PA Life Insurance Regulations
Maximum pre-existing condition period; individual policies not subject to ACA -- time limit on certain defenses health policy provision (accident and health only)
3 years
free look for long-term care insurance and Medicare supplements
3 years
the replacing insurer and the existing insurer must keep replacement transactions records for ____ years after the transaction or until the next commissioner's examination, whichever is sooner
3 years
Medicare Supplement Policies
30 day free look period the Medicare supplement buyer's guide and outline of coverage - must be delivered at time of application - acknowledgment of receipt must be obtained
Minimum inflation protection percentage that must be offered (LTC)
5%
Permitted compensation: first year commission may not be greater than _____% of the first-year premium
50%
Maximum pre-existing condition exclusion period (LTC)
6 months
Open enrollment within ____ of enrolling in Medicare Part B, and being age 65 or older (Medicare supplements)
6 months
Boycott, coercion and intimidation (unfair insurance practices)
engaging in action or agreement that would result in unreasonable restraint/monopoly of insurance business
Commissions and Fees
insurers/producers may pay commission/other compensation to a licensee for selling, soliciting or negotiating insurance - they may not pay commission to an unlicensed person - renewal or deferred compensation may be paid if the person was licensed at the time of sale but is no longer licensed - they may pay a one-time nominal referral fee to an unlicensed person per referral that does not depend on sale
a lapsed producer's license may be reinstated within ___ years of the license renewal date
1 year
Advertisement Definition
Advertisement is any: - Printed and published material audio visual material, and descriptive literature used in direct mail, newspapers, magazines, radio and television scripts, billboards - Descriptive literature and sales aids issued by a company, agent, or broker for presentation to members of the insurance-buying public including circulars, leaflets, booklets, and depictions, illustrations, and form letter Prepared sales talks, presentations and materials for use by agents, brokers, or solicitors
Use of statistics (advertisement requirements)
Advertisement using dollar amounts of claims paid, number of persons insured, or other stats must be accurate No irrelevant facts may be used, and the source of any stats must be identified
$____ per violation for non-willful violations
$1,000
$____ aggregate penalty for non-willful violations
$10,000
A person found guilty of insurance fraud is subject to the following civil penalties: second violation ___
$10,000
A person found guilty of insurance fraud is subject to the following civil penalties: for each subsequent violation _____
$15,000
$_____ per violation for willful violations
$5,000
A person found guilty of insurance fraud is subject to the following civil penalties: first violation ___
$5,000
maximum producer fine per violation of the insurance code
$5,000
$____ aggregate penalty for willful violations
$50,000
Standards for Marketing (Medicare Supplement Policies)
- established by insurers so comparisons of polices are fair/accurate - ensure excessive insurance isn't sold or issued - medicare supplement ads intended for use in PA must be filed with the Commissioner for review and approval
Producer (types of licenses)
- a person may not - sell - solicit - negotiate - a contract of insurance in PA unless licensed as an insurance producer for the line(s) of authority under which the contract is issued
Qualifications for License (licensing process)
- be at least 18 - have not committed any prohibited act under insurance laws - satisfied pre-licensing education requirements - passed or exempt from licensing exam - paid application fees
Advertisements must be (advertising requirements)
- complete and clear to avoid deception - truthful and not misleading in fact/implication
Compliance
- conduct business in accordance with current rules and laws set by government regulatory agencies and courts - applies to both insurance producers and companies - laws and regulations tell us what we must do
illustrations must include the following: (life insurance only)
- date of preparation and pagination - name of insurer - name and address of producer, if applicable - generic product name and form number - name, age and gender of insured - initial death benefit - dividend option used, if applicable
Claims practices
- department inquiries must be responded to within 15 working days - if a claim investigation cannot be completed within 30 days, the insurer must provide a written explanation doe delay and state when a decision may be expected - within 15 working days after insurer receives proof of loss, the first-party claimant must be advised of the acceptance/denial of the claim
Servicing a client includes
- educating the client before, during and after the sale - ensuring understanding of application/underwriting process, policy purchased, and any attached riders - treating all information with confidentiality - disclosing all information so the policy-owner/applicant can make an informed decision - keeping the prospect or the client informed of any rejection, exclusion or cancellation of coverage - showing loyalty to prospects and clients
A code of ethics helps producers avoid controversy, misunderstandings, and legal entanglements
- increased personal efficiency as an insurance producer - increases opportunities for renewals/referrals
Overview of ethics and insurance producer
- insurance producers have ethical responsibilities to insurers, policy-owners, the public and the state - duties of the producer to the insurer are established by agency and tangibly represented by the agency contract, which both parties agree to and sign
The commissioner may (insurance commissioner duties and powers)
- issue rules and regulations and implement and administer the insurance code, but may not change the code itself - secure or require any documents or information, including fingerprints, reasonably necessary to verify the accuracy of information provided on an app. - participate with the National Association of Insurance Commissioners (NIAC) in a centralized insurance producer license registry for submitting or obtaining information on insurance producers, including licensing history, lines of authority and regulatory action - approve forms to be used by individuals and business entities to apply to the Department for insurance producer license - approve additional limited lines of authority
The commissioner will (insurance commissioner duties and powers)
- license insurance producers - approve and administer, or contract for the overall administration of the pre-examination program, pre-examination courses of study, insurance producer licensing examinations, and continuing education programs
Unfair Claim Settlement Practices
- misrepresenting policy provisions - failing to acknowledge/respond to claim communications - failing to implement reasonable standards for prompt claim investigation - compelling insureds to institute litigation to recover amounts due by offering substantially less than the amounts ultimately recovered in actions brought by the insureds - making known to claimants a policy of appealing arbitration awards to compel claimants to accept a compromise less than the amount awarded in arbitration
Testimonials and endorsements (advertising requirement)
- must be genuine, current and accurate - must state if the person is being paid
Group Health Insurance
- no evidence of insurability is required - application and first premium are due within 31 days after group coverage terminates - premium for the individual policy must be at the insurer's customary rate for the person's age/risk class - converted policy effective date is the day after group coverage terminates
Duties of Producers with Regard to Replacement (replacement of life insurance)
- producer must make a reasonable effort to determine if the transaction will involve the replacement of existing life insurance or an existing annuity - if replacement is involved, producer must obtain w/ or as a part of each app for life insurance a statement signed by the applicant verifying that the applicant understands the replacement - producer should secure a list of all existing policies being replaced - producer must provide & sign a NOTICE REGARDING REPLACEMENT OF LIFE INSURANCE AND ANNUITIES to the applicant when there is a replacement - producer must leave copies of all sales proposals or other sales material, including a copy of the NOTICE REGARDING REPLACEMENT
Appropriateness of Recommended Purchase (Medicare supplement policies)
- sale of a Medicare supplement that provides an individual with more than one Medicare supplement policy is prohibited - the Medicare supplement may not be issued to individuals enrolled in medicare Part C unless the effective date of Medigap coverage is after the termination date of Part C
A person who, for no commission (producer license)
- secures and furnishes written information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident, and health insurance - performs administrative services related to the enrollment of individuals under plans - issues certificates under plans or otherwise assists in administering plans - performs administrative services related to mass marketed property and casualty insurance - provides risk management services to a business entity
Marketing Standards (Long-term care insurance)
- selling excessive coverage, high-pressure tactics, and twisting (misleading or using incomplete representations, or fraudulent comparisons) are prohibited practices - companies must train producers on proper marketing standards/procedures to ensure sales presentations and products comparisons are fair and accurate - PA requires a 1-time, 8-hour course before selling long-term care (LTC) insurance
Separate Accounts
- separate accounts are established with variable life and variable annuities - does not include insurer's general account - applicants must be given an investment policy statement of separate accounts - insurers/producers must adopt suitability standards regarding variable product recommendations - both insurance and federal FINRA licenses are required
Temporary license may be issued to: (types of licenses)
- surviving spouse - an employee - a court-appointed representation if the producer - dies - becomes disabled - enters active military service - temporary may not exceed 180 days and is not transferable - a person may not use a temporary license to transact new insurance business - the purpose is to maintain, transfer, or conclude existing business
Application (producer's ethical responsibility)
- the primary responsibility is to the insurer - there is an ethical duty to educate the prospect about the application process, including - why information if required - how it will be evaluated - the need for accuracy/honesty/ in answering all questions - the meaning of important items, such as a wavier of premium, automatic premium loan, nonforfeiture options, policy loans and conditional receipt
Required Disclosures (Viatical settlements)
- the viator has the right to rescind the contract for 30 days from contract date and at least 15 calendar days from the date of receipt of proceeds - funds must be sent within 3 business days after transfer of policy ownership - there are alternatives to viatical settlement (such as accelerated death benefit) - some/all of proceeds may be taxable - may be adversely affect Medicaid eligibility
Chronically Ill (viatical settlements)
- unable to perform at least 2 ADLs -- activities of daily living (eating, toileting, transferring, bathing, dressing, or continence) - requiring substantial supervision to protect oneself from threats to health/safety due to severe cognitive impairment
Surrender Comparison Index Disclosure (life insurance only)
- used to compare costs - producers certify disclosures was given at policy delivery or earlier - insurer keeps certification for 3 years
Privacy notice must explain (GLBA)
- what info the company gathers about the customer - where this info is shared - how the company safeguards the information initial privacy notice must be given to the customer no later than when the customer relationship begins
Free look for health insurance
10 days
Free look for life insurance
10 days
Insurers must acknowledge receipt of a claim within ___ working days
10 days
Free look (life insurance)
10 days -- individual life insurance 45 days -- individual policies issued as replacements, issued by the same insurer (internal replacement) 20 days -- individual policies issued as replacements, issued by a different insurer (external replacement)
Permitted compensation: renewal commissions may not exceed_____% of the renewal premium
10%
Maximum pre-existing condition exclusion period; individual policies on a non-medical basis -- simplified issue (accident and health only)
12 months
Maximum pre-existing condition period; group policies not subject to ACA (accident and health only)
12 months
Minimum benefit period (Long-term care LTC)
12 months
insurers must respond to an inquiry from the insurance department within ____ working days
15 days
Length of temporary insurance producer license, without requiring an examination if a licensed producer dies, becomes disabled, or enters active military service
180 days
Permitted Compensation Arrangements (Medicare Supplement Policies)
1st year commissions on the sale of Medicare supplement policies may not exceed 200% of the commission paid for selling or servicing the policy in the second year commission or compensation provided in subsequent renewal years must be the same as provided in the second year and must be provided for at least 5 renewal years compensation for replacing an existing Medicare supplement policy may not exceed the renewal compensation normally paid by the replacing insurer
Chronically ill is being unable to perform at least ____ activities of daily living (ADLs) or requiring substantial supervision due to severe cognitive impairment
2 ADLs
Producer licenses are issued for a term of
2 years
Free look for external (other insurer) replacement of life insurance
20 days
Number of hours that may be carried forward to next continuing education term
24 hours
Prelicensing Education Requirements
24 hours
Requirement for each two-year continuing education term
24 hours
Terminally ill is having an illness that is expected to result in death in _____ months or less
24 months
Producer's time to notify the commissioner of change of address, administrative actions, or criminal charges
30 days
insurers must provide an insured explanation if a claim investigation cannot be completed within _____ days
30 days
life, accident, or health insurance policy forms must be filled and approved by the commissioner. Once forms have been filled, they are considered approved after ____ days unless the commissioner rejects them
30 days
probationary period must not exceed ____ days (health and accident only)
30 days
Health Insurance standards
30 days- maximum PA probationary period 10 days- free look (except Medicare supplement and long-term care require 30 days free look) Coverage of mentally/physically handicapped child may continue past limiting age when: - the policy remains in force - incapacity continues - dependent remain chiefly financially dependent on the policyholder (parents) Proof of incapacity must be received within 31 days of the expiration date
Permitted Compensation Arrangements (Disability Income Insurance)
5 year commissions may not be greater than 50% of the first 5 year premium renewal commissions provided for a minimum of 5 years may not exceed 10% of the renewal premium if a replacement is involved, the compensation may not exceed the renewal commission paid by the replacing insurer
Prohibited Acts (producer regulation)
A licensee or applicant for insurance producer license may not: · Provide incorrect, misleading, incomplete or false info to the Dept. in a license app. · Violate insurance laws or regs. Of the commonwealth or subpoena · Obtain a license through misrepresentation or fraud · Improperly withhold, misappropriate or convert money or property received in the course of doing business · Admit to or be found to have committed any unfair insurance practice or fraud · Use fraudulent, coercive or dishonest practices or demonstrate incompetence, untrustworthiness, or financial irresponsibility in the conduct of doing business in PA · Have a license revoked or suspended · Have another person's name on app. For insurance or on any document related to insurance of financial service transaction · Cheat on exam · Knowingly accept insurance business that was sold by a person who is not licensed · Failure to pay child support · Commit a felony · Commit a misdemeanor that involves the misuse or theft of money or property belonging to another person · Commit fraud
Insurance fraud deregulation
A person who commits an offense if, knowingly and w/ to defraud that person: · Presents or causes to be filed w/ the state or local gov. agency a document that contains false, incomplete, or misleading info. Concerning any fact material to the agency's determination in approving or disapproving a motor vehicle insurance rate filing · Presents or causes to be presented to any insurer or self-insured any statement forming a part of, or in support of a claim that contains any false, incomplete or misleading info. Concerning any fact material to the claim · Assists, solicits, or conspires w/ another to prepare any statement that is intended to be presented to any insurer or self-insured in connection w/ a claim that contains false, incomplete or misleading info concerning the claim · Engages in unlicensed producer or unauthorized insurer activity knowingly and w/ the intent to defraud an insurer, a self-insured or the public · Knowingly benefits, directly, or indirectly from the proceeds derived from a violation of this section due to the assistance, conspiracy or urging or any person
Proper illustration components (Sales Practices)
A proper illustration must have the date of preparation and pagination must also include the: - name of the insurer - name & address of the producer - generic product name and form number - name, age, and gender of insured - underwriting class of the insured - initial death benefit - dividend option used
Fraud warning (insurance fraud & deregulation)
All applicants & all claim forms should contain or attach the following notice: Any person who knowingly & with intent to defraud any insurance company or other person files an app. For insurance or statement of claim containing any materially false info or conceals for the purpose of misleading, info concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties
Inadequate Disclosures (advertisement requirements)
An advertisement is misleading and deceptive if it refers to a contract's benefits, costs, terms or conditions without disclosing any of its exceptions, reductions, limitations or restrictions that affect the basic provisions Advertisements may not: - Say that a medical examination is not required, without disclosing conditions relating to an insured's health that might prevent a contract from being issued or the insured from receiving full benefits - Falsely represents or imply that prospective insureds become group members & get special rates or underwriting privileges - Imply that a contract continues indefinitely, when it contains provisions for non-renewal or cancellation, or allows termination for circumstances out of the insured's control - Sate or imply that a company is licensed in PA if it is not true (if a company not licensed in this state uses advertising likely to be seen by PA residents) must use disclaimer: "this offer is not available to residents of PA - Misrepresents the assets, corporate structure, financial standing, age, or the position of the company in the industry - Imply or create the impression that the company, its financial conditions, merits, or status are approved or endorsed by this state or the US gov. - Include a recommendation by a commercial rating system, unless the purpose and limits of the recommendation are explained - Falsely represent that a contract is an industry or special offer or that there are substantial advantages available only for a limited time or to a specific group of people - Falsely represent that only a certain number of policies will be sold - Make unfair, incomplete or non-comparable comparisons of policies and benefits or make disparaging comments about competitors
Identification of Company, Policies, and Contracts (advertisement requirements)
An advertisement must disclose where different plans have differing benefits and premiums, or where benefits can only be obtained through a combination of policies Name of the actual insuring company must be stated in the advertisement and must not resemble agencies of the federal gov. All contracts must be identified by the form number, and any addresses listed must be identified as the home, branch, or district officers of the insurer
Commissions and Fees (producer regulation)
An insurance company & producer may pay a commission, brokerage fee, service fee, or other compensation to a licensee for selling, soliciting, or negotiating a contract of insurance A company or licensee may not pay a commission... to an unlicensed person for activities related to the sale, solicitation or negotiation of a contract of insurance Insurance company or producer may pay: · Renewal or other deferred commission to a person that is not a licensee for selling, soliciting, or negotiating a contract of insurance is the person was a licensee at the time of sale, solicitation or negotiating · A fee to an unlicensed person for referring someone who is interested in purchasing insurance if the referring person does not discuss specific terms of a contract insurance o Referring person receives no more than a one-time nominal fee for a fixed dollar amount Licensed producer may charge in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business · Fee charged by the licensee must be disclosed in advance in writing to the person & be reasonable in relationship to services provided
Company Responsibility and Control (advertising requirements)
At all times, every company must maintain complete control over the content, form & method of distributing all advertisement about its contract Advertisement is the responsibility of the company, regardless of its author, creator, or designer
Duration of Coverage (consolidated omnibus budget reconciliation act COBRA)
COBRA coverage is a continuation of the exact same group coverage that the employee had a as a covered employee this distinction is important so as not to confuse this provision w/ the conversion of group coverage to an individual policy or individual group premium is the same, except now the terminated employee pays the entire premium (employee and employer share) ti the employer for the privilege of continuing the group benefits
Unfair claims settlement
Committing any of the following acts, will be deemed to be an unfair claim settlement practice: · Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue · Failing to promptly acknowledge pertinent communications with respect to claims arising under insurance policies o Acknowledge receipt within 10 working days of notification of a claim unless payment is made within this time o Respond to an inquiry from Insurance Department within 15 working days o Provide necessary claims forms within 10 working days of notification of a claim · Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies o If investigation cannot be completed within 30 days insurer must provide claimant with written explanation for delay o Explanation must be provided after 30 days and every 45 days thereafter until investigation is complete · Not attempting in good faith to effectuate prompt, and fair settlements of claims submitted in which liability has become reasonably clear o Within 15 days after the insurer receives the proof of loss, must be notified of the acceptance or denial of claim o If insurer needs more time for claim must provide notification of the reasons within 15 working days o Upon payment of $1,000 or more in settlement of a third-party liability claim, written notice must be mailed to the claimant at the same time payment is made
COBRA
Consolidated Omnibus Budget Reconciliation Act of 1985 - group medical and dental only - qualifying event applies to loss of group coverage for any reason, except termination for gross misconduct
Advertising File (Advertising requirements)
Each company must maintain a file containing every individual contract advertisement & typical blanket, franchise, & group advertisements used by the company and must indicate the form number of the contract advertised along w/ the manner of distribution Files must be kept for 4 years or until the next regular examination of the company and is subject to inspection by the Department Failure to maintain the file or to producer the file at the request of the Department will subject the responsible company & individuals to sanctions
Boycott, coercion, and intimidation (unfair insurance policies)
Entering into any agreement to commit or by any concentrated action committing any active boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of or monopoly in the business of insurance is illegal
Examination of Books and Records (producer regulation)
Every company or person subject to examination in accordance w/ this act must keep all books, records, accounts, papers, documents and any or all computer recording relating to its property, assets, business and affairs Department may require in order to verify the financial condition of the company or person and ascertain whether the company or person has complied with the laws of this commonwealth · Can conduct examination of records one every 5 years · Any licensed foreign or alien insurer, the Department may accept an examination report on the company prepared by the insurance department for the company's state of domicile
Producer regulation
Fiduciary responsibility - insurance producer is responsible in a fiduciary capacity for all funds collected/received - may not commingle customer funds with their own - funds of each insurer must be identifiable from producer records
Misleading, deceptive or unclear statements (advertisement requirements)
Form and content of an advertisement must be sufficiently complete & clear to avoid deception or the capacity or tendency to mislead or deceive An advertisement must be truthful and not misleading in fact or implication Advertisement is unlawful if it has the effect or tendency to mislead or deceive purchasers about benefits payable, losses covered, or premiums payable Words or phrases that are not reasonably comprehended by the segment of the general public to which an advertisement is directed may not be used
Advertising File (advertising requirements)
company must maintain a file of all ads for 4 years
Prohibited advertising of guaranty fund (advertisement requirements)
Guaranty association has been established by law to help pay covered claims and prevent financial losses to claimants and policyholders when insurance companies who are association members become impaired or insolvent It is unlawful for any insurer, agent or other rep. of the insurer to use the existence of the association for the purpose of sales, solicitation or as an inducement to purchase any kind of insurance protected by the association
Mandated Benefits (Health Insurance Portability & Accountability Act HIPPA)
HIPPA guarantees for a 48-hour hospital stay for new mothers and their babies after a regulatory delivery (96 hours a C-section) coverage for mental illness by requiring similar coverage for treatment of mental and physical conditions law eliminates insurance policy limits that apply only to mental health coverage small employers cannot be denied group health insurance coverage b/c one or more employees are in poor health
HIPPA -- Privacy
HIPPA imposes specific requirements on health care providers, insurers and intermediaries with respect to the privacy of the insureds' health/medical info applicants must be given notice of: - the insured's privacy practices - applicant's rights to maintain privacy - applicant's opportunity to opt-out intermediary must provide the applicant with the Notice of Insurance Information Practices
Policy Disclosures (Health Insurance Portability & Accountability Act HIPPA)
HIPPA imposes specific requirements on health care providers, insurers and producers w/ respect to the privacy of the insured's health and medical info applicant must be given notice of the following: - the insurer's privacy practices - the applicant's right to maintain privacy - applicant's opportunity to opt-out producer must provide the applicant w/ the Notice of Insurance Info Practices
HIPPA
Health Insurance Portability and Accountability Act 1997 - ensures portability of group insurance coverage - includes various mandated benefits that affect - small employers - self-employed - pregnant women - mentally ill - designed to minimize pre-existing conditions exclusions
Penalties (insurance fraud & deregulation)
If a person is found by a court to have violated any provision of this section he will be subject to civil penalties of not more than $5,000 for the first violation $10,000 for the second violation $15,000 for each subsequent violation Penalty will be paid to the prosecuting authority to be used to defray the operating expenses of investigating & prosecuting insurance fraud Deposited into insurance fraud prevention fund
Misappropriation of funds (unfair insurance policies)
Insurance producer who acts in negotiating a contract of insurance for an insurance company and who embezzles or fraudulently converts to his own use, or who, with intent to use or embezzle, disposes of or fraudulently withholds any money or substitute for money received by him as a producer, without the consent of the company, is guilty of theft
Opt-out
Instruction by the consumer to the licensee not to disclose nonpublic personal financial info about that consumer to a nonaffiliated 3rd party
Privacy (Gramm-Leach-Bliley Act) (Federal Regulation)
Insurance and financial holding companies have the potential to capture unprecedented amounts of info about their customers Law establishes a min. federal standard for financial privacy The law requires that technical, administrative and physical safeguards be established to: - Ensure the security and confidentiality of customer records and info - Protect against any anticipated threats or hazards to the security or integrity of such records - Protect against unauthorized access to use of such records or info that could result in substantial harm or inconvenience to any customer Written disclosure authorization forms must be furnished stating: - Who is authorized to disclose personal info - Kind of info that may be disclosed - Reason info is being collected; how it will be used Any person who obtains info about a client without having a legitimate reason to receive it is subject to fines and imprisonment
Fiduciary Responsibility (producer regulation)
Insurance producer is responsible in a fiduciary capacity for all funds received or collected as an insurance producer and shall not without the express consent of the insurance entity on whose behalf the funds were received: · Mingle funds with the producer's won funds or funds with held by the insurance producer in any other capacity
Assumed Names (producer regulation)
Insurance producer license issued by the Department may be issued only in the name of the applicant or business entity If licensee is doing business under a fictious name the licensee is required to notify the Commissioner in writing prior to the use of the fictitious name
False advertising (unfair insurance policies)
Is making, issuing, publishing, or circulating an advertisement, announcement or statement containing any representation or statement w/ respect to the business of insurance or w/ respect to any person in the conduct of his insurance business that is untrue, deceptive, or misleading Prohibited to make, publish, issue or circulate any estimate, illustration, circular, statement, sales presentation, or omission comparison that: · Misrepresents the benefits, advantages, conditions, or terms of any insurance policy · Misrepresents the premium overcharge (commonly called dividends) or share of the surplus previously paid on any insurance policy · Is misleading as to the financial condition of any person, or as to legal reserve system upon which any insurer operates · Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature · Misrepresentation for the purpose of inducing or tending to induce the lapse forfeiture, exchange, conversion or surrender of any insurance policy · Misrepresenting for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy · Misrepresents any insurance policy as being shares of stock
Pre-existing conditions (long-term care insurance)
LTC may not include a pre-existing condition exclusion of more than 6 months nor exclude coverage for any pre-existing conditions except those occurring during 6 months from the effective date - post-claims underwriting is prohibited - insurer must determine the applicant's insurability before the policy is issued 30 day -- free look
LTC Partnership Coverage (Disability Income Insurance)
LTC partnership program is administered by the Department of Public Welfare purpose of this program is to reduce future medicaid costs for LTC by delaying or eliminating dependence on Medicaid incentives are provided for individuals to insure against the potentially substantial costs that arise upon the need for LTC program including the treatment of assets for Medicaid eligibility and estate recovery must be structured and administered by Department of Public Welfare in accordance w/ federal laws & applicable federal guidelines for qualified state long-term care partnership
Shopper's guide (long-term care insurance)
LTC shopper's guide in a format developed by National Association of Insurance Commissioners (NIAC) or a guide developed and/or approved by the commissioner must be provided to all prospective applicants for LTC
Licensing Process
License exam ad pre-licensing education exemptions - business entity - non-resident producers - professional designation - CLU: life and health license - CPCU: property and casualty license - CIC: life, health, property and casualty licenses - if line of authority is - only limited line credit insurance - restricted to limited line - restricted to fraternal insurance
Maintenance and Duration
License reinstatement - the licensee may request reinstatement within 1 year of lapse - reinstatement if effective retroactively back to the lapse date if reinstated within 60 days after the license lapsed - if a person applies for reinstatement more than 1 year after the lapse date, the person must reapply for a license
Annuity and life insurance sales (privacy of consumer financial info & financial institution sales and disclosures)
Licensee employed by a financial institution soliciting annuities or life insurance sales (except credit life insurance) must provide applicants w/ written disclosure at or prior to the time of app Disclosure must include a notice stating that: · Insurance or annuity is not a deposit · Insurance or annuity is not insured by the Federal Deposit Insurance Corporation or any other agency or instrumentality of the federal gov. · Insurance or annuity is not guaranteed by the financial institution or an affiliated insured depository institution · Insurance or annuity is subject to investment risk, including potential loss of potential when appropriate
Address Change (producer regulation)
Licensee must notify Insurance Department of any change of address within 30 days
Notice of Privacy Policies (privacy of consumer financial info & financial institution sales and disclosures)
Licensee must provide a clear & conspicuous notice that describes it privacy policy and practices to an individual who becomes the licensee's customer, not later than when the licensee est. a customer relationship & customer to any nonaffiliated 3rd party Licensee not required to provide an initial notice to a consumer if the licensee does not disclose any nonpublic personal info about the consumer to any nonaffiliated 3rd party and the licensee does not have a customer relation w/ the consumer A licensee may define 12- consecutive- month period but must apply it to the customer on a consistent basis Initial, annual and revised privacy notices that a licensee provides must include: · Categories of nonpublic personal financial info that the licensee collects · Categories of nonpublic... that the licensee discloses · Categories of affiliates and nonaffiliated 3rd parties to whom the licensees discloses nonpublic personal financial info · Categories of nonpublic personal financial info about the licensee's former customers that the licensee discloses & the categories of affiliates and nonaffiliated 3rd parties whom the licensee discloses nonpublic personal info about the licensee's former customers · Explanation of the consumer's right to opt out of the disclosure of nonpublic personal financial info to any nonaffiliated 3rd including the methods by which the consumer may exercise that right at that time · Any disclosures that the licensee makes under the federal fair credit reporting act · Licensee's policies and practices w/ respect to protecting the confidentially & security of nonpublic personal financial info
Reporting of administrative or criminal actions (producer regulation)
Licensee must report to the department any administrative action taken against the licensee in another jurisdiction or by another governmental agency in PA within 30 days of final deposition matter · Report must include o Copy of the order o Consent order Other relevant legal documents
Producer as Fiduciary
Loyalty to insurer - producers must act in the insurer's best interest in every matter involving the insurer's business Care and skill - producers have a duty to act with the utmost care and skill - sometimes the producer may have to refer business to others more qualified Full disclosure - producers are obligated to disclose all info that may affect the insurer - most significant during applications/claims- handling Prompt action and follow-up - producers are responsible for transmitting completed applications and premium receipts as quickly as possible Handling premiums - producers have fiduciary duty to account for all funds received - it is considered unethical to delay/withhold premium payment Avoiding conflicts of interest - producers with exclusive contracts cannot serve two principals at the same time - captive producers may not only work with one insurer - producers have an ethical obligation to inform insurers about any other related service they provide and receive compensation
Mail-order solicitation (advertisement requirements)
Mail-order advertisement must not falsely represent that b/c no agent will call and no commissions are to be paid to agents the insurance is a "low cost plan" b/c the cost of advertising & servicing such policies is a substantial cost in the marketing of direct-response products
Unfair discrimination (unfair insurance policies)
Making or permitting any unfair discrimination between individuals of the same class who have the same life expectancy in the rates charged for any contract of insurance, is prohibited Underwriting/eligibility standards based solely on race, religion, nationality or ethnic group, age, sex, family size, occupation, place of residence, or marital status are not allowed
Defamation (unfair insurance policies)
Making, issuing, publishing, or circulating any oral or written statement that is false or maliciously critical of or derogatory to the financial condition of any person, meant to injure the person Statements that are false or maliciously critical of or derogatory to the financial condition of any insurer and that are calculated to injure an insurer are also deemed to be defamation of insurance company
Maximum Elimination period (disability income insurance)
Maximum elimination periods in PA - 90 days for benefit periods of 1 year or less - 180 days for benefit periods of 1-2 years - 365 days for benefit period of 2 years or more
Minimum Standards for Core Benefits (Medicare Supplement Policies)
Medicare supplement plans have been standardized by law all insurers selling Medicare supplements must, at a minimum make available a policy or certificate that includes only the basic core benefits (known as Plan A) Minimum standards for Medicare supplement Plan A (core benefits) include the following: - coverage for Part A Medicare eligible expenses for days 61-90 not covered by Medicare - coverage for Part A Medicare eligible expenses for each of the Lifetime Reserve Days not covered by medicare - 100% of the Medicare eligible expenses for an additional 365 days after all the inpatient reserve days are exhausted - coverage for the reasonable cost of the first three pints of blood - coverage for the coinsurance amount of Medicare eligible under Part B of Medicare - coverage of cost sharing for Part A Medicare eligible hospice care and respite care expenses
Misrepresentation (unfair insurance policies)
No company, officer, or producer may make, issue, circulate, or use, or cause or permit to be made, any written or oral statement misrepresenting the terms of a policy or contract of insurance Parties may not misrepresent the terms of a contract to induce a person to lapse, forfeit, or surrender the policy issued, or to alter or convert it for another policy or contract
Twisting (unfair insurance policies)
No insurance producer may make any misrepresentation or incomplete comparison of policies to any insured person for the purpose of inducing the policyholder to lapse, forfeit, or surrender the insurance, and take out a policy in another company associate, or exchange insuring against similar risks
Rebating - illegal inducement (unfair insurance practices)
No insurance producer may offer, promise, allow, give, set off or pay a rebate of, or part of a premium on the contract of insurance or on the insurance producer's commission, earnings, profits, dividends or other benefit, or any special advantage in date of the policy or age of issue Person who violates this rule commits a misdemeanor of the 3rd degree Insurance producer may offer or give to an insured or prospective insured on an annual aggregate basis, any favor, advantage, object, valuable consideration or anything other than money that has a cost of a redeemable value of less than equal to $100
Filing requirements (advertising requirements)
No later than the first day of publication, an advertisement for mail-order solicitation of individual or franchise accident and health contracts must be filed w/ the department as "initial filing of a mail order solicitation" Renewed filing is required 2 years after first publication & the department has the right to review all advertisements
Suitability of Annuities
PA added Act 48 of 2018 to strengthen suitability of annuity sales - when recommending purchase/exchange of an annuity, insurer/producer must have reasonable grounds for believing the recommendation is suitable for the consumer based on facts disclosed by the consumer - suitability information includes: - financial status - tax status - investment objectives, including liquidity needs
Continuing education
PA continuing education law outline: - minimum training for new producers - ex: a one-time 8 hour course before selling long-term care insurance - acceptable topics for continuing education courses - procedures for sponsors and reporting of CE each licensee is required to complete 24 credit hours of approved CE for each 2 year license period as a condition for a license renewal
Health Policy Provisions
PA health policy provisions follow the NAIC model law, with the following exception: - time limit on certain defenses -- after 3 years from the date of issue, no misstatements (except fraudulent misstatements made by the applicant in the application) may be used to void the policy or deny a claim for loss incurred/disability commencing after expiration of such 3-year period
Purpose and definition of Long-term Care Insurance
PA insurance law is to protect purchasers of coverage form deceptive sales practices and to est. standards for this type of insurance LTC insurance is any policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity period, prepaid or other basis for one or more necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital LTC care insurance will not pay for claims due to alcoholism or drug addiction, suicide, or mental illness, war, or active duty in the armed services, felonies or aviation includes group and individual policies or riders whether issued by insurers
Medical Foods Coverage
PKU a genetic metabolic disorder causing an inability to process amino acids, which causes severe intellectual/chronic physical disabilities - insurance coverage equivalent to prescription drugs is provided, if the medical foods are administered under a doctor's care - normal co-payments/coinsurance apply, but medical foods are not subject to the insured's deductible
Partial Disability (disability income insurance)
Partial Disability - inability to preform one or more (but not all) major important/essential duties of employment/occupation - may be related to the percentage of time worked, specific number of hours or both - when a policy provides total and partial disability benefits, only one elimination period required
Consent agreement (insurance fraud & deregulation)
Person accused of violating this section is not prevented from entering into a written agreement not admitted or denying the charges but consenting to payment of the civil penalty May be used in a subsequent civil or criminal proceeding, but notification of any such agreement will be made in the licensing authority
Prohibited disclosure of privacy of consumer info and financial institution sales and disclosures
Producer (licensee) may not, directly disclose nonpublic personal financial info about the consumer to a nonaffiliated third-party unless: · Licensee has provided to the consumer an initial notice · Licensee has provided to the consumer an opt-out notice (relating to the form of opt-out notice and the opt-out methods) · Licensee has given the consumer a reasonable opportunity before it discloses the information to the nonaffiliated 3rd party to opt-out of the disclosure Consumer does not opt out
Life insurance disclosures (life insurance only)
Purpose - protect purchaser from misrepresentation, unfair comparison, and deceptive or misleading sales methods - provide prospective clients with pertinent information about the policy being solicited
Purpose and Scope (disclosure requirements in the solicitation of life insurance)
Purpose of disclosure requirements in the solicitation of life insurance is to protect the purchaser from misrepresentation, unfair comparison and deceptive & misleading sales and methods Disclosure requirements are intended to provide prospective clients w/ a statement containing pertinent info regarding the policy being solicited Classes of insurance that are not subject to disclosure regulations include annuities, group life insurance, credit life insurance, life insurance of $5,000 or less
Insurance fraud prevention act (insurance fraud & deregulation)
Purpose of the insurance fraud prevention act is to coordinate and fund fraud prevention activities and to support enforcement of the insurance fraud laws Insurance fraud prevention authority may use the money in the fund to provide financial support to: · Law enforcement, correctional agencies, & county district attorneys' offices for program designed to reduce insurance fraud · Other gov. agencies, community, consumer, and business organizations for programs designed to reduce insurance fraud · Programs designed to inform insurance consumers about the costs of insurance fraud & suggest methods for preventing insurance fraud · Reward programs leading to the arrest & conviction of persons & organizations engaged in insurance fraud
Return of Premium (ROP) term life
ROPs return all/part of the premium paid, if the insured is still alive at the end of the policy term the premium for the ROP term is higher than a comparable level term policy
Do not call list (federal regulation)
Registry is nationwide in scope, applies to all telemarketers Covers both interstate and intrastate telemarketing The do-not-call registry does not prevent all unwanted calls. It does not cover the following: - Calls from organizations with which you have established a busines relationship - Calls for which you have given prior written permission - Calls which are not commercial or do not include unsolicited advertisements Calls by or on behalf of tax exempt nonprofit organizations
Fair Credit Reporting Act (federal Regulation)
Requires consumer reporting agencies to adopt reasonable procedures for exchanging info on credit, personnel, insurance and other subjects in a manner that is fair and equitable to the consumer w/ respect to the confidentiality, accuracy, relevancy, and proper use for this info Reports on consumers are prohibited unless the consumer is made aware than an investigative consumer report may be made Notice must be given no later than 3 days after report was requested
Residual Disability (disability income insurance)
Residual Insurance - must be defined in relation to reduction in earnings - may be related to being unable to perform either some or all duties May require qualification period - insured must be continuously totally disabled before receiving benefits - period may be longer than elimination period for total disability
Testimonials and Endorsements (advertisement requirements)
Testimonials must be genuine, current, and accurate Any financial interest in the company by the person making the statement must be prominently displayed in the advertisement Paid endorsement must be used if the person was compensated for making an endorsement or testimonial, and any proprietary relationship between an entity making an endorsement & the insurance company must be disclosed
Certificate of compliance (Advertisement Requirements)
The authorizing officer of each company must annually file a Certificate of Compliance stating to the best of his knowledge all company advertisements used during the past year compiled w/ or were made to comply w/ all applicable insurance laws and regulations
Rebating (unfair insurance practices)
offering valuable consideration/inducement to/for insurance
Criminal conduct reporting (producer regulation)
Within 30 days of being charged with criminal conduct, a licensee must report the charges to the department Licensee must provide to the department all of the following within 30 days of their availability to the licensee: · Copy of the criminal complaint, information or indictment · Copy of the order resulting from a pretrial hearing Report of the final deposition of the charges
Shopper's Guide (Disability Income Insurance)
a LTC insurance shopper's guide in the format developed by the National Association of Insurance Commissioners a guide developed or approved by the Commissioner must be provided to all prospective applicants of a LTC insurance policy or certificate
Pre-existing conditions (Health Insurance Portability & Accountability Act HIPPA)
a group health plan may not define a pre-existing condition more restrictively than: a condition in which medical advice, diagnosis, care or treatment recommended or received during the 6 months prior to the enrollment date in the plan pre-existing condition can be excluded for up to 12 months
Lines of Authority
a license may be issued to sell the following types of insurance: - property - casualty - personal lines - limited line credit - limited line self-storage - motor vehicle rental - limited lines, ad determined by the commissioner - life - accident and health or sickness - variable life and annuity products
Assumed Names (Maintenance and Duration)
a license may only be issued in the name of the applicant or business entity - the licensee must notify the insurance commissioner in advance if a fictitious name is to be used
Lapses
a licensee who allows a license to lapse by failing to renew in a timely manner, pay the fee required or complete the continuing education required within one year of the license renewal date request the department to reinstate the license
Sales Practices (life insurance only)
a life insurance company, producer, solicitor or other representative may not - infer that by buying life insurance, the prospect will acquire stock ownership interests/status in the company - imply that the policy was sold by the investment department of the insurer - allude to payment of insurance dividends (unless specifically provided in contract) or special treatment from insurer
Variable Universal Life Insurance
a life insurance policy combining characteristics of universal and variable life policies a VUL policy contains unscheduled premium payments and death benefits and a cash value that varies according to the underlying funds whose investment portfolio is managed by the policyowner
Insurance company exceeding power of authority -- certificate of authority
any insurance company that exceeds the powers granted under the certificate of authority
Insurance Fraud
a person commits an offense if, knowingly and with intent to defraud - presents false, incomplete, misleading claim, info - conspires with another by submitting false claim info - intentionally engages an unlicensed producer/unauthorized insurer - knowingly benefits directly/indirectly from a violation - is an owner, administrator, or employee of any health care facility allowing another to use the facility to further a scheme or conspiracy - uses another person's insurance ID card to present a fraudulent claim
Violent crimes control law enforcement act - fraud and false statements (federal regulation)
a person who has been convicted of a felony involving 1. breach of trust 2. dishonesty 3. insurance crimes as defined in 18 ISC Sec. 1033 prohibited from engaging in insurance activities unless written consent is granted by the Commissioner of Insurance * come back to
Pre-existing Conditions (Minimum Standards for Benefits)
a policy of accident and health insurance must clearly disclose the intent of the insurer as to the applicability or non-applicability of coverage relating to pre-existing conditions, the policy must specify that coverage pertains solely to accidental bodily injuries resulting from accidents occurring after the effective date of coverage, and that sickness is limited to which is diagnosed or treated subsequent to the effective date of coverage or expiration of the probationary period
Termination (producer appointment)
a producer remains appointed with an insurer until appointment is terminated in writing or the producer's license is suspended, revoked or otherwise terminated - the insurer must notify the Department in writing within 30 DAYS following termination - the insurer must mail a copy to the licensee within 15 days - the licensee may file written comments within 30 days of receipt
License suspension/termination
a producer's license can be suspended or terminated for violating marketing ethics
Required Disclosures (Viatical Settlements)
a provider or broker must disclose certain info to the viator (policyowner) no later than the time of the app for the contract is signed by all parties following disclosures must be provided in a separate document signed by the viator and the provider - possible alternatives or viatical settlement contract should be considered, including accelerated death benefits or policy loans offered under the viator's life insurance policy - some or all of the proceeds of the viatical settlement may be taxable under federal income tax and state franchise and income taxes - proceeds of the viatical settlement could be subject to the claims of creditors - receipt of the proceeds of a viatical settlement may adversely affect the viator's eligibility for Medicaid or other gov. benefits - viator has the right to rescind a viatical settlement contract for 15 calendar days from the date of the receipt of the viatical settlement proceeds
Accelerated (living) benefit
accelerated death benefits may be paid if - the insured's life expectancy is either 6 months or less or 12 months or less - the insured suffered total, permanent disability - insured is confined to a health care facility and expected to remain there for the rest of their life policy must contain a clear statement that the death benefit and any accumulation values and cash values will be reduced if the accelerated death benefit is paid
Recommendation (Suitability of Annuities)
advice provided by an insurance producer, or an insurer where no producer is involved, to an individual consumer that results in a purchase or exchange of an annuity in accordance w/ that advice
Time Limit on Certain Defenses (Policy clauses, provisions, and state-mandated coverage)
after 3 years from the date of issue of this policy, misstatements, except fraudulent misstatements made by the applicant in the application for such policy, shall be used to void the policy or to deny a claim for loss incurred or disability commencing after the expiration of such 3 year period
Conversion/termination of group health insurance policy
all certificate holders must be given written notice of conversion privilege within15 days before/after the group policy termination date - if notice is given more than 15 days but less than 90 days after coverage termination, conversion privilege is extended for 15 days after actual notice is given - if termination notice is not given within 90 days, the right to conversion privilege expires
Alcohol Abuse & Dependency
all group health policies providing hospital or medical/surgical coverage must provide coverage for alcohol dependency/abuse costs are subject to deductibles, co-payments and coinsurance but may not be less favorable than other forms of coverage
Coverage of Newborns (Policy clauses, provisions, and state-mandated coverage)
all individual and group health insurance policies issued in this state that provide coverage for a family member of of the insured or subscriber must cover a newly born child of the insured or subscriber from the moment of birth
Fair Credit Reporting Act
all insurers/producers must comply applicant info obtained from a 3rd party - "notice to the applicant" must be given to all applicants that a report(s) will be ordered concerning their past credit history and any other pertinent info
Fraudulent Viatical Settlement Acts (Viatical Settlements)
all of the following are considered fraudulent viatical settlement acts: - presenting or preparing false material info or concealing material info in connection w/ an applicant for a viatical settlement contract, an insurance policy or a claim for benefits - destroying, concealing, or altering the assets or records of a license or other person engaged in the business of viatical settlements - misrepresenting or concealing the financial condition of a licensee or insurer - engaging in the business of viatical settlements w/o a license, certificate of authority, or other legal authority - filing a document that contains false info or otherwise conceals info about a material fact w/ the Commissioner or an insurance regulator in other jurisdiction - presenting or preparing an insurance policy w/ knowledge that was fraudulently obtained in a viatical settlement transaction - embezzlement, theft, or conversion of money or other property in connection w/ a viatical settlement - attempting to commit or helping someone else commit any of these acts
Indemnification
an agreement where your insurer helps cover loss, damage or liability incurred from a covered event
Annuity (Suitability of Annuities)
an annuity that is an insurance product and is individually solicited, regardless of whether the insurance product is classified as an individual or group annuity
Application for a License
an applicant with a principal place of residence or business in PA may apply for resident insurance producer license an applicant must submit to the PA insurance department: - completed application indicating the lines of authority for which the applicant desires to be licensed - applicant's fingerprints, in order for the Department to receive national criminal history records info from the FBI Criminal justice information services division - documentation verifying that the applicant passed or is exempt from the insurance licensing examination on the lines of authority for which the applicant desires a license the required license fee and fees for obtaining national criminal history records info - nonrefundable $55 fee must accompany an application for a resident insurance producer license - nonrefundable $110 fee must accompany an application for a nonresident insurance producer license - nonrefundable $165 fee must accompany a late application for license renewal
Nonresident producer license
an individual who is currently licensed as a resident insurance producer in another state or territory may apply to the Department for a nonresident insurance producer license for the equivalent lines of authority as the individual is licensed at his home state
Fiduciary (producer as fiduciary)
an individual whose position and responsibilities involve a high degree of trust and confidence trustees, guardians and executors by virtue of their responsibilities are fiduciaries as are insurance producers insurance producer generally is given the power and express authority to act for the insurer by: - soliciting applications for coverage - describing coverage and policies to prospects and applications and explaining how such policies can be purchased - collecting premiums - providing service to prospects and the insurer's policyholders (pg. 65-66)
Producer Appointments and Disclosures (insurance company regulation)
an insurance producer may not act on behalf, or as a representative of, the insurer unless the insurer producer is appointed by the insurer an insurance producer representing and insurance consumer (as opposed to representing an insurance company) may execute a written agreement with the insurance consumer prior to representing or action on their behalf: - delineates the services to be provided - provides full and complete disclosure of the fee to be paid to the insurance producer by the insurance consumer an insurer that appoints an insurance producer must file w/ the department a notice of appointment an appointment fee of $15 will be billed annually to the insurer for each producer appointed by the insurer during the preceding calendar regardless of the length of time the producer held the appt. must be paid within 30 days
General Agent (Suitability of Annuities)
an insurance producer that provides supervision on behalf of an insurer to an insurer's sales force in a particular geographic region or territory
Benefits Payable (Advertising Requirements)
an insurer must not represent that its claim settlements are liberal or generous, or imply that coverage or settlements will be beyond the actual terms of the contract advertising for benefits where payment is conditional on confinement in a hospital must not use phrase such as tax free, extra cash, extra income or extra pay because it can mislead the public into believing they can profit from being hospitalized advertisements for hospital indemnity coverage must state that benefits are payable only during hospital confinement and properly identify where benefits will be computed on a daily pro rata basis
Record-keeping Requirements (Suitability of Annuities)
an insurer, exclusive agent and insurance producer must maintain or be able to make available to the Commissioner records of the info collected from the consumer and other info used in making the recommendations that were the basis for the insurance transaction for 5 year after the transaction is completed by the insurer
Insurable Interest (Policy Provisions)
an interest engendered by love and affection or could mean a lawful economic interest in having the life of the insured continue, as distinguished from an interest that would arise only by the insured's death every person may insure his own life, but a person may not insure the life of someone else unless the beneficiary under the policy has an insurable interest in the life of the insured a business entity that provides benefits to its officers, directors or employees may insure those personnel w/o their signing a personal application if the entity notifies the personnel in writing of the intent to purchase the insurance & obtains their prior written consent
Open Enrollment (Medicare Supplement Policies)
an issuer may not deny or condition the issuance or effectiveness of a Medicare supplement policy or certificate, nor discriminate in the pricing of a policy or certificate b/c of the applicant's heath status, claims experience, receipt of health care, or medical condition if an app is submitted prior to or during the 6 month period beginning w/ the first day of the first month in which: - the applicant is enrolled for benefits under Medicare Part B - the applicant who is retroactively enrolled in Medicare Part B due to a retroactive eligibility decision made by the Social Security Administration received notice of retroactive eligibility to enroll each medicare supplement policy and certificate currently available from an insurer must be made available to applicants who qualify under this section w/o regard to age
Outline of Coverage (Specified Dread Disease or Accident Coverage)
an outline of coverage must be issued w/ any specified disease or specified accident policy the type of coverage must be identified in the title and the following must be included: - a statement explaining that the policy is designed to provide restricted coverage paying benefits only when certain losses occur as a result of specified diseases or specified accidents and that coverage is not provided for basic hospital, basic medical or surgical or major medical expenses - brief specific description of the policy benefits, restrictions and exceptions - description of the terms and conditions of renewability and any rights of cancellation reserved to the insured
Owner/partner/employee (temporary license)
an owner, partner or employee of a business entity licensee upon the death or disability or the designated licensee -- the temp. license is used by the owner, partner or employee to operate the business entity until: - the business is sold or transferred - licensee recovers and returns to the business - new personnel is trained, licensed and designated as the designated licensee
Variable Annuities
annual statement to policyholders - company must mail an annual statement to the contract holder - statement includes number of accumulation units and the value of the account - statement must be mailed on a fixed date annually (usually anniversary date of annuity)
Defamation (producer's ethical responsibility to the state)
any false, maliciously critical, or derogatory communication -- written or oral -- the injures another's reputation, fame, or character unethical producers practice defamation by spreading rumors or falsehoods about the character of a competing producers or the financial condition of another insurance company
Additional Mandated Benefits (Policy clauses, provisions, and state-mandated coverage)
any individual or group health policy issued in PA must provide coverage for dependent children cover treatment for alcohol abuse and dependency provide coverage for cancer therapy including chemotherapy and cancer hormone treatment mammography coverage for women over age of 40
Disclosure Statement (disclosure requirements in the solicitation of life insurance)
any life insurance producer or insurer soliciting life insurance business must provide any prospective purchaser w/ a written disclosure statement clearly labeled as such disclosure statement must include (but not limited to): - statement that the disclosure statement will not be considered as an offer to contract or as altering or modifying any policy or rider that might be issued - the name, age, and sex of the proposed insured, to the extent that each is know - source of insurance including the producer or insurer - info about the basic policy rider or supplemental benefit built into the policy such as a descriptive title - amount of coverage and benefits offered including the face amount, retirement, income and cash surrender value - premiums - dividends payable - surrender comparison index for policies - policy illustrations must not be made part of the contract and must clearly display the fact that values shown are not guaranteed
Replacement of Life Insurance
any transaction is known as a replacement in which new life insurance protection is to be purchased and it is known, or should be known, by a producer or insurer that existing insurance is to be: - lapsed - surrendered - pledged as collateral - borrowed against - converted to reduce paid-up - continued as extended term - reissued with reduced cash value - converted so that amount or period of coverage is reduced
Misrepresentation (producer's ethical responsibility to the state)
any written or oral statement that does not accurately describe a policy's features, benefits, or coverage it is unlawful to make any misleading representations or comparisons of companies or policies to insured persons to induce them to forfeit, change, or surrender that insurance (includes unintentional misrepresentations)
Replacement Requirements (Medicare Supplement Policies)
app. forms must inquire whether the applicant has another Medicare supplement policy, whether a Medicare supplement policy is intended to replace any other accident or sickness policy or certificate currently in force, whether the applicant is eligible for Medicaid producer must also ascertain if the prospect has Medicare Advantage, in which case he or she should not purchase a Medicare supplement if the sale will involve replacement an insurer or its agent must furnish the applicant w/ a notice regarding replacement detailing the essential differences in coverage and warning the policyholder that the failure to truthfully answer all medical and health history questions on the app may cause the company to deny future claims or cancel the contract
Replacement (Disability Income Insurance)
app. forms shall include questions designed to elicit info as to whether as of the date of the app. applicant has another LTC insurance policy or certificate in force or whether a LTC policy or certificate in intended to replace another accidental and sickness LTC presently in force
Unintentional Lapse (long-term care insurance)
applicants must provide the insurer with the name of at least 1 other person who will receive notice of lapse/termination - or applicant may sign a written waiver to not designate a 3rd party - notice of non-payment/pending lapse must be mailed no sooner than 30 days after payment is owned and at least 30 days before lapse/termination - LTC insurance must contain a reinstatement provision if lapse occurs and the insurer is provided proof of cognitive impairment/functional incapacity
Replacement Requirements (Medicare supplement policies)
application forms must inquire about other Medicare supplement coverage - if replacement occurs, the insurer/agent must give applicant a Notice Regarding Replacement - before policy delivery - signed by agent and applicant - signed copy left with applicant - additional copy returned to insurer
Suitability & replacement Sales (Disability Income Insurance)
applications which include a personal worksheet questionnaire, are to include questions designed to determine suitability and if the applicant has or had any other LTC coverage in effect producers are required to list all health policies they sold to the applicant that are in force & those that were sold in the last 5 years that are no longer in force if a policy is replaced, proper replacement procedures, must be followed by all parties, and all pre-existing condition restrictions, waiting periods, and probationary periods, and probationary periods must be waived
COBRA -- who it applies to
applies to employers with 20+ employees - provides former employees/their families a continuation of benefits under the employer's group health plan - same group coverage the employee had as a covered employee - a qualified beneficiary may continue to participate in the group plan by paying 102% of the actual group rate to the sponsor
Eligible Person (Medicare Supplement Policies)
are those who had prior group health coverage of Medicare Advantage and who apply for Medicare supplement coverage within 63 days after the date of termination or disenrollment of the prior coverage, and who submit evidence fo the date of termination or disenrollment w/ the app
Notice to Buyer (Disability Income Insurance)
be prominently displayed on the first page of the Outline of Coverage & the policy stating "this policy may not cover all of the costs associated w/ LTC incurred by the buyer during the period of coverage/ The buyer is advised to review carefully all policy limitations" post-claims underwriting is prohibited an insurer must determine an applicant's acceptability as an insured before a policy is issued
Pre-License education and licensing exam (licensing)
before applying for an insurance producer license, an individual must satisfactorily complete pre-examination education and pass an insurance producer licensing examination - must complete a min. of 24 credit hours of approved pre-licensing courses - at least 3 hours of those 24 credit hours must be on ethics - then will be issued a proof of completion - all candidates must submit a completed application for examination indicating the lines of authority
General Rules (Viatical Settlements)
before the viatical settlement contract is executed, a viatical settlement provider must obtain a witnessed document in which the viator: - consents to the viatical settlement contract - represents that he has a full and complete understanding of the contract and the benefits of the insurance policy - acknowledges that he has entered into the contract freely and voluntarily - acknowledge that he is terminally or chronically ill and that the illness was diagnosed after the policy was issued - acknowledges that he is of sound mind and under no constraint or undue influence
Non-qualified Policy (long-term care insurance)
benefit triggers in PA - eligibility for benefits may not be more restrictive than requiring either - inability to perform up to 3 activities of daily living (ADLs) - cognitive impairment the 6 ADLs include bathing, continence, dressing, eating, toileting and transferring
Qualified Policy (long-term care insurance)
benefit triggers: - payment when chronically ill is determined by - inability to perform at least 2 ADLs for an expected period of at least 90 days due to loss of functional capacity or cognitive impairment
Accelerated (living) Benefit Provisions (Policy Provisions)
benefits provisions in individual life insurance policies are acceptable in PA if they provide that a living benefits will be paid in any of the following situations: - insured's life expectancy is expected to be for a limited period of the time ranging from 6 months or less to 12 months or less - insured suffers a total and permanent disability - insured is confined to an eligible health care facility w/ the exception that the insured will remain in the facility for her entire lifetime accelerated death benefit must be at least 25% but no more than 100% of the total death benefit affected by the benefit payment and may be paid periodically or in a lump sum policy must contain a clear statement that the death benefit & any accumulation values & cash value will be reduced if an accelerated death benefit is paid
Civil penalties (insurance fraud)
civil penalties per violation - first violation -- $5,000 - second violation -- $10,000 - each subsequent violation -- $15,000
Market Conduct
combination of both ethics and compliance refers to how insurance companies and producers conduct themselves with ethical standards and in compliance with rules and laws governing insurance policy sales, marketing and underwriting practices
Cease and Desist Order (disciplinary actions)
commissioner will send notice of violation by certified mail to the person believed to be in violation notice shall state the time and place for the hearing, which shall not be less than 10 days from the date of the notice person will have an opportunity to he heard and to show cause why an order should not be made by the Commissioner to cease and desist
Ethical conduct
conduct that a reasonable person is expected to have under any circumstances
Compliance
conducting business in accordance with current rules and laws set by gov. regulatory agencies and the courts laws and regulations set the minimum standard by which producers are expected to behave. WHAT WE MUST DO
Gramm-Leach-Bliley Act (GLBA)
consumer: an individual who obtains, from a financial institution, financial products/services to be used primarily for personal, family, or household purposes; also, legal rep of such an individual Customer: a consumer that has developed an ongoing relationship with a financial institution - customers must be given an initial and annual privacy notice
Viatical Settlements
contract is a written agreement between the viatical settlement provider and the life insurance policy owner - the policyowner is paid an amount (less than the policy's death benefit) in exchange for assigning transferring or selling ownership of the policy to the settlement provider
Group Life Conversion
conversion notice must be given at least 15 days before expiration of group coverage - if notice is not given, an additional period of 15 days must be granted, but does not extend beyond 60 days after coverage expiration date
Specified Accident Coverage (Specified Dread Disease or Accident Coverage)
covers a specific kind of accident for accidental death or accidental death and dismemberment combined policy may include coverage for disability or hospital and medical care w/ a benefit amount of no less than $1,000 for accidental death $1,000 for double dismemberment $500 for single dismemberment benefit amount may not be so limited to as to be unjust, unfair, or misleading to the public
Refund of Prepaid Premiums (Policy Provisions)
death of an insured, the proceeds payable under any individual life insurance policy, other than a single premium life insurance policy, will include premiums paid for any period beyond the end of the policy month in which death occurred
Qualifications for a License
department will issue a resident or nonresident insurance producer license, for a period not to exceed two years, to an applicant when the department determines that the applicant: - at least 18 years of age - has not committed any act that is prohibited under the state's insurance laws - satisfied the pre-licensing education requirements - has passed (or is exempt from) the insurance producer licensing examination - has paid all applicable fees - possesses the general fitness, competence, and reliability sufficient to satisfy the department that the applicant is worthy of licensure
Disclosure Statement (life insurance only)
describe the purpose/importance of disclosure and significant elements of the policy and riders offered - info about basic policy, rider, or supplemental benefit built into policy such as descriptive title - amount of coverage and benefits offered including face amount, retirement income, and cash surrender value
Agency
describes the relationship between the producer and the insurer and has four key principles: 1. acts of the producer (within scope of the producer's authority) are acts of the principal (insurer) 2. a contract completed by a producer on behalf of a principal is a contract of the principal 3. payments made to a producer on behalf of a principal are payments to the principal 4. knowledge of the producer regarding business of the principal is presumed as knowledge of the principal
With replacements producers must....
determine if the transaction involves the replacement of existing life insurance/annuities - obtain a signed, written statement that the applicant understands that replacement is taking place - provide Notice Regarding Replacement of life insurance and annuities signed by both the producer and the applicant - list all existing policies to be replaced - leave copies of all sales proposals/materials including copy of the notice, with the applicant
Other Requirements (Disability Income Insurance)
disability income policy may not: - require a loss from accidental injury to begin within less than 30 days after the accident - require an insured to be confined to his residence due to sickness or injury as a condition for benefits - define this disability period as starting on the date when the company receives written notice
Relation of Earnings to Insurance (Disability Income Insurance)
disability income policy may provide that if the monthly benefit specified in the policy exceeds the insured's monthly pre-disability earnings, the benefit payable to the insured will be reduced proportionately provision may not reduce the total monthly benefits below the lesser of $200 or the monthly benefit amount specified in the policy provision may be used only if the insured has the right to renew the policy until at least age 50, or for a policy issued after age 54, for at least 5 years
Minimum Benefits Standards (Disability Income Insurance)
disability income protection coverage provides weekly or monthly periodic payments for a specified period during a continuing disability resulting from either sickness or injury or a combination of both policies providing disability income protection coverage in PA must: - provide the periodic payments that are payable after age 62 and reduced solely on the basis of age are at least 50% of the amounts payable before age 62 - contain an elimination period no greater than 90 days for coverage providing benefits for 1 year or less, 180 days for coverage providing benefits for more than 1 year but not more than 2 years - have a max benefit period during disability for at least 6 months
Service (producer's ethical responsibilities to the policyowner)
during and after the sale -- is just as important as selling to needs in meeting a producer's ethical responsibilities services is defined to mean: - educating the client before, during and after the sale, ensuring that he or she fully understands the application and underwriting process, the policy purchased and any attached riders - treating all information with confidentially - disclosing all info so that the policyowner or applicant can make an informed decision - keeping the prospect or client informed of any rejection, exclusion or cancellation of coverage - show loyalty to prospects and clients
Required Disclosure Provisions (Medicare Supplement Policies)
each medicare supplement policy must include a renewal or continuation provision that is appropriately captioned, on the 1st pg. of the policy, and that describes any right of the insurer to change or increase the premium this provision must state the duration for renewability, the term of coverage issued and the renewal term except for rider and endorsements carrying out the insured's written requests, exercising a specifically reserved policy right, or where required to avoid duplication of Medicare benefits all riders or endorsements added to a Medicare supplement policy that reduce or eliminate benefits require the insured's acceptance a Medicare supplement policy may not provide for the payment of benefits based on standards described as "usual and customary" "reasonable and customary" or other similar wording
Terms of Renewability (Minimum Standards for Benefits)
each policy of accident and health insurance covered by PA law must include a renewal, continuation, or non-renewal provision the language or specifications of this provision must be consistent w/ the type of contract to be issued such as non-cancelable and guaranteed renewable, guaranteed renewable, renewable at the option of the insurer
Guaranteed Issue (Medicare Supplement Policies)
eligible persons had prior group health or Medicare Advantage and applied for the Medicare supplement within 63 days after the termination date prior coverage for eligible persons, Medicare supplement insurers may not - deny issuance of Medicare supplement coverage - discriminate in price of supplement because of health status, claims experience, receipt of health care, or medical condition
Grace Period (Policy Provisions)
every life insurance policy issued for sale in PA must provide the insured w/ a grace period of 30 DAYS within which any premium after the first year may be paid insurer may charge interest on unpaid premium at the rate of NO MORE than 8% per year for the number of days which the overdue premium is not paid policy continues in full force during the grace period if a claim is made during the grace period the insurer may deduct the amount of the premium due and any interest charges on unpaid premium from any settlement
Free-Look (Minimum Standards for Benefits)
except for a single premium non-renewable policy, each individual accident and health insurance policy issued in PA must include a notice on the 1st pf or cover stating that the policyholder has 10 days after the date of policy delivery in which to return the policy and receive a full refund of premiums if not satisfied for any reason returned policies are considered void from the beginning
Exemptions for Continuing Education Requirements
exempt from the continuing education requirements: - a licensee who was licensed as an agent or broker for a line of authority prior to Jan. 1, 1971 and who has been continuously licnesed as a agent, broker, or producer for the line of authority since that time - a licensee which is a business entity - a licensee who has only a limited line of authority - a licensee who has a line of authority limited to restricted fraternal - a licensee who has a line of authority restricted to limited line credit insurance if the insurer provided a course of instruction to each individual whose duties will include selling, soliciting, or negotiating the insurance - a non-resident licensee who has satisfied the CE requirements by a resident licensee satisfying the PA requirement -- a producer may request an extension in case of military duties or extenuating circumstances
Permitted Compensation (long-term care insurance)
first-year commissions may not be greater than 50% of the first-year premium - renewal of commissions must be provided for a minimum of 5 years and may not exceed 10% of renewal premium - if replacement is involved, compensation may not exceed renewals paid by replacing by insurer
Permitted Compensation Arrangements (Medicare supplement policies)
first-year commissions may not exceed 200% of renewal commissions paid for selling/servicing a policy in the second year - commissions the following years must be the same as the second year (i.e. level commission) and must be paid for a minimum of 5 renewal years - compensation for replacing an existing Medicare supplement policy may not exceed the renewal compensation normally paid by the replacing insurer
Insurable Interest (life insurance olnly)
for people related by blood or law insurable interest means interest engendered by love and affection - otherwise, insurable interest means lawful economic interest in having the life of the insured continue, distinguished from interest that would arise only by the insured's death - for life insurance, insurable interest needed only exist at the time of application
Long-term group disability coordination of benefits-- worker's compensation and social insurance (Disability Income Insurance)
for total disability of the injured employee under worker's compensation claims, payment of 66% of wages begins after the 7th day or total disability and is payable for the duration of total disability the compensation may not be more than the state max and in no cases would payment of compensation be required after disability ceases if benefit is less than 50% of the statewide average weekly wage, then the benefit is the lower of 50% or 90% of the worker's average weekly wage nothing in this act required payment of total disability compensation benefits for any period during which the employee is employed or receiving wages
Required Documents (replacement of life insurance)
generally required that every insurer when replacement is involved, supply a written comparison of the policy terms, conditions and benefits to an insured written comparison must be supplied within 5 working days following the request each insurer (except for a direct-response insurer) shall provide a Buyer's Guide to any prospective purchaser prior to accepting the app for life insurance from the prospective purchaser
Conversion and Continuation (Disability Income Insurance)
group LTC issued in PA must provide covered individuals w/ a basis for continuation or conversion of coverage means coverage must be cont. under the existing group policy when it would otherwise terminate, subject only to the cont. timely payment of premium when due, or coverage must be converted for any insured who has been covered under the group policy for at least 6 months converted policy must be an individual LTC policy that provides benefits identical to, substantially equivalent to, or in excess of those provided under the group policy
Conversion and Continuation (long-term care insurance)
group LTC must provide covered individuals with basis for continuation/conversion coverage - coverage must continue under the existing group policy when it would otherwise terminate, subject only to timely premium payment - coverage must be converted (no evidence of insurability) for any insured covered by the group policy for at least 6 months - converted policy must be an individual LTC policy providing benefits identical to substantially equivalent to, or in excess of those provided under the group policy
Mental Illness (health insurance only)
group health insurance issued to groups of 50+ employees must provide coverage for mental illness - this must include at least 30 inpatient/60 outpatient days annually - there must be no difference in annual limits for mental illness and any other illnesses - cost-sharing arrangements (deductibles and co-payments) for serious mental illnesses pay not prohibit access to care
Conversion privilege (Group Health Insurance)
group policies providing hospital, surgical or medical expense benefits on an expense-incurred basis must include the option for conversion - individuals must have been continuously insured by the group policy for at least 3 months - this does not apply to indemnity, specific disease, or accidental injury-only policies
Conversion Privilege (Policy clauses, provisions, and state-mandated coverage)
group policies that provide hospital, surgical or medical expense benefits on an expense-incurred basis must include an option for conversion of coverage when insurance under the group policy has been terminated for any insured who has been continuously insured by the group policy for 3 months or more does not apply to indemnity, specific disease, or accidental injury-only policies
Terminally ill (viatical settlement)
has an illness that can reasonably be expected to result in death in 24 months or less
Protection of Beneficiaries from Creditors (Policy Provisions)
if a life insurance policy is effected by any person on his own life or another life, the lawful beneficiary is entitled to its proceeds creditors of the decreased may not attached any lien or claim to the policy proceeds proceeds are left w/ an insurer, the proceeds will be protected against any claims by beneficiaries' creditors
Reinstatement (Policy clauses, provisions, and state-mandated coverage)
if a premium has not been paid at renewal date, the policy may be reinstated depending on the insurance's company guidelines w/ or w/o a reinstatement app
Fraud and False Statements
if found guilty, certain types of false/fraudulent statements are specifically outlined in federal law are punishable by: - a fine - imprisonment for up to 10 years imprisonment is possible for up to 15 years if false statements jeopardized the safety/soundness of an insurer and were a significant cause of the insurer being placed in conversation, rehabilitation, or liquidation by the courts
Temporary license
if the insurance department determines that the issuance of a temp. insurance producers license is int he public interest and that the person requesting the license is worthy to receive a temp. license temp. license will be for a period not to exceed 180 days and is not transferable the department may issue a temp. insurance producer license to: - surviving a court-appointed personal representative of a resident individual licensee who dies or becomes mentally or physically disabled -- temp. license is used by the spouse or rep. to operate the insurance business owned by the licensee until - business is sold or transferred - the licensee recovers and returns to the business - new personnel is trained and licensed to operate the licensee's business
Relation of earnings to insurance (disability income insurance)
if the monthly benefit exceeds the insured's monthly pre-disability earnings, the benefit will be reduced proportionately
Policy Delivery (life insurance only)
if the policy or annuity is delivered by hand the delivery receipt must be used and state the date the policy/annuity was received by the policyholder - the receipt date is the date policyholder and producer sign delivery receipt if policy/annuity is mailed, certificate of mailing is adequate proof of delivery
PA LTC Partnership Policies
in 2007 the PA state LTC partnership program was established Purpose-- reduce future Medicaid costs for care be delaying/eliminating dependence on Medicaid cost by providing incentives to insure against potentially substantial costs for long-term care partnership policies follow federal requirements for qualified state LTC insurance partnerships
Pre-existing Conditions
in PA group long-term disability policies may not define a pre-existing condition more restrictively than a disease/physical condition caused by illness/injury for which medical advice/treatment is received within 90 days immediately prior to coverage under the group contract - pre-existing conditions must be covered after the person has been covered for more than 12 months under the group
Pre-existing Conditions (Policy clauses, provisions, and state-mandated coverage)
in PA pre-existing conditions for group insurance may not be defined more restrictively than a disease of physical condition caused by illness or injury for which medical advice or treatment has been received within 90 days immediately prior to becoming covered under the group contract such condition must generally be covered after the person has been covered for more than 12 months under the group contract long-term disability benefit provisions may require that the total disability resulting form a pre-existing condition commence after the individual has been covered for more than 12 months under the group contract
Probationary Period (Minimum Standards for Benefits)
in accident and health contracts delivered or issued for delivery in this state (PA) shall not exceed 30 days (w/ some exceptions including elective surgery)
Penalties (Disability Income Insurance)
in addition to other penalties provided by PA law, an insurer or producer found to have violated requirements relating to the regulations of LTC insurance or the marketing of LTC insurance may be subject to civil penalties up to 3x the amount of any commissions paid for each policy involved in the violation or $10,000 (whichever is greater)
Outlines of Coverage (Minimum Standards for Benefits)
in order to provide for full and fair disclosure in the sale of an accident and health policies, these policies must be delivered in this state along w/ an outline of coverage an outline of coverage briefly describes the terms & benefits provided by the contract these outlines generally must meet requirements set forth by the commissioner
Appropriateness of Recommended Purchase and Excessive Coverage (Medicare Supplement Policies)
in recommending the purchase or replacement of a Medicare supplement policy, an agent must make reasonable efforts to determine the appropriateness of a recommended purchase or replacement sale of Medicare supplement coverage that will provide an individual w/ more than one Medicare supplement policy or certificate is prohibited
Partial Disability (Disability Income Insurance)
in relation to a person's reduction in earnings, and may (but not all) of the major, important or essential duties of his employment or occupation also be related to a percentage of time worked, a specified number of hours or to compensation when a policy provides total and partial disability benefits, only one elimination period may be required
Residual Disability (Disability Income Insurance)
in relation to a person's reduction in earnings, and may be related to either being unable to perform some part of the major, important or essential employment duties or being unable to perform all usual business duties for as long as is usually required policy providing residual disability benefits that may require qualification period, where the insured must be continuously totally disabled before receiving benefits the qualification period for residual benefits may be longer than the elimination period for total disability
Total Disability (Disability Income Insurance)
inability to perform all of the substantial and material duties of the insured's own regular occupation after 24 months of continuous disability, total disability may be defined as the inability to perform all of the substantial and material duties of any occupation for which the insured is reasonably suited by reason of education, training, or experience total defined in relation to a person's inability to perform duties, but may not be based solely upon the person's ability to perform "any occupation whatsoever" or engage in any training or rehabilitation may require that the total disability be continuous or uninterrupted for a specified period of time or to a specified age
Creditable Coverage (Health Insurance Portability & Accountability Act HIPPA)
includes most health coverage, including coverage under a group health plan, an individual health insurance policy, Medicare, or Medicaid as long as there is not a break in creditable coverage for 63 more days, and individual's prior creditable coverages reduces the maximum pre-existing condition exclusion period that the new group health plan can apply to that indivdual
Right to examine -- Free look (Disability Income Insurance)
individual LTC insurance policyholder and group certificate holders who contribute to the cost of coverage have the right to return the policy within 30 days of delivery and have the premium refunded if they are not satisfied for any reason a notice regarding the free-look trail period must be prominently printed on the 1st page of the policy or certificate
Cancer Benefits
individual and group health policies and HMOs providing hospital or medical/surgical coverage must provide coverage for: - cancer chemotherapy, including orally administered - cancer hormone treatments - other FDA approved treatments treatments may be performed in a physician's office, hospital in/outpatient department, or any other medically appropriate treatment setting
Free Look (Policy Provisions)
individual life insurance policies and annuity contract delivered in PA must allow the policyholder to return the policy within 1o DAYS of its delivery for a full refund if the policyholder is not satisfied w/ it for any reason FREE-LOOK PERIOD is 45 DAYS for INDIVIDUAL VARIABLE POLICES that are issued as replacements by the same insurer that issued the original policy variable life replacement policies issued by a DIFFERENT insurer must allow 20-DAY return period
Inflation Protection (long-term care insurance)
inflation protection of at least 5% compounded annually must be offered - insured not required to purchase - outline of coverage must chart benefits with and without inflation protection LTC policies issued to individuals must be either guaranteed renewable or non-cancelable
Suitability Information (Suitability of Annuities)
info relating to an annuity that is appropriate to determine the suitability of a recommendation, including the following: - age - annual income - financial situation and needs, including the financial resources used for the funding of the annuity - financial experience - financial objectives - intended used the annuity - financial time horizon - existing assets, including investment and life insurance holdings - liquidity needs - liquid net worth - risk tolerance - tax status
Full Disclosure (producer's ethical responsibilities to the policyowner)
informing the prospect or client of all facts involving a specific policy or plan so that an informed decision can be made
Full Disclosure (producer's ethical responsibility)
informing the prospect/client of all facts about a specific policy, so the client can make an informed decision
Contract Information (Suitability of Annuities)
insurance Department must maintain an electronic database of contract info for each life insurer that has life insurance policies or annuity contracts in force in the Commonwealth all life insurers having a life insurance policy or annuity contract in force in PA must provide and maintain a valid address w/ the Insurance Department
Duties of Insurers w/ Regard to Replacement (replacement of life insurance)
insurance companies are required to inform all producers soliciting insurance on their behalf of the duties of a producer w/ regard to replacement producer provide a NOTICE OF APPLICANT when replacement is involved
Life Policy Locator Service (Suitability of Annuities)
insurance department and all life insurers must participate in the life policy locator service adopted by the National Association of Insurance Commissioners in providing for the responding to search requests for life insurance policies or annuities in force in the Commonwealth covering a decedent
Terms of Renewability (health insurance standards)
policies must include renewal, continuation or non-renewal provision
Entire Contract (Policy clauses, provisions, and state-mandated coverage)
insurance policy, including endorsements and the attached papers, if any, constitutes the entire contract of insurance no change in this policy shall be valid until approved an executive officer of the insurer and unless such approval be endorsed or attached no agent has authority to change this policy or to waive any of its provisions
Producer's Ethical Responsibility to the Public
insurance producer represents his insurance company to the general public - to prospective insurer producer's actions help shape the public's perceptions of the insurance industry producer's primary ethical duty to the public is to provide accurate information regarding insurance policies and benefits in a fair and unbiased manner info should be complete in every way, providing the prospect with the details of any deductibles, waiting periods, benefit limitations, exclusions or qualification requirements for the policy
Insurance Producer Training (Suitability of Annuities)
insurance producer who has the authority to sell annuities must complete at least 4 continuing education credits in an annuity training course covering the following topics: - types of annuities & various classifications of annuities - identification of the parties to an annuity - how product-specific annuity contract features affect consumers - application of income taxation of qualified and non-qualified annuities - primary uses of annuities - appropriate sales, practices, replacement, and disclosure requirements
Eligible Family Members
insured, spouse, and children of insured (or spouse) not exceed age 19 - for health plans subject to the federal affordable care act, coverage may continue until the dependent turns 26
Insurer Supervisory Requirements (Suitability of Annuities)
insurer must est. a supervision system that is reasonably designed to achieve the insurer's and its insurance producer's compliance w/ this regulation, including but not limited to the following: - insurer must maintain reasonable procedures to inform its insurance producers of the requirements of this regulation and will incorporate the requirements of this regulation into relevant producer training manuals - insurer will est. standards for insurance producer product training and will provide product-specific training and training materials that explain all material features of its annuity products to its insurance producers - insurer will maintain producers for review of each recommendation prior to issuance of an annuity that is designed to ensure that there is a reasonable basis to determine that an annuity recommendation is suitable - the insurer must maintain reasonable procedures to detect recommendations that are not suitable. including the confirmation of consumer suitability info, systematic customer surveys, interviews, confirmation letters - insurer will obtain certification annually from a senior manager who is responsible for insurer and insurance producer compliance
Penalties (long-term care insurance)
insurer/producers violating LTC laws/regulations are subject to civil penalties - up to 3 times the amount of any commissions paid for each policy involved in the violation - $10,000 whichever is greater
HIPPA Portability -- Certificate
insurers can require a certificate of prior creditability coverage - if there is no credible coverage - group plans could not impose more than a 12-month pre-existing conditions exclusive for a person who sought medical advice, diagnosis, or treatment within the previous 6 months - this exclusion cannot be applied to newborns, adopted children or pregnancies on the effective date
Approval of Policy Forms (insurance company regulations)
insurers cannot not issue or sell insurance policies until the forms have been filed and approved by the commissioner considered approved after 30 days unless commissioner rejects them commissioner may extend this period for another 30 days to continue to review anyone who issues an insurance policy or contract without the Commissioner's approval if guilty of a misdemeanor, may pay a fine up to $500 Commissioner may revoked the offender's license, refuse to issue a new license for up to one year and impose a fine up to $1,000
Regulation of Insurer Solvency (insurance company regulations)
insurers doing business in PA must maintain specified minimum levels of capital stock and surplus amounts required vary depending on the line of insurance and how the company is organized every domestic insurer must submit a report of its RBS (risk-based capital) levels to the Commissioner and the NIAC every year by March 1
Standards in Marketing (Medicare Supplement Policies)
insurers must est. marketing procedures at assure that comparison of Medicare supplement policies by its agents or producers will be fair and accurate and to ensure that excessive insurance is not sold or issued procedures must establish a mechanism for determining whether a replacement policy contains benefits clearly and substantially greater than the benefits under the replaced policy
Separate Accounts (Variable Contracts)
insurers organized under PA law may establish one or more separate accounts. Used in connection w/ the operation of a variable and viable life contract the proceeds used for life insurance and annuities payable in fixed or variable amount reserves that guarantee dollar amounts and the duration of funds guaranteed as to the principal amount or a stated rate of interest may not be included in these amounts
Inflation Protection (Disability Income Insurance)
insurers that offer some form of inflation protection must offer each policyholder, at the time of app., the option to purchase inflation protection benefit levels may be increased annually or periodically at the insured's option at the rate of at least 5% per year, compounded annually outline of coverage must chart benefits w/ and w/o inflation protection
Credit Life (Misc Life Insurance Topics)
involves life insurance that is issued in connect w/ an installment-type loan amount of coverage may not exceed the total indebtedness cost per $1,000 is generally greater than other forms of life insurance generally purchased through the leading institution
Needs Selling (producer's ethical responsibilities to the policyowners)
involves problem analysis, action planning, product recommendation, and plan implementation requires two important commitments on the producer's part: 1. commitment to obtain and maintain the knowledge and skills necessary to perform those tasks 2. commitment to educating the prospect or client about the products and plans that may be implemented on the producer's recommendation
Market Conduct
is a combination of ethics and compliance - this refers to how companies and producers conduct themselves in accordance with ethical standards and compliance with insurance rules/law - aka professional behavior
Variable Accumulation Annuity Contract (Variable Contracts)
is an annuity policy or contract, other than a variable annuity under which amounts accumulated for the purchase of a fixed annuity or a fixed annuity and a variable annuity, where the accumulation values vary according to the investment experience of a separate account fixed annuity shall be purchased at rates at least as favorable to the policyholder at those stated in the variable accumulation annuity contract
Fiduciary
is an individual whose position and responsibilities involve a high degree of trust and confidence
Variable Annuity Contract (Variable Contracts)
is any policy or contract that provides for deferred or immediate annuity payments, the amount of which, after such payments have commenced, varies according to the investment experience of a separate account maintained by the insurer for the purpose of funding this contract
Advertising (Medicare Supplement Policies)
issuer shall provide a copy of any Medicare supplement advertising intended for use in this Commonwealth whether through written, radio or television medium, to the Commissioner for review or approval by the Commissioner to the extent it may be required under state law
Prohibited advertising of Guaranty Fund (advertising requirements)
it is unlawful to use the existence of a Guaranty fund as inducement to buy any kind of insurance protected by the fund
Financial Institution Sales
licensees employed by a financial institution soliciting annuities/life insurance sales (except credit life) must provide applicants with written disclosure at/before the time of application starting that the insurance/annuity is - not a deposit - not insured by the FDIC or any other federal agency - not guaranteed by the financial institution - subject to investment risk, including potential loss financial institutions must have a separate area for sales of annuities/insurance distinct from the area where deposits/loan applications are discussed and accepted - signs must be used to distinguish the insurance and annuity sales area from the lending and deposit area - the commissioner will exempt an institution if the number of staff/size of facility prevents compliance
Administrative Action (Reporting of Actions)
licensees must report to the department any administrative action taken in another jurisdiction or by another governmental agency in PA within 30 days
Criminal Conduct (Reporting of Actions)
licensees must report to the department within 30 days of being charged with criminal conduct
Renewal
licenses are generally issued for a term of two years licenses are renewed every 24 months in the producer's birth month licensee must remit to the department a completed renewal from, the required fee, and verification that the licensee has completed the continuing education
Approval of Policy Forms
life and health policy forms must be approved by the Commissioner before use - forms are considered approved after 30 days unless rejected - Commissioner must notify insurer to extend the review for another 30 days Disapproval and appeals - if the form is disapproved, the Commissioner notifies the insurer in writing - insurer may request a hearing within 30 days of giving notice - hearing must be held within 30 days after the Commissioner receives the request
Reinstatement (Policy Provisions)
life insurance policy is written to the Commonwealth must have a min of 3 years to reinstate such policy 3 year time period starts from last premium paid
Reinstatement (life insurance only)
life policies must allow a minimum of 3 years to reinstate a lapse policy - the 3 years starts from the last premium paid
False Advertising (unfair insurance practices)
making or circulating an advertisement containing any statement regarding any person or company in the business of insurance that is untrue deceptive or misleading - misrepresents benefits, conditions, terms or dividends of a policy - misrepresents the financial condition of person or insurer - uses an insurance policy name that misrepresents its true nature
Defamation (unfair insurance practices)
making or issuing an oral/written statement that is false derogatory or maliciously critical to the financial condition of the person/insurer
Cold Leading Advertising (Medicare Supplement Policies)
marking direct or indirect use of any marketing method that fails to disclose in a conspicuous manner that a purpose of the marketing is it solicit insurance and that an insurance agent an insurance company will contact the prospect
Pre-Existing Conditions (Disability Income Insurance)
no LTC policy may exclude a pre-existing condition exclusion provision of more than 6 months nor exclude coverage for any pre-existing conditions except those occurring 6 months from the effective date
Condition of eligibility (health insurance standards)
may include insured, spouse, and dependent children
Serious Mental Illness (Policy clauses, provisions, and state-mandated coverage)
means any of the following mental illnesses as defined by the American Psychiatric Association: schizophrenia, bipolar disorder, obsessive compulsive disorder, major depressive disorder, panic disorder, anorexia nervosa, bulimia nervosa, schizoaffective disorder, and delusional disorder group health insurance policies issued to groups of 50 or more employees must provide for serious mental illnesses that meets the following minimum requirements: - coverage for serious mental illness must include at least 30 inpatient and 60 outpatient day annually - insureds must be allowed to convert coverage of inpatient days to outpatient days on a one-for-two basis - there must be no difference in either the annual or dollar amount of coverage for serious mental illnesses and any other illnesses - cost-sharing arrangements, such as deductibles and co-payments for coverage of serious mental illness may not prohibit access to care
Non-cancelable (Disability Income Insurance)
means the insured has the right to continue the insurance in effect by the timely payment of premiums and the insurer has no right to make any change unilaterally in the insurance of premium
Guaranteed Renewal (Disability Income Insurance)
means the insured has the right to continue the insurance in force by the timely payment of premiums and the insurer cannot decline to renew but may arise rates on a class basis
Minimum benefit period (disability income insurance)
minimum benefit period - 6 months disability payments after age 62 -- at least 50% of amounts payable prior to age 62
Mammography Coverage
minimum coverage includes all costs for annual mammograms for women age 40 or older - it must also include any mammogram based on a physician's recommendation for women under 40
Grace Period (Policy clauses, provisions, and state-mandated coverage)
minimum grace period s are 7 days for weekly premium policies 10 days for monthly premium policies 31 days for all other policies days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force
Unfair Trade Practices Act (producer's ethical responsibility to the public)
model act originally by the National Association of Insurance Commissioners (NIAC) in the 1940s to deal with the inappropriate use of advertising. since been expanded to include all major deceptive or unfair trade practices producer's duty to present each policy with complete honesty and objectivity
Outlines of Coverage (health insurance standards)
must be delivered with policy; briefly describes terms/benefits
Outline of Coverage (Disability Income Insurance)
must be provided by the time of app to each person applying for a LTC policy; a shoppers guide, in at least 12-pt font and must be provided to each prospect content of each documentation are prescribed by state regulation
Outline of Coverage (Medicare Supplement Policies)
must be provided to all Medicare supplement insurance applicants at the time of application and an acknowledgment of receipt must be obtained if a policy is issued on a basis that would require revision of the outline, a substitute outline of coverage describing the policy actually issued
Non-qualified LTC Policy (Disability Income Insurance)
must condition payment of benefits on a determination of the insured's ability to perform "activities of daily living" and/or cognitive impairment eligibility for the payment of benefits may not be more restrictive than requiring either a deficiency in the ability to perform up to three of the activities of daily living or the or the presence of cognitive impairment activities of daily living include bathing, continence, dressing, eating, toileting, and transferring
NAIC
national association of insurance commissioners - organization formed to promote uniformity in state insurance laws - prepare model laws that commissioners may represent to their respective state legislators
Cancellation and Non-Renewal (Disability Income Insurance)
no LTC policy may be cancelled, non-renewed or terminated for any reason other than non-payment of premium a policy issued to an individual must be either guaranteed renewable or non-cancelable
Prohibited Practices (Sales Practices)
no life insurance company, producer, solicitor may make any statement or reference relating to the growth of the life insurance industry or the tax status of life insurance companies in connection w/ any solicitation ...may make any statement that reasonably gives rise to the inference that a prospective insured, by virtue of purchasing a policy of life insurance, will enjoy a status common to a stockholder or will acquire a stock ownership interest in the insurance company ... may make any statement implying that a life insurance policy was sold by the investment department of the company ...may make any statement or reference implying that by purchasing a life insurance policy, the purchaser will receive special treatment from insurance company, including the payment of dividends
Permitted compensation: maximum first-year compensation (medicare supplements)
no more than 200% of servicing compensation
Application Responsibilities of Producers (Laws and Regulations of Sales Practices in PA)
no one other than the applicant may alter any written app for insurance, by erasure, insertion or otherwise, without the applicant's written consent making an alteration w/o the consent of the applicant is illegal advertising the security provided by the State Guaranty Fund is prohibited
Managers and Exclusive General Agents
no person may act as a manager or exclusive general agent without being licensed acting as a manager or exclusive general agent without a license is a third degree misdemeanor - punishable by a fine of up to $1,000 per day following are not required to be licensed as a manager or exclusive general agent: - a licensee whose authority is limited primarily to the production of insurance business with limited underwriting authority - a manager or exclusive general agent operating under a management contract or exclusive general agency agreement entered into before Dec. 22, 1965
Backdating a Policy (Policy Provisions)
no policy of life insurance may be issued or delivered in this state if it claims to be issued or to take effect more than 6 MONTHS before the app. for insurance was made point of backdating a policy is to make it effective at an earlier date than the present to preserve a slightly lower premium or reduce an insured's age
Nonforfeiture Benefits (long-term care insurance)
nonforfeiture benefits must be offered - if the offer is rejected by the insured, the insurer must provide a contingent benefit upon lapse - a contingent benefit triggers when the premium increases to a specified percentage over the insured's initial premium at issue, and the policy lapses within 120 days of the due date of the increased premium - policyholders must be notified at least 30 days before the due date of the increased premium
Conditional Receipt (producer's ethical responsibilities to the policyowner)
normally is given when the applicant pays the initial premium at the time the app. for a policy is signed means the applicant and the company have formed what might be called a conditional contract -- contingent upon conditions that existed at the time of application or when a medical examination is completed
Maximum pre-existing condition exclusion period for individual and group policies subject to affordable care act (accident and health only)
not allowed
Revocation, suspension, nonrenewal, or denial of license (disciplinary actions)
notice must specify the nature of the alleged violation and fix a time and place, at least 10 days thereafter, when a hearing on the matter will be held after the hearing or upon failure of the person to appear at the hearing, if a violation of this act is found, the Commissioner impose any combination of the following: - denial, suspension, refusal to renew or revocation of the license of the person - civil penalty not to exceed $5,000 for each violation of this act an order to cease and desist - any other conditions the Commissioner deems appropriate
COBRA -- Federal Continuation
notification period to employee -- 14 days employee's decision period -- 60 days Continuation Period - 18 months for termination employee - 29 months for disabled employees - 36 months for dependents of deceased/divorced employee
Rebating (producer's ethical responsibility to the state)
occurs if the buyer of an insurance policy receives any part of the producer's commission or anything else of significant value as an inducement to purchase a policy ex of rebating: - offering, paying or allowing any rebate to 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
Illegal inducement (unfair insurance practices)
offering anything not stated in the insurance contract, including rebate of premiums, special favors or dividends - illegal inducement is a 3rd degree misdemeanor
Premium Increase (long-term care insurance)
on/before the effective date of substantial premium increase, the insurer must: - offer reduced policy benefits so the premium is not increased - offer to convert coverage to paid-up status with a shortened benefit period - notify the policyholder that default/lapse during a 120-day period after the premium increase is considered election of the offer to convert coverage to paid-up status
Termination of Appointments (insurance company regulations)
once appointed, an insurer producer remains by an insurer until the insurer terminated the appt. in writing to the insurance producer or until the insurance producer's license is suspended, revoked, or terminated an insurer that terminates an appointment must notify the Department in writing on a form (or electronic) within 30 days following the effective date of the termination must send a notification to an insurer by mail within 15 days
Optional Provisions (Policy clauses, provisions, and state-mandated coverage)
optional provisions that are found in the license examination manual are the same the PA code following are option provisions: - change of occupation - misstatement of age - other insurance w/ the same or other insurers - unpaid premiums - cancellation - conformity w/ state statues - illegal occupation - intoxicants and narcotics
Viator (viatical settlements)
original owner of life policy who enters into a viatical settlement contract
Critical Illness/Dread Disease
outline of coverage must be provided and include: - type of coverage identified in title - statement explaining the restricted nature of coverage (i.e cancer only, heart disease) - a brief, specific description of policy benefits, restrictions, exceptions - description of terms and renewability conditions and any rights of cancellation
Long-term Care Insurance
outline of coverage must be provided before application - outline of coverage includes a description of benefits exclusions, reductions and limitations contained in policy the shopper's guide must be provided to each prospect
Fraudulent actions, statement or reports
overvaluing of any land, property, or security - false financial condition/solvency of a business in insurance - willfully embezzling, abstracting, purloining, or misappropriating any monies, funds premiums - corruptly influencing, obstructing or impeding the due and proper administration of law under which any proceeding is pending
Producer License
person may not sell, solicit, or negotiate a contract of insurance in PA unless licensed as an insurance producer for the line of authority under which the contract is issued the following person are not required to be licensed as insurance producers: - an insurer - an employee of an insurer or a rating organization employed by an insurer who is not engaged in the sale, solicitation, or negotiation of insurance contracts, and who inspects, rates, or classifies risks, or supervises the training of insurance producers - an officer, director, or employee of an insurer or of an insurance producer as long as the individual does not receive a commission on policies written or sold to insure risks residing, located or to be performed in PA and their activities are executive, administrative, managerial, or clerical and are only indirectly related to the sale, solicitation or negotiation of insurance
Viatical Settlement Broker
person, on behalf of original viator-owner who negotiates settlement for a fee, commission or other consideration
Viatical Settlement Provider
person, other than original viator-owner, who enters into a viatical settlement contract
Nonforfeiture Benefits (Disability Income Insurance)
policy offered w/ nonforfeiture benefits (mandatory after 3 years of coverage) must have the same coverage elements, eligibility, benefit triggers, and benefit length as coverage w/o nonforfeiture benefits offer for nonforfeiture benefits must be in writing if it is not described in the outline of coverage or other materials given to the prospective policyholder policy lapses within 120 days of the due date of the increased premium policyholders must be notified at least 30 days prior to the due date of the increased premium on or before the effective date of a substantial increase, the insurer must: - offer to reduce the policy benefits so the premium is not increased - offer to convert the coverage to a paid-up status w/ a shortened benefit period - notify the policyholder that a default or lapse during the 120-day period after the premium increase will be considered the election to convert coverage to a paid-up status
Disability Income Insurance
policy that provides periodic payments (weekly or monthly) for a specified time period during the period of disability
Policy Loans (Policy Provisions)
policyowner may not borrow against the cash value of life insurance contract until the policy has been in force for 3 fill years insurer may advance an amount up to but not exceeding, the loan value of the policy upon request of the policyowner if policyholder fails to repay the lean the policy will not be voided unless any indebtedness equal or exceeds the loan value company has the right to deduct from the face amount or death benefit of contract any existing indebtedness when an insured dies interest rate charged on a policy loan may be a fixed amount -- generally a max of 8%
Federal Affordable Care Act (pre-existing conditions)
pre-existing condition rules do not apply to: - disability income insurance - medicare supplements - long-term care insurance - accident only policies
Unintentional Lapse (Disability Income Insurance)
prevent an unintentional lapse, no policy must be issued w/o the applicant providing the insurer w/ the name of at least one person in addition to the applicant who is to receive notification of lapse or termination, or the applicant may sign a written waiver reflecting his desire not to designate a person to receive notification notices of non-payment and pending lapse must be mailed no sooner than 30 days after payment is owed and at least 30 days prior to lapse or termination
General Duties and Power (insurance commissioner)
primary duty of the Insurance Commissioner is to see that insurance laws are properly executed & the public interest is protected by enforcing these laws - have the power to revoke licenses of insurers, adjusters and producers for just case - power to regulated insurers for solvency, approve policy forms - regulate most insurance premiums - issuing licenses and collecting the appropriate fees - appointing examiners who are delegated the duty of examining insurers - issuing cease and desist order to insurers, adjusters and producers for just cause - conducting hearings in connection with the wrongdoing of an insurer or licensee - reporting illegalities in the insurance business to the state attorney general
Advertisement definition (advertising requirements)
printed, audio, and visual literature used in direct mail, newspapers, magazine, radio/tv, sales, talks, presentations, and materials used by agents, brokers, or solicitors
License Renewal
producer licenses renew every 24 months in the producer's birth month - licensee must - submit renewal form - pay renewal fee - complete continuing education (CE) requirement
Policy illustrations (life insurance only)
producer may not alter, change or modify results of the life insurance/annuity illustration (spreadsheet) - illustrations are not part of the policy entire contract - the insurer/producer may not - state/imply that dividends are guaranteed - use incomplete or misleading illustrations - use the terms vanish or vanishing premium to imply that the policy may become paid up, where non-guaranteed elements are used to pay all or portion of the future premiums
Policy Illustrations (Sales Practices)
producer may only use and may not withhold, alter, change or modify the results of a life insurance or annuity illustration system provided by insurer must notify if policy form is to be marketed w/ or w/o illustration when using an illustration in the sale of a life insurance policy, an insurer or its producers may not: - represent policy as anything other than a life insurance policy - use or describe non-guaranteed elements in a manner that is untrue, or deceptive or misleading, or has the capacity or tendency to mislead - state or imply that the payment or amount of non-guaranteed elements is guaranteed - use an illustration that does not comply w/ the requirements of state law - use an illustration that at any policy duration depicts policy performance more favorable to the policyowner than that produced by the illustrated scale of the insurer whose policy is being illustrated - provide applicant w/ an incomplete illustration - represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless such representation is true - use the term vanish or vanishing premium or any similar term that implies the policy may become "paid-up" to describe a plan whereby non-guaranteed elements are used to pay all or a portion or future premiums
Health Insurance Replacements
producer must give notice of applicant regarding replacement of accident and sickness insurance at time of application
Penalties for Violating the Disclosure Regulation (disclosure requirements in the solicitation of life insurance)
producer will be fined, suffer certificate or license suspension or revocation, or both for violating disclosure regulations insurer will be fined, have its certificate of authority suspended or revoked
Misappropriation of Funds (unfair insurance practices)
producers who embezzle/fraudulently covert money to their own use while negotiating a contract is guilty of theft
Insurers must provide.... (replacement of life insurance)
provide 20 or 45 day free look (instead of usual 10 days) - require a signed statement acknowledging replacement - require notice to applicant with replacements - provide comparative information forms - maintain client records for 3 years after the relationship ends - keep records of dealings for 3 years (both replacing and conserving the insurer)
Variable Life Insurance
provides a guaranteed minimum death benefit actual benefits paid may be more, however, depending on the fluctuating marketing value of investments behind the contract at the insured's death cash surrender value also generally fluctuates w/ the market value of the investment portfolio
Cost Disclosures (life insurance only)
provides life insurance purchaser way to make cost comparisons between same type of policies with same premium payment period/pattern
Cost disclosures -- life insurance comparison index disclosures (disclosure requirements in the solicitation of life insurance)
purpose of cost disclosures is to provide the purchaser of life insurance a means of making a cost comparison of the same type of life insurance policies having the same premium payment period and pattern
Purpose (Minimum Standards for Benefits)
purpose of these standards is to provided for reasonable standardization of terms and coverages contained in individual accident and health insurance policies, non-grouped subscriber contracts issued by health plan corporations, or non-profit health service plans categories of plans include: - basic hospital expense coverage - basic medical-surgical expense coverage - hospital confinement indemnity coverage - major medical expense coverage - disability income protection coverage - accident only coverage - specified disease or specified accident coverage - supplemental coverage
Insurance Fraud Prevention Act (insurance fraud)
purpose: - to coordinate and fund fraud prevention activities - support enforcement of insurance fraud laws - administered insurance fraud prevention authority
Qualifying Event (consolidated omnibus budget reconciliation act COBRA)
qualifying event occurs when the employee, spouse or dependent child becomes ineligible for coverage under the group insurance contract for the following reasons: - death of a covered employee - termination (other than due to gross misconduct) or reduction of work hours of covered employee - medicare eligibility for the covered employee - divorce or legal separation of the covered employee from the covered employee's spouse - termination of a child's dependent status - bankruptcy of the employer
Suitability (long-term care insurance)
reasonable efforts must be made to determine that purchased of LTC suitable - producers must list all health policies they sold to the applicant that are in force, and those that were sold in last 5 years that are no longer in force - if replacement is involved, a Notice to Applicant Regarding Replacement of Individual Accident & Sickness or Long-term care insurance must be signed by the applicant and the producer
Agency
relationship between an insurance producer and the insurance company is governed by the concept of agency one of the parties (principal) has authorized the other (the producer) to preform certain legally binding acts on the principal's behalf key principals of agency law are as follows: - act of the producer (within the scope of the producer's authority) are the acts of the principal - contract implemented by a producer on behalf of the principal is a contract of the principal - payments made to a producer on behalf of the principal are payments to the principal - knowledge of the producer regarding business of the principal is presumed to be knowledge of the principal
Replacement of Life Insurance
replacement is a transaction in which a new life policy is to be purchased and the producer/insurer knows the existing insurance to be: - lapsed or surrendered - pledged as collateral or borrowed against - converted to reduce paid-up - continued as extended term - reissued with reduced cash value - converted so that amount/time of coverage is reduced when replacement is involved, the insurer must provide a written comparison of policy terms, conditions, and benefits within 5 working days
Duties of Insurers and Insurance Producer (Suitability of Annuities)
replacing an annuity, the insurer or insurance producer must take into consideration whether the consumer: - will incur a surrender charge - will be subject to the commencement of a new surrender period - will lose existing benefits, including death, living or other contractual benefits - will be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements - would benefit from product enhancements and improvements - has had another annuity replacement, including a replacement within the preceding 36 months Neither an insurance producer nor an insurer where no insurance producer is involved will have any obligation to a consumer related to any annuity transaction if: - no recommendation is made - a recommendation was made and was later found to have been prepared based on material inaccurate info provided by consumer - a consumer refuse to provide relevant info and the annuity transaction is not recommended - a consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurer of the insurance producer
Required Disclosure Provisions (Disability Income Insurance)
required disclosure provisions state that riders and endorsements changed or added after issue must be agreed to in writing by the insured when benefits are payable on a "reasonable and customary" or similar basis, the terms must be defined; - limitations or conditions on eligibility for benefits must be described in a separate paragraph titled Limitations or Conditions on Eligibility LTC insurance may not include any policy that is offered primarily to provide: - basic Medicare supplement coverage - basic hospital expense coverage - basic medical surgical expense coverage - hospital confinement indemnity coverage - major medical expense coverage - disability income coverage, accident only coverage - specified disease - specified accident coverage - limited benefit health coverage
Retained Asset Account (Misc Life Insurance Topics)
retained asset account is a life settlement option available to beneficiaries at death of the insured beneficiary has the option to have the death benefit places in this account w/ the life insurer beneficiary will receive interest on the account and have access to the account and have check writing privileges
Return of Premium (ROP) Term Life Insurance (Misc Life Insurance Topics)
return of premium term policies will return all or part of the premium paid for the policy if the insured is still alive at the end of the policy term premium for the ROP term policy will be higher than a comparable level term policy
Rebating
returning part of the commission or giving anything else of value to the insured as an inducement to buy the policy it is illegal and cause for license revocation in most states
Required Disclosures (long-term care insurance)
riders/endorsements changed/added after issue must be agreed to in writing by the insured - terms must be defined if benefits are payable on a reasonable and customary or similar basis - limitations/conditions on eligibility must be described in a separate paragraph titled limitations or conditions on eligibility for benefits - a brief policy description must appear at the top or bottom of the first page - must be classified qualified or non-qualified LTC
Duties of the Principal to the Producer
rule of agency law is that the principal (insurer) is responsible for all of a producer's acts when the producer is acting within the scope of his authority responsibility includes fraudulent acts, omissions, and misrepresentations
Compliance w/ Other Rules (Suitability of Annuities)
sales made by an insurance producer and in compliance w/ FINRA requirements pertaining to suitability and supervision of annuity transactions must satisfy the requirements under this section applies to FINRA broker-dealer sales of annuities if the suitability and supervision is similar to those applied to variable annuity sales
Effects of Divorce on Designations of Beneficiaries (Policy Provisions)
section applicable if an individual: - is domiciled in the Commonwealth - designates the individual's spouse as a beneficiary of the individual's life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement providing for payments to the spouse - either: - at the time of the individual's death is divorced from the spouse - dies during the course of divorce proceedings and no decree of divorce has been entered and grounds have been established designation was intended to survive the divorce based on: - wording of the designation - a court order - written contract between the individual and the spouse or former spouse - designation of a former as a beneficiary after the divorce decree has been issued
Marketing Standards (Long-Term Care Insurance)
selling excessive coverage high-pressures tactics and twisting (misleading or incomplete representations or fraudulent comparisons) in an attempt to sell an LTC policy are prohibited practices reasonable efforts must be made to determine that the purchase of an LTC policy is suitable for the individual companies must train their producers on proper marketing standards and procedures to ensure sales presentations and product comparisons will be fair and accurate
Cooperative Insurer (Misc Life Insurance Topics)
this is an organization that was formed to provide insurance for its members the motive for formation could have been to make coverage available, lower premium costs, or provide better services for its members Cooperative can be est. by consumers or by producers can ether be incorporated or unincorporated organizations
Considerations in Replacing Health Insurance (Laws and Regulations of Sales Practices in PA)
several relevant provisions should be scrutinized including pre-existing conditions, waiting periods, exclusions, limitations, insurer underwriting requirements application for health insurance must contain a question to elicit info as to whether the coverage applied for is to replace a policy that is currently in force if replacement is involved, the producer must provide at the time of application, a notice to applicant regarding replacement of accident and sickness insurance if a producer engages in misrepresentation during the replacement of health insurance contracts in this state, he way be exposed to errors and omissions liability
Variable Annuity
similar to a fixed annuity in that retirement payments will be made periodically to the annuitants, usually over the remaining years of their lives there are no guarantee of the dollar amount of the payments they fluctuate according to the value of an account invested primarily in common stock
Ethics
standards of conduct and moral judgment WHAT WE SHOULD DO characteristics of an ethical insurance producer are: - honesty - integrity - fairness - compassion - respect for others - personal responsibility - accountability
Marketing Ethics (producer's ethical responsibility to the state)
states carry the major burden of regulating insurance affairs, including the ethical conduct of producers licensed to conduct business within their border only insurers that have been authorized or licensed by a state may issue policies in that state
Civil and Administrative Fines (disciplinary actions)
the court may, in an action filed by the Commissioner, impose the following civil penalties - for each method of unfair competition, act or practice and in violation of this act that the person knew or reasonably should have known was a violation, - penalty not more than $5,000 for each violation but not exceed an aggregate penalty of $50,000 in any 6 month period - for each method... did not know nor reasonably should have known, was a violation, a penalty may be imposed of not more than $1,000 for each violation but not exceed $10,000 in any 6 month period - department may assess an admin. fine of no more than $100 per day per violation if a licensee doe snot correct the violation within 15 days
Coverage of Mentally or Physically Handicapped (Policy clauses, provisions, and state-mandated coverage)
the coverage of any unmarried family member insured by an accident and health policy who is before age 19, mentally or physically incapable of earning his own living on the date as of which the dependent status of a covered family member would otherwise expire because of age will continue under the policy while the policy remains in force or is replaced by another policy as long as the incapacity continues and as long as the dependent remains chiefly financially dependent on the policyholder
Open Enrollment (Medicare Supplement Policies)
the insurer may not deny/limit issuing a medicare supplement policy if applied within 6 months of enrollment in Medicare Part B - if the applicant had continuous creditable coverage for at least 6 months, the issuer may not exclude benefits based on pre-existing conditions - if the applicant had creditable coverage for less than 6 months, the insurer must reduce the pre-existing condition exclusion period by the amount of time the applicant had creditable coverage
Address Change (Maintenance and Duration)
the licensee must notify the commissioner within 30 days of any address change
Business entity license
upon designating one or more individuals licensed as a producer to be responsible for the business entity's compliance with the state's insurance laws and regulations, a business entity may apply to the department for an insurance producer license for the same lines of authority held by the designated licensees
Pre-license education and license exam exemptions
the licensing exam and the pre-licensing education requirements are not required if the candidate is a(n): - business entity - person who possess the professional designation of Chartered Life Underwriter (CLU) and is applying for life accident and health line of authority - person who possess the professional designation of Chartered Property and Casualty Underwriter (CPLU) and is applying for a property, casualty, or accident and health line of authority - person who possess the professional designation of Certified Insurance Counselor (CIC) and is applying for a life, accident and health or property and casualty line of authority - person who posses any other professional designation for which the requirements are waived by the Commissioner - person who is licensed in another state as an insurance producer for the lines of authority for which the person desires to be licensed in PA - person whose line of authority restricted to a limited line - individual whose line of authority will be restricted to domestic mutual fire insurance and will be w/ an insurer writing only coverage other than insurance on automobiles - individual whose line of authority will be restricted to fraternal insurance
Policy Loans
the owner may borrow against life insurance cash value after the policy is in force for 3 full years - insurer must defer granting a loan up to 6 months (delay cause) - policy terminates if the loan indebtedness equals or exceeds the loan value - insurer deducts outstanding indebtedness from death benefit when the insured dies - maximum fixed-loan interest rate is 8%
Replace or Replacement (Suitability of Annuities)
the purchase of a new policy or contract where it is known pr should be known to the proposing producer, or to the proposing insurer if there is no insurance producer, that by reason of the transaction, an existing policy or contract has been or will be: - lapsed, forfeited, surrendered or partially surrendered or assigned to the replacing insurer or otherwise terminated - converted to reduced paid-up insurance, continued term insurance or otherwise reduced in value by the use of non-forfeiture benefits or other policy values - amended so as to effect a reduction in benefits or in the term for which coverage would otherwise remain in force or which benefits would be paid - reissued w/ a reduction in cash value - used in a financed purchase
Surrender Comparison index disclosure (disclosure requirements in the solicitation of life insurance)
this is a common method used to compare costs involves and describes: - name, age and sex of insured - face amount of the policy - descriptive title of the policy - policy number - 10-year surrender index and the 20-year surrender index per $1,000 of face amount - explanation of the purpose and use of Surrender Comparison Index insurance company must keep the certification for 3 years or until its next examination by the Insurance Department
Reinstated Asset Account (life insurance only)
this is a life settlement option available to beneficiaries at the death of the insured - beneficiary has the option to have the death benefit placed in this account with the insurer The beneficiary: - receives interest on the account - has access to the money via check-writing privileges
Specified Dread Disease/Critical Illness Coverage (Specified Dread Disease or Accident Coverage)
this plan covers specifically named diseased (cancer or AIDS) and has a deductible amount of no more than $250 an overall aggregate benefit limit of at least $5,000 and a benefit period of at least 2 year items required to be covered include: - semi-private hospital room and board and other hospital furnished medical services or supplies - treatment by a legally qualified physician or surgeon and private duty services of a registered nurse (RN) - drugs and medicines prescribed by a physician - hospital confinement of at least $100 per day for at least 500 days - surgical expenses equal to reasonable and customary charges up to an overall lifetime maximum of $3,500 - radium, cobalt, chemotherapy, or X-ray therapy expenses while not hospital confined to at least $1,000
Express authority
through appointment, the producer, is given power and authority to act for the insurer by: - soliciting applications for coverage - describing coverage and policies to prospects/applicants - collecting premiums (sometimes only initial premium) - providing service to prospects and the insurer's policyholders
Total disability (disability income insurance)
total disability - first 24 months - inability to perform all substantial and material duties of an insured's own regular occupation - after 24 months - inability to perform all substantial/material duties of any occupation for which insured is reasonably suited by reason of education, training or experience (ETE)
HIPPA -- portability
under HIPPA, a person changing jobs is eligible for the new employer's medical plan without losing coverage for pre-existing conditions if - the person had continuous, creditable coverage for at least 12 months - there is no more than a 63 day gap - an individual with group health insurance who leaves to become self- employed cannot be denied coverage
Conditions of Eligibility (Minimum Standards for Benefits)
under accident and health insurance contracts issued in this state, eligible family members may include the insured, spouse, children and spouse's children who are younger than age 19, unless a dependency test is specified and any other person dependent upon the insured
Unfair discrimination (unfair insurance practices)
underwriting standards must not be based on race, religion, nationality, or ethnic group, age, sex, family size, occupation, place of residence, or marital status - it's unfair discrimination to charge different premiums or extend different benefits to individuals of the same class and essentially the same hazard
Twisting (producer's ethical responsibility to the state)
unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policyowner producers must provide certain disclosure documents when they solicit any insurance sale documents are intended to help the consumer make an informed decision about what plan of insurance is best to buy in most states a producer's license can be suspended or terminated for violating marketing ethics
Change of Beneficiary (Policy clauses, provisions, and state-mandated coverage)
unless policyowner makes an irrevocable designation of beneficiary, the right to change beneficiary is reserved to the owner and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or to any other changes in this policy
Penalties (Suitability of Annuities)
upon determination by hearing that this statute has been violated the commissioner may pursue one or more of the following courses of action: - issue an order requiring the person in violation to cease and desist from engaging in the violation - suspend or revoke or refuse to issue or renew the certificate or license of the person in violation - impose a civil penalty of no more than $5,000 for each violation - impose any other penalty or remedy deemed appropriate by the Commissioner including restitution
High Pressure Tactics (Medicare Supplement Policies)
using any method of marketing having the effect of or tending to induce the purchase of insurance through force, fight, threat or undue pressure to purchase or recommended the purchase of insurance
Licensing (Viatical Settlements)
viatical settlement brokers and providers must be licensed by the Department of Insurance to qualify for a license, the applicant must: - submit an application and pay the required fees - be competent and trustworthy and intend to act in good faith under the license - have a good business reputation and be qualified for the license through experience, training, or education - if a legal entity, provide a certificate of good standing from its state of domicile - certify that it has implemented an anti-fraud plan that meets the requirements of state law - for out-of-state companies, provide the name of a designated agent an applicant for a viatical settlement provider license must also: - provide a detailed plan of operation - submit certain required financial statements - be bonded or otherwise provide for its financial accountability as required by the department the license application will be approved or disapproved within 90 days of receipt unless the applicant waives the time period
Exceptions, Reductions, and Limitations (Advertising Requirements)
when an advertisement refers to specific dollar amounts, time periods, costs, losses or benefits any reductions or limitations that affect the benefits must be clearly revealed exceptions, reductions and limitations may not be described by using the words only, just, merely or minimum and must not be worded positively so as to misleadingly imply some benefit
Conversion to Individual Policy (Policy Provisions)
when individual insured under a group life insurance policy becomes entitled to have an individual policy issued w/o evidence of insurability but is not given at least 15 days before the expiration date of the eligibility period, the individual must be allowed an additional period additional period expires 15 DAYS after the individual is given the notice, but may not extend beyond 60 days after expiration date of the period
Policy Delivery Receipt Requirement (Misc Life Insurance Topics)
when the individual policy or annuity is delivered to the policyholder by the producer by hand, a delivery receipt must be used receipt must be in at least a duplicate set an state the date the policy or annuity was received by the policyholder For purposes of determining the commencement of the free-look period, the date of delivery of the policy or annuity must be: - the date of mailing of the policy or annuity by the insurer - date of the policy or annuity is physically delivered to the owner by a representative of the insurer - date of electronic transmission of the policy or annuity (the insurer must retain evidence of electronic transmittal for the entire period of the insurance policy or annuity)
Qualified LTC Policy (Disability Income Insurance)
will pay only for qualified LTC services received by a chronically ill individual provided under a plan of are prescribed and updated annually by a licensed health care practitioner payment of benefits is conditioned on a determination of the insured's inability to perform at least 2 activities of daily living for an expected period of at least 90 days due to a loss of functional capacity or to serve cognitive impairment
Notification Statements and COBRA election (consolidated omnibus budget reconciliation act COBRA)
within 14 days of the plan being notified of a qualifying event, the plan must provide the qualified beneficiaries w/ an election notice, which describes their rights to continuation coverage and how to make a COBRA election an individual has 60 days after the notice which to elect continuation if continued is not elected within 60 days the option to do so is forfeited
Claim Procedures (Policy clauses, provisions, and state-mandated coverage)
written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy or as soon thereafter as is reasonably possible indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of loss indemnity for loss of life will be payable in accordance w/ the beneficiary designation and the provisions respecting such payment which may be prescribed and effective at the time of payment
Duties of the insurance fraud section (insurance fraud & deregulation)
· Responding to notification or complaints of suspected insurance fraud generated by law enforcement authorities, gov. units & general public · Reviewing reports of insurance fraud submitted by authorized insurers, their employees, and licensed insurance producers & investigating incidents that require investigation Conducting independent examinations of insurance fraud, conducting studies to determine the extent of insurance fraud & publishing info and reports
Guaranteed issue is available to those who had prior group health coverage or Medicare advantage who apply for a Medicare supplement within ____ days after the due date of termination or disenrollment of the prior coverage (medicare supplements)
63 days
Maximum policy loan annual fixed interest rate
8%
Defamation (unfair marketing practices)
is false, maliciously, critical or derogatory communication (written or oral) that injures another's reputation, fame or character
Twisting (unfair marketing practices)
is persuading a policyowner to drop a policy for the purpose of selling another policy with no regard for possible disadvantages to the policyowner - involves misrepresentation by a producer to convince a policyowner to switch insurers and/or policies
Twisting (unfair insurance practices)
making misrepresentations or incomplete comparisons of policies to insureds to induce policy lapse, forfeiture, or surrender of insurance to write a new policy with similar risks with another carrier
Misrepresentation (unfair insurance practices)
making written/oral statements misrepresenting terms of policy or contract - making statements that insurance dividends are guaranteed
Conditional receipt (producer's ethical responsibility)
normally given when an applicant pays the initial premium at the time the application is signed - applicants are covered immediately from the date of application (or medical exam), if she passes the insurer's under writing
The insurance commissioner must give __ days' notice of a hearing
10 days
the amount of valuable consideration, other than money, an insurance producer may offer or give to an insured or a prospective insured or a prospective insured, on an annual aggregate basis, that does not violate rebating statue
$100
Lines of Authority that may require a license (types of licenses)
- life insurance - accident & health or sickness insurance - variable life and annuity products - property insurance - casualty insurance - personal lines - limited line credit insurance - motor vehicle insurance - self storage - limited lines, as determined by commissioner
Continuing education includes ___ hours of education
3 hours
The penalties for violating LTC regulations are up to _____ times the amount of any commission paid for each policy involved in the violation, or $_____, whichever is greater
3 times $10,000
The viator has the right to rescind the contract for ____ days from the contract date and for at least _____ days after receiving the viatical settlement proceeds
30 days 15 days
Free look for internal (same insurer) replacement of life insurance
45 days
Prohibited Act
a licensee/applicant for an insurance license may not - provide incorrect, misleading, incomplete or false info to the Department in a license application - obtain/attempt to obtain a license through misrepresentation/fraud - violate insurance laws/regulations - improperly withhold, misappropriate or convert money or property received in the course of doing business - intentionally misrepresent the terms of an insurance contract/application - commit an unfair insurance practice or fraud - have an insurance license denied, suspended or revoked by government entity - knowingly accept insurance business from an unlicensed person - use fraudulent, coercive, or dishonest practices - fail to pay child support - fail to pay state income tax - commit a felony or its equivalent - commit fraud, forgery, dishonest acts, or an act involving breach of fiduciary duty - fail to notify the Department of an address change within 30 days - demonstrates a lack of general fitness, competence or reliability
Managers and exclusive general agents (GAs) (types of licenses)
anyone acting as a manager/exclusive GA must be licensed - volition is considered a 3rd degree misdemeanor - fine up to $1,000 per day
Agency contract
appoints a producer to act on the insurer's behalf and identifies the agent's authority - appointed producers (agents) have a fiduciary relationship with the insurer
Continuing Education (CE)
complete 24 credit hours for each 2-year license period - may carryover up to 24 hours to next period Licensees exempt from CE - licensees continuously licensed before 01/01/1971 - business entities - limited line/limited line credit insurance licensees - licensees with only fraternal line of authority - non-resident licensees
Principal's responsibility
duties of the principal to the producer - a principal (insurer) is responsible for all the producer's acts when the producer is acting within the scope of his authority - responsibilities include fraudulent acts, omissions and misrepresentation
Insurer Examinations
examination of books and records - department of Insurance may conduct examinations of insurers whenever deemed appropriate, but at least once every 5 years
Maximum Fines (disciplinary actions)
unfair competition -person knew it was a violation - $5,000 per violation - $50,000 aggregate in any 6-month period unfair competition - person didn't know it was a violation - $1,000 per violation - $10,000 aggregate in nay 6-month period violation of Commissioner's order - up to $10,000
Producer Appointment
producer may not act on behalf of/as a representative of an insurer unless appointed by the insurer - must file a Notice of Appointment with the Department
Policy Delivery (producer's ethical responsbility)
producer's duties - prompt delivery - review features/benefits - preform periodic reviews to reassess suitability
rate must be filled ____ days before use
30 days
the commissioner must conduct examination of every licensed insurer at least once every ____ years
5 years
the commissioner must examine rating organizations at least once every ____ years
5 years
Minimum age to obtain a producer's license
age 18
Commissioner
executes insurance laws to protect public interest - issues, suspends, or revokes licenses - regulates insurer solvency, approves policy forms and insurance premium rates - may not be a director, officer, or producer of an insurer - appointed by the governor for a 4-year term may not change the code itself
Tie-in Sales Prohibited (unfair insurance practices)
financial institutions may not require purchase of insurance from a specific insurer/producer as a condition of any loan or deposit transaction
Non-resident (types of licenses)
if currently licensed as a resident insurance producer in another state/territory, a producer may apply to the PA insurance department for a non-resident license for the same line(s) of authority as in their home state reciprocity: PA insurance department may waive requirements for non-resident license in PA if producer's home state awards the same to PA producers
Disciplinary Actions
if the commissioner suspects an insurance violation, the commissioner will hold a hearing regarding the alleged violation - at least 10 days notice required after the hearing, if a violation is found, the commissioner may - deny, suspend, refuse to renew, or revoke license - assess civil penalty up to $5,000 per violation - issue cease and desist order
Regulation of Insurer Solvency
insurers doing business in PA must main specified minimum levels of capital stocks/surplus - the amount depends on the lines of insurance and how the company is organized domestic insurers must submit a report of risk based capital levels to the Commissioner and NAIC every year by March 1
Rebating (unfair marketing procedures)
occurs when a purchaser receives any part of the producer's commission or anything of value as an inducement to purchase a policy examples of rebating -offering, paying or allowing any rebate or other inducement not specified in the policy, or any special favor or advantage concerning insurance dividends or other benefits that will accrue in order to place, negotiate or renew a policy - offering, paying or allowing any rebate of any premium on any insurance policy or annuity
Unauthorized Insurers
only insurers authorized/licensed by the state may issue policies - producers must make sure insurers are authorized to do business in PA The state guaranty fund does not cover liabilities of unauthorized, non-admitted insurers