FL - RULES LIFE
1. Senior Conusmers
65 and older
Payment of benefits
Benefit must be PAYABLE TO THE BENEFICIARY
advertising gifts
an insurer or agent may not give insureds or prospective insures for the purpose of advertising any articles of value more than 25$
Existing insurer
company whose policy is being replaced
what must the agent do
give applicant a written comparison and summary statement at the request of the policyholder
9. Competent parties
minimum age for entering into a life insurance contract or annuity is 15
Misstatement of age
policy PREMIUMS and BENEFITS may be adjusted in the event of the age of the insured being misstated
Replacing insurer
the company that issues the new policy
3. Code of Ethics of FL association of Insurance and Financial Advisers
establishes a broad outline appropriate and inappropriate business behavior for life insurance agents.
C. Policy Clauses and Provisions
promulgated to protect the interest of the public
individual life insurance
rate is based on underwriting of an individual
2. Grace Period in FL
required grace period is 30 DAYS however, the insurer may impose an interest charge not to exceed 8% per year for the number of days elapsing before the premium is paid - if policy becomes a claim during grace period, the insurer may deduct the amount of premium due up to 8% per year from the settlement
Free insurance
advertising, offering, or providing free insurance as an inducement to the purchase or sale is prohibited
3. Conversion
all group policys must provide a conversion privilege - may convert to ANY TYPE OF INSURANCE EXCEPT TERM LIFE -WITHOUT PROVING INSURABILITY - all based on age. -FA/DB will be equal to the group term face amount, but premium will be higher -31 days to convert
7. Protection of Beneficiaries from Creditors
all policies must entitle the beneficiary to proceeds under the policy, regardless of any creditor's claims against the insured. same with cash surrender value. creditor's cant garnish
When recommending a purchase of an annuity, the INSURER or AGENT must have reasonable grounds to believe that the recommendation is suitable for the consumer based on facts disclosed
and must make sure they obtain all the right info
replacement means
any transaction when a new life policy is purchased and as a result, the existing life policy will -lapse, forfeited, surrended, terminated -reissued with any reduction of CV -converted to a reduced paid-up insurance, continued as extened term insurance -amended to reduce benefits -used in a finance purchase
FL replacement rule
applies when an agent makes a proposal and knows that the purchase of such policy will replace existing life policy it lays out rules to be followed when making such proposal
5. Policy Loans
cant charge more than 10 % a year loan value of policy must be at least equal to cash surrender value at the end of the current policy year interest not paid by due date will be added to the existing indebtedness at the same rate if total loan amount and interest exceeds the loan value, the policy will be terminated
Buyers Guide
contains generic info about life insurance. BG provided to insureds in this state must be in compliance with the BG adopted by the National Association of Insurance COmmissioners
if an insured under a group policy dies during the conversion period, the DB will be paid by the GROUP policy
even if the first premium has been made
2. Disclosure
every applicant of life insurance must be given a written disclosure statement that provides basic info about cost/coverage MUST BE GIVEN NO LATTER THAN TIME OF APPLICATION disclosure statements will help applicants make more informed and educated chooses
6. Policy Settlement
every contract must provide that when a policy becomes a claim by the death of the insured, settlment must be made upon receipt of due proof of death and surrender of the policy
group in FL
group = MORE THAN ONE PERSON UNDER ON POLICY USUALLY WRITTEN AS ANNUALLY RENEWABLE TERM insurability not required if sign up during open enrollment
certificate must contain
group policy number -description of insurance protection -name of insured, beneficiares and dependents -rights and conditions
4. Coverage for Dependednts
group policy's cover , but may not exceed the amount of insurance for the insured
Insurability
insurer reserves right to require an insurance applicant to provide EVIDENCE OF INDIVIDUAL INSURABILITY as a condition of coverage
1. FL Life Insurance Solicitation law
spells out info and procedures required of agents and insurers when proposing life insurance to a prospective buyer
each producer who initiate the application must submit the following to the insurance company as part of the application
statement signed by applicant as to whether replacement of policy is involved in the transaction -a signed statement as to whether the producer knows replacement is or may be involved in the transaction
duties of the replacing insurance company
-require from producer a list of the applicants life insurance or annuity contracts to be replaced and a copy of replacement notice provided to the applicant -send each existing insurance company a written communication advising of the proposed replacement within a specified period of time and date that the application is received in the replacing insurance companies home office- a policy summary statement containing the policy data must be included
Existing insurers must provide policyowners a policy summary for the existing life insurance within
10 days of receiving the written comms and replacement if requested. they too must keep records for 3 years or untill next inspection
1. Agent Reponsibilites
3 areas of importance
Grace period
31 days must be allowed for the payment of every premium after the first, subject to an interest charge. during grace period policy will continue in force. overdue premium will be deducted from claim
1. FREE LOOK PERIOD
Life, and annuities have a special 14 day free-look period of FL
an annuity contract issued to a SENIOR consumer MAY NOT contain
a surrender or deferred sales charge for withdrawn of money from an annuity exceeding 10% of the amount withdrawn
8. designation of beneficiaries
if a FORMER spouse of the policyowner is designated as the beneficiary, the beneficiary designation will be void at the time the policyowners marriage is legally dissolved. LIFE AGENTDS cannot be designated as policy beneficiaries unless the agent is placing coverage on a family member (controlled businesses)
Conversion on termination of policy
if a policy is terminated for a class of insured, every insured who has been covered by the policy for 5 YEARS, including their dependents are entitled to convert to individual coverage subject to the same conditions and limitations as the group policy
Death Pending Conversion
if an insured dies during the conversion period, before an individual policy has become effective, the death benefit must be payable as a claim under the group policy
replacement rules DO NOT apply to
industrial insurance -group, franchise, and individual credit life -group life issued in connection with a pension -variable life or annuities -application for insurance is made to the same insurer -existing life insurance is nonconvertible term policy with 5 years or less to expire
Policy Summary
is a written statement that describes the elements of the policy and includes key features, conditions, and restrictions of the policy being applied for......MUST BE A SEPARATE DOCUMENT NOT TO BE COMBINED WITH THE SALES ILLISTRATION
group life
is written as a master policy, issued to a sponsoring organization, covering multiple lives. all individuals covered by same rate cost of coverage paid by the employer in excess of 50,000 is taxed to the employee!!
E. Annuity Suitability
its the PRODUCERS responsibility to make sure that annuity transactions address consumer's needs and financial objectives
False info and advertising
may not knowingly make, publish, disseminate, circulate or place before the public (directly or indirectly) and advertisement, announcement, or statement of stuff thats not true
2. FL replacement rule
sets requirements and procedures to be followed by insurance companies and agents when a proposal is being made in which a prospective life insurance buyer will be replacing existing insurance contracts with the proposed new insurance
using misleading terms
such as financial planner, investment adviser, financial consultant, or similar, to imply that the insurance agent is generally engaged in an advisory business in which compensation is not related to sales (unless its true)
who is responsible for all advertisments
the INSURER whose policies are advertised are RESPONSIBLE FOR ALL ITS ADs... regardless of who wrote, crated, presented, or distributed them
The individual policy may not exceed the small of the following options
the amount of individual life protection ceasing because of termination, minus the amount of any life insurance for which the insured becomes eligible under any group or, 10,000
Certificate of insurance
the insurer is required to insure the policyholder for delivery to EACH INDIVIDUAL INSURED A CERTIFICATE OF INSURANCE
when policy pays in lump sum
the payment MUST INCLUDE INTEREST at an annual rate equal to or greater than the Moodys Corporate Bond Yield Average-Monthly Average Corporate - from the date claim was received to the date insurer receives written proof of death
regulation on life insurance solicitation applies to any issuer of insurance, including fraternal benefit societies BUT, does not apply to
-annuities -credit life insurance -group life insurance variable life insurance which the DB and CV vary according to the investments in a SEPARATE account and, -Life insurance policies issured in connection with pension and welfare plans subject to ERISA
In FL must be at least as favorable as the following
-in the event of a default in any premium payment for at least 1 year - a paid-up nonforfeiture benefit will become effective as specified in the policy unless the person entitled to it elects another option within 60 days after the due date of the premium default. -upon policy surrender within 60 days after the due date of any premium in default, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a CASH SURRENDER VALUE -if the policy is paid-up or is continued under a paid-up nonforfeiture benefit, the insurer will pay a Cash Surrender amount if the policy is surrendered within 30 DAYS AFTER THE POLICY ANNIVERSARY Insurer reserves the right to defer payment of Cash Surrender value for 6 months after the surrender of a policy
every insurance policy issued in FL must specify
-names of parties to the contract -subject of insurance -risk insured against -effective date and period of coverage -premium -conditions pertaning to the insurance -the forms numbers and edition dates of all endorsements
insurers must maintain records of the info collected from senior consumers for
5 years after the insurance transaction is completed by the insurer
3. Advertising and Sales
must be accurate and not misrepresented facts applies to all ads and forms
Duties of the replacing producer
present the applicant a Notice of Regarding Replacement that is signed by the APPLICANT and PRODUCER - copy must be left with the applicant -obtain a list of all existing life insurance/annuity policies to be replaced- including policy names and numbers of companies -leave applicant with the ORIGINAL or 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
it must contain
prominently placed title such as STATEMENT OF POLICY COST and BENEFIT info -Name and address of the insurance producer -full name and address of the insurance company -Generic name of policy and EACH RIDER -annual premium/annual premium for each rider/guaranteed amount payable upon death/guaranteed cash surrender values/effective policy loan annual percentage -dividends -a statement printed close the life insurance cost indexes as follows "AN EXPLANATION OF THE INTENDED USE OF THESE INDEXES IS PROVIDED IN THE LIFE INSURANCE BUYERS GUIDE"
3. Secondary Addressee (secondary notice)
protects elderly insures. coverage for persons 64 and older that has been in force for at least 1 year cannot lapes for nonpayment of premium after expiration of the grace period without the insured notifying the policy owner and a specified secondary addressee (if designated in writing by the policy owner) of impending lapse in coverage. -if grace period is more than 51 days, the policy owner must be given the notification at least 21 days before expiration of grace period
in addition
require from the agent with the applicantion a completed copy of NOTICE TO APPLICANT REGARDING REPLACEMENT OF LIFE INSURANCE, and a copy of all Sales Proposals used for presentation to the applicant -send the applicant, when requested, the "Notice to the applicant regarding replacement of Life insurance" - a completed comparative info form containing info regarding the proposed insurance within 5 WORKING days of the date of application. -provide each prospective purchaser a buyers guide and policy summary prior to accepting applicant initial premium. -send EXISTING insurer a copy of the replacement notice IMMEDIATELY upon it's receipt at home office -maintain copies of replacement notice, all written comms, for 3 years, or until conclusion of next regular exam, whichever is later
Entire Contract, Representation vs. Warranties
this provision states that a copy of the application must be attached to the policy when issued. all statements made by the policy holder will be deemed as REPRESENTATIONS not WARRANTIES
purpose of life insurance solicitation regulation is
to provide buyers with info which will improve their ability to select the most appropriate policy
4. Nonforfeiture Options
nonforfeiture values are the benefits of a life insurance policy that the owner does not forfeit, even if the policy lapes
How do they do this
obtain relevant info from consumer and evaluate following factors age income tax status financial need timeline investment objective liquidity needs risk tolerance
Conversion of termination of ELIGIBIIGY
upon termination of employment or membership in the group, insureds have the right to CONVERT TO AN INDIVIDUAL COVERAGE without evidence of inruability within 31 DAY
Also
insurer may include a provision permitting an adjustable max interest rate. adjustable rate may not exceed the higher of the following: 1. the published monthly average for the calender month ending 2 months before the date which the rate is determined 2.the rate used to compute the cash surrender values under the policy during the applicable period plus 1% a year.
if more than one person in group is older than 65 and they purchase an annuity they are considered
a senior consumer
1. Eligible Group
more than 1 -employee groups(includes retired employees) -debtor groups (at least 100 new entering per year) -labor union groups(eligible members must be all of the members union) -trustee groups -association groups(must be in existence for at least 2 years, hold regular annual meeting, have at least 100 members) -credit union groups (policy must benefit all members)