CAA Life & Health Insurance Principles Flashcards
6 cards from real CAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAA Life & Health Insurance Principles flashcards as text
What is a 'deferred annuity' in the context of US retirement products?
Answer: An annuity where the income payments are postponed to a future date, allowing accumulated funds to grow tax-deferred in the interim
A deferred annuity accumulates value tax-deferred during a savings phase and then converts to income payments at a future annuitization date chosen by the contract holder.
What is the 'policy reserve' in a traditional whole life insurance policy?
Answer: The liability the insurer must hold to meet future policy obligations, funded by past premiums in excess of current costs
The policy reserve is an actuarial liability representing the present value of future benefits minus the present value of future net premiums, funded by premium overpayments in early policy years.
Under the US Affordable Care Act (ACA), what does the 'medical loss ratio' (MLR) requirement mandate for health insurers?
Answer: That at least 80–85% of premium revenue must be spent on medical claims and quality improvement activities
The ACA MLR requirement mandates that individual and small-group insurers spend at least 80% (large groups: 85%) of premiums on medical care and quality improvement, limiting administrative costs and profits.
What is 'credibility theory' used for in group health insurance ratemaking?
Answer: Blending a group's own experience with industry-wide data to produce a more reliable rate estimate
Credibility theory provides a weighted blend of a group's own experience and a broader manual rate, with the weight on own experience increasing as the group's data becomes more statistically reliable.
What does the term 'incurred but not reported' (IBNR) mean in health insurance reserving?
Answer: An estimated liability for claims that have already occurred but have not yet been submitted to the insurer
IBNR reserves represent the actuary's estimate of the liability for medical services already rendered but for which claims have not yet been filed or recorded by the insurer.
Which factor does an actuary primarily use to adjust health insurance premiums for an aging workforce in an employer group?
Answer: Age-sex adjustment factors that reflect higher expected medical costs for older employees
Age-sex adjustment factors are applied to premium calculations to account for the higher medical utilization and costs associated with older and female members in the group.