Health and life insurance exam pt 5

Change of address

every producer licensed in Missouri must notify the Director in writing within 30 days of an change of address

Surplus

excess of company's assets over liabilities

The life and health insurance guaranty association is required to maintain 3 accounts

- life insurance account -annuity account -health insurance account

If the insurer requires evidence of insurability, and that evidence is provided _____ days after the date the debtor becomes obligated to the creditor, the term of the insurance begins on the date the company determines the evidence of insurability to be satisfactory

30

How long does the director have to approve or disapprove a policy or contract after the filing?

45 days

Certificate of authority

Authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate. Must be renewed annually as of July 1 and will remain in force unless otherwise terminated, suspended or revoked

What must companies do annually for policyholders of an individual variable contract?

Mail the contract holder a statement reporting the investments held in the separate account at least annually. Must also submit an annual statement of the business of its separate account to the director

Dependent

Someone relying on the insured for support

How can a business entity obtain an insurance producer license?

The business entity must pay a license fee of $100 and must designate a licensed individual insurance producer to be responsible for the entity's compliance with the insurance laws, rules and regulations

Whose responsibility is it to make sure that annuity transactions address consumer's needs and financial objectives

The producer

What happens if a producer allows their license to expire?

Within 12 months, the producer may reinstate the same license, they must provide proof that the CE requirements were met and pay a penalty of $25 per month that the license was expired

Director

a chief officer of the department of insurance, financial institutions and professional registration. Appointed by the governor with the consent of the senate and holds office concurrently with the Governor until a successor is appointment

Statue

a formal written law enacted by legislature, insurance statutes can be found in the state insurance code

Grace period

a grace period of 7 days for weekly period mode, 10 days for monthly premium mode, and 31 days for any other premium mode will be granted for the payment of each premium falling due after the first premium. The policy will still continue in force

Reciprocity

a mutual interchange of rights and privileges

Grace period and lapse

a written notice of the termination of coverage must be sent to the policyowner at least 30 days prior to the termination. After policy lapse, a grace period of at least 30 days must be provided

False advertising

advertising covers a wide scope of communication, from publishing an ad in a newspaper or magazine, to broadcasting a commercial on TV or the internet. Advertisements cannot include any untre, deceptive, or misleading statements that apply to the business of insurance

Time limit on certain defenses

after 2 years from the date of issue of a policy, no misstatements exempt fraudulent misstatements made by the applicant in the application for such policy can be used to void the policy or to deny a claim for loss incurred or disability

Continuing education

all insurance producers must successfully complete 16 credit hours of CE every 2 years, prior to license renewal. 3 of those hours must be completed in courses related to ethics,state law, and producer duties

Pro rata premium

an adjustment of the premium charge in proportion to the exact coverage that has been in force

Solicitation

an attempt to persuade a person to buy an insurance policy, and it can be done orally or in writing

Inducement

an offer that attempts to influence the other party

Companies that issue and deliver variable contracts in this state must meet the following requirements

be licensed to tractact insurance in this state and are in good standing have and maintain capital and/or surplus of at least 2.5 million

Nonforfeiture values

benefits in a life insurance policy that the policyowner cannot lose

Moral turpitude

conduct that is contrary to community standards of justice, honesty or good morals

Trade practice

each act as part of a trade practice does not constitute a separate violation, each act constitutes a level 2 violation which may result in a $1,000 fine with a maximum penalty of $50,000

Exempt

not subject to an obligation

Deframation

occurs when an oral or written statement is made that is intended to insure a person engaged in the insurance business

Misstatement of age and sex

provision must stipulate that the death benefit will be adjusted to the amount that would have been purchased in accordance with the most recent mortality charge at the correct age or sex

Each producer who initiates the application must submit the following to the insurance company with or as part of each application

-a statement signed by the applicant as to whether replacement of existing life insurance or annuity is involved in the transaction -A signed statement as to whether the producer knows the replacement is or may be involved in the transaction

A person must meet the following qualifications before a license is issued

-be at least 18 years old -file an application with director -pay the $100 license fee, submitted with the application - pass each exam which is required for the license being sought -have not committed any act that is grounds for license denial, suspension, or revocation If the director does not take action within 25 working days from the receipt of an application, the application will be deemed approved

All graded life insurance policies in the state of MO that provide graded (increasing) life insurance policies during early policy years must comply with the following:

-be offered on a guaranteed issue basis or on underwriting standards that justify grading of the death benefit -provide accidental death benefits in an amount of at least the face amount of the policy during the graded-death benefit period -If the insured is age 65 and under, cannot grade the death benefit in excess of 3 years unless the policy provides at least 50% of the face amount as a first year death benefit -If the insured is between the ages of 66 and 75, cannot grade the death benefit in excess of 2 years unless the policy provides at least 50% of the face amount as a first year death benefit. The 2 year period can be extended t o3 years if the death benefit during the third policy year equals or exceeds 65% of the ultimate death benefit -if the insured is age 76 or older , cannot be issued unless the policy provides at least 50% of the face amount as a first year death benefit

All universal life insurance policies in the state of Missouri must include the following provisions

-periodic disclosure to policyowner -current illustrations -policy guarantees -calculation of cash surrender -changes in basic coverage -grace period and lapse -misstatement of age and sex -maturity date

What are the purposes that the Director has the power and authority to make rules and regulations

-regulate the internal affairs of the department of insurance -prescribe forms and procedures to be followed in proceedings before the department - aid in interpretation of any state insurance law -withdraw or amend any rule or regulation

Disclaimer on the policy first page will do the following

-state the name and address of the life and health insurance guaranty association and insurance department -prominently warn the policy or contract holder that toe MO life and health insurancy guaranty association may not cover the policy, or if coverage is available it will be subject to substantial limitations -state that the insurer and its agents are prohibited by law from using the existence of the guaranty association for the purpose of sales, solicitation or inducement to purchase any form of insurance -emphasize that the policy or contract holder should not rely on coverage under the MO life and health insurance guaranty association when selecting an insurer -provide other information as directed by the director

How often must a producer's licensed by renewed?

Biennially (every other year) on the anniversary date of issuance The renewal fee is $100 per license

What must insurers not use when making recommendations for purchasing a variable contract?

Misleading sales or advertising materials that may or appear to be false

What happens if you willingly violate a director's cease and desist order?

Punished up to $100,000, imprisonment of up to 10 years, or both. A person's license or certificate of authority may be subject to suspension or revocation

What happens if an insurance producer applies for an insurance license who was previously licensed for the same lines of authority?

They will not be required to complete an examination, only applies if the person is currently licensed or if the application was received within 90 days

Commission

a joint public agency that has the power to develop uniform standards for product lines, receive and provide review of products and give approval to those product filings that meet the uniform standards

Insurance producer

a person required to be licensed by laws of this state to sell,solicit, or negotiate insurance. Producer licenses are issued for a period of 2 years. No person is committed to sell, solicit, or negotiate insurance in this state of any class or classes of insurance unless that person is licensed for that line of authority

Nonresidents

a person who is not a legal resident of Missouri may be licensed to act in this state without taking a written examination if all of these conditions are met: -the person is currently licensed as a resident and in good standing -the person has submitted the proper request for license and has paid the fees prescribed by the director -the person has submitted to the director the application for licensure that the person submitted to his or her home state -the state in which the person resides accords the same privilege to residents of missouri

claimant

a person who submits a claim payment of benefits

Graded death benefit life insurance policy

a policy intended to be used for substandard risks. The death benefit INCREASED over time and is issued with little or no underwriting. If the insured suffers a quick death there will be a limited death benefit, if they insured lives longer, the death benefit will increase over time

Guaranteed renewable

a policy written on a noncancellable basis with the guaranteed right to renew

Suitability

a requirement to determine if an insurance product is appropriate to the exact coverage that has been in force for a customer

Credit insurance

a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. Credit life is usually written as decreasing term insurance, and it may be written as an individual policy or as a group plan. Credit life insurance cannot pay out more than the balance of the debt

Reinstatement

an insurance company is NOT obligated to reinstate a lapsed policy. The isurer may accept past due premiums and immediately reinstate the policy. Most insurers will require payment of premiums, reinstatement app, and proof of insurability . If no decision is made the policy will automatically be reinstated on the 45th day. 10 day waiting period before losses relating to sickness are covered

Replacement

any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be any of the following: -lapsed, forfeited, terminated - reissued with any reduction in cash value -amended -used in financed purchase

Periodic disclosure to policyowner

at least once a year, the policyowner must receive, without any additional charge, a policy status report for the period ending no earlier than 3 months prior to the report mailing date

Interstate insurance product regulation compact

formed to help states jointly regulate designated insurance products. The purpose of the compact is -to promote and protect consumers of individual and group annuities, life and long term care insurance and disability income products -develop uniform standards for insurance products establish a central clearinghouse to receive and provide review of insurance products -approve product filings and advertisements -improve coordination of regulatory resources and expertise between states -perform any other related functions that are consistent with the state regulation of the business of insurance

Cease and desist orders

if the director suspects that an insurer or its agent has committed a violation or is engaged in an unfair trade practice, the director may issue a statement of charges and hold a hearing for any purpose deemed necessary

Discrimination

in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. No discrimination may be made on an individual's marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry

Time payment of claims

indemnities payable under this policy for any loss will be paid immediately upon receipt of due written proof of such loss

Representations

indicating that all statements made by the insured are considered representations and not warranties

surplus lines

insurance not available from authorized insurers; placed with nonadmitted insurers who specialize in offering insurance to the high-risk market

Home state

insurer's headquarters, principal place of business

Retrospective commissions

insurers in missouri are prohibited from using any payment plans to insurance producers which would allow the company to receive an agreed portion of its earned premium free from any normal claims

Rebating

is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal. Rebated may include -rebates of premiums payable on the policy -special favors or services -advantages in the dividends or other benefits -stocks, bonds, securities, and their dividends

Profit sharing

is permitted: the amount of commission paid to an insurance producer may vary with the loss experience of the policies written by the producer

Misrepresentation

it is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements. Committing this act is called misrepresentation

Inducement

it is unlawful to pay, offer, or accept any of the following as an inducement to buy insurance -any special favor or advantage -any stocks, bonds, securities, or accrued dividends or profits -anything of value not specified in the insurance contract

An insurance producer may qualify in one or the more following lines of authority

life insurance coverage (benefits of endowment and annuities) accident and health or sickness insurance variable life and variable annuity products credit (limited line credit insurance) Property, casualty, personal lines and surplus lines any other line of insurance permitted under state laws or regulations

Suicide exclusion

life insurance policies may exclude or restrict liability of death as a result of suicide if the suicide was committed within 1 year from the date of the policy issue, whether the insured is deemed sane or insane. The insurer is responsible for a prompt refund of paid premiums. The suicide exclusion or restriction must be clearly stated in the policy

Conservation

means any attempt by the existing insurer or its producers, or by the broker to dissuade a current policyowner from the replacement of existing life insurance or annuity

NAIC

national association of insurance commissioners, an organization composed of insurance commissioners from all 50 states, the district of Columbia and the 4 US territories, formed to resolve insurance regulatory issues

Commissions and compensation

no insurer transacting business in Missouri may pay any commission or other compensation to any person for services as an agent in obtaining insurance, except to a licensed producer of the company

commission

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

Expense incurrent contract

pays health policy benefits as a reimbursement of actual expenses

Policy guarantees

polcies must provide guarantees of minimum interest credits and maximum mortality and expense charges. Figures based on nonguarantees cannot be included in the policy

Changes in basic coverage

polices must state if the policyowners have the right to change the basic coverage

Regulation on the maximum interest rate on policy loans

policy loan interest rates may not exceed 8% per year maximum rate for each policy must be determined at regular intervals at least once a year, but not more frequently than once every 3 months

Lapse

policy termination due to nonpayment of premium

Fiduciary capacity

position of trust

duties of replacing producer

present the applicant a notice regarding replacement that is signed by both the applicant and the producer. A copy must be left with the applicant Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers adn the names of all companies being replaced Leave the applicant with the original or a copy of written or printed communications submit to the replacing insurance company a copy of the replacement notice with the application

Premium handling standards

producers must ensure that each applicant for new policy receives coverage as soon as reasonably possible, if the insurer does not provide coverage within 30 days of the application, the producer must inform the prospective insured of this fact in writing

Record keeping

producers must maintain complete records for each individual insurance policy it is the responsibility of the insurer. The records must be maintained for 3 years an must be available for inspection. Upon the director's respect, producers must retrieve records within 5 business days

Examination of records

purpose is to ensure that the companies remain solvent and conduct business insurance in compliance with state laws and regulations pertaining to licensing, policy forms, rates, claims, and market conduct. The Director must conduct a financial examination of any domestic insurance company at least once every 5 years

Duties of replacing insurance company

require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant Send each existing insurance company a written communication advising of the proposed replacement within a specified period of time of the date that the application is received in the replacing insurance company's home or regional office. A policy summary or ledger statement containing policy data on the proposed life insurance or annuity must be included

Discosure

revealed information to help someone make an intelligent and educated decision

Evidence of insurability

setting forth conditions under which the insurer reserves the right to require evidence of individual insurability

Collateral

something of value pledged for the payment of a debt

Misstatement of age

specifying an equitable adjustment of premium or benefits in case of misstatement of age

Assignability

states that the insured under a group life policy may assign any incidents of ownership under the policy, such as the right to designate a beneficiary, to have an individual policy, and to pay premiums

Entire contract

stating that a copy of the application must be attached to the policy

Certificate of insurance

stating that the insurer will issue the policyholder for delivery to each individual insured a certificate specifying the insurance protection

Nonrenew

terminate an insurance policy at its expiration date

Current illustrations

the annual report must include notice that the policyholder has the right to request an illustration of current and future benefits and values

Replacing insurer

the company that issues the new policy

Existing insurer

the company whose policy is being replaced

Notice of claim

the insured must notify the insurer of a loss within 20 days or as soon as possible

Claim forms

the insurer upon receipt of a notice of claim, will furnish to the claimant such forms utilized by the insurer for filing proof of loss. If the forms are not provided with 15 days of notice the claimant will be deemed to have complied with the requirements of the policy

Proofs of loss

the owner of the policy must provide the insurer with written proof that there was a loss with 90 days of the loss, but no later than 1 year from the loss

Entire contracts; changes

the policy, including the endorsements and attached papers, constitutes the entire contract of insurance. Changes are only valid if approved by the executive officer of the insurer. Producers do not have authority to change this policy or to waive any of its provisions

Incontestability

the validity of the policy may not be contested after the policy has been in force for 2 years unless for nonpayment of premium or fradulent misstatements by the applicant or insured

War and aviation exclusion

this provision stipulates that life insurance policies must include a notice of any war or aviation exclusions. The notice must be prominently displayed on the face of the policy and clearly name and explain the exclusions contained in the policy

cease and desist

to stop and discontinue

The missouri life and health guaranty association

was created to protect policyholders, insureds, and beneficiaries of life insurance policies, health insurance policies, annuity contracts and supplemental contracts when the insurers fail to perform contractual obligations due to financial impairment. All insurers are required to be members of the association as a condition of their authority to transact insurance in this state

Penalities

when the director determines that a person is guilty of an unfair method of competition, the guilty person will be orders to pay a find of up to $1,000 for each violation, not to exceed $100,000 in any 12 month period

Maturity date

whenever a policy provides a maturity or end date, it must contain a statement that it is possible that coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner