exam fx 6-8

Certificate of Insurance

A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

Misrepresentation

It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, et

Group life insurance may be extended to the employee's family members or dependents, subject to the following:

The insurance premium is paid by the employer, covered employee, or both. Coverage may be limited or excluded by the insurer on any family member or dependent based on evidence of individual insurability. Upon request from the policyholder, the amount of coverage for family members or dependents may be limited to a percentage of that available to the employee.

The Delaware Insurance Fraud Prevention Bureau was established for the following reasons:

To initiate and conduct independent inquires and investigations when the Bureau has reason to believe that an act of fraud has been, or is currently being committed. To review reports or complaints of alleged insurance fraud from federal, state and local police, other law-enforcement authorities, governmental agencies, insurers and the general public to determine whether such reports require further investigation. may impose an administrative penalty of not more than $10,000 for each act of insurance fraud on any person. The person in violation will also be liable for costs incurred by the Delaware Insurance Fraud Prevention Bureau, which would be assessed at 15% of each penalty.

Payment of Claims

When the benefits under the policy become payable due to the death of the insured, the settlement must be made upon the receipt of proof of death. The settlement period cannot exceed 2 months from the receipt of the proof of death.

Buyer's Guide

is a consumer publication that explains life insurance in general terms to assist the applicant in making their decision. I

Twisting

is a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer.

Churning

is defined as replacing insurance policies for the sole purpose of making commissions.

Standard Nonforfeiture Law

policyowner defaults on the payment of any premium due on a life insurance policy that has cash value, the insurer must notify the policyowner of the cash surrender value and the options as to the application of the cash as provided in the policy, in writing, within 60 days after the default.

Delaware Life and Health Insurance Guaranty Association

protects policyowners, insureds, and beneficiaries from financial losses caused by insurers who become insolvent or otherwise unable to perform their contractual obligations.

Conflict of issues

resolve conflicts of issues with the insured or insurer

Privacy Act of 1974

safeguards against an invasion of privacy through the misuse of records by federal agencies.

unfair trade practice

to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.

errors and omissions (E&O) liability insurance.

An insurance agent or broker may wish to obtain professional liability insurance to protect against financial losses that could occur due to the agent's negligent acts or actions.

Binding Authority

An insurance agent's authority to effect coverage on behalf of the insurer. only property and casualty agents

Certain types of policies are exempt from this regulation:

Annuities; Credit life insurance; Group life insurance; Variable life insurance; or Life insurance policies issued in connection with pension and welfare plans.

Insurance fraud is defined as the following:

Any misrepresentation of material fact, made knowingly and intentionally, with the intent to injure, defraud or deceive. Giving false, incomplete or misleading information concerning any material fact to the application for issuance of insurance. Assist, solicit or conspire with another person to prepare oral or written statements which contain false, incomplete or misleading information, for either issuance of insurance or submitting a claim for insurance benefits.

the types of eligible groups:

Employer groups - employees in a workplace; Debtor groups - people borrowing money from a creditor (loans); Labor unions - members of a union or organization; Trustee groups - multiple employers of similar type of business grouping together; Association groups - must have a minimum of 100 members and in business for at least 2 years; Credit union groups - members of credit unions.

Dividends

No later than by the end of the 3rd policy year in participating policies (such as those issued by mutual or stock companies) the insurer must annually pay the divisible surplus to the insured, in cash or applied to other dividend options as provided by the policy.

Duties of the replacing producer:

Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. A copy must be left with the applicant. Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced. Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. Submit to the replacing insurance company a copy of the replacement notice with the application.

Rebates may include, but are not limited to, the following: .

Rebates of premiums payable on the policy; Special favors or services; Advantages in the dividends or other benefits; and Stocks, bonds, securities, and their dividends or profits

Complaints Lacking Merit:

The DOI may determine that the complaint did not have merit in which case it will not be deemed to be founded.

Referral for Formal Process:

The DOI may initiate a proceeding to make a formal determination as to whether the complaint is founded. T

Resolved in Favor of Consumer:

The DOI may resolve a complaint through negotiation or mediation, with some benefit accruing to the consumer. Any resolution in favor of the consumer will be considered a complaint resolved in favor of the consumer.

market conduct

describes the way companies and producers should conduct their business. It is a type of "code of ethics" for producers with procedures to adhere to and penalties for failure to comply. Conflict of interest; A request for a gift or loan as a condition to complete business; and Supplying confidential information.

Suitability

evaluate customer's needs for insurance and make appropriate recommendations

Life insurance solicitation

is attempting to sell insurance or asking or urging a person to apply for a particular type of insurance. Life insurance solicitation rules stipulate that a buyer's guide and policy summary be provided to prospective insureds.

Implied authority

is authority that is not expressed or written into the contract, but which the producer is assumed to have in order to transact the business of insurance for the principal.

Commingling

is mixing the client's money with the producer's personal money.

Prior to a sale of consumer credit insurance, the following information must be disclosed to the debtor in writing, and in a clear and conspicuous manner:

of consumer credit insurance is optional and not a condition of obtaining credit approval; Whenever more than one kind of consumer credit insurance is available to the debtor, an explanation whether the debtor has an option of purchasing each kind separately; Conditions of eligibility; Description of coverage; Conditions for coverage cancellation: within the first 30 days the policy may be returned for a full refund of premiums; after that, the debtor may cancel the policy at any time during the term of the loan and receive a refund of unearned premium.

restatement in annunity

reinstated within 1 year from the default in making stipulated payments to insurer unless the cash surrender value has been paid. All overdue stipulated payments and any indebtedness must be paid with interest. The insurer may also require evidence of insurability.

consumer credit insurance, credit life and health

-insurance covers the life and disability of a debtor during the time a loan is outstanding. - will pay off the balance of a loan in the event of the death or disability of the debtor. - is usually written as decreasing term insurance, and it may be written as an individual policy or as a group plan. The creditor is the owner and the beneficiary of the policy although the premiums are generally paid by the borrower (or the debtor).

It is unlawful to pay, offer or accept any of the following as an inducement to buy insurance:

Any special favor or advantage in dividends or benefits; Any stocks, bonds, securities, or accrued dividends or profits; or Anything of value not specified in the insurance contract.

replacement rules do not apply in the following cases:

Credit life insurance; Group life insurance or group annuities; When the existing and the replacing insurers are the same; The application for insurance is made to the same insurer that issued the existing insurance and a contractual policy change or conversion privilege is being exercised Life insurance or annuities issued in connection with a pension, profit-sharing or other benefit plan that qualifies for tax deductible premium.

following policy plans are prohibited from issue or delivery by life insurers in this state:

Plans that provide for the accumulation of profits and for payment of all or part of the profits only to members of a designated group or class of policyholders; Policies registered with any agency of the state, bank, escrow company or other institution other than the insurer; Policies that provide benefits or values for surviving or continuing policyholders contingent upon the lapse or termination of other policyholders' policies; Policies that contain or refer to any of the following provisions or statements:Investment returns or profit-sharing, other than the dividends of participating policies;Referring to premiums as "deposits;"Relating policyholder interest or returns to those of stockholders;That the policyholder is a member of a select group, and will be entitled to extra benefits or dividends not normally available to policyholders.

Disclosure letters and forms

are used as safeguards to protect the consumers. Information is treated with confidentiality and can only be used for the purpose it is intended.

Apparent authority

is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Express authority

is the authority a principal specifically grants to a producer by means of the producer's contract.

Replacing insurer

is the company that issues the new policy.

Existing insurer

is the company whose policy is being replaced

Agency

is the fiduciary relationship between a person and brokerage, authorizing the brokerage to act as the producer

Coercion

is to require, as a condition to a loan, that the applicant purchase insurance from a specific insurer.

Reinstatement

lapsed life insurance policy may be reinstated at any time within 3 years (2 years for industrial life policies) from the date of premium default. The following requirements apply to reinstatement of life insurance policies: Policy was not surrendered for cash; cash value has not been exhausted; or the paid-up term insurance, has not expired; Provide evidence of insurability; Payment of all past premiums with interest not to exceed 6% per year; Payment of any indebtedness.

Replacement

means any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be any of the following: Lapsed, forfeited, surrendered, or otherwise terminated; Reissued with any reduction in cash value; Converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; Amended so as to affect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; or Used in a financed purchase.

Grace period in annuities

must be 1 month (at least 30 days). The insurer may charge interest up to 6%. If a claim arises during this period, the amount of payment, plus interest, may be deducted from amount payable under the contract.

Defamation

occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition of any person or a company.

Grace Period

provision allows a grace period of 1 month, but not fewer than 30 days, for a stipulated payment of premium to the insurer before the policy will lapse, subject to an interest charge not exceeding annual 6%. If a claim arises during this period, the amount of payment, plus interest may be deducted from amount payable under the contract.

Consumer Credit Insurance Model Act

the Commissioner may impose an administrative penalty (not to exceed $15,000 per violation for individual producers, and $50,000 for companies). The Commissioner may also revoke or suspend the license or certificate of authority of the person or company guilty of repeated will

For the purposes of administration and assessment, the Guaranty Association maintains 2 separate accounts:

the life insurance and annuity account, and the health insurance account.

Gramm-Leach-Bliley Act (GLBA)

was created to respect the privacy of the customers, and to protect the security and confidentiality of the customer's nonpublic personal information. The privacy notice must also explain to the customer the opportunity to opt-out, or prevent financial institutions (including insurance companies) from sharing nonpublic personal financial information about that consumer to nonaffiliated third parties.

term of the credit life insurance

will begin on the date the debtor becomes obligated to the creditor. The term will terminate on the scheduled maturity date of the debt, not to extend more than 15 days beyond maturity date.

group insurance provisions

Group life insurance policyholders are entitled to a grace period of 31 days after the premium due date. During the grace period, the coverage will remain in force; however, the policyholder may be liable to the insurer for the payment of a pro rata premium. Incontestability Just like in individual life insurance policies, the incontestability period for group life policies is also 2 years.

Discrimination

in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. No discrimination may be made on the basis of an individual's marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry unless the distinction is made for a business purpose or required by law.

Policy Conversion

insured's termination of employment, the insured must be entitled to convert to an individual life insurance policy without evidence of insurability, provided that the application for the individual policy is made and the premium is received within 31 days. If a group policy is terminated, every person insured at the date of termination (if insured for at least 5 years) is entitled to convert to an individual life insurance policy. The amount of the individual policy may not exceed the smaller of either the amount of the group life insurance or $10,000. If an insured under the group policy dies during the period of conversion to an individual policy, the amount of life insurance which he or she would have been entitled to will be payable as a claim under the group policy, whether or not the application for the individual policy has been made. the insurer must provide a notice of the right to convert to an individual policy at least 15 days prior to the expiration of such period.

Policy Loan

After 3 years, and if policy has sufficient cash surrender value, the insured may borrow the cash value at an interest rate of not more than 8%. The insurer may take up to 6 months after the request to borrow, to disperse funds. If a claim is submitted, any outstanding balance will be deducted from the policy proceeds.

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy.