Life ins

Anyone who violates Ohio insurance law may be subject to what per violation fines?

$25k

Self-insurance is

-Practiced by organizations that establish reserves to protect themselves against loss -Is a legitimate method of insuring loss by establishing one's own reserve of funds

The free look or right to examine provision allows the policyowner the right to review and then return a policy for a full refund within no less than how many days?

10 days

What minimum percentage of eligible employees must be insured under a noncontributory group life policy?

100%. If employees do not contribute to the cost of their group life insurance, the insurance must be available to all members of the group or to all employees.

Agents are required to obtain at least how many hours of continuing education credits to renew their licenses?

24

Licensees must complete at least 24 hours of continuing education in each license renewal period. How many of these hours must consist of ethics training?

3

An agent who changes his residential address must notify the DOI of the change within:

30 days

An insurance agent must notify the Superintendent about any administrative action taken against the agent within

30 days

An insurer must notify the Superintendent of the termination of an agent's appointment within how many days?

30 days

The Superintendent's examination of an insurance company may be deferred for up to how many years?

5

The payment of claims provision states that an insurer will pay the death benefi within how many days after receiving notification of the claim

60 days

If a group insurance policy is contributory, what % of employees must participate?

75%

Market value adjusted annuities

A fixed annuity with a market value adjustment feature. Offers the flexibility of various guarantee terms combined with the potential for higher interest rates than traditional fixed investments. Guaranteed rate is only valid if the investment is held to maturity. Not a variable product.

Group Credit Life Insurance

A lender, or creditor, may sponsor a group life insurance plan for its group of debtors. Group credit insurance can be made payable to the sponsoring group and the amount of coverage is limited to each individual insured's remaining debt balance

The consideration clause

A part of the insurance contract that states that both parties must give something of value for the transfer of risk, and specifies the conditions of the exchange. Specifies the amount and frequency of premium payments that the policyowner must make to keep insurance in force

Estopel

Actions reasonably relied on by one party can't be denied by the party that accepted the same previously

Characteristics of insurance contracts

Adhesion Aleatory Unilateral Conditional Indemnity

When agent act on behalf of insurers, they are acting under which legal principle?

Agency

Universal life is distinguished from whole life ins in that...

partial withdrawals can be taken from the cash value account

Accelerated Death Benefits

An advance of death benefits. Written certification from a physician is required, diagnosing a qualifying even that will substantially decrease the insured's life span. Accelerated death benefits are tax exempt.

Who must sign endorsements, modifications, or any other changes to a life insurance contract?

An executive officer of the company

Factors in determining a life annuity payment amount

Annuitant's age, gender, payment guarantee, assumed interest rate

When the insured and the beneficiary in a life insurance policy die simultaneously, how must the proceeds of the policy be distributed?

As if the insured had survived the beneficiary

The Superintendent of Insurance has the duty to examine an insurer's records how often?

At least once every three years

Elements of a legal contract

CLOAC Consideration Legal Purpose Offer Acceptance Competent parties

Profit-sharing plan

Contributions made by employer Based on company profits Contributions not made every year Maximum contribution is 25% of total employee payroll

Each of the following would affect a license applicant's suitability to become licensed in Ohio:

Conversion Material misrepresentation Fraudulent actions

Annuities are included in gross estate if

Death occurs during accumulation- entire value including cost is included Death occurs during annuitization- present value of future payments is included

Making or permitting any inequalities between individuals of the same class with regard to premium rates charged best describes:

Defamation

Deferred annuity

Do not start an income stream immediately. Annuity owner chooses the premium amount and the frequency of premium payments. Accumulate funds may be withdrawn at any time, subject to a possible surrender charge. Owner is not required to annuitize the contract.

Simplified Employee Pension

Employer makes contribution on employee's behalf Higher contribution limits than Trad IRA Employees must be 100% vested

Which of the following would be considered a moral hazard in underwriting a health insurance risk? A hazardous occupation, excessive dieting, a family history of diabetes, a serious heart ailment

Excessive dieting. Moral hazards are habits or lifestyles of applicants that could pose additional risk for the insurer

What elements of an adjustable life policy are adjustable?

Face amount, cash value, premium

Two parties in insurance contract:

First is the insured, the second is the insurer or the insurance company

Buyer's Guide

Generic document that has been recommended for use by the national association of Insurance Commissioners. A company must use the current Buyer's Guide no later than six months after approval by the NAIC

Direct response marketing

Includes mail, newspapers, magazines, television, internet. No producer/agent involved, and insurance is sold directly to the public by the insurer

Joint-life-and survivor option

Insurer promises to make payments until the last survivor of two annuitants dies.

Master policy

Issued to the employer under a group plan; contains all the insuring clauses defining employee benefits.

What are powers or duties of the Superintendent of Insurance?

Issues cease and desist orders Collects fees and issues insurance licenses Regulates companies for solvency and most insurance rates

Insurers must certify their agent appointments to the superintendent each year by what date?

June 30

Standard life insurance dividend options:

Leaving the dividends with the insurer to accumulate at interest in a cash account. Taking the dividend as an income tax-free cash distribution from the insurer. Using the dividend to purchase a unit of paid-up whole life insurance

Uses of annuities

Life income, tax favored savings, funding IRAs, education funds.

Distributions at death to a beneficiary

Lump sum- all of gain is taxable Five year withdrawal- interest out first- no 10% penalty Annuity payments- taxed according to the exclusion ratio If spouse is beneficiary- transfer ownership to spouse with no tax consequences

Twisting

Making any misrepresentation or incomplete comparison of policies to any person for the purpose of inducing that person to lapse their current policy

All of the following are true regarding unfair trade practice penalties:

Maximum aggregate penalty of $35k in any 6-month period Civil penalty of up to $3500 for each violation Civil penalty of up to $10k for each violation of a Superintendent's cease and desist order

An agent may request an extension for license renewal for all of the following:

Military service Long-term medical disability Other extenuating circumstances

An agent who provides a policyholder with inaccurate information in order to induce that individual to lapse or surrender her current policy is engaged in:

Misrepresentation

Joint life, second to die

Must be legally married

Life with period certain

Pays income for as long as annuitant is alive, annuitant also selects a payment period and payments are guaranteed to be made for at least that number of years

Modified life

Premiums are generally lower in the first years of the policy and higher in the later years. This type of policy is designed for persons with limited financial resources who have the promise of higher resources in later years. The total over the period of the policy would be equivalent to the straight whole life policy.

Taxation of Group Life Insurance

Premiums paid by employer are tax deductible Premiums paid by employee are NOT tax deductible Death benefits to a named beneficiary are not taxable Premiums paid by employer for insurance above $50k is taxable income to the employee

The period of time a new employee has to wait before she may enroll in a group life insurance plan is called

Probationary period. Typically range from 1-12 months

Keogh plans

Qualified retirement plans set up by self-employed persons and non-incorporated businesses such as sole proprietorships and partnerships.

An insurance agent or broker offering any valuable consideration or inducement to a prospective insured that is not specified in a policy or contract is engaged in

Rebating

Statement of Good Health

Required if there is no premium with the application If the proposed insured's health has changed, agent can't deliver policy

What needs to be filed 30 days prior to use?

Riders Policy forms Premium rates

Withdrawals during accumulation period

Same treatment as a MEC. LIFO taxation. Interest out first. Income tax on interest. 10% penalty on interest if younger than 59.5

SIMPLEs

Savings Incentive Match Plan for Employees Employers with 100 employees or less Employees can contribute 100% immediate vesting for employer contributions All employees earing $5k or more per year must be allowed to participate 25% early withdrawal penalty for first two years of participation

Estate Taxes

Taxes due on transfer of wealth Life insurance death benefits are included as insured's gross estate if: -payable to the insured's estate -insured owns the policy at the time of death -insured transferred ownership within three years of death

What can an insured add to a permanent insurance policy which will provide additional coverage, yet cost less than purchasing a separate policy?

Term insurance rider. If the insured dies while the term rider is in force, the beneficiary will receive the death benefit from the permanent policy and the term policy.

Enrollment period

The amount of time an employee has to sign up for a contributory group health plan.31 days.

Tammy owns a participating whole life insurance policy for which she has selected the paid-up additions option. If the insurer declares a dividend of $500 in the current year, how will this amount be used with this dividend option?

The insured uses the $500 as if it were a single premium to purchase a unit of paid-up whole life insurance based on Tammy's attained age.

Describe facultative reinsurance

The reinsurer considers each risk before allowing the transfer to be made from the ceding company.

Cost-of-living-rider

Tied to an increase in the inflation index, most commonly the CPI. The COL rider provides for automatic increases in the policy death benefit in proportion to increases in the CPI.

Modified Endowment Contracts (MEC)

Too much premium paid in first seven years of policy- flexible premium universal life and single premium whole life Interest on cash values not taxed while in he policy Withdrawals or loans are taxed Interest out first 10% penalty on interest if withdrawn before age 59 1/2 unless insured is disabled Once a MEC always a MEC.

Which of the following risk management methods is used by insurance companies? Sharing, Retention, Reduction, Transfer

Transfer.

A contract agreement between a ceding insurer and reinsurer to underwrite certain classes of risks is known as

Treaty reinsurance

Surplus lines insurance is placed with a nonadmitted carrier by a surplus lines agent. T/F

True

Multiple Employer Trust (MET)

Trust formed by group of small employers in same or similar industries

Equity-indexed annuity (EIA)

Type of tax-deferred annuity whose credited interest is linked to an equity index- typically the S&P 500. Guarantees a min rate, typically between 1% and 3%, if held to the end of the surrender term and protects against loss of principal

Waiver

Voluntarily giving up a right

Express authority

Written agreement with the insurer. Specific wording in the contract that tells the producer what he can/cannot do

An insurance company who wants to do business in Ohio must obtain:

a certificate of authority

For group insurance policies, the covered individual receives proof of coverage in the form of

a certificate of insurance

A deferred compensation plan is

a nonqualified plan funded by the employer

Accumulation units

accumulated values of variable annuities, similar to shares purchased in a mutual fund. Value of an accumulation unit is found by dividing the total value of the separate account by the number of existing accumulation units.

An investigative consumer report is also called

an inspection report. This is a general report on an applicant's finances, character, hobbies, work, health, and other habits. The information is usually obtained through interviews with friends and associates

An insurance fraud warning must be on all

applications and claim forms

An agent may not charge the applicant a fee for any of the following except

if several conditions are met, including the consumer consenting to the fee

Life with refund option

if the annuitant dies and the total payments received are less than the amount paid for the annuity, the difference is paid to the beneficiary

The settlement option that will pay the largest amount to the beneficiary regardless how long he lives:

life only or straight life option

Refusal to issue or renew

means the decision of the Superintendent not to process either the initial license application or the renewal

Revocation

means the permanent termination of all authority to hold an agent's license

If a new license is issued to a person whose license was suspended, any appointment of the person to represent an insurer

must be made again in accordance with the requirements of the insurance code

Annuitization period

pay-out phase of the contract. Money in the contract is converted into a series of regular income payments that can continue for life or for a stated period of time.

Joint life

pays income until the death of the first of two or more annuitants

Immediate annuity

provides an individual with an income that may begin as soon as a month after a purchase, or may be delayed for up to one year. Funds accumulate on a tax-deferred basis

An agent who offers to share a commission with a prospective insured in return for the purchase of a life insurance contract has engaged in

rebating

Fixed period and fixed amount are types of

temporary annuities

Suspension

termination of all authority of any agent's license for a specified or indefinite period of time

Late license renewal may be applied for as late as

the last day of the second month following the license renewal date

Installment refund option

the same income payments continue to the secondary beneficiary after the primary bene dies, until the entire death benefit amount is paid

Surrender for cause

the voluntary termination of all authority to hold any agent'ss

Mutual insurers are owned by

their policyholders. Mutual insurers do not have stock or stockholders.

If an insurance company determines that it has sustained a cybersecurity event involving nonpublic information, it must notify the superintendent no later than:

three business days after the event is discovered

Buy-sell agreement

transfer the business from the owner to the other party at an agreed-upon price

At the state level, the government is involved in providing

unemployment insurance

Agent licenses renew

upon application every 2 years on the last day of the agent's birth month

Exclusion ratio

used to determine the nontaxable portion of each monthly payment. Annuity payments after annuitization are taxed according to the exclusion ratio. Premiums paid in / total of expected payments over life expectancy = percentage of payment not taxed

Accumulation Period

when an annuity is being funded, before a payout begins