Insurance terms to study

Flexible premium policies 2. Universal life

-AKA flexible premium adjustable life -AKA as interest-sensitive policy PH has flexibility to increase amt. of premium paid and later decrease it again -PH may skip paying a premium and policy will not lapse as long as there is sufficient cash value -two ways to pay: Minimum premium is amt. need to keep policy in force for current year. Will make policy perform as annually renewable term product Target premium is recommended amt. that should be paid in order to cover costs of ins. protection and keep policy in force throughout lifetime -contract interest rate 3-6% -potential for PH to get current interest rate not guaranteed in contract, but may be higher because of current market conditions -has two components: Insurance and cash account The insurance component is usually annually renewable term ins. -Two death benefit options: 1. A = level death benefit remains level (pure ins.) while cash value increases 2. B = increasing death benefit includes annual increase in cash value so death benefit gradually increases each year. -any point in time total death benefit will always be equal to face amt. plus current amt. of cash value -expenses are much greater than Option A causing cash value to be lower in older years.

Flexible premium policies 1. Adjustable life

-Adjustable life developed to provide PH with both term and permanent coverage -can assume the form of either term or permanent ins. -insured determines how much coverage -insurer determines appropriate type of ins. to meet insured's needs -as insured's need change, the pH can make adjustments to policy -increase/decrease premium or premium paying method -increase/decrease face amt. -change period of protection -convert from term to whole life or vice versa -increases in death benefit/changing to lower premium type will usually require proof of insurability -converting from whole life to term, the insurer may adjust the death benefit -PH may pay additional premiums above and beyond to accumulate greater cash value or shorten premium paying period -cash value of adjusted policy only develops when premiums paid are more than cost of policy

What is a nonresident agent?

-An individual or business entity currently licensed as a resident producer in another state. -license must be renewed biennially by the last date of the licensee's birth month

Assumed name (agent)

-An insurance agent that intends to do business in Ohio under any name other than the agent's legal name must notify the superintendent prior to using the assumed name. -a license will only be issued in the legal name of the applicant. -commissions will only be paid in the legal name of the licensee.

Reinstatement of license NEED TO KNOW

-Failed to renew license may be eligible within 12 months following the renewal date.

Personal life ins. proceeds paid in a lump-sum may be used for any of the following expenses

-Final medical expenses of insured, funeral expense, and day to day expenses family maintenance -debt cancellation by paying off debts such as home mortgage, auto loans -Emergency reserve funds paying for unexpected expense such as travel and lodging for family members -Education funds for paying children's education expenses so they can remain in school, or surviving spouse who may need additional education or training -Retirement fund as a source of retirement income -bequests leaving funds to the insured's church, school or charity

Cease and desist

-In certain instances the superintendent has the power to issue an order that requires a person to cease and desist form any activity. -must specify the act or practice that is subject to the order. -the superintendent's final order is appealable -the superintendent determines that an agent or a business entity has violated any regulations of the Insurance code

Whole life insurance

-PERMANENT life insurance is a general term used to refer to various forms of life insurance policies that BUILD cash and remain in effect for the entire life of the insured as long as the premium is paid. -Most common is WHOLE LIFE -whole life policies also build CASH VALUE (living benefits) which PH can borrow against, or which is entitled to in the event the policy is surrendered. -cash value called NONFORFEITURE VALUE, does not usually accumulate until the third policy year and it grow tax deferred -PH can borrow against the cash value. -insurer may defer payment of any loan request for up to 6 months. Characteristics of whole life: 1. Level premium 2. Death benefit 3. Cash value 4. Living benefits Three basic forms of whole life ins. is: Straight life (ordinary life) or (continuous premium whole life) is the basic whole life policy -PH pays the premium for the life of the policy. -will be the lowest annual premium Limited-pay whole life is designed so that the premiums for coverage will be completely PAID UP well before age 100. -all other factors being equal, this type of policy has a SHORTER PREMIUM-PAYING period than straight life ins, so the annual premium will be higher

Life insurance basics a. insurable interest

-PH must face the possibility of losing money or something of value in the event of loss. -must exist between the pH and insured at the time of application -once policy has been issued, insurer must pay the policy benefit whether or not an insurable interest exists. -valid insurable interest may exist between the PH and insured when the policy is insuring any of the following: 1. PH own life 2. life of a family member (spouse or a close blood relative 3. life of a business partner, key employee or someone who has a financial obligation to the PH (such as a debtor to a creditor)

Planning for income needs approach

-Replacing insured's salary or lost services -Social security income (blackout) period -Liquidation vs. retention of capital

Disciplinary actions NEED TO KNOW

-Revocation is the PERMENANT termination of all authority to hold any license as an agent -Suspension is termination of all authority to hold any license as an agent in this state for either a specified or indefinite period of time under any terms or conditions determined by the superintendent -Refusal to issue or renew (denial) is the decision of the superintendent of insurance not to process either the initial application for license as an agent or the renewal of such license.

Life insurance policies NEED TO KNOW

-Term insurance is a temporary protection because it only provides coverage for a specific period of time. AKA pure life -policies provide for the greatest amt. of coverage for the lowest premium as compared to any other form of protection. -usually max age above which coverage will not be offered or at which coverage can't be renewed. -aka pure death protection 1. if insured dies during this term, the policy pays the death benefit to the beneficiary -if policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term.**** -there is no cash value or other living benefits***** -regardless of the type of term insurance purchased, the PREMIUM IS LEVEL throughout the term of the policy **** -upon selling, renewing, or converting the term policy, the premium is figured at attained age ****

Felony or misdemeanor NEED TO KNOW

-The superintendent may suspend, revoke, or refuse to issue or renew a license if an agent has been convicted of or pleaded guilty or no content to a felony or misdemeanor that involves the misuse or theft of money or property, forgery, fraud, dishonest acts, or moral turpitude regardless of whether the judgment of conviction has been entered by the court.

What is the purpose of a temporary license?

-To allow adequate time to sell the business -to recover -to provide for training of new personnel to carry on the business.

Guaranty Association disclaimer

-Unfair trade practice to make a statement that insurer's policies are guaranteed by existence of ins. guaranty

Fixed insurance or annuities are contracts that offer guaranteed minimum/fixed benefits stated in the contract

-Variable life or annuities cash value accumulate based specific portfolio of stocks w/o guarantees of performance -annuities keep pace with inflation -determined by values securities backing it

Can a licensed agent surrender his/her license? NEED TO KNOW

-Yes, at any time as long as the agent is not under an investigation by the superintendent. -when the agent's license is surrendered, suspended, revoked, canceled or inactivated, all agent's appointments are VOID.

A resident insurance agent license may be issues to: NEED TO KNOW

-a BUSINESS ENTITY if the superintendent of insurance finds that the applicant meets the requirements.

Illustration

-a presentation or depiction that includes non-guaranteed elements of a policy of individual or group life ins. over a period of years. -purpose of illustration rules is to provide standards that will protect consumers and foster consumer education

Fraudulent insurance act NEED TO KNOW

-act committed by a person who, knowingly and with intent to defraud: 1. prepares an ins. application that contains materially false information 2. conceals any material fact for the purpose of misleading the insurer 3. prepares or submits any claim that contains false information

Change of address by the agent NEED TO KNOW

-agent must notify the superintendent within 30 days of any change in residential or business address or phone number.

Viatical settlements

-allows someone living with a life threatening condition to sell their existing life ins. policy to use the proceeds when they are needed the most before their death. -usually receive a percentage of the policy's face value from a third party who purchases the policy -new owner continues to maintain premium payments and will eventually collect the entire death benefit

Executive bonuses

-an arrangement where employer offers to give the employee a wage increase in amt. of premium on a new life policy on the employee -employee owns the policy and has all control -that amt. is tax deductible to employer -is income TAXABLE to employee -if employee is not wiling to accept the offer the employer will not provide it

Solicitation and sales presentations

-an attempt to persuade a person to buy an ins. policy -it can be done orally or in writing -providing information about available products, describing the policy benefits, making recommendations about specific type of policy -trying to secure a contract

What is unfair insurance trade practices? NEED TO KNOW

-an unfair method of competition or unfair deceptive act or practice in the business -unfair to knowingly commit an unfair trade method of competition to engage in action with enough frequency that the commission is unfair marketing practices indicates a general business practice. -Department of insurance determines if agent committed an unfair trade or competition -department may issue cease and desist order

What is rebating? NEED TO KNOW

-any inducement offered to the insured in the sale of ins. products that is not specified in the policy. -both offer and acceptance of a rebate is illegal. -rebating may include the following: a. rebates of premiums payable on the policy b. special favors or services c. advantages in the dividends or other benefits d. stocks, bonds, securities and their dividends or profits

Disclosure rules

-applies to solicitation, negotiation or procurement of life ins. or annuities -applies to any issuer of life ins. including fraternal benefit societies -agent must identify himself as a life ins. agent with full name of ins. comp. DOESN'T apply to: -credit life, group life, life policies issued in connection w/pension and welfare plans or variable life

Social Security disability benefits

-claimant must be able to demonstrate that the disability will last at least 12 months

Interest-adjusted net

-considers time value of month or (investment return on ins. premiums if been invested elsewhere) by applying interest adjusted to early premiums and dividends -surrender cost index and net payment cost index

Variable ins. or annuities

-contracts which cash values accumulate based on specific portfolio of stocks w/o guarantees of performance -keeps pace with inflation and are determined by the value of securities backing it

Birth of first child

-covered under a group plan PH must notify the insurer within 31 days in order to have coverage

Business uses of life insurance

-creates immediate payment upon the death of the insured -most common use by businesses is an employee benefit and serves as a protection for employees and their beneficiaries -funding business continuation agreement, compensating executives, protecting the business against financial loss resulting from death/disability of key employees

Single premium whole life

-designed to provide level death to age 100 for a one-time lump sum payment -completely paid up after one premium and generates immediate cash

Fair Credit reporting act NEED TO KNOW

-established for reporting agencies must follow in the order to ensure that records are confidential, accurate, relevant, and properly used. -protects consumers against the circulation of inaccurate or obsolete information -acceptability of a risk is determined by checking the individual risk against many factors directly related to the risk's potential for loss.

Life and Health ins. Guaranty Association

-formed to protect PH insured, beneficiaries and anyone entitled to payment under ins. policy from incompetence and insolvency of insurers -will pay covered claims up to certain limits -funded by its members through assessment -all authorized insurers which are required to be members, contribute to a fund to provide for payment of claims for insolvent insurers

Life ins. policy cost comparison method

-helps consumers make educated decisions on purchasing life ins. -industry developed specific methods and indexes that measure and compare actual policy costs -traditional methods are INTEREST ADJUSTED net cost and COMPARATIVE interest rate method

Determining amt. of personal life ins. 1. Human life value approach 2. Needs approach

-human life value approach gives the insured an estimate of what would be lost to the family in the event of the premature death of the insured -calculates insured's wages, inflation, number of years to retirement and time value of money -needs approach is based on the predicted needs of a family after the premature death of the insured. -factors considered are income, amt. of debt including mortgage, investments and other ongoing expenses

What is misrepresentation? NEED TO KNOW

-illegal to issue, publish, or circulate any illustration or sales material that is false, misleading or deceptive as to policy benefits and terms, payment of dividends, etc. -also refers to oral statements -terms, benefits, conditions, or advantages of any ins. policy -any dividends to be received from the policy or previously paid out -financial condition of an person or the ins. comp. the true purpose of an assignment or loan against a policy -representing an ins. policy as a share of stock or using names or titles that may misrepresent the true nature of a policy and also considered false advertising.

Unfair discrimination NEED TO KNOW

-in rates, premiums, or policy benefits for persons within the SAME CLASS or with SAME LIFE EXPECTANCY -no discrimination may be made on the basis of an individual's marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry UNLESS the distinction is made for a business purpose or required by law.

Investigate consumers reports

-information is obtained through an investigation and interviews with associates, friends, and neighbors of the consumer -reports can't be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. -an individual who UNKNOWINGLY violates the fair credit reporting act is liable in the amt. equal to the loss to the consumer, as well as any reasonable attorney fees incurred in the process. -an individual who WILLFULLY violates this act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500 -the consumer has the right to know what is in the report -if consumer challenges any of the information in the report, the reporting agency is required to reinvestigate and amend the report if warranted. -PROHIBITED information includes bankruptcies, more than 10 years old, civil suits, records of arrest or convictions of crimes, or any other negative information that is more than 7 years old.

Specialized policies 2. Survivorship life (second to die)

-insures 2 or more lives for a premium that is based on JOINT AGE -since survivorship pays on the LAST DEATH, the joint life expectancy in a sense is extended, resulting in lower premium than that typically charged for joint life -policy is often used to *offset the liability of the estate tax* upon the death of the last insured

Specialized policies 1. Joint life EX: a married couple purchasing a house may use a joint life policy for mortgage protection if both spouses work and earn close to the same amt. of income. If one spouse dies, the ins. pays the mortgage for the surviving spouse.

-is a single policy designed to insure 2 or more lives -can be term or permanent -premium less for same type and amt. on same individual -joint whole life functions similar to individual whole life with two major exceptions: * premium based on joint average age that is between the ages of the insured's *death benefit paid upon 1st death only -common for joint life policies to be issued to husbands and wives -the need for insurance is no longer present after the first insured dies -also used to insure the lives of business partners in the funding of a buy/sell agreement and other business life needs.

Key person Someone who has specialized knowledge, skills or business contacts

-key employee is the insured -event of death, the business would use the money for additional costs of running the business and replacing the key employee -business can't take a tax deduction for expenses of the premium, except if the key employee DIES, benefits are usually received TAX FREE -employee(s) would need to gibe permission for the coverage

Buy-sell EX: Value of business is $1,000,000. Partners A and B have equal interest $500,000 each. A and B buys a policy on each other. If A dies, B gets 100% ownership of the business and A's heirs receives $500,000.

-legal contract determines what will be done /business if owner dies or disabled -aka business continuation agreement -can be used for partnerships and corporation Cross-purchase-EACH partner buys a policy on the other partner -Entity purchase-PARTNERSHIP buys the policies on the partners -Stock purchase-used by privately owned corporation when each STOCKHOLDER buys a policy on each of the others -Stock redemption-CORPORATION BUYS one policy on each shareholder

Agent appointment procedures NEED TO KNOW

-licensee must be appointed by that insurance company -the insurer must file a notice of appointment with the superintendent no later than 30 days after the date the agency contract is executed. -before appointing a licensee an insurer will certify to the superintendent that the person is competent, financially responsible, and suitable to represent the insurer.

1035 waiver

-life insurance policy to life insurance policy (must be single life to single life or joint life to joint life) -life insurance policy to annuity policy (must be single life to single life) -the insured and owners must be the same on the policy being exchanged to the new policy -at a minimum a 1035 Exchange Form, and an Absolute Assignment Form must be completed. -it's a good idea to have a completed 1035 exchange form, a letter signed by the owner waiving the conservation period, and the existing carrier's surrender form in some cases to speed this process up as must as possible. -the Attorney General may bring a civil action in the US district court

Group insurance types of sponsors

-may be sponsored by employers, debtor groups, labor unions, credit unions, associations and other organizations form for a reason other than to purchase ins.

What is twisting? NEED TO KNOW

-misrepresentation or incomplete or fraudulent comparison of ins. policies that persuades an insured/owner to his/her detriment, to cancel, lapse, switch policies or to take out a policy with another insurer.

OHIO life and health ins. Guaranty association

-must create a disclosure doc. describing general purposes and current limitation -must include copy of this doc. at or prior to time of delivery -failure to receive doc. doesn't grant insured any special rights -warn PH the association may not cover policy or coverage will be subject to limitations and exclusions -liability of association may not exceed the lesser of the contractual obligations which ins. company is liable, or amts. with respect to any one life, regardless of # of policies or contracts. -for purposes of administration and assessment, the association maintains two separate subaccounts: **life and annuity **health insurance

Illustrations are required to include:

-name of insurer -name of business address of agent -age and sex of proposed insured -underwriting or rating classification -generic policy name, company product name and form # -initial death benefits -dividend options election or application on nonguaranteed elements

Viatical settlement provider

-person other than a viator that enters into or effectuates a viatical settlement contract Does not include: -bank, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life ins. policy as collateral for a loan -issuer of a life ins. policy providing accelerated benefits under and pursuant to the contract -a financing entity -special purpose entity -related provider trust -viatical settlement purchaser -an accredited investor or qualified institutional buyer who purchases a viaticated policy settlement provider

Replacement

-practice of terminating existing policy or letting it lapse and getting a new one -producers and comp. take special underwriting measures to help PH make informed decisions -any transaction new life ins. or new annuity is purchased; existing ins/annuity has been or will be: **lapsed, forfeited, surrendered, terminated **reissued with reduction in cash value **converted to reduce paid up ins. continued as extended term or reduced in value by use of non-forfeiture benefits/other policy values **amended **used in a financial purchase -producer must present to the applicant a NOTICE REGARDING REPLACEMENT signed by applicant and producer

Suspend, revoke or refuse to issue or renew any license of an agent, assess a civil penalty, or impose any other authorized sanction for any of these reasons NEED TO KNOW

-providing incorrect, misleading, incomplete or materially untrue information -obtaining or attempting to obtain a license through misrepresentation or fraud -improperly withholding, misappropriating, or converting any money or property -intentionally misrepresenting the terms, benefits, value, cost or effective dates of any actual or proposed insurance contract of application for insurance. -fraud, forgery, dishonest acts, or breach of fiduciary duty -fraudulent, coercive, or dishonest practices -failing to submit an application for insurance -failing to inform a PH or applicant of the identity of the insurer or identity of any other insurance agent or licensee known to be involved in procuring, placing or continuing the insurance for the PH or applicant, upon the binding of the coverage -business entity, failing to report an individual licensee's violation to the dept. when the violation was known or should have been know by one or more of the partners, officers, managers, or members of the business entity -soliciting, marketing or selling an product or service that offers benefits similar to insurance -failing to fulfill a refund obligations -offering, selling, soliciting, or negotiating policies, contracts, agreements, or applications for insurance, or annuities providing fixed, variable or fixed and variable benefits, or contractual payments

Group life insurance characteristics

-purpose of the group must be created for a purpose other than to obtain group insurance -size of group-larger number of people in the group the more accurate the projections of future loss experience will be. (Law of Large Numbers) -turnover of the group-a group should have a steady turnover; younger, lower risk employees enter the group and older, higher risk employees leave -financial strength of the group-group insurance is costly to administer -the underwriter should consider whether or not the group has the financial resources to pay the policy premiums -whether or not it will be able to renew the coverage -based on the average age of the group and ratio of men to women.

Comparative interest rate CIR

-rate of return that must be earned on "side fund" in a (buy term invest the difference plan) so value will be equal to surrender value of higher premium policy at a designated point of time

Participating (mutual) NONPARTICIPATING does not pay dividends

-refers to any policy that distributes DIVIDENDS to PH by cash payments, reduced premiums, units of paid up ins., savings program, or by the purchase of term ins.

Field underwriting

-risk selection and classification process. -involves careful analysis of many different factors to determine the acceptability of applicants for insurance. -underwriting is the process where an ins. company determines whether or not a particular applicant is insurable and what premium to charge -agent is front line (field underwriter) because the agent is usually the one who has solicited the potential insured. -agent's report provides the agent's personal observations concerning the proposed insured and does not become part of the entire contract, but is part of the application process

Premium refunds

-superintendent has the authority to suspend, revoke, or refuse to issue an ins. license for violating the regulation on refunds of premium. -premiums owed to the PH or applicant must be refunded in a timely manner,

Unfair claims settlement practices NEED TO KNOW

-the Ohio insurance code protect consumers in the area of claim settlement by prohibiting certain practices that are deemed unfair and/or deceptive. 1. any misrepresentation of contract provisions related to policy benefits 2. not acknowledging a notice of claim within 15 days 3. not replying within 21 days to any claim inquiry from the superintendent 4. not investigating a claim with 21 days of the receipt of a notice of a claim 5. not providing a claimant with necessary information regarding statements or forms that may be needed to settle a claim within 15 days of receiving a notice of claim 6. not settling a claim fairly and reasonable with the terms of the policy 7. forcing claimants into litigation to settle a claim 8. forcing a claimant to accept a settlement that is less than that which would have been awarded through arbitration 9. attempting to settle a claim based on an application that was changed without the consent of the insured. 10. purposely delaying a claim payment without just cause 11. not notifying a claimant regarding acceptance or rejection requested in within independently evaluating the insured's liability 12. not adopting reasonable standards for processing communications from claimants. 13. not paying a claim within 5 days of final agreement to the settlement.

Illegal inducements NEED TO KNOW

-to pay, offer or accept any of the following as an inducement: a. special favors or services b. advantages in the dividends or other benefits c. stocks, bonds, securities and their dividends or profits d. anything of value not specified in the ins. contract This regulation does not prohibit any of the following: 1. paying bonuses to PH or abating (reducing) their premiums 2. making allowance to PH who have continuously made premium payments directly to an office of the insurer in an at. that fairly represents the saving in collection expenses 3. readjusting the rate of premium for a group ins. policy based on the loss or expense experience

Group insurance underwriting requirements

-underwritten on group basis -each participant completes a short application that clearly identifies the insured and insured beneficiary -if group is large enough, no medical questions because it is based on the nature of the group and groups past claims experience

Fraud and false statements

-unlawful insurance fraud for any person engaged in the business of insurance to willfully, and with the intent to deceive, make any oral or written statement that are either false or omit material facts. -includes information and statements made on an application for insurance, renewal of a policy, claims for payment or benefits, premiums paid, and financial condition of an insurer. -Federal law makes it illegal for any individual convicted of a crime involving dishonesty, breach of trust, or violation of the Violent Crime Control and Law Enforcement Act to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory official (director of insurance or commissioner of insurance) -a 1033 wavier.

Illustration rules applies to all group and individual life policies EXCEPT

-variable life -individual and group annuity contracts -credit life -life ins. policies w/illustrated death benefits not exceeding $10,000

Limited-pay policies EX: an insured may need some protection after retirement but doesn't want to be paying premiums at that time

-well suited for insured's who do not want to be paying premiums beyond a certain point in time -limited-pay (paid-up at 65) purchased during insured's working years, would be the best choice

Premiums with application Ex: if an agent collects the initial premium from the applicant and gives him a conditional receipt, if the applicant dies the next day, the underwriting process will proceed as though the applicant were still alive. The applicants beneficiary will receive the death benefit. (if insurer approves the coverage)

-when agent collects premiums, the agent must issue a premium receipt -most common type of receipt used in a conditional receipt. -policy can be effective as early as the date of application if premium is submitted with application -with conditional receipt the applicant is covered by ins. as of the date of application providing insurer determines the applicant to be insurable at the rating for which the policy was applied -premiums are paid in advance

Viatical settlement contract

-written agreement entered into between a provider and a viator. -includes an **agreement to transfer ownership or change the beneficiary designation of a life ins. policy at a later date** regardless of date that compensation is paid to the viator. -must establish the terms under which the viatical provider will pay compensation in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership to the provider -must provide the viator with an unconditional right to **rescind the contract** for at least 15 calendar days after receipt of the proceeds.

Group Life

-written as master policy -covers the lives of more than one person -single policy -rec's certificate of ins. -rate and coverage based on group underwriting -all individuals covered same amt. and rate

Individual life ins.

-written on a single life -rate and coverage is based on the underwriting of that individual

Group life insurance Two features that distinguish group ins from individual are: 1. Evidence of insurability is usually not required (unless applicant is enrolling for coverage outside the normal enrollment period) 2. Participants (insured's) under the plan do not receive a policy because they do not own the policy

-written on a single policy -rate and coverage is based upon the underwriting of that individual -issued to the sponsoring organization, covers the lives of more than one individual member of that group. -usually written for employee-employer groups, but other groups are eligible -written as annually renewable term ins. -each participant is issued a certificate of ins.

industrial (home services)

-written on an individual basis -distinguishing features include **written in small amts. face value is less than $1,000 **premiums payable on weekly or monthly basis **premiums collected by a representative of ins. comp at home of insured **policies written as nonmedical (no exam is required, however, medical hx info is still collected

Ordinary life

-written on individual basis -large face amt. (at least $1,000) -premiums can be paid annually, semiannually, quarterly, or monthly -premiums paid by insured directly to ins. comp -PE may be required to prove applicant's insurability

Specialized policies 3. Juvenile life

-written on the life of a minor. -aka jumping juvenile because the face amt. increases at a predetermined age, often age 21, but premium remains level.

Credit life insurance

-written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor -written as decreasing term -may be written as an individual or group policy -when written as a group policy, the creditor is the owner of the master policy and debtor receives a certificate of ins. -creditor is the owner and beneficiary -premiums are generally paid by the borrower (debtor) -can't pay out more than the balance of the debt -no financial incentive for the death of the insured -creditors may require the debtor to have life ins. but can't require the debtor buys ins. from a specific insurer

A licensee may be qualified for any of the following lines of authority NEED TO KNOW

1. Life-coverage on human lives 2. Accident and Health-coverage for sickness, bodily injury or accidental death and disability income 3. Variable life and variable annuities-coverage under variable life and/or variable annuities 4. Credit-debt insurance (limited line)

Classes of life insurance

1. PERMANENT policies remain in effect to age 100 as long as the premium is paid 2. TERM is temporary ins. specific period of time aka pure life

Superintendent (director) duties

1. adopting, amending, and rescinding rules 2. conducting investigations 3. conducting examinations of insurers 4. enforcing and administering laws 5. approving policies and rates 6. imposing penalties for violations of insurance laws

Life insurance basics B. personal uses of life insurance EX: some life policies accumulate cash value that is available to the PH during the policy term

1. survivor protection provides the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of insured's death 2. Estate creation-a person may create an estate through earnings, savings, investments. -all methods require disciplined action and significant period of time -creates an immediate estate -when insured purchases a life ins. policy they have an estate of at least that amt. the moment the first premium is paid. 3. cash accumulation-specific amt. of monies for specific needs with guarantees that the money will be available when needed 4. Liquidity-some policies provide liquidity to the PH -means the policy's cash values can be borrowed against at any time and used for immediate needs. 5. Estate conservation-proceeds may be used to pay inheritance taxes and federal estate taxes so that it is not necessary for the beneficiaries to sell out the assets

How can a new physician be added to the PPO's approved list?

Agree to follow the PPO standards and charge the appropriate fees

Cancellation of agent's license NEED TO KNOW

All appointment are void.

Uniform mandatory provisions concerning claims NOT TRUE

An insured must notify the insurer of a claim on forms prescribed by the insurer

What is an insurance agent?

Any person who in order to sell, solicit or negotiate insurance, is required to be licensed under the laws of this state

Notice regarding replacement

Applicant intends to replace an existing accident/sickness policy with a Medicare supplement policy, the agent must furnish this to the applicant

Franchise ins.

Health coverage for small groups whose numbers are too small to qualify for true group insurance

Personal information about individuals (disclosure)

In order to receive information, a disclosure must be made: -with the individual's written authorization -to a person other than ins. comp. disclosure is reasonably necessary to enable that person to perform a professional function or to determine the individual's eligibility for an ins. benefit -to an insurer, agent, ins. support organization of self-insurer, provided the info disclosed is limited to what is reasonably necessary to detect or prevent criminal activity, fraud, misrepresentation, or nondisclosure in connection with ins. transactions -to a medical care inst. or professional -to law enforcement or other governmental authority or as otherwise permitted or required by law.

Mutual insurer

Ins. companies may be classified to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders

Increased benefits

Issue age policy premiums increase in response to

Three basic types of term coverage available NEED TO KNOW

LEVEL term is the most common type of temporary protection purchased. The word level refers to the death benefit that DOES NOT CHANGE throughout the life of the policy -Annually renewable term is the purest form of term insurance. The death benefit remains level and the policy may be guarantee to be renewable each year without proof of insurability, but the PREMIUM INCREASES annually according to the attained age, as the probability of death INCREASES -LEVEL premium provides level death benefit and level premium during the policy term. -DECREASING term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term. -decreasing term is primarily used when the amt. of needed protection is time sensitive, or decreases over time. -decreasing term is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely -decreasing term is usually convertible, however, it is not renewable since the death benefit is $0 at the end of the policy term. -RE-ENTRY OPTION the insured at the end of the term policy with a guaranteed renewable option, may answer medical questions to prove insurability and qualify for a discounted premium rate

Disclosure authorization form

MUST HAVE A DISCLOSURE AUTHORIZATION FORM written in plain language, must be dated and must specify the following information: - types of persons authorized to disclose information about the individual -nature of the information authorized for disclosure -names of ins. institutions or agents to whom the individual is authorizing the disclosure of information -purpose for which information is collected -length of time the authorization will remain valid -the right of the individual to receive a copy of the authorization form

Specialty health care services (Except)

Services that are provided in combination with other health care services

Transfer of personal policy to friend. What conditions would this be possible?

The insured will need a written consent of the insurer.

What is the purpose of licensing?

To ensure that a producer meets educational and ethical standards required to fulfill producer's responsibilities to the insurer and to the public.

Viator (owner of policy or certificate holder under group policy)

Viator does not include: -a licensee -an accredited investor or qualified institutional buyer -a financing entity -a special purpose entity -a related provider trust

Group insurance conversions to individual policy

\-employee terminates membership in the insured group, employee has the right to convert to an individual policy w/o proving insurability at a standard rate and based on attained age -face amt. of death benefit will be equal to the group term face amt. but the premium will be higher -employee has a period of 31 days after terminating group to exercise the conversion -during this time the employee is still covered under the original group policy -insured dies during the conversion period, a death benefit equal to the max amt. of individual ins. must be paid by the group policy whether or not the application for individual policy was completed.

Prospective review

a physician submits claim information prior to providing treatment

Insolvency

an insurer is considered insolvent for a period of 3 years the insurer is unable to pay its obligations when due or has few assets than liabilities, plus any required capital contributions

Experience rating benefit

experience rating helps employers with low claims experience because they get lower premiums

Adverse selection

risks with higher probability of loss seeking ins. more often that other risks

Endodontics

type of dental treatment involves the dental pulp with the teeth

Proportionate amt.

when insured fails to notify both ins. companies that he has other coverage

Consumer reports

written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports and other public sources