State Requirements Insurance Test

Within how many days must an existing insurer provide a policy owner with a summary of their existing life insurance regarding the replacement of their policy?

5 days after receiving communication of replacement of their policy

How long must replacing insurers maintain replacement register regarding the policy?

5 years

What is the effective rate that may be charged on policy loans?

6% per year - commissioner may authoirze a maximum of 8%

Debtor Groups

Must receive new entrants at a rate of 100 per year or be reasonably expected to achieve 100 new entrants during the first policy year. The policy gives insurers the right to require evidence of individual insurability if less than 75% of the new entrants become insured

Assignment of Proceeds

Whole life insurance policies upon proper assignment or pledge of the policy may be advanced an equal amount to the loan value of their policies

If a producer renews his license before it expires what is issued?

a new license

Advertising

all advertisements and illustrations must be understandable to the public - clearly defined, truthful and precise info

Existing insurer def.

an insurer who issued the policy to be replaced

Replacing insurer

an insurer who proposes to issue a new policy replacing an existing

Representations

answers on an application

conservation effort

any attempt by an existing insurer or its producer to dissuade or discourage a policyholder from replacing or dropping their existing life insurance policy or annuity

Policy Replacement defined

any transacation in which a new life insurance policy or annuity contract is purchased to replace a policy currently withing force.

Application and Statements Provision

application provides underwriting info that must be attached to an issued policy. after policy is issued, any unanswered questions are considered waivd by an insurer. statements made by the policyholder or an insured on an application are representations

Group Life Insurance Eligibility - What defines a true group?

having at least 10 people whose coverage is provided under one master policy

Ms. Ward misstated her age on an application what will be adjusted?

her death benefit to reflect her current age

Alex died 12 days after his conversion from his employer's plan to his individual plan. Who will pay his death benefit?

his group policy

Statement to debtors

in the case of creditor policy to insure debtors the policyholder must be provided a form to reduce or pay off the indebtedness

Incontestability Provision

incontestability 2 years after the policy becomes effective

Who is not considered for group coverage?

individuals related by blood, marriage or adoption

Who defines the minimum number of a group?

state law

Replacement regulations do not apply to

1) Credit life policies 2) Group life insurance 3) any individual non convertible, nonrenewable policy of term life ins. with an expiration of less than 3 years

Group Life Insurance Eligibility Characteristics:

1) True group (10 people and one master policy) 2) Must be in existence for reasons other than purchasing insurance 3) Coverage is available, without individual examiniations, (Guaranteed issue) 3)policy is issued to employer, trust, union, or other association. Certificiate of issurance is issued as well 4) Group insurance cannot be obtained to benefit an employer - must be for sole benefit of covered employee, spouse and dependents 5) Premiums are based on the average age of the group and the ratio of men to women (premiums may be paid entirely by the policy holder (employer) or may be paid jointly by the policy holderr (employer) and an insured (member, employee)

Public Employee Groups

10 members

Betty, an insured group member, misstated her age on her application. What will the insurer most likely do in this circumstance?

Adjust their premium to correct age

Misstatement of Age Provision

For group insurance - premium will be adjusted to the correct age if misstated on an application Indiviudal insurance - the death benefit will be adjusted

What happens to an insured who dies after coverage but before the end of the conversion period?

If an insured dies after coverage but before the end of the 31st day will receive benefits from the group plan

What are issued to employees under the master policy?

Individual certificates of insurance

The ___ company notifies the ____ company regarding the replacement of the policy.

Replacing; replacement

Conversion is to the benefit of?

The company

The act of trying to discourage a policy holder from dropping his/her existing policy is called:

conservation effort

Who pays for noncontributory plan?

employer pays the premium

Who funds teh Life and Health Insurnace Guaranty Association??

insurance companies - it is mandatory they all participate and fund the association

Life and Health Insurance Guaranty Association

is a private, non profit, non stock corporation

Evidence of Insurability Provision

msut be provided if an insured joins the plan after the enrollment period

When is it legal for a client to sign an incomplete app?

never

Do married individuals qualify as a group for coverage?

no

Contributory plan

premium is paid both by policyholder and an insured. 75% of eligible employeers are covered

Noncontributory plan

premium is paid by employer, union or association. 100% of eligible employees must be covered

Group insurance evaluates

the group as a WHOLE regarding participation, purpose and size

Conversion Right

the right a terminated employee has to convert their group coverage to a Whole Life Policy without providing proof of their insurability *In the case of termination from the master policy, an employee has the right to convert to an individual policy.

After a policy is issued any unanswered questions are considered,

waived by an insurer

Employee Group

10 members: amount of insurance must be based on a plan precluding individual selection by an insured or policyholder

Volunteer, fire, rescue, ambulance

15 members

Credit union groups must have how many eligible members to qualify for group insurance?

25

Labor Union Groups

25 members

Credit Union Groups

25 members. amount of insurance cannot exceed the total amount of their shares and deposits in the credit union or $5,000 whichever is less

Joe is converting his group coverage to an individual plan. when must he submit his first premium for his individual policy?

31 days

What is the conversion period when an employee has the right to convert an individual policy, due to their employment terminiation?

31 days is covered employee is terminated to convert to an individual policy

Grace Period Provision

31 days that a policy will not lapse due to nonpayment

Who protects the policyholders from an insruance company's impairment or insolvency?

Life and Health Insurance Guaranty Association

Assignment of an insured's interest

Under group life policy, an insured may assign any or all ownership rights, including conversion rights, in accordance with the arrangement that exists between an insured, group and isnurer

Nonforfeiture provision

Under the terms of a group policy, it is not necessary that the grup policy contain the same nonforfeiture provisions as those in individual life insurance policies. However, if a group life insurance policy is not a term policy, it must contain a nonforfeiture porivsion that the commissioner believes to be fair to both an insured and insurer

What is the grace period for a life policy

31 days to pay premium after its past due date

What three things are not included in conservation?

1) Late payment reminders 2) Late payment offers 3) Reinstatement offers

What requirements must be met in the assignment of proceeds? (3)

1) Premiums have been paid for a minimum of 3 years 2) there is cash surrender value associated with the policy 3) there is no default of the premium beyond the grace period

Dependent coverage

1) individuals covered under a group plan do not choose benefit levels 2) possible for dependents of an insured (employee, member) under the group life plan -spouse, unmarried chidlren under 26 (natural, stepchildren, legally adopted and court ordered) -parent if there is proof of dependency -any person who can be proven as dependency

Within 6 months the life insurance policy or annuity contract will:

1) lapse, be surrendered, forfeited or terminated 2) reissued resulting in a reduction in cash value 3) pledged as collateral or subjected to borrowing 4) converted to a reduced paid up policy, continued as an extended term or reduced by the use of nonforfeiture benefits

XYZ has 10,000 employees. If their insurance is noncontributory how many of their employees must participate?

10,000

Multiple Employer Welfare Arrangement

100 members. must be in existence for five years

Professional Association Group

100 members. must have been in active existence for at least 2 years

Trustee Groups

100 members. no less than an average of 5 people per employer unit are required.

What percentage of eligible employees must be covered under a noncontributory plan?

100% participation is requred

Provisions and Disclosure

upon completion of a life insurance or annuity application, a statement must be signed by the applicant and agent containing an indication as to whether the proposed policy o contract will be replacing an existing policy or contract * All solicitation materials to replacing insurer and applicant must be provided by producer *existing insurers must provide the policy owner with a summary of their existing life ins. within 5 days of receiving written communication regarding replacement of their policy