Massachusetts Life and Health Insurance Exam

Per Stirpes

"By the branch" if beneficiary is deceased, it goes down the line to their children

Penalties for intentional violations of privacy statutes- $ per violation

$1,000

Unfair or deceptive trade practices require how much penalty per violation?

$1,000

Penalties for intentional violations of privacy statutes- $ Maximum for an insurance representative

$10,000

Penalty for violating a commissioners cease and desist order

$10,000

Public adjusters maximum penalty for violations

$10,000

(Guaranteed Association) Maximum benefits for any one life- Life insurance cash values

$100,000

(Guaranteed Association) Maximum benefits for any one life- Other health insurance benefits

$100,000

(Guaranteed Association) Maximum benefits for any one life- Present value on annuity benefits

$250,000

(Guaranteed Association) Maximum benefits for any one life- Disability insurance benefits

$300,000

(Guaranteed Association) Maximum benefits for any one life- Life insurance death benefits

$300,000

(Guaranteed Association) Maximum benefits for any one life- Long Term Care insurance benefits

$300,000

Penalties for intentional violations of privacy statutes- $ Maximum for an insurance institution or support organization

$50,000

(Guaranteed Association) Maximum benefits for any one life- Basic hospital, medical, and surgical insurance or major medical insurance benefits

$500,000

Annuitization period

(liquidation, pay-out period) income is paid to the annuitant

Exclusions

* See list on pg 357

Variable Annuity

*Must be licenses with securities to sell- money is put into separate accounts and the growth will fluctuate. The payouts are also variable

HIPAA (Health Insurance Portability and Accountability Act)

*Preexisting conditions- 6 month exclusion period includes most health coverage guaranteed 48 hour for child birth, 96 for C section Small employers cannot be denied

Major Medical Covered Expenses

*See chart on Pg. 356

labor union

*Taft Hartley Trust An organization of workers that tries to improve working conditions, wages, and benefits for its members

Business Uses of Life Insurance

*buy sell funding (cross purchase, entity purchase) *key person *executive bonus *deferred compensation

Eligible groups

*groups can't exist solely for the purpose of buying insurance Employer Sponsored Multiple Employee Combined -Multiple Employer Trust (MET) -Multiple Employer Welfare Arrangement (MEWA) Labor Unions- Taft Hartley Trust Trade or professional association Lender Group

Determining Amount of Life Insurance needed

*human life value (current income) *needs approach (money for specific needs

Surrender or Withdrawal

- 10% tax if withdrawn before 59 1/2. - surrender period - waiting period. - surrender fee - penalty for early withdrawal.

optional provisions

- Change of Occupation - Misstatement of Age or Sex - Other Insurance with This Insurer - Insurance with Other Insurer - Insurance with Other Insurers - Relation of Earnings to Insurance - Unpaid Premiums - Cancellation - Conformity with State Statues - Illegal Occupation - Intoxicants and Narcotics

Variable Life

- Death Benefit is Variable - Only one death benefit option - Premium is fixed - Mortality Rates are fixed & guaranteed - Cash Value is Variable & No Guaranteed - Yes, investment options - No partial surrenders

Medicare Part A Coverage

- Hospitalization (per episode of illness (DRG)- cost for person goes up the longer they are there) - Skilled nursing facility (no coverage beyond 100 days) - home (skilled) health care (100 visits per illness) - hospice care - does NOT cover unskilled nursing home care Excludes: -first 3 pints of blood -private duty nursing -non medical services -intermediate care -custodial care

Methods of Marketing

- Independent - Exclusive or captive - General agents or managing general agents - direct writing companies

Classes of Life Insurance Policies

- Individual vs. Group - Term vs. Permanent - Participating vs. Non-participating - Fixed vs. Variable - Industrial & Home Service

Fiduciary Trust

- Promptly sends premiums to insurer - Has knowledge of products - Complies with laws and regulations - Does not commingle funds

Time of Payment of Claims

- Provides for immediate payment of the claim after the insurer receives notification and proof of loss. no longer than 60 days

Effective Date of coverage

- Terms of conditional receipt is issued - Substandard and pays additional premium - date of policy issue - No receipt - policy issue date if premium paid at delivery

Material Misrepresentation

- a false statement that changes the outcome of issuing a policy - generally with the health statement

Assignment by policyowner

- collateral - pledging the policy as collateral for a loan. - absolute - complete change of ownership.

producers report

- completed by the producer (agent). - not attached to policy if issued.

contributory

- employee pays part or all of the premium - 75% of eligible employees must enroll

Return of Premium Rider

- increasing term insurance rider - amount of rider equal to all premiums paid - death must occur while rider is in force

Required Signatures

- insured - producer/agent - applicant (if not the insured)

Medically Defined Disability

- the insured must also be confined to the house and under the treatment of a doctor.

Insuring clause or agreement

- usually found on the first page of the policy. - insurers promise to pay upon death. - includes the face amount. - usually signed by an officer of the company.

long term care rider

-Advance of death benefits while insured is living -Percentage of face amount each month -May pay for home care, assisted living, and nursing home care -reduces death benefit payable upon death

Requirements to be a qualified long term care policy

-Benefit Triggers: Cannot perform at least 2 ADL for at least 90 days, or cognitive impairment certified by a physician -Guaranteed renewability -Coverage of only long term care expenses -No benefits for expenses reimbursable under medicare No cash surrender value Any dividends or refunds or premiums must be used to offset future premiums or increase benefits -Conforms to specified consumer protection marketing and benefit standards

Dividend Options- Carppo

-Cash -Reduce premium -Accumulate at interest -Paid-up additions -Purchase one year term

Types of long term care

-Facility Based Care *Skilled Nursing Care- Performed by licensed nurses under doctors orders *Intermediate Care-Intermittent care performed by licenses nurses *Custodial Care- Help performing ADL's informal caregiver - Home health care -Adult Day Care -Respite Care -Assisted living facilities

4 types of medicare advantage plans

-Medicare Managed Care Plans HMO or POS -PPO No gate keeper, more cost if outside network -Private fee for service plans plans negotiates the fees that providers will be paid -Medicare Specialty plans Special needs such as kidney failure

Disability Income Rider

-Pays a monthly income benefit to the insured in the event he or she becomes disabled -Pays benefits for life or until a disability ends once a waiting period has passed from the date of the insured's disability

Skilled care in nursing home (Medicare)

-Requires prior 3 day hospital stay -Medicare pays 100% for first 20 days -Beneficiary has daily co pay days 21-100 No medicare coverage after 100 days

Group Underwriting

-looks at broad characteristics of group to determine rates -still must control adverse selection

Dental Prosthodontics-

Artificial replacements, such as a bridge and dental implants

Navigators

Funded by government through federal grants cannot sell insurance or provide advice help determine eligibility for public assistance

Increasing Term

-death benefit increases -premium increases

Personal Uses of Life Insurance

-survivor protection -mortgage payoff -estate creation -estate conservation -liquidity -cash accumulation

Lapsed Producer licenses may be reinstated within how many years of the license renewal date

1 year

Free look for health insurance-MA

10 days

Free look for life insurance

10 days

Free look for long term care?

10 days

COBRA Premiums

102% of group premium *Employer no lonoger contribute

Producer appointment- How many days to file notice of appointment after the agency contract is executed or the first insurance application is submitted

15 days

Rates must be filed with the commissioner how many days before their effective day?

15 days

producer termination- producer must receive notice within how many days after notifying the commissioner

15 days

Public Adjusters Total hours of continuing education

15 hours

Required ethics hours for producer continuing education

15 hours

Minimum age to obtain a producer license

18

How long can a temporary insurance producer license, without forcing an examination be valid if a licensed producer dies, becomes disabled, or enters the armed forces of the united states

180 days

Time limit on contesting application information

2 years after application Fraud in the application can void the policy when discovered

Free look for replacement of life insurance

20 days

Maximum first year commision may be no more than what percent of servicing compensation (Renewal)

200%

Public Insurance Adjusters minimum age to obtain a license

21

A commissioner must give how many days advance notice of a hearing?

21 Days

Unfair or deceptive trade practices punitive damages of up to what % of claim?

25%

OBRA

29 months if disbled at the time of termination

Public adjusters license expires after how many years?

3

Free look for medicare supplement policies- MA

30 days

Grace Period- Standard life insurance policies

30 days

Producer must report a change of legal name or address within how many days?

30 days

Producer termination- Commissioner must be notified within how many days after termination date

30 days

Producers must report criminal acts within how many days?

30 days

Producers must report non resident change of legal residence within how many days?

30 days

An eligible employee is one who works a minimum of how many hours per week on a full time basis? - MA

30 hours

Grace Period- variable scheduled premium policies (Variable whole life)

31 days

Group health insurance must continue how for how many days after an individual leaves the group

31 days

conversion period for group life insurance

31 days

Free Look Provision

Generally 10 days after policy delivery to cancel policy w/ full refund, except 30 days for seniors or for replacement policies.

Producers subsequent 36 month renewal period requires how much continuing education?

45 hours

Renewal compensation must be paid for at least____ years?

5

Maximum pre-existing condition period- Long Term Care

6 months

Producers initial 36 month renewal period requires how much continuing education?

60 hours

Grace Period- Variable flexible premium policies (Variable universal life)

61 days

Eligibility for Medicare COverage

65 and over kidney failure (renal failure received social security disability for at least 24 months

Primary Care Provider

A HEALTH CARE PROVIDER WHO PROVIDES CHECKUPS AND GENERAL CARE * All insured and dependent must have a PCP

US Patriot Act

A U.S. federal act that broadens the surveillance of law enforcement agencies to enhance the detection and suppression of terrorism

Moral Hazard

A belief that intentionally causing a loss is acceptable

Own Occupation

A definition of total disability. The insured must be unable to work at her own occupation. It is easier for the insured to receive benefits under policies using this definition.

Keogh Plan

A federally-approved, tax-deferred savings program for self-employed people, allowing them to set money aside for their retirement.

Multiple Employer Trust (MET)

A group of small employers who do not qualify for group insurance individually, formed to establish a group health plan or self-funded plan.

Risk Retention Group

A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry.

Fixed Period Settlement Option

A life insurance settlement option in which the number of payments is fixed by the payee, with the amount of each payment determined by the amount of proceeds.

Fixed Amount Settlement Option

A life insurance settlement option whereby the beneficiary instructs that proceeds be paid in regular installments of a fixed dollar amount. The number of payment periods is determined by the policy's face amount, the amount of each payment, and the interest earned.

Accelerated Benefit Rider

A living benefit or terminal illness rider - if you have terminal illness, you can use the money before you die and it reduces the overall death benefit

HMO (Health Maintenance Organization)

A managed care organization that provides comprehensive medical services for a predetermined annual fee per enrollee. Prepaid services Co pays Gate Keeper (PCP) Limited CHoise of providers Limited service area

Sickness

A medical condition, disease or illness.

presumptive disability

A provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

Waiver of Cost of Insurance

A rider that waives the deduction of the monthly cost of insurance and expense charges associated with a Universal Life type policy while the insured is totally disabled, usually after 6 months of continuous disability.

Rollover & transfer

A rollover occurs when an IRA account owner takes temporary ownership of IRA account funds when moving the account to another custodian. One hundred percent of the funds withdrawn must be rolled into the new account within 60 days or they will be subject to tax and a 10% early withdrawal penalty, if applicable. An individual can make only one rollover from an IRA to another (or the same) IRA in any 365 day period (not per calendar year), regardless of the number of IRAs the individual may own. The limit will apply by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs, as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. However: ■ Trustee-to-trustee transfers between IRAs are not limited ■ Conversions from traditional to Roth IRAs are not limited

Flexible Spending Account (FSA)

A salary reduction cafeteria plan that uses employee funds to provide various types of health care benefits.

employer-sponsored retirement plan

A savings plan for retirement that is offered through a company's benefits package; contributions are usually matched by the company.

Life Income Settlement Option

A settlement option providing for life insurance that provided income to beneficiaries based upon life expectancy

Reinsurance-

An insurance company sells some of its risk to other insurance companies.

A- CANHAM Risks

Accidental

ERISA

Act that allows employers to set up insurance plans. Also allows funding for Medicaid

Llyod's Associations

Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk.

Flexible policies

Adjustable life- Adjusts death benefit, adjust premium (Increase required proof of insurability)

A- CANHAM Risks

Affordable

Facility of Payment provision

Allows for a relative to get some of the payment from the benefits because the person is helping paying for the funeral and hospital etc

Misstatement of Age

Allows the insurer to go back and make changes to the benefits so that they match the correct age o Benefits will be adjusted accordingly

Contract Policy

An agreement between the insured and the insurer

Fixed Annuity

An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments.

Deferred Annuity

An annuity that starts sometime in the future.

Mutual Insurer

An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them.- Non Taxable dividends & Participating Polcies

Stock Insurer

An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders.- Issues Non Par Policies

Modified Endowment Contract (MEC)

An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY. *Once MED- Always MEC Interest on cash values not taxed while in the policy Withdrawals or loans are taxed -interest out first -10% ppenalty on interest if withdrawn before 59& 1/2 unless disabled

Utmost Good Faith

An obligation to act in complete honesty and to disclose all relevant facts.

Premium Mode

Annual, semi - annual, quarterly, monthly -annual is the lowest

Estate Taxes Life Insurance Death Benefit

Annuities are included in gross estate if death occurs during accumulation- entire value including cost is included Death occurs during annuitization- present value of future payments is included

Individual Life Insurance Full Surrenders-

Any Gain is taxable

Insurable Interest

Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.- must be proven before policy can be purchased

Features of dental insurance

Any provider VS PPO Scheduled vs non scheduled benefits Preventative- usually 100% covered basic services -80/20 major services- 50/50

COBRA

Applies to employers who employ 20 or more Employer must allow employee or dependents to remain on the group plan Applies to medical and dental- not life insurance extends coverage for 18 months if terminated extends coverage for 36 months if dependents no longer qualify fur to -divorce -Too old -death of employee

Long Term Care

Assistance with living Not medical treatment Usually not covered by Medicare

How often will the commissioner conduct an examination of every domestic company?

At least every 5 years

Medicare Part A

Automatically eligible at 65 supported by payroll taxes premium charge for those not fully qualified for social security

A- Method of handling risk

Avoidance

STOLI/IOLI

Banned in most states Investors named as beneficiaries

Spendthrift Provision

Benefits cannot be paid in lump sum, cannot be claimed by creditors before payment to beneficiary

Major Medical Insurance

Broader Coverage Supplemental major coverage -insured has a basic policy -major medical pays when basic ends

C- CANHAM Risks

Calculable

Medicare part BAdditional Info

Calendar year Deductible 80/20 Coinsurance after deductible No Stop Loss

Revocable

Can be changed by owner at any time

Term- Convertible

Can be changed to permanent insurance, no new application required

CANHAM Risks

Can be insured with the following characteristics

Morale Hazard

Carelessness

Long Term Care Provisions Non forfeiture

Cash Value or return of percentage of premiums minus claims paid policy has been surrendered or has lapsed for nonpayment of premiums

Extended Term Insurance

Cash values buy single premium term insurance, same amount of insurance as old policy default option by insurer*

Peril

Cause of Loss

Legal Contract

Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent Parties

Medicare Part C- Advantage Plans

Contracts with and pays private companies enrollees medical expenses paid by private plan Must be enrolled in A & B also May provide outpatient drug coverage 4 types of Medicare advantage plans

`Roth IRA

Contributions not tax deductibe limits same as IRA Qualified Distributions are tax free

Decreasing Term

Death benefit decreases, premium remains level

Level Term Insurance

Death benefit is level, premium level for the term

Medical Expense Policies for Self Employer Persons

Deduct premiums if have a net profit from business not covered by a group policy Benefits not taxable

Major Medical Features

Deductible Coinsurance Stop Loss Insured Maximum Out of pocket

Medicare Part B Coverages

Doctor Outpatient Services Home Health

State Long Term Care Partnership programs

Dollar for dollar asset protection joint effort between insurance companies & state insurance Department and state medicaid agency

Insurance Company Locations

Domestic, Foreign, and Alien

coordination of benefits

Eliminates the duplication of payments when an employee, spouse, or dependents have health coverage under two or more plans. *Birthday/ calendar rule

Medical Savings Account (MSA)

Employed by less than 50 employer Self Employed Contributions deductible Must have HDHP Tax Free withdrawals New plans not allowed after 2006

Eligiility

Employee Full Time Actively at work Completed probabationary period dependednts enrollment

Employer Responsibilities

Employer Notification responsibilities Emplopyer Mandate *Employer 50 or more must offer ACA

Simplified Employee Pension (SEP)

Employer makes contributions on employee behalf higher contribution limits employees must be 100% vested

Termination of group coverage

Employer terminated plan Employer didnt pay premium Employee: -Quit -laid off -reduction in hours

Health Reimbursement Account (HRA)

Employer-funded plan that reimburses employees only for eligible and substantiated health-care expenses. HDHP not required Money rolls over from year to year

Savings Incentive Match Plan for Employees (SIMPLE)

Employers with 100 EE or less Employees can contibute 100% vesting for EE contributions 25% early withdrawal penalty

Group Health/ Medicare

Employers with less than 20 EE- Medicare is primary Employers with 20 or more- Group plan is primary for EE, Medicare is primary for retirees

ERISA (Employee Retirement Income Security Act)

Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation

Fraud and False Stataments

Fine and or imprisonment (10-15 years) *Embezzlement included

Joint Life

First to die, second to die (Survivorship Life)

Traditional Whole Life

Fixed Premium, Fixed & level death benefit, Cash Values *Guaranteed interest, may be surrendered, may be borrowed, endows at 100 *Death Benefit- Amount at risk to the company, plus cash values

Universal Life Insurance

Flexible premium permanent life insurance twith Cash account

Metal Tiers of ACA

Four levels of coverage, each must offer minimum EHB Tiers represent average proportion of expected costs percentages represent how uch plan will pay

Risk Purchasing Groups

Groups of people with similar insurance needs who form an organization to buy insurance as a group.

Long Term Care Provisions Optional Benefits

Guaranteed insurability allows insured to raise daily benefit uses attained age No medical questions not currently receiving benefits

Point of service

HMO allows subscribers to use providers outside of HMO No gate keeper for out of network services subscribers pay more of the cost *Called open ended HMO

Physical Hazard

Hazard that can be seen

Pre-existing condition

Health plans can no longer exclude pre existing conditions (except Grandfathered)

H- CANHAM Risks

Homogeneous

Time of Payment of Claims

Immediately or no less frequent than monthly for disability payments

Estate Taxes Life Insurance Death Benefit

Included in insured gross estate if Payable to estate, insured owns the policy at time of death, issured transfer ownership within 3 years of death

Long Term Care Provisions Benefit Amount- How much?

Indemnity- Stated dollar amount per day Reimbursement- Acutal expense or stated dollar amount per day, whichever is less Home Care- if covered usually 50% of facility amount Higher the benefit- higher the premium

HSA (Health Savings Account)

Individually owned medical expense savings account Contributions are tax deductible Withdrawals are tax free Must have HDHP Account values accumulate from year to year

Grace Period following the due date of premium

Insurance still in force during grace period Weekly preium= 7 days Monthly premium= 10 days Annual , semi annual, quarterly= 31 days *unpaid premiums deducted from a claim

Long Term Care Benefit Triggers

Insured must be unable to perform activities of daily living Eating Dressing Toileting Continence Bathing Transferring *Insured has cognitive impairment

Long Term Care Provisions Elimination Period

Insured qualified for benefits benefits not paid until end of period time deductible longer the elimination period- lower the premium

Characteristics of Group Health insurance

Insures many people in one contract usually less expensive than individual insurance sponsor received master contract participants receive a certificate of insurance

Variable Policies

Life insurance plus investments, must have securities license too, investments in separate account *Owner can lose money

Graded Premium Whole Life

Lower premiums for designated timeframe (typically 5-10 years); payments rise annually thereafter until leveling off

Distributions at death to a beneficiary

Lump Sum- ALl gain is taxable 5 year withdrawal-interest out first - No 10% penalty Annuity Payments- Taxed according to exclusion ration If spouse is beneficiary- transfer ownership to spouse with no tax consequences

Long Term Care Insurance Regulations

Marketing: -Must provide applicant with a shopper guide and outline of coverage -consider suitability of applicant -notice regarding replacement -30 day free look -describe policy renewal conditions on its first page

M- CANHAM Risks

Measurable

Gross Premium

Net Premium plus expenses, gross annual

STARR

Method of handling risk

Long Term Care Provisions Benefit Period- How Long

Minimum 12 months Usually 2-5 years May choose lifetime Subject to lifetime maximum amount Longer benefit period- higher the premium

Medicare Part B

Monthly Premium that increases with income level 'Not required- can have part A only initial enrollment period -3 months before age 65 -month of age 65 -3 months after 65 Annual Open enrollment -January 1- March 31 each year

premium elements

Mortality Interest Expenses Net Premium (Mortality minus interest) = Net Single

dependent coverage

Most group life insurance policies cover the member's dependents, as long as the amount of coverage does not exceed 50% of the insured member's coverage.

Medigap regulations

Must be given NAIC Buyers Guide 30 day free look guaranteed renewal guaranteed acceptance if bought within 6 months of enrollment in Medicare Part B Cold Lead Advertising not allowed Sales COmmisions cannot exceed 200% of renewal commisions renewal commisions must be level in years 2-5

Medicare Supplement plan- Core benefit Plan A

Must cover hospital co pays for days 61-90 and lifetime days adds an additional 365 days of coverage to a benefit period- covered at 100% Covers Medicare Part B Coinsurance Must be offered if company sells an y medicare supplement plans Doesnt cover part A and B deductibles

Individual Retirement Account (IRA)

Must have earned income, non working spouse can make contributions based upon earned in come or spouse

IRA Required Minimum Distribution

Must start taking withdrawals by 72 First minimum withdrawal can be delayed until April 1 tje following year after turning 72 50% penalty if not taken

Change of insurers

No loss or gain in benefits for current claim

Temporary annuities

No payment for life- Fixed period, fixed amount

Emergency Medical Servcies

No preauthorization required In Network or out of network normal cost sharing requirements

N- CANHAM Risks

Non- Catastrophic

Reduced Paid-Up Insurance

Nonforfeiture option where cash value is used to make a single premium payment to purchase as much of the same type of insurance as possible. Face amount of the new policy would be less than the original policy but no further premium payments would be necessary. Policy can be reinstated.

Suicide

Not covered before 2 years in contract

Individual Life Insurance Cash Value Loans

Not taxed while policy is in force, taxed is policy is surrendered and there is a gain

Guaranteed Insurability Rider

Optional rider that enables the policyowner to purchase additional amounts of coverage at predetermined times without proof of insurability.

Waiver of Premium Rider

Optional rider that requires an insurer to assume payment of premiums should the insured become totally disabled for six months for the duration of the disability.

ACA

PPACA, Obamacare, and health care reform Signed in 2010 with reforms Additional refrms began jan 2014 Grandfathered= before ACA Non Grandfathered= existed after ACA

Single Premium Whole Life

Paid up for life with one large premium payment

Death benefit of Annuity

Pay out accumulated money of pwner dies, pay out of money if annuitant dies too soon

Life Income Period Certain

Payments are guaranteed for the lifetime of the recipient or a specified period of time, whichever is longer.

Joint Life and Survivorship Annuity

Payments are made to two annuitants with the survivor continuing to receive payments after the first annuitant dies.

Joint Life and Survivor Annuity

Payments may decrease by 2/3 or 1/2

Joint and survivorship

Pays two beneficiaries an income for life

IRA deductibility

Phase out of deductions base upon adjusted gross income No deduction if imcome above max AGI

Long Term Care insurance regulation standards

Policy must be at least guaranteed renewable A sale must include an offer of inflation protection Pre existing conditions- 6 month look back limit

Adhesion

Policy written by the insurance company

Conditional Receipt

Premium with the application; coverage effective as of the date of application or medical exams - whichever is later

Taxation of Annuities

Premiums are not tax deductible Interst during accumulation not taxed in the contract Withdrawals= interest our first, income tax on interest -10% penalty on interest if younger than 59 & 1/2 No penalty if withdrawal due to disability or death or annuitization

Individual Life Insurance

Premiums are not tax deductible, interest earned on cash values tax deferred- not taxed while in the policy

Medical Expense Policies for Self Employer partnerships

Premiums deductible for partnership Premiums are income to partners benefits not taxable

Cost Containment- Managed Care

Preventative Care

Utilization Management

Prospective review concurrent review retrospective review

Prepaid

Provider is paid a set fee in advance- customers called subscribers/ participants

Experience Rating

Rating system that bases insurance rates on claims history of individual group

R- Method of handling risk

Reduction

Statement of Good Health

Required if no premium with application, if health changed- agent can't deliver policy

R- Method of handling risk

Retention

Non-Qualified Plans

Retirement plans that do not meet the requirements of ERISA are known as non-qualified plans These plans often discriminate in favor of the highly paid employees and often have no vesting prior to retirement age The contributions paid in by employers are not tax deductible until the employee actually receives the funds

Exposure

Risks for which the insurance company would be liable

Dental Diagnostic and preventative

Routine exams and x rays, regular cleanings , fluoride treatments

Medicare Part B Exclusions

Routine foot, vision, dental or hearing most immunizations Mst outpatient prescription drugs private duty nursing cosmetic surgery

Modified Premium Whole Life policy

Same as WL but premium low for 1st 3-5 yrs., THEN has one-time premium increase- levels off afterwards

Section 1035 Exchange

Section 1035 of the Internal Revenue Code allows for certain exchanges without recognizing a gain or loss for tax purposes, such as an annuity exchanged for another annuity. -Life to Life= Not Taxable -Annuity to Annuity = Not Taxable Life to Annuity = Not Taxable Annuity to Life = TAXABLE

S- Method of handling risks

Sharing

Market Value Adjusted Annuties

Single premium deferred annuities, interest rate for a fixed number of years, early withdrawal penalty

Group Underwriting Considerations

Size of the group composition of the group flow of members through group plan design contributory vs. non contributory persistency administrative capability

Alternatives to Hospital care

Skilled Nursing Facilities Intermediate nursing facilities rehabilitiative facilities Home health care

Hazard

Something that causes an increase in the chance of loss

Classification of Risks

Standard, Preferred, Substandard, Declined

Federal Government Health Insurance

TRICARE- Active Military Veterans- Former Military Medicare- Primarily for senior citizens & social security disability

Free PReventative Care

Take care of yourself now to prevent future conditions

Binding Receipt

Temporary, not commmon in life insurance

Agency

The insurance agent acts on behalf of principal (Insurance Company)

Law of Large Numbers

The larger the group, the more accurate losses can be predicted

Essential Health Benefits (EHB)

The minimum coverage requirements for health insurance under the affordable care act. the qualified plans must be guarantee issue with a no pre-existing conditions and no lifetime benefit maxiumums

Group Insurance Premium

The premium for the group insurance is calculated in the methods.

Accumulation Period

The time before an annuitant's retirement during which the annuitant is making payments or investments in an annuity.

Group Credit Life

These are set-up by banks, finance companies, etc. in case the insured dies before a loan is repaid. Policy benefits are paid to the creditor and used to settle the loan balance. The premiums are usually paid by the borrower. A decreasing term policy is commonly used.

Fair Credit Reporting Act

Third Pary information, notice to applicant requiredm consumers have rights and can dispute information in files

T- Method of handling risk

Transfer

Insurance

Transfer of Risk

Distributions from IRA upon death

Transfer to spouse is not taxable Entire value or IRA is included in deceased EState

usual, customary, and reasonable (UCR)

Type of retrospective fee-for-service payment method in which the third-party payer pays for fees that are usual, customary, and reasonable, wherein usual means usual for the individual provider's practice, customary means customary for the community, and reasonable is reasonable for the situation.

Risk

Uncertainty/ Possibility of Loss

Qualified Health Plan

Under the Affordable Care Act, starting in 2014, an insurance plan that is certified by an Exchange, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements. A qualified health plan will have a certification by each Exchange in which it is sold.

Agent Delivery

Usually must get signed delivery receipt

Backdating

Usually no more than 6 months

Group Eligibility

classes, not individuals, waiting period before eligibility for insurance, enrollment follows probationary period (Usually 31 days), no medical questions, late enrollment = medical questions,

Long Term Care Provisions Exclusions

Wars Alcohol or drug abuse self inflicted injuries treatment provided without cost to the insured mental illness-without demonstrable organic cause *Dementia or alzheimers is covered

Payor Rider

When an adult insures a child, premiums will be waived until the child reaches 21, if the adult dies or is disabled

proof of loss

Within 90 days

Long Term Care Provisions Inflation protection

Yearly increase in benefit coverage by a stated percentage -simple -compound (2X usually

Medicare—Part D Prescription Drug Coverage

a United States federal-government program to subsidize the costs of prescription drugs and prescription drug insurance premiums for Medicare beneficiaries. -purchased from private company -premium charge, reduced by income level -Annual deductible -25% co pay until gap -Payment policy stops- donut home -5% co pay after donut hole -Donut hole gap ends in 2020

Self-insurance

a business that pays its own claims

Medicaid

a health care program that assists low-income families or individuals in paying for long-term medical and custodial care costs Health coverage for the poor regardless of age a person can be covered by both Medicare and Medicaid funded by state and federal government

Reinstatement

a policy can be restored within a specified period of time with proof of insurability

imcome replacement

a reduction in income trigger payent

Defined benefit

a retirement benefit in which an employee is guaranteed certain payments on retirement

subsidies

a sum of money granted by the government advanced premium tax credits cost sharing (only available in silver tier)

open enrollment

a time when employees can change their participation level in various benefit plans and switch between benefit options *No medical questions

limited benefit policies

accident only, dread disease, critical illness, hospital indemnity, credit disability, blanket coverage, [rescription drugs, vision, hearing

estoppel

actions reasonably relied on by one party cant be denied by the party that accepted the same previously

accidental death or dismemberment rider

amount of rider is the principal sum, paid in addition to face amount if death is due to accident, death within 90 days of accident

employer-sponsored retirement plan

an IRS-approved retirement plan offered by an employer (also called qualified plans) Regulated by ERISA Employer & Employee Contributions tax deductible Interest earning grow tax deferred

Immediate annuity

an annuity in which the annuitant begins receiving monthly benefits immediately

Any provider

any provider the insured chooses

Surplus Lines

any type of insurance for which there is no available market within the state, and the coverage must be placed with a non admitted insurer

Reinstatement of health policy

application and recipt company must deny within 45 days after applcation or policy is in effect accident claims covered immediately sickness clains covered 10 days after reinstatement

Underwriting Sources of Information

application, medical exams, physicians statement, AIDS Testing, Medical Information Buereau, Consumer Reports, Investigative Reports

Community rating

based on pooling groups

representation

believed to be true

Per Capita

by the head -- per person *Not inheritable

modifications

can only be made by company, owner can request a change

Irrevocable

can't be changed without beneficiary pprival

IRA Funding

investments can't be put in life insurance, art work, antiquesm stamps or coin collections, precious metals

Optionally Renewable

company may not renew

medical exam and autopsy

company pays all costs

Conversion

convert to individual permanent policy, cost based upon attained age, no medical questions, death curing conversion is covered

Dental orthodontics

correction of irregular alignment of the teeth

comprehensive care

covers broad range of services

Specified coverage

covers only specific services

Accidental death rider

death due to accident that must have occured within 90 days of accident, doubles or tripled the face value

Any Occupation

definition for being totally disabled in a disability income policy. person cannot perform any occupation he/she is qualified *more difficult to qualify

Legal action against the insurer

earliest 60 days after proof of loss maximum three years after proof of loss

Employer sponsored group life

employer is policyowner, employee recieved a certificate of coverage, employee names beneficiary

Agent Authority

express, implied, apparent

concealment

failure to disclose known facts

other provisions

free look (10 days, 30 for senior citizens) , insuring clause, consideration clause, renewability, optionally renewable, conditionally renewable, conditionally renewable, guaranteed renewable, non cancellable, military suspense

Group Annuities

funded by employer contributions, distributions determined by employer

warranty

guaranteed to be true

Life Annuity

guarantees income for life and payment to stop at death; nothing to heirs (highest income)

Interest Sensitive Whole Life

has current interest rate, guaranteed interest rate

Health insurance covered benefits

hospital and medical bills loss of income- disability Dental Bills Longer Term care- medical ad no medical expenses

profit sharing

incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary

Life and Period Certain Annuity

income for life, regardless of how long, death before end of period- remaining payments to beneficiary

life with refund annuity

income for life- regardless of how long, death before payments equal to accumulation money- Balance to beneficiary, lump sum or monthly payment

Misrepresentation

information that is not true, but would not affect the insurance company decision

Residual Market

insurance from the state or federal government

Credit Life individual

insured policy-owner, assigned to lender, insurance can be greater than the debt, doesn't stop when debit is paid, more expensive than group, may require medical questions

Guaranteed Renewable

insurer must renew premiums can be rasied by classes

noncancelable

insurer must renew premiums cannot be rasied

fraud

intentional act to cheat another

health insurance exclusions

intentional, war, elective cosmetic surgery, workers compensation, felony

Interest Only Settlement Option

interest if paid on the death benefit, death benefit paid at a later date

Small Group size for health plans is how many employees?

less than 50

Use of annuities

life income, tax favored savings, funding individual retirement accounts (IRA) , Education finds

limited plans

limited benefits limited perils- cancer / vision notice insured must be informed of the limited benefits

Limited choice

limited to contracted providers

Access to Cash Values While Insured is Living

loan reduced death benefits, if interest if not paid, loan automatically taken to pay interest,

Basic Hospital, Medical, and surgical policies

low coverage amounts, non deductibles

Preferred Provider Organization (PPO)

managed care network of health care providers who agree to perform services for plan members at discounted fees Fee for service pre negotiated rates Insured pays less in petwork of PPO providers

Notice of Claim

need to provide notice of claim within 20 days off loss if continuing disability can only be required to provide proof every 6 months

Health Care Tax Credit for small employers

maximum credit- 50% of premiums paid for small business employers 35% of premiums paid for small tax exempt employers *Eligible for 2 years

Late enrollment

medical questions required

Continuous Premium Whole Life

most common type of whole life insurance; stretch premium payments over the whole life of the insured up to age 100

Changes in the Application

must be initialed by the applicant

claim forms

must be suplied by insurer within 15 days of notice of loss

ownership rights

name or change a beneficiary, select how benefits paid, borrow or withdraw from cash values, recieved dividends, surrender or cancel the policy,

conditionally renewable

non renewal can occur under certain conditions - turning 65

aleatory

not equal value - small premium for a large amount of coverage

individual life insurance death benefits

not taxed if paid in a lump sum, interest is taxable, if paid over time, part of payment is not taxed and part is

individual life insurance accelerated benefits

not taxed, certified termially ill, or permanently confinded to nursing home

individual life insurance dividends

not taxed, interest earned is taxed

Prohibition on lifetime/ annual limit

on all EHB limits allowed on non EHB

SHOP

online application to compare health plans for small businesses 50 employees or less

Reducing Hospital Care Costs

outpatient benefits -2nd surgical option -preauthorization- precertification -limits on lengths of stay

indemnity

pay for the loss but with no gain

Joint Life

payments stop when first of two annuitants dies

Life Income - Refund

pays beneficiaries income for life, guaranteed payment will be at least equal to death benefit

benefit schedule

pays only a specified amount regardless of the actual charge

Entire Contract

policy (with riders and amendments) and copy of the application

Grace Period

premium not paid by due date, usually 31 days followin due date, insurance still in force, death benefit paid minus premiums due

Non-contributory

premium paid by employer, 100% of eligible employees must enoll

Indeterminate Premium Whole Life

premiums adjusted by company, guaranteed maximum premium

payment of premium

premiums are due in advance

COBRA Automatically ends

premiums not paid employer stops group plan individual becomes covered by another plan individual becomes eligible for medicare

Taxation of Business Life Policies

premiums not tax deductible except for executive bonus death benefits not taxable premiums for executive bonus policies are taxable income to the employee

Taxation of group life insurance

premiums paid by employer are tax deductible premiums paid by employee are not tax deductible Death benefits are not taxable premiums paid by employer for insurance above $50,000 is taxable income to the employee

Adverse Selection

risks that have a greater than average chance of loss

Medicare Supplemental Plans

private insurance plan [premiums not subsidized by Medicare *Cannot be sold to Medicare Part C

fee-for-service

provider is paid as services are provided- customers called insureds

Long Term Care Insurance

provides for long-term care expenses not covered by Medicare -bought from insurance company -insured choose type and amount of of coverage protects assests upon death

Fraternal Insurer

provides insurance and other benefits must be a member of the society to get the benefits

Qualified long term care insurance

received favorable tax treatment -benefits are paid tax free -premiums may be deductible

Term features

renewable (No new application required, new preium based upon attained age

Dental Restorative

repairing or restoring teeth that have been damaged usually by tooth decay

Individual Mandate

required by law to have insurance or else you have to pay a fine

limited-payment life insurance

requires the payment of premiums for a limited time for a lifetime protection// at the end of the term does not pay any more premiums, but has lifetime protection

Comprehensive Major medical

stand alone policy

Certificate of Authority

state license for an insurance company

Admitted or Authorized

state requires the insurance company to have a certificate of authority

Uniform Simultaneous Death provision

states that if both the insured and the primary beneficiary die as a result of the same accident, then it is always assumed that the insured died last This provision ensures that the insured's contingent beneficiary would receive the policy proceeds, rather than the heirs of the primary beneficiary

Dental oral surgery

surgery performed in the oral cavity

Annuity payments after annuitization

taxed according to exclusion ration premiums paid (divided by TOTAL of expected payments over annuitants life expactancy = percent of payment not taxed If annuitant lived beyond life expectancy, 10% or payment becomes taxable

Individual Life insurnace withdrawals

taxed only if withdrawal exceeds premiums paid, only gain is taxed

Estate Taxes

taxes levied on a person's estate or total holdings after that person's death

military suspense

temporary suspension while in military, reactivated afrer discharge

Treaty Reinsurance

the reinsurer accepts the transfer according to an agreement called a treaty

Facultative Reinsurance

the reinsurer evaluates each risk before allowing the transfer

Equity Indexed universal Life

tied to performance of equity index (S&P)

dental periodontics

treatment of supporting structures of the teeth- GUMS

dental endodontics

treatment of the pulp- soft tissue in the center of tooth

Equity Indexed Annuities

type of fixed annuity that offer the potential for higher credited rates of return than their traditional counterparts but also guarantee the owners principal. There is a minimum guaranteed rate(3-4%) so a certain rate of growth is guaranteed. Designed to bridge the gap between fixed and variable annuities.

Non-admitted

unauthorized-insurance company not required to have a Certificate of Authority from the state

Reciprocal Insurers

unincorporated groups of people that provide insurance for one another through individual indemnity agreements

Accident

unintentional injury

IRA contributions

up to 100% of earned income, subject to annual maximums, extra contributions age 50 and over

Coverage of Children tp Age 26

up to, not including 26, children can remain if : Married, not living with parents, attending school, not financially depended or eligible to enroll in employer plan *Past age 26 if unmarried, financially depended, and have physical or mental impairment

consideration

value given by policy owner, information in the application and premium

waiver

voluntary giving up of a right