policy
    without evidence of insurability.

LG 4
29
Advantages of Term
  • Economical way for young families to purchase
    large amounts of life insurance.
  • Provides for needs that will disappear over time.

LG 4
Disadvantages of Term
  • Premiums become more costly as you get older.
  • Does not build cash value.

30
Whole life insurance
  • Provides death protection plus a savings feature
    called cash value.
  • If policy canceled prior to death, insured has
    right to cash value this is the nonforfeiture
    right.

LG 4
31
How the cash value accumulates in a 200,000
whole life policy
LG 4
32
Types of Whole Life Policies
  • Continuous premium (straight life)
  • Level premiums paid until death or cancellation
    of policy.
  • Limited payment
  • Level premiums paid for a specified number of
    years insurance remains in force until death.
  • Single premium
  • Lifetime coverage purchased with a single
    premium.

LG 4
33
Advantages of Whole Life
  • Provides a savings vehicle.
  • Cash value can be borrowed against.
  • Premiums remain constant.
  • Cash value accumulates tax-free until redeemed.

LG 4
34
Disadvantages of Whole Life
  • Dollar for dollar provides less death protection
    than term for young people.
  • Relatively low return on savings.
  • Loans must be repaid with interest or
  • Tax penalties may be assessed on cash values
    withdrawn early.
  • If you have a loan outstanding when you die, that
    amount is subtracted from the face value of your
    policy.

LG 4
35
Universal Life Insurance
  • Provides death protection plus a savings feature.
  • Premiums are unbundled into 2 separate
    accounts.
  • Savings grow at the current interest rate vs.
    guaranteed minimum rate.
  • Provides flexibility in premiums paid and death
    benefit.
  • Understand the risks before you buy!

LG 4
36
Other Types of Life Insurance
  • Variable life insurance
  • Provides death protection plus a savings, or cash
    value, feature.
  • Cash value can be invested in a variety of mutual
    funds for greater possible return.
  • Returns not guaranteed and actual death benefit
    can vary.

LG 4
37
Variable Universal Life Insurance
  • Combines the flexibility of premium payment
    feature of universal with the investment choices
    offered by variable.
  • Group life insurance
  • Usually term insurance that is offered through
    employers.
  • Premiums usually lower than those on individually
    purchased policies.

LG 4
38
Credit and Mortgage Life Insurance
  • Type of decreasing term insurance.
  • Pays off outstanding loan balance if borrower
    dies before loan is repaid.
  • Usually a costly form of coverage.
  • Consider increasing your regular term insurance
    coverage instead.
  • Industrial life insurance
  • Whole life policies with small face amounts.
  • For low-income families.

LG 4
39
Buying Life Insurance
  • Know the amount and type of coverage you need.
  • Compare costs and features.
  • Select a large, highly rated, financially secure
    company.
  • Select a reputable agent.

LG 5
40
Key Features of Life Insurance Policies
  • Beneficiary clause
  • Settlement options
  • Policy loans
  • Premium payments
  • Grace period
  • Nonforfeiture options
  • Policy reinstatement
  • Change of policy
  • Multiple indemnity
  • Disability clause
  • Guaranteed purchase options
  • Suicide clause
  • Exclusions
  • Participation
  • Living benefits
  • Viatical Settlement

LG 6
41
INSURING YOUR HEALTH
42
Health InsuranceImportance of Health Insurance
  • Protect against economic loss in the event of
    serious accidents or illnesses.
  • Protect against the rising cost of health care,
    which is outpacing other costs in general.

LG 7
43
Health Insurance Options
1. Private Insurance
  • Available to individuals or families.
  • Provided as group health insurance plans through
    various employers.

LG 7
44
Traditional Indemnity Plans
  • Also called fee-for-service plans.
  • Typically offer unlimited choice of doctors and
    hospitals.
  • You pay a deductible plus a percentage of
    eligible costs.
  • Reimbursements based on usual, customary and
    reasonable (UCR) charges.
  • Health care services are separate from insurer.

LG 7
45
Managed Care Plans
  • Monthly payments made directly to health care
    providers.
  • Designated group of doctors and hospitals
    provide services.
  • Plans hold down costs by controlling amount of
    care provided and emphasizing prevention of
    illness.
  • Charge monthly fees plus copayments for services.

LG 7
46
Types of Managed Care Plans
  • Health Maintenance Organizations (HMOs)
  • Group HMOs provide services for members from a
    central facility one stop shopping!
  • Individual Practice Associations (IPAs) contract
    with physicians who operate out of their own
    offices and community hospitals.

LG 1
47
  • Preferred Provider Organizations (PPOs)
  • Provide broader network of approved physicians
    and also allow use of out-of-network providers
    for a higher copay.
  • Other Managed Care Plans
  • Exclusive Provider Organizations (EPOs) allow
    members to use only affiliated providers or bear
    entire cost out of pocket.
  • Point-of-Service Plans reimburse members similar
    to indemnity plan when providers outside of
    network are used.

LG 1
48
Blue Cross/Blue Shield Plans
  • Prepaid hospital and medical expense plans rather
    than insurance.
  • Originally non-profit, but now organized as
    for-profit independent corporations.
  • Blue Cross acts as intermediary between groups
    that want healthcare and physicians who contract
    to provide their services.

LG 1
49
2. Government Health Insurance Plans
  • Medicare program
  • Health insurance administered by Social Security.
  • Available to qualified people 65 and older and to
    those receiving SS disability benefits.
  • Funded by payroll taxes paid by employers,
    employees and the self-employed.

LG 1
50
Components of Medicare
  • Part ABasic hospital insurance
  • Provided free for those who are qualified.
  • Covers hospital room and board and various other
    inpatient and outpatient care.
  • Deductibles apply, with amounts varying according
    to length of stay.
  • Part BSupplementary medical insurance
  • Optional coverage available for a monthly premium
    to those eligible for Part A.
  • Covers services of doctors and surgeons, lab
    tests, x-rays, and various other services,
    including some home health care.

LG 1
51
Medicaid
  • State administered healthcare program for people
    of any age of low economic means.
  • Federal government also provides some amount of
    funding.
  • Eligibility and levels of coverage vary by state.

LG 1
52
Workers compensation insurance
  • Premiums paid by employers for workers injured on
    the job.
  • State administered coverage varies.
  • Coverage typically includes
  • Medical and rehabilitation expenses
  • Disability income
  • Lump-sum payments for death or dismemberment
  • Second-injury funds

LG 1
53
Health Insurance Decisions
  • Evaluate your healthcare cost risk, considering
  • Medical care and rehabilitation expenses
  • Loss of income from disability
  • Determine available coverage and resources
  • Choose a health insurance plan

LG 1
54
Medical Expense Coverage and Policy Provisions
  • Hospitalization
  • Pays a portion of per-day room and board charges,
  • Use of hospital facilities, and
  • Selected other services.

LG 1
55
Surgical expenses
  • Pays cost of surgery either in or out of the
    hospital.
  • Not all procedures are covered, such as cosmetic
    or experimental surgery.
  • Physician expenses
  • Pays physician fees for nonsurgical care in
    hospital.
  • Includes consultation with specialists and lab
    tests.

LG 1
56
Major medical insurance
  • Broad coverage for illnesses and injuries of a
    catastrophic nature.
  • Amount of coverage is large.
  • May have lifetime limits.
  • Dental insurance
  • Covers necessary dental care and some dental
    injuries.
  • Mostly offered through group insurance plans.

LG 1
57
Comprehensive major medical
  • The most desirable coverage, it combines major
    medical with basic hospital, surgical and
    physicians expense coverages.
  • Usually offered through group plans with low
    deductible.

LG 1
58
Coverages You Dont Need!
  • Accident policies
  • Only cover certain types of accidents, usually
    travel-related ones.
  • Sickness and dread disease policies
  • Coverage limited to specific disease or illness
    prohibited in some states.
  • Hospital income policies
  • Guarantee a per-diem for hospital stays, but
    generally exclude certain illnesses.

LG 1
59
Policy Provisions of Medical Expense Plans
  • Terms of Payment
  • How much your medical expense plan will pay is
    usually determined by the following 4 provisions

LG 1
60
Deductible
  • The initial amount not covered.
  • Determined on a calendar-year or per-incident
    basis.
  • Participation (Coinsurance)
  • Company pays only a portion of the medical
    expenses after the deductible.
  • Plan may include a stop-loss provision to cap
    your out-of-pocket expenses.

LG 1
61
Internal limits
  • Limits amount paid on certain items to usual,
    customary, and reasonable charges even if cost of
    entire surgery or illness is within the norms.
  • Coordination of benefits
  • Eliminates double payment when coverage provided
    under more than one policy.

LG 1
62
Terms of Coverage
  • Important provisions to consider include
  • Persons and places coveredWho is covered and
    where are you covered?
  • CancellationObtain a policy that cannot be
    canceled unless premiums are not paid.
  • Preexisting conditionsHow are they covered?
  • Pregnancy and abortionWhat is the extent of the
    coverage provided?

LG 1
63
  • Mental illnessHow restricted is the coverage?
  • Rehabilitation coverageHow much is provided?
  • Continuation of group coverage (COBRA)At your
    expense, you can continue your previous
    employers coverage for up to 18 months after you
    leave the job.

LG 1
64
Cost Containment Provisions for Medical Expense
Plans
  • Pre-admission certification
  • Continued stay review
  • Second surgical opinions
  • Waiver of coinsurance
  • Limitation of insurers responsibility

LG 1
65
Long-Term Care Insurance
  • Provides for delivery of medical and personal
    care, other than hospital care, to persons with
    chronic medical conditions due to illness or
    frailty.

LG 1
66
Do You Need Long-Term Care Insurance?
  • Do you have a lot of assets to preserve for your
    dependents?
  • Can you afford the premiums?
  • Is there a family history of disabling disease?
  • Are you male or female?
  • Do you have family who can care for you?

LG 8
67
Long Term Care Provisions
  • Type of careWhat types of care are covered? Ex
    nursing home, in-home.
  • Eligibility requirements Gatekeeper provisions
    determine when insured qualifies for benefits.
  • Services coveredWhat levels of service are
    covered? Ex skilled, intermediate care,
    custodial.

LG 1
68
  • Daily benefitsWhat is the daily maximum
    reimbursement?
  • Benefit duration How long will the benefits
    last?
  • Waiting period Once eligible, how long before
    the payments begin?

LG 1
69
  • RenewabilityIs the policy guaranteed renewable?
    Optional renewability NOT desired!
  • Preexisting conditionsHow will they be handled?
  • Inflation protectionCan you increase benefits
    with rising costs?
  • Premium levelsHow much are they? Will they
    increase?

LG 1
70
How to Buy Long-Term Care Insurance
  • Buy the policy while you are healthy.
  • Buy the right types of coverage, but dont buy
    more coverage than you need.
  • Understand what the policy covers and when it
    pays benefits.

LG 1
71
Disability Insurance
  • Provides families with weekly or monthly payments
    to replace income lost when the insured is unable
    to work due to an illness, injury or disease.

LG 1
72
Estimating Disability Needs
  • 1. Calculate monthly take-home pay.
  • 2. Estimate existing benefits, such as
  • Social Security
  • Other government benefits
  • Company disability benefits
  • Group disability policy benefits
  • 3. Subtract the total of (2) from (1)

LG 1
73
Disability Insurance Provisions
  • Definition of disability"Own Occupation" most
    desirable. Benefits may never kick in if you can
    perform Any Occupation.
  • BenefitsHow much will they be and how long will
    they last?
  • Probationary periodHow long after policy is
    issued before benefit privileges are available?

LG 1
74
  • Waiting periodOnce disabled, how long before
    benefits begin?
  • RenewabilityIs it guaranteed renewable or
    noncancelable?
  • Other featuresLook for cost of living adjustment
    (COLA), guaranteed insurability option, and
    waiver of premium.

LG 1
75
In summary you
  • Can explain the concept of risk and the basics of
    insurance underwriting.
  • Can discuss the primary reasons for life
    insurance, and identify those who need coverage.
  • Can calculate how much life insurance you need.
  • Can differentiate among the various types of life
    insurance policies and describe their advantages
    and disadvantages.
  • Are able to choose the best life insurance policy
    for your needs at the lowest cost.
  • Are familiar with the key features of life
    insurance policies.
  • Can discuss why having adequate health insurance
    is important, and explain the basic coverage and
    policy provisions of health insurance plans.
  • Can assess the need for and features of long-term
    care insurance and disability insurance.

Summary
76
Internet Links and On-Line Resources
  • Manulife Financials Insure Right Calculator
  • Survivor Benefits under the Canada Pension Plan
  • Find your life expectancy at Dinkytown.net
  • Find out more about various life insurance
    products and policy types at the Canadian Life
    and Health Insurance Association website.
  • Get quotes on term life policies at Term Life
    Insurance Canada.
  • Get details of coverage provided through CompCorp.

Web Links
77
THE END!
78
Appendices
  1. Key Terms and Definitions

79
Key Chapter Terms and Definitions
  • Risk avoidance
  • Loss prevention
  • Loss control
  • Risk assumption
  • Insurance policy
  • Underwriting
  • Multiple-of-earnings method
  • Needs analysis method
  • Canada Pension survivors benefits
  • Term life insurance
  • Straight- or level-term policy
  • Decreasing-term policy
  • Renewability
  • Convertibility provision
  • Whole life insurance
  • Cash value
  • Nonforfeiture right
  • Universal life insurance
  • Group life insurance
  • Beneficiary
  • Policy loan
  • Accidental death or multiple indemnity clause
  • Disability clause
  • Guaranteed insurability or purchase option
  • Participating policy
  • Group health insurance
  • Workers compensation insurance
  • Medical reimbursement account
  • Deductible
  • Participating (coinsurance) clause
  • Internal limits
  • Coordination of benefits provision
  • Preexisting condition clause
  • Long-term care
  • Waiting (elimination) period
  • Guaranteed renewability
  • Optional renewability
  • Disability insurance

Terms
80
DefinitionsRisk Avoidance
  • Avoidance of an act that would create a risk.

Terms
81
DefinitionsLoss prevention
  • Any activity that reduces the probability that a
    loss will occur.

Terms
82
DefinitionsLoss control
  • Any activity that lessens the severity of loss
    once it occurs.

Terms
83
DefinitionsRisk assumption
  • The choice to accept and bear the risk of loss.

Terms
84
DefinitionsInsurance policy
  • A contract between the insured and the insurer
    under which the insurer agrees to reimburse the
    insured for any losses suffered according to
    specified terms.

Terms
85
DefinitionsUnderwriting
  • The process used by insurers to decide who they
    will insure and to determine applicable rates
    they will charge for premiums.

Terms
86
DefinitionsMultiple-of-earnings method
  • A method of determining the amount of life
    insurance coverage needed by multiplying gross
    annual earnings by some selected (often
    arbitrary) number.

Terms
87
DefinitionsNeeds analysis method
  • A method of determining the amount of life
    insurance coverage needed by considering the
    persons financial obligations and his or her
    available financial resources in addition to life
    insurance.

Terms
88
DefinitionsCanada Pension survivors benefits
  • Benefits included under provision of the Canada
    Pension Plan that are intended to provide support
    to families faced with the loss of their
    principal wage earners.

Terms
89
DefinitionsTerm life insurance
  • Insurance that provides only death benefits, for
    a specified period, and does not provide for the
    accumulation of cash value.

Terms
90
DefinitionsStraight- or level-term policy
  • A term insurance policy that is written for a
    given number of years, with coverage remaining
    unchanged throughout the effective period.

Terms
91
DefinitionsDecreasing - term policy
  • A term insurance policy that maintains a level
    premium throughout all periods of coverage, but
    decreases the amount of protection.

Terms
92
DefinitionsRenewability
  • A term life policy provision that allows the
    insured to renew his or her policy at the end of
    its term without having to show evidence of
    insurability.

Terms
93
DefinitionsConvertibility provision
  • A term life policy provision that allows the
    insured to convert the policy to a comparable
    whole life policy.

Terms
94
DefinitionsWhole life insurance
  • Life insurance designed to offer ongoing
    insurance coverage over the course of an
    insureds entire life it provides stated death
    benefits and allows for the accumulation of cash
    value.

Terms
95
DefinitionsCash value
  • The accumulated refundable value of an insurance
    policy results from the investment earnings on
    paid-in insurance premiums.

Terms
96
DefinitionsNonforfeiture right
  • A life insurance feature that gives the whole
    life policyholder, on policy cancellation, the
    portion of those assets that had been set aside
    to provide payment for the future death claim.

Terms
97
DefinitionsUniversal life insurance
  • A form of permanent cash value insurance that
    combines term insurance (death benefits) with a
    tax-sheltered savings/investment account that
    pays interest at competitive money market rates.

Terms
98
DefinitionsGroup life insurance
  • A type of life insurance that provides a master
    policy for a group and each eligible member of
    the group receives a certificate of insurance.

Terms
99
DefinitionsCredit life insurance
  • A type of life insurance sold in conjunction with
    installment loans usually a term policy of less
    than five years, with a face value that
    corresponds to the outstanding balance on a loan.

Terms
100
DefinitionsMortgage life insurance
  • A term policy designed to pay off the mortgage
    balance in the event of the borrowers death.

Terms
101
DefinitionsBeneficiary
  • A person who receives the death benefits of a
    life insurance policy on the insureds death.

Terms
102
DefinitionsPolicy loan
  • An advance, secured by the cash value of a whole
    life insurance policy, made by an insurer to the
    policyholder.

Terms
103
DefinitionsAccidental death or multiple
indemnity clause
  • A clause in a life insurance policy that
    typically doubles or triples the policys face
    amount in the event the insured dies in an
    accident.

Terms
104
DefinitionsDisability clause
  • A clause in a life insurance contract containing
    a waiver-of-premium benefit alone or coupled with
    disability income.

Terms
105
DefinitionsGuaranteed insurability or purchase
option
  • An option in a life insurance contract giving the
    policyholder the right to purchase additional
    coverage at stipulated intervals without
    providing evidence of insurability.

Terms
106
DefinitionsParticipating policy
  • A life insurance policy that pays policy
    dividends that reflect the difference between the
    premiums that are charged and the amount of
    premium necessary to fund the actual mortality
    experience of the company.

Terms
107
DefinitionsGroup health insurance
  • A type of health insurance consisting of
    contracts written between a group (for example,
    employer, union, or other organization) and a
    private insurance company.

Terms
108
DefinitionsWorkers compensation insurance
  • A type of insurance required by provincial and
    territorial governments and paid for by employers
    that compensates workers for job-related illness
    or injury.

Terms
109
DefinitionsMedical reimbursement account
  • An account into which employers place
    contributions that employees can use to pay for
    medical expenses. Usually combined with a
    high-deductible health insurance policy.

Terms
110
DefinitionsDeductible
  • The initial amount NOT covered by an insurance
    policy and therefore the responsibility of the
    insured it is usually determined on a
    calendar-year or on a per-illness or
    per-occurrence basis.

Terms
111
DefinitionsParticipation (coinsurance) clause
  • A provision in many health insurance policies
    stipulating that the insurer will pay some
    portion of the amount of the covered cost in
    excess of the deductible.

Terms
112
DefinitionsInternal limits
  • A feature commonly found in health insurance
    policies that places a constraint on the amounts
    that will be paid for certain specified expenses
    even if the overall policy limits are not
    exceeded by the claim.

Terms
113
DefinitionsCoordination of benefits provision
  • A provision often included in health insurance
    policies to prevent the insured from collecting
    more than 100 percent of covered charges it
    requires that benefit payments be coordinated in
    the event the insured is eligible for benefits
    under more than one policy.

Terms
114
DefinitionsPreexisting condition clause
  • A clause included in most individual health
    insurance policies that permits permanent or
    temporary exclusion of coverage for any physical
    or mental problems the insured had at the time
    the policy was purchased this clause, if
    included at all, is much less restrictive in
    group policies.

Terms
115
DefinitionsLong-term care
  • The delivery of medical and personal care, other
    than hospital care, to persons with chronic
    medical conditions resulting from either illness
    or frailty.

Terms
116
DefinitionsWaiting (elimination) period
  • The period, after the insured meets the policys
    eligibility requirements, during which he or she
    must pay long-term care expenses after the
    waiting period expires, the insured will begin to
    receive benefits for the duration of the policy
    as long as its eligibility requirements continue
    to be met.

Terms
117
DefinitionsGuaranteed renewability
  • Policy provisions ensuring continued insurance
    coverage for the insureds life-time as long as
    he or she continues to pay the premiums. The
    insurer may raise the premiums in the future,
    however, if the claims experience for the
    insureds peer group of policyholders is
    unfavourable.

Terms
118
DefinitionsOptional renewability
  • Contractual clause allowing the insured to
    continue insurance only at the option of the
    insurer.

Terms
119
DefinitionsDisability insurance
  • Insurance that provides a weekly or monthly
    payment to replace income when the insured is
    unable to work as a result of a covered illness,
    injury, or disease.

Terms
120
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