2-15 B 7 & 8

Excess business?

"Excess business" is permitted when an agent's own company is not able to write the amount of insurance requested by the applicant. -Excess business is that portion of a risk above the limits of that which the agent's own insurer will accept. -A licensed life agent may place excess or rejected risks with any other authorized insurer without being required to secure an appointment as to such other insurer.

Agent ethics?

- Licensed agents may not submit applications to an insurance company without the following: the insurance companies name on the first page, and the agent's license number - Information must be legible and a copy of the application must be provided to the applicant

Unauthorized entities?

- Those insurers who are nonadmitted, meaning they have not been approved or authorized to sell insurance in the state. Reason for concerns: -potential for criminal activity within the insurance business -adverse economic impact on authorized insurers -potential for unpaid claims due to dishonesty

Notice of replacement?

- When a life agent makes a life insurance proposal and knows or should know that the purchase of such policy will replace an existing life insurance policy, the replacement rule applies - Replacement means any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuities will be replaced

Underwriting criteria?

-Age -Gender -Occupation -Physical conditions -Avocations -Moral or morale hazards -Financial status of the applicant

Taxation of medical expense insurance?

-Incurred medical expenses that are reimbursed by insurance may not be deducted from an individual's federal income tax - Incurred medical expenses that are not reimbursed by insurance may only be deducted to the extent they exceed 7.5% of the insured's adjusted gross income -Benefits received by an insured under a medical expense policy are not included in his gross income because they are paid to offset losses he incurred - For self-employed individuals, 100% of their health insurance premium is tax deductible

Limitations and exlcusions?

-Preexisting conditions or diseases -Alcoholism and drug addiction -War or acts of war -Participation in a felony, riot or insurrection -Suicide or self-inflicted injury -Aviation (except for fare-paying passengers)

Taxation of disability income insurance?

-Premiums paid for personal disability income insurance are not deductible by the individual insured, but the disability benefits are tax-free to the recipient -When a group disability income insurance plan is paid for entirely by the employer and benefits are paid directly to individual employees who qualify, the premiums are deductible by the employer. The benefits, in turn, are taxable to the recipient -If an employee contributes to any portion of the premium, her benefit will be received tax-free in proportion to the premium contributed

Every insurance policy issued in the state of Florida must specify the following:

-The names of the parties to the contract -The subject of insurance -The risks insured against -The effective date and period of coverage -The premium -The conditions pertaining to the insurance -The form numbers and edition dates of all endorsements attached to the policy

Unfair claims settlement?

-can't refuse claim w/o conducting a reasonable investigation - delaying or refusing a settlement just bc the claimant retains an attorney or public adjustor -compelling an insured to commence litigation by offering an inadequate settlement -must cite specific policy that applies

Agent responsibilites?

1. The Solicitation Law: spells out the information and procedures required of agents and insurers when proposing life insurance to a prospective buyer 2. Replacement Rule: sets forth the requirements and procedures to be followed by insurance companies and agents when a proposal is being made in which a prospective life insurance buyer will be replacing existing insurance contracts with the proposed new insurance 3. Code of Ethics: establishes a broad outline defining appropriate and inappropriate business behavior for life insurance agents.

Notice to buyer?

A "notice to buyer" must be on the first page of each long-term care policy delivered in. It explains that some long-term care costs may not be covered

Prepaid Limited Health Service Organization (PLHSO)?

A PLHSO is any person, corporation, partnership, or any other entity that, in return for a prepayment, undertakes to provide or arrange for, or provide access to, the provision of a limited health service to enrollees through an exclusive panel of providers for the following services: -ambulance service -dental and vision care services -mental health services -substance abuse services -pharmaceutical services

Domestic insurance company?

A company that resides and is incorporated under the laws of the state in which its home office is located. -Company chartered in Florida would be a domestic company in Florida.

Foreign insurance company?

A company whose home office is located in another state. It is considered to be a foreign company in all states except for its home state. -Company chartered in Texas would be a foreign company in Florida.

Individual contract?

A contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber covering the subscriber and the subscriber's dependents. -An insurer may NOT issue an HMO contract

Discount Medical Plan Organization (DMPO)?

A discount medical plan organization is an entity that, in exchange for fees, dues, charges, or other consideration, provides access for discount medical plan members to providers of medical or ancillary services and the right to receive medical or specialty services from those providers at a discount. -you generally pay a monthly fee to get discounts on specific services or products from a list of participating providers.

Medicaid?

A federal and state assistance program that pays for health care services for people who cannot afford them.

Medicare?

A federal program of health insurance for persons 65 years of age and older

Time Limit on Certain Defenses (incontestable period)?

A health or disability policy is incontestable after it has been in force for a period of 2 years. Only fraudulent misstatements in the application may be used to void the policy or deny any claim at this point.

Licensing?

A licensee may not transact insurance business in Florida until the licensee is appointed by an insurer. Individuals looking to acquire an insurance license must meet the following eligibility requirements: -Must be at least 18 years old -Must be a U.S. citizen or legal alien -Must be a Florida resident -May not be an employee of the United States Department of Veterans Affairs -May not be a funeral director or direct disposer -Complete a 60-Hour pre-licensing education course -Pass the insurance state licensing examination -Must be trustworthy and competent

Maternity benefits?

A maternity provision may provide a fixed amount for childbirth or a benefit based upon a specified multiple of the daily hospital room benefit Frequently, the maternity benefit is available only as an added benefit for an additional premium

Fraternal benefit society?

A nonprofit society that: -does not have capital stock -is formed solely for its members -operates on a lodge system -has a representative form of government

Member?

A person who makes a contract or on whose behalf a contract is made with a health maintenance organization for health care services.

Subscriber?

A person who makes a contract with a health maintenance organization, either directly or through an insurer or marketing organization, under which the person or other designated persons are entitled to the health care services.

Substandard risk?

A substandard risk is one below the insurer's standard or average risk guidelines. -Poor health, a dangerous occupation, or attributes and habits that could be hazardous. -Some substandard applicants are rejected outright. -Others will be accepted for coverage but with an increase in their policy premium.

Adopted and Prospective Adopted Children?

All health plans must provide coverage to the insured's adopted children on the same basis as other dependents.

Newborn child coverage?

All health plans that provide coverage to family members of the insured, must provide coverage for the insured's newborn child from the moment of birth for a period of 18 months.

Viatical settlements?

Allows someone with a terminal illness to sell their existing life insurance policy to a third party for a percentage of the face value. -To receive a percentage of the policy face value, an owner of a life policy may sell the policy to a viatical settlement provider. -Viatical settlement brokers must be licensed before conducting any viatical transactions. Proceeds of the viatical settlement contract could be subject to the claims of creditors. -the original policy owner is called the Viator and the new third party owner is called the Viatical or sometimes called the Viatee.

Commingling?

An agent who has combined premiums collected with personal funds has engaged in commingling, which is a prohibited act. An agent must maintain premiums in a separate account.

Conservation?

An agent's attempt to stop the replacement of an existing life insurance policy or annuity is known as conservation.

Discount medical plan?

An arrangement or contract in which a person, in exchange for fees or other consideration, provides access for plan members to the services of providers of medical services at a discount.

Insurance agency?

An insurance agency is any business location where insurance transactions take place that can only be performed by licensed insurance agents

Reinstatement?

An insurance company that requires an application for reinstatement has 45 days to reject the application before reinstatement is automatic. In other words, if the insurer takes no action within 45 days, the policy is considered reinstated automatically.

Outline of coverage?

An outline of coverage is required and provides a very brief description of the important features of the policy. It is considered a summary of coverage. It requires: -A summary of the policy's principal exclusions and limitations -A statement of the policy's renewal and cancellation provisions -A description of the policy's principal benefits and coverage

Background check?

Any inquiry or investigation of the applicant's qualifications, character, experience, background, and fitness must include submission of the applicant's fingerprints to the Department of Law Enforcement and the Federal Bureau of Investigation and consideration of any local, state, or federal criminal records.

Provider?

Any person, including a physician or hospital, who is licensed or otherwise authorized in this state to provide health care services.

Certificate of authority?

Before an insurance company can sell insurance in a specific state, they must apply for a license or Certificate of Authority from that state's Department of Insurance. -Once approved and given a Certificate of Authority, they are eligible to transact insurance.

Buyer's guide?

Buyer's Guide provides basic information about an insurance policy. It helps a buyer choose the amount and type of insurance to buy, and how to save money by comparing the cost of similar policies.

Coercion?

Coercion is when an agent uses physical or mental force, with the intent of convincing an applicant to buy insurance.

COBRA?

Consolidated Omnibus Budget Reconciliation Act -is a federal law that requires employers with 20 or more employees to include a continuation of benefits provision for former employees and their dependents. -guarantees that the participant can continue the group coverage (at their own expense) at group rates if their participation in the group plan is terminated because of a qualifying event. -It is important to remember that COBRA benefits apply only to group health insurance, not group life insurance.

Controlled business?

Coverage written by an agent on his/her own life, health, property, immediate family, or business associates. Most states will not issue a license to a person if it is determined that their primary purpose is to write controlled business.

Dread disease policy?

Dread Disease policies cover a single disease or illness only.

ERISA?

ERISA supersedes Florida state law relating to employee retirement plans. The savings clause in ERISA protects the following areas of state regulation: -Insurance, Banking, and Securities

Endodontics?

Endodontics is the branch of dentistry dealing with diseases of the dental pulp. Root canals would be an example. Endodontics is commonly excluded or limited from a dental policy.

Expense?

Every business has expenses that must be paid and the insurance business is no different. -Each health insurance policy an insurer issues must carry its proportionate share of the costs for employees' salaries, agents' commissions, utilities, rent or mortgage payments, maintenance costs, supplies, and other administrative expenses.

Excess charges?

Excess charges occur when an agent knowingly collects money for a premium or an additional charge for insurance that is not provided for in the policy.

FLORIDA HEALTHY KIDS CORPORATION

Florida Healthy Kids offers health insurance for children ages 5-18. Health Kids is designed to provide quality, affordable health insurance for families not eligible for Medicaid. -Families with children covered by the Florida Healthy Kids Corporation program pay only a portion of the premium

Medical Examinations/HIV?

For underwriting an individual policy, insurers may require proposed insureds to undergo an HIV test, but only in conjunction with other medical tests. The basis for requiring an HIV test cannot be the proposed insured's sexual orientation. The insurer must obtain written consent from the proposed insured in order to conduct the HIV test.

Fraud?

Fraud occurs when someone intentionally deceives another with the intent to gain financially.

Reporting of actions?

If an agent is found guilty of a felony, he/she is required to notify the Department of Insurance within 30 days.

Senior citizen grace period?

In Florida, anyone over the age of 64 will receive an additional 21 days beyond the normal policy grace period.

Handicapped children?

In Florida, coverage for a child who is dependent on the parents for support due to a physical handicap may be continued beyond the contractual limiting age when the child is incapable of self sustaining employment.

Morbidity?

Indicates the average number of people at various ages who can be expected to become disabled each year due to accident or sickness.

Group life certificates?

Instead of a policy, the participants under a group plan are issued certificates of insurance as evidence that they have coverage. -Each person insured under a Group Life insurance policy is a certificate holder

Domestic, foreign, and alien?

Insurers are classified according to their domicile. What are the three types of insurers.

Alien insurance company?

Is one that is chartered and organized in any country other than the United States. It is considered an alien insurance company in all states. -Company chartered in Canada would be an alien company in Florida.

Reinsurance?

Is the transfer of risk from one insurer to another.

Unfair Discrimination?

It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. -Ex: would be providing different terms of coverage for different policyowners in the same risk classification. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality.

Interest?

Just as with life insurance, interest is a major element in establishing health insurance premiums. -A large portion of every premium received is invested to earn interest. -The interest earnings reduce the premium amount that would otherwise be required from policyowners.

Free look?

Known as the "Right to Examine". Health insurance policies must provide a minimum free-look period of 10 days upon policy delivery. -This allows the policyowner time to decide whether or not to keep it -If the policyowner decides not to keep the policy within the 10 days allowed, a full refund will be given.

Grace period?

Life insurance policies must provide a grace period of 30 days after the due date. If the insured dies during the grace period, the insurance company may deduct any premium due from the death benefit.

Long-term care?

Long-term care insurance is designed to provide coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services in a setting other than an acute care unit of a hospital.

Preferred risk?

Many insurers reward good risks by assigning them to a preferred risk classification. -Reduced premiums with the expectation of better than normal mortality or morbidity experience. -Characteristics that contribute to a preferred risk rating include not smoking, weight within an ideal range, and not drinking.

Misrepresentation?

Misrepresentation is when an agent uses publications, sales materials, or makes statements that are false, misleading, or deceptive to unfairly influence the purchase of a policy. -Ex: would be when an agent tells a client that dividends are guaranteed

Churing?

Occurs when an agent has a policyholder replace one policy for another with the same company for the sole purpose of making more commission. -This can involve using the cash value and/or dividends of an existing policy to purchase another policy with the same insurer. -This normally is done using misrepresentation or deception and is not in the policyholder's best interest. Agents who use twisting or churning can be charged with a first degree misdemeanor and a fine from $5,000 to $75,000 for each violation.

Sliding?

Occurs when an agent tells an applicant that in order to get the product they want, they are required by law to get an additional product as well.

Twisting?

Occurs when an insurance agent convinces a policyowner to cancel their current policy so that they can purchase new life insurance policy with another company. -This would involve the agent using misrepresentations or incomplete comparisons of the advantages and disadvantages of the two policies. -Twisting is a form of misrepresentation and is illegal.

Defamation?

Occurs when an oral or written statement is made that is intended to injure a person in the insurance business or be critical and misleading about the financial condition of a person or company.

Oral surgery?

Oral and maxillofacial surgery is surgery to treat many diseases, injuries and defects in the head, neck, face, jaws and the hard and soft tissues of the oral and maxillofacial region.

Orthodontics?

Orthodontics is the treatment of irregularities in the teeth (esp. of alignment and occlusion) and jaws, including the use of braces.

Periodontics?

Periodontics is a dental specialty that involves the prevention, diagnosis and treatment of disease of the supporting and surrounding tissues of the teeth or their substitutes. It also involves the maintenance of the health, function, and esthetics of these structures or tissues.

3 types of applicant ratings:

Preferred risk, standard risk, and substandard risk

Duties of the replacing agent?

Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the agent. A copy must be left with the applicant. -Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. -Submit to the replacing insurance company a copy of the Replacement Notice with the application. -An agent must disclose the possible tax consequences of replacing or exchanging an existing annuity or life insurance policy. -The replacement of existing life insurance policies with new contracts of life insurance requires a written Comparison and Summary Statement at the policyowner's request.

Prosthodontics?

Prosthodontics is a branch of dentistry dealing with the replacement of missing parts using biocompatible substitutes such as bridgework or dentures

Rebating?

Rebating happens when an agent refunds part of their commission, or exchanges anything of value to induce someone to purchase an insurance policy -Rebating is allowed in Florida if the agent rebates insureds in the same actuarial class. -An insurer or agent may give to a prospective insured, for the purpose of advertising, any article of merchandise having a value of not more than $100.

Office of insurance regulation?

Regulation, compliance, and enforcement of statutes related to the business of insurance and the monitoring of industry markets (regulatory oversight of company solvency, policy forms and rates, market conduct performance, and new company entrants in the FL market

Replacement?

Replacement is strictly regulated and requires full disclosure by both the agent and the replacing insurance company. Replacement regulations exists to assure that purchasers receive specified information and it also reduces the opportunity for misrepresentation. -a new policy or contract is to be purchased, and the agent is aware that an existing policy or contract has been, or will be: -Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated -subjected to loans exceeding 25% of the cash value -Used in a financed purchase

Restorative?

Restorative dentistry is the procedure for restoring the function and integrity of a missing tooth structure. Examples include fillings, crowns, and dental bridges.

Standard risk?

Standard risk is the term used for individuals who fit the insurer's guidelines for policy issue without special restrictions or additional rating. -Individuals meet the same conditions as the tabular risks, which the insurer premium rates are based

Home agencies?

The Department of Financial Services considers all of these factors when determining whether an agent's home is an insurance agency: -Listing the location address on business cards/marketing materials and solicits business to be done at that location -There is a sign on the house indicating someone is there -The agent meets clients there -Insurance transactions take place at that location

Hearings?

The Financial Services Commission may hold hearings for any purpose within the scope of the insurance code deemed necessary, such as: -Person engaging in unfair competition, or any unfair or deceptive act -Person engaging in business of insurance without a license -The best interest of the public would be served

National Association of Insurance and Financial Advisors (NAIFA)?

The National Association of Insurance and Financial Advisors is a professional organization whose code of ethics is incorporated into Florida law and whose responsibility it is to establish the activities of agents. -The insurer must provide a buyer's guide along with a policy summary to any prospective purchaser before accepting the applicant's initial premium or upon the applicant's request.

Ambulatory services?

The advances in medicine now permit many surgical procedures to be performed on an outpatient basis where once an overnight hospital stay was required these outpatient procedures are commonly referred to as ambulatory surgery.

Interest rates?

The maximum fixed policy loan interest rate that an insurer can charge in Florida is 10%. Adjustable rates for policy loans are based on Moody's corporate bond index.

FLORIDA EMPLOYEE HEALTH CARE ACCESS ACT?

The purpose of the Florida Employee Health Care Access Act is to make group health insurance available to employers with 50 or fewer employees. -The provisions of the Florida Employee Health Care Access Act require that all small group health benefit plans be issued on a "guaranteed-issue" basis

USA Patriot Act?

The purpose of the USA Patriot Act is to detect and deter terrorism. -A life insurance policy that can be cash-surrendered is an attractive money laundering vehicle because it allows criminals or terrorists to put dirty money in and take clean money out in the form of an insurance company check.

False advertising?

This includes making false statements about the financial condition of an insurer. An insurer exaggerating its dividends in a publication is also considered a form of false advertising.

Florida Life and Health Guaranty Association?

To provide funds to protect an insured in the event of an insurer's insolvency. -It is funded by insurance companies through assessments -Agents are prohibited from using the existence of the Life and Health Guaranty Association for selling, soliciting, or inducing purchase of an insurance policy

Binding reciept?

Under a binding receipt, coverage is guaranteed until the insurer formally rejects the application. Even if the proposed insured is ultimately found to be uninsurable coverage is still guaranteed until rejection of the application.

Mandatory second options?

Under the mandatory second surgical opinion provision, an insured typically will pay more out-of-pocket expenses for surgeries for which only one opinion was obtained -The mandatory second surgical option provision can help contain the cost of a group medical plan

Unfair trading practices?

Using deceptive, dishonest, fraudulent or unethical methods to obtain customers.

Industrial policies?

When an insured has industrial life insurance policies with a single insurance company that total $3,000 or more in face value, the insured has the option to convert all of these policies into one ordinary life insurance policy at standard premium without evidence of insurability.

Case management?

or "Utilization review" -Case management involves a specialist within the insurance company, such as a registered nurse, who reviews a potentially large claim as it develops to discuss treatment alternatives with the insured. -The purpose of case management is to let the insurer take an active role in the management of what could potentially become a very expensive claim.

Pre certification review?

prior approval of a health care process to determine the appropriateness of care