Chapter 11
temporary
temp license is valid for a max of 180 days
policy loan interest rate
The maximum fixed interest rate charged by insurers is 8% in Massachusetts. The adjustable or variable rate will be based on an index, such as Moody's Corporate Bond Index or Standard and Poor's.
impersonating a producer
violator may be assessed 100 fine
authorized insurer
An insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state. (admitted insurance company)
termination of producer appointment
An insurer that terminates an agent appointment must notify the Commissioner within 30 days of the date of termination --within 15 days of such notice notice, the insurer must mail a copy
Cobra/conversion
COBRA is a federal law that requires employers with 20 or more employees to include continuation of benefits provision for former employees and their dependents --COBRA guarantees the participant can continue the group coverage
false advertising
an illegal practice to falsely advertise insurance products or services in anyway
office of insurance reg
ensure that insurance companies licensed to do business in a state are financially viable, operate with the laws and reg of the insurance industry
incontestability period
A provision that the policy terms shall be incontestable after it has been in force for a period of 2 years from its date of issue (unless the purpose for taking out the coverage was fraud).
marketing practices
Agent reposponibilities: state insurance regulations most important: --notice of replacement --free look
fraud and false statements 1033 waiver
As it applies to insurance, any person engaged in interstate insurance business who engages in intentional unfair or deceptive insurance practices, or overvalues an insurance product in a financial report or document presented to a regulatory official, will be in violation of federal law. Other violations include, but are not limited to: embezzling money from an insurance company, misappropriating insurance premiums, and writing threatening letters to insurance offices.
Group life certificate
Group policy number -description of the insurance protection --names of the insured, beneficiarys, and dependents, rights and conditions
states reasons for concerns
Potential for criminal activity within the insurance business --adverse economic impact on authorized insurers --potential for unpaid claims due to dishonesty
process
applicant for a resident producer license in mass --18 yrs --resident of mass --be deemed competent, honest, and trustworthy and not have committed any act that is grounds for license denial, suspension, or revocation --passed state exam for the lines of authority which licensure is sought --summit application fees --12 months of passing your state license exam, you must apply for and be issued a license or you will be required to retake the exam. A producer can represent either an insurer or insured.
agent ethics
may not submit applications to insurance company without : companies name on first page -agents license number info must be legible and copy of application must be sent to applicant
mutual life insurance companies
owned and controlled by its policyowners. These policyholders elect a board of trustees or directors to manage the firm. ---
Guaranty Association will provide:
$300,000 in life insurance death benefits • $100,000 protection of cash surrender for life insurance • $100,000 in health insurance benefits • $100,000 in present value annuity benefits
producer appointments
-oducer cannot act as an agent for an insurer unless he or she is appointed to work for that insurer --producer's authority to bind an insurer to an insurance contract is granted in the producer's appointment with the insurance company --he producer of an insurer can be personally liable when the producer performs an act which is prohibited in the agency contract
assumed names
Producers wishing to conduct business under a name other than their legal name must notify the Commissioner before using such name.
stock & mutual company
Stock Insurance Company: An insurance company that is owned and controlled by stockholders. The stockholders provide the capital and share in profits or losses. --produce profits for the owners, the stockholders.
advisor
an individual who provides insurance advise for compensation. To provide advice person must --Be a Massachusetts resident • Pass a written licensing examination • Supply 3 references with the application for a license • Renew their license every 3 years
alien insurance company
chartered and organized in any country other than the US --chartered in Canada would be an alien company in Massachusetts
continuing education
60 hours during the first 36-month period after date of initial license issuance. -- based on the producer's date of birth. --45 hours for each 36-month period after the first renewal cycle
free look
allows insured a number of days from the delivery date of the policy to look over a new policy and return it for a full refund if dissatisfied for any reason --mandated in most states
buyers guide
basic info about an insurance policy --explains how buyer should go about choosing amount and type of insurance to buy and how a buyer can save money by comparing the cost of similar policies -insurers must provide buyers guide along with policy summary
misrepresentation
illegal to misrepresent any fact
false financial statements
illegal to publish any false financial statement regarding a person or entity
boycott, coercion, and intimidation
illegal to unreasonably restrain or monopolize the business of insurance
domestic insurance company
resides and is incorporated under the law of the state in which its home office is located
notice of replacement
when life agent makes a life insurance proposal and knows or should know that the purchase of such policy will replace an existing life insurance policy the replacement rule applies --replacement means any transaction in which new life insurance or a new annuity is purchased and as a result existing life insurance or annuities will be replaced
reinstatement and renewal
who allows his or her license to lapse may, within 12 months renewal date reinstate the license without retaking state licensing exam
free look
with a face amount of less than 25,000 must provide minimum free-look period of 10 days upon policy delivery
Fair credit reporting act
--a federal law that regulates the use and disclosure of consumer credit information -The consumer who was investigated must be advised that credit, insurance, or employment was denied because of an unfavorable report.
nonresident producers
--if non resident still an apply for nonresident license in mass as both states have a reciprocal agreement --submit an application form, proof of resident, license, and fees
illustrations
A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that the policyowner may need to resume premium payments depending on actual results.
unfair discrimination
An example of this would be charging different premiums for policyholders in the same risk classification.
unfair claims practices
Misrepresenting to insureds pertinent facts or policy provisions relating to coverage at issue • Failing to acknowledge and act reasonably promptly upon communications with respect to an insurance claim • Failing to adopt and implement reasonable standards for prompt investigation and processing of an insured's claims • Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds
producers
an individual appointed by an insurance company that represents the company and presents policies on its behalf is called producer. ---producer originating an insurance application usually is the major personal contact with the insured --authorized to solicit, receive, and forward applications to the insurer.
cease and desist order
issued against a producer prohibits a specific practice listed in the order
insurable interest
means the person acquiring the contract must be subject to loss upon the death, disability, or illness of the insured --must occur at the time the application is taken, but not required afterwards --An insurable interest in each other's lives may exist in absence of an economic interest when the individuals are married.
unauthorized
nsurance company that has been denied or not yet applied for a Certificate of Authority and may not sell insurance in this state. (non-admitted insurance company)
unauthorized entities
state regulation of insurance is in public interest
Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license
violated an insurance law, attempted to obtain a license through misrepresentation or fraud, been convicted of a misdemeanor or felony, used dishonest practices, cheated on a state licensing exam
life settlements
• Effectuating life settlement contracts • Procuring life settlement contracts • Tracking life settlement contracts
Hearings
•may issue notice of hearing to any person found to have committed an unfair or deceptive act No existing producer's license will be revoked until the producer has been afforded a right to a hearing on the charges
business entity
business entity wants to transact insurance, that person must first register with the Department of Insurance under the business entity's license and obtain an individual producer's license.
backdating
polices cannot be backdated more than 6 months from date of issue
foreign insurance company
A company whose home office is located in another state. It is considered to be a foreign company in all states except for its home office. EX: Texas would be a foreign company in Massachusetts
adress change
must report a change in dress within 30 days
Commissioners general duties and power
Issue insurance related licenses for producers or a certificate of authority to insurers • Adopt, amend, and rescind insurance rules • Examine books and records of insurers • Regulate insurance advertising • Determine, set, or compute the reserves of life insurers • Make final judgments in a legal proceeding • Issue a cease-and-desist order or put on probation any person or entity found to have committed an unfair, deceptive, or illegal act; proceed with a hearing; and issue a final order • Administer oaths • Subpoena the attendance of witnesses to testify
complaint record
producer is required to maintain and retain a complaint record for two years
reporting of actions
must report any administrative action that occurs in another jurisdiction to commissioner. must be submitted within 30 days of final disposition --within 30 days of initial pretrial hearing date
penalties and fines
person may, after hearing, be subject to a civil fine of up to $1,000 for each unfair act or practice. --
special broker
places insurance business with insurers that are not authorized to transact business in this state. Surplus-lines broker
entire contract
provision that the policy and the application shall constitute the entire contract between the parties.
