Unit 24

All life insurance policies (except industrial) issued in NE must contain

- a provision that all premiums should be paid in advance - a one-month grace period for payment of any premium, except the first - a free-look provision granting the policyholder the right to return the policy within 10 days of receipt with a refund of all premiums paid if not satisfied for any reason - table showing loan values during at least the first 20 years of the policy

An insurance company must pay interest on life insurance policy proceeds if:

- insured was a NE resident upon death - death date was on or after June 6 1991 - the beneficiary elects to receive proceeds in a lump-sum payment - AND the proceeds are not paid to the beneficiary w/in 30 days of receipt of insured's death

Replacement regulation applies to

-individual annuity contract - limited-pay life policies - endowment insurance NOT: Group life insurance

Viatical settlement purchaser

1. A person who gives money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy 2. A person who owns, acquires or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy that has been or will be the subject of a viatical settlement contract, for the purpose of deriving an economic benefit

Minimum age for contracting insurance

10+ may, and these minors may surrender a policy with written approval of a parent/guardian for their support

A life insurance policy cannot take effect more than how many months before the original app was made?

6

Disclosure requirement in the life insurance solicitation regulation mandate that prospective purchasers be given...

A Buyer's Guide and Policy Summary

Chronically ill

A continuing or recurring illness that prevents the person from performing activities of daily living or requires supervision because of a cognitive impairment. (walking and driving do no count) - requires substantial supervision

Prima Facie Evidence

A legal term used to refer to evidence that is good and sufficient on its face to establish a given fact or prove a case.

Viatical Settlement Provider

A person, other than a viator, that enters into or effectuates a viatical settlement contract. This settlement is arranged for a terminally ill person selling their life insurance policy to a third party for less than its mature value to benefit from the proceeds while alive

Duties of Existing Insurer

The existing insurer must be able to provide the Director with all notifications received by replacing insurers for at least 5 years. Within 5 business days of receiving a replacement notice, the existing insurer must send the insured a letter advising them of the right to receive information about the existing policy or contract values.

A producer's presentation that compares the cost of 2 or more similar life insurance policies must recognize what?

The time value of money

Producer Licensing

All individuals selling individual variable annuities must be licensed to write variable contracts

Liabilities

Any surplus or deficit that may arise in a separate account by virtue or mortality or by expense costs should be adjusted by withdrawals from or additions to separate account so that the assets of such account equal the liabilities

Single(k) Plans

Designed for owner-only businesses. Allows business owner to take advantage of higher contribution limits than those available through SIMPLEs and SEPs. Vesting in employer contributions is 100% immediate. Ineligible employers include those who employ full-time employees Eligible employees include: - business owner or immediate family member of owner - 21+ - employed up to two years

Duties of agents and brokers in Replacement Sales

Each agent/broker who initiates an app for life insurance or an annuity must submit to the insurer: - a statement signed by the applicant about replacement - signed statement by broker regarding the replacement

The life insurance solicitation regulation applies to...

Endowment life insurance

Safe Harbor 401(k) Plans

Gives eligible employees the opportunity to contribute a portion of salary to a retirement plan. Employers can contribute match funds or non-elective amounts to the plan on behalf of these employees. Employers can deduct their contributions at up to 25%. Employees who want to contribute must: - be 21+ - employed 1+ year and working 1000 hours in the year since hired All contributions are 100% vested immediately Funds withdrawn BEFORE 59.5 are subject to federal income tax as well as a 10% IRS penalty **union members and nonresident aliens are generally ineligible

Spouse/child conversion upon policy termination

Maximum amount of insurance any covered spouse or depending child under policy is 50% of the amount the member was insured

General rules for viatical settlements

Must be obtained: - written statement for a physician that the viator is of sound mind - document of insured consenting to release of medical records W/in 20 days after viator executes transfer of any rights the viatical settlement provider shall give written notice that the insurance policy will become a viaticated policy The insurer must respond to a request for verification of coverage submitted within 30 calendar days All viatical settlement contracts entered into provide the viator with an unconditional right to rescind the contract within 60 days of signing or 30 days of receiving proceeds (whichever is less)

Exclusions

Policy provisions that eliminate coverage for specified exposures. Common exclusions are death from war, acts of war, and aviation.

No-lapse guarnatee

Provision/rider that can be attached to a universal life policy guaranteeing that even if the policy cash value drops to zero or less, the policy will not lapse as long as a minimum premium is paid at a certain time

Purpose and scope

Requires insurers to provide info to purchasers of life insurance

NE Protection in Annuity Transactions Act

Set standards for the sale or marketing of annuities. An insurance producer who engages in the sale of annuity products must complete an approved one-time four-credit annuity training course

What is the name of the insured who enters into a viatical settlement

Viator

Stranger Owned Life Insurance (STOLI)

a large policy acquired by a group of investors with the specific intention of selling the policy in the secondary life insurance market and ultimately making a substantial profit when the insured dies

Terminally ill

an illness or condition from which recovery is not expected and death is expected in 24 months or less

replacement regulation

the goal of replacement regulation is to ensure that the public's financial interests are being protected in the replacement and that any replacement has a valid purpose.