Term
More stringent underwriting of preferred risk products results in which of the following?
A. more competitive prices
B. increased expected mortality on the block of policies
C. more insureds qualifying for the preferred class |
|
Definition
A only is correct – CHAPTER 1
Chapter 1 |
|
|
Term
All of the following are regulatory components of life insurance pricing EXCEPT:
1. reserve bases
2. tax rates
3. surplus needs
4. expense levels |
|
Definition
| D: Expense levels,. CHAPTER 1 |
|
|
Term
The relationship of mortality savings versus the cost of obtaining an underwriting requirement
is:
1. surplus
2. protective value
3. uniquely protective
4. reserve value |
|
Definition
| B: Protective Value,CHAPTER 1 |
|
|
Term
In a cost benefit study, an underwriting requirement that is credited with uncovering adverse
information is said to be:
1. uniquely protective
2. based on age-specific amounts
3. a source of statistical noise
4. a part of the due diligence process |
|
Definition
| 1: uniquely protective. CHAPTER 2 |
|
|
Term
Many companies hesitate to share the results of a cost-benefit study for which of the following
reasons?
A. cost of the study
B. concern about antitrust
C. proprietary nature of the results |
|
Definition
| A, B and C are correct. CHAPTER 2 |
|
|
Term
Factors to consider when comparing underwriting requirements among peer life insurance
companies include all of the following EXCEPT:
1. target market
2. size of the company
3. morality expectations
4. distribution system |
|
Definition
| 2: Size of the company. CHAPTER 2 |
|
|
Term
The insured lives mortality table used to establish life insurance policy reserves is:
1. group life
2. standard and ordinary
3. individual annuity
4. individual ultimate |
|
Definition
| 2: Standard and ordinary. CHAPTER 3 |
|
|
Term
All of the following statements regarding basic life insurance mortality tables are correct
EXCEPT:
1. They represent a greater proportion of individuals in a higher socio-economic group than
does the general population.
2. They reflect the mortality of individuals who purchased life insurance at standard or
better rates.
3. They represent a lower proportion of unhealthy individuals than does the general
population.
4. They typically have the lowest mortality rates of any insured lives mortality tables. |
|
Definition
| 4: Lowest mortality rates . CHAPTER 3 |
|
|
Term
Which of the following statements regarding lif
e settlements and viaticals is/are correct?
A. They involve the purchase of life policies from policyowners.
B. They may dramatically reduce policy lapse rates.
C. They are unlikely to affect life companies’ pricing assumptions. |
|
Definition
| A and B only are correct. CHAPTER 3 |
|
|
Term
All of the following are coronary risk factors in the Framingham Study EXCEPT:
1. build
2. cholesterol
3. gender
4. blood pressure |
|
Definition
|
|
Term
Which of the following statements regarding preferred risk classes is/are correct?
A. The number of classes varies by product.
B. Preferred risks generally produce lower mortality assumptions.
C. Permanent products with investment-oriented cash values may offer fewer
classes. |
|
Definition
| A, B, and C are correct , CHAPTER 4 |
|
|
Term
The risk stratification model that uses debits and credits to determine risk classes is:
1 knock-out
2. point system
3. weighted average
4. excess mortality |
|
Definition
| 2. Point System . CHAPTER 4 |
|
|
Term
The provision that allows changing a term policy to a permanent product
without additional medical requirements is a:
1. guaranteed insurability option
2 term conversion
3. re-entry
4. reinstatement |
|
Definition
| 2. term conversion . CHAPTER 5 |
|
|
Term
All of the following statements regarding term insurance re-entries are
correct EXCEPT:
1. They require underwriting evidence if guaranteed renewable.
2. More favorable premiums are sometimes available with evidence of insurability.
3. Their higher premiums reflect the attained ages of the insureds.
4. The renewal of coverage is normally commissionable. |
|
Definition
| 1. They require underwriting evidence if guaranteed renewable . CHAPTER 5 |
|
|
Term
Post-issue policy changes that typically require underwriting review
include which of the following?
A. beneficiary changes
B. conversion of a term policy
C. requests for rating reductions |
|
Definition
| C only is correct, CHAPTER 5 |
|
|
Term
In the U.S., a public trust that may last for an unlimited period of time to better serve society
is a/an:
1. irrevocable life insurance trust
2. revocable trust
3. charitable trust
4. dynasty trust |
|
Definition
| 3: charitable trust, CHAPTER 6 |
|
|
Term
In Canada, all of the following statements regarding the tax treatment of deceased individuals
are correct EXCEPT:
1. There is no estate tax.
2. All capital property of the deceased may be subject to capital gain taxation.
3. There is no tax break for property directly left to a spouse.
4. Tax credits are allowed for charitable donations. |
|
Definition
| 3: There is no tax break for property directly left to a spouse. CHAPTER 6 |
|
|
Term
Multilife underwriting utilizes all of the following individual life insurance products
EXCEPT:
1. term
2. variable
3. universal
4. private placement |
|
Definition
|
|
Term
All of the following are common nonqualified executive compensation plans EXCEPT:
1. Bonus 162 plans
2. equity repurchase plans
3. deferred compensation plans
4. employee stock ownership plans (ESOP's) |
|
Definition
| 4: employee stock ownership plans (ESOPs). CHAPTER 7 |
|
|
Term
Which of the following statements regarding corporate owned life insurance (COLI) is/are
correct?
A. It typically utilizes permanent products.
B. It was developed as an executive benefit.
C. It does not contain eligibility requirements for coverage. |
|
Definition
| A and B only are correct, CHAPTER 7 |
|
|
Term
| Accelerated Death Benefits |
|
Definition
an advance cash payment of a life insurance death benefit paid by a life
insurance company to an insured who is terminally ill. CHAPTER 8 |
|
|
Term
| Activities of Daily Living (ADL) |
|
Definition
activities that people do independently every day including eating,
bathing, dressing, transferring location, maintaining bowel and bladder continence, and toileting. CHAPTER 8 |
|
|
Term
|
Definition
a definition of total disability which defines Total Disability as the insured’s inability,
due to injury or sickness, to perform the important duties of any gainful occupation for which he/she is
reasonably qualified. The insured must be under the regular care and attendance of a legally qualified
medical practitioner. CHAPTER 8 |
|
|
Term
|
Definition
| the maximum length of time an insured is eligible to collect benefits while on a disability claim. CHAPTER 8 |
|
|
Term
|
Definition
| problems with attention, affect, memory, or other loss of intellectual capacity. CHAPTER 8 |
|
|
Term
|
Definition
the legal transfer of one person’s interest in a policy to a creditor as security for
a debt. Under a collateral assignment, the creditor is first entitled to be reimbursed out of policy proceeds
for the amount owed. The beneficiary is then entitled to any excess of policy proceeds over the amount
due the creditor in the event of the insured’s death. CHAPTER 8 |
|
|
Term
|
Definition
policy type in which the company can change the premium, policy
provisions, or cancel the policy as long as it does so for all insureds within a specific class who own the
contract. (Also referred to as “cancelable.”) CHAPTER 8 |
|
|
Term
| Contractual Exclusion Riders |
|
Definition
riders that are included in the wording of every policy of a particular type and outline situations where benefits would not be payable. E.g., no benefit would be payable if the
claim resulted from the insured’s participation in an illegal act. CHAPTER 8 |
|
|
Term
|
Definition
| Life insurance proceeds payable upon proof of the insured’s death. CHAPTER 8 |
|
|
Term
|
Definition
A memory exercise designed to be used as a screening tool for short-term
or primary memory loss. The test requires a person to recall as many as possible of 10 common nouns
after a specific interval. May be used to assess the cognitive status of Long-Term Care insurance
applicants. CHAPTER 8 |
|
|
Term
|
Definition
| a rider attached to an insurance policy that excludes losses arising from certain conditions or avocations. CHAPTER 8 |
|
|
Term
|
Definition
| health or personal care services required on a long-term basis in a facility, such as a nursing home. CHAPTER 8 |
|
|
Term
|
Definition
policy type in which the insurance company cannot cancel the policy, change
any provision, or add any restrictions as long as premiums are paid. The premiums cannot be changed for
an individual policyholder but can be changed for all policies of that type or in that specific class. CHAPTER 8 |
|
|
Term
|
Definition
services provided in the insured’s home by skilled caregivers; individuals who can assist
with home management or other services to maintain an individual’s functional ability, speech,
occupation, and/or physical therapists. CHAPTER 8 |
|
|
Term
| Instrumental Activities of Daily Living |
|
Definition
social survival skills that must be performed either on a
household or individual basis. Activities related to independent living including managing finances,
using the telephone, doing housework, preparing meals, shopping, using transportation, taking medication. CHAPTER 8 |
|
|
Term
|
Definition
| a beneficiary whose interest in an insurance policy cannot be revoked without that individual’s written consent. CHAPTER 8 |
|
|
Term
|
Definition
| an employee whose unique skill sets are considered so essential to a company that the employee would be difficult to replace if they were unable to work. CHAPTER 8 |
|
|
Term
|
Definition
| a person of legal age and sound mind who is recognized by law as being able to contract with others. CHAPTER 8 |
|
|
Term
|
Definition
| the prevalence of disease or disability within a population. CHAPTER 8 |
|
|
Term
|
Definition
the risk of a particular individual contracting a disease, or other disabling condition, at
any given time, when compared to other individuals of the same age and sex. CHAPTER 8 |
|
|
Term
|
Definition
| the number of deaths that occur at a given time, in a given group, or from a given cause. CHAPTER 8 |
|
|
Term
|
Definition
| the risk of a particular individual dying, at any given time, compared to other individuals of the same age and sex. CHAPTER 8 |
|
|
Term
|
Definition
for the purposes of Disability Insurance can be defined as the desire of the individual to
work. Some factors influencing an individual’s motivation to work may include their work ethic, type of
occupation, personal situation (e.g. married, children), work environment, and income level.CHAPTER 8 |
|
|
Term
|
Definition
a policy type in which, as long as premiums are paid on time, the company cannot
cancel the policy, increase premiums, add restrictive riders, change policy provisions, or make any change to the policy. CHAPTER 8 |
|
|
Term
|
Definition
a definition of total disability, which defines Total Disability as the insured’s
inability, due to injury or sickness, to perform the important duties of his/her own occupation. The
insured must be under the regular care and attendance of a legally qualified medical practitioner. CHAPTER 8 |
|
|
Term
|
Definition
a definition of total disability, which defines Total Disability as the insured’s
inability, due to injury or sickness, to perform the important duties of his/her own occupation. The
insured is not working in any other reasonable occupation. The insured must be under the regular care
and attendance of a legally qualified medical practitioner. CHAPTER 8 |
|
|
Term
| Short Portable Mental Status Questionnaire |
|
Definition
| test used to assess cognitive status: memory, practical survival skills, and mathematical ability. CHAPTER 8 |
|
|
Term
|
Definition
income that would continue in the event of an insured’s inability to work such as
income from investments, alimony, rental income, royalties, pension income, trust income, and capital
gains. CHAPTER 8 |
|
|
Term
|
Definition
| purchasing insurance policies for cash from terminally ill policyholders. CHAPTER 8 |
|
|
Term
|
Definition
the amount of time that must elapse between the onset of a disability or loss of the
ability to perform two or more activities of daily living, and when the proceeds of the policy become
payable. CHAPTER 8 |
|
|
Term
The purchase of an existing life insurance policy from the insured/owner is a/an:
1. accelerated death benefit
2. structured settlement
3. non-recourse financing purchase
4. viatication |
|
Definition
| 4. Viatication. CHAPTER 8 |
|
|
Term
Long term care underwriting generally requires all of the following EXCEPT:
1. attending physician statements
2. physician exams
3. cognitive testing
4. face-to-face interviews |
|
Definition
| 2. Physician exams. CHAPTER 8 |
|
|
Term
General exclusion riders for disability products provide that benefits will not be payable if
disability is caused by which of the following?
A. act of war
B. normal pregnancy
C. engaging in a high risk occupation |
|
Definition
| A and B only are correct. CHAPTER 8 |
|
|
Term
|
Definition
a method of allocating automatic reinsurance among several reinsurers,
using the first letter of the insured's last name, CHAPTER 9 |
|
|
Term
|
Definition
| the acceptance of a cession by a reinsurer, or a retrocession by a retrocessionaire. CHAPTER 9 |
|
|
Term
|
Definition
a reinsurance agreement by which one company permanently transfers
full responsibility for a block of policies to another company. CHAPTER 9 |
|
|
Term
|
Definition
the dollar amount of risk on a single or joint life to which a reinsurer is
willing to obligate itself without making its own underwriting assessment. CHAPTER 9 |
|
|
Term
|
Definition
a form of reinsurance in which the ceding company is obligated to cede,
and the reinsurer is obligated to assume, risks which meet specific criteria based on the
provisions of the reinsurance agreement and the ceding company's underwriting. CHAPTER 9 |
|
|
Term
|
Definition
a form of reinsurance that provides coverage for losses resulting from an
accident or natural disaster involving more than one insured. These losses typically must exceed
a specified amount and number of insureds and/or locations. CHAPTER 9 |
|
|
Term
|
Definition
the risk transferred to a reinsurer by a direct writing company or to a
retrocessionaire by a reinsurer, CHAPTER 9 |
|
|
Term
|
Definition
| the company that transfers its risk to a reinsurer, CHAPTER 9 |
|
|
Term
|
Definition
| the document that describes the risk transferred, CHAPTER 9 |
|
|
Term
|
Definition
a method of reinsurance under which the assuming company receives a
proportionate share of all of the risks and cash flows of the policy. The reinsurer receives its
share of the premiums and benefits, and sets up its share of the reserves. CHAPTER 9 |
|
|
Term
|
Definition
a type of reinsurance in which a ceding company establishes a dollar
amount retention limit and a reinsurer agrees to assume amounts over this limit, up to the
reinsurer's automatic binding limit. CHAPTER 9 |
|
|
Term
| Facultative-obligatory reinsurance |
|
Definition
a form of life reinsurance which is a hybrid between
facultative and automatic. The risk to be ceded is submitted to the reinsurer, which has limited
rights to decline individual risks. CHAPTER 9 |
|
|
Term
|
Definition
reinsurance in which the risk is offered by a direct writer to a reinsurer
for underwriting approval. The reinsurer has the option to accept or decline the offering. CHAPTER 9 |
|
|
Term
|
Definition
the act of submitting an underwriting case to several reinsurers in order
to obtain the most competitive offer, CHAPTER 9 |
|
|
Term
|
Definition
specialized reinsurance transacted primarily to achieve financial goals,
such as capital management, tax planning, or the financing of policy reserves. CHAPTER 9 |
|
|
Term
|
Definition
a form of reinsurance wherein the direct company will retain a fixed
percentage of every dollar of insurance coverage issued, and cede the balance to the reinsurer.
Once the company retention limit is reached, the treaty may stipulate that all additional coverage
can be automatically ceded to the reinsurer within the constraints of the autobind and jumbo limits. CHAPTER 9 |
|
|
Term
|
Definition
a limit placed on the amount of coverage that may be in force and applied for on
an individual life for automatic reinsurance purposes. If such insurance exceeds the limit, the
risk must be submitted for facultative review. CHAPTER 9 |
|
|
Term
|
Definition
a form of reinsurance in which premiums and losses are shared
proportionately between the ceding company and the reinsurer. Under quota share, the same
percentage applies to all reinsured policies in a given class of business. CHAPTER 9 |
|
|
Term
|
Definition
the transfer of part of the hazards or risks that a direct insurer assumes by way of
insurance contract or legal provision on behalf of an insured to a second insurance carrier, the
reinsurer, who has no direct contractual relationship with the insured CHAPTER 9 |
|
|
Term
|
Definition
a method of allocating reinsurance among several reinsurers. Using this
method, each reinsurer receives a specified percentage of each risk ceded to the pool. CHAPTER 9 |
|
|
Term
|
Definition
| liabilities for amounts an insurance company is obligated to pay in accordance with an insurance policy or annuity contract. CHAPTER 9 |
|
|
Term
|
Definition
a specified maximum amount of insurance that a life insurer is willing to carry
at its own risk on any one life without transferring some of the risk to another insurance company. CHAPTER 9 |
|
|
Term
|
Definition
| the risk ceded by a reinsurer. CHAPTER 9 |
|
|
Term
|
Definition
| a reinsurer that contractually accepts from another reinsurer a portion of the ceding company's underlying reinsurance risk. CHAPTER 9 |
|
|
Term
|
Definition
the written contract defining the reinsurance agreement. The treaty contains provisions
defining the terms of the agreement including specific risk definition, data on limits and retention, and provisions for premium payment and duration. CHAPTER 9 |
|
|
Term
| Yearly renewable term (YRT) |
|
Definition
a form of life reinsurance under which the risks, but not the
permanent plan reserves, are transferred to the reinsurer for a premium that varies each year with
the amount at risk and the ages of the insured. CHAPTER 9 |
|
|
Term
Which of the following are types of quota share reinsurance?
A. first dollar
B. excess of retention
C. facultative-obligatory |
|
Definition
| 1: A and B only are correct. CHAPTER 9 |
|
|
Term
All of the following are reviewed in reinsurance audits EXCEPT:
1. eligibility for automatic reinsurance
2. age and amount requirements
3. file documentation
4. agent licensing requirements |
|
Definition
| 4: Agent licensing requirements. CHAPTER 9 |
|
|
Term
Which of the following statements regarding establishing reinsurance rates is correct?
1. The accounting department of the reinsurer determines the rates.
2. A direct company with a narrow and riskier market may pay lower rates,
3. Confidence in the direct company's underwriting expertise is a key factor when
setting rates.
4. Direct companies with similar distribution systems have similar rates. |
|
Definition
| 3: Confidence in the direct company’s underwriting expertise is a key factor when setting rates, CHAPTER 9 |
|
|
Term
All of the following conditions are frequently included in a conditional receipt EXCEPT:
1. completion of all medical requirements
2. proposed insured's insurability
3. immediate coverage
4. initial premium payment |
|
Definition
| 3: Immediate coverage. CHAPTER 10 |
|
|
Term
Underwriting file documentation should include all of the following EXCEPT:
1. e-mails
2. telephone messages
3. personal notations
4. references to underwriting guidelines |
|
Definition
| 3: Personal notations. CHAPTER 10 |
|
|
Term
| Which of the following are necessary for an insurer to rescind a life insurance policy? |
|
Definition
| 4: A, B, and C are correct. CHAPTER 10 |
|
|
Term
The world’s leading private sector provider dedicated to investor protection and market
integrity is the:
1. Securities and Exchange Committee (SEC)
2. Federal Trade commission ( FTC)
3. National Association of Insurance Commissioners (NAIC)
4. Financial Industry Regulatory Authority (FINRA) |
|
Definition
| 4: Financial Industry Regulatory Authority (FINRA). CHAPTER 11 |
|
|
Term
Issues raised by stranger/investor owned life insurance (SIOLI) include which of the
following?
A. Rebating
B. Privacy issues
C. Lack of insurable interest |
|
Definition
| A, B and C are correct. CHAPTER 11 |
|
|
Term
In the U.S., which of the following statements regarding the Health Insurance Portability
and Accountability Act (HIPAA) is/are correct?
A. It standardizes the use of electronic data exchange
B. It requires companies to be licensed before entering into viatical settlement
agreements.
C. It provides security measures to protect health information. |
|
Definition
| A and C only are correct.CHAPTER 11 |
|
|
Term
All of the following are benefits to using records from a prescription database during the
underwriting process EXCEPT:
1. It can identify increased patterns of specific drug use.
2. It can provide legitimate conditions of the prescribed drugs.
3. It can accurately identify all of the prescription drugs the applicant is using.
4. It can alert the underwriter to multiple doctors prescribing similar medications. |
|
Definition
| 3. It can accurately identify all of the prescription drugs the applicant is using. CHAPTER 12 |
|
|
Term
Alcohol abuse is associated with elevation of all of the following blood tests EXCEPT:
.
1. MCV
2. HDL
3. GGTP
4. BUN |
|
Definition
|
|
Term
Which of the following may be possible signs of an individual with an alcohol abuse
disorder?
A. low HDL
B. a medical history of chronic pancreatitis
C. a history or current treatment of depression or mood disorder |
|
Definition
| B and C only are correct. CHAPTER 13 |
|
|
Term
Risk concentration is typically a concern when insuring:
1. celebrities
2. physicians
3. high profile political figures
4. members of a sports team |
|
Definition
| 4: Members of a sports team, CHAPTER 13 |
|
|
Term
Affluent individuals who engage in amateur athletic activities present underwriting
challenges for all of the following reasons EXCEPT:
1. They may lack prerequisite training.
2. They may be in poor physical condition.
3. They have limited access to superior health care.
4. They have the financial means to engage in high risk activities. |
|
Definition
| 3: They have limited access to superior health care, CHAPTER 13 |
|
|
Term
A producer's cover letter accompanying a life insurance application on a high profile
individual should include which of the following?
A. purpose of the coverage
B. any unusual details about the sale
C. how the amount was determined |
|
Definition
| A, B and C only are correct, CHAPTER 13 |
|
|
Term
A competition department may analyze and compare its products based on all of the
following EXCEPT:
1. pricing
2. compliance
3. features
4. compensation |
|
Definition
| 2: compliance. CHAPTER 14 |
|
|
Term
External audits of the underwriting department may be performed by all of the following
EXCEPT:
1. reinsurance companies
2. paramedical vendors
3. insurance regulatory agencies
4. Medical Information Bureau (MIB, Inc) |
|
Definition
| 2: paramedical vendors. CHAPTER 14 |
|
|
Term
Advantages of a functional team structure include which of the following?
A. handling volume fluctuations easily
B. addressing multi-faceted problems rapidly
C. developing expertise in a discipline |
|
Definition
| A and C only are correct, CHAPTER 14 |
|
|
Term
| Relationship between the pricing actuary and the underwriter |
|
Definition
- tie between two functional areas to ensure profitability
- CHAPTER 1 |
|
|
Term
|
Definition
- capital that is held above and beyond the expected needs of the product in order to
ensure, with a very high probability, that all policyholder claims will be met.
- component in constructing profit expectations
CHAPTER 1 |
|
|
Term
| 4 types of risk covered by the assigned (or allocated) surplus. |
|
Definition
- Asset Risk
- Insurance Risk
- Interest Rate Risk
- Business Risk
Ch1 |
|
|
Term
| Asset Risk (covered by surplus) |
|
Definition
The risk that the assets supporting the product line lose some or all of
their value. Ch 1 |
|
|
Term
| Insurance Risk (covered by surplus) |
|
Definition
The risk that the price for the insurance product provided is
inadequate. This could occur primarily from the misestimation of the underlying expected mortality or the introduction of a risk not contemplated when the product was
priced (e.g., an influenza epidemic, HIV infection or any other mortality event that materially changes the expectations of the underlying mortality curve). Predominantly for term. CH1 |
|
|
Term
| Interest Rate Risk (covered by surplus) |
|
Definition
| The risk that assets must be sold at a loss in order to meet the cash needs of a policyholder. This risk (and the management of it) has precipitated a significant amount of industry work aimed at matching the liability cash flows of a product with the cash flows of the invested assets. This risk management process is known as asset/liability management (or ALM). CH 1 |
|
|
Term
| Business Risk (covered by surplus) |
|
Definition
This is a “catch-all” category of risk management to cover anything
not specifically included in the C1, C2 or C3 category. CH 1 |
|
|
Term
|
Definition
- single biggest cost in a life insurance product. 50-60% of term.
- Being overly aggressive by, on average, between ½ and 1 table (25% of expected mortality) will erode all of the expected profitability.
- 90-95% of appls were approved as “std” risks for ins purposes. Others rtd to decline. CH1 |
|
|
Term
|
Definition
These criteria focused particularly on the cardiovascular risk, by requiring better blood pressure,
cholesterol, cholesterol/HDL ratios, family history, and other factors than had typically been required for std underwritten lives.
- the (rated) residual std group is the least homogenous group. CH1 |
|
|
Term
| With more stringent underwriting two things take place |
|
Definition
- the expected mortality decreases on the block of policies that qualify at this tighter level of criteria. This results in lower, more competitive prices.
- however, is that fewer people will qualify under the more stringent underwriting requirements. |
|
|
Term
| 4 types of risk covered by the assigned (or allocated) surplus. |
|
Definition
- Asset Risk
- Insurance Risk
- Interest Rate Risk
- Business Risk
Ch1 |
|
|
Term
|
Definition
- neither good nor bad
- need to be predictable, built in a
homogenous manner and done in a way that both the actuary and the uw'er have common understanding & common accountability for the results that emerge. CH1 |
|
|
Term
| “Actuarially supportable” |
|
Definition
In regard to mortality expectations, both the expected
level and relative mortality differences have been demonstrated through time with studies of
actual insured lives experience or that differences have been observed in clinical medicine
applications and reasonable approaches have been utilized to extrapolate those studies to insured
lives applications. CH1 |
|
|
Term
|
Definition
- by far the largest decrement affecting the number of policies ultimately in force
- not uncommon for a product to
have 50-100 times more lapses than deaths
- impact of lapses on profitability depends on when the lapses occur, early duration lapses hurt profitability, later duration lapses
improve profitability. CH1 |
|
|
Term
| On average, that policy must be in force for at least five years to recover the expenses incurred upon issue. |
|
Definition
|
|
Term
| Expense levels built into the product |
|
Definition
These include the agent’s
compensation, corporate overhead, support of an agency system, advertising, underwriting
expenses and so on. |
|
|
Term
| reserve basis (est by regulation) |
|
Definition
In the US, reserve standards are established by the state & are generally consistent across the nation, in Canada reserves are established by federal regulation. These standards include an underlying mortality table, max interest rates, and method to be used. The purpose of the reserve standards is to make sure enough of the premium earned in the early durations of a contract is held until the time when the group of policyholders ages and the probability
of death is greater than the premium received. The orientation of statutory reserve stds is to be quite conservative and to err in favor of the policyholders. CH1 |
|
|
Term
| non-forfeiture laws (est by regulation) |
|
Definition
For policies that have a level premium structure, the policyholder, in essence, pays too much for coverage in the early duration of the contract and not
enough in later years. Non-forfeiture laws allow for the return of this excess premium, in the form of a cash value (net of allowing the company to recover its expenses), if the policyholder chooses to lapse the policy. CH1 |
|
|
Term
| surplus needs (est by regulation) |
|
Definition
A safety net needs to be provided, beyond the level of reserves being
held, in case experience turns out to be much worse than expected. This safety net is referred to as capital requirements or risk-based capital (RBC). CH1 |
|
|
Term
| tax law (est by regulation) |
|
Definition
Federal taxes paid by an insurance
company on premium are income based and are affected by three main components:
a. corporate tax rate
b. tax reserves
c. DAC (Deferred Acquisition Cost) tax.
In order to pay taxes more quickly. CH1 |
|
|
Term
| “DAC,” or Deferred Acquisition Cost, tax |
|
Definition
The DAC tax is a way to disallow full
deductibility of acquisition expenses in the year they were incurred, but rather to force them to
be recognized over a 10 year period. Again, the effect is to increase current income to speed up
the payment of taxes. As a final note, it should be mentioned that income in total is not changed
by these procedures. Only the timing of the income is affected. CH1 |
|
|
Term
|
Definition
At the federal
level, taxes relate primarily to the company’s income (federal income tax) and at the provincial level they relate to premiums (provincial premium tax). CH1 |
|
|
Term
| Relationship of Pricing and Underwriting |
|
Definition
The interaction between the actuary and the underwriter in product development takes form
through two main decision processes: the setting of the underwriting requirements and the reasonableness of the pricing expectations. CH1 |
|
|
Term
|
Definition
- the relationship of mortality savings from a requirement to the cost of admin'ing the particular req.
- To the extent that greater mortality cost is saved than the cost of the req, the req should be ordered. If the reverse is true, the req should not be ordered.
- An effective protective value study must estab a hierarchy of determining which req comes 1st.
- Policy size, timeliness of info, & policyholder behavior may be analyzed in the construction of a protective value study. |
|
|
Term
|
Definition
- Its not uncommon for the uw'ing selection process to eliminate over 70% of the deaths in the 1st year of a policy, when compared to the results of individuals of the same attained age in the ultimate portion of mortality expectations
- It cannot be stressed enough that the absolute underwriting process is not nearly as relevant as what changes are being made to the process. |
|
|
Term
|
Definition
- controversial topic in the uwing over the past decade than exceptions.”
-type & frequency of exceptions should be shared w/actuary to determine the impact on the
expected mortality and to determine what adjustments are necessary. CH1 |
|
|
Term
|
Definition
- amount
of premium differential between the appropriate class and the contemplated class and to consider
that over the expected life of the policy CH1
-Depending on the magnitude of the exception, it can take up to a dozen
appropriately priced risks to overcome the expected loss of placing the competitive case. |
|
|
Term
The single most
important aspect to consider when dealing with these demanding price-sensitive cases, is to make
a completely informed decision. |
|
Definition
|
|
Term
factors to consider in comparing peer companies’ age-and-amount limits
for underwriting requirements |
|
Definition
| - bases used to set a company’s current limits, such as results from cost-benefit studies - other reqs used -- uw'ing manual --uw'ing philosophy --target market --distribution system -- products --mortality expectations --experience-monitoring capabilities. CH2 |
|
|
Term
| “sentinel effect” of testing |
|
Definition
- The reduction in prevalence observed among tested individuals
- deters applicants with known or
suspected impairments or abnormal lab findings from applying for insurance, or causes them to apply for amounts below requirement threshold limits |
|
|
Term
| Stakeholders in the cost-benefit analysis study |
|
Definition
- In addition to the underwriter, the product development actuary, new
business administrator, research and analysis associate, and a rep from marketing may be among the primary stakeholders. CH2
- diversity of viewpts |
|
|
Term
|
Definition
After quantifying the benefits associated with using a req, it is helpful to translate that information into age-specific amounts at
which the costs associated with obtaining the requirement are approximately counterbalanced by
the corresponding savings in costs of mortality. CH2
- The threshold amount of insurance sufficient to justify routinely requesting a requirement |
|
|
Term
| Steps to Cost Benefit Study |
|
Definition
- Select a random sample of cases with uw'ing req to be eval'd
- No SI cases (full uw)
- Items to consider recording
- Lead to adverse decision? Extra mortality uncovered? $ value of protection for $ spent?
- Net savings by ordering req.
- value in suppl bene's
- recording info -- expenses
- time for req, expense of req, CH2 |
|
|
Term
| Items to Record for Cost-Benefit Study |
|
Definition
| -- file # --Gender -- Age -- Tobacco -- Term/Perm -- face amt, riders, total policies -- type of req -- reason for ordering req -- addt'l items trigged by other item -- cost - final action w/w out req-- protective value of req CH2 |
|
|
Term
| Calculation of Mortality rates:dx |
|
Definition
| number of deaths during an interval CH3 |
|
|
Term
| Calculation of Mortality rates: Ex |
|
Definition
= exposure during an interval, or
= (persons exposed to risk of dying)(duration of interval exposure), or
=( lx)(interval duration), usually expressed “in person-years” CH3 (multiply by) |
|
|
Term
| Calculation of Mortality rates: qx |
|
Definition
= interval mortality rate, or
= deaths / exposure, or
= dx/Ex CH3 (/ = divide by) |
|
|
Term
| Calculation of Mortality rates; lx |
|
Definition
number of individuals alive at the beginning of an interval (x) who are
exposed to risk of dying CH3 |
|
|
Term
| Mortality rates in monetary terms... |
|
Definition
.. allows the advantage of weighting mortality experience by policy size
thus providing a better indication of the financial impact of mortality.
--allows other factors, like the time value of money and policy lapse rates, to be taken into consideration in order to more accurately forecast mortality costs CH3 |
|
|
Term
|
Definition
- based on death rates calculated for large segments of the population w/o regard to individual health, tobacco, socioeconomic, or employment status, CH3
- segmented by sex, race, and residence |
|
|
Term
| “period” (current) life tables. |
|
Definition
- most life tables
- death rates are calc'd from data collected over a relatively short period (1 to 3 years)
- depict death rates for a large number
of birth cohorts (groups) CH3
- simplifying assumptions
- report only historical death rates and do not predict future death rates |
|
|
Term
| Cohort (generation) life tables |
|
Definition
- report actual death rates for a group, or cohort, of indiv's born around the same time.
- accurately report historical death rates for a birth cohort up to the time the table was created. CH3
- report only historical death rates and do not predict future death rates |
|
|
Term
| insured lives life tables |
|
Definition
1. select and ultimate (also known as basic) tables
2. annuity tables
3. group life tables
4. pension life tables
5. standard and ordinary tables (Commissioners Standard Ordinary or CSO tables)
6. disabled life tables CH3 |
|
|
Term
|
Definition
- report the mortality of individuals who purchased life insurance at standard or
better rates.
- proportion of persons from higher socioeconomic groups and a lower proportion of disabled persons and those with ill health, when compared to the general population CH3 |
|
|
Term
|
Definition
Death rates following the select period are termed ultimate rates CH3
- during the ultimate period, the beneficial effect of underwriting and socioeconomic status usually results in mortality rates below those for the general population. |
|
|
Term
| select period in basic tables |
|
Definition
the period of time after policy issue
during which the effect of uwing continues to result in lower death rates compared to the entire pool of policyholders. Death rates immediately following policy issue are at their lowest and gradually rise over the select period as the effectiveness of underwriting wears off. CH3
- cohort life table |
|
|
Term
| Individual annuity tables |
|
Definition
- have the lowest mortality rates of any insured lives mortality tables.
- known to attract healthy persons having the greatest longevity (bc they pay over a period of time) CH3 |
|
|
Term
|
Definition
- aggregate life tables because little, if any, individual uwng is done for group insurance.
- mortality rates on a par with or slightly higher than individual select and ultimate tables CH3 |
|
|
Term
| Social Security or Pension Life Tables |
|
Definition
| higher mortality rates that are close to, but somewhat less than, population rates because selection is limited to the requirement that persons eligible for Social Security or pensions must have been actively employed at some time CH3 |
|
|
Term
| Standard and Ordinary tables |
|
Definition
- used by valuation actuaries to set policy reserves and determine cash values
- conservative d/t the addition of loadings to the underlying basic tables
- ignoring most of the selection that results from underwriting
- mortality reflected is on a par with that of Social Security or Pension life tables. |
|
|
Term
| Disabled lives life tables |
|
Definition
reflect mortality rates of persons no longer able to work d/t disability.
- mortality rates in these tables are somewhat higher than general
population mortality rates. CH3 |
|
|
Term
| Est cost for impairment where no data exists. |
|
Definition
- available source of data for these determinations may be found in the medical (clinical) literature.
- simplify assumptions
- approximations
- actual death rates
- not directly translatable |
|
|
Term
| set of “aggregate standard” pricing rates |
|
Definition
actuaries set prices by multiplying the mortality rates in basic tables by various factors reflecting market considerations and underwriting effectiveness.
- further subdivided to reflect the mortality expected among various
classes of better risks (preferred pricing) and the remainder within the original “standard” group (residual standard pricing).
- excluded are people who have risk factors at the time of policy issue that would be expected to CH3 significantly increase their mortality risk |
|
|
Term
Data from the
American Council of Life Insurers indicate that 92% of individuals applying for insurance
receive offers of standard or better premium rates, 6% receives offers at substandard pricing, and
only 2% are declined coverage. |
|
Definition
|
|
Term
|
Definition
the difference in death rates observed in the population having the
impairment compared to the death rates expected in an otherwise matched population w/o the impairment. - the observed death rate is designated as q and the expected death rate is designated q’. The excess death rate (edr) is then q-q’ (q minus q’). In insured lives studies, q’ represents the baseline mortality assumption. CH3 |
|
|
Term
| Relative Mortality Rate (rmr) |
|
Definition
- or mortality multiples are the ratios btw observed mortality rates (q) and expected mortality rates (q’). Thus, rmr = q/q’ (q divided by q’).
- form the basis of a classification system for rating substandard mortality risks in which a “table” of excess mortality risk represents a 25% increase in risk over that expected for
standard mortality risks |
|
|
Term
|
Definition
- many companies share their mortality data on substd issues to create pooled data for inter-company mortality studies.
- Even so, relatively few impairments have been analyzed in this manner. |
|
|
Term
|
Definition
- excess mortality risk increases with each duration that the policy remains in force
- mortality multiple |
|
|
Term
|
Definition
-excess mortality risk is thought to remain constant
- number of extra deaths per 1,000 insured lives per year plus a load for overhead and profit margin. |
|
|
Term
|
Definition
excess mortality risk decreases with time.
- avoid the antiselection that might result if permanent table ratings or permanent FE ratings were applied
- it is never appropriate to convert temporary FE ratings into table ratings |
|
|
Term
|
Definition
1948 study of CAD risk factors
1971 Offspring study - ages 30-60
- medical history; physical measurements such as height, weight and blood pressure, a resting EKG; chest X-ray; and blood chemistries - to see if predicted hrt dz
- development of credits to be applied to reduce debits assoc with ratable diseases |
|
|
Term
|
Definition
- started by splitting tob/NT 1990 – 1995 Society of Actuaries
- Framingham Study
- 80s HIV blood testing
- sub stratify std class
- an intercompany preferred lives study has yet to be published |
|
|
Term
|
Definition
1. if there is a range of mortality contained inside the standard class, and
2. if standard mortality is defined as 1.0 or 100%, and
3. if a subset of those risks with a lower mortality expectation is ID;d & offered a lower-priced rate class, then
4. by definition, those remaining in the std class will exhibit higher mortality. |
|
|
Term
| The process of deriving mortality in this manner has been called the “conservation of deaths” method |
|
Definition
| Once the % qualifying for the preferred class is set $ the mortality discount has been determined, algebra derives the mortality of the remaining insureds. The process of deriving mortality in this manner has been called the “conservation of deaths” method of setting mortality and is commonly employed as a technique for pricing preferred products. |
|
|
Term
| normal distribution range of mortalities |
|
Definition
- used frequently in science and nature
- bell shaped (most of the insureds would exhibit mortality close to average and few would have very good or very bad mortality within the standard class)
- fair appx of mortality |
|
|
Term
| Point System for creating pref risk |
|
Definition
| - hypothetically: pts to get to classes. Or debit/credit system |
|
|
Term
| Knock-Out for creating pref risk |
|
Definition
- series of rules whereby the proposed
insured either qualifies for the risk class or is “knocked out” of the risk class based upon the rule. |
|
|
Term
| primary risk factors for the development of CAD |
|
Definition
- Framingham Study
- age, sex, smoking (baseline factors)
- blood pressure (banded by age, 115/75 good, ever 20/10 doubles risk)
- cholesterol (under 200 ideal, 1% reduction = 2% reduc. risk) - HDL ^
- diabetes, LVH on resting EKG: : outside pref category
- build not in study but impt. CH4 |
|
|
Term
| Other factors to consider when setting pref criteria |
|
Definition
* Accidental Death Risk- Driving, Travel, Avocations, occupations
* Drugs, alcohol * Personal medical hxs (remote hx)
* Fam Med Hx (Dm, stroke, kidney, ca, cad)
* TX- could cause other impairments |
|
|
Term
|
Definition
- extra tests (ex; blood) and cost
- PI disappointment
- erode std mortality expectation
- potential for uw error
- appeals common |
|
|
Term
| The primary concern in underwriting life contracts is mortality CH5 |
|
Definition
|
|
Term
universal key concepts that provide an appropriate frame of reference when
considering post-issue policy changes |
|
Definition
1. contractual vs. non-contractual policy provisions
2. change in amount at risk
3. insurability
4. antiselection CH5
5. customer/producer/company impact. |
|
|
Term
| Contractual Right vs. Noncontractual Right |
|
Definition
- The starting point when considering post-issue policy chg is the policy contract.
- Owner cgs being scrutinized
- riders guartantee chgs
- non contr chgs: face amount ^ , tob
to NT, & risk reclassifications from substd to std, or even std to pref |
|
|
Term
| Key among contractual provisions for the purpose of post-issue transactions |
|
Definition
| incontestability, grace period and reinstatement, and for term policies, the conversion privilege |
|
|
Term
| 2001 CSO (Commissioners Standard Ordinary) mortality tables |
|
Definition
| have had an additional impact on non contractual policy changes- made harder |
|
|
Term
|
Definition
With the exception of term, it may be possible to have an increase in face amount even though the actual amt at risk to the insurer has declined.
- less risk = less req's |
|
|
Term
| Customer/Producer/Company Impact on policy chgs |
|
Definition
- Varies significantly by carrier
1. demographics of the market the insurer may target (such as upper vs. lower income)
2. type of producer relationship (such as captive vs. broker)
3. business structure of the insurer (such as stock vs. mutual company)
4. company philosophy. CH5 |
|
|
Term
|
Definition
Re-entries are term insurance policies that have reached the end of their period of specified coverage & are being considered for renewal. A renewal that can be completed without evidence is referred to as guaranteed renewable term. The premium associated with it reflects the now older age of the insured, as well as the fact that there is no current underwriting. CH5
- commissionable - may absorb 3-4 tables
- no rate ^, decline or rewrite new policy |
|
|
Term
| 1035- may represent extra risk |
|
Definition
- cost of insurance charges (COIs) will
reflect actuarial pricing that is based on the expectation of new business, with fullevidence uw'ing; perform of new policy may be better CH5
- new prem. may be less than old prem.
- exchange may repr an even greater risk |
|
|
Term
requirements for reinstatement will
depend on such factors as... |
|
Definition
- facultatively reinsured? - face amount?
- current policy values - age
- duration policy had been in force
- duration it has been lapsed
- any lapses and reinstatements
- disclosed health hx on the reinstatement application CH5 |
|
|
Term
| When underwriting premium waiver or disability income benefit, the risk is one of morbidity rather than mortality. |
|
Definition
|
|
Term
| Arguments for the Estate Tax: |
|
Definition
1. The tax assists in the redistribution of wealth from rich to the poor
2. The tax provides meaningful financial support for institutions of
government and national programs.
3. The tax encourages support for charitable gifting as a strategy for reducing the taxable estate. CH6 |
|
|
Term
| Arguments against the Estate Tax: |
|
Definition
1. The tax disproportionately affects successful citizens & penalizes entrepreneurs looking to safeguard their life’s work and pass it intact to their heirs. CH6
2. Money removed from economy via the Estate Tax causes a loss of jobs.
3. Tax-supported gv't institutions are less effective at promoting economic
prosperity than a free-market economy. |
|
|
Term
the estate tax is computed on the
taxable estate..... |
|
Definition
| ...which is an amount determined by subtracting certain allowable deductions from the gross estate. CH6 |
|
|
Term
| gross estate is the true starting point for the computation of the estate tax. |
|
Definition
| the value of all property interests, real or personal, tangible or intangible, of an indiv. on the date of death to the extent of his or her interest in the property. Most property is valued at fair market value (FMV):“the price at which the property would chg hands btw a willing buyer and a willing seller CH6 |
|
|
Term
|
Definition
-(land and permanent attachments) may not always have a ready market from
which to estimate a fair market value.
-valued @ the higher of the highest price available or its salvage value |
|
|
Term
| special use valuation (real property) |
|
Definition
designed to value the property according to its current use, not its potential value if used for other
purposes. CH6
- publicly traded stock & corp bonds are valued on the date of death or an alternate valuation date
- US gov't bonds valued at the date of death redemption price
- |
|
|
Term
| The Adjusted Gross Estate |
|
Definition
| - allowable deductions: debts (mortgage), funeral expense, med expense, admin fees, loss of estate during admin |
|
|
Term
| Marital and Charitable Deductions |
|
Definition
-subtracted from the adjusted gross
estate to arrive at the taxable estate.
- Property that is passing to the spouse (deduct on 2nd death)
- power of appt- donor says where property goes CH6
- owned/controlled by 2+ people
- charitable remainder trusts
- Guarn. annuity interest
- split gifts (part bene/part charity) |
|
|
Term
| charitable remainder trusts |
|
Definition
| a beneficiary receives the income from the property, but the charity gets the property itself upon the death of the beneficiary ch6 |
|
|
Term
| guaranteed annuity interests |
|
Definition
| the charity gets income for a specific term, then the property passes to a beneficiary CH6 |
|
|
Term
|
Definition
- strive to adopt a reasonable rate
- reflect the types of investments that make up the estate (CD vs stock)
= adjust to the age of the estate owner. (older=less time to grow)
- assume that some invest' income will be consumed by the estate owner and will not be completely reinvested. ch6 |
|
|
Term
|
Definition
| Canada has no estate tax. Instead, the Canadian Income Tax Act provides that a deceased taxpayer is considered to have “sold” all capital property at fair market value immediately before death. Any capital gains thus realized will be subject to tax on the terminal income tax return of the deceased. |
|
|
Term
|
Definition
- US Citizens are taxed on the value of their estate assets worldwide, regardless of where those assets are located.
-all citizens living abroad, have multiple citizenship status, former citizens and expatriates (for ten years after U.S. citizenship is
renounced) CH6 |
|
|
Term
| Residency or domicile is proven by two factors: |
|
Definition
1. physical presence CH6
2. intention to remain in the country.
==illegal immigrants may be subject to an estate tax if it can be shown that they had no intent of leaving the ctry. Foreigners with temp working papers may be subject to the tax if they intended to violate the legal time limits of their visa. |
|
|
Term
|
Definition
assets owned in the U.S. by foreign decedents are subject to estate tax, even if the decedent has never visited the U.S. and has no residence in the country.
-land, homes, tangible property, corporate stock, and bank accts. One important exception is life insurance, which if owned directly by a nonresident alien, ch6 |
|
|
Term
| Tax Treatment of Foreigners Subject to the U.S. Estate Tax |
|
Definition
1. The estate tax exclusion amount for non-resident aliens is only $60,000.
2. The charitable deduction applies, but only to U.S. charities.
3. There is no marital deduction if the spouse is not a U.S. citizen. However, if the spouse becomes a U.S. citizen before the estate tax return is filed, the deduction can be applied.
4. Foreign death tax credits may be applied against the U.S. estate tax. |
|
|
Term
| estate tax treaties exist between countries to help insure against the risk of “doubletaxation” on the same estate assets. |
|
Definition
|
|
Term
| Income with Respect of a Decedent (IRD) |
|
Definition
the income the decedent earned but did not receive before his or her death
-taxed twice: terminal income tax and estate tax
= IRD deduction; the bene deduct fed estate tax on IRD from income tax
-- Another solution is to purchase life insurance. CH6 |
|
|
Term
| Trusts (estate planning tool) |
|
Definition
- property is held and managed for the welfare of a beneficiary.
- act as an independent taxpayer(lower rate)
= internal value of a life
insurance policy accumulates in a tax-free manner and creates no income tax liability
-may exist not to exceed twenty-one years after the creation |
|
|
Term
|
Definition
- or inter vivos trust is a type of living trust, and is set up before the death of the grantor. --no estate tax savings ---grantor may undo the trust at any time ---control over the trust assets (termed an incident of ownership) means that the grantor never completely gives up the assets
-allows the grantor to enjoy the
the gratitude of the bene |
|
|
Term
| Irrevocable Trusts(ILIT's) |
|
Definition
- type of living trust --- provide significant opportunities for tax
savings as well as wealth and income shifting. --- grantor cannot change the trust, undo the trust, manage assets, or make arrangements to reclaim assets in the future
- Assets removed reduce the size of the estate and the estate tax.
--appreciation happens outside estate
- Income generated is taxed to the trust often at a lower rate
- The trust assets are not vulnerable to the grantor’s creditors. |
|
|
Term
|
Definition
- they may exist, theoretically, forever (public trust)
- irrevocable and must not name a specific individual(s) but instead a class of benes
- trusts create tax benefits by shifting assets out of the estate, reducing the estate tax |
|
|
Term
| charitable remainder trust (CRT) |
|
Definition
- allows a percentage of the trust assets to be paid out annually to a non-charitable beneficiary over a period of time.
- Typical assets placed include property and stock with potential for large appreciation (donor avoids capital gains tax)
- pays regular income to the donor, based on the value of the gift, for life
- @ death of the donor, heirs will receive the proceeds of the life ins free of income or estate tax and the charity will receive what is left in the CRT
- face amount typically equal the fair market value of property or assets placed in the CRT |
|
|
Term
| Generation Skipping trust |
|
Definition
- In wealthy families one of the greatest financial concerns is multi-generational financial planning.
- most often used in situations where the wealthy adult children of wealthy
elders would not substantially benefit by an act of inheritance
- avoid the costs of repeated estate tax payments that occur when assets are transferred through successive generations
- addresses any concerns the grantor may have about the
effect that unearned wealth might have on the character of his or her descendents
- does not invoke the Generation-Skipping Transfer Tax |
|
|
Term
|
Definition
-private trust that can last indefinitely
- can be funded tax-free with the generation-skipping exemption
or the annual gift exclusion amount. Life insurance can be purchased to complete or augment the trust funding when the grantor dies. |
|
|
Term
|
Definition
two types of personal trusts – inter vivos (living) --treated as a separate
taxpayer
--trusts and testamentary
trusts (established at death)- useful tools
in providing funds for minors or permanently disabled children, and are often funded wholly or partially with life insurance. |
|
|
Term
| The Family Limited Partnership (FLP) |
|
Definition
-modified business partnership
-General Partners--daily management of the partnership,elders,
-Limited Partners-passive role and have no daily management respons's
- attractive estate planning tool for same-sex couples
- liability protection against creditors. --Buy-sell agreements may be used |
|
|
Term
| BOLI, or “bank owned life insurance.” |
|
Definition
-offset rising employee benefit costs.
-executive
retirement plans, deferred compensation plans, and even retiree medical obligations. CH7
- |
|
|
Term
| COLI (corporate owned life insurance) |
|
Definition
| -eligibility may be determined by whether or not the eligible employee is an “executive”. |
|
|
Term
| CHOLI (charity owned life insurance) |
|
Definition
-also known as FOLI (foundation owned life insurance)
-plans designed to insure multiple or large numbers of lives on behalf of a charity or foundation
- provide an assured stream of ongoing revenue to the charity from the life
insurance proceeds CH7 |
|
|
Term
|
Definition
- plan participation is compulsory and the amt of insurance to be placed on each life is fixed-- amt of cvg on each life is predetermined in a method not of the participant’s choosing
= much of the concern w/ antiselection is eliminated, CH7 |
|
|
Term
|
Definition
- not as protected from antiselection by their plan design. CH7
- some measure of evidence even if it is less than traditional full underwriting
- CHOLI, older individ's |
|
|
Term
| Eligibility requirements are an important criteria in establishing the expected overall mortality of a multilife plan, and as such, must be strictly followed. |
|
Definition
|
|
Term
|
Definition
-relates to how much insurance is permitted on any one life relative to the size of the group, and how much is permitted on any one life relative to the average death benefit for the group
- max face limits or “multiples,” or increments of insurance that are multiplied by the number of participating eligible lives to determine the maximum death benefit on any one life. ch7 |
|
|
Term
| Aggregate-Funded Plan Design (multi life) |
|
Definition
- Most deferred compensation plan
- the employee may allot any amount of salary he or she wishes within the constraints of the employer’s plan
- all monies are pooled together (aggregated) and spread equally over the lives being insured
- employee has no ownership rights in the insurance CH7 |
|
|
Term
|
Definition
- amounts of insurance vary by title or salary groupings, may produce a highly variable spread of risk problem
- several differing levels of employee classes-- flat amounts of cvg that increase in steps, based on set criteria, usually by title or by salary bands
- a single unhealthy employee may shift the expected mortality and profitability of any class if he or she is promoted into a sm group of senior execs w/ higher benes |
|
|
Term
|
Definition
- least desirable method
- best evidence to the uw'er & may permit the least expensive prem on the most favorable lives, impedes the most efficient means of serving the best interests
-least commonly used method in this marketplace, ch7 |
|
|
Term
|
Definition
-full uw with one difference. Substd risks may be accepted at Std pricing in order to avoid the problems that arise w/ having to rate a risk
-still entails the most costly means of underwriting |
|
|
Term
|
Definition
= pricing for SI is more expensive than for a fully uw group, to
allow for some level of increased mortality. A commonly used method is to accept risks believed to be 200% of mortality or better, based solely on the answers provided in the appl, and to accept them at “Std” SI premium.
-minimal uwing costs & provides for quick decisions
-offers may include ratings as needed |
|
|
Term
|
Definition
-Perhaps the most desirable method of underwriting-- actually a conditional guarantee, must be actively at work, not been absent from work due to illness or injury during, “not to exceed X days absent”, preceding the time of enrollment
- least expensive and most efficient and expeditious method of uwing groups of lives. -- highest level of accepted lives-- more expensive
-- is the underwriting method of choice for
groups of lives |
|
|
Term
| Nonqualified Executive Compensation Plans |
|
Definition
The most prevalent form of multilife sales is nonqualified executive compensation plans. Most commone:
1. deferred compensation plans
2. supplemental executive retirement plans (SERPs)
3. Bonus 162 plans
4. equity repurchase plans. |
|
|
Term
| Deferred Compensation Plans (non qual. exec plan) |
|
Definition
- The most easily uw multilife plan (meaning the plan with the least degree of antiselection), and which may permit the largest amounts of GI coverage on fewer lives than other programs
- exec's goal is to min. tax & to max the ultimate return on money deferred (not the death bene)
- all the deferrals are aggregated together & spread equally, either by equal premium or by equal death
bene, over the lives being insured
- employer’s objective is to spread the deferral $$ over the fewest # of lives possible in order to min the cost of insurance charges
- biggest chlg to the uwer is finding common ground w/ the employer client
in determining the appropriate # of insured lives that can accommodate relatively lg death benes, yet still be uwritten on a GI basis.
- aggregate funded |
|
|
Term
| Supplemental Executive Retirement Plans (SERPs) |
|
Definition
- 2nd most favorable for exec plans
- desire to max income in retirement while minimizing taxation
- “cash value” (not death bene) will
help fund the executive’s retirement
- owned/pd by employer - remove anitselect.
- funded non aggregate |
|
|
Term
| Bonus 162 Plan (exec plan) |
|
Definition
- bene paid for by the employer for key employees, is considered a bonus for compensation purposes
- corp paid bene made available to all employees of either a certain class, title or pay grade, with no selectivity as to participation. 2nd , the
amt of cvg provided is established on some nonselective basis, typically a set
multiple of salary.
- uw determine face amount via GI uwing
- owned by indiv, not employer |
|
|
Term
| Equity Repurchase Plans (multi life) |
|
Definition
| - exec has ownership in co, co must repurchase. buys insurance to cover. |
|
|
Term
|
Definition
- may cover all employees -- GI uw'ing
- defined benefit & defined contribution plans: ESOP contrib's made by the employer on behalf of the employee are set aside as stock shares in the company
- sinking fund for repurchase |
|
|
Term
|
Definition
“private placement products” nonregistered products designed to be attractive
investment vehicles that still enjoy the tax advantages of more traditional forms of life insurance: only available to qualified
purchasers (financial standards) CH 7 |
|
|
Term
| marketing of COLI and BOLI business |
|
Definition
- an area of specialization (agts that sell indiv life don't usually sell this)
- enrollment labor intensive
- SI usually short form CH7
- GI forms attest to the employees’ being insured willingly, have no ownership rights to the life insurance, and incorporate the actively at work
questions & perhaps a tob use question. |
|
|
Term
| External forces outside the industry which may have a significant impact on the multilife plan marketplace |
|
Definition
Three such forces are:
1. insurer financial ratings
2. interest rates
3. the regulatory environment (biggest challenge) |
|
|
Term
| Legislation affecting multi life market |
|
Definition
1. ERISA (Employee Retirement Income Security Act of 1974)
2. TEFRA (Tax Equity and Fiscal Responsibility Act of 1982)
3. DEFRA (Deficit Reduction Act of 1984)
4. TAMRA (Technical and Miscellaneous Revenue Act of 1988)
5. Pension Protection Act of 2006 (good for this market) |
|
|
Term
| Pension Protection Act of 2006 |
|
Definition
- provided a way to retain certain tax advantaged benefits for corp owned life
ins, provided that, at time of issue, the insured was either a director or a highly
compensated employee.
- defined highly comp employee:
1. a 5% or more shareholder at any time during the preceding year
2. earned compensation of $95,000 (for 2005, indexed for inflation) in the preceding year
3. one of the five highest paid officers
4. among the highest paid 35% of all employees. CH7 |
|
|
Term
|
Definition
at age 37, the chance of suffering a disability of at least 90 days duration is
8X greater than the chance of dying. While death is inevitable, disability is more probable. CH8
- odds of mortgage foreclosure d/t disability are 16X greater than the risk of foreclosure due to death |
|
|
Term
|
Definition
- when claim benefits are paid out on a living benefit, they are non-taxable if the premiums have been paid with after-tax
dollars |
|
|
Term
| DI Conditionally Renewable |
|
Definition
- aka “cancelable,” allow the insurance co the most flexibility in making changes to in force policies
- does not provide for any premium or policy provision guarantees nor for the continuation of the policy.
- can chg but must be for all in a certain class
- Low cost, those who do not qualify for traditional DI CH8
- For indiv's in high-risk and/or lower-skilled occupations, seasonal or PT work or home-based work, where trad. cvg may be issued on a substd basis or declined |
|
|
Term
|
Definition
- cannot be canceled, have any changes made to its provisions, or addtl restrictions applied, provided the prem is paid to date.
- lower prem but can ^ if co. have poor claims hx w/that block of business
- uw'ing less restrictive
- bene limitations |
|
|
Term
|
Definition
- the most strictly uw as it represents the greatest risk to the company. CAnnot:
1. increase the premium or add any additional chg for the policy, w/o the agreement of the policy owner
2. chg or add any provision or restriction to the policy
3. cancel the policy, regardless of changes in the insured's occupation or health
- time limit, usually to age 65. |
|
|
Term
| DI non cancelable, after age 65 |
|
Definition
1. premiums are usually no longer guaranteed and are based on the insured’s attained age on an annually renewable basis
2. the waiting period remains unchanged as per the original contract but the benefit period is changed to either 12 or 24 months
3. the definition of disability is “Total”
4. any benefit riders are terminated. CH8 |
|
|
Term
| Total Disability Definition |
|
Definition
Own Occupation, Regular Occupation, and Any
Occupation. CH8 |
|
|
Term
| Loss of Income Policies (Residual) |
|
Definition
- Some disability insurance policies measure total disability in terms of income loss CH8
- The amt paid is based on proportionate loss of income rather than the loss of ability to perform duties |
|
|
Term
|
Definition
-Regular or Own Occupation definitions of total disability are typically utilized
- benefit periods are 12, 18, or 24 months- A longer benefit period is not appropriate bc if an employee is truly necessary to the operation of the company, the full replacement of that employee should be made w/i one to two years |
|
|
Term
| Office Overhead Expense covered expenses |
|
Definition
| 1. rent 2. property tax 3. utilities 4. depreciation 5. leased and rented equipment 6. business liability ins 7. dues for profes assoc's 8. interest on debt 9. accounting fees 10. certain employee wages 11. other fixed expenses customary in the operation of the business. CH8 |
|
|
Term
| Disability Buy-Sell three different forms of benefit payment |
|
Definition
1. lump sum that pays the benefit out all at once
2. monthly benefit payment
3. combination of a lump sum plus a monthly benefit. |
|
|
Term
|
Definition
- typically more restrictive than life underwriting
-routine requirements, the attending physician and specialist reports are of great importance in evaluating the morbidity risk |
|
|
Term
|
Definition
occupation and duties are important factors in determining:
1. whether the client is eligible for disability insurance
2. the type of product available
3. the amount of coverage
4. the rates to be charged.
-5 or 6 occupational classifications (by duties, not title) |
|
|
Term
|
Definition
The goal of most companies is to replace about 75 – 80% of after-tax income for lower
income individuals, reducing the percentage to 35 – 50% for individuals in the higher income brackets. CH8 |
|
|
Term
|
Definition
Most companies exclude the value of the principal residence, assets for personal use,
and total net worth of up to five million dollars before a monthly benefit amount and/or benefit
period reduction would be required. CH8 |
|
|
Term
|
Definition
| - premium ratings -- chg policy type -- bene adjustments -- exclusions -- remove riders CH8 |
|
|
Term
| One of the differences between LTC and other insurance products is the higher average age of the insureds at time of uw'ing (approximately age 60 for LTC). |
|
Definition
| - most are guaranteed renewable (only prem increases) CH8 |
|
|
Term
|
Definition
The benefit payment is based on a daily, weekly, or monthly fixed dollar amount.
1. Indemnity
2 expense incurred method
3 disability method |
|
|
Term
|
Definition
| the benefit is a set dollar amount and is not based on the specific services received or the expenses incurred. Payment is made if the insured is eligible for benefits and the services received are covered by the policy. |
|
|
Term
| LTC expense incurred method |
|
Definition
| benefits are paid if the insured is eligible for benefits and if the claim is for eligible services. The coverage pays the lesser of the expense incurred or the dollar limit of the policy. Most policies currently available pay benes using the expense incurred method |
|
|
Term
|
Definition
once the insured meets the benefit eligibility criteria, the full daily
benefit is paid even if the insured is not receiving any long-term care services |
|
|
Term
|
Definition
| - medical, cognitive, and functional status, as well as current or past use of health care services. Among the best predictors of long-term care use is functional status, which includes the ability to perform the Activities of Daily Living (ADLs) and the Instrumental Activities of Daily Living (IADLs). |
|
|
Term
|
Definition
| -- bathing -- continence -- dressing -- eating -- toileting -- transferring CH8 |
|
|
Term
| LTC Instrumental Activities of Daily Living (IADLs) |
|
Definition
| social survival skills: telephone, finances, transportation, shopping, laundry, housework, med admin, meal prep CH8 |
|
|
Term
| LTC cautious uw conditions |
|
Definition
| - OA, cardiac, COPD, chronic illness, co morbid (dm & hrt dz), multiple RX, PT, chronological vs physiological age. |
|
|
Term
|
Definition
- Delayed Word Recall (DWR)
- The Enhanced Mental Skills Test (EMST)
- The Short Portable Mental Status Questionnaire (SPMSQ) CH8
- Telephone or In-Person Interview |
|
|
Term
|
Definition
1. adding an extra premium rating
2. increasing the waiting period
3. decreasing the benefit period, decreasing the benefit amount
4. some combination of the above.
- NOT usually exclusions
- not concerned with the
mortality risk involved, but rather whether or not the condition could lead to the insured’s loss of
ability to perform ADLs |
|
|
Term
| Critical Illness (CI) insurance |
|
Definition
- recover financially
- funds that can be used by the insured for any purpose
- some business cvg
- once benefit is paid, the policy is terminated unless only partial benefits
were paid. CH8
- aka Living Insurance, Dread Disease Insurance, and Crisis Cover
- only need to be dx to claim benes
-- can include exclusions |
|
|
Term
| CI common covered conditions |
|
Definition
1. heart attack 2. stroke
3. multiple sclerosis CH8
4. kidney failure 5. blindness
6. deafness 7. coronary artery bypass surgery 8. life threatening cancer
9. loss of limbs 10. paralysis. |
|
|
Term
| CI definition should include... |
|
Definition
1. a clear and precise description of the event for which a benefit is payable
2. the evidence required for claims validation
3. any exclusions specific to the definition for which benefits would not be payable. |
|
|
Term
| CI elements of risk selection |
|
Definition
family history (age of onset), cardiovascular disease risk factors, and some conditions that increase the risk of certain cancers.
- build,BP, lipids, blood sugar, and smoking |
|
|
Term
| Accelerated Death Benefits |
|
Definition
- provide a larger payout than
would be available through a loan or surrender. This is because policy loans or surrenders are
usually based on cash value, while the amount available through ADBs is generally based on the policy's face value
- provide access to benefits without the need to sell the policy to a
viatical company.
- accrues interest in much the same manner as a policy loan would accrue interest
- if collaterally assigned, the consent of the assignee is required
- not intended to replace DI, CI, or LTC insurance
- any exclusion endorsement added to the cvg will also apply to the ADBs CH8 |
|
|
Term
| Reinsurance “indemnity” arrangements |
|
Definition
| one of the key provisions is that there is no contractual relationship between the insure and the reinsurer |
|
|
Term
| New Market Entrance (reinsurance roll) |
|
Definition
- The direct-writing company may not have the necessary expertise.
- the mortality of that block of business may not be as expected.
- Each claim has a much higher financial impact when only a few policies are in force. |
|
|
Term
|
Definition
... states that the greater the number of occurrences that take place:
a. the more accurate the prediction of future results
b. the less the deviation of the actual losses from the expected losses
c. the more reliable the prediction will be.
- Out of a large group of policyholders, an insurance company can accurately predict the number of policyholders who will suffer a claim. |
|
|
Term
|
Definition
an amount of money put aside by the direct carrier to cover actual or potential liabilities owed to policyholders. ch9
- direct writing company may turn to financial reinsurance |
|
|
Term
| Financial reinsurance covers non-mortality risks |
|
Definition
1. policy persistency 2. interest
3. cash values 4. reserve requirements (as noted above) 5. secondary guarantees 6. return of premium.
- obtained on blocks of business
- does not involve the underwriting department |
|
|
Term
|
Definition
- quota share arrangements allow for the use of reinsurance before the company
retention is exhausted. ch9
- first-dollar quota share, which means that the company cedes a portion and retains a portion of every dollar of insurance coverage, up to its retention |
|
|
Term
|
Definition
- the reinsurer shares in all the premiums and policy benefits, and even sets up its own share of the reserves and supports the internal cash value of the policy
- reinsurance company sets up admin services that mirror & integrate with that of the ceding company - can be labor-intensive & expensive.
- useful when the ceding company is sm & needs a large amt of reinsurance support. ch9 |
|
|
Term
|
Definition
| - The act of securing automatic reinsurance ch9 |
|
|
Term
| automatic binding limit or autobind limit. |
|
Definition
| the maximum amount a direct writing company is allowed to cede automatically ch9 |
|
|
Term
|
Definition
| - companies set up auto reinsurance arrangements with multi reinsurers CH9 |
|
|
Term
| Facultative-Obligatory Reinsurance (fac-ob) |
|
Definition
- a hybrid that combos
characteristics of both facultative and automatic arrangements.
- full uw'ing file is not submitted for review
- reinsurer has a limited right to
decline individual risks |
|
|
Term
| Reinsurance treaty provisions |
|
Definition
- Parties to the Agreement (NOT uw'er)
- Automatic Reinsurance conditions
- Facultative Reinsurance conditions
- Commencement of Liability
- Reinsured Risk Amount -- Reductions, Terminations, and Changes - Claims
- Conversions, Exchanges,& Replacements
- Errors and Omissions - Dispute Resolution -- Arbitration
- Forms, Manuals, and Issue Rules |
|
|
Term
|
Definition
| - Product -- market -- distribution system -- uw'ing (manuals, personnel experience, reins. manuals, audit results) CH9 |
|
|
Term
| Reinsurance Underwriting Audits |
|
Definition
- Reinsurers place significant value on a ceding company’s internal audit results as well as their own audits of the ceding co files & will take into consideration audits done by other reinsurers.
- Multiple audits conducted by several reinsurers and/or the direct carrier increase the reliability of the results.
- area of review: TX temp insurance, compliance w/forms, follow uw rules, getting A/A req's, file documentation, timeliness, clear communication, adhere to autobind limits, final assessment including exceptions. CH9 |
|
|
Term
| Material misrepresentation |
|
Definition
| false statement of fact that is of such significance that had the truth been known at time of underwriting, the decision would have been different |
|
|
Term
|
Definition
- creates coverage if the proposed insured dies prior to policy issuance
provided the conditions stated in the receipt were first met.
- conditions most frequently
included in this type of receipt involve the completion of all medical requirements and the
proposed insured’s insurability (e.g., being acceptable at the rate class applied for CH10 |
|
|
Term
| Temporary Insurance Agreement (TIA) |
|
Definition
provides coverage (assuming no material
misrepresentation) until the uw'er either accepts or rejects the risk (immediate) CH |
|
|
Term
| sins of omission and commission |
|
Definition
two principles of law:
1. Waiver is the intentional giving up of a known privilege or right, either expressed or implied.
2. Estoppel- if by your actions, words, silence another person took action to their detriment, you can't later defend your action CH10 |
|
|
Term
| Waiver (sins of omission) |
|
Definition
| Waiver is the intentional giving up of a known privilege or right, either expressed or implied. |
|
|
Term
| Estoppel (sins of omission) |
|
Definition
Estoppel is an equity principle applied to life insurance contract law. If by your actions,words, or silence, another person has relied or taken action that they would not have
otherwise taken, to their detriment, your defense is waived and you are prohibited (“estopped”) from later defending, denying, or rescinding your original course of action. CH10 |
|
|
Term
|
Definition
- voiding of a life insurance contract for material misrep w/in the first two policy years while the insured is still living ch10
- involves the legal dept & a indiv. in the underwriting department. |
|
|
Term
|
Definition
- UWer determine the significance of the misrepresentation or omission
- present this info to the claims area in a way that doesnt compromise the company’s ability to contest the claim
- UWer NOT to recc if claim to be pd. |
|
|
Term
|
Definition
| -life insurance activity in four or more of the last seven years ch10 |
|
|
Term
| SOME RULES FOR DEPOSITION WITNESSES |
|
Definition
| - tell the truth -- think before speaking -- answer the question -- don't volunteer info -- dont answer question you don't understand -- speak in full, complete sentences - "did you know" questions, you might not know -- do not guess -- be specific/vague as you remember -- don't explain thought process -- say if paraphrasing or quoting -- summarize when possible -- don't use "honestly" etc... -- avoid adjectives and superlative -- don't testify what other people know, your state of mind - see document if on exhibit -- don't tip off of docs that exist if not there (say you don't remember) ch10 |
|
|
Term
| SOME RULES FOR DEPOSITION WITNESSES pt 2 |
|
Definition
| don't let examiner put words in your motuh, don't answer compound questions, pay attention to intro clauses, use recess, if interrupted let atty finish and state you weren't finished, do not collapse if caught in inconsistency, don't adopt summary of your prior testimony, stay quiet when done answering. don't argue. know other side will score pts. avoid jokes, avoid obscenity . hold flash of insight til tt atty. if find mistake, let atty know. CH10 |
|
|
Term
| McCarran-Ferguson Act 1945 |
|
Definition
continued regulation and taxation
of insurance by states is in the public’s best interest CH11 |
|
|
Term
|
Definition
- standardization of electronic data
interchange, as well as to provide security measures to protect health information and its disclosure
- Privacy Rule protects all "indiv identifiable health info" while allowing the flow of health information
- life insurers are not specifically “covered entities” CH11 |
|
|
Term
| Canadian Life and Health Insurance Association, Inc. (CLHIA) |
|
Definition
developed a set of privacy guidelines
- hallmarks of the guidelines are notification and consent CH11 |
|
|
Term
| define the term "insurance company" (PATRIOT ACT) |
|
Definition
1. the issuing, underwriting, or reinsuring of a life insurance policy
2. the issuing, granting, purchasing, or disposing of any annuity contract; or
3. the issuing, uwing, or reinsuring of any insurance product with investment features similar to those of a life insurance policy or annuity contract, or which can be used to store value and transfer that value to another person.CH11 |
|
|
Term
| Stranger- Owned Life Insurance (STOLI, SOLI, IOLI) |
|
Definition
- intent of all the parties to the transaction is to sell the policy
-contractually require the insured to provide information regarding health to investors and lenders CH11 |
|
|
Term
|
Definition
- tagged with the pejorative label
“dead peasant” insurance when it was discussed in certain newspaper articles
- Congress “COLI Best Practices Act of 2005” (limit to execs, notice & consent, disclosure reqs, tax if reqs not met)--- Pension Protection Act of 2006 CH11 |
|
|
Term
| National Association of Insurance Commissioners Viatical Settlement Model |
|
Definition
- developed a “model
law” in 2007 that requires companies and brokers to obtain a license before entering into viatical settlement agreements
- a state insurance commissioner has authority to refuse to grant or to revoke a license
- prohibition on the sale of a STOLI policy for five years, with some hardship exceptions ch11 |
|
|
Term
| National Council of Insurance Legislators (NCOIL) adopted a Life Settlement Model Act. |
|
Definition
- defines STOLI and makes it a fraudulent act to enter into any plan or practice that involves STOLI
- prohibits misuse of trusts and premium financing, but only prohibits the sale or transfer of the policy for two years |
|
|
Term
| state guaranty association |
|
Definition
- when insurer is insolvent, they protect the consumer
- insurer become "member insurers" - pool insolvencies, The amount member insurers are assessed is based on the
amount of premiums they collect
- most states basic limits of $300,000 in life insurance death benefits and
$100,000 in cash surrender or withdrawal value for life insurance |
|
|
Term
| no lapse guarantee - specified premium guarantee & shadow account |
|
Definition
guaranteed death benefit so
long as the policy owner pays a specified premium each year
- alternative or hypothetical account value is calculated using an alternate set of expense charges, cost of insurance and interest CH11 |
|
|
Term
|
Definition
- concerns w/appropriate reserve levels
- required companies to increase reserves for secondary guarantee features found on UL policies
- Actuarial Guideline AXXX- reqs for 2ndary guart. using shadow account |
|
|
Term
| NAIC future travel guidelines |
|
Definition
| “the risk of loss for individuals who travel to a specified location at a specified time is reasonably anticipated to be greater than if the individual did not travel to that destination at that time; and the risk classification is based on sound actuarial principles and actual or reasonably anticipated experience.” CH11 |
|
|
Term
| three ways life insurance companies can do business |
|
Definition
1. stock company
2. mutual company (policy owners own co)
3. mutual holding company (MHC) - hybrid
CH11 |
|
|
Term
| agencies that are charged with antitrust enforcement |
|
Definition
| Federal Trade Commission (FTC) and the Department of Justice CH11 |
|
|
Term
|
Definition
- restore investor confidence in the United States capital markets by providing more structure and govt oversight
- co's must tell truth about their businesses, the securities they are selling, and the risks involved in
investing.
--treat investors fairly and honestly, putting investors' interests first ch11
- The primary mission is to protect investors and maintain the integrity of the securities markets |
|
|
Term
| FINRA - Financial Industry Regulatory Authority |
|
Definition
- protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services
- touches on virtually every aspect of the securities industry |
|
|
Term
| The National Survey on Drug Use and Health (NSDUH) |
|
Definition
- primary source of information on
the use of illicit drugs, alcohol, and tobacco in the United States in those aged 12 or older CH12 |
|
|
Term
|
Definition
- in 12 mth period, 1 or more:
1. failure to fulfill major role obligations at work, school, home (e.g., repeated absences or poor work performance)
2. situations in which it is physically hazardous (driving)
3. legal problems (arrests)
4. recurrent social or interpersonal
problems (fights) CH12 |
|
|
Term
|
Definition
3+ in the same 12-month period:
- Tolerance - withdrawal - using more than RX'd - desire/fail to cut back - too much time getting or recovering - give up things enjoyed - continued use despite health issues CH12 |
|
|
Term
Alcohol-related deaths are
the third leading cause of preventable deaths in the U.S., exceeded only by tobacco use and obesity. |
|
Definition
ch12
- fewer are getting treatment for
alcohol use disorders than in the past |
|
|
Term
|
Definition
- ethanol - CNS depressant (low amt = stimulant)
- metabolized 0.5 ounce/hour, 95% in liver (the rest thru urine, breath, sweat, feces, and saliva) |
|
|
Term
|
Definition
stomach to intestine, then to blood
1. the amount of alcohol consumed
2. the concentration of alcohol in the drink 3. the speed of consumption
4. the presence or absence of food in the stomach 5. level of hydration 6. body type. |
|
|
Term
| alcohol has specific and significant effects on the function of at least two types of neuronal receptors |
|
Definition
GABA (gamma-amminobutyric acid) receptors (sedative- becomes depend. on etoh) and glutamate receptors, particularly the NMDA (N-methyl-D-aspartate) receptor
- nmly work together |
|
|
Term
| GABA (gamma-amminobutyric acid) receptor |
|
Definition
- once dependent on etoh, during w/drawl the cells become hyper-excitable, leading to irritability, insomnia, hypertension,
tachycardia, hallucinations, and seizures. |
|
|
Term
| NMDA (N-methyl-D-aspartate) receptor |
|
Definition
- Alcohol decreases the excitatory activity
- inhibition leads to the memory deficits, impaired judgment, and sedative effects of alcohol -- seizure activity and hypoxic damage. CH12 |
|
|
Term
|
Definition
- primary chemical messenger in the reward centers of the brain, which promote feelings of pleasure.
- etoh increases release while drinking, but eventually goes down. CH12 |
|
|
Term
| Factors associated with increased risk of abuse and dependence. |
|
Definition
- Serotonin dysfunction, altered ALDH enzyme (metabolism)
- family hx
- NON Genetic; more than three to four drinks per day. and drink to self-medicate CH12 |
|
|
Term
|
Definition
-malnutrition (appetite suppresant, oral inflammation, vit deficiency)
- Reflux - GI bleeds -- vomiting/esophagus tear
- most
common cause of chronic pancreatitis is alcohol abuse; the risk significantly increases with ingestion of 35+ drinks per week CH12 |
|
|
Term
|
Definition
1. hepatic steatosis, which occurs in 90% of heavy drinkers 2. alcoholic hepatitis (10-35%) 3. cirrhosis 10-20%)
-- by production of free radicals -- more toxins thru liver wall -- cell death
- woman have more etoh hep than men |
|
|
Term
| Cardiovascular System from etoh |
|
Definition
- cardiomyopathy, htn, and stroke.
- associated with afib, aflutter,
supraventricular tachycardia, ventricular arrhythmias, and sudden death.
- effect on the myocardium is a direct toxic result of ethanol or its metabolites
- increased BP -- increased risk of ischemic and hemorrhagic stroke CH12 |
|
|
Term
|
Definition
- damage CNS & PNS d/t alterations in neurotransmitter levels and neuronal cell membrane function.
- front lobes; dopamine sensitive (reasoning, judgment, emotion, complex
problem solving. memory formation, abstract thinking, problem solving, attention, concentration, & perception of emotion) CH12
- toxic polyneuropathy |
|
|
Term
| Nervous System - etoh - toxic polyneuropathy |
|
Definition
| distal sensory disturbances with ain, paresthesia, and numbness in a glove-and-stocking pattern; weakness and atrophy of distal muscles, primarily in the lower extremities; loss of tendon jerks; and autonomic dysfunction |
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Term
|
Definition
- frequent, severe infections (nutritional deficiencies) inhibit immune proteins
- Increase hep c replicaiton and reduce tx effectiveness
- Cancer; etoh group 1 carcinogen (oral, stomach, liver, breast, ovaries)- stimulate tumor growth. CH12 |
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Term
|
Definition
- goal is remission
- Effectiveness depends on: motivation, age of onset, duration of abuse, compliance, successful tx of co-morbid.
- Antabuse, Revia, Campral
- 1 yr after tx, 25% relapsed CH12 |
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Term
| Possible etoh abuse indicators |
|
Definition
| - hx mood dx (SI, S attempt), personal stressors, hx violence, hx other abuse, MVR (dui, speeding...), unstable job, fam hx, easy access, frequent fall/accident, high risk behaviors, tobacco use, physical signs (htn, gi, liver, pancreas, insomnia, tremors, memory) CH12 |
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Term
|
Definition
- released into the serum when liver cells are damaged
- ALT more specific, AST more sensitive-- ratio greater than 2 is suspicious
- elevations do not correlate well with the presence or extent of alcohol-related liver disease
- GGT elevated for other factors (dilantin, NSAIDS, statins) - alone not a marker CH12 |
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Term
| Mean corpuscular volume (MCV) |
|
Definition
- measure of RBCs CH12
- macrocytosis & etoh (low levels): high levels like B12/folate deficiency |
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Term
| Triglycerides and Uric Acid |
|
Definition
| - both elevated (lactic acid increased production) CH12 |
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Term
| Hemoglobin Associated Acetaldehyde (HAA) & eoth |
|
Definition
- Acetaldehyde is a major metabolite of ethanol
- chronically elevated, attaches to hemoglobin
- not a binge drinking marker CH12 |
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Term
| CAGE Questionnaire (etoh) |
|
Definition
Need 2 "yeses"
1. Have you ever felt you needed to Cut down on your drinking?
2. Have people Annoyed you by criticizing your drinking?
3. Have you ever felt Guilty about drinking?
4. Have you ever felt you needed a drink first thing in the morning (Eye-opener) to steady your nerves or to get rid of a hangover? |
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Term
| Michigan Alcohol Screening Test (MAST) |
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Definition
- oldest & most accurate screening test
- 22-question test effective in id'ing dependent drinkers with up to 98% accuracy
- takes time, not recent etoh (over time) |
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Term
| Alcohol Use Disorders Identification Test (AUDIT) |
|
Definition
- 10 questions
- dv'loped by World Health Org WHO)to determine if a person’s etoh consumption is harmful. CH12 |
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Term
|
Definition
- equally div. chronic & acute (binge drinking)
- The leading chronic cause of alcohol attributable deaths (AADs) was alcoholic liver disease, and the leading acute cause of AADs was injury from MV crashes.
- 72% males |
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Term
|
Definition
| defined as five or more drinks per occasion for men and four or more drinks per occasion for women |
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Term
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Definition
-powerful stimulant that increases alertness, decreases appetite, and provides a sensation of pleasure
- In contrast to cocaine, which is
quickly removed and almost completely metabolized in the body, meth has a much
longer duration because the drug is present in the brain longer, producing a prolonged stimulant effect. CH12 |
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Term
|
Definition
- dissociative anesthetic. Its trance-like sedative effect produces an “out of body” experience and sense of detachment from reality.
- effects unpredictable |
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Term
|
Definition
| - most potent mood- and perception-altering drug known. CH12 |
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Term
|
Definition
- long term
- polysubstance (3+)
- influence success: duration of abuse, drug used, poly-substance, mental health dx, relapse, # years drug free CH12 |
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Term
|
Definition
- Pain relievers were second only to marijuana as having the highest levels of past year dependence or abuse.
- commonly abused pain relievers are the opioid compounds
- Variety, easy to get, easy access CH12 |
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Term
|
Definition
A professional athlete’s career generally takes place between the ages of 16 and 35 and spans a period of 10 to 15 years. CH13
- contract 2 - 8 yrs
- short term cvg; “marquee” (big name) players as their salaries are very large and rep a significant liability to the team.
- best product: reducing term
- long term disability could be uw'ing favorable since contract short term CH13 |
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Term
|
Definition
- Usually the only source of info available to the uwer is a detailed summary of past travel but future international travel is often unpredictable
- Ambassadors to a nation are usually assigned for a three-year period in any one country |
|
|
Term
| Entertainment/Celebrity/Media Personalities |
|
Definition
- tabloids : need 3rd party interviews, mvr, Google
- A full drug screen should be a routine requirement.
- how they fill time btw movies CH13 |
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Term
|
Definition
- a type of insurance taken out by the studio on an entertainer and is
primarily seen in Europe and the UK
- PI is not aware of cvg & it generally expires when the project involving the entertainer is finished CH13 |
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Term
| Financial UW high profile |
|
Definition
- purpose must be clear & amt required to offset the risk must be in line with the
face amount
- Info should be obtained from reliable sources such as accts, bankers, or tax attorneys
- mindful of short term travel insurance (inexpensive, pd monthly) CH13 |
|
|
Term
| Indiv Insurance Entertainment Celebrities |
|
Definition
- consider who stands to benefit from the proceeds and make sure it makes sense
- amount of coverage should match the
potential loss CH13
- Review of the individual’s spending habits may provide valuable information |
|
|
Term
|
Definition
- proficient in the five classic
managerial functions of planning, organizing, staffing, directing, and controlling.
- practical responsibilities in
planning, organizing, execution, risk management, employee training, and leadership of the department. |
|
|
Term
| Goals subject to “suboptimization” |
|
Definition
– the process by which
achievement of the goals of one unit may jeopardize the achievement of another unit’s goals, even though both are part of the same organization CH14 |
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Term
| UW Manager Set Goals in... |
|
Definition
1. mortality results to meet pricing assumptions 2. time service
3. accuracy of risk assessment by underwriters 4. productivity 5. research and development of risk selection policies and procedures 6. participation in industry studies and activities 7. employee training and development. 8. participation in systems development and enhancement 9. participation in company marketing objectives. CH14 |
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Term
| In Op Planning Phase, manager planning role: |
|
Definition
1. estimating necessary resources
2. budgeting 3. developing and communicating the operational policies that direct activities toward the
goals 4. establishing measurement methods for goal achievement. |
|
|
Term
| Protective Value Analysis |
|
Definition
- types of expense/mortality analysis that may be done by today’s uw'ing manager
- (or “cost/benefit”) analysis is the means by which to determine the value of an A/A uw'ing req. The cost of obtaining and
handling the requirement is compared to the value of the requirement
- If the mortality benefit exceeds the cost of the requirements, the requirement is said to provide “protective value.” CH14 |
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Term
|
Definition
- types of expense/mortality analysis that may be done by today’s uw'ing manager
- UW responsibilities:
1. creation and revision of application forms and “drill-down” questions
2. collection and evaluation of protective value data on the tele-underwriting process
3. review and validation of the automated risk selection process
4. periodic updates to the forms and process. CH14 |
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Term
|
Definition
- types of expense/mortality analysis that may be done by today’s uw'ing manager
- Good; can handle more work w/out more staff, more temporary increase in work, functions the carrier doesn't have
- Bad; lose direct control, lost skill sets, costly CH14 |
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|
Term
| functionally structured UW department |
|
Definition
- individuals who are performing the same or very similar work are grouped together for management and reporting purposes
- Access to guidance, volume fluctuations, professional support, develop expertise, consistency btw employees |
|
|
Term
| integrated UW team structure |
|
Definition
- individuals from many functional areas who work together on business of a specific type or from a particular source
- expose variety of disciplines, address multiple faceted problems, focus on customer, understand entire business, variety of skill levels |
|
|
Term
| How to decide which UW structure to use... |
|
Definition
| - marketing strategy, complexity of products, mortality results, # of staff and expertise, quality of communication, training resources, time frame for transition. CH14 |
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|
Term
|
Definition
| - Submitted business, approval %, final action report, final action by uw'er, tobacco use ratios, requirements ordered, time service, placement ratios, unit cost, informals processed |
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|
Term
|
Definition
- provide feedback on a select group of high risk cases to determine if the company is exposed to greater risk than planned.
- typically done only on cases that have been placed and are in force
- provide details of any underwriting errors, reinsurance problems, or patterns of agent behavior that may put the company at higher risk than anticipated in pricing.
- for the head of dept, or head of LOB CH14 |
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|
Term
| Underwriter authority limits |
|
Definition
- limit on the maximum risk amount that an underwriter is allowed to accept alone – that is, on his or her signature only.
- second signature above amt
- limit on the maximum risk amount that an underwriter is allowed to accept alone – that is, on his or her signature only. CH14 |
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|
Term
| An effective performance evaluation system will include: |
|
Definition
job description, skill list, standards, case review/audit program
- Individual goals CH14 |
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