State Laws Chapter 8

The maximum civil penalty that can be levied for a violation of the insurance code is__________ per violation:

$25,000 If the Superintendent determines that a violation that could result in action against a license, the Superintendent may assess a civil penalty of up to $25,000 per violation.

Penalties and Fines for Violations

If the superintendent, by written order, finds that any person has violated the insurance code, the superintendent shall issue an order requiring that person to cease and desist from engaging in the violation. In addition, the superintendent may: - Suspend or revoke the person's license to engage in the business of insurance - Order that an insurance company or insurance agency not employ the person or permit the person to serve as a director, consultant, or in any other capacity for such time as the superintendent determines would serve the public interest. No application for termination of such an order for an indefinite time shall be filed within 2 years of its effective date. - Order the person to return any payments received by the person as a result of the violation --- If the superintendent issues such an order, the superintendent shall order the person to pay statutory interest on such payments In addition, each violation the insurance code, a civil penalty of up to $3,500 for each violation but not to exceed an aggregate penalty of $35,000 in a 6 month period. A series of similar violations committed, but not in separate insurance sales transactions shall be considered a single violation. For each violation of a cease and desist order issued by the superintendent the superintendent will assess a civil penalty of up to $10,000. Cease and Desist Orders If a licensed individual violates the insurance code, is causing or is about to cause harm, the Superintendent may issue an order that the individual cease and desist from violating the law. The order must: - Be sent by certified mail, return receipt requested - Specify the particular act subject to the order and specify the date (within 15 days of the order) of a hearing. Within 15 days after objections are submitted, the Superintendent will issue a final order either confirming or revoking the Cease and Desist Order. The agent can appeal in writing the final order. Civil Penalties If the Superintendent has reasonable cause to believe that an order issued under this section has been violated, he/she may request the Attorney General to prosecute the party(s) involved in the name of the state. In response to this prosecution, the court may impose any of the following: - For each violation, a civil penalty of not more than $25,000 - Injunctive relief - Restitution - Any other appropriate relief Criminal Penalties No person licensed to sell life insurance may sell shares (or be compensated for the sale of such shares) of capital stock of any life insurance company or agency for which the person is appointed to sell life insurance. Whoever violates this law will be fined not less than $25, nor more than $500, or imprisoned not more than 6 months, or both. Whoever sells for or represents an unauthorized insurer (other than a licensed surplus lines broker), or any surplus lines broker that solicits, procures, places, or renews any insurance through an unauthorized insurer without complying with the due diligence requirements will be fined not less than $25, nor more than $500, or imprisoned not more than 1 year, or both. Whoever fails to make required reports under the insurance code, or who implements any form of advertising without complying with state laws will be fined no less than $100, nor more than $500. Whoever sells solicits, or negotiates insurance without the proper license, is guilty of a misdemeanor of the first degree. Hearings Before imposing a penalty, or denying, revoking, suspending or refusing to issue a license, the Superintendent must provide a licensee/applicant with notice of a hearing. The hearing must be served by certified mail with a return receipt requested, and sent to the last known address of the licensee/applicant. If mail service fails, the notice must be published once a week for 3 consecutive weeks in the newspaper of record in the county where the last known address is located. If the licensee/applicant has an attorney who is involved in the matter, a notice must also be mailed to him/her.

Insurance Fraud Regulation

Insurance fraud is an act committed by an individual who knowingly gives or conceals false material information to an insurer, agent, or broker with the intent to obtain insurance, an inaccurate rating, or undue claim payments. It includes such acts as: - Transferring or concealing any property belonging to an insured or insurer to avoid unfavorable claim settlements - Concealing, destroying, mutilating, altering, or making a false entry in any document that affects or relates to the property of an insurer - Withholding any document that affects or relates to the property of an insurer from a receiver, trustee, or other officer of a court entitled to its possession - Giving, obtaining, or receiving anything of value for acting or attempting to act in any judicial proceeding if the act results in or contributes to the impairment or insolvency of any insurer This applies not only to the person actually committing the act, but to any person(s) aiding, abetting or otherwise participating in the act. Every insurer must adopt an antifraud program and specify in a written plan the procedures it will follow when instances of insurance fraud or suspected insurance fraud are brought to its attention. The insurer shall identify in the written plan the person or persons responsible for the insurer's antifraud program. The plan must be developed within 90 days after obtaining its license to transact business within this state or within 90 days after beginning to engage in the business of insurance within this state and must thereafter maintain such a written plan. If an insurer modifies the procedures it follows for instances of insurance fraud or suspected insurance fraud, or if there is a change in the person or persons responsible for the insurer's antifraud program, the insurer must modify the written plan it maintains pursuant to this section. Insurance fraud is a misdemeanor of the 1st degree. If the amount of the claim that is false or deceptive is: - $1,000-$7,500, the fraud is a felony of the 5th degree - $7,500-$150,000, the fraud is a felony of the 4th degree - $150,000 or more, the fraud is a felony of the 3rd degree In the absence of fraud, no individual (including the Superintendent or an employee of the Superintendent) is subject to liability for damages (e.g. libel or slander) by virtue of filing any reports or furnishing information, without malice, required by insurance laws. No liability for damages will arise against an individual for providing or receiving information relating to suspected fraudulent insurance acts that is furnished to or received from: - Any law enforcement official, employee, or agent - The Superintendent, any employee of the Superintendent, any Insurance Fraud Bureau, or the NAIC - Any other person involved in the detection or the prevention of insurance fraud All documents, reports, and evidence in the possession of the Superintendent or the Superintendent's designee, which pertain to an insurance fraud investigation are confidential law enforcement investigatory records. As such, they are not subject to subpoena in civil actions by any court of this state. Notice of Warning All applications and claim forms must clearly contain a warning substantially as follows: "Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud." Fraud Notification If an insurer has a reasonable belief that a person is perpetrating an insurance fraud, it must notify the department of insurance. No notification is required if fraud is suspected in connection with claims of less than $1,000.

Policy Summary

The Policy Summary is a written statement describing the elements of the policy, including, but not limited to: - A prominently placed title as follows: "STATEMENT OF POLICY COST AND BENEFIT INFORMATION." - The name and address of the insurance agent or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary - The full name and home office or administrative office address of the company where the life insurance policy is to be or has been written - The generic name of the basic policy and each rider - The following amounts, where applicable, for the first 5 policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns; including, but not necessarily limited to, the years for which cost comparison indexes are displayed and the earlier of at least one age from 60-65 and policy maturity: --- The guaranteed annual premium for the basic policy --- The guaranteed annual premium for each optional rider --- The guaranteed amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider; with benefits provided under the basic policy and each rider shown separately --- The guaranteed total cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and --- Any guaranteed endowment amounts payable under the policy which are not included under cash surrender values in this paragraph - The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary must also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law. - The cost comparison indexes for 10 and 20 years but in no case beyond the premium-paying period. Separate indexes must be displayed for the basic policy and for each optional term life insurance rider. Such indexes need not be included for optional riders which are limited to benefits; such as accidental death benefits, disability waiver of premium, preliminary term life insurance coverage of less than twelve months and guaranteed insurability benefits; nor for any basic policies or optional riders covering more than one life. - This statement in close proximity to the cost comparison indexes: "An explanation of the intended use of these indexes is provided in the Life Insurance Buyer's Guide." - The date on which the policy summary is prepared The policy summary must consist of a separate document. All information required to be disclosed must be set out in such a manner as not to minimize or render any portion obscure. Any amounts which remain level for 2 or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts for the first 5 years of the policy be listed in total, not on a per thousand nor per unit basis. If more than one insured is covered under one policy or rider, death benefits must be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts can be displayed as a zero and not as a blank. Buyer's Guide The Buyer's Guide is a document that contains, and is limited to, the current buyer's guide, which has been recommended for use by the NAIC. A company must use the current buyer's guide no later than 6 months after approval by the NAIC. Duties of Insurers The insurer must provide to all prospective purchasers a buyer's guide and policy summary prior to accepting the applicant's initial premium or premium deposit. If an illustration is used in the sale of a policy, a policy summary does not have to be provided. If a policy for which application is being made contains an unconditional refund provision (free look) of at least 10 days, the buyer's guide and policy summary must be delivered prior to or at the time of policy delivery.

Duties of Existing Insurers

The existing insurer must: - Retain all replacement notifications received for at least 5 years or until the conclusion of the next regular examination conducted by the insurance department, whichever is later - Within 5 business days of being notified that a policy is being replaced, send a letter to the policyowner of the right to receive information regarding the existing policy or contract values including an in force illustration or policy summary - Upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice advising the policyowner that the release of such values may affect the policy's guaranteed elements, non-guaranteed elements, face amount or surrender value.

Definitions

Viatical Settlement Broker A viatical settlement broker is a person that, on behalf of a viator and for a fee, commission, or other valuable consideration, offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers or viatical settlement brokers. This does not include an attorney, a certified public accountant, or a financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser. Viatical Settlement Provider Viatical settlement provider means a person, other than a viator, that enters into or effectuates a viatical settlement contract. It doesn't include any of the following: - A bank, savings bank, savings and loan association, credit union, or other regulated financial institution that takes an assignment of a policy solely as a collateral for a loan - A premium finance company exempted from the licensure requirements that takes an assignment of a policy solely as collateral for a premium finance loan - The issuer of a policy - An individual who enters into or effectuates not more than one viatical settlement contract in any calendar year for the transfer of life insurance policies for any value less than the expected death benefit - An authorized or eligible insurer that provides stop loss coverage or financial guarantee insurance to a viatical settlement provider, purchaser, financing entity, special purpose entity, or related provider trust - A financing entity - A special purpose entity - A related provider trust - A viatical settlement purchaser - Any other person the superintendent determines is not consistent with the definition of viatical settlement provider A viatical settlement provider entering into a viatical settlement contract must first obtain all of the following: - If the viator is the insured, a written statement from an attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract - A document in which the insured consents in writing to the release of the insured's medical records to a viatical settlement provider or viatical settlement broker and to the insurance company that issued the policy covering the life of the insured Within 20 days after a viator executes documents necessary to transfer any rights under a policy or within 20 of entering any expressed or implied agreement, option, promise, or other form of understanding to viaticate the policy, the viatical settlement provider must give written notice to the insurer that issued that policy that the policy has or will become a viaticated policy. Viatical Settlement Contract - Right to Rescind After Receipt of Proceeds Each viatical settlement contract entered into must provide the viator with an unconditional right to rescind the contract for at least 15 calendar days after the receipt of the viatical settlement proceeds. If the insured dies during the rescission period, the viatical settlement contract is deemed to have been rescinded, subject to repayment of all viatical settlement proceeds to the viatical settlement provider. If a viatical settlement contract is rescinded by the viator, ownership of the insurance policy or certificate reverts to the viator or to the viator's estate if the viator is deceased, regardless of any transfer of ownership of the policy or certificate by the viator, viatical settlement provider, or any other person. Stranger Originated Life Insurance (STOLI) Any insurance company that issues life insurance policies in Ohio must include questions in its life insurance applications that are structured to identify and prevent stranger-originated life insurance. A company may comply by use of an addendum to its application forms in use. A company that issues more than one policy form is not required to include identical questions related to the characteristics of STOLI on all of its applications for life insurance. Questions may vary based on the type of product being applied for, the amount of insurance being applied for and the likelihood that such policy is a STOLI transaction. Insurers must file the amended application forms with the Superintendent within 12 months following the effective date of this rule. Violations of this rule are considered an unfair and deceptive trade practice.

The Superintendent has the ability and duty to take all of the following actions, except: A) Aid in the interpretation of any law B) Create and update the insurance code (laws) C) Inquire into violations of the insurance law D) Regulate the internal affairs of the Department of Insurance

B) Create and update the insurance code (laws) The creation of the law is legislative process, which falls to the state legislature.

Replacement Duties of Producers

A producer who initiates an application must submit to the insurer a statement signed by both the applicant and the producer declaring whether the applicant has existing policies or contracts. If the answer is "no," the producer's duties with respect to replacement are complete. If answer is "yes", the producer must present the applicant with a Notice of Replacement, to be signed by both the applicant and the producer, certifying the notice has been read aloud by the producer or the applicant did not wish the notice to be read aloud. A copy must be left with the applicant. The Notice of Replacement must state whether each policy or contract will be replaced, or whether a policy will be used as a source of financing for the new policy or contract.

General Grounds for Disciplinary Action

Class A Offenses Grounds for disciplinary action(s) against an agent/broker include but are not limited to: - Providing incorrect, misleading, incomplete, or materially untrue information in a license or appointment application - Violating or failing to comply with any insurance law, rule, subpoena, consent agreement, or order of the Superintendent or of the insurance authority of another state - Obtaining or attempting to obtain a license, or commit any insurance transaction through misrepresentation or fraud - Improperly withholding, misappropriating, or converting any money or property received in the course of doing insurance business - Intentionally misrepresenting the terms and benefits of any actual or proposed insurance contract - Having been convicted of a felony or a misdemeanor involving: --- The misuse or theft of money or property belonging to another --- Fraud, forgery, dishonest acts, or breach of a fiduciary duty --- Moral turpitude - Demonstrating incompetence, untrustworthiness, or financial irresponsibility - Having a license, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory - Forgery, that was known or even should have been known - Failing to respond within 21 days to an inquiry from the Department of Insurance regarding a claim - Using notes or any other reference material to complete an examination for a license - Knowingly accepting insurance business from an individual who is not licensed - Failing to comply with any administrative or court order directing payment of state income tax - Causing or permitting a policyholder or applicant to designate the agent or the agent's family member as the beneficiary, unless insurable interest exists - Transferring or placing insurance with an insurer other than the one expressly chosen by the applicant, without the applicant's consent or absent extenuating circumstances - In the case of an agent that is a business entity, failing to report an individual licensee's violation to the department when the violation was known or should have been known by one or more of the partners, officers, managers, or members of the business entity - Using professional designations that have not been earned or conferred - Obtaining a premium loan in an insured's name without that person's knowledge and written authorization - After an appointment has been terminated, using any of an insurer's materials in a manner that would cause a reasonable person to believe that the licensee was acting on behalf of or otherwise representing the insurer - Failing to fulfill a refund obligation to a policyholder or applicant in a timely manner: --- 30 days after the date the policyholder, applicant, or insurer takes or requests action resulting in a refund --- 30 days after the date of the insurer's refund check, if the agent is expected to issue a portion of the total refund --- 45 days after the date of the agent's statement of account on which the refund first appears - Using a license primarily for controlled business - Conducting any insurance transactions without proper licensure or authorization - Failing to disclose to an applicant for insurance or policyholder upon accepting a premium or an order to bind coverage from the applicant or policyholder, that the person has not been appointed by the insurer - Having any professional license suspended or revoked as a result of a mishandling of funds or breach of fiduciary responsibilities or having been subject to a cease and desist order or permanent injunction for unlicensed activities - Soliciting, procuring an application for, or placing, either directly or indirectly, any insurance policy when the person is not authorized under this chapter to engage in such activity - Soliciting, marketing, or selling any product or service that offers benefits similar to insurance, but is not regulated by the Superintendent, without fully disclosing to the prospective purchaser that the product or service is not insurance and is not regulated by the Superintendent Class B Offenses Grounds for disciplinary action(s) against an agent/broker include but are not limited to: - Failing to submit an insurance application within 7 days after accepting a premium - Failing to provide a written response to the department of insurance within 21 calendar days after receipt of any written inquiry from the department, unless a reasonable extension of time has been requested of, and granted by, the Superintendent

General Insurance

Surplus Lines Surplus Lines insurance provides coverage when insurance cannot be obtained from admitted insurers. However, it cannot be utilized solely to receive lower cost coverage than would be available from an admitted carrier. Each State regulates the procurement of Surplus Lines insurance in its State. Surplus Lines insurance can be placed through non-admitted carriers; non-admitted business must be transacted through a Surplus Lines Broker or Producer. Do Not Call List The Federal Trade Commission amended the Telephone Consumer Protection Act (TCPA) to give consumers a choice about receiving unwanted telemarketing calls. It is illegal for most telemarketers or sellers to call a number listed on the National Do Not Call Registry. Companies must update their list at least once every 31 days. The TCPA also limits the hours that telemarketers may call noncustomers at home to between the hours of 8 am - 9 pm.

Unfair Claims Settlement Practices

The following acts are considered unfair or improper settlement practices in Ohio: - Failing to maintain claim data for a minimum of 3 years or until the completion of the state's next financial examination - Misrepresenting pertinent facts or policy provisions relating to coverages at issue - Denying a claim on the grounds of a specific policy provision, condition, or exclusion without making reference to the provision, condition, or exclusion - Failing to investigate and reply to (that is, deny or accept) claims within 21 calendar days after receiving notice - Forcing insureds to sue by offering less than the amount due - Failing to adopt and implement standards for the prompt investigation and settlement of claims arising under an insured's policies - Failing to attempt in good faith, to effectuate a prompt, fair, and equitable settlement of a claim in which liability has become reasonably clear - Failing to notify the claimant that more time is needed for investigation. Claimants must be notified within the initial 21-day investigation period if more time is needed. Thereafter, claimants must be notified at least every 45 calendar days of the investigation's status. - Attempting to settle a claim for less than a reasonable person would believe he/she is entitled based on written or printed advertising material - Attempting to settle claims on the basis of an application that was altered - Making known to insureds or claimants a policy of appealing from arbitration awards - Delaying the investigation or payment of a claim by requiring a preliminary claim report, and later requiring a formal proof of loss containing the same information - Failing to promptly settle a claim where liability has become reasonably clear under 1 portion of the policy in order to influence settlements under other portions of the policy - Failing to pay the agreed upon settlement amount within 5 working days of the agreement - Reducing a claim amount because of betterment deductions without specifically itemizing such reductions on the written estimate The following are not considered unfair claim settlement practices: - Failing to pay a claim prior to receiving a proof of loss - Failing to pay a claim for services received prior to the coverage effective date - Failing to pay a claim when a policy is in a lapsed status - Settling a claim by arbitration The insurer has 15 working days to acknowledge the receipt of a first-party claim, provide necessary claim forms, and reply to all other pertinent communications from the claimant. Insurers have 21 days to respond to Department of Insurance requests for claim information. The insurer may request from the insured a proof of loss, which is a statement that provides details of the loss and is accompanied by any supporting documentation. The insured has 60 days to submit a proof of loss to the insurer. A person cannot accept a commission or other compensation for selling, soliciting or negotiating insurance in Ohio if that person is required to be licensed but is not so licensed. If any person asks to be excused from attending and testifying or from producing any books, papers, records, correspondence, or other documents at any hearing on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture and notwithstanding is directed to give such testimony or produce such evidence, he must none the less comply with such direction. However, he will not be prosecuted or subjected to any penalty or forfeiture for testimony or evidence given. No testimony given or evidence produced will be used against him upon any criminal action, investigation, or proceeding, provided that he will be exempt from prosecution or punishment for any perjury committed by him while so testifying. Any unauthorized foreign/alien insurer who is delivery insurance contracts, soliciting, collecting fees, or other insurance transactions is deemed to have an appointment by such insurer of the superintendent of insurance and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all statements of charges, notices, and lawful process in any proceeding instituted in respect to the misrepresentations, or in any action, suit, or proceeding for the recovery of any penalty therein provided.

Supplemental Illustrations

A supplemental illustration may also be provided so long as: - It is appended to, accompanied by or preceded by a basic illustration - The non-guaranteed elements shown are not more favorable than the corresponding elements used in the basic illustration - It contains the same statement required of a basic illustration that non-guaranteed elements are not guaranteed Supplemental illustrations must include a notice referring to the basic illustration for guaranteed elements and other important information.

Which of the following people would be required to meet the prelicensing education requirements established for agents by the state of Ohio?

An applicant with law degree from Ohio State Must be an insurance degree for exemption

Illustration Delivery and Record Retention

If a basic illustration is used in the policy sale and the policy is applied for as illustrated, a signed copy of that illustration must be submitted to the insurer with the application. A copy must also be provided to the applicant. If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued must be sent with the policy and labeled "Revised Illustration." If no illustration is used in the policy sale or if the policy is applied for other than as illustrated, the agent must so certify in writing. The applicant must acknowledge on the same document that no illustration was provided at the time of sale but that one will be provided no later than at the time of policy delivery. A signed copy of the illustration or certification must be retained by the insurer until 3 years after the policy is no longer in force. A copy need not be retained if no policy is issued.

Living Benefit Provisions/Riders

If an individual life policy provides long-term care benefits, the insurer must provide the policyholder a semi-annual report that includes: - A statement that explains how the long-term care insurance benefits affect the other policy terms, including the death benefit - A description of the available long-term care insurance benefits, including the length of the benefit period and any guaranteed lifetime benefits - The exclusions, reductions, and limitations on benefits for long-term care insurance - The impact of exercising other policy rights on the long-term care benefits - A description of any cost guarantees, for long-term care insurance benefits - All current and projected maximum lifetime benefits - Whether or not long-term care inflation protection is available The insurer must provide a monthly report to the policyholder while the policy's long-term care benefit is being paid. The monthly report must include a description benefits paid, an explanation of any resulting changes to policy values, and the amount of remaining long-term care benefits.

Policy Forms/Rates/Exceptions - Rates

Ohio limits the fixed interest rate on policy loans to a maximum of 8% per year. Alternatively, the state allows adjustable interest rates on policy loans, which must be the lower of: - The published monthly average ending 2 months before the rate's determination date; or - The rate used to compute the policy cash surrender values during the loan period plus 1% per year Insurers issuing credit life and/or accident and health insurance must file their schedules of premium rates with the Superintendent. They must also file their formulas for computing refunds when debtors pay-off loans ahead of schedule. Such formulas must be approved by the Superintendent. Adjustable rates must be determined at least once every 12 months, but no more frequently than once in any 3-month period. Adjustable rates may be increased if the published rates on which they are based increase .5% per year. The adjustable rate must be reduced whenever the published rates decrease by .5% or more per year. When a policy loan is made, the insurer must notify the policyholder of the current interest rate being charged. Insureds must also be notified in advance of any interest rate increase. Premium rates for credit life insurance or credit accident and health insurance cannot exceed those on file with the Superintendent. No evidence of coverage can be delivered, issued for delivery, renewed, or used unless it contains a clear, concise, and complete statement of the premium rate with respect to individual and conversion contracts, and relevant copayment and deductible provisions with respect to all contracts. The statement of the premium rate, however, may be contained in a separate insert.

Beneficiaries

The Superintendent may suspend, revoke, or refuse to renew a license, assess a civil penalty, or impose any other sanction on a licensee for causing or permitting a policyholder or applicant for insurance to designate the insurance agent or agent's spouse, parent, child, or sibling as the beneficiary of a policy or annuity, or owner or beneficiary of a trust funded by a policy or annuity sold by the agent unless the agent or a relative of the agent is the insured or applicant. Life insurance may be procured to benefit a person's spouse, children, other dependents, or a creditor as appointed and provided for in the policy. A religious, charitable, scientific, literary, educational, or other institution or entity considered to be nonprofit by the IRS, may be the owner of or designated beneficiary of life insurance issued on the life of an individual. Any such entity or institution will have an insurable interest and is entitled to enforce all the rights and collect the benefits under the policy. Exemption of Proceeds from Claims of Creditors All benefits payable or entitled to be payable to a designated beneficiary upon the death of the insured will be free from all claims of creditors of the insured or annuitant. If benefits are owed to a creditor in accordance with the terms of the contract, the company issuing the policy will be discharged of any liability. Insuring the Life of a Spouse A married person may insure the life of a spouse for the sole use of receiving such benefits as the beneficiary. Benefits will be paid to the beneficiary free from the claims of creditors of the insured and the spousal beneficiary. Beneficiary in case of Death of Spouse In the event of the death of a spouse before the death of the insured, benefits may be made payable to their children, or guardian if under age, for their benefit as designated in the policy. If there are no children or other named beneficiary, the policy will become the property of the named insured and payable to their estate. Beneficiary Revocation Unless stated differently under a divorce decree, the termination of marriage revokes the designation of a spouse as the beneficiary of death benefits. Accelerated Benefit (Terminal Illness) Accelerated benefits are payable under a policy, when a qualifying event occurs that meets the following criteria: - The benefits are payable to the policyholder during the lifetime of the insured and upon the occurrence of a medical condition that drastically reduces the insured's life span, or confines the insured to an institution for the remainder of his/her life - The benefits amounts payable are fixed at the time accelerated benefits are paid The benefits reduce the death benefit. Accelerated benefits do not include benefits designed to provide or supplement long-term care insurance.

License Denial, Probation, Surrender, Suspension, Revocation, or Refusal to Issue or Renew

The Superintendent may suspend, revoke, or refuse to renew a person's license for any of the following reasons: - Providing incorrect, misleading, incomplete, or materially untrue information in a license or appointment application - Failing to submit an insurance application within 7 days after accepting a premium - Intentionally misrepresenting the terms and benefits of any actual or proposed insurance contract - Having been convicted of a felony or a misdemeanor involving: --- The misuse or theft of money or property belonging to another --- Fraud, forgery, dishonest acts, or breach of a fiduciary duty --- Moral turpitude - Having a license, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory - Cheating on a licensing exam - Forging any application or any document used in an insurance transaction - Failing to provide a written response to the department of insurance within 21 calendar days after receipt of any written inquiry from the department, unless a reasonable extension of time has been requested of, and granted by, the Superintendent - Committing any unfair trade act or practice - Demonstrating incompetence, untrustworthiness, or financial irresponsibility - Failing to pay federal, state, or local income taxes - Failing to appear to answer questions before the superintendent after being notified in writing by the superintendent of a scheduled interview, unless a reasonable extension of time has been requested of, and granted by, the superintendent Before the Superintendent suspends, revokes a person's license, or applies another penalty, he/she must give the licensee an opportunity for a hearing. If the Superintendent determines that a violation described in this section has occurred, the Superintendent may take one or more of the following actions: - Assess a civil penalty of up to $25,000 per violation - Assess administrative costs to cover the expenses incurred by the department in the administrative action - Suspend all of the person's licenses - Permanently revoke all of the person's licenses for all lines of insurance - Refuse to issue a license - Refuse to renew a license - Impose a minimum of a 2-year suspension on all of the person's licenses for all lines of insurance - Accept a surrender for cause offered by the licensee, which would be for at least 5 years and prohibit the licensee from seeking any insurance license No agent can surrender their license if the Superintendent is investigating any allegation of wrongdoing by the agent. A licensee subject to an agency disciplinary action has the right to appeal the action, and receive a hearing before the Court of Common Pleas in Franklin County. The license must provide the agency with a notice of appeal within 15 days of their action.

Duties of Replacing Insurers

The replacing insurers must: - Notify any other insurers that may be affected by a proposed replacement within 5 business days of receiving a completed application indicating replacement. If an existing insurer requests a copy of the proposed replacing policy or disclosure documents, they must be supplied within 5 business days. - Maintain copies of the Notice of Replacement for at least 5 years or until the next regular examination by the insurance department, whichever is later - Provide to the policyowner a notice of the right to return the policy within 30 days of delivery and receive an unconditional full refund of all premiums or considerations paid on it.

Life Insurance Basics - Insurable Interest

An employer, or a trust that is sponsored by an employer for the benefit of its employees, has an insurable interest in the lives of its employees, directors, and retired employees. On the lives of its non-management and retired employees, insurable interest is limited to the amount of the aggregate projected gross liabilities under the employee benefit plans. Also, a married person has an insurable interest in their spouse and can cause insurance to be placed on that spouse.

A licensee can be qualified for any of the following lines of authority:

Life (insurance coverage on human lives) including benefits of endowment and annuities, and can include benefits in the event of death or dismemberment by accident and benefits for disability income Accident and health, which is insurance coverage for sickness, bodily injury, or accidental death, and can include benefits for disability income Property, which is insurance coverage for the direct or consequential loss or damage to property of any kind Casualty, which is insurance coverage against legal liability, including coverage for death, injury, or disability or damage to real or personal property Variable life and variable annuity products, which provide insurance coverage under variable life insurance contracts and variable annuities Personal lines, which is property and casualty insurance coverage sold to individuals and families for noncommercial purposes Credit, which is limited line credit insurance Title, which is insurance coverage against loss or damage suffered by reason of liens against, encumbrances upon, defects in, or the unmarketability of, real property Surety bail bond Any other line of authority designated by the Superintendent Portable electronics insurance Surplus Lines Broker - A broker negotiates coverage and obtains insurance (except life) on property or persons in Ohio from insurers not authorized to transact business in this state - The applicant must be a resident of the United States - The person must hold both a Property and Casualty license - The license expires on January 31st on the year following the year it was issued - The applicant must post a $25,000 penal bond - Before soliciting from an unauthorized insurer, the broker must comply with due diligence requirements of Ohio. The broker must contact at least 5 (or as many as he/she represents) authorized insurers for which the broker has written business. If after 10 days the broker has not received a declaration from any of these authorized insurers, he/she may place the risk with an unauthorized insurer.

Standard Provisions

Entire Contract The policy and the application constitute the entire contract between the parties and are incontestable after it has been in force for 2 years, except for nonpayment of premiums, violations of the conditions relating to naval or military service in time of war or to aeronautics, and at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident or by accidental means. Payment of Premiums All premiums must be payable in advance to either the home office or to an agent of the company. Grace Period All life policies must have a grace period of 1 month after the first premium paid. The extension may be subject to an interest charge and coverage will continue in force. If the insured dies during the grace period, the overdue premium will be deducted in any settlement under the policy. Reinstatement If a policy lapses due to nonpayment of premium, it may be reinstated within 3 years after the lapse, if the person provides evidence of insurability and repays all outstanding premiums, plus interest. Misstatement of Age If the age of the insured has been understated, the amount payable under the policy will equal the amount of insurance the premium paid would have purchased at the correct age. Payment of Claims (Death Settlement) When a policy becomes a claim by the insured's death, settlement will be made no later than 2 months after receiving due proof of death.

Renewal/Nonrenewal

An agent who wishes to renew their insurance agent license must do all of the following: Complete a renewal application Complete CE credit requirements prior to submitting a license renewal application Pay any required fees - In addition to the license renewal fee, the fee for filing a renewal application during the late renewal period is $50 - In addition to the license renewal fee, the fee for filing a renewal application during the reinstatement period is $100 - The Superintendent will waive the fee due to active military service; the Superintendent can waive the fees due to long-term medical disability or other extenuating circumstances Individual resident and nonresident insurance agent licenses must renew their license by the last day of their birth month. The date of initial licensure to the date of the first license expiration can't be less than 18 months or more than 29 months. On-going license expiration dates after the initial license renewal for individual resident and nonresident insurance agent licenses are the last day of the agent's birth month every 2 years thereafter. Nonresident business entities must renew by the last day of September in odd numbered years. On-going renewal dates are the last day of September every odd numbered year thereafter. Resident business entities must renew by the last day of September in even numbered years. On-going renewal dates are the last day of September every even numbered year thereafter. All surety bail bond agents must renew their surety bail bond license by the last day of February each year. An applicant must not have committed any act that is a ground for the refusal to issue, suspension of, or revocation of a license. If an individual or business entity does not apply for the license renewal on or before the renewal date, a late renewal application may be submitted, along with all applicable fees, prior to the first day of the second month following the license renewal date. A license that is not renewed as required is automatically suspended for nonrenewal on the first day of the second month following the renewal date. If a license is suspended for nonrenewal, the individual or business entity is eligible to apply for reinstatement of the license within the 12-month period following the date by which the license should have been renewed. A license that is suspended for nonrenewal that is not reinstated is automatically canceled unless the Superintendent is investigating any allegations of wrongdoing.

Insurance Regulation

Licensing The licensing process protects the public interest by ensuring that licensees are competent and qualified to hold an insurance license and are held accountable for their actions. Maintenance and Duration Qualifications The Superintendent must issue a resident agent license to: An individual applicant who: - Is at least 18 years of age - Has not done anything to justify denying, suspending, or revoking the license - If required, has met prelicensing education and exam requirement - Is trustworthy and of good character - Is registered with the financial industry regulatory authority if applying for variable life-variable annuity line of authority - Has consented to a criminal records check and the results of the applicant's criminal records check are determined to be satisfactory - Is a United States citizen or has provided proof of having legal authorization to work in the United States A business that: - Is registered, or maintains its main office, in Ohio - Has designated a licensed agent responsible for its compliance - Has not done anything to justify denying, suspending, or revoking the license A license must state: - The licensee's name - The license's number, issue date, and expiration date - The lines of authority granted - Any other information the Superintendent requires

Statement, Incontestability, Prohibited provisions, Modifications

Statement of the Insured All statements made by the insured in the application must, in the absence of fraud, be considered representations and not warranties. Incontestability After a life policy issued in Ohio has been in force for 2 years, and 3 annual premiums have been received, an insurer is prohibited from contesting any claim, other than fraud, on the policy because of errors, omissions, or misstatements in the policy application. This provision does not apply to misstatements of age. Prohibited Provisions The following provisions are prohibited in all life insurance policies issued or delivered in Ohio: - Forfeiture for failure to repay any policy loan (principal and or interest) while the total policy indebtedness is less than its loan value - Requirement that legal action against the insurer must be initiated in less than 5 years - Settlement at policy maturity for less than the face value (minus any outstanding indebtedness) - Limiting policy dividends to only select participating policies and select policy holders - Preferential benefits or advantages that will not be available to policies purchased from the company at future dates or under other circumstances, the effect of which is to discriminate against those future policies Modifications At the policyholder's request, any life insurance company may convert a life policy, endowment policy, or annuity into a policy of another insurance plan or annuity, on or after the effective date of the original policy or annuity. If a newly written policy or annuity is issued prior to the application date for exchange, alteration, or conversion, the amount of insurance or annuity on the changed plan may not exceed the greater of the following amounts: - The amount that the premium paid for the original policy or annuity would have purchased, at the age of the insured on the effective date of the original policy or annuity, on the newly written policy or annuity plan - The amount of the original policy or annuity

Appointment Procedures

Agent Appointment An insurance agent shall not act as an agent of an insurer unless the insurance agent is appointed as an agent of the insurer. An insurer must file a notice of appointment with the Superintendent within 30 days after the date the agency contract is executed, or the first insurance application is submitted, whichever is earlier. An insurer must pay the Superintendent a $20 fee for every appointment. By appointing an insurance agent, an insurer certifies that the person is competent, financially responsible, and suitable to represent the insurer. The insurer must also certify that the appointment is not for the purpose of writing controlled business. While an appointment remains in force, an insurer is bound by the acts of the appointed person's actual and apparent authority as its agent. Generally, agent appointments and terminations must be submitted electronically. Appointments automatically renew on July 1st of each year unless terminated by the insurer. The Superintendent will bill insurers for appointment and termination fees. Property and casualty license holders and life and health license holders have a single fee, but a separate fee will be billed for variable life and variable annuity products. Cancellation of Appointment If an agent's license is surrendered, revoked, or suspended, all appointments held by the agent are void. If a new license is issued to that person or if that person's previous license is reinstated, a new appointment(s) are required. Termination Notification An insurer that terminates the appointment, employment, contract, or other insurance business relationship with an agent must notify the Superintendent within 30 days after the termination effective date. The insurer must provide any additional information, documents, records and other relevant data. If terminated for any disciplinary action set forth by state law as grounds for disciplinary action, the insurer or authorized representative of the insurer must promptly notify the Superintendent of any additional information the insurer discovers upon further review or investigation. Within 15 days after notifying the Superintendent, an insurer must mail a copy of the notification to the agent at the agent's last known address. If terminated for any disciplinary action set forth by state law as grounds for disciplinary action, the notification must be sent by certified mail, return receipt requested, postage prepaid, or by overnight delivery using a nationally recognized carrier. Within 30 days after receiving a copy of such notification, an agent may file written comments with the Superintendent. At the same time, the agent must file a copy of the comments to the insurer. Comments become part of the Superintendent's file on the agent and must accompany every copy of any report distributed or disclosed for any reason about the agent.

Reporting of Felony and Crimes of Moral Turpitude

A licensee must notify the Superintendent of any administrative action taken against the licensee in another jurisdiction or by another governmental agency within 30 days after the matter's final disposition. A licensee must notify the Superintendent of Insurance if the licensee is subject to any criminal prosecution, by any jurisdiction, other than for a misdemeanor traffic violation. The licensee must provide notice within 30 days after his/her initial appearance before a judge or magistrate. In addition, the licensee must provide the Superintendent with a certified copy of the court's entry or order that reflects the final disposition of the case, within 30 days after its final disposition. The superintendent may suspend, revoke, or refuse to issue or renew any license of an insurance agent, assess a civil penalty, or impose any other sanction or sanctions authorized for any of the following reasons: - Having been convicted of or pleaded guilty/no contest to a felony regardless of whether a judgment of conviction has been entered by the court - Having been convicted of or pleaded guilty/no contest to a misdemeanor that involves the misuse or theft of money or property belonging to another, fraud, forgery, dishonest acts, or breach of a fiduciary duty, that is based on any act or omission relating to the business of insurance, securities, or financial services, or that involves moral turpitude regardless of whether a judgment has been entered by the court Policy/Application Signature The Superintendent may suspend, revoke, or refuse to issue or renew any license of an insurance agent, as well as assess a civil penalty, or impose any other sanctions if that agent forges or causes the forgery of an application for insurance, or the forgery of any document related to or used in an insurance transaction.

Requirements

A person must have an insurance license in order to obtain an application, give a premium quote, discuss coverages, solicit, negotiate, write, deliver, renew, or bind. The classes of insurance requiring a license are Life, Accident and Health including Health Insuring Corporation products; Variable Life and Variable Annuity products; Property and Casualty; Personal Lines; Credit, Title, and Surety Bail Bonds. Each candidate must complete 20 hours of authorized prelicensing education for each of the following exams: - Life and Variable Products - Accident and Health - Property - Casualty - Surety Bail Bond - Personal Lines Pre-licensing education is valid for 180 days from the date of completion. You will to need pass your state exam within this time frame. Persons with a Bachelor or Associate's degree in insurance from an accredited institution are exempt from agent prelicensing requirements. Any person with a professional designation of Chartered Property and Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU) is exempt from agent prelicensing and examination requirements. Prior to submitting an application for insurance licensing, a resident must request a criminal background check for submission to the Superintendent. Applicants must also submit a full set of fingerprints.

Resident/Nonresident Licensees

A person who is not a legal resident of Ohio may be licensed to act in this state as a nonresident agent or broker without taking a written examination, providing: - The applicant otherwise complies with state licensing requirements - The other state certifies that the applicant currently holds a valid license Unlicensed residents of bordering states (Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia) may qualify for a nonresident agent's license by completing Ohio prelicensing and examination requirements. To get a nonresident license from Ohio, an individual must submit the NAIC uniform application and pay any required fees. If his/her home state does not issue nonresident licenses on the same basis, the nonresident must meet the requirements for a resident agent's license. To get a nonresident license, a nonresident business must: - Submit a nonresident uniform business entity application - Be authorized to do business in Ohio - Designate a licensed individual agent responsible for the entity's conduct To issue a nonresident license, the Superintendent must find that the applicant: - Is currently licensed in good standing in his/her home state and that state issues nonresident agent licenses to Ohio residents on the same basis - Submitted a license request and a copy of the license application he/she submitted to his/her home state - Is trustworthy and of good character - Has not done anything to justify denying, suspending, or revoking the license An agent must notify the Department within 30 days after any change in name, address, or resident license status. The Department may revoke a nonresident license for failing to maintain a resident license in any other state. In order to determine an applicant's status in another state, the Superintendent may use the NAIC's producer database or require a certification letter from the applicant's home state. Change in Name, Address, Email, Telephone Number If a licensed agent changes his/her address within his/her state or residence, he/she must file a change of address with the Superintendent within 30 days after making the change. This includes nonresident licensees who change their state of residence. If a licensed agent changes his/her state of residence, he/she must file a change of address with the Superintendent and provide certification from the new state within 30 days after making the change. If the agent complies with the change of address filing requirement, the license will be changed to a nonresident license and no fee or license application will be required. If a licensee changes his or her name or telephone number, or email address this too must be reported to the Superintendent within 30 days.

Replacement

A replacement is any transaction in which new life insurance is purchased, while the existing policy is: - Lapsed, forfeited, surrendered or terminated - Amended to reduce the benefit or term of the in force coverage - Reissued with a reduction in cash value - Converted to reduced paid-up insurance, continued as extended term insurance, or reduced in value by using nonforfeiture benefits or other policy values - Pledged as collateral or subjected to borrowing for amounts in aggregate of 25% of the policy loan value The following types of policies are exempt from replacement regulations: - Credit life insurance - Group life insurance or annuities - A change or conversion privilege within an existing policy - A policy issued by the same insurer as the existing policy - An existing non-convertible term life insurance policy that will expire in 5 years or less and cannot be renewed - Immediate annuities that are purchased with proceeds from an existing contract - Structured settlements Conservation is any attempt by the existing insurer or agent to keep a policy in force where replacement is contemplated.

License Surrender and Inactive Status

A resident insurance agent license will be perpetual unless surrendered by the licensee, or suspended or revoked by the Superintendent. License Surrender Any person licensed as an agent in Ohio may at any time surrender any or all licenses held unless the agent is being investigated by the Superintendent. Inactive Status An agent, other than a business entity, who is no longer engaged in insurance in any capacity that requires a license, may apply to the Superintendent for inactive status. The Superintendent may grant inactive status only if satisfied that the person is no longer engaged in and has no intent to engage in any activity that requires an agent's license for at least 24 months. At the time of application for inactive status, the agent must be in good standing with the Superintendent and must be in compliance with continuing education requirements. Once granted inactive status, the person is exempt from continuing education requirements.

Agent Regulation - Fees

An agent may charge a consumer a fee if all of the following conditions are met: - The fee is disclosed to the consumer in a manner that separately identifies the fee and the premium - The fee is not calculated as a percentage of the premium - The fee is not refunded, forgiven, waived, offset, or reduced by any commission earned or received for any policy or coverage sold - The amount of the fee, and the consumer's obligation to pay the fee, are not conditioned upon the occurrence of a future event or condition, such as the purchase, cancellation, lapse, declination, or nonrenewal of insurance - The agent discloses to the consumer that the fee is being charged by the agent and not by the insurance company, that neither state law nor the insurance company requires the agent to charge the fee, and that the fee is not refundable - The consumer consents to the fee - The agent, in charging the fee, does not unfairly discriminate A fee may not be charged for taking or submitting an initial application for coverage with any one insurer or different programs with the same insurer; or processing a change to an existing policy, a cancellation, a claim, or a renewal, in connection with any of the following personal lines policies: - Private passenger automobile - Homeowners, including coverage for tenants or condominium owners, owner-occupied fire or dwelling property coverage, personal umbrella liability, or any other personal lines-related coverage whether sold as a separate policy or as an endorsement to another personal lines policy - Individual life insurance - Individual sickness or accident insurance - Disability income policies - Credit insurance products An agent may charge a fee for agent services in connection with a policy issued on a no-commission basis if the agent provides the consumer with prior disclosure of the fee and of the services to be provided. In the event of a dispute between an agent and a consumer regarding any required disclosure, the agent has the burden of proving that the disclosure was made. Anyone who violates these regulations will have engaged in an unfair trade practice. This section does not apply with respect to any expense fee charged by a surety bail bond agent to cover the costs incurred by the surety bail bond agent in executing the bail bond.

Agent Regulation Commissions and Compensation

An insurance company can pay commissions or compensation only to a properly licensed (and appointed, if applicable) agent of the company. An unlicensed person may be compensated for a referral to a licensed agent so long as the person does not discuss specific insurance policy terms and conditions. The compensation must be a fixed dollar amount for each referral and cannot depend on whether the referred person purchases an insurance product. A licensed agent of an insurance company may pay commissions to another licensed agent for the procurement of insurance as long as both agents are licensed in the same line and the insurance companies are authorized to do business in this state. Such compensation cannot be based on the policy premium amount. A licensed life agent in Ohio can pay a commission to his/her subagent who writes business in another state if the subagent is licensed as a life agent by the state of his/her residence. A person cannot accept a commission or other compensation for selling, soliciting or negotiating insurance in Ohio if that person is required to be licensed but is not so licensed. An insurer must pay commissions or other compensation for any activity requiring a license to the licensee's legal or trade name. An agent may do any of the following: - Pay commissions to an agent licensed for the appropriate line of business who is not appointed with the same insurer - Assign commissions to an unlicensed person or entity under a written agreement as long as the assignment is not a mere pretext for an unlawful commission or fee payment An agent or insurer may pay an unlicensed person or organization: - For rendered administrative services as long as the payment is reasonable and does not reflect sales production - To cover the production costs for an endorsement

Insurance Information Privacy

An insurance company or agent must provide a notice of information practices regarding insurance transactions to all applicants/policyholders. An abbreviated notice may be given, but the insurer must supply the full notice to the policyholder if it's requested. In the case of a policy renewal, a notice must be provided no later than the policy renewal date, except that no notice must be required in connection with a policy renewal if either of the following apply: - Personal information (any individually identifiable information gathered in connection with an insurance transaction from which judgments can be made about an individual's character, habits, avocations, finances, occupation, general reputation, credit, health, or any other personal characteristics; includes an individual's name and address and medical record information but does not include privileged information) is collected only from the policyholder or from public records - The required, written notice has been given within the previous 24 months In the case of a policy reinstatement or change in insurance benefits, a notice must be provided no later than the time a request for a policy reinstatement or change in insurance benefits is received by the insurance institution, except that no notice is required if personal information is collected only from the policyholder or from public records. The required notice must be in writing and state all of the following: - Whether personal information may be collected from persons other than the individual or individuals proposed for coverage - The types of personal information that may be collected and the types of sources and investigative techniques that may be used to collect such information - The types of disclosures allowed and the circumstances under which such disclosures may be made without prior authorization. However, only those circumstances need be described that occur with such frequency as to indicate a general business practice - A description of the insured's rights and the manner in which such rights may be exercised - That information obtained from a report prepared by an insurance support organization may be retained by the insurance support organization and disclosed to other persons In lieu of the notice, the insurer or agent may provide an abbreviated notice informing the applicant or policyholder of all of the following: - Personal information may be collected from persons other than the individual or individuals proposed for coverage - Such information as well as other personal or privileged information subsequently collected by the insurance institution or agent may in certain circumstances be disclosed to third parties without authorization - A right of access and correction exists with respect to all personal information collected - The notice will be furnished to the applicant or policyholder upon request It's illegal to use false pretenses to acquire information from an insurance institution, agent, or insurance support organization. Whoever violates this rule is guilty of a felony of the 4th degree.

State Regulation Acts Constituting Insurance Transactions

Any of the following acts are defined as an insurance transaction: - Issuing or delivering contracts of insurance to residents of Ohio or to corporations authorized to do business therein - Making or proposing to make any insurance contracts - Soliciting, taking, or receiving any application for insurance - Receiving or collecting any premium, commission, membership fee, assessment, dues, or other consideration for any insurance contract or any part of one - Disseminating information as to coverage or rates, forwarding applications, inspecting risks, fixing rates, investigating or adjusting claims or losses, or transacting any matters subsequent to effecting a contract of insurance and arising out of it - The law defines "negotiate" to mean that one directly confers with, or advises someone as to the terms, benefits, or conditions of a particular insurance contract, provided the person that is conferring or offering advice either sells insurance for an insurer (acts as a solicitor or agent), or arranges the purchase of insurance for buyers (acts as a broker or counselor) To "sell" means to exchange or provide a contract of insurance to a purchaser in exchange for money (consideration) behalf of an insurer. To "solicit" means to attempt to sell insurance to someone; it also means to ask or urge a person to apply for a particular kind of insurance from a particular insurer. No person may sell, solicit, or negotiate insurance in Ohio unless they are licensed in that line of authority. No company, corporation, or association, may engage in the business of insurance, unless it is expressly authorized by the applicable state laws and those laws have been complied with.

Unfair Insurance Trade and Claims Settlement Practices

Anyone who commits any of the following acts is guilty of a 4th degree misdemeanor (an agent is justified in disobeying an insurer's instructions to commit an illegal act). Rebating Offering any rebate, discount of premium, or credit not specified in the policy is illegal. It is not rebating to: - Readjust group policy premiums based on actuarial data - Give life policyholders surplus from nonparticipating insurance - Reduce industrial life policyholders' premiums to reflect a decrease in the insurer's collection expenses - Pay to an authorized officer, agent, or solicitor of such company, association, or partnership of commissions at customary rates on policies or contracts of insurance effected through him by which he himself is insured, provided such officer, agent, or solicitor holds himself out as such and has been engaged in such business for 6 months prior to any such payment Premium Refunds and Other Incentives It is illegal to not a refund obligation in a timely manner (30 days after the date requiring refund action occurs; 30 days after the date of the insurer's refund check if the agent is expected to issue a portion of the total refund; 45 days after the date of the agent's statement of account on which the refund first appears). False Advertising Presenting any information before the public which is untrue, deceptive, or misleading is illegal. This includes knowingly entering false information or omitting true information in any book, report or record with the intent to deceive official examiners of such materials. Misrepresentation It's illegal to make false, misleading representations, or fraudulent comparison of insurance policies, misrepresenting the terms or benefits of an insurance policy, or making misleading representations as to the financial condition of any insurer. This includes: - Misrepresenting funds actually available for losses and claims or a subscribed capital not actually paid up in cash - Whoever violates this section of the Revised Code is guilty of a misdemeanor of the 4th degree - Presenting a financial standing that is different than what its last examination states - Intentionally misstating the cost of any financed policy - Making, when intending to use, any statement that a life policy is company shares or that endowment proceeds are anything other than benefits for which premiums have been paid - Representing that a life insurance policy or annuity is a contract for the purchase of funeral goods or services

Examination of Books and Records

Before issuing a license, the Superintendent may examine the financial affairs of any insurer. Whenever the Superintendent deems it necessary, but at least once every 3 years, he/she may make, or direct to be made, an examination of the affairs and financial condition of any insurance company in the process of organizing, applying for admission, or doing business in Ohio. This examination may be deferred up to 5 years if necessary. The Superintendent, or an appointed examiner, must have free access to all books and papers that relate to the business including those kept by the company's agents. If any records appear to be inadequate for the examination, the insurer may be required to employ experts to rewrite, post or balance any such records/accounts. All examination fees and expenses must be paid by the company being examined. Insurance companies, directors, officers, agents, and employees may be examined under oath. Refusal to submit to an examination by an insurer is grounds for suspension, refusal, or nonrenewal of any license or Certificate of Authority held by the company. After the examiner issues his/her report, the insurer has 30 days after the postmark on the envelope in which the report was mailed to file with the Superintendent any written objections to the report. The Superintendent has the power to administer oaths, summon, and compel by order or subpoena the attendance of witnesses to testify in relation to any matter which, by state insurance laws, is the subject of inquiry and investigation, and require the production of any book, paper, or document pertaining to such matter.

Deliberately including false information in company records in order to deceive department of insurance examiners would be considered: A) Misrepresentation B) Twisting C) False Advertising D) Compliance with Privacy Laws

C) False Advertising False advertising may be directed at the insurance department or the public. Misrepresentation refers to actions taken in one's interaction with the public.

Company Regulation

Certificate of Authority The Superintendent will issue a Certificate of Authority to an insurer when it has: - Deposited the required amount of securities - Filed a duly certified copy of its Articles of Incorporation - Filed a copy of the Attorney General's approval - Filed a copy of its bylaws or constitution No insurance company may transact any insurance business until it procures a certificate of authority from the Superintendent of Insurance. If the annual statement required demonstrates the insurer's solvency to the Superintendent, then he/she will renew its certificates of authority. These certificates must be retained by the recorder for at least 2 years from the date of filing and will provide the authority for agents to issue new policies. When an insurance company notifies the superintendent of insurance that it has fulfilled certification requirements, he/she will examine its condition. If the superintendent finds that the company is properly organized and has complied with the law entitling it to transact business and issue policies, and unless he/she also finds the name assumed by it so nearly similar to that of another company doing business in this state as to lead to confusion or uncertainty on the part of the public, he/she shall furnish the company with its license. So long as such insurance company complies with the law, the superintendent, annually upon its application, shall renew such license, certified copies of which may be used in evidence for or against the company in all actions. Insolvency For an insurer issuing only assessable fire insurance policies, insolvency is: - The inability to pay any obligation within 30 days after it becomes payable; or - If an assessment is made within 30 days after such date, the inability to pay the obligation 30 days following the date specified in the first assessment For any other insurer, insolvency is determined when it is unable to pay its obligations when due, or when its admitted assets do not exceed its liabilities plus the greater of either of the following: - Any capital and surplus required by law for its organization - The total par or stated value of its authorized and issued capital stock

Other Credit & Penalties

Credit for Publication, Instruction and Association Events A person may receive up to 10 hours CE credit per reporting period for the publication of articles or books authored by the licensee. Requests for such credit must be in writing and accompanied by proof of authorship and publication. The Superintendent awards such credit. CE credit may be allowed for the authors of written materials used in, and instructors for, approved courses. A person who authors materials for an approved course and teaches the same course in a compliance period may receive credit for authoring the written materials or instructing the course, but not for both activities in 1 compliance period. Instructors for approved CE courses may receive for credit 2 times the number of hours actually spent instructing a course. Credit will be given only once per course per compliance period. Licensees can earn up to 4 credits per renewal period for participation in certain association meetings and activities. Penalties Failing to meet CE requirements will result in license suspension. The suspension becomes effective when the Superintendent mails a notice of 60 days. During this time, the agent may provide proof of compliance. The license may be revoked if the agent fails to demonstrate compliance within 1 year after the Superintendent provides the licensee notice and an opportunity for a hearing. An agent whose license is revoked due to CE compliance failure must apply for a new insurance agent's license. The following are violations of the prelicensing education and CE statutes and rules: - Knowingly using, submitting or filing any false or deceptive document or record for the purpose of complying with the agent education statutes and rules, or in responding to any inquiry from the Superintendent concerning agent education - Obtaining, accepting or using any evidence of completion or participation from a provider if the person has not attended or completed the course in question - Cheating, using unauthorized materials, or receiving unauthorized help during an exam - Assisting another person to comply with agent education requirements when that person knows or should know that such assistance violates the law - Disruptive threatening or deceptive behavior during a course or exam, which is grounds both for termination of one's participation and as well as grounds for the Superintendent to refuse to accept successful completion of the course or exam - The use of any unauthorized telecommunication device, exam notes and study guides, or conversations with unauthorized persons during an exam The penalty for a single violation is either a $500 fine or the Superintendent's to refusal to issue a license.

Cyber Security Requirements

Cyber Security Event - Event that has a likelihood of materially harming an Ohio consumer as a result of unauthorized access to and disruption of an information system. Nonpublic Information - Information not available to the public and includes information that can be used to identify a consumer (Social Security number, credit card number, account passwords, health care information, etc.) Encryption - The transformation of data into a form that results in a low probability of assigning meaning without the use of a protective process or key. Each licensee (insurer) must implement a comprehensive written information security program based on the licensee's risk assessment. This program should assess and protect against any threats to the confidentiality of nonpublic information. The program also should: - Define and periodically reevaluate a schedule for retention of nonpublic information and a mechanism for its destruction when no longer needed - Protect against unauthorized access to or use of nonpublic information and minimize the likelihood of harm to any consumer As part of its information security program, each licensee must establish a written incident response plan designed to promptly respond to, and recover from, any cyber security event that compromises the confidentiality, integrity, or availability of nonpublic information in its possession, the licensee's information systems, or the continuing functionality of any aspect of the licensee's business or operations. If a licensee learns that a cyber security event has or may have occurred, the licensee must notify the Superintendent as soon as possible. The licensee must maintain records concerning all cyber security events for a period of at least 5 years from the date of the cyber security event and must produce those records upon demand of the superintendent of insurance.

Defamation, Unfair Discrimination, & Illegal Inducements

Defamation of Insurer It is illegal to make a false or malicious oral/written statement intended to injure someone in the insurance business. An example would be making a false statement about an insurer's financial condition. Unfair Discrimination - Permitting individuals of the same class and hazard to be charged different rates for the same insurance coverage (unless the rate differential is based upon sound actuarial principles or is related to actual experience) - Refusing to issue, cancel, or decline an insurance policy based on sex or marital status - Making any distinction or discrimination on the basis of race as to premiums or rates charged for life policies - Using underwriting standards that charge different rates for the same coverage based on a person's handicap Illegal Inducements - Giving anything of value as an inducement to purchase insurance - Stating, in order to commit an act of twisting, that an insurer was required to change an insurance form to comply with Ohio's insurance law Whoever violates this section of the Revised Code is guilty of a misdemeanor of the 4th degree. A promotional/advertising item with a value of $50 or less is not a valuable consideration if it is given to induce a person (insured or potentially insured) to obtain a quote and is not tied to the purchase of an insurance policy.

Conversion to an Individual Policy

If coverage under a group life plan ceases because of the termination of employment, the insured is entitled, without evidence of insurability, to an individual policy without disability or supplementary benefits, provided that application is made, and initial premium is paid to the insurer, within 31 days after termination. The individual policy may not exceed the amount of life insurance under the terminated policy, minus the amount of any life insurance for which the person is eligible under the same or any other group policy. The conversion privilege is available to the following individuals: - A surviving dependent, if any, at the death of the employee or member, with respect to the coverage under the group policy that terminates by reason of the employee's or member's death - A dependent of an employee or member upon termination of the dependent's coverage, while the employee or member remains insured under the group policy, by reason of the dependent ceasing to be a dependent under the group policy If the individual is not given notice of the right to obtain individual coverage at least 15 days prior to the expiration of the 31-day conversion period, then the individual will have an additional period to exercise that right. This additional period will extend for 15 days after the individual is given notice, but in no event will the period extend beyond 60 days after the expiration date of the period provided in the policy. Written notice provided to the individual or mailed by the policyholder to the last known address of the individual, or mailed by the insurer to the last known address of the individual furnished to the insurer by the policyholder, constitutes notice for purposes of this division. If a group plan is terminated, every person insured at the termination date who has been insured for at least 5 years prior to termination, is entitled to a 31-day right of conversion to an individual policy without proof of insurability. Coverage is limited to the lesser of $10,000 or the group policy's coverage amount.

Financial Requirements

In order to help determine an insurer's financial condition, the Superintendent requires insurers to file an annual audit of their financial statements, prepared by independent certified public accountants. The standards used by the Superintendent to determine whether an insurer's continued operation might be hazardous to their policyholders, creditors, or the general public, include but are not limited to: - Adverse findings reported in financial condition or examination reports, statutory audit reports, and actuarial opinions, reports or summaries - The NAIC's financial analysis solvency tools and reports; and - Whether the insurer has adequately provided for anticipated cash flows required by the contracted obligations and related expenses, when compared to the insurer's assets Insurers with direct premiums written less than $1 million and having fewer than 1,000 policyholders at the end of any year are exempt from this requirement for that year. However, the Superintendent can deny that exemption if he/she finds it necessary. An insurer may not be incorporated in Ohio until the Superintendent has certified to the Secretary of State that it has placed in escrow, $100,000 in paid-in capital and $150,000 in contributed surplus. No fidelity guaranty company organized under the laws of another state, district, territory or country can be licensed to transact business unless at least $200,000 of its assets are invested in the securities permitted by Ohio, or in securities permitted by the laws of the state, district, or territory in which it is organized, and until such securities are deposited with the superintendent in this state, or the superintendent or other officer of another state, district, or territory.

Illustrations

Insurers must notify the Superintendent as to whether a policy form is to be marketed with or without an illustration. All marketing efforts must reflect this decision. If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited. If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration delivered in accordance with this regulation is required. The illustration must be clearly labeled "life insurance illustration" and contain the following basic information: - Name, age, and sex of the proposed insured - Name of the insurer - Name and business address of agent - Underwriting and/or rating classification on which the illustration is based - Generic name of the policy, the insurer product name, if different, and form number - Dividend option election, or use of non-guaranteed elements - Initial death benefit When using an illustration in the sale of a life insurance policy, the following actions are prohibited: - Representing the policy as anything other than a life insurance policy - Misrepresenting non-guaranteed elements of the contract - Stating or implying that the payment or amount of non-guaranteed elements is guaranteed - Use an illustration that depicts policy performance more favorably than the current illustrated scale - Provide an applicant with an incomplete illustration - Represent premium payments as not being required each year unless it is true - Use the term "vanish" of "vanishing premium," or a similar term - Except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported" or is not "self-supporting" The rules regarding illustrations apply to all group and individual life insurance policies and certificates with the following exceptions: - Variable life insurance - Individual and group annuity contracts - Credit life insurance; or - Life insurance policies with illustrated death benefits on any individual not exceeding $10,000

Policy Forms/Rates/Exceptions - Interest Rates and Forms

Interest Rates Each individual policy, group certificate, or notice of proposed insurance must provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance will be paid or credited promptly to the person entitled thereto; provided, that the superintendent will prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund must be filed with and approved by the superintendent. If a creditor requires a debtor to make any payment for credit life insurance or credit accident and health insurance and an individual policy or group certificate of insurance is not issued, the creditor must immediately give written notice to such debtor and promptly make an appropriate credit to the account. The amount charged to a debtor for credit life or credit accident and health insurance cannot exceed the premium charged by the insurer, as computed at the time the charge to the debtor is determined. No dividend or rate credit with respect to premiums payable during a calendar or policy year will be granted by an insurer prior to the end of such calendar or policy year and then only retrospectively based upon experience. Forms No certificate can be furnished by any insurer until a copy of the form of such policy, certificate, endorsement, rider, or application and of its premium rates and of the classification of risks has been filed with the superintendent. A form cannot be delivered until 30 days after it has been filed with the Superintendent. If he/she doesn't approve of the form, written notice of his/her findings will be sent to the insurer. If the Superintendent has given written approval, the Superintendent may withdraw approval on any ground stated in this section. However, this only can take place after a hearing of which at least 20 days' written notice has been given to the insurer.

Individual Underwriting by the Insurer Information Sources and Regulation

Medical Examinations and Lab Tests Including HIV In underwriting an individual life or accident and health policy, an insurer may require an applicant for coverage to submit to an HIV test only in conjunction with tests for other health conditions. No applicant may be required to submit to an HIV test on the basis of sexual orientation. An insurer that requests an applicant or an insured to take an HIV test must obtain the individual's written consent for the test and inform the applicant of the purpose of the test. The consent form must include: - Information about the tests to be performed - The confidentiality of the results - Procedures for notifying the applicant of the results - A general interpretation of test results An insurer may disclose the results of a positive HIV test only to the following persons: - The applicant - The applicant's physician (If consent is granted by the applicant) - Any other person the applicant specifically designates in writing - A medical information exchange for insurers operated under procedures designed to ensure confidentiality Applicants for group life or health policies cannot be required to submit to an HIV test, unless they are seeking coverage under policies sponsored by membership organizations.

CE Reporting and Credits

Reporting All required CE credits must be completed and posted on the licensee's record with the Ohio Department of Insurance before a license can be renewed. Failure to receive the Department's CE reporting form does not relieve the licensee of the responsibility to file the report in a timely manner. The licensee holds the responsibility to prove they completed the required continuing education hours and complied with reporting rules. Credits CE credit cannot be carried over from another state or province. The Superintendent may grant credit for a course that is held prior to the issuance of a written approval for the course. Duplicate classes may only be given credit for the first completed course in a compliance period. Partial credit, rounded down in one hour increments, may be given for classroom courses only at the provider's option. If partial credit is given, the course participation fee must be paid to the superintendent or its designee in the amount required as if the agent had attended the entire class. Agents who complete more than the required number of credit hours in a renewal period may apply those credit hours to the next renewal period, not to exceed 50% of the required credit hours for the next renewal period. Excess CE credit hours will be carried over as general credit hours. A licensee may not be required to complete the entire course if all of these conditions are met: - The course is 30 hours or longer - The Superintendent acknowledges, in writing, that the content of the course would qualify for CE credit - The number of continuing credit hours requested by the provider and approved by the Superintendent is less than the total number of course hours To qualify for CE credit, both the course and provider must be approved by the Superintendent. Up to 12 excess credit hours can be carried over to the next compliance period.

Annuity Principles and Concepts

Suitability Requirements Information that is reasonably appropriate to determine the suitability of an annuity includes the person's: - Age - Annual income - Financial situation and needs, including the financial resources used to fund the annuity - Financial experience and objectives - Intended use of the annuity and within what time frame - Existing assets, including investment and life insurance holdings - Liquidity needs and liquid net worth - Risk tolerance - Tax status Duties of Insurers and Agents Before recommending the purchase, exchange or replacement of an annuity, there must be reasonable grounds for believing that the recommendation is suitable for the consumer. Such reasonable grounds include: - The consumer has been reasonably informed of the annuity's various features, such as fees, charges, and interest limitations - The consumer would benefit from certain annuity features, such as tax-deferred growth, annuitization or death or living benefits - The particular annuity as a whole is suitable for the consumer The insurer or agent must make reasonable efforts to obtain a consumer's suitability information before the annuity is purchased, exchanged or replaced. Exemptions Unless otherwise specifically included, the above suitability requirements do not apply to transactions involving: - Direct response solicitations where no recommendation based on collected suitability information is made - Contracts used to fund pension or welfare benefit plans - Benefit or deferred compensation plans established for government or church employees - A nonqualified deferred compensation plan established or maintained by an employer or plan sponsor - Settlements relating to personal injury litigation, dispute, or claim resolution process - Certain prepaid funeral contracts Record Keeping Insurers, independent agencies, business entity agents and insurance agents must maintain or be able to make available to the superintendent records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for 8 years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance agent.

Continuing Education (CE)

The Ohio Department of Insurance requires that agents renew their license biennially (every 2 years) by the last day of their birth month. Property, Casualty, Personal Lines, Accident & Health - Agents who hold a license for 1 or more of these lines of authority are required to complete 24 hours of CE, 3 of which must be ethic-specific, prior to renewing their license. CE courses cannot be taken twice during the same compliance period, but a course can be taken again in a different compliance period. Exemptions The following individuals are exempt from the 24-hour CE requirement described: - Title Insurance licensees - Surety Bail Bond licensees - Licensees only licensed for limited lines. Furthermore, no prelicensing education, licensing examination or continuing education is required for a limited lines license. Limited lines licenses may be issued for the following lines of insurance: ---Credit insurance products ---Rental car insurance ---Crop insurance providing protection against damage to crops from unfavorable weather conditions, fire, lightning, flood, hail, insect infestation, disease or other yield-reducing conditions or perils ---Funeral expense insurance sold to provide for payment of funeral or burial goods and services, so long as the agent is also a licensed funeral director in this state ---Travel insurance coverage for trip cancellation, trip interruption, baggage, life, sickness and accident, disability, and personal effects when limited to a specific trip and sold in connection with transportation provided by a common carrier ---Title insurance marketing representative - Nonresident agents in compliance with the continuing education requirements of their home state - Persons granted inactive status by the State Director of Insurance - Renewal extensions

Temporary License, Convictions reporting, Assumed Name

The Superintendent may issue a Temporary Agent's license for up to 180 days without requiring the applicant to pass a written exam. A license may be issued to the spouse or court-appointed representative of an agent that dies or becomes mentally or physically disabled. It may also be issued to an employee of a business entity upon the death or disability of the sole remaining licensed agent. A license may be issued to a designee of a licensed agent entering active service in the U.S. Armed Forces. The temporary licensee must be sponsored by a licensed agent or insurer, who will be responsible for all acts of the temporary licensee. A temporary license may not remain in force after the business being serviced by the temporary licensee is disposed of. Duty to Report Criminal Convictions and Administrative Disciplinary Actions An agent must notify the Superintendent of: - Any administrative action taken against him/her in another jurisdiction or by another governmental agency having professional, occupational, or financial licensing authority within 30 days after the final disposition of the matter. A copy of the order, consent to order, or any other relevant legal document must be included. - Any criminal prosecution, other than misdemeanor traffic, of the agent by any jurisdiction within 30 days after the initial appearance before a judge or magistrate. The notice must include a certified copy of the charging document. Within 30 days after the disposition, the agent must provide a certified copy of the court's entry/order that reflects the final disposition of the prosecution and any other relevant legal documents. Assumed Business Names An insurance agent that intends to do business in Ohio under any name other than the agent's legal name must notify the Superintendent prior to using the assumed name.

Basic Illustrations

The following requirements apply to all basic illustrations: - The illustration must be labeled with the date on which it was prepared - Each page must be numbered and show its relationship to the total number of pages in the illustration (e.g., page 4 of 7) - The assumed dates of payment receipt and benefit pay-out within a policy year must be clearly identified - Guaranteed death benefits and values must be clearly labeled - Any non-guaranteed elements must be clearly labeled as non-guaranteed --- Guaranteed elements must be shown before any corresponding non-guaranteed elements - The policy's accumulation value, if shown, must be shown in close proximity to the corresponding value available upon surrender - Policy benefits and values must be shown in graphic or chart form in addition to the tabular form Narrative Summary - A basic illustration must include a narrative summary conveying the following: - A brief description of the policy, including a statement that it is a life insurance policy - A brief description of the premium outlay - A brief description of any policy features, riders, or options, guaranteed or non-guaranteed, and the impact they may have on policy benefits and values - Identification and a brief definition of column headings and key terms used in the illustration - A statement containing the following: "This illustration assumes that the currently illustrated non-guaranteed elements used will not change for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown." Numeric Summary - A basic illustration must also include a numeric summary of the death benefits, values and the premium outlay for at least policy years 5, 10, 20, and at age 70. Statements - Statements substantially similar to the following must be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery. A statement to be signed and dated by the applicant or policy owner reading as follows: "I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed." A statement to be signed and dated by the insurance agent or other authorized representative of the insurer reading as follows: "I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration."

Viatical Settlement

Viatical Settlement Broker Authority and Licensing Viatical settlement brokers or providers must be licensed, unless they have held resident or nonresident life insurance licensure for at least 5 years. An application, nonrefundable filing fee, and criminal record check are required. The applicant must file a detailed plan of operation, and submit proof of financial responsibility, a general description of the method the applicant will use to determine life expectancies, and copies of all contract, application, and disclosure forms intended for use in Ohio. The license renews on March 31st the year after its issue and each succeeding year, and will expire if the renewal fee is not paid by the designated date. A viatical settlement broker must complete at least 15 hours of CE biennially. Disciplinary Actions Promoting Purchase for Purpose of Selling It is a violation for any person to issue, solicit, market, or otherwise promote the purchase of a policy for the purpose of or with an emphasis on selling the policy. Advertising False and misleading advertisements are prohibited and include, but are not limited to, those including any of the following representations: - "Guaranteed," "fully secured," "100 percent secured," "fully insured," "secure," "safe," "backed by rated insurance companies," "backed by federal law," "backed by state law," or "state guaranty funds," or similar representations - "No risk," "minimal risk," "low risk," "no speculation," "no fluctuation," or similar representations - "Qualified or approved for individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, simplified employee pensions (SEPs), 403(b), Keogh plans, TSA, or other retirement account rollovers," "tax deferred," or similar representations - Utilization of the word "guaranteed" to describe the fixed return, annual return, principal, earnings, profits, investment, or similar representations - "No sales charges or fees" or similar representations - "High yield," "superior return," "excellent return," "high return," "quick profit," or similar representations - Purported favorable representations or testimonials about the benefits of viatical settlement contracts or viatical settlement purchase agreements as an investment, taken out of context from any newspaper, trade paper, journal, radio or television program, or any other form of print and electronic media

Agent Responsibilities

Solicitation, Sales Presentations, and Disclosure Requirements A life insurance policy must have the words "life insurance" in its title unless it's accompanied by other language that clearly indicates the contract is a life insurance policy. Standards The following standards must be met in all advertisements, illustrations and sales presentations: - Policies that provide a pure guaranteed annual endowment must clearly separate the gross premiums and benefit amounts of the endowment from the life insurance benefits - The annual endowment amount must be expressed in dollars and not as a premium percentage - Dividends may not be presented as anything other than surplus reflecting the company's actual experience in mortality, interest return on investment and administrative expense within a single year - Dividends must be presented as tax-free only to the extent they are a return of premium. Only the dividend amount that exceeds premiums paid will be counted as taxable income - Dividends cannot be presented as apt to increase because of their historical upward trend unless there is also a disclosure of any decreases or nonpayment of dividends - Dividends cannot be presented as though they will make the policy 'self supporting' and thus guarantee future benefits - Terms such as "investment," "investment plan," "expansion plan," "profit," "profits," "profit sharing," and other similar terms cannot be used to mislead a prospect to believe he/she is buying something other than a life insurance policy or annuity contract - Prospects/policyholders cannot be referred to as a "partner" unless the person has been advised he/she does not have the legal rights of a partner in a statutory or common law sense - Statements cannot be made that create the impression a person would be buying stock in a company or otherwise be an investor rather than simply buying life insurance - Statements cannot be made that imply by buying a policy, a purchaser or prospective purchaser will become a member of a limited group of persons who are to receive special advantages or favored treatment in the payment of dividends - The growth and earnings of an insurer's parent or affiliate company cannot be stated without a clear explanation that such a company is not the life insurance company whose policy is offered for sale. Example If you're selling for Company A, which is owned by the highly profitable Company Z, you cannot mention Company Z unless you make absolutely clear the policy for sale is offered by Company A, and not Company Z. - Death benefits cannot be presented as "in lieu of profits" - Policy sales cannot falsely be presented as limited only to shareholders - Premiums cannot be referred to as "deposits" unless their payment establishes a debtor-creditor relationship between the insurer and the policyholder - Illustrations may not project future dividends unless they clearly indicate the dividends shown are not guaranteed - Benefits cannot be presented as guaranteed if the policy is allowed to lapse unless there is an explanation of the nonforfeiture benefits - Sales kits and prepared sales presentations must include a clear and unequivocal statement that life insurance is the subject of the solicitation - Dollar amounts cannot be used unless their source and the subject matter to which they pertain is clearly identified. Example An illustration using dollar amounts to show how much money a policyholder may receive must also use dollar amounts to show how much a policyholder must pay. - Producers cannot make any general statement that insurance companies make a profit because of policy lapse or surrenders - Any negative experience other companies have had with policies like or similar to the one being solicited must be disclosed - Policy features cannot be falsely presented as being available only in your company's policies - Future purchase options cannot be presented as though they are already in force - A policy cannot be solicited as a 'now or never' offer Backdating of Policies In Ohio, a life insurance company or agent may not issue or deliver any policy or contract that takes as of a date more than 3 months before the application was made. This is known as backdating for the purpose of conserving the insured's age and is only allowed up to 3 months prior to the date of application.

All of the following transactions are exempt from Ohio's annuity suitability requirement, except: A) A nonqualified deferred compensation plan B) Formal prepaid funeral contracts C) Direct response solicitations made without recommendations D) All sales of immediate annuities

D) All sales of immediate annuities Exemptions from the suitability requirements are based on whether the sale is made with recommendations by an agents, not by the type of annuity bought. The other exemptions are policies bought by firm's and products such a funeral plan that may have elements of an annuity, but which are limited in scope and directed toward an entirely different purpose.

Ohio Life and Health Insurance Guaranty Association (OLHIGA)

The Ohio Life and Health Insurance Guaranty Association (OLHIGA) is a nonprofit association comprised of all licensed and admitted carriers in Ohio, organized to cover claims of insolvent member carriers. All member insurers must be members of the association as a condition of their authority to transact the business of insurance in Ohio. OLHIGA will cover claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency. All policy provisions between the insured and insolvent carrier still apply. Each state-admitted carrier is assessed amounts necessary to pay the obligations of the OLHIGA, based upon the amount of premiums written by each insurer. Benefits The association is legally liable for the contractual obligations for which a member insurer is liable or would have been liable if it were not an impaired or insolvent insurer, up to the following limits: Life - $300,000 in life insurance death benefits - $100,000 in net cash surrender and net cash withdrawal values for life insurance Health - $300,000 in disability insurance - $300,000 in long-term care insurance - $500,000 in basic hospital, medical, and surgical insurance or major medical insurance - $100,000 in health insurance benefits other than basic hospital, medical, and surgical insurance, major medical insurance, disability insurance, or long-term care insurance, including any net cash surrender and net cash withdrawal values Annuities - $250,000 in retirement annuity benefits, including net cash surrender and net cash withdrawal values - $250,000 in present value of structured settlement annuity benefits, including net cash surrender and net cash withdrawal values - $1 million in other unallocated annuity benefits OLHIGA does not cover variable contracts or any plan that is self-funded or uninsured. Obligations The Association must: - Give members at least 30 days to pay assessments - Be audited each year an insurer becomes insolvent - Annually report its finances to the Superintendent of each year and give each member a copy of the report - Protect persons acting in good faith as authorized on its behalf A member aggrieved by the Association must submit any appeal to the Board of Directors and wait 30 days before appealing to the Superintendent. Prohibited Advertising of Life and Health The use of the Ohio Life and Health Insurance Guaranty Association for the purposes of sales, solicitation, or inducement to purchase any form of insurance is prohibited.

Inactivity Due to Military Service or Extenuating Circumstances

An individual licensed as an insurance agent who is unable to comply with the license renewal procedures and who is unable to engage in the business of insurance due to military service, a long-term medical disability, or some other extenuating circumstances may request an extension of the renewal date of their license. An extension may be granted at the discretion of the Superintendent of Insurance. Extension requests must be made in writing, prior to the expiration of the license for non-renewal.

Consent/Settlement Agreements

The superintendent, under a settlement agreement to which a person has consented in writing for the purpose of assuring the person's correction of a series of offenses and future compliance with the laws of this state relating to the business of insurance, may impose a single penalty in whatever amount the parties determine to be justified under the circumstances.