PA License Exam

LTC, Right to examine

Free look period 30 days

Limited Pay whole Life

Premium payments will cease at age 65, but coverage will continue until death or age 100

Medicaid

States administer the program that isfinanced by fed and state funds

excess funds handled in HRA

THEY ARE CARRIED over to the next year

Address change

a licensee must notify the department of a change of address within 30 days

the two types of assignments for life are

absolute and collateral

HRA account of 1000 and incurres 750

allowef to rollover unuesd amounts to next year, in this case the 250

general disability polices

do not cover for oveerseas accident

true of bail out provision

it allows owner to surrender the annuity without a charge

employeer contributions to HRA

not included in employees taxable income so they dont get to receive income from taxes on income when received

when annuity is written, whose life expenctancy is taken into account

the annuitant

Viator

the owner of life insurance policy who enters into a viatical settlement contract

Employee quits her job where she has $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a traditional IRA how much will be transferred from one plan administor to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence. During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to another.

Variable life policy with $100,000 face amount, sees increase to $150,000 then thts new face amount but then sees drop to $70,000. What is the policies face amount adjusted to?

$100,000 becasue face amount was decreased the face amount went back to original $100,000. It cannot be below the guaranteed minimum amount of $100,000 of original face amount of policy for variable life policy but cash value is nto guaranteed and can go above 100,000.

minimum 2 year hospital confinement for dread disease

$50,000 (100 a day up to 500 days)

additionally monthy benfit rider

1 year

Pennsylvania regulations and required provisions

-Outline of coverage: must be given at time of initial solicitation, must include description of benfits provided by policy, list of exclusions and limitations, a statement of the continuation terms, statement that it is just a summary and the actual policy should be read, and and explanation of return policy. - Right to examine (free Look), individual LTC insurance policyholders must have right to return within 30 days and to have first premium paid returned fully if after examination of policy the policy holder is not satisfied for any reson. -pre-existing conditions, no long term care may use definition more restrictive that the definiton, a condition for which medical advice was recommended from a health care service provider within 6 months before the effective coverage date. cant exclude preexisting conditon unless such loss begins within 6 months of the effective coverage date. So basically if the pre-existing conditon was before 6 months before coverage or after 6 months of being coverage it cant be excluded. - continuation and conversion, group long term care insurance issued by PA on or after march 16, 2002 must provide option of conversion of coverage. the continuation provison allows u to maintain coverage unless failing to pay required premiums when coverage would otherwise terminate. the conversion provision provides an individual, whose coverage under the group policy would otherwise be terminated and whose been covered for atleast 6 months prior to termination, with a converted policy by the inusrer undr whose group policy the individual is covered, without proof of insurability. - unintentional lapse, to prevent unintentional lapse, every inurer offering long term care insurance must comply with these conditions: the inusred must give written designation of who is to be notified of lapse or termination of policy.cant lapse due to fail of premium unless the insurer, at least 30 days before the effective date of lapse or termination, has been given written notice to insured and designated persons., policy must also provide a reinstatement option in the event of a lapse. -required disclosure provisions, renewabilty provision, riders and endorsments added after the policy has taken effect, definitions of " usual and customary" "reasonable and customary" and similar wording. limitations on preexisting conditons or other conditons affecting eligibilty for benefits. - Inflation protection, long term on an indemntiy basis must offer inflation protection, increased annually or periodically at rate atleast 5% insured option per year, compounded annually. adjustments must be at a level which provides reasonable protection from future increases in the cost of care for which benefits are provided. -nonforfeture benefit, must have coverage elements, eligiblity, benfit triggers, benefit period tha are the same coverage to be issured wihtout nonforfeiture benfits. the standard nonforfeture credit will be equal to 100% of the sum of all premiums paid, including premiums paid prior to change in benfits. shall begin by end of 3rd year follwing policy issue date. the contigent benefit upon lapse effective during first 3 years aw well as thereafter. for policy with attainted age, nonforfetuire begins on the earlier of either the end of the 10th year or end of the 2nd year following date policy is no longer attained age.or certificat is no longer atained age. -Replacement, cant use info not approved by insurer. copies of sale and promotional materials must be left with the applicant, insurer must provide applicant with notice regarding replacement of accident and health insuance, as well as a compariosn of the benefits of the new policy and the policy being replaced. -Standards for marketing, must contain a notice to buyer that states the policy may not cover all medical expenses. twisting and misleading representation of polices as weel as using high pressure tactics and cold lead advertising is prohibited. -suitability of recommended purchase, must develop suitable standards, producer must creat a long term care insurance personal worksheet for the client and given to the insurer, applicant must also be given disclosure form, entitled "things you should know before you buy long term care insurance", the issurer must reprt annually to the commissioner the total numner of applicants received, number of applicatns declined to provide info on the personal worksheet, the number of applicants not suitable and the numebr of appicants who were suitable. -Shoppers guide, a long term care shopers guide in the format by the National Association of Insurance Commissioner or developed or apporved by commissioner must be provided to all applicants. -Permitted compensation arrangements, insurer may provide commission to a producer for the sale of a long term care policy only if the first year commission is not greater than 50% of the first year premium. a commsion provided for aminimum of 5 subsequent years may not exceed 10% of the renewal premium. when there is a replacement of an existing policy or duplication of coverage, an insurer may not provide compensation to its producers and a producer may not recieve compensation greater than the renewal compensation payable by replacing or duplicative insurer. - Penalities, an insurer or producer found to have violated requirements relationg to regualtions of long term care insurance must be subject to a civil penalty of up to 3 times the amount of any commission paid for each policy involved in a violation or $10,000, whichever is greater.

childhood immunizations

150% all health insurance policies must provide coverage for childhood immunizations up to 150% of the average wholsale price of the immunizing producer.

Insurance for seniors and special needs

30 day free look, commission to producer cant exceed first year cant exceed 200% of commission for selling policy in sencond year. eligbible those who apply within 63 days after date of termination. for guarnateed issue. Eligible persons are either enrolled in employee welfare benefit plan, with a medicare advantage organization, or policy ceased or discontenud due to insolvency or violation of insurer.

OBRA 1990

30 months End stage renial disease before eligible

In Pennsyivania, accident and health insurance lines must maintain at least how much capital?

Accident and Health insurance lines must maintain $100,000 of capital and $50,000 of surplus.

MEC vs Life Insurance

All life insurance policies are subject to a 7-pay test, and any time there is a material change to a policy (any increase in the death benefit), a new 7-pay test is required. Any life insurance policy that fails the 7-pay test is considered a Modified endowment contract and loses the standard tax benefits of a life insurance contract. The death benefit to the beneficiary is received tax free.

Barring extenuating circumstances, what is the maximum time an insurer has to complete an investiagtion of a claim?

An insurer must complete an investigation of a claim within 30 days after notification, unless for some reason this is unreasonable.

underwriter find relevant info not provided by applicant but informed by producer

Application. the agents report is part of the application. this allows them to help in the underwriting process.

Employer contributions made to a qualified plan

Are subject to vesting requirements. A qualified plan is approved by IRS, which then gives employer and employee benefits of deductable contributions and tax deferred growth.

Which of following is NOT true regarding a $100,000 20 year level term policy?

At the end of 20 years, the policy cash value will equal $100,000. This is because term insurance does not accumulate cash value. -What is true about a $100,000 20 year level term policy is that premiums will be level for 20 years, if the insured dies before 20 years the beneficiary will receive $100,000 and the policy will expire at the end of 20 years.

A minor son of the insured

Because a minor does not have the legal capacity to release the inusrer from further obligation, the benefits would be passed to a guardian or a trustee until not a minor.

Carol is insured under her employers group life insurance at her place of employement. All of following are true except:

Carol can choose what type of conversion she wants either term or permanent. This is not true becasue when group is converted to individual, the insurer will determine what type of coverage and it is usually permanent. -What is true is that if carol quits she has 31 days during conversion period to convert to individual policy, she would not need to provide proof of insurabiltiy, and should she convert her coverage will be based on attained age. Upon conversion the face amount will be same when swithed to individual but the premiums will be higher. during the 31 days the employee is convered by group. If the death occurs during conversion the group will pay maximum benefit of individual policy by group regardless if application was completed or not. If the master contract is terminated, every member insured for 5 years or more will have ability to convert to individual permanant insurance of the same coverage. -In Pennsylvania, if insured is not given notice of his or her conversion priviledge 15 days prior to the expiration date, the insured will have an additional 15 days within which to convert. In no case will an additional time be allowed beyond 60 days. (conversion right is 15 days prior to expiration date, if not informed given an additional 15 days. the maximum amount of time can not exceed 60)

Delivery

Delivery receipt requirements: when a policy is delievered to a policyholderby the producer by hand, a deliver receipt must be used.

term used to described the nontaxed return of unused premiums

Dividends. The return of unused premiums is called dividends.dividends are not considered to be income for tax purposes since they are the return of unused premiums

During open enrollment for FSA changes can be made

FSA benefits can be changed during open enrollment , unles circumstance deemed Qualified life event

How are contributions to a Tax sheltered annuity treated with regard to taxation?

Funds contributed are excluded from employees taxable income, but are taxable upon withdrawal.

HRAs are defined contribution plans

HRAs are defined contribution plans, not defined benefit plans

tax deductable

HSA contributions are tax deductable

A modified endowment contract

If a life insurance policy develops cash value faster than a seven-pay whole life contract it is a Modified endowment contract. It then loses the benefits of a standard life contract.

Collateral Assignment

If trying to secure a loan with a bank and needed proof of additional assets to secure loan, you can use the collateral assignment of a life insurance policy to the bank.

Return of Premium Rider

In addition to paying the face amount it pays the amount of premiums. The rider stipulates that the death occurs by a certain age in order to receive premiums so this rider does have an expiration date. The return of premium rider is funded using by using increasing term insurance.

The two components of a universal policy

Insurance and cash account are the two components of universal life. The insurance component is always annual renewable term insurance, the cash account accumulates on a tax deferred basis each year and earns either the guranteed contract rate or the current rate, whichever is higher.

When a reduced paid-up nonforfeture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium.

LTC insurance

LTC insurance is any policy or rider advertised, marketed, offered or designated to provide coverge for no less than 12 consecutive months for each covererd person on an expense, indemnity, pre paid or other basis.

Level Term Insurance

Level term insurance is the most common type of temporary insurance used. The word level refers to the death benefit that does not change throughout the life of the policy.

Life Insurance death proceeds are generally

Life insurance death proceeds are generally not taxed as income.

Part A

Part A of Medicare helps pay for inpatient hosptial care, inpatient care in skilled nursing facility, home health care, and hospice care

Class designation

a designation such as the child of insured or children of insured, or all current members of a group, are classified as "Class designation" The individuals need not to be specifically named since each who fall into the class will share the benefit.

Employeer has sponsored a qualifed retirement plan for its employees where employeers will contribute money whenever a profit is realized. This is called

Profit sharing plan. A profit sharing plan is one where the employeer will contribute monies into employees reitrement plan when the complany shows a profit.

Maintance and Duration

Renewal: licenses are effective for a 2 year period, renewal by filling out renewal form, paying required fee, and completeing continued education requirement. will be renewed unless found not in compliance with state rules. Lapse by not proper renewal will have 1 year from department request renewal date to reinstate license. same renewal requirements in this case as above.

If an immediate annutiy is purchased witht the face amount at death or with a cash surrender value, this would be considered a

Settlement option. A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

Size of each installment

The size of each installment determines the length of time benefits are received under the Fixed Amount Settlement Option. It logically follows that larger installment sizes fall into shorter benefit periods.

Under a SIMPLE plan, which is true regarding taxation on contributions and earnings?

They are tax deferred until withdrawn. A SIMPLE plan is available to small businesses that employee 100 or fewer employees who receive atleast $5,000 in compensation from employeer in the past year. To establish a SIMPLE plan an employer must not already have a qualified plan in place. Employees who elect to participate defer a specified amount eac year up to certain amount and the employer then makes a matching contribution, dollar for dollar, up to an amount equal to 3% of employees annual compensation. Taxation is deferred on both contributions and earning until withdrawn.

Annuity Productss

Variable Annuities: assets in a seperate account: assets in separate account will be examined periodically by the department. any income, gains, losses realized or unrealized on each separate account shall be credited to or charged against the amount allocated to such separate account wihtout regard to the other income gains, losses of the company. Deficits in separate account, created by virtue of mortality experience guaranteed by the life insurance company or by expense cost so guaranteed will be adjusted by transfers from unallocated surplus reserves not required by law to the separate account so that the assets shall be at least equal to the liabilites. Annual statments must be given for each separate account.

Death benefits payable to a beneficiary under a life insurance policy are generally Not subject to income taxation by the federal government.

When premiums are paid with after tax dollars, the death benefit is generally not subject to federal income taxation.

ROTH IRA

allows you to keep money past age 70 1/2

Suitabilty of Annuities

before reccomending particular annuity to consumer, must make "reasonable effort" to obtain consumers suitable information. using insured suitable info, the producer or insurer must have reasonable grounds to believe the annuity transaction is suitable before making reccomendation to purchase annuity. Suitable info is any info gathered that is reasonably appropriate to determine suitable reccomendation, including age, annual income, financial situation and needs, financial experience and objectives, intended use of annuity, existing assets, liquidity needs, liquidity net worth, risk tolerance and tax status.

Benefit triggers for LTC

cannot exceed more that 3 acts of daily living, or the presence of cognitive impairment. -Shoppers guide, devolped by NAIC or approved by commissioner. Permitted compensation for LTC , cant exceed 50% of first year first premium. and 5 subsequent years and not 10% renewal premium. Penalities are up to 3 times of commission recieved or 10,000 whichever is greater.

LTC pre existing conditions

cant use definition more restrictive than definition, for a condition where medical advice given prior to 6 months before coverage or after 6 months of coverage.

Accident and death disbersmnent

death benefit will be paid if death occurs within 90 days not 24 hhors

The FIO rider doesnt allow increase of benefit for

death of spouse

death benefit in variable life policy

depends on performance of separate account

policy summary for life insurance

describes the specific information about a policy

Temporary

director will issue temp license maximum of 180 days without requiring passing examination if it is neccisarry for servicing following cases. Serviving spouse of an insurance producer, employee of insurance producer, the designee of an insurance producer entering armed forces, any person in an extenuating circumstance where it is un best interest in public to grant temporary license.

Required disclousre provisions

each medicare supplement policy must include the following provisions: - a renewal provison on the first page of the certificate that clearly states duration and limits of remewabilty and continuation and the duration of coverage term -policies may not use the terms "usual or customary" and "reasonable and customary" -any pre-existing condition limitations -30 day free return provision -A buyers guide and outline of coverage.

Guaranteed Issue

elligible indiviuals are those who apply for medicare supplemental coverage wihtin 63 days after the date of termination or disenroollment of the prior coverage and submit proof of the date of termination of the prior coverage. cant be denied based on pre existiong conditions or be discriminated against. Eligible persons are either enrolled under an employee welfare benefit plan, with a medicare advantage organization, or under a medicare supplement policy that has ceased because of insolvency or violation by the inusrer.

flexible spending accounts

form of cafateria plan used from salary reduction. allowed to contriubute certain amoujtn befoe reporting incmome. FSA subject to limits and use it or lose it basis.

Renewabilty

generally allowed to renew, unless failed to pay premiums in accordance with contract terms, fraudulently misrepresented a material fact, violated policy rules, or in case of managed care plans, fails to live in the plan service area. may not be offered of plan ceased offereing that type of coverage.

Group Life

group life can be converted to a whole life (permanent) not term, the rate is based on the groups average age and percent of men and women.

continuation and conversion

group long term care insurance issued in PA on or after march 16, 2002 must provide the insured with the basis for continuation or conversion of coverage.

employees group medical benefits regarding tax and income

group medical and dental benefits are received tax free to employees. also, premiums paid by employeer are deducted as business expense.

Conversion Priviledge

group polices must include conversion option when group inusrance terminated for an inusred who has been continuously covered by group policy for 3 months or more. if becomes eligble for indiviaul policy, may do so without proof of insurabilty, as long as he turns in application and pays the first premium withn 31 days after the termination of coverage.. conversion not required if terminated due to nonpayment of premium or if coverage is replaced by similar coverage within 31 days. the effective day of coverage of converted poicy will be the day after the group coverage terminates. each must be given notice of the conversion policy within 15 days befor or after the date of termination of group coverage.

insuracne excecutive producer

has ability to make changes to policy

Terminally ill

have an illness that can be reasonably expected to result in death in 24 months or less

gate keepr of HMO

helps control specialist costs

Assumed names

if licensee wished to conduct business under an assumed name, must notify the commissioner in writting prior to using the assumed name.

Replacement

if the sale involves replacement, must include notice to appicant with a notice regarding replacement. if medicare supplement policy is replacing another medicare supplement policy that has been in affect for atleast 6 months may not include pre existiong conditions, waiting periods, elimination periods, or probationary periods.

true regarding term health policy

in term health policy, policy holder has no rights to renewal

A return of premium is written as what type of coverage

increasing

Privacy of consumer financial information

insurance policy must contain a privacy notice that prohibits insurers from disclosing nonpublic infor concering the buyer to nonaffiliated third parties. exception is insurer provided the customer with an initial notice, an opt out notice, and a reasonable time to opt out out the disclouser, the insure may not discriminate against him for doing so. insurer must also provide customer an annual privacy notice. any violation of these rules is considered to be unfair method of competition and a deceptive act.

optionally renewable

insurer has option to renew or not

Variable Life, Sometimes called variable whole life insurance. Is a level, fixed premium, investment base method.

like traditional forms of life insurance, these policies have fixed premiums and guaranteed minimum death benefits. The cash value is not guaranteed and fluctuates between performance of portfolio account in which premiums have been invested by insurer. The policyowner bears the risk in variable contracts. Becasue insurnace compnay is not bearing risk they cannot be kept in the general account, The separate account invest in stocks, bonds, and other security options. any domestic insurer issuing variable contracts must have one or more separate accounts. Each separate account must maintain assets with a value atleast equal to the reserves and other contract liabilities.

if settlement option not chosen which will be used

lump sum

mammography coverage

must provide coverage. include all costs every year for women 40 years and older and mammograms based on physicians recommendation for women under 40

Annuity Products

market value adjusted annuites (modified guaranteed annuities): the commissioner will value the reserve liabilities each year for all outstanding life insurance policeis and annuities. a new policy must contain a notice on the from that the buyer has 45 days, if the modified annuity is from the insurer or 20 days if it is from a different insurer, to look over and return the policy.

true regarding disability benefits to employees

may be subject to taxation if premiums were paid by the employer

What is the primary difference between and IRA and SEP

much more money can be contributed to an SEP. A simplifed Employee Plan (SEP) is a type of qualifed plan suited for a small employer or self employed. employer contributions not included in employees gross income. The primary difference is that SEP can contribute much more. (IRA can only contribute established annual dollar limit or 25% of the employees compensation, whichever is less)

Long Term Care Inusurance

must be for longer than 12 months, it is any policy or rider other than an acute care unit of a hospital.

Advertising

must provide a copy of any medical supplement advertising inteded for use in PA to commissioner for review and approval.

Managers and exclusive general agents

no person may engage in these activites without license except producers whose authority is limited to the production with limited underwriting, or a manager operating undr management contract or exclusive general agency agreement prior to Dec. 22 1965. Any person in violation of this rule has commited 3rd degree misdemeanor and will be required to pay a fine not to exceed $1000

Newborn child coverage

notify the insurance company within 31 days of date of birth of newborn and pay required premiums

how often may a viatical settlement provider contact an insured regarding health if expected to live for more than a year

once every 3 months

Group health insurance (employer group health insurance)

pre existing conditions. cant exclude conditoon that was recomended within 90 days before the effective coverage date. such condition must be covered after coverage existed for 12 months under the group contract. notice must be given to insured. telling other policy only when the exclusions are in the other policy about preexistiong conditons. a pre existiing conditon excluson will nto be acceptable for blanket coverage or group student accident and sickness insurance and group mortgage disability insurance.

when insured initiates the cancalation of policy, returns made in form of

short rate basis

Rollovers and Transfers

situations exists when one wishes to transfer one qualified retirement plan to another qualified retirement plan. However, benefits are taxable the year in which they are recieved if not done properly. There are two ways to do this properly, Rollover and Transfer. A rollover is a tax free transfer from one retirement plan to another. Genreally IRA transfers must be done within 60 days, If the distribution is paid directly to person then 20% is withheld by the payor. The 20% can be avoided if the transfer is done immediately and this is called a direct rollover. The second way to avoid taxation is Transfer (or direct transfer), The term transfer (or direct transfer) refers to a tax free transfer of funds from one retirement program to a traditional IRA or a transfer of interest in a traditional IRA from one trustee directly to another.

Producer Responsibilites

solicitation and sales presentation: advertising: advertisements are required to be kept on file and must be submitted for review at least 30 days prior to publication. In addition, authorizing officer of each company must annually file a certificate of compliance stating to the best of his knowledge that all company advertisements used during the past year complied with or were made to comply with the insurance laws

What are the personal uses of life insurance

survivor protection, estate creation and conservation, cash accumulation and liquidity

insurers must notify commissioner of illustrations marked for that certification of that notifcation within how many days of anniversiy of coverage

the annual certification must be provided within 30 days of anniversiy of original certification.

true regarding waiver of surrender charge on annuity contract

the charge may be waved if confined to long term care facility for atleast 30 days

which of the following statements about group life is correct?

the cost of coverage is based on the percent of men and women in a group

policy owner of adjustable life insurance wants to increase the death benefit

the death benefit can be increased by providing proof of insurability

best reason to purchase life insurance rather than annuity

to create an estate. with insurance, the death benefit creates an immediate estate should the insured die.

the paid up addition uses the dividend to

to purchase a smaller amount of the same type of insurance as the original policy

Chronically ill

unable to perform atleast 2 activites of daily living, or requiring substantial supervision to protect oneself from threats to health and safety due to severe cognitive impairment.

90 days of loss

under uniform required privison,proof of loss under health must usaully be filled within 90 days

Limited Lines

will recieve a nonresident limited lines producer license granting the same scope of authority as granted under the license issued by the producers home state.

investigative consumer report request must notify

within 3 days that report wil be obtained

Other provisions affecting income benefits

all health insurance policeis may contain provisions: Relation of earnings to insurance: if the monthly amount of loss of time benifits promised for the same loss is greater than the monthly earnings of the inused, the insurer will only be liable for tho proportionate amount of the monthly earnings to monthly benefits, but may not reduce to amounts below $200. this provision may only be used if the insured has the right to renw the policy until at least age 50m or for a policy issued after age 44, at least 5 years.

appropriateness of recomended purchase and excess coverage

a producer may not sell midicare supplemental coverage to an indiviual already who has a medicare supplement policy.

Guaranteed insurability

allows insured to purchase additional coverage at specified times (usually 3 years) or specific events (marriage or birth of child), without evidence of insurabilty by paying an additional premium. when this happens,insured purchases additional coverage at his attained age. This rider usually expired up age 40.

Continuing education

must complete 24 hours of continuing edu for each 2 year period for license renewal. continuing edu requirements are not required for licenses who have been issued prior to January 1st 1971, who are business entity, who have a line of authority limited to restricted fraternal, domestic mutual fire insurance, or limited line credit insurance, or who are nonresidents who satisfied their home state continuing edu requirements.

Regualtion of Variable Annuities (SEC, FINRA, and Pennslyvania)

variable annuities are policies which provied for deferred or immediate annuity payments, the amount of which varies depending on the investment experience of a separate account maintained by the insurer.

Viatical settlement broker

person on behalf of viator offers to negotiate viatical settlements between a viator and a viatical settlement provider

Regulation of variable life insurance

variable life insurance policy is defined as an individual policy for life insurance, the amount or duration of which varies accoring to the investment experience of seperate accounts established. An insurer seeking commissioner approval to enter into variable life insurance business must write and keep on file a statement specifying the standards of suitabiltiy to be used by the insurer. An insurer may not sell variable life insurance policies unless the commissioner, after conductiing investigation approves.

Viatical settlement purchasor

a person who purchases a life insurance policy that is the subject of a viatical settlement contract

Unfair insurance practices:

-Rebating and inducement prohibited, 3rd degree misdemeanor -misrepresentation, written or oral that doesnt accurately describe a poliies benefits, conditions of coverage, it is simply a lie. Any statement saying HMO is form of insurance is misrepresentation. relating benefits and not including conditions or limitations is misrepresentation - suggesting policy is better suited for person than fact would indicate to a reasonable person is a misrep. Statements are misrep when taken into contect of whole presentation the may tend to mislead a person - it is illegal to make any misleading representation or comparisions of companies or policies to insired person to induce them to forfeit, change or surrender their present insurance. -Twisting, unethical act of persuading policy to drop for purpose to sell another policy without regard of possible disadvantages. twisting involves form of misrep or twisting of truth, by the producer convince policy owner to swith insurance companies. oftern involved encourageing policy to lapse so he can take out another. - false advertising- advertisments must be complete, clear, and truthful to avoid deception - Defamation, injures anothers rep, fame, or character. both indiviuals and companys can be defames. spreading rumors or falsehoods of competing producers or about the finacial condition of company, most states say cant circulate literatuer that is false, malicioulsy critical or derogatory to injure anyone engaged in business. -boycott, coersion. intimidation, all have bullying in common. difference is means of getting result. coercison manipulates through something that is desireable. intimadation is through threat of negative result. a boycott is form of intimidation that group refused to do business with company to run them out of business or to force them to act a certain way. All states have laws forbidding these practices. illegal in result of monopoly.

At work benefits

-partial disabilty benefit: partial disabilty is inabbilty to perform 1 or more but not all essential duties of his employement or may be realted to a percent of time worked or compensation. when a policy provded total and parital disability benfits, only one elimination period may be required. -residual disabilty benefits, residual disabilty is defined in relation to indiviudals reduction in earnings and may be related to either the inabilty to preform some essential duties of employement of the inabilty to perfomr all usuall business duties as long as usually requried. policy which provided residual disabilty benefits may require a qualification period, during which insured mut be continuould disabled before residual disablity benefits become paybale. the qualification peropd for residual benefits may be longeer than the elimination perod for total disabilty.

Life insurance disclosure statement

A life insurance agent must provide a purchasor with a written consent disclosure statement no later than the time of the applications form is signed by the applicant, clearly labeled and describes the purpose and importance of the disclosure and the significant elements of the policy

Classes of life insurance policies

Fixed versus variable life insurance: general account versus seperate account: any life insurance company may establish 1 or more seperate accounts and may allocate any amount to these. income of separate account will not affct income of company.assets into separate account will be valued at market value on date of valuation and will be invested in shares of a specific investment company. must gain satifaction of commissioner and PA license to do business can offer variable contracts. insurer cant offer variable contracts to anyone convicted of felony or misdemeanor or who has violated any state inusrance or security laws related to embezzlement, fraud, or missappropriation of funds.

Common Exclusions from coverage

Pre-existing conditions, if coverage of policy is not applicable to pre existing conditions it must say so in policy that it is limited to soley accidental bodily injuries resulting from accidents that occur after effective date of coverage, and that sickness is limited to that whick is diagnosed or treated subsequent to the efective date of coverage or expiration of the probationary period Policies issued in Pennsylvania cannot exclude pre existing conditions in group medical policies for more than 6 months and one year for group disabilty income policies and individual medical policies issued on a nonmedical basis. pre-existing conditions may not be defined more restrictively than a disease or physical condition caused by illness or injury for which medical advice or treatment has been received within 90 days immediately prior to becoming covered under the group contract. such condition must be covered after the individual has been covered for more that 12 months under the group contract. Long term disability benefits provisions may require that the total disability resulting from a preexistiing condition commence after the individial has been covered for more that 12 months under the group contract.

Viatical settlement provider

a person, other than the viator who enters into or effectuates a viatical settlement contract

physcially handicapped/mentally retared children

a policy issued after Jan 1, 1968 that terminates coverage at specified age may not terminate coverage of unmarried child who is uncapable of sustainable living employment by reason of retardation or physical handicap as long as the policy holder shows proof of the childs incapabilty within 31 days of specified termination age.

Viatical settlement contract

a written agreement entered into between a viatical settlement provider and a person owning a policy establishing the terms under which compensation will be paid, which compensation is less that the expected death benefit of the insurance policy, in return for the viators sale of policy.

Prohibited acts

cant violated PA laws, obtain license by misrepresentation, missaproriate funds, intentionally misrepresent the terms of insurance contract, cheat on exam, accept insurance business by someone unlicensed, fail to comply with child support obligations, fail to pay taxes, commit a felony, commit a misdemeanor involving theft of money or property, or fail to notify the department of a change of address within 30 days.

Producer is someone who sells, solicits, or negotiates insurance contract and must be licensed. The following dont have to be licensed as insurance producer:

insurer, employee of insurer not engaged in sale, an officer, director or employee of insurer, a person who for no commission helps provide information, a salaried employee who counsoles or advises on insurance issues.

Unfair discrimination

is the unequal application of the principles used to approve, rate, set premiums, and issue inusrance policies. cant discriminate rates charged on policy between those of same class with same hazard in the amount of premiums rates in any manner. it is illegal to refuse to insure based on sex, maritail status, race, religion, or national orgin. refuse to insure soley because other insure has refused to write a policy for them or has cancelled an existing policy, or terminate or modify coverage or refuse to renew coverage soley because the applicant or insured is mentally or physically impaired.

Insurace Fraud Regualtion

purpose of article is to prevent and reduce insurance fraud. the act established the following: The insurance fraud prevention authority, has power to employ other staff members, supply finances to the section of insirance fraud, assess the scope of the insirane fraud problem, and develop and implement statewide plans. A sperate account in the state treasury called the insurance fraud prevention trust fund, in order to provide funds for use in combation insurance fraud. A section of insirance fraud withing the office of attorney general that is responsible for investigating and prosecuting insurance fraud and has the power to initiate and conduct investigations, to prosecute and report incidents of fraud to other agencies, adn to pay all civil and criminal fees into the insurance fraud prevention trust fund. The act also established the following rules governing insurance fraud detection: 1, Evidence of insurance fraud gathered in an investigation must remain confidential and is not subject to public inspection until the section deems it appropriate to share the information. until the section opens the evidence up for public inspection, the evidence may not be subpoenaed 2, every licensed agent or insurer must cooperate fully with the section. 3, persons who cooperate with the section will not be subject to civil or criminal liability. Examples of fraudulent actions include the following acts when committed knowingly and with the intention to defraud: presenting documents to government agencies that contain false, incomplete, or misleading information. Assisting, conspiring, or making false, incomplete, or misleading statement concerning claims. Engaging in unlicensed producer activity. Knowingly benefiting from the fraudulent act of another. Fraudulent acts are subject to civil penalty up to $5,000 for the first violation, $10,000 for second violation, $15,000 for 3rd violation and each subsequent violation.

Non resident

$110 application fee and submit a nonresident producer application form. Can be denied if their home state does not accept PA on the same basis.

Federal Regulation

-Fair credit reporting act: consumer credit reports are confidential and may only be disclused to legally authorized individuals or entities. Consumers must be notified of disclosures terms and conditions. upon notification of possible identyy theft, reporting agencies must include a fraud alert, Consumer credit reports with fraud alerts may not be used for credit or insurance applications without consent of the consumer. -Fraud and False statements: indivuals engaged in business of insurance found to have committed fraud or knowingliy made material false statements are subject to federal criminal charges including a fine up to $50,000 and 10 years in prison. indiviuals found to have missaproriated, missmanaged or embezzled funds will engaged in the business of insurance are subject to federal criminal charges including a fine up to $50,000 and 10 years in prison.

General rulesa viatical settlement provider must obtain the following before entering into a viatical settlement contract:

-a document where viator consents and has sound mind to fully understand -a document where insured consents to release his medical records to a viatical settlement provider, broker, and insurance company that the issued life insurance policy form. - if a life insurance policy is being viaticated within the first 2 years of being issued, a document where party consents to the tolling of the running of the policys contestability period until after the inusrer has completed a good faith investigation A viatical settlement provider must give the insurance company of the policy being viaticated written notice within 20 days of entering into the agreement with a viator. A viatical settlement provider must deliver a copy of the medical release, a copy of the viators application for the viatical settlement contract, a copy of notice and a request for verification of coverage to the insurer that issued the life policy that is subject to the transaction

childhood immunizations

150% of the average wholesale price of the immunizing producer.

dependednt child coverage

19 years. individual or group health policy in PA must provide coverage for dependent child to age 19

Annuities

Annuity Principles and Concepts: Right to examine, as a general rule, individual fixed dollar or variable annuities or pure endowment contracts mut contain a right to examine (free look) provision allowing return within 10 days of its delivery with a full payment of all unearned premiums. -If the individual fixed dollar or vairable annuity contract was offered as a replacement for an existing annutiy contract or life insurance policy witht he same insurer or insurer group, the free look provision must allow atleast 45 days for the contractholder to return the policy. - If it was offered as a replacement for an existing annuity contract or life insurance policy with an insurer from a different group than which issued the original contract or policy, the free look provision must be at least 20 days.

Group Disabilty Income Insurance

Coordination of benefits (workers compensation benefits and social insurance) for total disabilty, 66 and 2/3 per centum of the wages of the injured employee must be paid beggining after the 7th day of total disabilty, and paybale for the duration of total disabilty, bu the compensation may not be more than the maximum compensation payable. if the benefit calculated is less than 50 per centum of the statewide average weekly wage, then the benefit payable will be the lower of 50 per centum of the statewide average weekly wage or 90 per centum of the workers average weekly wage employees receiving total disabilty payments will be required to submit a medical examination which must be requested by the insurter within 60 days upon the expiration of 104 weeks to determine the degree of impairment due to the compensatable injury. if it is determinded that the individuals impariment rations is less that fifty pre centun impairment under the most recent edition of the american medical associaistion " guides to the ecaluationof permanent impariment" the employee wil then receive partial disabilty benefits after 60 days notice of the modifications is given. employees may not be required to submit to medical examination more that twice in a 12 month period the total numenr of weeks of partial disabilty may not exceed 500 weeks for an injury, regardless of any changes in status of disabilty. the compensation for a partial disabilty is 66 an 2/3s per centim of the fifference between wages of the injured employee and the earning power of the employee after the injury. The coordination of benefits provision in the Pennsylvania Workers Compensation act prohibits acts againts an individual receiving an excess of insuance benefits. if an inusred is collecting workers compensation beneftis , he or she may be able to receive other types of benefits, includign unemployement compensation, severance, pensions, social security disabilty, social security retirement, or medicare; however, receiving any of these benefits may reduce the amoun fo workers compensation benefits the insured will receive.

Benficiary-Related Clauses

Effects of Divorce on Designation of Beneficiaries: This rule applies if an indivual: domiciled in PA, designates spouse as beneficiary of a life policy, annuity contract, pension, or profit sharing plan proving for payment to spouse, either is divorced from the spouse at time of death or dies during course of divorce proceeding where no divore decree has been entered. As general rule,any designation of beneficiary in favor of the individuals spouse or former spouse that was revocable by the individual at the time of death will become ineffective for all purposes and must be constructed as if the spouse or former spouse had predeceased the individual, unless it appears designation was intened to survive the divorce based on any of the following: wording of designation, court order, written contract bettween lovers,desgination of former spouse after the divorce decree has been issued. unless court ordered, no insurance company, pension plan, profit sharing plan or trustee is liable for making payment to spoude or former spouse which would havbe been proper in the absence of the abouve rules. any payment wil be liable to anypne prejudiced by the payment.

Insurable Interest

Every person may insure his own life, but a person may not insure the life of someone else unless the beneficary under the policy has an insurable interest in the life of the insured. can be for a loved one or lawful economatic interstest in having the others life continue.business may also take out policies to assure health of employees. individuals repsonsible for children as well may take out policies.

Credible coverage

HIPAA allows individuals coming into group plan to be given credit for previous coverage undr another policy. Certificates must be issued of crdible coverage when individual terminates from a group or COBRA upon request.

Individual underwriting by the insurer

Info sources and reg: Med examination and lab tests including HIV: no HIV test may be performed wihtout written consent of the subject, insurer only required to inform subject of a negative test result if the subject request notification. the insurer may not inform the subject of positive result rather must inform a designee chosen by the subject. selection criteria and unfair discrimination: unfair discrimination between individuals of same class in the amount of premiums for any life or health accident insurance is prohibited. Any violation of this rule results in a misdemeanor and fine up to $500

Health Insurance Basics

Limited Policies: Types of limited Policies: Specified (dread) disease a policy which provides coverage for each person insured under the policy for specifacally named diseases with a deductable amount not to exceed 250 and an overall aggregate benefit limit of no less that $5,000 and a benefit period of not less than 2 years providing coverage for hospital room and board, treatment, X rays, private services from a registrered nurse, and ambulance services. An explanation of the specified disease rules is required on the Outline Of Coverage given to the insured.

National Do-Not Call List

National do not call list is administered by the Federal Trade Commission (FTC) purpose is the allow consumers to place a limit on the number of phone calls of personal telemarketing phone calls they receive. once put on the list, telemarketers have 31 days to remove your phone number from list. if contuned calling , consumers can make complaint to the national do not call registry website. Telemarketer are required to update list every 31 days and delete numbers that have been added to do not call list. once added to list it will never expire and will remain their permanetly, phone numbers can be taken off the national do not call list by calling a toll free number.

Individual disabilty income insurance

Pennsylvania minimun benefit standards, following standards: -periodic payments for persons over 62 may only be reduced soley on the basis of age and must be at least 50% of the original amount. -the elimination period must be no greater than 90 days when coverage is 1 year of less, 180 days when 1-2 years, and 365 for anything over 2 years -policies must have maximum period of time for which it is payable during disabilty of at least 6 months -no policy, which contains income disiabilty benefits, may be required the insiured to remain at home. a disabilty income policy may not require a loss from accidental injury to begin within less that 30 days after the incidnet, require the insured to be confied to his residence as a condition for benefits, or deifne the disabilty perod as starting on the date when the company received notice.

common exclusions from coverage

Pre-existing conditions intentionally self inflicted injuries war or acts or war elective cosmetic surgery conditions covered by workers compensation government plans (sickness or inuries eligible for medicare benefit coverage) commission of or attempt to commit a felony

Individual Health Insurance Policy General Provisions

Required Provisions: all health insurance policies must contain the following provisions: -Entire contract -Time limit on certain defenses, after 3 years from the date the policy is issued, no misstatments made by the applicant may be used to void the policy. -Grace Period, the insured is entitled to a grace period of a certain number of days in order to pay any subsequent premiums after the first premium has already been paid. (weekly premiums 7 days, monthly premiums 10 days, all other policies 31 days) -Reinstatement, may be reinstated if insured defaults on a premium payment as long as the insured approves -Notice of Claim, written notice of claim must be given to the insurer within 20 days after the occurance of any loss covered in the policy. -Claim Forms, after receiving notice of claim, the insurer must furnish the insured with the proper forms to fill out within 15 days. -Proof of Loss, written proof of loss must be given to the insurer within 90 days of loss. -Time and Payment of Claims, any settlement due will be paid immediately upon receipt of proof of loss -Physical examination and autopsy, the insurer, at its own expense, may conduct examinations of the insured. -Legal Actions, No action at law or equity may be brought to recover on the policy prior to the expiration of 60 days after written proof of loss has been furnished. -Change of Beneficiary, unless the insured makes an irrevocable designation of beneficiary, he retains the right to change the beneficary.

Other general provisions

Right to examine, free look within 10 days and receive full refund of the first premium payment

Company regulation

Solvency: Insurance companies required to maintan minimum levels of capital stock and surplus. if not capable of handling debt commissioner informs them not to issue anymore new policies until funds become equal to liabilties. Insurance compaines must establish reserved set by the NAIC. Life and annuity lines of insurance for a stock insurer must maintain 1 million of capital and 50K of surplus, Life and annuity lines of insurance for mutual insure must maintain 1 million of policy holder surplus. Finally, accident and health insurance lines must maintain 100,000 of capital and 50,000 of surplus.

Life and Health Insurance Guarantee Association

The PA Life and Health Guarantee Association is a group of licensed insurance companies created by legislature in 1978. purpose of association is to protect policy holders of polices issed by an insolvent insurance company, up to specified limits. all insurance companies licensed to write life and health insurance are required to be members of the association. if company should fail, the maximum amount of protection provided by the association is as follows: - Life Insurance Death Benefit: up to$300,000 - Life Insurance Cash Surrender: $100,000 - Health Insurance Claims: $300,000 It is unlawful for any insurer, agent or other representitive to use the existence of the association for the purpose of sale, solicitation, or inducement of insurance.

Accelerated Living benefit provision/rider

acceptable to pay living benefit when expected to die in 12 months or less, insured suffered a total and permanent disabilty, or the insured is confined to an eligible health care facilty for the rest of expected life. The accelerated death benefit must be atleast 25%, but no more that 100% of the total death benefit by the benefit payment

Treatment for alcohol abuse and dependency

all group health, sickness, or accident insurance policies providing hosptital or medical coverage must provide coverage for those benefits for alochol and other drug dependency. this rule does Not apply to medicare and medicaid supplemental policies or limited coverage policies. lifetime limit of 4 detoxifications, for up to 7 day treatment each for hospital stays, a min of 30 day per non hospital stays an min of 30 outpatient stays, lifetime limit of 120 sessins. before qualified must be certified by physician of alcohol or drug abuse. deductableas and copayments palans mut be approved by commissioner.

Commissions and fees

an insurance entity may pay a commision to a licensee for selling an insurance policy but may not pay to someone not licensed except if they were licensed at time of the sell or gave reference to other licensees. cant pay commission to a person if under suspension, or revoked, a licensee may charge a fee in addition to a commission for a sale of an insurance policy, as long as the fee is disclosed in advance in writting and is reasonable.

Producer disclosure

an insurance producer is required to provide the following disclosures in writting to a consumer: 1, a list of the services to be provided; and a clear explanation of the fee to be paid to the producer.

Outline of coverage

an outline of converage must be given to prospective applicant for health insurance at the time of initial solicitation. Outline must include description of benefits provided by policy, list of exclusions and limitations, a statemnt of the continuation terms, a statement that the outline is just a summary and the actual policy should also be read, and an explanation of the return policy.

HIPAA (Health Insurance Portability and Accountabilty Act)

eligibility: guranteed coverage if total creditable coverage is at least 18 months, all COBRA or state continuation coverage has been used up, and individual is not elligible for medicare or medicaid. Guaranteed issue. cant exclude preexisting conditions, deny enrolment or decline coverage. -pre-existing conditions, generally may not be denied on preexisting conditions. a group health issuer may impose a pre existing condition exclusion only if condition needed medical treatment within 6 months prior to enrolment date, the exclusion period is no longer than 12 months, and the period of exclusion is reduced by agreate of the credible coverage periods.

Producer regulation

fiduciary responsibilty: insurance producers are responsible for all funds received as a producer and shall not mix those funds wiht his own funds unless he is given express consent. -Examination of books and records: any insurance company who is subject to examination must keep all books, record, accounts, documents. and computer recording related to its business. Examinations may take place as often as commissioner deems neccesarry but must take place atleast once every 5 years.

Gramm-Leach-Billey Act

financial services modernization act was passed in 1999, purpose of allowing financial entities to merge and accomadate greater competition. Law repealed the glass steagall act, giving insurers ability to merge with banks, and eithe rfinancial institution to perform duties of both. regardless, entity acting as insurer is regulated by its respective home state insurance department. The GLBA defines consiner as indivual who obtains products or services used primarily for personal, family, or household purposes for finacial institution. GLBA defines collection of information as tha which is organized by a persons name or personally identifuale number such as SS # or insuracne policy number. The GLBA protects againts the discloser of nonpublic personally identifaible information. 2 disclosers must be made, first discluser made when customer relationship is established, this occurs when consumer becomes customer, such when policy is purchased, at this time they provide privacy policies. must provide an update of privacy policy annually. second disclosuer must be made before discloser of protected information. at this time, company must provide opportunity to opt out of this disclusore with instructions to do so. the discloser will indicate what the opt-out applies. Must be in writting.

Marketing requirements

if advertisement includes dollar amount it must also disclose the policies exceptions and limitations. an advertisment may not use the words "only", "Just", "merely", or "minimun"

Revocation, suspension, nonrenewal or denial of license

if fail to appear or deemed guilty, commissioner may also choose to deny, revoke, suspend or refuse to renew license. If commissioner revokes due to fraud, all other licenses agent holds will be revoked as well. The commissioner may also issue a civil penalty not to exceed $5000 per violation and not to exceed $50,000 in any 6 month period for willful violations and a fine not to exceed 1000 per violation up to 10,000 for any 6 month period for unknowingly violating these rules. If licensee fails to pay the fine within 30 days of receiving notice, a failure to pay notice will be given with 15 days to correct violation, the court may impose a fine not to exceed 100 per violation per day.

Appointment of producers

insurance producer may not act on behalf of the insurer unless the procuder is appointed by the insurer. must execute written agreement prior to representation that describes representation and all fess to be paid, including a 12.50 dollar appointment fee within 30 days. consumer must file a notice to dep that will approve/dissaprove. appointment of producer in writting will be terminated if license suspended or revoked. The dep must be notified within 30 days of termination and the licensee must be notified of the termination within 15 days of notifying department.

serios mental illness

min standards: 30 inpatient 60 outpatient annually inpatient days can be coverted into outpatient days on a 1-for-2 basis. no dif between annual or lifetime dollar limit in coverage cost sharing agreements must not prohibit acces to care

Policy forms

unlawful to sell any policy covering about all topics until approved by commissioner. Considered approved after being filled for 30 days unless denied, if issued policy that is not approved the company is guily of misdemeanor and must pay a $500 dollar fine. in addition, subject to up to to $1000 fine for each violation, as well as a suspension or revocation of license.

Medical Plans: PA mandated benefits (individual and group)

vaginal delivery normal is 48 hours Caesarean delivery is 96 hours if cleared to leave earlier than those times, policy must provide at least one home health care visit within 48 hours after discharge. -Routine pap smears check vagina for cancer

The term "illustration" in a life policy refers to

a presentation of nonguaranteed elements of the policy

Optional Provisions

-Change of Occupation, if insured is injured after changing to more dangerous occupation required to pay higher premium, likewise less premium if changed to less hazardous occcupation. -Misstatement of Age, correct and make adjustments - Other insurance in this insurer, if previous accident or sickness policy is in place creating an excesss in aggregate indemnity, the excess insurance will be void and all premiums paid for such will be returned. -Insurance with other insured ( expense incured benefits), if has second policy which covers same loss on service basis, or expense incurred basis, if does not give notice to his first policy then the only obligations of first policy will be to cover the proportion of the loss which would otherwise have been payable plus the total of the like amounts under all such other valid coverages -Other benefits, if has other valid coveraged with other inusrers wich provide for same loss, only liablity if not told first is for the proportion of the indemnitites otherwise providd for such loss that the inusred had notice of. -unpaid premiums, when a claim is made, any premiums due may be deducted from the claim payment. -Cancellation, the insurer may cancel the polucy at any time by giving written notice to the insured and returning any neccessary premium payments. -Conformity with state statutes, any provision that conflicts witht the laws of Pennsylvania, is automatically amended to conform witht the minimum statutory requirements. -Illegal occupation, company is not liable for any loss which result from the unsired comminting a felondy in an illegal occupation. -intoxicants and narcotics, company is not liable if loss resulting from insured being drunk or under the influence of any narcotic unless taken on the advice of a physician.

metal level protection

4 classes, bronze, sliver, gold, platinum

Qualified plans include these

401(k) plan Tax sheltered account plan HR-10 -company profits isint an issue for them.

403(b) tax sheltered annuities (TSAs)

A 403(b) or tax sheltered annuity (TSA) is a qualified plan available to employees of certain nonprofit organizations under section 501(c)(3) of the internal revenue code, and the employees of public school systems. Contributions can be made by the employeer or employee by reductions in salary and are excluded from employees taxable income. As with any other qualified plan, 403(b) limits employees cntributions to a maximum amount that changes annually, adjusted by inflation. The same catch up provisions apply.

Licensee has 30 days to notify department about which of the following actions

A change of address 30 days Any criminal charges taken againts them 30 days Any administrative action taken againts them 30 days

Insurable interest

A debtor does not have insurable interest in a creditor

All of the following could own group life insurance EXCEPT

A group looking for low cost insurance.

All of the following could own group life insurance EXCEPT

A group needing low-cost life insurance. Groups pruchasing group life insurance must be formed for reasons other than purchasing insurance

Disclosure to consumers

A viatical settlement provider must provide the viator with the following disclosers before the contract is signed: -alternatives to viaticle settlement contracts, including accelerated death benefits -some viatical settlement proceeds may be taxable -viatical proceeds may be subject to claims of creditors -having a viatical settlement may adversely affect elligibility for Medicaid -viator has right to rescind the contract within 15 calander days from receipt of proceeds -funds will be sent within 3 days -other rights may be forfeited by the viator by entering into a viatical settlement contract -all info provided by a viator will be shared with the insurer that issued the life insurance policy that is the subject of the viatical transaction.

what limits the amount a policyowner may borrow from a whole life policy?

Cash value. The amount available for a loan in a whole life policy is the amount of cash value. If any outstanding loans, the amount will be deducted plus interest.

Disciplinary actions

Cease and Desist order: if possibly commited violation, the department will notify of alleged violation and the time and place or hearing, which may not be less than 10 days from the date of notice. If fail to appear or deemed guilty, the commissioner will order cease and desist order, requiring the licensee to stop committing the violation

1State regulation

Commissioner general duties and powers: The PA insurance department is managed and operated by the commissioner. Commissioner appointed by governer with advice and consent of senate. remains in office at discretion of governer, appointed 4 year ter. Commissioner is responsible for issuing producer licenses and approving pre examination programs, producer license exams, and continuing edu programs. In addition, other duties of the commissioner include collecting fees, issuing cease and desist orders, conducting hearings, reporting illegalities to the state attorney general, and regulating insurer solvency, policy forms, and premium rates.

Minimum benefit standard

Medicare supplement policies must meet minimum standards: the policy may not exclude losses incurred more that 6 months from the effective date of coverage for pre existing conditon. medicare eligible expenses are any expenses deemed reasonable by medicare. coverage must not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. -coverage part A medicare eligible expenses to the extent not covered by medicare to the extent not covered by medicare from the 61-90th day of benefit period. part A eligible expenses incurred daily hospital charges during the use of medicare lifetime hospital inpatient reserve days. upon exhaustion of medicare hospital inpatient coverage, coverage of 90% of the medicare part A expenses. Coverage of 20% of the amount of Medicare eligible expenses under Part B, not to exceed calander year out of pocket deductable.

Insurance for Senior Citizens and Special needs individuals

Medicare supplements: open enrollment, may not deny or discriminate in pricing based on health status or claims experience.

11.0 Disabilty Income related insurance

Qualifying for disability benefits: inabilty to perform duties: for the first 24 months after injury, "total disabilty is defined as the inabilty of insured to perform all the substantial and material duties of his regular occupation. after 24 months, "total disabilty is defined as the inabilty of the insured to perform all substantial and matieral duties of Any Occupation for which he is reasonably sutied

Life Insurance Policy Provisions, options, and riders

Standard provisions: -entire contract -right to examine (free Look) allowed to return policy within 10 days and receive a refund of first premium payment -payment of premiums- all premiums payable in advance -grace period, insured entiteld to 30 day grace period to pay first premium. policy stays in force during grace period, if make claim policy may deduct premium payment from claim along with any interest charges on the unpaid premium from any settlement paid under the policy -reinstatement, may be reinstated within 3 years from the date of default in premium payments -incontestabilty period, incontestable after in force 2 years from date issued -misstatement of age/sex, amount paybale if misstated will be changed and adjusted to the amount that would have been if correctly stated. -payment of claims,if the insured dies, settlement will be made upon receipt of proof of death -prohibitted provisions including backdating, no policies, except for industrial insurance policies with monthly premiums, may contain the following provisions. @ provision for forfetiure of policy for failure to repay any loan of policy @ a provision limiting any action of law less than 2 years after the cause of action accrues @ backdating more than 6 months before app made @ provision for mode of settlement maturity of less value that amount insured less the indebtness to the company and less any deductables

Which is true regarding taxation of accelerated death benefit under a life insurance policy?

They are tax free to terminally ill insured, and tax free up to a certain limit for chronically ill insured. When received by terminally ill tax free. when received by chronically ill insured (for example, someone who has cancer, alhtimizer disease or other severe illness) the benefits are received tax free up to certain limits.Any amount received in excess of the dollar limit must be included in the insureds gross income.

Reduced Paid-Up insurance

Under this option, the cash value given from nonforfeiture is used by insurer as a single premium to purchase a completely paid-up permanant policy that has reduced face value from that of the former policy. The new policy builds its own cash value and will remain in force until death or maturity.

IRS required corridor or gap between the cash value and death benefit

Universal Life Option A (Level Death Benefit Option) policy must maintain a "corridor" specified gap between cash value and death benefit, as required by the IRS. If the corridor is not mainained, the policy is no longer defined as life inusrance for tax purposes, and consequently losses most tax advantages that have been associated with life insurance.

Universal Life

Universal Life also referred to by generic name, flexible premium adjustable life. That implies that the policy owner has the flexibilty to increase or decrease premiums at anytime. In fact, policyowner can even skip premium payment as long as there is sufficient cash in the cash account to pay the premium. If the cash value is to small the policy will expire. -Since the premiums can expire the insurer will give the policy owner two options for paying premiums -- the minimum premium, is the min amount needed to keep policy in force for that year, paying the minimum will make the policy perform as an annually renewable term product. --Target premium, is a reccommended amount that will cover the cost of insurance and to keep the policy inforce for its lifetime. As well as being a flexible premium policy, universal life is also a interest sensitive policy. Although the insurer guarantees a contract interest rate (usually 3-6%) there is also potential for a policy to get a current interst rate, whihc is not guaranteed in the contract but may get a higher rate becasue of current market conditions

Viatical and life settlements

Viatical settlement broker authority and licensing: must obtain proper license by filling out license form that includes an audited financial statement and pay a fee (300 for providers, 100 for brokers) to be elligble for licensure, applicant must be bonded or otherwise provide for its financial accountability in an amount required by the department. The application will be approved or denied within 90 days.

Jumping Juvenial policy

While many policies have a level death benefit, Jumping Juvenial policy provide a low face amount in the early years, then increase usually by 5 times the amount by a specified age usually 21.

Pennsylvania Law defines business entity as

a person which is not an individual. After 1 or more licensed as producer must comply with state insurance laws may apply to department for insurance producer license as business entity application, will be same lines of authority held be individual producers.

Conditions for payment

an accelerated benefit contract must disclose the conditions for payment, including a certification signed by a licensed physician diagnosing the life expectancy of insured and the proposed treatment during the coverage period.

Permitted compensation arrangements

an insurer may provide commision to a producer for the sale of medicare supplemental policy if the first year commission is no more than 200% of the commission for selling the policy in the second year. commission in subsequent year must be same as 2nd year and provided no fewwer than 5 renewal years. May not pay commission to producer that is greeater than the replacement renewal compensation if an existing policy is replaced.

how are variable annuitites regulated

by the state and federal agencies

cost saving service

case management provision

Qualified plan retirements

characteristics of qualified plans include, IRS approval, are permanent, designed for benefits to employees and beneficairies, formally written and communicated to employees, does not discriminate or favor specific groups, not geared specifically to specific groups, have a vesting requirement,does not favor stock holders, officers or high paid employees. - Non qualified plans are not subject to these and dont require vesting requirements, are allowed to favor particular groups, dont require government approval, nonqualifed plans accept after tax contributions.

Life Insurance Policies: Group Life Insurance

conversion to individual policy: when individual insured under group is entiteld to have individual policy issued without proof of insurability but is not given 15 day notice before expiration date, given additional 15 days to exercise conversion right before the eligibiltiy period is up. the additional period expired 15 days after the individual is given notice, but may not extend past 60 days after the expiration ddate of the period providd by the policy

convertable term policy

convertable term is one that allows you to switch to permanent life insurance policy

a universal life policy has two types of interest rate

current and guaranteed

Replacement

defined as transaction in which new life insurance is bought, and the insurer knows or should have known that the insureds existing life insuracne is being surrendered to the new insurer or amended and reissued with a reduction in cash value. replacement regualtions do not generally apply to policies whos face amount is less than $5,000 the insurers duties include informing personnel or replacement regualtions and requyiring signed statement with every applicationa s to whether the proposed is replacing an existing policy and a signed statment from producer as to whether he had knowledge of replacement. the producer must also give the applicant a notice regarding replacement of life insurance and turn the application in to the replacing insurer. Replacement rules do not apply to group life insurance or replacing existing insuracne polices witht he same insurer.

true concerning whole life

dividend interest is taxable, policy loans are not tax deductable, and premiums are not tax deductable

Fixed period option

does not guarantee payments for life of beneficary but does guarantee all proceeds will be paid out.

LTC policies daily acts of living

does not include sleeping. usually for LTC cant be more that 3 acts which would be things like eating, baithing, dressing, toiling, mobility.

payor benfit rider

does not increase death benefit, only eliminates premium payments if cant pay for and payor dies or is disabled

patient protection act

does not offer tax deductions for health premiums but it does offer tax advantages

cancer therapy

health insurance policies issued by hospital plan or professional healht service plan corp must provide coverage for cancer patients chemo therapy and hormone treatments

annual gynecological examinations

health insurance policies must provide coverage for annual examination

HSA

help individuals save for qualified out of pocket health expenses such as the deductable from high expense deductable health plan

Reporting of actions

licensee must report any admin action taken against them in another jurisdiction or by another gov agency of PA within 30 days of final disposition of matter. licensee must report any criminal charges within 30 days of being charged. Report must include copy of the compliant, the order, and the final dispostion.

Unfair claims settlement practices

misrepresenting pertinent policy benefits and provisions failing to respond to insured within 10 working days of written notice of claim and failing to respond to department within 15 working day sof claim inquiry failing to complete investiation of a clain within 30 days after notification, unless this is unreasonable. failing to explain the ground for cliam denial within 15 working days compelling insured to institute litigation order to recover amounts due.

Illustrations

must be clearly labled "life insurance illustrations" illustrations of life insurance illustrationscannot be altered by producer provided by insurer. must contain name of insurer and producer, name, age, sex of the insured, underwritting upon which illustration is based, the name of the policy, the initial death benefit, the dividend option. when using illutration must refer to the policy as nothing other than a life insurance policy, as guaranteeing payment, as untrue. nor may the inusurer use terms vanish or vanishing premiums.

newborn child coverage

must provide benefits on an expense incurred basis.must include for defects and birth abnornalities, does not have to include routine well baby care, immunizations, exams not neccesary for treatment of defect except to the extent dependednt covered on same basis. the insured may also be required to notify the insurance company of the birth and pay required premiums within 31 days after date of birth.

Rates

not excessive, inadequate, or unfair. risk should be grouped by classification to establish proper min premiums. any manuals regarding classifications, reules and rates must be approved by commissioner and kept on file for at least 30 days before being used. If commissioner dissaproves of any filing, he must hold a hearing after given at least 10 days of written notice. the commissioner cannot dissaprove of any rates unless they are in violation of insurance laws. A business entity can apply to commissioner for a license as rating organiation by submitting an application and paying $25 fee. every application will be granted or denied withing 60 days of filling date. If approved, will remain in force for 3 years. Rating organizations must provide a forum for aggrievated persons who wish to discuss the rating system. Commissioner must examine each rating organization at least once every 5 years. the organization can be examined under oath at any time and must exhibit all books, record, accounts, and documents. Any violation of these principles is subject to a maximum fine of $50 fee for each violation and $500 for each willful violation.

not an unfair trade practice

offering policyholders bonuses out of surplus accumulated from nonparticipating insurance. -it is illegal to rebate premiums or offer special favors. dividend advantages, or any other benefits not specified in the contract to induce people to purchase life insurance annuities. However, it is not considered rebating to pay policy owners fair and equitable bonuses or to reduce their premiums out of surplus accumulated from nonparticipating insurance.

Medicare has 4 parts

part A,Hospital care financed through FICA (portion of payroll tax. Part B, medical care, from insured and part from fed goveernment, Part C, allows to receive support from health care providers. Part D, is for prescription coverage.

usually true about participating life insurance policy

pay dividends to policyowners. can pay in form of dividends by cash payments, reduced premiums, units of paid up insurance, a savings program, or by purchase of term insurance.

joint and survivor

payments continue after first death but for this case when wife is alive and husband dies instrade of reciveing 250 she receives half until she dies

Permitted exclusions in an accelerated benefit contract

permitted exclusions include: acts of war, active duty in the military, commiting an assault or felony, participation in a riot, suicide or attempted suicide, drugs and alcohol, pre-existing conditions and Alzheimer's disease.

physically handicapped/retarded childern

policy issued after Jan 1, 1968 may not exclude unmaried child who is uncapable of things. policyholder should notify wit proof within 31 days of specified termination age.

Limited pay life

premiums will be paid up in full well before 100 and usually in a specified number of years.

fraudulent viatacal settlement acts: all are considered

presenting false info to the viatical settlement contract destroying, altering, or concealing assets or records of a licensee or other person misrep or concealing condition of person engaging in business wihtout license filling false info on document with commissioner presenting info known to be false embezzlement, theft, or conversion of money or other property in connection with viatical settlement contract attempting to commit or help someone commit any of these acts

NOT among goals of medicare supplement policy

pressuming applicant is eligble for medicade, based on nature of policy.Medicare suplement policies must ask applicant if they are eligible for medicaid

Credible coverage

proof of prior insurance, used to reduce waiting periods and exlusions and preexistiong conditions. For HIPAA is atleast 18 months, all COBRA or state continuation covergage used up, and the individual is not eligbile for medicare or medicare. HIPAA allows individuals coming from group plan to be given credit into a group lan for previous coverage under another policy. certificates of credible coverage must be issued when the individual terminates from a group or COBRA or upon request. For managed care plans renewabily will not be accepted if moved out of service area.

true regarding inpatient care in HMO

provide member with inpatient care in or out of service area, trratments may be limited for mental or alcohol

coverage for adopted childern

provide same coverage

component of dental insurance not requiring deductable of applicant

routine and preventive maintance

Pennsylvania regulations and required provisions

standards for marketing: procedures to make sure fair and accurate. first page of policy must contain a notice to the buyer that states that the policy may not cover all medical expenses.Twisting, misleading representations of poicies, as well as high pressure tactics and cold lead advertising, is prohibited.Twisting is inducing someone to lapse, forfeit or convert any insurance policy. High pressure tactics tactic to induce purchase of insurance through force, fright , thrreat, or under pressure. Cold lead advertising is conspicous act of purpose of marketing to solicit insurance that fails to disclose that purpose and that the insuance agent will end up contacting buyer.

Temporary License

subject to limitations seen fit by director, possibly having a sponsor, entiteld to revoke license if endagering public, a person may not engage in transacting new insurance agreement contract.

attending physician statement

tells best for underwriter about medical history. includes past diagnoses, medical treatment, length of recovery time and prognosis

Effect of death benefit

the form contains a clear statement that the death benefit will be reduced if an accelearated death benefit is paid. -Exclusions and restricions include: acts of war, active duty in militarry, commiting assault or felony, participarion in riot, suicide or attempted suicide, drugs and alcohol, pre existing condidtion, alzheimers disease

cash value of universal life policy

the insurer credits the cash value with a current, non guranteed, interest rate and backs cash value with a lower guaranteed rate

Life insurance surrender comparison index disclosure

the interest adjustment method at 5% shall be used to provide a 10 year and 20 year surrender comparison index per $1000 of face amount of basic insurance. index based on premise that the policy will be surrenderd at end of 10years and 20 years. provides cost comparison with policies with same premium payment period and pattern. disclosure must be given to an applicant by the time the policy has been delivered and mut describe the rules stated above.

disability income

the part of the benefit that is provided by employer is taxable to the employee when received

limited pay whole life

the premium payments will cease at age 65, but coverage will continue until death or reaching age 100