Florida Specific Concepts

Are mail order insurance companies permitted in the state of Florida? Explain.

No, they are not. The transaction of insurance, including the application, must be taken and the policy delivered through a licensed and appointed Florida agent.

What was the Barnett case and what did it allow?

(Barnett Bank of Marion County vs Nelson, Florida Insurance Commissioner) A Supreme Court decision that permitted the sale of all other lines of insurance.

EPO

(Exclusive Provider Organization) A variation of the PPO concept, an EPO contracts with an extremely limited number of physicians and typically only one hospital to provide services to members; members who elect to get health care from outside the EPO receive no benefits.

HMO

(Health Maintenance Organization) Health care management stressing preventative health care, early diagnosis, and treatment on an outpatient basis. Persons generally enroll voluntarily and pay a fixed fee periodically.

What was the VALIC case and what did it allow?

(Nations Bank of NC vs Variable Annuity Life Insurace Co) A Supreme Court decision that permitted the sale of annuities.

PPO

(Preferred Provider Organization) Association of health care providers, such as doctors and hospitals, that agree to provide health care to members of a particular group at fees negotiated in advance.

What is the nature of the favorable tax treatment according to qualified retirement plans?

1. Employer contributions are considered "ordinary and necessary" expenses and may be deducted from income. 2. The earnings of investments in a qualified plan are exempt from income taxation. 3. Employer contributions are not taxable until the employee begins to withdraw those funds (usually after retirement).

What are the major types of groups eligible for Group Life Insurance in Florida?

1. Employer-employee group 2. Labor union group 3. Trustee group 4. Debtor group 5. Association group 6. Credit union members 7. Dependent group

What entities of state government are involved in the regulation of the insurance business in Florida?

1. State Legislature 2. Department of Financial Services (headed by the CFO) 3. Commissioner of the Office of Insurance Regulation 4. State court system

What is the Insurance Code and who administers it?

A broad legal framework prescribing the general standards for the insurance industry; the Department of Financial Services and the Office of Insurance Regulation.

Unfair Trade Practices Act

A model act written by the National Association of Insurance Commissioners (NAIC) and adopted by most states empowering state insurance commissioners to investigate and issue cease and desist orders and penalties to insurers for engaging in unfair or deceptive practices, such as misrepresentation or coercion.

Universal Life Insurance

A relatively new product that utilizes a fund into which premiums are paid regularly or intermittently, giving it flexible premiums and adjustable benefits. When necessary, the insurance company withdraws the amount required to pay the ART premium selected for that period. The unused funds in the account are credited with interest and debited for expenses. Accumulations are tax-sheltered, as they are in other life insurance policies. ALso: Flexible premium, two-part contract containing renewable term insurance and a cash value account that generally earns interest at a higher rate than a traditional policy. The interest rate varies. Premiums are deposited in the cash value account after the company deducts its fees and a monthly cost for the term coverage.

Qualified Plan

A retirement or employee compensation plan established and maintained by an employer that meets specific guidelines spelled out by the IRS and consequently receives favorable tax treatment.

What must be provided to the policyholder when replacement is being considered?

A written comparison and a summary statement.

Policy Conversion

Allows the policyowner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be based on the attained age (premium based on age when policy was converted) or at the original age (premium based on age when original policy was issued).

Describe the special requirements that are required in FL of agents who solicits Medicare supplements.

An agent must ask every person solicited whether s/he is currently covered under another contract and must explain the extent to which the proposed coverage will overlap or duplicate the existing coverage.

Policy Assignment

An agreement between the policyowner and a second party in which the policyowner assigns certain ownership rights to the second party. An assignment is filed with, and acknowledged by, the company but the company assumes no responsibility to carry out the assignment. It may be executed at the local branch office by completion of blanks provided for that purpose. They are sent to the home office for recording and endorsement, after which one copy is returned to the assignee.

Pre-existing Condition

An illness or medical condition that existed before a policy's effective date; usually excluded from coverage, through the policy's standard provisions or by waiver.

Code of Ethics Rule 69B-215.230., Misrepresentations

Declared to be unethical and encompass any untrue and malicious statement of any variety and in any arena that that isn't truthful about the benefits or risks of a policy, or that makes untrue statements about the insurance business as a whole or those who are in the industry.

Code of Ethics Rule 69B-215.225., Defamation

Declared to be unethical and is defined as making a statement in any way that is false or maliciously critical of any agent or company.

PLHSO

Any person, corporation, partnership, or any other entity that, in return for prepayment, provides/arranges for/provides access to the provision of a limited health service to enrollees through an exclusive panel of providers for services such as: ambulance, dental, vision, mental health, substance abuse, chiropractic, podiatric, and pharmaceutical services

Provider

Any physician, hospital, organization, or other person or institution that furnishes health care services and is licensed or otherwise authorized to practice in Florida.

Community Health Purchasing Alliances

CHPAs are state-chartered, nonprofit private organizations acting as clearing houses for health insurance plans. Although the 1997 law provided for CHPAs to serve several groups, including small businesses, Medicaid recipients,and state employees, the CHPAs currently serve only small businesses. Note: I did not find this in the book and online references to it were VERY limited. Here is the link to a 1998 report... other info I found refers to this idea as pretty much a terrible idea that never really went anywhere.... http://www.oppaga.state.fl.us/MonitorDocs/Reports/pdf/9814rpt.pd

What are combination plans?

Combination plans are plans that cover more than one individual on one policy such as a joint life policy; these policies often include survivorship provisions.

Code of Ethics Rule 69B-215.210., Scope

Declares the business of life insurance to be a public trust; all agents have a common obligation to serve the best interests of the insuring public by being informed, ethical, and avoiding unfair trade practices and establishes criminal penalties for doing so.

Non-Participating Life Insurance Policy

Does not share the surplus earnings of the insurance company and therefore does not receive dividends.

Small Employer

Employer who employs not more than 50 employees, the majority of whom are employed in Florida

What is the Code of Ethics of the FAIFA (Florida Association of Insurance and Financial Advisors)?

Establishes a broad outline defining appropriate and inappropriate business behavior for life insurance agents; it also establishes the activities of agents as one of public trust.

Extension of benefits (re: HMOs)

Every HMO contract must provide that if the HMO terminates the contract, it shall be without prejudice to any continuous loss that commenced while the contract was in effect. This applies until the earliest of the following: 12 months, member s no longer totally disabled, another carrier assumes coverage, or maximum benefits under the contract have been paid.

Unfair Claim Settlement Practice

Failing to affirm or deny coverage of claims upon written request of the subscriber within a reasonable time, not to exceed 30 days after a claim or proof-of-loss statements have been completed and documents pertinent to the claim have been requested in a timely manner and received by the HMO.

Policy Application

Form supplied by the insurance company usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives information to the home office underwriting department, so it may consider whether an insurance policy will be issued and, if so, at what premium rate.

Time Limit on Certain Defenses

Generally, states that after two years, no misstatements (except for fraudulent ones) made by the applicant on the application, shall be used to void the policy or to deny a claim for loss incurred commencing after the end of that period. Also provided that no claim for loss incurred after two years from the date of issue shall be denied on the grounds that a disease or physical condition (not specifically excluded by name) had existed prior to that date.

Florida Employee Health Care Access Act

Governs group health insurance provisions provided by insurers or HMOs to small employers. A "small employer" is one who employs 1-50 people, the majority of whom are employed in FL. (pg. 504-505)

Florida Comprehensive Health Association

Guarantees health insurance to Florida residents who cannot get coverage because of poor health , at rates up to 250% of standard rates. All health insurers, service organizations, and fraternal benefit societies selling health insurance must belong to the association.

Accountable Health Partnerships

In accordance with a 1999 law, AHPs may be created by health care providers, health maintenance organizations, and health insurers, for the purpose of providing health care services to alliance members. Note: I did not find in the book. Here's the link: http://www.leg.state.fl.us/statutes/index.cfm?App_Mode=Display_Statute&Search_String=&URL=Ch0408/Sec706.htm&StatuteYear=1999

Discrimination

In insurance, this is the act of treating certain groups of people unfairly in the sale/pricing of policies; treating any given class of risk differently from other like risks. Discrimination is expressly prohibited in most state insurance codes, as it is in Florida.

Subscriber

Indicates the person or entity who has a health maintenance contract with the HMO, pays the fee, and uses the services of the HMO.

What is a Policy Summary?

Informational consumer guide book that explain insurance policies and insurance concepts; in many states (including Florida), they are required to be given to applicants when certain types of coverage are being considered. The policy summary addresses the specific product being presented for sale. It identifies the agent, the insurer, the policy, and each rider. It includes information about premiums, dividends, benefit amounts, cash surrender values, policy loan interest rates, and life insurance cost indexes of the specific policy being considered.

What is a Buyers Guide?

Informational consumer guide book that explain insurance policies and insurance concepts; in many states (including Florida), they are required to be given to applicants when certain types of coverage are being considered. This is a generic publication that explains life insurance in easily understandable language; does not address a specific product.

Group Insurance

Insurance that provide coverage for a group of persons, usually employees of a company, under one master contract.

Explain the dual regulation that variable annuities are subject to.

Insurers selling variable annuities are still subject to regulation by the state's Office of Insurance Regulation, but the annuity itself is regulated as a security. The common stock accounts backing variable annuities as open-end investment companies and the sales personnel as security broker-dealers are all under the regulatory control of the SEC.

Summarize Florida's Privacy Rules

Is an agent wishes to disclose a consumer's protected information (financial and health-related)to an entity other than the insurance company(ies) that the agent is representing, the agent must give the consumer a copy of the agent's privacy notice and an opportunity to prohibit the disclosure of that information to non-affiliated third parties (aka "opt out").

Florida Health Insurance Coverage Continuation Act

It extends essential provisions similar to the federal COBRA to employers in FL with less than 20 employees for up to 18 months beyond the time coverage would have otherwise ended. It requires that insurers sell plans to these employers at rates that do no exceed 115% of the regular group rate (or 150% if the beneficiary was disabled at the time the continuation began) and gives employees a right to elect continued coverage without providing evidence of insurability if their employer-sponsored coverage will end for a variety of reasons.

Twisting (re: HMOs)

Knowingly making any misleading representations or incomplete of fraudulent comparisons of any HMO contract or HMO organization or any insurance policy or insurer for the purpose of inducing any person to lapse, forfeit, terminate, surrender, retain, or convert and insurance policy or HMO contract with another insurance company or HMO.

Defamation

Making any oral or written statement or any pamphlet, circular, article or literature that is false or maliciously critical of any person and that is calculated to injure such person.

Fifth Dividend Option

Newer option; allows the policyowner to buy one-year term insurance at net rates with the dividends received. In most cases, the policyowner is limited to purchasing term insurance equal to no more than the current cash value on the contract.

How does a Non-Admitted company differ from an Admitted one?

Non-admitted companies are not under the regulation of the Florida Office of Insurance Regulation with regard to examination of its financial soundness, nor the examination and approval of types of coverage offered, nor its advertising through the mail.

Participating Life Insurance Policy

One in which the policyowner receives policy dividends. These dividends are part of the divisible surplus and are considered a return of premium based on the financial success of the insurance company.

What is an Admitted Life or Health Insurance Company?

One which the Office of Insurance Regulation has licensed to transact business in Florida under the provisions of state law.

Dividend

Policyowner's share in the divisible surplus of a company issuing insurance on the participating plan

Accumulation Unit

Premiums an annuitant pays into a variable annuity are credited as accumulation units. At the end of the accumulation period, accumulation units are converted into annuity units.

Medicare supplements

Private health insurance policies that provide coverage to fill gaps in Medicare coverage; designed to pay some or all of the deductible and co-pay amounts that Medicare recipients are required to pay.

Code of Ethics Rule 69B-215.215., Twisting

Prohibits external replacements of policies through misrepresentation or fraudulent means.

What are the characteristics of Group Life Insurance?

Provided under a master contract for members of qualified groups. It is generally written as a one-year renewable term plan, without medical examination, and at rates that are more favorable than individual policies. The cost may be paid by the organization, the members, or both.

Free- Look Provision

Provides that after the policyholder has received and read the policy and they decided they don't want it the policy may be returned for a full refund of the premium received. The existence of this provision must be disclosed no later than when the policy is delivered.

Portablility

Provision under the Florida Health Care Access Act in which when a worker or dependent will have to meet the waiting period for an existing condition only once, even if the individual changes employers and insurers. This is limited to those who had qualifying coverage to a date not more than 63 days before the effective date of the new coverage

Required Provisions

Provisions that must be included in health insurance contracts as a matter of law.

Variable Life Insurance

Relatively new form of whole life insurance. Provides a guaranteed minimum death benefit; actual benefits paid may be more, depending on the fluctuating market value of investments behind the contracts at the insured's death. The cash surrender value also generally fluctuates with the market value of the investment portfolio

What is the Florida Replacement Rule?

Sets forth the requirements and procedures to be followed by insurance companies and agents when a proposal is being made in which an existing insurance contract may be replaced. (see pg 423, 442)

Variable Annuity

Similar to a traditional, fixed annuity in that retirement payments will be made periodically to the annuitants, usually over the remaining years of their lives. Under the variable annuity, there is no guarantee of the dollar amount of the payments; they fluctuate according to the value of an account invested primarily in common stock.

According to the Insurance Code, what is meant by "transacting" insurance?

Solicitation or inducement to purchase insurance, preliminary negotiations toward the sale of insurance, effectuation of a contract of insurance and of matters subsequent to such

Entire Contract Clause

States that the policy, its endorsements, and any attached materials, including the application, constitute the entire contract of insurance. (This assures that no other documents that are not actually a part of the contract can be used to deny claims or coverage.

Describe the position and duties of the CFO.

The CFO is an independently elected official and member of the Governor's cabinet. The CFO is head of the Dept of Financial Services and a member of the Financial Services Commission. Regulation of insurance agents is directly administered by the CFO, as is insurance fraud and consumer protection.

Who administers the insurance laws of the state of Florida?

The Chief Financial Officer (CFO), the Financial Services Commission, and the Commissioner of the Office of Insurance Regulation.

Describe the position and duties of the Commissioner of the Office of Insurance Regulation.

The Commissioner of the Office of Insurance Regulation is appointed by the Financial Services Commission. This individual administers insurance company regulation, including licensing, rates, policy forms, market conduct, claims, certificates of authority, and solvency.

HMO Consumer Assistance Plan

The Florida Health Maintenance Organization Consumer Assistance Plan ("HMOCAP") was created by statute to protect persons enrolled for coverage with HMOs, subject to certain limitations, against the failure of their HMO to perform its contractual obligations due to its insolvency. The HMOCAP only provides protection for "commercial" HMO members - those who have group coverage, generally through their employer, or persons who purchase individual coverage directly through the HMO. Persons who are enrolled with an HMO for Medicaid or Medicare coverage are not covered by the HMOCAP. Rather, these persons must contact the Agency for Health Care Administration (for Medicaid) or the Center for Medicare and Medicaid Services (for Medicare), for their coverage questions. Pursuant to Florida's Insurer Insolvency statutes, the HMOCAP guarantees, reinsures, assumes, or provides coverage for members of the insolvent HMO subject to the terms and limitations provided in Florida law. Note: The only reference to this that I found in the book was that you couldn't use this to sell an HMO in any way in the state of FL. http://www.flhmocap.com/about-hmocap

What is the role of the SEC in variable annuity contracts?

The SEC asserted jurisdiction over variable annuity contracts in 1956 and that has been upheld in several court decisions. The SEC has jurisdiction over all variable annuity contracts issued by life insurance companies.

What is the solicitation of insurance?

The attempt to persuade a person to purchase an insurance produce by describing the benefits and terms, distributing an invitation to prospective purchasers, making general or specific product recommendations, completing orders or applications for insurance products, comparing products, advising on insurance matters, interpreting policies, or offering or attempting to negotiate a viatical settlement contract on behalf of another person.

How can the dividends on a participating policy be used?

The dividends can be taken in cash, used to reduce the premiums, left with the insurance company to accumulate interest, used to purchase paid-up additions to the face value, or used to purchase one-year term additions.

Health Maintenance Contract

The equivalent of a policy in traditional health care terminology; used in HMOs.

Open Enrollment (re: HMOs)

The law requires that each HMO that each HMO that offers a group plan within FL must have an open enrollment period of not less than 30 days during every 18-month period. During that time, each eligible group member may enroll regardless of health history.

Annuity Unit

The number of annuity unit denotes the share of the funds an annuitant will receive from a variable annuity account after the accumulation period ends. The basic measure and method by which the purchaser's annuity income is determined.

What is the purpose of an HMO?

The policy of the state of Florida is to eliminate legal barriers to the promotion and expansion of comprehensive prepaid health plans and to ensure that these plans deliver high quality health care without impeding other health care systems.

Exclusion Ratio

The portion of the return on investments that is income tax exempt. It represents a payback of initial investments rather than capital gains.

Participating v Non-participating Life Insurance

The premium payments in a participating policy are usually higher, although dividends can be used to reduce premiums. The surrender values are generally the same for both types of policies. The general policy provisions are the same, except the participating policy includes a dividend provision and options on how the policyowner can use the dividends.

Describe the duties of the state legislature in regards to the insurance business.

The state legislature makes new laws and amends existing laws relating to insurance. This body of laws is known as the Insurance Code. The legislature also established by law the Department of Financial Services and the Office of Insurance Regulation to administer that code.

Dollar Cost Averaging

The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

Policy Provisions

The terms or conditions of an insurance policy as contained in the policy clauses.

How long are free-look periods in Florida?

They vary according to policy type. Health and disability policies require a 10-day period, life and annuity policies require a 14-day period, and long-term care and Medicare policies require a 30-day period. (This does not apply to short term single premium policies such as aviation accident policies, etc.)

Health Care and Insurance Reform Act

This 1993 act established a new model for health care delivery in Florida called "managed competition" (and amended the Florida Employee Health Care Access Act).

What is the Florida Life Insurance Solicitation Law?

This law spells out the information and procedures required of agents and insurers when proposing life insurance to a prospective buyer.

Guarantee-issue basis

Under the ACA, all health insurance policies to describe a situation where a policy must offered to any eligible applicant without regard to health status.

Code of Ethics Rule 69B-215.220., Rebating

Unless expressly provided by law, rebating is declared to be unethical.

What products are exempt from the Florida Life Insurance Solicitation Law?

Unless otherwise specifically stated, the following products are exempt: 1. Annuities 2. Credit Life Insurance 3. Group Life Insurance 4. Life insurance policies issued in connection with pension and welfare plans subject to ERISA 5. Some variable life insurance products where the death benefits and cash values vary in accordance with unit values of investments held in separate accounts