19- Michigan Laws and Rules Pertinent to Insurance

Which of the following gifts from a producer would NOT be considered rebating? $5 pen $15 t-shirt $25 clock $50 gift card

$5 Pen

Under an expense-incurred individual health policy, what is the MAXIMUM length of time after issuance of the policy that an insurer can exclude coverage for a pre-existing condition? 24 months 12 months 6 months 3 months

12 Months

An employee is REQUIRED to work AT LEAST how many hours in a normal week to be eligible for small employer group insurance? 17.5 17 15.5 15

17.5

When an accident and health policy requires payment of an additional premium to provide coverage for a newborn, how many days after the birth is the first payment due? 60 31 14 10

31

Which of the following is REQUIRED to be licensed as an insurance producer? An underwriter of an insurer An administrator of a group plan A business entity soliciting insurance An officer or director of a licensed insurer

A business entity soliciting insurance

Michigan Insurance Code Chapter 45

A fraudulent insurance act includes, but is not limited to, acts or omissions committed by any person who knowingly, and with an intent to injure, defraud, or deceive. Financial Loss "Financial loss" includes, but is not limited to, loss of earnings, out-of-pocket and other expenses, repair and replacement costs, investigative costs, and claims payments.

Authorized & Unauthorized Insurers

Authorized insurer: An insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state. Also called an admitted insurance company Unauthorized insurer: An insurance company that has been denied or not yet applied for a Certificate of Authority and may not sell insurance in this state. Also called a non-admitted company

When determining the exact cause of death from an accident, which of the following actions by the insurer takes precedence? Autopsy Medical notes Death certificate Investigative report

Autopsy

With a scheduled dental policy, how are covered expenses paid? A coinsurance is normally applied to benefits paid A deductible must be met by the insured before benefits are paid Benefits are limited to a specific maximum dollar amount per procedure Covered expenses are fully reimbursed to the insured

Benefits are limited to a specific maximum dollar amount per procedure

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as coercion defamation intimidation boycott

Defamation

The entity that has the power to revoke a producer's insurance license is the insurer local agency Department of Insurance and Financial Services (DIFS) National Association of Insurance Commissioners (NAIC)

Department of Insurance and Financial Services (DIFS)

Departments of Insurance & Financial Services

Department of Insurance and Financial Services is a principal department in the Michigan executive branch with responsibility for insurance and financial institutions. headed up by a commissioner appointed to a four year term has the power to revoke a producer's insurance license

Who has the option to renew a small employer health plan? State insurance commissioner Employer Employees Employee union

Employer

A producer who knowingly submits a FALSE statement in support of a claim may be found guilty of coercion twisting rebating fraud

Fraud

Which of the following is NOT an illegal inducement? Giving the insured tickets to a sporting event valued at $100 Giving the insured a return of premium in excess of $25 Giving the insured an article of merchandise printed with the producer's name costing $5 Giving the insured a free policy of insurance resulting from the sale of a related policy of insurance

Giving the insured an article of merchandise printed with the producer's name costing $5

Which of the following services MUST be provided by HMO plans? Eye care Dental care Well child care Home health care

Home health care

When MUST a newborn child be covered under an existing health insurance policy? Immediately Within 24 hours Within 30 days Within 45 days

Immediately

Domestic, Foreign & Alien Companies

Insurance companies are classified according to the location of its corporation. Regardless of where the insurance company is incorporated, it still has to get a Certificate of Authority before transacting insurance within a state. The following definitions apply: Domestic insurance company: A company that resides and is incorporated under the laws of the state in which its home office is located. A company chartered in Michigan would be a domestic company in Michigan 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 office. A company chartered in Texas would be a foreign company in Michigan Alien insurance company: A company that is chartered and organized in any country other than the United States. It is considered an alien company in all states. A company chartered in Canada would be an alien company in Michigan

The unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance is called twisting defamation intimidation misrepresentation

Intimidation

Commissions

It is illegal for an unlicensed person to receive commissions from the sale, solicitation, or negotiation of insurance. However, renewal or deferred commissions are payable to retired producers.

HMO Definitions

Member: A person who makes a contract or on whose behalf a contract is made with a health maintenance organization for health care services. Provider: Any person, including a physician or hospital, who is licensed or otherwise authorized in this state to provide 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. 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 HMO mandatory coverage Every HMO must provide coverage for: Physician services including consultant and referral services Ambulatory services Inpatient hospital services, other than for mental illnesses Emergency health services Outpatient mental health services Limited intermediate and outpatient care for substance abuse Diagnostic laboratory services Home health services Preventative health services required under the Affordable Care Act

Providing incorrect, misleading, incomplete, or materially untrue information in the license application is forgery coercion embezzlement misrepresentation

Misrepresentation

Which of the following actions MUST be taken by producers Return unearned premiums to clients at the close of the agency's fiscal year Deposit premiums in separate accounts for each insurer that they represent Pay premiums due to insurers on a timely basis Maintain premium funds in interest-bearing accounts

Pay premiums due to insurers on a timely basis

Maintenance & Duration

Producer licenses are renewable biennially (every two years) with fee, renewal application, and proof of completing continuing education (CE). Exceptions are made for producers who are in active military service or other extenuating circumstances by requesting a waiver. Applicant can apply 90 days prior to license expiration date

Records Maintenance

Producers and insurers must keep full and accurate records of all insurance business in which they are involved. Records must be kept for at least five years.

Representing an unauthorized insurer

Producers are personally liable for the business they transact on behalf of insurers that are not licensed or unauthorized to do business in Michigan.

Unfair Trade Practices

Misrepresentation It is an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance. False advertising It is an illegal practice to falsely advertise insurance products or services in any way. This includes circulating statements, letters, or statements in newspapers, magazines or other solicitation materials. The identity of the insurer shall be made clear in all of its advertisements Defamation It is an illegal practice to make any public statement or advertisement that contains false or malicious information or unsubstantiated criticisms about an insurance company. Boycott, coercion, and intimidation It is an illegal practice to commit or coordinate any act or boycott, coercion, or intimidation in order to restrain or monopolize the business of insurance. Intimidation Initimidation is the unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance. False financial statements It is illegal to publish any false financial statement regarding a person or entity. Unfair discrimination It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality. Also, no insurer or producer may cancel or refuse to underwrite or renew a particular insurance risk based on race, color, creed, sex, or blindness of an applicant or policyholder. Twisting Twisting is the unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation. Insurance fraud It is illegal to commit an act of insurance fraud, which is defined as any intentional act occurring in the course of insurance business that attempts to deceive or misrepresent a material fact. Any person who, in the absence of fraud or bad faith, reports information regarding an act of insurance fraud will be given immunity. Illegal inducements It is illegal to promise employment, profits, stock, or returns as an inducement to insurance. Rebating It is illegal to offer a premium rebate, gift, or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance. The exception would be: A producer quoting life insurance may give an applicant an article of merchandise having an invoice value of $5.00 or less

Fiduciary Responsibility

Producers have a fiduciary responsibility for all funds collected from clients. Producers must not mingle these funds with their own personal funds. A producer must pay premiums due to insurers on a timely basis. However, producers are not required by law to open a separate bank account for such funds. A producer's fiduciary responsibility includes recording the receipt and distribution of premiums due to an insurer

Address/name change

Producers must report a change in address or name to the Commissioner within 30 days of the change.

Reporting of actions

Producers must report any bankruptcy, felony conviction, or any other administrative action that occurs in Michigan or another jurisdiction to the Commissioner within 30 days.

A producer's fiduciary responsibility includes which of the following activities? Recording the receipt and distribution of premiums due to an insurer Properly remunerating persons who furnish leads on prospects Providing needed insurance to prospective insureds through any sources that are available Guaranteeing payment to insureds for losses covered by policies that the producer sold

Recording the receipt and distribution of premiums due to an insurer

Continuing Education

Resident producers must complete 24 hours of continuing education every 2 years to keep their license active. Of those 24 hours required, 3 hours must be in ethics. Nonresident producers are not required to complete Michigan continuing education requirements as long as their home state requirements are met.

Dental

Restorative Restorative dentistry is the procedure for restoring the function and integrity of a missing tooth structure. Examples include fillings, crowns, and dental bridges. 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. 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. 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. Prosthodontics Prosthodontics is a branch of dentistry dealing with the replacement of missing parts using biocompatible substitutes such as bridgework or dentures Orthodontics Orthodontics is the treatment of irregularities in the teeth (esp. of alignment and occlusion) and jaws, including the use of braces. Dental Plans Occasionally, dental insurance is part of a health benefits package with a single deductible called an integrated deductible, applying to both medical and dental coverages. More often, however, dental coverage and claims are handled separately with a separate deductible. There also may be a probationary period in group dental insurance to help hold down coverage for preexisting conditions. Some dental policies are scheduled, meaning benefits are limited to specified maximums per procedure, with first dollar coverage. Most, however, are comprehensive policies that work in much the same way as comprehensive medical expense coverage. In addition to deductibles, coinsurance and maximums may also affect the level of benefits payable under a dental plan. Here are some other bullet points to consider when addressing dental plans: A pre-treatment estimate of the cost of dental services may be required whenever the patient requires dental treatment Comprehensive dental plans usually provide routine dental care services without deductibles or coinsurance to encourage preventative care (such as teeth cleanings, fluoride treatments etc) Dental plans are typically indemnity plans, which pay benefits based on a predetermined, fixed rate set for the services provided...regardless of the actual expenses incurred. To prevent adverse selection in a group dental expense plan, the plan may require any of the following: probationary periods, waiting periods, evidence of insurability, or limits on annual benefits With prepaid dental plans, coverage is limited to a closed panel of dentists The absence of deductibles on routine examinations encourages preventive care in dental insurance Dental treatment expenses required to repair an injury would normally be covered under a hospital or medical expense policy. Some hospital and medical expense plans will provide coverage for some dental related services related to the jaw or facial bones. Some of these include: reduction of any facial bone fractures; removal of tumors; treatment of dislocations, facial and oral wounds/lacerations in order to repair an injury; and the removal of cysts or tumors of the jaws or facial bones.

Producer Responsibilities

Solicitation and sales presentations Producers must provide applicants and prospects with the approved NAIC Buyer's Guide. Producers must also provide a Policy Summary to applicants. Policy summary The policy summary contains specific information on the provisions, benefits, and coverage of the policy applied for. ' Buyer's guide The buyer's guide enables applicants to compare different life insurance policies and help them choose which policy is best for their needs. A life insurance buyer's guide normally includes information such as: Deciding on how much life insurance to buy Comparing life insurance policy rates Comparing life insurance policy requirements Illustrations An illustration is a presentation, graph, or chart that includes non-guaranteed elements of a policy of life insurance over a period of years. Non-guaranteed elements are the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue. Illustrations must be clearly labeled as such, and contain the following: name and address of the issuing insurer; name, age, and sex of the proposed insured; generic name of the policy; initial death benefit; and any non-guaranteed elements such as dividend options. Words, phrases or illustrations may not be used in a manner that misleads or deceives. If an illustration is used, a copy of it must be submitted with the application for insurance, and a copy must be provided to the applicant. Backdating In order to save on premiums, a Life Insurance policy can legally be backdated up to 6 months. Minors In the interest of protecting the assets of a minor, state law requires that a guardian be appointed to administer the proceeds payable to the minor child. Replacement Notice of Replacement: under Michigan law the replacement of life insurance contracts with a new contract requires the producer to give the applicant a written comparison and summary statement at the request of the policyholder and to follow instructions regarding replacement as obtained from the appointing insurer. 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 any of the following: Lapsed, forfeited, surrendered, or otherwise terminated Reissued with any reduction in cash value Converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values Amended so as to affect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid Reissued with a reduction in cash value Used in a financed purchase Duties of the producer Present to 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 and the names of all companies being replaced. 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. Duties of the 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.

Stock & Mutual Company

Stock Insurance Company: An insurance company that is owned and controlled by shareholders. The stockholders provide the capital and share in profits or losses Stock insurance companies are considered nonparticipating because the policyowners do not share in the profits of the company The objective is to produce profits for the owners, the stockholders Stock insurance companies that issues both participating and nonparticipating policies are referred to as a company doing business on a mixed plan. Mutual life insurance companies: An insurance company owned and controlled by its policyowners. These policyholders elect a board of trustees or Commissioners to manage the firm. The profits of a mutual insurance company are returned to the policyowners in the form of dividends or retained as surplus to meet future obligations. Mutual insurance companies are considered participating because the policyowners do share in the profits of the company The objective is to provide insurance to its owners, the policyowners, at the lowest net cost

Cease & Desist Order

The Commissioner may issue a cease-and-desist order to any person found to have committed an unfair or deceptive act or has violated a state insurance law Upon a hearing, a penalty of $500 per violation (not to exceed a total of $5,000) may be imposed Upon a hearing, a penalty of $2,500 per violation (not to exceed a total of $25,000) may be imposed if the person reasonably knew he was in violation

Penalties

The Commissioner may suspend or revoke its certificate of authority to an insurer found in violation of the Unfair Trade Practices law and may impose a fine of at least $100 and no more than $125,000

Certificate of Authority

The Commissioner will examine the financial affairs of all insurers before issuing a certificate of authority to transact business in Michigan

Medicare Supplements

The marketing of Medicare Supplements is regulated to prevent sales of excessive insurance, inaccurate policy comparisons, and the failure to display notice of limitations to the buyer The producer who solicits the application is primarily responsible for determining the appropriateness of a Medicare supplement policy for a proposed insured When a Medicare supplement policy is purchased during the open enrollment period, the policy must be issued regardless of health status Free-look period for Medicare Supplements is 30 days The open enrollment period for Medicare (and Medicare Supplements) begin 3 months before your 65th birthday and lasts for 7 months An insurer may exclude coverage for a preexisting condition on a Medicare Supplement Policy for up to 6 months.

For what purpose is a life insurance application backdated? To reduce the premium To reduce the face amount To protect health status To allow for additional underwriting

To reduce the premium

Group insurance premium payments made by an employer under the terms of a Taft-Hartley Trust are paid directly to the trust insurer union from dues collected from the members union under the terms of a collective bargaining agreement

Trust

The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as twisting subrogation a life settlement coercion

Twisting

A father has a son who is mentally handicapped but not eligible for Medicare. The son is dependent on his father. Under which of the following circumstances can the son remain on the father's coverage after the age of 26? Under no circumstances With written proof of disability and dependency With written proof of ineligibility for Medicare If COBRA coverage is not available

With written proof of disability and dependency

In the Michigan Insurance Code, Chapter 45, insurance fraud defines financial loss as all of the following EXCEPT loss of earnings additional premiums out-of-pocket expenses repair and replacement costs

additional premiums

When the insured gives birth, coverage for eligible newly born children consists of coverage of injury or sickness including delivery expenses mother's lost wages birth abnormalities mother's hospitalization

birth abnormalities

A licensee who informs an insured of inaccurate terms, benefits, or advantages of any policy is committing which of the following violations? Discrimination Misrepresentation Fraud Defamation

misrepresentation

To receive proceeds from a death benefit, a minor must be related to the insured can only be named as a contingent beneficiary must be at least 16 years old must have an appointed guardian

must have an appointed guardian

A licensee can disclose a consumer's policy account number to all of the following EXCEPT a member in an affinity program that was identified to the consumer upon entering the program service provider marketing on behalf of the licensee consumer reporting agency nonaffiliated third party

nonaffiliated third party

All of the following occurrences may result in license revocation EXCEPT producing an inadequate amount of new premium having been convicted of a felony forging another's name to an application for insurance failing to meet court-ordered child support obligations

producing an inadequate amount of new premium

Crimes that involve the business of insurance and affect interstate commerce fall under US Code 1033. Any violations would be prosecuted by the US Attorney General the Director of Insurance the Insurance Department the FBI

the US Attorney General

nonresident Producer

A producer who holds a resident license in a different state may apply for a nonresident license in Michigan, as long as both states have a reciprocal agreement. To apply, nonresidents must submit an application form, proof of resident license in good standing, and fees. Nonresident producer applicants do not have to take the Michigan state licensing exam, but must not have committed any act for which the license could be denied, suspended, or revoked.

Business Entity

A business entity that acts as an insurance producer in any manner (sells, solicits, negotiates, advertises, collects commission) must be licensed in Michigan. The types of business entities that can be licensed in Michigan are corporations, limited liability companies, limited liability partnerships, partnerships, or sole proprietorships.

Reinstatement

A lapsed license may be reinstated within one year of the suspension date. The requirements include: reinstatement application renewal fee plus a reinstatement fee proof of completion of continuation education requirements

Producer

A producer is any person who sells, solicits, or negotiates insurance contracts for compensation on behalf of an insurer. This includes submitting applications to the insurer, collecting premiums, and delivering policies to policyowners. Each agency that transacts insurance must be licensed by the insurance department. An insurance producer CANNOT act as an agent of an insurer until the insurance producer becomes appointed by the insurer.

Shared Commissions

A producer may share a commission with another producer when the other producer is licensed in the same line of business.

Temporary

A temporary license may be issued in cases where a producer has become disabled or dies, requiring a replacement to service the producer's business. It also can be issued when the producer is actively serving in the military. A temporary license is valid for a maximum of 180 days.

Producer Records

All producers shall maintain full and correct transaction records of the business done by them for a period of 5 years.

Under long-term care insurance, which of the following MUST an insurer offer to each policyowner at the time of purchase? Lifetime minimum benefit levels Daily minimum benefit levels A decrease in annual benefit levels An inflation protection feature

An Inflation protection feature

Process

An applicant for a resident producer license in Michigan must Be at least 18 years of age Meet the prelicensing education requirements required by Michigan law Have passed the state exam for the lines of authority in which licensure is sought Submit the application with fees

Counselor

An insurance counselor is any person who, for a fee, offers to examine any policy for the purpose of giving advice or recommendations with respect to the benefits provided by the contract. An counselor must be licensed in the State of Michigan.

Assumed Names

An insurance producer doing business under any name other than the producer's legal name shall notify the commissioner prior to using the assumed name.

Termination of Producer Appointment

An insurer that terminates an agent appointment must notify the Commissioner within 30 days of the date of termination. Within 15 days of such notice, the insurer must mail a copy of the notice to the terminated agent, after which the agent will have 30 days to submit written comments to the Commissioner.

An insurer, in general business practice, fails to promptly provide a reasonable explanation for the denial of a claim. This is considered to be a contractual liability an unfair claim settlement practice a violation of the grace period provision a fraudulent insurance act

An unfair claim settlement practice

Consumer Information Privacy Regulation

Any documents or evidence in the Commissioner's possession and used in conjunction with an insurance fraud investigation are confidential. Other documents, evidence, etc. that do not relate to such investigation are public records. Consumer privacy regulations permit the release of an insured's financial information when an authorized agency makes a written request to the insurer during an insurance fraud investigation. Producers and insurers must provide applicants and policyowners with a notice of its information practices at the time of policy application, delivery, renewal, and when personal information is collected. Producers and insurers must receive a signed disclosure authorization form from applicants and policyowners before such private or personal information can be used. Before initiating an investigative consumer report, producers and insurers must notify applicants and policyowners they may be interviewed for the report, and that they may receive a copy of the report. A producer or insurer cannot disclose a consumer's policy number to nonaffiliated third parties. The exceptions to this include: member in an affinity program that was identified to the consumer upon entering the program consumer reporting agency service provider marketing on behalf of the insurer Producers and insurers must provide applicants with a written statement concerning an adverse underwriting decision. Producers and insurers cannot ask applicants for information pertaining to a prior adverse underwriting decision, unless the inquiry also requests the reasons for the adverse decision

Long Term Care

Definition 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. A health insurance producer license is required in order to solicit Long-term care insurance in the State of Michigan. 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. 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. Renewability Provision Individual long-term care insurance policies shall contain an appropriately captioned renewability provision on the first page of the policy form. The renewability provision shall clearly state that the coverage is guaranteed renewable or noncancellable Pre-existing Conditions Pre-existing conditions are those for which medical advice or treatment was recommended by or received from a health provider within six months preceding the effective date of an individual longterm care policy. Free look A 30 day free look period is required for long-term care policies. Inflation Protection All insurers issuing long-term care insurance policies must offer, as an optional benefit, an inflation protection feature which provides for automatic future increases in the level of benefits without evidence of insurability. Adjustments must be at a level which provides reasonable protection from future increases in the costs of care for which benefits are provided. Home Health Care Long-term care policies must pay for "at-home" care at the same daily amount as paid for a nursing home if the insured meets the qualifications for nursing home care. Limitations and Exclusions Exclusion or limitation of benefits on the basis of Alzheimer's Disease is NOT permitted. However, limits and exclusions may be placed on: 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)

Michigan Eligibility Requirements And Offers

Dependent children Dependent children are covered up to age 26 Physically or mentally handicapped dependents Handicapped children are not subject to an age limitation and may remain covered under the parent's health plan as long as he/she is unmarried and is dependent for support. Written proof of disability and dependency is required 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, and for a period of 31 days. If a premium is required to continue the newborn's coverage, it must be paid within the 31-day period Coverage includes injury and sickness, including medical care for diagnosed congenital defects and birth abnormalities Adopted and prospective adopted children All health plans must provide coverage to the insured's adopted children on the same basis as other dependents. Converted policies At the option of the insurer, a separate converted policy may be issued to cover a dependent. Definition of small employer A small employer is one that employs between 2 and 50 employees on at least 50% of its working days during the preceding calendar year. An employee is to work AT LEAST 17.5 hours in a normal week to be eligible for small employer group insurance. When offering a health benefit plan to small employers, the carrier MUST offer at least the standard plan A small employer carrier that offers health coverage in the small employer group market shall renew or continue in force that plan at the option of the small employer Workers' compensation Under workers' compensation, injured employees are covered for: Loss of wages Medical expenses Occupational illnesses

Health Required Provisions

Entire contract A provision that the policy, application, and all attachments shall constitute the entire contract between the parties. Time limit on certain defenses (Incontestable Period) A health or disability policy is incontestable after it has been in force for a period of 3 years. Only fraudulent misstatements in the application may be used to void the policy or deny any claim at this point. Grace Period The grace period for health and accident insurance is required to be no less than 7 days for weekly premium policies, 10 days for monthly premium policies and, 31 days for all other policies. If premium is paid within the grace period, coverage shall remain in effect. Reinstatement If a health policy is reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered. Injuries sustained from an accident, however, will be covered immediately. Notice of claim Written notice of a claim must be given within 20 days after a covered loss starts or as soon as reasonably possible. Claim forms An insurance company will send forms for filing proof of loss to a claimant within 15 days after company receives notice of a claim. Proof of loss Written proof for any loss must be given to the insurance company within 90 days. Payment of claims If benefits are not paid on a timely basis the benefits paid shall bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer. Right to examine (free-look) 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. A person who is eligible for Medicare has a free-look period of 30 days Legal Actions No legal action can be initiated within 60 days after proof of loss has been submitted to the insurance company. In addition, no legal action can be initiated after 3 years from the initial time written proof of loss has been provided. Continuation of group health insurance A group health insurance policy must be continued for an employee or member at least 6 months after the insurance has been cancelled for any reason other than nonpayment. Advertisements All advertisements for health insurance shall make clear the identity of the insurer. Physical Exams and Autopsies The insurer has the right to examine the insured during the claim process and to an autopsy when death is involved and where it is not forbidden by law. When determining the exact cause of death from an accident, an autopsy takes precedence Illegal occupation The insurer shall not be liable for any loss to which a contributing cause was the insured being engaged in a felony or illegal occupation.

Health Pre-Existing Conditions

Individual health insurance For individual health insurance: pre-existing conditions (conditions for which medical advice, diagnosis, care or treatment was recommended or received in the 12 months prior to the effective date of enrollment) may be excluded for a maximum of 12 months from the date of enrollment Group health insurance For group health insurance: Pre-existing conditions (conditions for which medical advice, diagnosis, care or treatment was recommended or received in the 6 months prior to the effective date of enrollment) may be excluded for a maximum of 12 months from the date of enrollment (18 months for late enrollees). Creditable coverage will be used to reduce the exclusion period, unless the individual has a coverage gap of 63 days prior to enrollment in the group plan. Continuation of group health insurance A group health insurance policy must be continued for an employee or member at least 6 months after the insurance has been cancelled for any reason other than nonpayment. Replacement health insurance When a person covered by a health insurance plan moves to another plan, any credit toward fulfilling the preexisting requirement on the prior plan will be transferred to the new plan. Pre-existing conditions, replacement policies When replacing an individual health policy in Michigan, the required replacement notice to the applicant must include notice that pre-existing conditions may not be covered. An individual's waiting period for pre-existing conditions is reduced when he or she has "creditable coverage." Creditable coverage is previous coverage under another group or individual health plan when there has not been a break in coverage of 63 days. The 63-day period begins when the individual's previous coverage ended. It ends when coverage under your plan begins, or, if earlier, when your group's waiting period for eligibility begins.

Life Required Provisions

Right to examine (free-look) Life 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 The required grace period for life insurance policies in Michigan is 1 month. The grace period is a time which a policy remains in force after the premium is due, but not paid. If the insured dies during the grace period, the death proceeds will still be paid, minus the premium due. Reinstatement A lapsed policy may be reinstated within 3 years from the due date upon evidence of insurability and all back premiums are paid with interest. Incontestability Period A provision that the policy terms shall be incontestable after it has been in force for a period of 2 years from its date of issue (unless the purpose for taking out the coverage was fraud). Interest on Insurance Proceeds Interest on benefits of a life insurance policy shall begin to accrue 30 days from the date of receipt of proof of death by the insurer. Entire contract A provision that the policy and the application shall constitute the entire contract between the parties. All statements made by the policyholder are considered representations. Policy Loan Interest Rate The maximum fixed interest rate for policy loans charged by insurers is 8% in Michigan. Group Life Insurance In the event of employment termination, a person covered by a group policy has the right to convert such coverage to an individual policy within the conversion period (31 days) without proving insurability. If this right is exercised, the employee is responsible for the payment of premium. Nonforfeiture law The request for a paid-up nonforfeiture option must be made to an insurer within 60 days after the due date of a premium in default. Policies must provide that the specified paid-up nonforfeiture benefit is effective unless the policyowner elects another available option within 60 days after the due date of the premium in default Cash Surrender The maximum length of time an insurer can defer payment of a cash surrender value of a life insurance policy or annuity is 6 months.

Which form of insurer has shareholders? Reciprocal company Mutual company Stock company Fraternal Society

Stock Company

Probation, suspension, revocation, refusal to issue or renew of licenses

The Commissioner may levy a civil fine, place on probation, suspend, revoke, refuse to renew, or deny a license to any person who has: Provided incorrect, misleading, incomplete or untrue information in the license application Violating any insurance laws, regulations, subpoena, or orders from the Insurance Commissioner Obtaining to obtain a license through fraud or misrepresentation Intentionally misrepresent the terms of an insurance contract Been convicted of a felony Committed any insurance unfair trade practice Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in this or any other state. Having an insurance license denied, suspended, or revoked by another state Forging a name to an insurance document or application Cheating on an insurance license examination Knowingly accepting insurance business from an unlicensed individual Failing to comply with a court order imposing child support Failing to pay state income tax

When an insurance licensee changes his or her address under the Michigan Insurance Code, who MUST be notified? The Secretary of State office The Insurance Agents Association The Bureau of Commercial Services The Commissioner of the Department of Insurance and Financial Services (DIFS)

The Commissioner of the Department of Insurance and Financial Services (DIFS)

Solvency

The Commissioner will suspend the certificate of authority of any insurer that becomes insolvent, is threatened with insolvency, or is delinquent in claims payment.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the use and disclosure of consumer credit information. The primary purpose of the Fair Credit and Reporting Act is to protect consumers with guidelines regarding credit reporting and distribution. Credit reporting agencies, such as Experian, Equifax, and TransUnion, are regulated by the FCRA. They are required by law to provide information about a consumer stored in the agency's files. Adverse information that has been removed from a consumer's file cannot be reinstated without notifying the customer within five days. Furthermore, agencies cannot store adverse information about a consumer for longer than a set period of time. For example, information about late payments and final judgments can only stay on a credit report for up to seven years, bankruptcies - 10 years, and tax liens - seven years from the date paid.Insurance companies are also subject to the FCRA because they use consumer credit reports during underwriting and risk selection. Insurers must notify consumers when an adverse underwriting decision has been made based on a credit report, and include the name of the credit reporting agency they used as the basis for the decision.

Fraud & False Statements Including 1033 Waiver

The Fraud and False Statements federal law makes it illegal to lie, falsify, or conceal information (orally or in writing) from a federal official. As it applies to insurance, any person engaged in interstate insurance business who engages in intentional unfair or deceptive insurance practices, or overvalues an insurance product in a financial report or document presented to a regulatory official, will be in violation of federal law. Other violations include, but are not limited to: embezzling money from an insurance company, misappropriating insurance premiums, and writing threatening letters to insurance offices. The punishment for violation is a fine up to $50,000, imprisonment up to 15 years, and/or license revocation An individual convicted of a felony involving dishonesty may engage in the business of insurance ONLY after receiving written consent from the state insurance regulatory agency and a 1033 waiver

Michigan Life & Health Guaranty Association

The Life and Health Guaranty Association is used to rehabilitate insolvent (financially incapacitated) insurers. Protects insureds against the failure in the contractual obligations of insurance policies and annuities (up to certain limitations) Producers are prohibited from using the existence of the Michigan Guaranty Association for selling, soliciting, or inducing purchase of an insurance policy

Producer appointments

The agreement between an insurance producer and insurer under which the insurance producer, for compensation, may sell, solicit, or negotiate policies issued by the insurer is called an appointment. A producer cannot act as an agent for an insurer unless he or she is appointed to work for that insurer. The insurer is required to file a notice of appointment to the Commissioner within 15 days from the date date the first insurance application is submitted or agency contract is executed Upon receipt, the Commissioner has 30 days to verify that the producer is eligible for appointment. If found ineligible, the Commissioner shall notify the insurer within 5 days.

Unfair Claim Settlement Practices

The following acts, omissions, or practices are defined as unfair and deceptive claim settlement practices when knowingly committed or performed with such frequency as to indicate a general business practice, and are prohibited: Misrepresenting to insured's pertinent facts or policy provisions relating to coverage at issue Failing to acknowledge and act reasonably promptly upon communications with respect to an insurance claim Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insured's Not attempting in good faith to effect prompt, fair and equitable settlements of claims on which liability has become reasonably clear; Refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss; the claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made Compelling insured's to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in those suits Failing to provide a reasonable basis for the denial of a claim upon request

Prohibited Long Term Care & Medicare Supplements Sale Practices

Twisting: Using misrepresentations or inaccurate comparisons to induce a person to terminate or borrow against their current insurance policy to take out an insurance policy with another insurer High pressure tactics: Used to induce the purchase of insurance through force, fright, threat, or undue pressure Cold lead advertising: Failing to disclose that the purpose of the marketing effort is insurance solicitation Misrepresentation: Misrepresenting a material fact in selling a long-term care insurance policy

Consumer privacy regulations permit the release of an insured's financial information when a distant relative requests financial information in writing the Department of Energy, Labor, and Economic Growth makes a written request to the insurer for employment purposes a creditor requests information in writing to approve a line of credit an authorized agency makes a written request to the insurer during an insurance fraud investigation

an authorized agency makes a written request to the insurer during an insurance fraud investigation

Deferred commissions may be paid to a person who sold an insurance policy when the person was a licensed broker at the time of sale was a licensed producer at the time of the sale passed the examination and applied for a producer license at the time of the sale passed the examination and applied for a solicitor license at the time of the sale

was a licensed producer at the time of the sale