NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55

Morbidity

Morbidity is a table used in calculating accident and health premiums.

Common disaster clause

Provision in most life insurance policies (and some wills) under which the primary beneficiary of the policy (or will) must survive the insured (or testator) by a certain number (usually from 60 to 90) days to qualify to receive the policy's (or will's) benefits.

Annuitant

The person that buys an annuity; may or may not be an annuity's policyowner.

Group life insurance policies

A type of life insurance in which a single contract covers an entire group of people. Typically, the policy owner is an employer or an entity such as a labor organization, and the policy covers the employees or members of the group. Group life insurance is often provided as part of a complete employee benefit package. In most cases, the cost of group coverage is far less than what the employees or members would pay for a similar amount of individual protection.

Variable Annuities

A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of mutual funds. Variable annuities differ from fixed annuities, which provide a specific and guaranteed return. The value of a variable annuity is based on the performance of an underlying portfolio of mutual funds selected by the annuity owner. Fixed annuities, on the other hand, provide a guaranteed return. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value.

Section 1035 Exchange

A 1035 exchange is a provision in the Internal Revenue Service (IRS) code allowing for a tax-free transfer of an existing annuity contract, life insurance policy, long-term care product, or endowment for another one of like kind. Section 1035 of the tax code allows for tax-free exchanges of certain insurance products. Life insurance policyholders can use a section 1035 exchange to trade an old policy in on a new one with better features. The 2006 Pension Protection Act modified the law to allow exchanges into long-term care products.

Life insurance on minors (3207(b))

A minor above the age of fourteen years and six months shall be deemed competent to enter into a contract for, be the owner of, and exercise all rights relating to, a policy of life insurance upon the life of the minor or upon the life of any person in whom the minor has an insurable interest, but the beneficiary of such policy may be only the minor or the parent, spouse, brother, sister, child or grandparent of the minor.

Settlement options

A settlement is the way in which your life insurance policy proceeds are paid out.

Accidental Death Benefit Rider

This type of rider provides an additional benefit if you die or suffer a combination of loss of limbs, sight, and hearing as a result of accidental bodily injury. When you purchase this additional coverage, the insurance company provides a schedule that assigns a benefit amount to each specific type of injury.

Life Settlement Broker

Life settlement brokers are state licensed professionals who represent life insurance policyholders in the life settlement process and negotiate on their behalf with life settlement providers.

Reduced paid-up insurance

You can use the cash value to purchase a whole life policy that is paid for. It will be less than the original face amount and since it is paid up, it won't require premiums. You'll just own that amount of life insurance from that point forward until you die.

Beneficiary

any person who gains an advantage and/or profits from something. In the financial world, a beneficiary typically refers to someone eligible to receive distributions from a trust, will, or life insurance policy.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan. generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

Termination responsibilities of producer

https://www.nysenate.gov/legislation/laws/ISC/2112

Elements of a Contract

offer and acceptance (Agreement) consideration competency and capacity Legal Purpose

ownership provision

provision that states that a policy may be owned by a different person than the one insured.

Producer Compensation Transparency

"Producer Compensation Transparency," requires all New York-licensed producers to offer unrequested information about their compensation to their clients. If a client asks for more information, the producer must make a second highly detailed disclosure.

One Year Term Dividend Option

"fifth dividend option" which allows the policyowner to use the dividends to purchase one-year term insurance at net rates, usually limited to no more than the current cash value on the contract.

Grace period

A uniform mandatory provision that gives the insured a period of time, based on the payment mode, to pay the required premium. During the grace period, the policy is still in force. For example: Policyholders can pay the premium 31 days after the initial due date.

Nonresident 2103(g)(5)

In the discretion of the Superintendent, no written insurance examination will be required of any individual seeking to be named as a licensee or sub-licensee who is a non-resident insurance agent.

Business Entities 2101(p)

A business entity means a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity.

Flexible Spending Accounts (FSAs)

Definition - An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices. ... You aren't taxed on this money Eligibility - medical expenses Contribution limits -$2,650 per year per employer. If you're married, your spouse can put up to $2,650 in an FSA with their employer too.

Defamation of Insurer (2604)

It is any false or malicious communication, written or oral, that injures another's reputation, fame or character. Individuals and companies both can be defamed. Unethical agents practice defamation by spreading rumors or falsehoods about the character of a competing agent or the financial condition of another insurance company. Both of these actions are considered illegal.

HIPAA (Health Insurance Portability and Accountability Act) 1996

Provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs; Reduces health care fraud and abuse; Mandates industry-wide standards for health care information on electronic billing and other processes; and Requires the protection and confidential handling of protected health information

Tax-deferred growth

You will pay no income taxes on the earnings from your annuity investments until you begin making withdrawals or receiving periodic payments. Note that withdrawals prior to age 59½ may be subject to an additional 10% tax.Footnote 1

Nonforfeiture options

a clause in your policy that allows you to receive full or partial benefits from your life insurance if the policy lapses or you want to cancel the plan.

Joint-Life (First to die)

combines life insurance for you and your spouse into one joint policy. Both individuals are listed as insured parties on the policy. When the first person dies, the policy's death benefits will be paid out to the survivor. The policy also terminates at that point, leaving the surviving spouse with no life insurance coverage.

Privacy (7810)

no life settlement provider, life settlement broker, or life settlement intermediary, or any authorized representative thereof, insurer, information bureau, rating agency or company, or any other person with actual knowledge of an insured or owner's identity, shall disclose the identity of the insured or owner, or any information that there is a reasonable basis to believe could be used to identify the insured or owner, or the insured's financial or medical information.

Medicare

Nature - national health insurance program financing - taxpayers administration - begun in 1966 under the Social Security Administration and now administered by the Centers for Medicare and Medicaid Services or Social Security Administration.

Certificate of Authority (1102)

The certificate of authority is an insurer's license to transact insurance in this state as an authorized insurer.

Advertising (7809)

(b) Advertisements shall be accurate, truthful and not misleading in fact or by implication. (c) No life settlement provider, life settlement intermediary, life settlement broker, or any person acting on behalf thereof shall: (1) directly or indirectly, market, advertise, solicit or otherwise promote the purchase of a policy for the primary purpose of, or with an emphasis on, settling the policy; or (2) use the words "free", "no cost" or words of similar import in the marketing, advertising, soliciting or otherwise promoting of the purchase of a policy. (d) The failure to follow the provisions of this section shall be a defined violation under article twenty-four of this chapter.

Broker License Requirements

- Be 18 years of age - High school diploma or equivalent - 2 to 4 years of experience as a practicing salesperson - Complete the required broker education - Take and pass the broker licensing exam - Complete the broker license application and pay the required fee

Guaranteed Minimum Withdrawal Benefit (GMWB)

A Guaranteed Minimum Withdrawal Benefit (GMWB) is a type of rider or contract attached to some annuity insurance policies. It guarantees the policyholder a steady stream of retirement income regardless of market volatility. A Guaranteed Minimum Withdrawal Benefit, or GMWB, guarantees a policyholder's income through all types of market activity. Maximum withdrawals are usually between five and ten percent. These types of riders are designed to protect policyholders during market downturns.

Term Riders

Added to a Whole Life or Universal Life policy, a term insurance rider can provide a fixed amount of term insurance for a specified period of time. If you have a temporary need for additional life insurance above the current face value of your existing policy and want an affordable way to have coverage, considering a term rider might be a solution for you.

Adjuster 2108

Adjusters will be licensed as either independent adjusters, or as public adjusters. The Superintendent may prescribe the types of independent adjusters' licenses according to the kind or kinds of insurance claims which the licensee is to be authorized to investigate and adjust. No adjuster may act on behalf of an insurer unless licensed as an independent adjuster, and no adjuster may act on behalf of an insured unless licensed as a public adjuster. A public adjuster works on behalf of the insured for a fee.

Renewal (2103(j); Reg. 5, Part 21.2)

All individual insurance agent licenses must be renewed every two years. Individual licenses are issued with an expiration date determined by the date of birth: The license of an agent born in an even numbered year will expire on the agent's birthday in an even numbered year. The license of an agent born in an odd numbered year will expire on the agent's birthday in an odd numbered year Adjuster licenses are not determined on a birth date renewal. Adjuster licenses expire on December 31st of even-numbered years.

Producer Definition (2101(k))

An insurance producer means an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the insurance laws of this state to sell, solicit or negotiate insurance.

Business Entities 2103(e)

Before any original insurance agent's license is issued to a business entity, there must be on file in the office of the Superintendent an application by the prospective licensee in such form or forms and supplements, and containing information the Superintendent prescribes and for each business entity, the sub-licensee or sub-licensees named in the application must be designated responsible for the business entity's compliance with the insurance laws, rules and regulations of this state.

Reduction of premium payments Dividend Option

Choosing to reduce or pay the premium with the dividend means the policyholder chooses to pay a part or all of the premium due with the dividend. If the dividend payment is less than the total premium due, the policyholder will need to pay the rest of the premium either with money out of pocket or with cash values from the whole life policy. It's much more common for the policyholder to pay with out-of-pocket money. Once the dividend payment equals or exceeds the premium due amount, the dividend can pay the entire premium due and the policyholder does not need to make any payment to the policy with any out-of-pocket money. It's fairly common to see older whole life policies using this option as the policyholder can keep his/her death benefit in force without having to pay the premium on the life insurance policy.

Decreasing Term Insurance

Decreasing term insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Premiums are usually constant throughout the contract, and reductions in coverage typically occur monthly or annually. Terms range between 1 year and 30 years. Decreasing term insurance is a more affordable option than whole life or universal life insurance. The death benefit is designed to mirror the amortization schedule of a mortgage or other high personal debt not easily covered by personal assets or income. Decreasing term insurance allows a pure death benefit with no cash accumulation. As such, this insurance option has modest premiums for comparable benefit amounts to either a permanent or temporary life insurance.

Health Savings Accounts (HSAs)

Definition - A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums Eligibility - You must be covered under a qualifying high-deductible health plan (HDHP) on the first day of the month. You have no other health coverage except what is permitted by the IRS. You are not enrolled in Medicare, TRICARE or TRICARE for Life. You can't be claimed as a dependent on someone else's tax return. Contribution limits - For 2019, the maximum contribution amounts are $3,500 for individuals and $7,000 for family coverage. If you're 55 or older, you can add up to $1,000 more as a "catch-up" contribution.

Guaranteed issue life insurance

Guaranteed issue life insurance takes the concept of simplified issue life insurance - forgoing the health exam - and takes it a step further in that you don't have to answer any questions about your health, either. As long as you can pay the premium, the insurer will cover you, needing only your age, sex, and state of residence. That makes it appealing for older people, whose declining health makes it prohibitively expensive to get coverage with another insurance types. Guaranteed issue life insurance is useful for elderly applicants, but others can likely get more life insurance coverage at a lower cost with a different policy type. Just like with simplified issue life insurance, the lack of insight into your health conditions that a medical exam and interview would provide means that you're going to be paying more for coverage.

Deferred Annuity Death benefits

If you die during the accumulation period, a deferred annuity includes a basic death benefit that pays some or all of the value of the annuity to your beneficiaries. You don't pay taxes on those earnings during the accumulation phase. Taxes are not due until you reach the payout phase.

Variable universal life insurance

If you think variable universal life insurance is just some aspects of universal and variable life insurance policies mashed together...well, you're mostly right. A variable universal life insurance policy takes the best (or worst, depending on how you look at it) of the other two policies: you can adjust the premium and death benefit amount while investing the cash value in the policy's cash value. But variable universal life insurance also comes with many of the same elements as the other two. Again, this policy is more complicated than most people need, and it isn't your best investment or insurance option.

Owner

In a "life settlement" transaction, a life insurance policy owner sells his or her policy to an investor in exchange for a lump sum payment. The amount of the payment from the investor to the policy owner is generally less than the death benefit on the policy, but more than its cash surrender value.

Misrepresentation (2123; Reg. 64, Part 216.3)

It is a violation for an agent to make false or misleading statements or unfair coverage comparisons.

Joint and Survivor

Joint and survivor annuities provide fixed, periodic payments for as long as either of two beneficiaries is alive with payment ending when the surviving beneficiary dies. If a policy has a $100,000 death benefit, the beneficiary can choose the joint and survivor life income option for her life and her spouse's life. The couple will receive $5,600 per year until both die. If one spouse dies, the remaining spouse will still receive the $5,600 per year for life.

Revocable versus irrevocable

Life insurance policies can have either a revocable or irrevocable beneficiary designation. A revocable beneficiary can be changed by the owner of the policy without the signature of the beneficiary. Most life insurance policies in Canada have Revocable beneficiary designations. An irrevocable beneficiary requires the beneficiary to sign off on any policy changes. Therefore, should the policy owner wish to change the beneficiary on a policy where an irrevocable beneficiary exists, both the policy owner and the irrevocable beneficiary must sign off on it. Irrevocable beneficiary designations are often given as part of a separation agreement or a divorce settlement. Because irrevocable beneficiaries have extraordinary powers, it is crucial that the policy owner be made aware of these powers should such a designation be made.

Financing transaction (Entities)

Life settlement investors are known as financing entities because they are providing the capital or financing for life settlement transactions (the purchase of a life insurance policy). A financing entity is an accredited investor whose principal activity in connection with the transaction is providing funds to establish the life settlement contract or to purchase one or more policies, and who has an agreement in writing with a life settlement provider to finance the acquisition of a life settlement contract.

Medicare—Part D Prescription Drug Coverage

Medicare Part D prescription drug coverage, often referred to as Part D, is provided and coordinated by Medicare-approved private insurance companies. Any beneficiary who is eligible for Original Medicare, Part A and/or Part B, and permanently resides in the service area of a Medicare Prescription Drug Plan, can sign-up for Medicare Part D. Medicare Part D coverage is optional, but if you don't enroll in Part D as soon as you're eligible, you might pay a late-enrollment penalty if you enroll later. You can get Medicare Part D coverage through a stand-alone Medicare Prescription Drug Plan if you're enrolled in Original Medicare. If you're enrolled in a Medicare Advantage plan, you can get this coverage through a plan that includes drug benefits, also known as a Medicare Advantage Prescription Drug Plan. Different insurers offer different types of plans, so your monthly plan premium and out-of-pocket expenses for prescription drugs will vary from plan to plan. You may have heard of the Medicare coverage gap (also called the "donut hole") but aren't clear on how it works. After your Medicare Part D coverage has paid a certain amount for prescription drugs, you may have to pay all costs yourself, up to a yearly limit. This temporary limit on what your Medicare Prescription Drug Plan will pay for covered drugs is the coverage gap. The coverage gap applies to both stand-alone Medicare Prescription Drug Plans and Medicare Advantage Prescription Drug Plans.

Negotiate (2101(m))

Negotiate or negotiation means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from licensed insurers, fraternal benefit societies or health maintenance organizations for purchasers.

Spouse/other-insured term rider

Provides level term coverage on the life of the insurers spouse. Such rider will also provide a conversion provision permitting the spouse to convert to permanent coverage without evidence of insurability prior to the termination of the rider or upon the death of the insured under the basic policy.

Rebating (2324, 4224)

Rebating occurs if the buyer of an insurance policy receives any part of the agent's commission or anything of significant value as an inducement to purchase a policy. State regulations are very strict in this respect and are designed to prohibit discrimination in favor of, or against, policyowners. In this state, the practice of rebating is illegal and the following are defined as illegal inducements: Offering, paying or allowing any rebate or other inducement not specified in the policy or any special favor or advantage concerning the dividends or other benefits that will accrue, in order to place, negotiate or renew the policy. Offering, selling or purchasing anything of value not specified in the policy. Offering, paying or allowing any rebate of any premium on any insurance policy or annuity contract.

Continuous premium (straight life)

Straight life insurance is a type of permanent life insurance that provides a guaranteed death benefit and has fixed premiums. Also known as whole or ordinary life insurance, the policy has a term length that lasts your entire life. This is different from term life insurance which expires after a set number of years. As a form of permanent life insurance, straight life insurance comes with a cash value account that will grow over the life of the plan. The cash value component of a life insurance policy is separate from the death benefit. Each month, part of the premium that you pay for a straight life policy will be added to the cash value account. The rest of the premium goes towards the company's costs for providing insurance

Death Benefit (face amount/face value/coverage)

The amount paid to beneficiaries when a policyholder dies.

Appointment of Agent

The appointment must be made 15 days from the date an agency contract is executed, or the first application is submitted

Proof of Death

The transfer on death designation lets beneficiaries receive assets at the time of the person's death without going through probate. This designation also lets the account holder or security owner specify the percentage of assets each designated beneficiary

Fixed annuities

These are fixed interest investments issued by insurance companies. They pay guaranteed rates of interest, typically higher than bank CDs, and you can defer income or draw income immediately. These are popular among retirees and pre-retirees who want a no-cost, modest and guaranteed fixed investment.

Prohibited Practices (7814)

Under the laws enforced by EEOC, it is illegal to discriminate against someone (applicant or employee) because of that person's race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age (40 or older), disability or genetic information.

Stranger-originated life insurance (7815)

an arrangement in which an investor holds a life insurance policy without an insurable interest. Without an insurable interest, the investor would ordinarily be prohibited from purchasing the original policy. Stranger-Owned Life Insurance policies are owed by third-parties, usually investors, with no insurable interest. SOLI policies are often offered in exchange for loans that the insured can use during his or her lifetime. SOLI is illegal as it gives the policyholder, who has no insurable interest or relationship with the insured, an advantage in the insured's death.

Types of Group plan sponsors

a designated party—usually a company or employer—that sets up a healthcare or retirement plan, such as a 401(k), for the benefit of the organization's employees. The responsibilities of the plan sponsor include determining membership parameters, investment choices, and in some cases, providing contribution payments in the form of cash and/or stock. Some companies offer retirement savings plans, pension plans, or health plans to their employees as part of their employee benefits program. These companies are referred to as plan sponsors. Employers are typically plan sponsors, but unions and professional bodies could also be plan sponsors.

Conditional Receipt

a document given to someone who applies for an insurance contract and has provided the initial premium payment. This receipt means that the person can only be insured if he or she meets the standards of insurability and is given approval by the insurance company.

Medicaid

a federal and state program that helps with medical costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and personal care services. Eligibility - Low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI). Benefits - States establish and administer their own Medicaid programs and determine the type, amount, duration, and scope of services within broad federal guidelines. Mandatory benefits include services including inpatient and outpatient hospital services, physician services, laboratory and x-ray services, and home health services, among others. Optional benefits include services including prescription drugs, case management, physical therapy, and occupational therapy.

Deferred annuities

an insurance contract designed for long-term savings. Unlike an immediate annuity, which starts annual or monthly payments almost immediately, investors can delay payments from a deferred annuity indefinitely. During that time, any earnings in the account are tax-deferred.

Non-forfeiture

an insurance policy clause stipulating that an insured party can receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment. Standard life insurance and long-term care insurance may have nonforfeiture clauses.

Trusts

an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies. Upon the death of the insured, the trustee invests the insurance proceeds and administers the trust for one or more beneficiaries. If the trust owns insurance on the life of a married person, the non-insured spouse and children are often beneficiaries of the insurance trust. If the trust owns "second to die" or survivorship insurance which only pays when both spouses are deceased, only the children would be beneficiaries of the insurance trust.

Guaranteed Minimum Income Benefit (GMIB)

an optional rider that annuitants can purchase for their retirement annuities. When the annuity has been annuitized, this specific option guarantees that the annuitant will receive a minimum value of payments on a regular basis, regardless of other circumstances. A guaranteed minimum income benefit (GMIB) is an optional rider attached to an annuity contract that guarantees a minimum level of payments once it has annuitized. GMIBs are often found with variable annuities, which contain some level of market risk. While handy, these riders will come at an additional cost to the annuity buyer.

Fair Credit Reporting Act (FCRA)

federal law that regulates the collection of consumers' credit information and access to their credit reports. It was passed in 1970 to address the fairness, accuracy, and privacy of the personal information contained in the files of the credit reporting agencies.

Automatic premium loans

often associated with a life insurance policy that has a cash value. It is a specific clause, or rider, within the policy that allows the insurance issuer to withdraw premium payments from the accrued value of the policy when the policyholder is unable to or neglects to continue paying.

Healthy New York

program designed to make reduced-cost, comprehensive health insurance available to working uninsured individuals, sole proprietors, and small employers with no more than 50 eligible employees that do not provide health insurance to their employees.

Business of Life settlement

refers to the sale of an existing insurance policy to a third party for a one-time cash payment. Payment is more than the surrender value, but less than the actual death benefit. After the sale, the purchaser becomes the policy's beneficiary and assumes payment of its premiums.

Cash Payment Settlement Option

type of option for which actual physical delivery of the underlying asset or security is not required. The settlement results in a cash payment, instead of settling in stocks, bonds, commodities or any other asset. This type of option avoids the high costs of transport or transaction fees.

Annuity (Accumulation period versus annuity period)

(pay in period) is the period of time over which the owner makes payments into an annuity. Furthermore it is the period of time during which the payments earn interest on a tax deferred basis (annuitization period, liquidation period or payout period), is the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant Annuity income period is based upon the following - amount of premium paid cash value frequency of the payment interest rate annuitants age gender

Cost-of-living adjustment (COLA)

A cost-of-living rider protects the purchasing power of your disability benefits against the effects of inflation. After you have received benefits for a year, this rider automatically increases the amount of your benefits to offset cost-of-living increases. Typically, increases in benefits occur annually and are tied to an established index that measures the cost of living, such as the consumer price index (CPI), or are a set percentage of your benefit. Some companies cap the increase amount to one or two times the original benefit. The insurance company lets you choose the CPI index or a fixed percentage at the time you purchase the rider. The cost-of-living rider is often very expensive, but it may pay off if you suffer a long-term disability.

Incontestability

An incontestability clause is a clause in most life insurance policies that prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed. A typical incontestability clause specifies that a contract will not be voidable after (usually two) or three years due to a misstatement.

Fixed (equity) indexed life

Equity-indexed universal life insurance is a type of permanent life insurance policy that ties its accumulation to a stock market index. Unlike variable universal life insurance, which allows policyholders to invest a portion of the cash value into a range of funds and stocks with various risk profiles, equity-indexed universal life insurance offers policyholders the opportunity to place the cash value in an equity index account, which pays interest according to a market index without actually investing the money in the market. An equity-indexed life policy receives gains on, but no losses its cash value if the market goes down. This type of policy tends to have lower premiums than other forms of whole life insurance. Equity-indexed universal life insurance is more complex than other forms of life insurance and offers no guarantees as to market returns.

Solvency (307)

It is required that each insurer file annual financial statements for review by the Superintendent to determine the continued solvency of the insurer.

Disability Riders

Just like cars have options that can be added to the standard model, so does disability insurance. Optional "add-ons" to the base policy of disability insurance are called disability insurance riders. Riders allow consumers to individualize—to add optional features—to their base policy, which address their specific income protection needs.

spendthrift clause life insurance

The spendthrift clause protects life insurance proceeds from creditors. The beneficiary's creditors are prohibited from claiming any of the policy's benefits before the beneficiary is paid. Payments are made to the beneficiary in lieu of receiving the policy proceeds in one lump sum. Policy proceeds are held in trust by the insurance company for the beneficiary's future payments. Policy distributions are not assignable or transferable and cannot be attached. The spendthrift clause prevents the beneficiary from changing the way in which the policy proceeds have been designated for payout. For instance, if the policy state the beneficiary is to receive a certain amount payable over a 15-year period, the beneficiary cannot assign or transfer the proceeds to another party in order to obtain a lump sum payment.

Medicare Part B (Medical Insurance)

Medicare Part B (medical insurance) is part of Original Medicare and covers medical services and supplies that are medically necessary to treat your health condition. This can include outpatient care, preventive services, ambulance services, and durable medical equipment. It also covers part-time or intermittent home health and rehabilitative services, such as physical therapy, if they are ordered by a doctor to treat your condition. Individual eligibility requirements - Anyone who is eligible for premium-free Medicare Part A is eligible for Medicare Part B by enrolling and paying a monthly premium. If you are not eligible for premium-free Medicare Part A, you can qualify for Medicare Part B by meeting the following requirements: You must be 65 years or older. You must be a U.S. citizen, or a permanent resident lawfully residing in the U.S for at least five continuous years. You may also qualify for automatic Medicare Part B enrollment through disability. If you are under 65 and receiving Social Security or Railroad Retirement Board (RRB) disability benefits, you will automatically be enrolled in Medicare Part A and Part B after 24 months of disability benefits. You may also be eligible for Medicare Part B enrollment before 65 if you have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (also known as ALS, or Lou Gehrig's disease). Enrollment - If you do not enroll during your initial enrollment period and do not qualify for a special enrollment period, you can also sign up during the annual General Enrollment Period, which runs from January 1 to March 31, with coverage starting July 1. You may have to pay a late enrollment penalty for not signing up when you were first eligible. Some people may get Medicare Part A "premium-free," but most people have to pay a monthly premium for Medicare Part B. Because Medicare Part B comes with a monthly premium, some people may choose not to sign up during their initial enrollment period if they are currently covered under an employer group plan (either their own or through their spouse's employer). Coverage's and cost-sharing amounts - outpatient care, preventive services, ambulance services, and durable medical equipment. It also covers part-time or intermittent home health and rehabilitative services, such as physical therapy, if they are ordered by a doctor to treat your condition.

Beneficiary Designation Options

Primary beneficiaries are the account owner's first choice for a beneficiary. In the event of death, the first person who can claim the assets is the primary beneficiary. Note that you can have multiple primary beneficiaries in some cases. For example, you could have three primary beneficiaries, all of which receive 33.3% of assets (assuming they are all still living at the time of your death). Contingent beneficiaries are used as a backup. In the event that there are no living primary beneficiaries, the contingent beneficiary claims the asset. Tertiary Beneficiary. Finally, the beneficiary next in line (should you choose to name one), is the tertiary beneficiary. This person or entity will receive the life insurance policy proceeds in the event that both the primary and the secondary beneficiaries are unable to do so.

Waiver of Premium Rider

The waiver-of-premium rider allows you to stop paying premiums in the event that you are disabled. This rider provides that you will not be required to pay any further premiums once you have been disabled for a certain period of time. Once you are able to return to work full-time, the rider requires you to begin paying premiums on your policy once again.

Superintendents Powers

The Superintendent shall have the power to prescribe and from time to time withdraw or amend, in writing, regulations: governing the duties assigned to the members of the staff of the department; effectuating any power, given to him to prescribe forms or otherwise make regulations; and governing the procedures to be followed in the practice of the department.

Cash surrender value (net cash value)

This is cashing your policy in. The insurance company will send you a check for the net cash value and then you can do whatever you want with the money. You'll use the cash surrender option if you need the cash.

Trust owned policies

Trust-owned life insurance (TOLI) is a type of life insurance that resides within a trust. TOLI is an estate planning tool mainly consumed by high-net-worth individuals, who rely on it to ensure the responsible distribution of inheritance assets among their heirs, reduce estate tax liability, and meet their charitable objectives. Trust-owned life insurance (TOLI) is a type of life insurance housed inside a trust. TOLI is favored by high-net-worth individuals who use this tool for estate planning needs. The assets housed within the trust that are bequeathed to beneficiaries can sidestep onerous tax obligations. TOLI policies demand regular reviews to make sure they adequately meet the current needs of the trust. If not, the products should be replaced with superior offerings.

Extended term

You can use the cash value to keep the original life insurance face amount but only for a specific term, or time period. How long the term is depends on the cash value of the policy. Once it's changed to extended term, you won't have to pay premiums anymore but you also won't build any more cash value.

Surrender and withdrawal charges

a penalty charged by an investor for withdrawing funds from an insurance or annuity contract early or cancelling the contract. Surrender fees act as an incentive for insureds to maintain their contracts and reduce the frequency of early withdrawals.

Family term rider

an addition to a life insurance policy that provides the beneficiary with an amount of money equal to the policyholder's monthly income if the policyholder dies. A family income rider is a type of death benefit, and it specifies the term for the additional coverage. It eventually expires if not activated. In some cases, the beneficiary of a family income rider may choose a lump sum rather than receiving monthly payments.

Life contingency options Annuity

an annuity payout option that provides a death benefit in case the annuitant dies during the accumulation stage. The terms and features of the life contingency option will vary from contract to contract.

Paid-up Additions Dividend Option

instructs the insurance company to take the annual dividend and purchase paid-up additions with it. Paid-up additions are mini whole life insurance policies that attach to a main whole life policy. They earn dividends themselves and have immediate cash value. This dividend option will ensure the most bang for the buck in terms of premiums generating cash surrender value. Put another way, if you seek to maximize return on premiums (i.e. the internal rate of return of a whole life policy) then the option to purchase paid-up additions is the dividend option you seek. This dividend option is also how whole life policies accumulate non-guaranteed cash value. The non-guaranteed cash value of a whole life policy is simply the cash value created through paid-up additions. Some life insurers refer to this as building "dividend additions" and will even make reference to surrendering dividend additions if the policyholder chooses to withdraw money from the policy at some point. If this is the case, understand that the terminology means the same thing.

Agent 2101(k)

insurance producer means an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the insurance laws of this state to sell, solicit or negotiate insurance. The applicant must be at least 18 years of age at the time of license issuance. An examination is required for each applicant, except where noted for applicants with a change in residency moving to New York (see code 2103 below).

Immediate Annuities

is purchased with a single, lump sum payment and provides income payments that start within one year from the date of purchase. first payment typically one month from start date

Policy loans

issued by an insurance company and uses the cash value of a person's life insurance policy as collateral. Sometimes it is referred to as a "life insurance loan." Traditionally, policy loans were issued at a very low-interest rate, but that is no longer universally true. If a borrower fails to repay a policy loan, the money is withdrawn from the insurance death benefit.

Medicare Part C (Medicare Advantage)

A Medicare Advantage Plan (like an HMO or PPO) is another Medicare health plan choice you may have as part of Medicare. Medicare Advantage Plans, sometimes called "Part C" or "MA Plans," are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, the plan will provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for non‑emergency or non-urgent care). These rules can change each year.

Dread Disease Policy

A dread disease policy, which is also known as a critical illness policy, is a type of insurance policy that pays out a tax-free lump sum in the event that you fall ill with one of the major illnesses, diseases, or events that the policy covers. These conditions can include things like: Cancer Heart-attacks By-passes Strokes Blindness Deafness Alzheimer's Parkinson's Organ Failure or Transplant Severe Burns Loss of Limbs Paralysis Accidental HIV Exposure Pregnancy-related Complications ... and more!

Convertible term

A convertible life insurance policy is simply a term life insurance policy that can convert to a permanent life insurance policy. Here's how it works: Let's say a 35-year-old man buys a 30-year convertible term life insurance policy. At age 45, he decides to convert that policy to a permanent life insurance policy. He will pay a substantially larger premium as a result but have coverage for the rest of his life. Most convertible policies have a time limit to convert, usually 10 years. Often, when the conversion option is close to expiring, life insurance companies let policyholders know that time is running out to execute this option.

Level benefit payment amount

A level death benefit is a payout from a life insurance policy that is the same whenever the insured person dies, whether shortly after purchasing the policy or many years later. Compared to a policy that provides an increasing death benefit, one that provides a level death benefit will be less expensive (that is, the premiums will be lower for the same amount of initial benefit). However, inflation will diminish the value of the level death benefit over time.

Insurable interest provisions

A person or entity has an insurable interest in an item, event or action when the damage or loss of the object would cause a financial loss or other hardships. To have an insurable interest a person or entity would take out an insurance policy protecting the person, item or event in question. The insurance policy mitigates the risk of loss should something beset the asset. Insurable interest is an essential requirement for issuing an insurance policy that makes the entity or event legal, valid and protected against intentionally harmful acts. People not subject to financial loss do not have an insurable interest. Therefore a person or entity cannot Insurable interest is the basis of all insurance policies. An insurable interest is an object which, if damaged or destroyed, would result in financial hardship for the policyholder. To exercise insurable interest, the policyholder would buy insurance on the person or item in question. The policy must not create a moral hazard, in which a policyholder would have a financial incentive to allow or even cause a loss.

Pure Life Annuity

A pure life annuity is a type of annuity that provides guaranteed periodic payments until your death. They are commonly used to provide a guaranteed income that continues for life. When you die, payments cease though they may continue to pay out to a beneficiary depending on the options you select. Pure life annuities can be thought of as longevity insurance, and in many ways, they're the opposite of a life insurance policy. While life insurance protects your family if you die early, a pure life annuity protects you and your family if you live too long.

Qualified Retirement Plans

A qualified retirement plan meets the requirements of Internal Revenue Code Section 401(a) of the Internal Revenue Service (IRS) and is therefore eligible to receive certain tax benefits, unlike a non-qualified plan. An employer establishes such a retirement plan on behalf of and for the benefit of the company's employees. It is one tool that can help employers attract and retain good employees.

Commissions and compensation

A sales commission is a sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services. Employers sometimes use sales commissions as incentives to increase worker productivity. A commission may be paid in addition to a salary or instead of a salary.

Single premium immediate annuities (SPIAs)

A single premium immediate annuity, or SPIA, is a contract in which you pay an insurance company a lump sum, or a premium, in exchange for guaranteed, periodic payments for life. A SPIA can begin paying out income almost immediately after you purchase it. People purchase SPIAs to fund retirement.

Hearings - Notice and Process (2405, Financial Services 305)

A statement of the charges and notice of a hearing to be held at a time not less than 10 days after the date of service of the notice and at the place fixed in the notice.

Straight Life Annuity

A straight life annuity, sometimes called a straight life policy, is a retirement income product that pays a benefit until death but forgoes any further beneficiary payments or a death benefit. Like all annuities, a straight life annuity provides a guaranteed income stream until the death of the annuity owner. What makes a straight life unique is that, once the annuitant dies, all payments stop and no more money or death benefits are due to the annuitant, their spouse, or heirs. This has the effect of making the straight life annuity less expensive than many other types of annuities and retirement income products.

Annuity

An annuity is an interest-bearing financial contract that combines the tax-deferred savings and investment properties of retirement accounts with the guaranteed-income aspects of insurance. "Annuities are sometimes described as the flip side of life insurance," stated Stephen Blakely in Nation's Business . "Whereas life insurance is designed to provide financial protection against dying too soon, annuities provide a hedge against outliving your retirement savings. While life insurance is designed to create principal, an annuity is designed ultimately to liquidate principal that has been created, typically in regular payments over a number of years." Some annuities stop payments when the owner dies, while others will continue to pay a spouse or other beneficiary.

single life annuity

An annuity or pension that pays out to only one person is known as a single-life payout. Single-life payout is one of two payout options an employer uses to distribute retirement benefits. At retirement, a retiree has the choice of either a single-life payout or a joint-life payout. A single-life payout means only the employee will receive the payments for the rest of his/her life, but the payments stop upon his/her death. A single-life payout is an annuity or pension option that means that payments will stop when the annuitant dies. In a joint-life payout, payments continue after death to the annuitant's spouse. Single-life payouts are generally larger on a per month basis since the payments stop upon the death of the annuitant.

Annual renewable term life insurance

Annual renewable life insurance works just like term life policies that have 10-, 20-, and 30-year terms. If you die while the term is active, your beneficiaries get a death benefit from the carrier. However, the term in an annual renewable term policy only lasts one year, after which it's renewed for another year, for a set number of years. Traditional term life insurance policies typically have a guaranteed level premium, meaning that your premium rates at the time of purchase are the same throughout the term of the policy. (Guaranteed level premium policies average out the cost over the life of the policy.) Your premiums will only go up if you let your policy lapse and try to purchase the same policy again.

Exclusion provision

An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement. In many insurance policies, the insuring agreement is very broad. Insurers utilize exclusions to carve away coverage for risks they are unwilling to insure. Catastrophic: Some risks are uninsurable because they are likely to affect a huge number of policyholders at once. An example is war. Covered Elsewhere: Many risks are excluded under one type of policy because they are covered under another. For instance, auto liability claims are excluded under a general liability policy because they are covered by a commercial auto policy. Easy To Control: Some risks are excluded because they are easily controlled by the policyholder. An example is damage to personal property in the open caused by rain, snow, ice or sleet. Such damage is excluded under most commercial property policies because it is easily prevented by the insured. Not Accidental: Most insurance policies cover fortuitous events. Thus, they exclude losses the insured caused intentionally. For example, both general liability and commercial auto liability policies exclude bodily injury that an insured inflicts on a third party intentionally. Maintenance Issues: Some risks are not practical to insure because they occur naturally. An example is wear and tear. Damage caused by wear and tear is excluded from both commercial property and auto physical damage coverage. Risks of this type can often be controlled through proper maintenance. Vehicle tires can be protected from wear and tear through proper rotation. Illegal: Many policies exclude losses that result from violations of the law or criminal acts. For example, general liability policies exclude bodily injury, property damage or personal and advertising injury that results from a violation of the Telephone Consumer Protection Act or CAN-SPAM Act. Partially Insurable: Some risks are insurable within specific parameters. For instance, many liability policies exclude liability assumed under a contract. However, coverage is provided for liability assumed under a contract that qualifies as an insured contract (as defined in the policy). Insurable for a Price: Some risks are insurable if you are willing to pay an additional premium. An example is a loss caused by theft committed by your employees. Such losses are routinely excluded under commercial property policies. However, you can insure such losses by purchasing employee theft coverage.

Nonresident 2101(d)

In this section, non-resident insurance agent means an individual who is a non-resident of this state and who is licensed or authorized to act as an insurance agent in the state in which he resides, or in which he or the firm or association of which he is a member or employee, or the corporation, of which he is an officer, director, or employee maintains an office as an insurance agent.

Medicare Part A (Hospital Insurance)

Individual eligibility requirements - Most people are automatically eligible for Medicare Part A at age 65 if they're already collecting retirement benefits from the Social Security Administration or the Railroad Retirement Board. You may qualify for Medicare Part A before 65 if you have a disability, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS). You must be either a United States citizen or a legal permanent resident of at least five continuous years. Coverages and cost-sharing amounts - Medicare Part A covers Medicare inpatient care, including care received while in a hospital, a skilled nursing facility, and, in limited circumstances, at home. Hospital care (inpatient) Limited home health services Skilled nursing facility care, provided that custodial care isn't the only care required Hospice care Medicare Part A also does not cover the cost of blood.

Change of Address (All Addresses, including Email) - (2134; Reg. 5, Part 21.4; Reg. 6, Part 22.3; Reg. 7, Part 23.4)

Licensees must inform the Superintendent by a means acceptable to the Superintendent of a change of business or residence address within 30 days of the change. This also includes e-mail addresses.

Assumed Names (2102(f))

Licensees must notify the Superintendent upon changing his, her or its legal name. Except for an individual licensee's own legal name, no licensee may use any name, in conducting a business regulated by this article that has not been previously approved by the Superintendent.

Withdrawals or partial surrenders

Life insurance policy owners are allowed to withdraw some or all of the cash that is in the cash value portion of their permanent life insurance policies. By withdrawing only some of the cash, the policy owner would be making a partial surrender, or a partial withdrawal. This partial surrender or withdrawal may come from the accumulation value or the amount of the death benefit relating to the policy. If the policy owner withdraws funds from the cash value portion of the policy, he or she may not have to pay taxes on all of these funds. This is because the portion of the withdrawal that is considered a return of premium will not be taxable. As an example, if the policy owner paid a total of $20,000 in premiums into the policy, and they have a total of $25,000 in total cash value, then they can decide to withdraw $23,000 and only $3,000 of that amount will be taxable. If the policy owner withdraws less than what they have paid into the policy, then they will not be hit with taxes at all on the withdrawal. It is important to note that a partial surrender or withdrawal of a life insurance policy will lower the cash value of that policy - and, even though it is not typically required that these funds be repaid, if the insured dies while there is still an unpaid cash value balance, then the amount of that unpaid balance will be charged against the death benefit that is paid out to the policy's beneficiary. There may also be additional costs involved when taking a partial surrender or withdrawal, such as processing and / or administrative fees from the life insurance company.

New York State Disability Benefits Law

Purpose - creates a state disability insurance program designed to provide employees with some level of income replacement in case of disability caused off-the-job. Definitions - provides temporary cash benefits to an eligible wage earner when he or she is disabled by an illness or injury that occurs off the clock, or becomes disabled due to pregnancy. As a NY-based employer, you are required to provide disability benefits to all eligible employees. Employment covered - An employer who has had in New York State employment one or more employees on each of at least 30 days in any calendar year shall be a "covered employer" subject to the Disability Benefits Law after the expiration of four weeks following the 30th day of such employment. These 30 days of employment need not be consecutive days but must be work days of employment in one calendar year. In addition to the above-stated provisions, employers of personal or domestic employees in a private home are subject if they employ at least one employee who works 40 or more hours per week for that one employer. An employer who by operation of law becomes successor to a covered employer, or who acquires by purchase or otherwise the trade or business of a covered employer, immediately becomes a covered employer. Benefits - will pay 50% of your average wages (calculated over the prior eight weeks) up to a maximum of $170 per week. Benefits will begin on your eight consecutive day out of work; the first seven days is an unpaid waiting period. You can receive benefits for a maximum of 26 weeks in a 52-week period.

Survivorship (Second-to-Die) Life Insurance

Second-to-die insurance is a type of life insurance on two people (usually married) that provides benefits to the beneficiaries only after the last surviving person on the policy dies. This differs from regular life insurance in that the surviving partner doesn't receive any benefits after the spouse dies. Thus, second-to-die insurance is used for estate planning.

Taxation of personal life insurance

Tax implications are important to consider when buying life insurance. The Internal Revenue Service (IRS) imposes different tax rules on different plans, and sometimes the distinctions are arbitrary. Life insurance premiums, under most circumstances, are not taxed—i.e. no sales tax is added or charged. These premiums are also not tax-deductible. If an employer pays life insurance premiums on an employee's behalf, any payments for $50,000 or more in coverage is taxed as income. Interest earned for prepaid insurance is taxed as interest income. Returns generated from whole life insurance policies are not taxed until the policy is cashed out. Employer-Paid Life Insurance When a person's employer provides life insurance as part of an overall compensation plan, the IRS considers it income, which means the employee is subject to taxes. However, these taxes only apply when the employer pays for more than $50,000 in life insurance coverage. Even in those cases, the premium cost for the first $50,000 in coverage is exempt from taxation. Prepaid Life Insurance Some life insurance plans allow the policyholder to pay a lump sum premium upfront. That money gets applied to the plan's premiums throughout the plan's duration. The lump-sum payment also grows in value because of interest. The growth of that money is considered interest income by the IRS, which means it can be subject to taxation when it is applied for a premium payment or when the policyholder withdraws some or all of the money he has earned. Similar to retirement accounts, such as 401(k) plans and IRAs, the accumulation of cash value on a whole life insurance policy is tax-deferred. Even though this money qualifies as income, the IRS does not require the policyholder to pay taxes on it until he cashes out the policy. Life Insurance Premiums Not Tax-Deductible.

Social Security Disability

The Social Security and Supplemental Security Income disability programs are the largest of several Federal programs that provide assistance to people with disabilities. While these two programs are different in many ways, both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either program. Qualifications for disability benefits - To qualify for Social Security disability benefits, you must first have worked in jobs covered by Social Security. Then you must have a medical condition that meets Social Security's definition of disability. In general, we pay monthly benefits to people who are unable to work for a year or more because of a disability. Benefits usually continue until you are able to work again on a regular basis. There are also a number of special rules, called "work incentives," that provide continued benefits and health care coverage to help you make the transition back to work. If you are receiving Social Security disability benefits when you reach full retirement age, your disability benefits automatically convert to retirement benefits, but the amount remains the same. The listing manual, which has been updated for 2020, includes: musculoskeletal problems, such as back injuries cardiovascular conditions, such as heart failure or coronary artery disease senses and speech issues, such as vision and hearing loss respiratory illnesses, such as COPD or asthma neurological disorders, such as MS, cerebral palsy, Parkinson's disease, or epilepsy mental disorders, such as depression, anxiety, autism, or intellectual disorder immune system disorders, such as HIV/AIDS, lupus, and rheumatoid arthritis various syndromes, such as Sjogren's Syndrome and Marfan Syndrome skin disorders, such as dermatitis digestive tract problems, such as liver disease or IBD kidney disease and genitourinary problems cancer, and hematological disorders, such as hemolytic anemias and disorders of bone marrow failure Definition of disability - the law defines disability as the inability to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. Waiting period - Five Months Disability income benefits - Federal benefits include a monthly cash payment and medical care. If you are disabled due to an accident or injury and are under age 65, you may already know that Social Security Disability (SSDI) benefits are available to help you financially until you can return to work, or in the event that you may never return In addition to any assistance received in a worker's compensation claim or personal injury suit, SSDI may be available as a financial aid to help you pay your bills, visit the doctor, fill prescriptions, and provide for your family.

Controlled Business (2103(i))

The Superintendent may refuse to issue, suspend, or revoke a license if an applicant receives more than 10% of the aggregate net commissions during a 12- month period from insurance sold to a licensee's spouse or other family members or business associates or their immediate family.

Accumulation at interest Dividend Option

The dividend option to accumulate at interest means the insurance company places the dividend payment in an interesting bearing account and adds interest to the account each year. The insurer sets the interest rate on these accounts annually and usually, announces it with other information regarding interest rates such as loan rates, universal life interest rates, and annuity rates. The rate can change annually, but most insurers establish a minimum guaranteed rate on these accounts. The policyholder cannot choose to place additional funds into the interest account. So for example, if a policyholder noticed that the interest rate paid on the account for the accumulate at interest option was far higher than his/her savings account, he/she would not have the option to move money from the savings account to the interest account at the insurance company. Only dividend payments can go to the account. The policyholder is free to withdraw funds from the interest account whenever he/she sees fit. But will not have the option to put the money back into the account at a later date. Once removed, the only way to build the account back up is through future dividend payments on the whole life policy.

Classes (per stirpes/per capita)

The estate planning terms "per stirpes distributions" and "per capita distributions" are commonly used in last wills and testaments and revocable living trusts. They describe how you want your property to be left to your beneficiaries. Per stirpes indicates that if any of your beneficiaries aren't living at the time of your death, their share of the estate will pass to their descendants. Per capita distributions can only go to the named beneficiaries and in equal shares. The term per stirpes is Latin for "by representation" or "by class." It means that each living beneficiary in a class of beneficiaries will receive an equal share. If a beneficiary is deceased and survived by any descendants, that beneficiary's descendants would take what their deceased parent would have taken "by representation." Per capita is Latin for "by total headcount" or "by a total number of individuals." All the living members of the identified group will receive an equal share if the beneficiaries are to share in a distribution per capita

Fixed Amount Option

The fixed amount option, also known as the installment amount option, means your beneficiary will be paid a fixed amount for as long as the settlement proceeds last. Any remaining balance can be passed to a secondary beneficiary if the beneficiary dies before receiving all proceeds. Good for: This option is good for beneficiaries who need to supplement their income.

Fixed Period Option

The fixed amount option, also known as the installment amount option, means your beneficiary will be paid a fixed amount for as long as the settlement proceeds last. Any remaining balance can be passed to a secondary beneficiary if the beneficiary dies before receiving all proceeds. Good for: This option is good for beneficiaries who need to supplement their income.

General account assets

The general account is where an insurer deposits premiums from policies it underwrites and from which it funds day-to-day operations of the business. The general account does not dedicate collateral to a specific policy and instead treats all funds in aggregate. The general account is where insurance companies place their collected premiums. The account is treated as an investable asset and is allocated accordingly. General accounts invest in less risky ventures in case they need to make a large payout to their policyholders, as was the case with the Fukushima disaster or during large wildfires.

Life Income Option

The life income option means the beneficiary will receive payments for his or her entire lifetime. If the beneficiary chooses this settlement option, the insurance company will decide how much income the beneficiary will receive each year based on age and gender although the company may purchase an annuity instead. Payouts stop when the beneficiary dies. If the beneficiary dies sooner than expected, the insurance company can keep the unpaid amount in most cases. This option tends to work best for people who want guaranteed payments for life but do not need a large sum of money at once. To understand how the straight life income option works, imagine a policy with a $100,000 death benefit. A 55-year-old male beneficiary chooses the life income option and receives $6,250 for life, based on his age and gender.

Cash payment Dividend Option

The option to receive the dividend in cash is pretty self-explanatory. Each year the life insurer pays the policyholder the dividend in the form of a check. The payment comes directly to the policyholder who can then use the cash for whatever purpose he or she sees fit.

Beneficiary

The person(s) who receive the death benefit. They are selected by the policyholder.

Return of Premium Rider

The return-of-premium rider might appeal to you if, like most people, you don't believe that you will actually become disabled, but you are buying a disability policy just in case. The return-of-premium rider entitles you to get back the premium money you pay in the event you don't need to use the policy benefits. Depending on the type of rider you choose, you will get either a portion of the money back at certain ages or after a certain number of years, or all of your money back at age 65 when the rider expires. Any claims payments made to you will reduce the amount of premium that you get back. Also, this rider will substantially increase your premium. Because of this rider's high cost and limits on potential premiums return, you should be wary as it may not be the best value for your premium dollar.

Annuities certain (types)

There are five major categories of annuities — fixed annuities, variable annuities, fixed-indexed annuities, immediate annuities and deferred annuities.

Fixed (equity) indexed annuities

These are essentially fixed annuities with a variable rate of interest that is added to your contract value if an underlying market index, such as the S& P 500, is positive. They typically offer a guaranteed minimum income benefit, and the chance of principal upside pegged to a market-based index. A drawback is that upside potential is limited by a so-called participation rate, caps or a spread — all methods in which your return in a rising stock market is trimmed. Consequently, buyers of these annuities never keep pace with a robust market. These appeal to retirees and pre-retirees who want to conservatively participate in potential market appreciation without fuss and with downside principal protection.

Guaranteed Insurability Rider (GI Rider)

allows the owner of a life insurance policy to buy additional life insurance with no underwriting. The guaranteed insurability rider is usually available at a small additional charge. The guaranteed insurability rider gives the owner of a life insurance contract the opportunity to add death benefit coverage to the policy at certain points in the insured person's life. The amount that can be added is limited to an amount such as the face value, or a given amount such as $10,000. The owner does not need to add coverage at the option date, and they may have the option to add less than the full available amount. Usually the option to add death benefit coverage through the GI rider occurs at certain pre-determined ages (which may vary by company) throughout the insureds life, but may also occur during special life events such as marriage or the birth of a child. Usually there is a cap to the amount of total coverage that can be added, or a cap to the amount of qualifying events to increase coverage.

Children's term rider

allows you to add term life insurance coverage on all children - natural, adopted and stepchildren. You may find this to be an affordable way to extend the benefits of your policy to your children. Coverage is typically available for children 15 days of age to 18-25 years of age, depending on carrier. Some of these common riders and endorsements come standard and may be automatically included with your policy at no additional charge, while others require you to pay an additional premium. There are also specific riders that can only be added at the time the contract is written and can't be endorsed onto the policy once it has been issued. Because life insurance products and companies differ, not all riders and endorsements presented here are offered under every life insurance policy contract or offered by every insurer.

Brokers 2101(h)

any licensed attorney at law of this state.

Defined Benefit Plan

employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history. The company administers portfolio management and investment risk of the plan. There are also restrictions on when and by what method an employee can withdraw funds without penalties. Benefits paid are typically guaranteed for life and rise slightly to account for the increased cost of living. A defined-benefit plan is an employer-based program that pays benefits based on factors such as length of employment and salary history. Pensions are defined-benefit plans. In contrast to defined-contribution plans, the employer, not the employee, is responsible for all of the planning and investment risk of a defined-benefit plan. Benefits can be distributed as fixed-monthly payments like an annuity or in one lump-sum payment. The surviving spouse is often entitled to the benefits if the employee passes away.

Payor benefit life/disability (juvenile insurance) Rider

may be added to the policy of a juvenile stating that if the payor (the one paying the premium) dies or becomes totally disabled prior to the juveniles reaching majority, the subsequent premiums due are automatically waived.

Estates

property that an individual owns only through the duration of their lifetime. It is also referred to as a tenant for life and life tenant. A life estate is restrictive in that it prevents the beneficiary from selling the property that produces the income before the beneficiary's death.

Disability income benefit Rider

provides financial protection to the owner of a life insurance contract that a disability will often incur. ... Usually a disability income rider will pay a monthly income of 1% of the face value of the contract, and/or will also waive the monthly cost of the life insurance contract

Child Health Plus

provides free or low-cost health insurance to children under the age of 19 who do not qualify for Medicaid and do not have other health insurance coverage. Eligibility - To be eligible for either Children's Medicaid or Child Health Plus, children must be under the age of 19 and be residents of New York State. Whether a child qualifies for Children's Medicaid or Child Health Plus depends on gross family income. Benefits - Well-child care. Immunizations. Treatment for illness or injury. Inpatient hospital medical or surgical care. Short-term physical therapy; occupational therapy, Radiation therapy. Therapeutic outpatient services (chemotherapy, hemodialysis). Inpatient and outpatient treatment for alcoholism and substance abuse, and mental health. Prescription and non-prescription drugs if ordered by a physician. Emergency care. Emergency ground transportation. Emergency, preventative and routine dental care. Limited orthodontic services are available for children with a severe medical condition such as cleft lip or cleft palate. Preventive and routine vision care (including eyeglasses). Speech and hearing services (with limits). Durable medical equipment. Hospice services.

Accelerated (living) benefit provisions/riders (3230)

refers to a clause in certain life insurance policies that enable the policyholder to receive the benefits before death. Accelerated benefits are normally reserved for those that suffer from a terminal illness, have a long term high-cost illness, require permanent nursing home confinement or have a medically incapacitating condition. Some insurance companies differ on how much cash can be pulled out and how close to death the insured has to be in order to receive these benefits. Insurers offer anywhere from 25 to 100 percent of the death benefit as an early payment. Accelerated benefits are also referred to as living benefits. Accelerated benefit riders are essentially the modern equivalent of the viatical settlements that terminally ill policyholders used in previous decades to raise cash to pay their medical bills.

Interest Only Settlement Option

the insurer holds the proceeds and pays interest to the beneficiary until such time as the beneficiary withdraws the principal.

Dividend options

varying ways in which insureds may elect to receive dividends under a life insurance policy. Dividends may be received in the form of cash payments, as increases to the policy's cash value, or as paid-up additional insurance.

False Advertising (2603)

It is a violation to make false or misleading statements regarding the advertising of insurance products. A producing agent may not issue any illustration or statement used to advertise his/her business unless the agent is authorized to transact those lines of authority.

Payment of Premium provision

a condition precedent to the payment of a Covered Loss that the Named Insured has remitted to us all Premium in accordance with the terms of this Policy.

Process 2103 (d-i)

1. The Superintendent may issue a license to any person, firm or corporation who has complied with the requirements of the Insurance Code, authorizing the licensee to act as agent of any authorized insurer. Every individual applicant for a license under this section and every proposed sub-licensee must be 18 years of age or older at the time of issuance of such license. The person must submit to and pass a written examination required by the Superintendent.

Who Should be Licensed (2101(k)(1))

1. The term "insurance producer" does not include: An officer, director or employee of a licensed insurer, fraternal benefit society or health maintenance organization or of a licensed insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and: (a) the officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance; (b) the officer, director or employee's function relates to underwriting, loss control, Inspection or the processing, adjusting, investigating or settling of a claim on a contract of Insurance; or (c) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting licensed insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance.

401k - Tax Sheltered Annuities

A 401(k) plan is a tax-advantaged, defined-contribution retirement account offered by many employers to their employees. It is named after a section of the U.S. Internal Revenue Code. Workers can make contributions to their 401(k) accounts through automatic payroll withholding, and their employers can match some or all of those contributions. The investment earnings in a traditional 401(k) plan are not taxed until the employee withdraws that money, typically after retirement. In a Roth 401(k) plan, withdrawals can be tax-free. A 401(k) plan is a company-sponsored retirement account that employees can contribute to. Employers may also make matching contributions. There are two basic types of 401(k)s—traditional and Roth—which differ primarily in how they're taxed. In a traditional 401(k), employee contributions reduce their income taxes for the year they are made, but their withdrawals are taxed. With a Roth, employees make contributions with post-tax income, but can make withdrawals tax-free.

Cash value

A tax-deferred savings account that are included in permanent life insurance policies. The cash value is basically an investment account inside of your straight life insurance policy. This account will grow according to a guaranteed rate over the course of the policy length. The rate of return will typically be large enough that when you turn 100 the cash value account will equal the value of the death benefit. At any point, you can use the cash value account for a variety of reasons, including:

Temporary License (2109; Regs. 9, 18, 29, Part 20.1)

A temporary license may be issued in the case of death, service in armed forces or disability. The Superintendent may issue a temporary insurance agent's or insurance broker's license, or both, without requiring the applicant to pass a written insurance examination or to satisfy certain requirements except as to age in the following cases: (1) In the event of the death of a person who at the time of his death was a licensed accident and health insurance agent; (a) to the executor or administrator of the estate of such deceased agent or broker; (b) to a surviving next of kin of such deceased agent or broker, where no administrator of his estate has been appointed and no executor has qualified under his duly probated will; (c) to the surviving member or members of a firm or association, which at the time of the death of a member was such a licensed insurance agent or licensed insurance broker; or (d) to an officer or director of a corporation upon the death of the only officer or director who was qualified as a sub-licensee or to the executor or administrator of the estate of such deceased officer or director; (2) to any person who may be designated by a person licensed pursuant to this chapter as an insurance agent, or an insurance broker, or both, and who is absent because of service in any branch of the armed forces of the United States. (3) to the next of kin of a person who has become totally disabled and prevented from pursuing any of the duties of his or her occupation, and who at the commencement of his or her disability the license or licenses may be issued for a term not exceeding 90 days from the death of such additional term or terms of 90 days each, not exceeding in the aggregate 15 months. The Superintendent may issue renewal licenses for an additional term or terms of 90 days each exceeding the aggregate period of 15 months when in his judgment it will best serve the interests of any person serving in the armed forces of the United States. No person holding a temporary license is permitted to solicit new business under the temporary license.

Level Term Life Insurance

A term life policy guaranteed to have the premium remain the same for the duration of the contract. This is what most people refer to as term life. Purchased for a set number of years (5, 10, 30 years, for example), the premium and the death benefit remains the same (level) until the end of the term. Many of these policies can be converted to a permanent policy at the end of the term, or can be canceled at any time.

Aiding Unauthorized Insurer (2117)

Acting for or aiding unlicensed or unauthorized insurers or health maintenance organizations. (a) No person, firm, association or corporation shall in this state act as agent for any insurer or health maintenance organization which is not licensed or authorized to do an insurance or health maintenance organization business in this state, in the doing of any insurance or health maintenance organization business in this state or in soliciting, negotiating or effectuating any insurance, health maintenance organization or annuity contract or shall in this state act as insurance broker in soliciting, negotiating or in any way effectuating any insurance, health maintenance organization or annuity contract of, or in placing risks with, any such insurer or health maintenance organization, or shall in this state in any way or manner aid any such insurer or health maintenance organization in effecting any insurance, health maintenance organization or annuity contract.

Flexible Premium or Adjusted Life Insurance

Adjustable life insurance is a term and whole life hybrid insurance plan that allows policyholders the option to adjust policy features. These policies allow policyholders the ability to adjust the period of protection, face amount, premiums, and length of the premium payment period. These policies also incorporate an interest-bearing savings component or cash value account. Adjustable life insurance policies are attractive to those who want the protection and cash value benefits of permanent life insurance yet need or want some level of flexibility with policy features. Using the ability to modify premium payments and face amounts, policyholders may customize their coverage as their lives change. For example, a policyholder may want to increase the face amount upon getting married and having children. An unemployed person may want to reduce premiums to accommodate a restricted budget. As with other permanent life insurance, adjustable life insurance has a savings component that earns cash value interest. Today, most adjustable life insurance cash value accounts have a guaranteed rate of interest.

Resident Licensees

All licensed agents, brokers, consultants and public adjusters must complete continuing education (CE) requirements as a condition of renewing these licenses. Licensees must complete 15 credits of approved continuing education during each biennial licensing period. After your license has been renewed the first time, continuing education (CE) will always be required upon subsequent renewal or relicensing applications. Credits must be accumulated during the renewal period, which begins with the effective date of the license and ends with the expiration date. CE must be completed before processing the renewal or relicensing application.

Agent 2101(a)

In this section, insurance agent means any authorized or acknowledged agent of an insurer, fraternal benefit society or health maintenance organization issued a certificate of authority pursuant to the public health law, and any sub-agent or other representative of such an agent, who acts as such in the solicitation of, negotiation for, or sale of, an insurance, health maintenance organization or annuity contract, other than as a licensed insurance broker.

Workers Compensation

Eligibility - All work injuries that occur during the course of work are covered under New York workers' compensation law. New York, like most states, also covers occupational diseases, which are illnesses that arise during the course of employment. Typical occupational diseases include asbestosis and hearing loss. Industrial (work-related) injuries can include bone fractures, sprains, burns, cuts, amputations, and other injuries that cause immediate harm. If your injury requires more than simple first aid, and it occurred in the course of your employment, you likely have a workers' compensation claim. Activities that happen outside the scope of your employment, such as commuting to and from work, are not covered. In other words, injuries or diseases arises from these activities do not give rise to a workers' compensation claim. Benefits - If you have an allowed workers' compensation claim, you will begin receiving workers' compensation benefits immediately. Your employer's workers compensation insurance carrier will pay medical bills for treatment related to your industrial injury. If you are unable to work due to your work-related injury or occupational disease for more than seven days, your employer's workers' compensation insurance carrier will begin payment of cash benefits to compensate for your lost wages. These temporary disability benefits equal two-thirds of your average weekly wage, multiplied by the percentage of your disability. Cash benefits are subject to a weekly maximum established by the state each year. As of July 1, 2017, the maximum benefit is $870.61 per week. These payments are usually paid every other week. The insurance carrier will continue to make these payments to you until your workers' compensation claim is closed or you are able to return to work, whichever occurs first. If your doctor finds that your injury has caused a permanent impairment, you may also be entitled to a permanent disability award. When a work injury results in death, the worker's family members can receive weekly death benefits and reimbursement for funeral expenses.

Savings Incentive Match Plan for Employees (SIMPLE)

Established by the Small Business Protection Act of 1996, a SIMPLE may be set up by employers who have no other retirement plan and who have 100 or fewer employees with at least $5,000 in compensation for the previous year. They may be structured as an IRA or as a 401(k) plan. Employees may defer any percentage of compensation up to $6,500 per year to the SIMPLE, and the employer is required to make a matching contribution of up to 3% of the employee's pay based on that election. The employer may reduce the maximum matching percentage in any two years out of five. Alternatively, the employer may establish a uniform 2% of salary contribution per year for all eligible employees regardless of whether they contribute to the SIMPLE or not.

Termination of Agent Appointment (2112(d); Regs. 9, 18, 29, Part 20.2)

Every insurer, fraternal benefit society or health maintenance organization or insurance producer or the authorized representative of the insurer, fraternal benefit society, health maintenance organization or insurance producer doing business in this state must, upon termination of a certificate of appointment, file with the Superintendent within 30 days a statement, in such form as the Superintendent may prescribe, the facts relative to such termination for cause.

Final expense insurance

Final expense insurance is a unique type of policy. It covers the cost of anything associated with your death, whether its medical costs, a funeral, or cremation - whatever your literal final expenses are. It's usually only issued to people of a certain age and the policy is valid up to a certain age. Like other permanent life insurance policies, there's a cash value that can grow over time. Final expense insurance is a simplified issue policy in most cases, but if you don't pass the health questionnaire you'll be placed in a guaranteed issue policy instead. Final expense insurance is usually attractive to older people who don't have other life insurance coverage (maybe they outgrew their term life policy) and don't have enough savings to pay for their own funeral, which can cost upwards of $8,000.Coverage is usually for small amounts, from $5,000 to $25,000, to cover those expenses. It's good if you don't have another way to pay for your funeral and don't want to burden your family with the costs. However, it has the same drawbacks as guaranteed issue life insurance: higher life insurance premiums for relatively low coverage amount. If you or your family are able to pay for a funeral through other means, that's your best bet.

Home State (2101(l))

Home state means the District of Columbia or any state or territory of the United States in which an insurance producer maintains his, her or its principal place of residence or principal place of business and is licensed to act as an insurance producer.

Nonresident 2101(e)

In this section, "non-resident insurance broker", means an individual who is a non-resident of this state and who is licensed or authorized to act as an insurance broker in the state in which he resides, or in which he, or the firm or association of which he is a member or employee, or the corporation, of which he is an officer, director or employee maintains an office as an insurance broker.

Cyber Security Requirements for Financial Services Companies (Reg 23 )

Is designed to promote the protection of customer information as well as the information technology systems of regulated entities. This regulation requires each company to assess its specific risk profile and design a program that addresses its risks in a robust fashion. Senior management must take this issue seriously and be responsible for the organization's cybersecurity program and file an annual certification confirming compliance with these regulations. A regulated entity's cybersecurity program must ensure the safety and soundness of the institution and protect its customers.

level-premium term insurance

Level-Premium Insurance is a type of life insurance in which premiums stay the same price throughout the term, while the amount of coverage offered increases. Premium payments often start at a higher level than policies with similar coverage but are ultimately worth more than competitors as policyholders experience increased coverage over time at no additional expense. Terms are usually 10, 15, 20 and 30 years, based on what the policyholder requires.

Reporting of Actions (2110(i)

Licensees must report to the Superintendent any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order or other relevant legal documents.

defined contribution plan

retirement plan that's typically tax-deferred, like a 401(k) or a 403(b), in which employees contribute a fixed amount or a percentage of their paychecks to an account that is intended to fund their retirements. The sponsor company will, at times match a portion of employee contributions as an added benefit. These plans place restrictions that control when and how each employee can withdraw from these accounts without penalties. Defined contribution (DC) retirement plans allow employees to invest pre-tax dollars in the capital markets where they can grow tax-deferred until retirement withdrawals. 401(k) and 403(b) are two popular defined-contribution plans commonly used by companies and organizations to encourage their employees to save for retirement. DC plans can be contrasted with defined benefit (DB) pensions, whereby retirement income is guaranteed by an employer. With a DC plan, there are no guarantees, and participation is both voluntary and self-directed.

limited-payment life insurance

Limited pay life insurance is for an individual who owns a whole life insurance policy but chooses to pay for the total cost of their premiums for a limited number of years. With the limited pay life insurance option, you pay premiums in the first 10, 15, or 20 years of ownership, but the benefits last a lifetime.

Unfair Discrimination (2606-2608, 2612)

Neither agents nor insurance companies are permitted to discriminate against perspective insureds. This means that a person cannot be given a different rate for coverage than another person in identical circumstances. They may not discriminate against a person solely because of an applicants' race, religion, occupation, where they live or their financial status.

Nonresident 2103(g)(11)

No written insurance examination will be required of any individual who applies for an insurance agent license in this state who was previously licensed for the same line or lines of authority in another state, provided, however, that the applicant's home state grants non-resident licenses to residents of this state on the same basis. Such individual shall also not be required to complete any prelicensing education. This exemption is only available if the person is currently licensed in that state or if the application is received within 90 days of the date of cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's producer database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries indicate that the producer is or was licensed in good standing for the line of authority requested. An individual or entity licensed in another state that moves to this state must make an application within 90 days of establishing legal residence to become a resident licensee. No prelicensing education or examination will be required of that person to obtain any line of authority previously held in the prior state except where the Superintendent determines otherwise by regulation.

457 Plan

Non-qualified, deferred compensation plan established by state and local governments for tax-exempt government agencies and tax exempt employees. While governmental 457 plans have special catch-up provisions for those age 50 or older, they enjoy an even greater contribution amount in the three years before retirement. The catch-up provisions three years prior to retirement will amount to double the normal amount for allowable maximum contributions. Until withdrawn, 457 plan contributions and all earnings remain untaxed. The 457 plan assets of tax-exempt employers are subject to the claims of the employer's creditors, but those of plans sponsored by governmental entities are not. Plan distributions may occur at retirement; on separation from employment; as the result of an unforeseeable emergency; and at death. Distributions may be taken as a lump sum, in annual installments, or as an annuity. In 2002 and later years, proceeds from a governmental 457 plan may be transferred to an IRA or a new employer's 401(k), 403(b) or 457 plan that accepts transfers from an old employer's plan. On withdrawal from an IRA or from the new plan, the distribution will be subject to immediate taxation at ordinary income tax rates.

Reinstatement

Reinstatement is the restoration of a person or thing to a former position. Regarding insurance, reinstatement allows a previously terminated policy to resume effective coverage. In the case of nonpayment, the insurer may require evidence of eligibility, such as an updated medical examination for life insurance, and full payment of outstanding premiums. Reinstatement of a life insurance policy occurs after the end of a grace period and when the contract is no longer in force. Reinstatement requirements may vary among life insurance providers. There is no guarantee by law for reinstatement terms. The reinstatement process may depend on how much time passed since the policy lapse and the type of insurance policy. Sometimes applying for a new policy may be less expensive than reinstating an old policy. After nonpayment of a life insurance premium, a policy enters its grace period. During the grace period, the insurance company remains responsible for paying death benefits on valid death claims. If the insurance company does not receive a premium payment during the grace period, the policy will lapse. At this point, the insurance company is no longer responsible for paying a claim. A life insurance policy may typically be reinstated within 30 days of a lapse without additional paperwork, underwriting, or attestations of health. Insureds often pay a reinstatement premium, which is larger than the original premium. Insurance companies add the additional reinstatement premium to the accumulated cash value of the policy and pay administrative expenses incurred from the lapse.

Sell (2101(n))

Sell or sale means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of a licensed insurer, fraternal benefit society or health maintenance organization.

Solicit (2101(o)) -

Solicit or solicitation means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular licensed insurer, fraternal benefit society or health maintenance organization.

Term Life Insurance

Term life insurance lasts for a set number of years before it expires. If you die before the term is up, a set amount of money, known as the death benefit, is paid to your designated beneficiary. Term life is considered the simplest, most accessible insurance policy. When you make your payments (known as your premium), you're simply paying for the death benefit that goes to your beneficiaries in the event of your death. The death benefit can be paid out as a lump sum, a monthly payment, or an annuity. Most people elect to receive their death benefit as a lump sum. Term life insurance policies are more affordable than other types of life insurance policies, usually costing between $30-40 a month for a 30-year, $500,000 policy for healthy people in their 20s and 30s. They expire at the end of the term, which can last up to 30 years.

Superintendent's General Duties and Powers (2404, Financial Services 201, 202, 301)

The Superintendent is empowered to: Examine and investigate into the affairs of any person in order to determine whether the person has violated or is violating the insurance and regulations of this state. Responses to requests for information by the Superintendent should be made not less than 15 business days. The Superintendent is authorized, after notice and hearing, to levy a civil penalty against such person in an amount not to exceed $500 per day for each day beyond the date specified by the Superintendent for response, but in no event will such penalty exceed $10,000. In the event the Superintendent levies five separate civil penalties against any one person within five years for failure to comply with this section, the Superintendent is authorized, after notice and hearing, to levy an additional civil penalty against not to exceed $50,000. The Superintendent is also authorized to levy additional civil penalties not to exceed $50,000, after notice and hearing, against such person for every five subsequent violations of this section within a five year period. Any licensee may surrender his or her license in lieu of payment of any civil penalty imposed by the Superintendent.

Consultants (2107)

The Superintendent may issue an insurance consultant's license to any person, firm, association or corporation who or which has complied with the requirements of this chapter with respect to either: life insurance, meaning all of those kinds of insurance authorized. Any such license issued to a firm or association shall authorize only the members of such firm or association named in such license as sub-licensees to act individually as consultants there under, and any such license issued to a corporation shall authorize only the officers and directors thereof named in such license as sub-licensees to act individually as consultants there under.

Suspension, Revocation, and Nonrenewal (2110)

The Superintendent may refuse to renew, revoke, or may suspend, for a period the Superintendent determines, the license of any insurance producer, insurance consultant or adjuster, if, after notice and hearing, the Superintendent determines that the licensee or any sub-licensee has: 1. violated any insurance laws, regulation, subpoena or order of the Superintendent of Insurance or of another state's Insurance Commissioner, or has violated any law in the course of his dealings in such capacity; 2. provided materially incorrect, materially misleading, materially incomplete or materially untrue information in the license application; 3. obtained or attempted to obtain a license through misrepresentation or fraud; 4. has used fraudulent, coercive or dishonest practices, demonstrated incompetence, demonstrated untrustworthiness, or demonstrated financial irresponsibility in the conduct of business in this state or elsewhere; 5. improperly withheld, misappropriated or converted any monies or properties received in the course of business in this state or elsewhere; 6. intentionally misrepresented the terms of an actual or proposed insurance contract or application for insurance; 7. has been convicted of a felony; 8. admitted or been found to have committed any insurance unfair trade practice or fraud; 9. had an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory; 10. forged another's name to an application for insurance or to any document related to an insurance transaction; 11. improperly used notes or any other reference material to complete an examination for an insurance license; 12. knowingly accepted insurance business from an individual who is not licensed; 13. failed to comply with an administrative or court order imposing a child support obligation; or 14. failing to pay state income tax or comply with any administrative or court order directing payment of state income tax. Before revoking or suspending the license of any insurance producer or other licensee pursuant to the provisions of this article, the Superintendent will give notice to the licensee and to every sublicensee and will hold, or cause to be held, a hearing not less than 10 days after giving notice. If an insurance producer's license or other licensee's license pursuant to the provisions of this article is revoked or suspended by the Superintendent, the Superintendent will give notice to the licensee. No individual, corporation, firm or association whose license as an insurance producer or other licensee has been revoked, and no firm or association of which such individual is a member, will be entitled to obtain any license under the provisions of this chapter for a period of one year after such revocation, or, if such revocation be judicially reviewed, for one year after the final determination affirming the action of the Superintendent in revoking such license. Before revoking the license of any non-resident insurance producer the Superintendent will give 10 days' notice in writing to the licensee of the action proposed to be taken. The Superintendent retains the authority to enforce the provisions of and impose any penalty or remedy. All licensees must report to the Superintendent any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. Within 30 days of the initial pretrial hearing date, a licensee must report to the Superintendent any criminal prosecution of the licensee taken in any jurisdiction.

Adjuster 2101(g)

The Superintendent may, in his discretion require an applicant for a license under this section to present evidence, in such form as he prescribes, that such applicant has been employed, for a period which he deems reasonable, by an insurer, an independent adjuster or a public adjuster, in the performance of duties which in his opinion would provide the applicant with a satisfactory preliminary training for the duties and responsibilities which would evolve upon him as a licensee under this section. The term independent adjuster means any person, firm, association or corporation who for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster.

Nonresident 2136 - Reciprocity

The Superintendent shall waive any requirements for a nonresident license applicant otherwise applicable under this chapter if: (a) the applicant has a current and valid license in his or her home state and is in good standing in his or her home state; (b) the applicant has submitted a completed application in the form prescribed by the Superintendent or submitted the application for licensure submitted to his or her home state; (c) the applicant has paid the fees required by this chapter; and (d) the applicant's home state awards nonresident insurance producer licenses to residents of this state on the same basis as provided in this subsection.

Penalties (2127):

The Superintendent, in lieu of revoking or suspending the license of a licensee, may in any one proceeding by order, require the licensee to pay a penalty in a sum not exceeding $500 for each offense, and a penalty in a sum not exceeding $2,500 in the aggregate for all offenses. Upon the failure of such a licensee to pay such penalty ordered within 20 days after the mailing of such order, postage prepaid, registered, and addressed to the last known place of business of such licensee, unless such order is stayed by an order of a court of competent jurisdiction, the Superintendent may revoke the license of such licensee or suspend the same for such period as he determines.

assignment provision

Transfer by the holder of a life insurance policy (the assignor) of the benefits or proceeds of the policy to a lender (the assignee), as a collateral for a loan. In the event of the death of the assignor, the assignee is paid first and the balance (if any) is paid to the policy's beneficiary. Other types of insurance policies may not be used for this purpose.

Self-employed Plans (Keogh plans)

Type of retirement plan designed for self-employed individuals and their employees. It can be set up by small businesses that are structured as LLCs, sole-proprietorships, or partnerships. A Keogh is similar to a 401(k) for very small businesses, but the annual contribution limits are higher than 401(k) limits.

Right to Examine ("Free Look") Provision

The free look period for a life insurance contract is a trail period, typically 10 days. This period is for policy owners, and is mandated by most states in the United States. The free look period allows a policy owner to review their contract after it is delivered, without having to make an unchangeable financial commitment. If an owner wants to return the policy after reviewing the contract, he/she may do so for a full refund of all money given to the insurance company.

Premium

The regular payment made toward the insurance policy. These are typically monthly.

Sharing Commissions (2121, 2128)

The sharing of commissions with an unlicensed person or entity is prohibited.

Entire Contract Provision

This is a provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions and endorsements.

Simplified issue life insurance

Typically when you apply for life insurance, you go through a paramedical exam as part of the underwriting process so the insurer can find out how risky you are to insure. Ultimately, it helps them set your premium rate. With simplified issue life insurance, though, you can skip the medical exam. That's the "simplified" part of this policy type. Known as a "no exam policy," a simplified issue policy gets you life insurance without the health exam. You're not out of the woods completely, though. You don't need to go through the medical exam, but you do need to fill out a health questionnaire, answering questions like if you smoke, have been diagnosed with serious illnesses, and so on. People in poor health may have to take the exam if they have too many health issues, and they could flat-out be denied by insurers. For those healthier people in a hurry, though, it might be a good option to skip scheduling the paramedical exam, which adds some time to the underwriting process. But with this benefit comes a major financial drawback. With a term life insurance policy, your premium rates are directly tied to your chances of outliving your policy. If you're young and/or healthy, you'll pay lower rates than someone who is older and/or in poor health. That's why the medical exam is important. Since there is no medical exam with simplified issue life insurance, the policies tend to be more expensive than term policies.

Unfair Claim Settlement Practices (2601; Reg. 64, Part 216.3-216.6)

Unfair settlement practices include: Knowingly misrepresenting to a claimant pertinent facts or policy provisions related to the coverages at issue. Failing to acknowledge within reasonable time, communications with respect to claims arising out of its policies. Failing to adopt and implement reasonable standards of prompt investigation of claims arising out of an insurer's policies. Claims must be promptly investigated to determine liability. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonable clear. Compelling policyholders to institute suit to recover amounts due under its policies by offering less than the amounts ultimately recovered in suit brought by them

Fiduciary Responsibility

When someone has a fiduciary duty to someone else, the person with the duty must act in a way that will benefit someone else, usually financially. The person who has a fiduciary duty is called the fiduciary, and the person to whom the duty is owed is called the principal or the beneficiary.

Cease and Desist Order (2405)

Whenever the Superintendent has reason to believe that a person has committed or is committing a defined violation or has been engaged in or is engaging in any method of competition, or any act or practice, which could become a determined violation and that a proceeding thereon would be in the interest of the public, he shall serve upon that person a statement of the charges and notice of a hearing to be held at a time not less than 10 days after the date of service of the notice and at the place fixed in the notice. The person will be given an opportunity at the hearing to be heard personally or by counsel. Anyone violating a cease and desist order may be subjected to a fine of up to $5,000 for each violation.

Brokers 2101(c)

a licensed insurance representative who does not represent a specific insurance company, but places business among various companies. Legally, the broker is usually regarded as a representative of the insured rather than the insuring company.

Misstatement of age provision

a provision in a life insurance policy that adjusts the amount of insurance when the insured's age was misstated on the application to the amount that the premium would have purchased at the correct age based on the insurer's rates at the date of policy issuance.

Single premium Life

a type of life insurance that charges the policyholder a single up-front premium payment to fully fund the policy. It was once a popular tax shelter. Single-premium life insurance requires a large sum of money from the policyholder that puts this type of insurance out of reach of many applicants. The great advantage to single-premium life insurance is that the single payment fully funds the policy, immediately guaranteeing a sizable death benefit to the beneficiaries. Two popular single-premium policies are single-premium whole life and single-premium variable life. The two differ in how each policy accumulates a cash value. The first offers a risk-free fixed interest rate. The second invests the cash value in actively managed portfolios and comes with the risks and potential rewards of active investing.

License display

an insurance agent or broker must prominently display the license or licenses of the supervising person or persons responsible for that office. While the Insurance Law and regulations promulgated thereunder do not require other insurance agents or brokers in an office to display their licenses, the Department is of the view that it is a good practice for each licensee to do so.

Whole Life Insurance

considered a permanent life insurance policy because if does not expire. It has a death benefit but also a cash value, which is a tax-deferred savings account that is included in the policy. The cash value accrues interest at a predetermined fixed rate. Each month, a certain portion of your premium will go into the cash value of the policy, which offers a guaranteed rate of return (The exact amount that goes into savings is determined by your individual policy). The policy's cash value grows over time. Due to the fees and the extra feature, a whole life insurance policy can cost five to 15 times as much as a term life policy (for the same death benefit amount). Whole life lasts for as long as you pay the premiums. However, the cash value component can make whole life more complex than term life because you have to consider surrender fees, taxes, and interest as well as other stipulations. May be worth it if you need the cash value to cover things like endowments or estate plans, which might benefit from the greater options that a whole life policy provides.

Characteristics of Group Plans

differs from individual insurance in several respects. A distinctive characteristic is the coverage of many persons under one contact. A master contract is formed between the insurer and the group policy owner for the benefit of the individual members. In most plans, the group policy owner is the employer. Employees receive a certificate of insurance that shows they are insured. A second characteristic is that group insurance usually costs less that comparable insurance purchased individually. Employers usually pay part or all of the cost, which reduces or eliminates premium payments by the employees. In addition, administrative and marketing expenses are reduced as a result of mass distribution methods. Another characteristic is that individual evidence of insurability is usually not required. Group selection of risks is used, not individual selection. The insurer is concerned with the insurability of the group as a whole rather with the insurability of the single member within the group. Term insurance is the most common form of group life insurance. Group term life is typically provided in the form of yearly renewable term insurance. When group term insurance is provided through your employer, the employer usually pays for most (and in some cases all) of the premiums. The amount of your coverage is typically equal to one or two times your annual salary. Group term coverage remains in force until your employment is terminated or until the specific term of coverage ends. You may have the option of converting your group coverage to an individual policy if you leave your employer. However, most people choose not to do this because these conversion premiums tend to be much higher than premiums for comparable policies available to individuals. Typically, only those who are otherwise uninsurable take advantage of this conversion option.

Universal life insurance

has a cash value, just like a whole life insurance policy. Your premiums go toward both the cash value and the death benefit. But there's a twist: the policyholders of universal life policies can change the premium and death benefit amounts without getting a new policy. Basically, although you have a minimum premium to keep the policy in force, you can use the cash value to pay the premium. That means if you have enough money in the cash value, you can use that to skip premium payments entirely, letting the accrued interest do the work. the cash value of a universal life insurance policy has an interest rate that's sensitive to current market interest rates. If the interest rate being credited to your policy decreases to the minimum rate, your premium would have to increase to offset the reduced cash value. You can also adjust the death benefit within limits outlined in your policy. Increasing it may subject you to further underwriting, while there may be fees to decrease it. If your financial situation changes, the ability to change the death benefit amount within your policy is appealing. While this can be done with term life insurance policies, this feature is one of the main selling points of a universal policy.

Universal Life Insurance

permanent life insurance with an investment savings element and low premiums like term life insurance. Most universal life insurance policies contain a flexible premium option. However, some require a single premium (single lump-sum premium) or fixed premiums (scheduled fixed premiums). Policyholders have the flexibility to adjust their premiums and death benefits. Universal life insurance premiums consist of two components: a cost of insurance (COI) amount, and a saving component, known as the cash value. The cost of universal life insurance is the minimum amount of a premium payment required to keep the policy active. can accumulate cash value, which earns interest based on the current market or minimum interest rate. Policyholders may borrow against the accumulated cash value without tax implications.

Simplified Employee Pension (SEP)

retirement plan designed for self-employed persons, partnerships, sole proprietors, independent contractors, and owner-employees of an unincorporated trade or business; however, it may be set up by any type of business. A SEP is an easy method for a small employer to establish a retirement plan for employees without the complex administration and expense found in qualified retirement plans. In fact, an employer may establish a SEP only if that employer has no qualified retirement plan in effect. Under a SEP, the employer may make a contribution of up to the lesser of 15% or $30,000 of compensation to IRAs established in each employee's name. Hence, such an arrangement is known as a SEP-IRA. When made, these contributions are owned in their entirety by the employee, and they may be withdrawn and/or transferred by the employee at any time. Contributions to a SEP by the employer are discretionary, but must be deposited into each eligible employee's IRA when made. Because these accounts are IRAs, the amounts therein are subject to all IRA rules regarding transfer, withdrawal and taxation.

Variable Life Insurance

similar to whole life insurance in that they both have a cash value, but the functions of the cash values are quite different. With a whole life insurance policy, the cash value component is a savings account. That's why, although the growth might be small compared to other investment options, there is a guaranteed minimum rate. It also includes dividend payments from the life insurance company. A variable life insurance cash value, though, is more akin to investing. The money paid into it goes into a series of mutual fund-like sub-accounts where you can get some decent growth, but you can also lose money depending on the market. The cash value is more or less placed in the stock market. While this makes variable life insurance policies a better investment option than whole life insurance policies - the potential for higher, tax-deferred growth makes it a "super-IRA" - you can only invest in the sub-accounts available through your policy. That means you don't get to choose from the wide variety of mutual funds that are available on the open market. As an investment vehicle, variable life insurance policies provide tax-free money to beneficiaries during the time that the policyholder is alive. Once that person dies, however, that money is retained by the insurance company. Like other types of life insurance, a variable policy can help cover funeral and end-of-life expenses.

Credit life insurance

type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies. The face value of a credit life insurance policy decreases proportionately with the outstanding loan amount as the loan is paid off over time, until both reach zero value. typically sold by banks at a mortgage closing; it could also be offered when you take out a car loan or a line of credit. The pitch is to protect your heirs if you die, since the policy will pay off the loan. If your spouse or someone else is a co-signer on your mortgage, credit life insurance would protect them from making loan payments after your death. This could be appealing if you are the primary breadwinner in your family, and the loan co-signer would be unable to make payments in the event of your death. But in most cases, any heirs who are not co-signers on your loans are not obligated to pay off your loans when you die; debts are not generally inherited. The exceptions are the few states that recognize community property, but even then only a spouse could be liable for your debts, not your children. When banks loan money, part of their accepted risk is that the borrower could die before the loan is repaid. As such, credit life insurance really protects the lender, not your heirs. In fact, the payout on a credit life insurance policy goes straight to the lender, not to your heirs. Credit life insurance is a specialized type of life insurance policy intended to pay off specific outstanding debts in the case the borrower dies before the debt is fully repaid. Such a policy may be required by certain lenders for specific purposes. Credit life policies feature a term that corresponds with the loan maturity and decreasing death benefits that correspond with the reduced debt outstanding over time. Credit life policies, due to their specific nature, often have less stringent underwriting requirements.