SC Laws & Rules
Free Look - Long-Term Care
A 30 day free look period is required for long-term care policies.
MAXIMUM amount an individual can contribute to a Flexible Savings Account
$2,500
Bronze Plans
60% actuarial level of coverage provided
Silver Plans
70% actuarial level of coverage provided
Gold Plans
80% actuarial level of coverage provided
Platinum Plans
90% actuarial level of coverage provided
Notice to buyer
A "notice to buyer" must be on the first page of each long-term care policy delivered in. It explains that some long-term care costs may not be covered.
Foreign Insurance Company
A company that home office is located in another state. It is considered to be a foreign company in all states except for its home office. A company chartered in Texas would be considered a foreign company in South Carolina
Alien insurance company
A company that is chartered and headquartered in any country other than the United States. It is considered an alien company in all states. A company chartered in Canada would be considered an alien company in South Carolina
Domestic insurance company
A company that resides and is incorporated under the laws of the state in which its home office is located. A company chartered in South Carolina would be considered a domestic company in South Carolina
Continuation of Group Health Insurance
A group health insurance policy must be continued for an employee or member at least 6 months after the insurance has been cancelled for any reason other than nonpayment.
Time Limit on Certain Defenses (Incontestable Period)
A health or disability policy is incontestable after it has been in force for a period of 2 years. Only fraudulent misstatements in the application may be used to void the policy or deny any claim at this point.
Reinstatement
A lapsed license may be reinstated within six months of the renewal date. However a penalty fee will be required in addition to the renewal fee.
Shared Commissions
A producer may share a commission with another producer when the other producer is licensed in the same line of business.
Reinstatement
A lapsed policy may be reinstated within 3 years from the due date upon evidence of insurability and all back premiums are paid with interest. If a health policy is reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered. Injuries sustained from an accident, however, will be covered immediately.
REGULATIONS - Agent/Producer Appointments
A producer cannot act as an agent for an insurer unless he or she is appointed to work for that insurer. Insurers are responsible for submitting an appointment notice to the Director within 15 days of an agent's appointment or submission of first insurance application. The insurer is also responsible for paying the agent's appointment renewal fee.
Producer
A producer is any person who sells, solicits, or negotiates insurance products. This includes submitting applications to the insurer, collecting premiums, and delivering policies to policyowners. Each agency that transacts insurance must be licensed by the insurance department. An insurance producer CANNOT act as an agent of an insurer until the insurance producer becomes appointed by the insurer.
Nonresident Producers
A producer who holds a resident license in a different state may apply for a nonresident license in South Carolina, as long as both states have a reciprocal agreement. To apply, nonresidents must submit an application form, proof of resident license in good standing, and fees. Nonresident producer applicants do not have to take the South Carolina state licensing exam, but must not have committed any act for which the license could be denied, suspended, or revoked.
Entire Contract
A provision that the policy and the application shall constitute the entire contract between the parties.
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).
Definition of Small Employer
A small employer is one that employs between 1 and 50 eligible employees on at least 50% of its working days per year. An eligible employee is an employee who has a regular workweek of at least 30 hours. The employer has the option to renew a small employer health plan. For health group cooperatives, the group size is 2 - 50.
Temporary
A temporary license may be issued in cases where a producer has become disabled or dies, requiring a replacement to service the producer's business. People (or circumstances) that are eligible for a temporary license include: • the producer's surviving spouse • a court-appointed personal representative • a business owner/partner/employee • designee of a producer entering active service in the armed services • any circumstance where the Director deems it to be in the public interest A temporary license is valid for a maximum of 180 days.
Viatical settlements
A viatical settlement contract is an agreement under which the owner of a life insurance policy sells the policy to another person in exchange for a bargained-for payment, which is generally less than the expected death benefit under the policy. Proceeds of the viatical settlement contract could be subject to the claims of creditors.
Adopted and Prospective Adopted Children
All health plans must provide coverage to the insured's adopted children on the same basis as other dependents.
Newborn Child Coverage
All health plans that provide coverage to family members of the insured must provide coverage for the insured's newborn child from the moment of birth, and for a period of 31 days. If a premium is required to continue the newborn's coverage, it must be paid within the 31-day period. Coverage includes injury and sickness, including medical care for diagnosed congenital defects and birth abnormalities.
Dependent Child Age Limit
All health plans which cover the insured's dependents must allow unmarried children to continue coverage under a parent's health plan until age 26.
Inflation Protection - Long-Term Care
All insurers issuing long-term care insurance policies on an indemnity basis, must offer, as an optional benefit, an inflation protection adjustment which provides for automatic future increases in the level of benefits without evidence of insurability. Adjustments must be at a level which provides reasonable protection from future increases in the costs of care for which benefits are provided.
Producer records
All producers shall maintain full and correct transaction records of the business done by them for a period of 5 years.
Records - Replacement Forms
Replacement forms must be kept on file by the producer and insurer for a minimum of 5 years.
Licensing Process
An applicant for a resident producer license in South Carolina must • Be at least 18 years of age • Not have been convicted of a felony or committed any act within the last 10 years that is grounds for denial, suspension, or revocation • Have passed the state exam for the lines of authority in which licensure is sought • Submit the application with fees
Illustrations
An illustration is a presentation, graph, or chart that includes non-guaranteed elements of a policy of life insurance over a period of years. Non-guaranteed elements are the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue. Illustrations must be clearly labeled as such, and contain the following: name and address of the issuing insurer; name, age, and sex of the proposed insured; generic name of the policy; initial death benefit; and any non-guaranteed elements such as dividend options. If an illustration is used, a copy of it must be submitted with the application for insurance, and a copy must be provided to the applicant.
Mutual Life Insurance Companies
An insurance company owned and controlled by its policyowners. These policyholders elect a board of trustees or directors to manage the firm. The profits of a mutual insurance company are returned to the policyowners in the form of dividends or retained as surplus to meet future obligations. • Mutual insurance companies are considered participating because the policyowners do share in the profits of the company • The objective is to provide insurance to its owners, the policyowners, at the lowest net cost
Unauthorized Insurer
An insurance company that has been denied or not yet applied for a Certificate of Authority and may not sell insurance in this state. • Also called a non-admitted company • A non-authorized insurer is not afforded protection by the guaranty fund
Authorized insurer aka authorized insurance company
An insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state.
Stock Insurance Company
An insurance company that is owned and controlled by stockholders. The stockholders provide the capital and share in profits or losses • Stock insurance companies are considered nonparticipating because the policyowners do not share in the profits of the company • The objective is to produce profits for the owners, the stockholders • Stock insurance companies that issues both participating and nonparticipating policies are referred to as a company doing business on a mixed plan.
Claim forms
An insurance company will send forms for filing proof of loss to a claimant within 15 days after company receives notice of a claim.
Termination of Producer Appointment
An insurer that terminates an agent appointment must notify the Director within 30 days of the date of termination. Within 15 days of such notice, the insurer must mail a copy of the notice to the terminated agent, after which the agent will have 30 days to submit written comments to the Director.
Performing w/o License Penalty
Any person performing an insurance act without a license can be found guilty of a misdemeanor, fined up to $10,000, and/or imprisoned up to 2 years.
Commissions
It is illegal for an unlicensed person to receive commissions from the sale, solicitation, or negotiation of insurance. However, renewal or deferred commissions are payable to retired producers. An insurer or producer may pay a commission to a person who does not sell, solicit, or negotiate insurance for referring a client. However, the referral commission cannot be based on the sale of an insurance product.
Notice of claim
Written notice of a claim must be given within 20 days after a covered loss starts or as soon as reasonably possible.
4 Plan Tiers ACA
Bronze, Silver, Gold, Platinum
Claims
Claims must be paid within 30 days by the insurer after proof of loss is received.
Endodontics
Endodontics is the branch of dentistry dealing with diseases of the dental pulp. Root canals would be an example. Endodontics is commonly excluded or limited from a dental policy.
REGULATIONS - Reporting of Actions
Producers must report any bankruptcy, felony conviction, or any other administrative action that occurs in South Carolina or another jurisdiction to the Insurance Department within 30 days.
Cold lead advertising
Failing to disclose that the purpose of the marketing effort is insurance solicitation
PRE-EXISTING CONDITIONS - Group Health Insurance
For group health insurance: Pre-existing conditions (conditions for which medical advice, diagnosis, care or treatment was recommended or received in the 6 months prior to the effective date of enrollment) may be excluded for a maximum of 12 months from the date of enrollment (18 months for late enrollees). Creditable coverage will be used to reduce the exclusion period, unless the individual has a coverage gap of 63 days prior to enrollment in the group plan.
Fraternal Benefit Society
Fraternal Benefit Societies are a nonprofit corporation, society, or order without capital stock that have a representative form of government and are organized through a lodge system. Fraternal benefit societies exist for the benefit of its members and their beneficiaries.
Physically or Mentally Handicapped Dependents
Handicapped children are not subject to an age limitation and may remain covered under the parent's health plan.
FRAUD AND FALSE STATEMENTS
Illegal to lie, falsify, or conceal information (orally or in writing) from a federal official. 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. • The punishment for violation is a fine up to $50,000, imprisonment up to 15 years, and/or license revocation • Violations are prosecuted by the US Attorney General • An individual convicted of a felony involving dishonesty may engage in the business of insurance ONLY after receiving written consent from the state insurance regulatory agency and a 1033 waiver
Group Life Insurance
In the event of employment termination, a person covered by a group policy also has the right to convert such coverage to an individual policy within the conversion period (31 days) without proving insurability. If this right is exercised, the employee is responsible for the payment of premium.
Ins Co Penalties
Insurance companies can be fined up to $15,000 per violation and/or suspend or revoke authority to do business in this State. If violation is willful, the fine can be up to $30,000 as well as possible suspension or revocation of authority to do business.
Child Enrollment; Non-Custodial Parents
Insurers are required to permit a child to enroll under a non-custodial parent's health insurance if mandated by court-ordered health care coverage. Restrictions for seasonal enrollment will not apply. If the non-custodial parent fails to enroll the child, other coverage will be obtained through the other parent or Medicaid.
Interest on Insurance Proceeds
Interest on benefits of a life insurance policy shall begin to accrue 30 days from the date of receipt of proof of death by the insurer.
UNFAIR TRADE PRACTICES - Boycott, Coercion, and Intimidation
It is an illegal practice to commit or coordinate any act or boycott, coercion, or intimidation in order to restrain or monopolize the business of insurance.
UNFAIR TRADE PRACTICES - False Advertising
It is an illegal practice to falsely advertise insurance products or services in any way. This includes circulating statements, letters, or statements in newspapers, magazines or other solicitation materials.
UNFAIR TRADE PRACTICES - Defamation of Insurer
It is an illegal practice to make any public statement or advertisement that contains false or malicious information or unsubstantiated criticisms about an insurance company.
UNFAIR TRADE PRACTICES - Misrepresentation
It is an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance.
UNFAIR TRADE PRACTICES - Unfair Discrimination
It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality.
Prosthodontics
Prosthodontics is a branch of dentistry dealing with the replacement of missing parts using biocompatible substitutes such as bridgework or dentures
Insurance Fraud Act
It is illegal to commit an act of insurance fraud, which is defined as any intentional act occurring in the course of insurance business that attempts to deceive or misrepresent a material fact. Any person who, in the absence of fraud or bad faith, reports information regarding an act of insurance fraud will be given immunity.
Rebating
It is illegal to offer a premium rebate or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance. It is illegal for any person to obtain information from an applicant or policyowner under false pretenses. Violators are guilty of a felony charge in the fourth degree. All records pertaining to an applicant for insurance and a producer are confidential, except when the Director must take action because of an actual or potential criminal offense.
Prohibited Inducements
It is illegal to promise employment, profits, or returns as a way to induce the sale of an insurance product .However, merchandise with the insurer's logo is allowed to be given for advertising purposes as long as the value does not exceed $25.
UNFAIR TRADE PRACTICES - False Financial Statements
It is illegal to publish any false financial statement regarding a person or entity.
Policy Forms
It is illegal to use policy forms until they have been submitted to, and formally approved by, the Director. Once submitted, the Director will notify the insurer within 30 days as to whether the policy forms are approves or disapproved.
Right to Examine (Free Look)
Life insurance policies must provide a minimum free-look period of 10 days upon policy delivery. This allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep the policy within the 10 days allowed, a full refund will be given.
Misdemeanor Penalties
Misdemeanors are fined up to $2,500 or face maximum imprisonment of 2 years, or both.
Misrepresentation
Misrepresenting a material fact in selling a long-term care insurance policy
Pre-existing exclusions - Long-Term Care
No Long-Term Care policy may exclude pre-existing conditions for a period of more than 6 months.
Legal Actions
No legal action can be initiated within 60 days after proof of loss has been submitted to the insurance company.
Long-Term Care
One or more necessary or appropriate diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services in a setting other than an acute care unit of a hospital is provided by long-term care insurance.
Oral surgery
Oral and maxillofacial surgery is surgery to treat many diseases, injuries and defects in the head, neck, face, jaws and the hard and soft tissues of the oral and maxillofacial region.
Outline of Coverage
Outline of coverage is required and provides a very brief description of the important features of the policy. It is a summary of coverage and describes policy features, benefits, exclusions, and riders in a Long-Term Care policy.
Periodontics
Periodontics is a dental specialty that involves the prevention, diagnosis and treatment of disease of the supporting and surrounding tissues of the teeth or their substitutes. It also involves the maintenance of the health, function, and esthetics of these structures or tissues.
PRE-EXISTING CONDITIONS - Individual Health Insurance
Pre-existing conditions (conditions for which medical advice, diagnosis, care or treatment was recommended or received in the 12 months prior to the effective date of enrollment) may be excluded for a maximum of 12 months from the date of enrollment.
Maintenance and Duration
Producer licenses are renewable biennially (every two years) with fee, renewal application, and proof of completing continuing education (CE) on or before the last day of the producer's birth month. Exceptions are made for producers who are in active military service or other extenuating circumstances by requesting a waiver.
Representing an Unauthorized Insurer
Producers are personally liable for the business they transact on behalf of insurers that are not licensed or unauthorized to do business in South Carolina. Producers who transact insurance on behalf of unlicensed or unauthorized insurers in South Carolina are guilty of a misdemeanor.
Fiduciary responsibility
Producers have a fiduciary responsibility for all funds collected from clients. Producers must not mingle these funds with their own personal funds. However, producers are not required by law to open a separate bank account for such funds.
Records Maintenance
Producers must keep full and accurate records of all insurance business in which they are involved. Records must be kept for at least five years.
Solicitation and Sales Presentations
Producers must provide applicants and prospects with the approved NAIC Buyer's Guide. Producers must also provide a Policy Summary to applicants. Under South Carolina law, the Buyer's Guide and Policy Summary must be delivered with or prior to the policy delivery.
REGULATIONS - Address/Name Change
Producers must report a change in address or name to the Department of Insurance within 30 days of the change.
Continuing Education
Resident producers must complete 24 hours of continuing education every 2 years to keep their license active. At least 3 of the 24 hours must be in ethics. An excess of up to 18 hours may be carried over to the next biennial continuing education period. The responsibility for regulating the insurance continuing education requirements and approving the courses belongs to the Department of Insurance. Nonresident producers are not required to complete South Carolina continuing education requirements as long as their home state requirements are met.
Restorative - Dental
Restorative dentistry is the procedure for restoring the function and integrity of a missing tooth structure. Examples include fillings, crowns, and dental bridges.
South Carolina Health Insurance Pool (SCHIP)
State's high risk pool coverage for residents who cannot obtain coverage through the traditional insurance market. To be eligible, individuals must be a resident of South Carolina, have been rejected by at least one health insurer based on a health condition, and be federally eligible (an individual who is ineligible for Social Security, Medicare, or Medicaid). The pool offers the following types of coverage's and plans: major medical, PPO, and high-deductible.
Rates
The Director has the authority to set reasonable standards for rate-making (setting premiums).
Notice and Hearing
The Director may call and hold hearings for any purpose deemed necessary. The notice of the hearing must be given to the person cited at least 30 days prior to the designated date.
Cease and Desist Order
The Director may issue a cease-and-desist order to any person found to have committed an unfair or deceptive act or has violated a state insurance law.
Examination of Records
The Director must examine the financial affairs of each insurer operating in South Carolina prior to issuing a certificate of authority. At the very least, a company shall be then examined once every 5 years. The insurer must not impede an examination and is required to assist in the examination procedures
Certificate of Authority
The Director will examine the financial affairs of all insurers before issuing a certificate of authority to transact business in South Carolina.
Solvency
The Director will suspend the certificate of authority of any insurer that becomes insolvent, is threatened with insolvency, or is delinquent in claims payment.
FAIR CREDIT REPORTING ACT
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the use and disclosure of consumer credit information. The primary purpose of the Fair Credit and Reporting Act is to protect consumers with guidelines regarding credit reporting and distribution. Adverse information that has been removed from a consumer's file cannot be reinstated without notifying the customer within five days. Furthermore, agencies cannot store adverse information about a consumer for longer than a set period of time. For example, information about late payments and final judgments can only stay on a credit report for up to seven years, bankruptcies - 10 years, and tax liens - seven years from the date paid.
Life and Accident and Health Insurance Guaranty Association
The Insurance Guaranty Association is used to rehabilitate insolvent (financially incapacitated) insurers. Producers are prohibited from using the existence of the Insurance Guaranty Association for selling, soliciting, or inducing purchase of an insurance policy.
Buyer's Guide
The buyer's guide enables applicants to compare different life insurance policies and help them choose which policy is best for their needs. The content of a Buyer's Guide must be approved by the Director.
NFAIR CLAIMS METHODS
The following acts, omissions, or practices are defined as unfair and deceptive claim settlement practices when knowingly committed or performed with such frequency as to indicate a general business practice, and are prohibited: • Misrepresenting to insured's 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 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 insured's • Not attempting in good faith to effect prompt, fair and equitable settlements of claims on which liability has become entirely satisfy the claim loss; the claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order
Physical Exams and Autopsies
The insurer has the right to examine the insured during the claim process and to make an autopsy when death is involved and where it is not forbidden by law.
Policy Loan Interest Rate
The maximum fixed interest rate for policy loans charged by insurers is 8% in South Carolina.
Cash Surrender
The maximum length of time an insurer can defer payment of a cash surrender value of a life insurance policy or annuity is 6 months.
Policy Summary
The policy summary contains specific information on the provisions, benefits, and coverage of the policy applied for.
Proof of loss
Written proof for any loss must be given to the insurance company within 90 days.
Replacement
The primary purpose of replacement regulation is to protect policyowners from misrepresentations and loss of benefits. Any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuities will be any of the following: • Lapsed, forfeited, surrendered, or otherwise terminated • Reissued with any reduction in cash value • Converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values • Amended so as to affect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid • Reissued with a reduction in cash value • Used in a financed purchase
Suitability - Long-Term Care
The producer must have reasonable grounds for believing that the recommendation is suitable for the customer of a Long-Term Care Insurance Policy.
Grace Period
The required grace period for life insurance policies in South Carolina is 31 days. The grace period is a time which a policy remains in force after the premium is due, but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the 31 days or the insured dies during the grace period. The grace period for health and accident insurance is required to be no less than 7 days for weekly premium policies, 10 for monthly premium policies, and 31 for all other policies. If premium is paid within the grace period, coverage shall remain in effect.
UNFAIR TRADE PRACTICES - Twisting
Twisting involves making a false written or oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured.
Notice of Replacement
Under South Carolina law the replacement of life insurance contracts with a new contract requires the producer to give the applicant a written comparison and summary statement at the request of the policyholder and to follow instructions regarding replacement as obtained from the appointing insurer.
High pressure tactics
Used to induce the purchase of insurance through force, fright, threat, or undue pressure
Replacement Health Insurance
When a person covered by a health insurance plan moves to another plan, any credit toward fulfilling the preexisting requirement on the prior plan will be transferred to the new plan.
Pre-existing conditions, replacement policies
When replacing an individual health policy in South Carolina, the required replacement notice to the applicant must include notice that pre-existing conditions may not be covered. An individual's waiting period for pre-existing conditions is reduced when he or she has "creditable coverage."
Creditable coverage
previous coverage under another group or individual health plan when there has not been a break in coverage of 63 days. The 63-day period begins when the individual's previous coverage ended. It ends when coverage under your plan begins, or, if earlier, when your group's waiting period for eligibility begins.
Preexisting - Medicare (How Long Can It be Excluded?)
• An insurer may exclude coverage for a preexisting condition on a Medicare Supplement Policy for up to 6 months
Duties of the Producer
• Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. A copy must be left with the applicant. • Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced. • Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. • Submit to the replacing insurance company a copy of the Replacement Notice with the application.
Duties of the Replacing Insurance Company
• Require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant. • Send each existing insurance company a written communication advising of the proposed replacement within a specified period of time of the date that the application is received in the replacing insurance company's home or regional office. A policy summary or ledger statement containing policy data on the proposed life insurance or annuity must be included. • When a life insurance or annuity replacement policy is sold, the policyowner has a right to return the policy for a full refund of premium within 30 days.
OEP Medicare
• The open enrollment period for Medicare (and Medicare Supplements) begin 3 months before your 65th birthday and lasts for 7 months