IL Life Insurance - Illinois Statutes and Requirements Pertinent to Life Only
To what does the Replacement Regulation NOT apply?
-group annuities -life coverage in a tax-qualified retirement plan -variable life -nonrenewable coverage expiring in <=5 years
At what annual rate does interest on life insurance proceeds accrue from the date of death of the insured?
Interest proceeds accrue annually at 10% on the total amount payable.
Variable life, group life, and annuities are EXEMPT under which rule?
Life Solicitation. The life solicitation rule applies to all life insurance sales, including fraternal benefit life insurance, but not to credit life, group life, franchise life, variable life, annuities, and life insurance in pension and employee benefit plans subject to ERISA.
The Replacement Regulation minimizes
Misrepresentation. The Replacement Regulation requires that certain steps be followed in the replacement of insurance policies, in order to make sure that policyowners receive the information they need to make decisions that reflect their own best interest. It also minimizes the opportunity for misrepresentation and incomplete disclosure.
Ronald is buying life insurance policies. He is unclear which one to buy, and his insurer explains the costs of similar plans, in addition to their basic features. Which rule requires the insurer to disclose such information?
The Life Solicitation Rule requires insurers to deliver at least certain minimum information designed to help buyers select the most appropriate life insurance plan for their needs, understand the basic features of the policy they are considering, and evaluate the relative costs of similar plans.
Under standard circumstances, at what point should a Buyer's Guide be distributed to a prospective buyer?
The insurer must provide to all prospective purchasers a Buyer's Guide and a policy summary prior to accepting the applicant's initial premium or premium deposit, unless the policy for which application is made contains an unconditional refund offer of at least 10 days.
What is the main purpose of the regulation on life insurance policy illustrations?
The purpose of the regulation on individual and group life insurance policy illustrations is to provide standards that will protect and educate consumers.
How does an one qualify for a viatical settlement provider license?
To qualify for a viatical settlement provider license, an applicant must have a good business reputation, training and education qualifying them for the license, and a detailed plan of operation. The applicant must also be found competent and trustworthy.
To what does the Replacement Regulation apply?
-nonrenewable coverage expiring in >5 years -
What must an insurer present to a prospective policy purchaser before the initial premium is paid?
.Buyer's Guide. The insurer must provide to all prospective purchasers a Buyer's Guide prior to accepting the applicant's initial premium or premium deposit, unless the policy for which application is made contains an unconditional refund offer of at least 10 days.
How long must an insurer's advertisements be kept on file?
4 years. Insurers must keep a complete file of all printed, published, or prepared advertisements on file for either 4 years or until the insurer's next regular examination by the Department, whichever comes later.
If a viatical settlement provider moves his business the new address must be reported to the Director within
A business address change by a viatical settlement provider must be reported to the Director within 30 days.
According to the life insurance replacement regulations, what would be an example of policy replacement?
A policy is reissued with a reduction in cash value.
The term "illustration" in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy. The term "illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years. Illustrations must also include name of the insurer and the agent, information about the proposed insured and the policy itself.
A proposed policy form includes accelerated benefits. Before the policy can be legally used, it must be approved by which of the following?
All policy and certificate forms must be filed with and approved by the Department of Insurance prior to use.
accelerated benefit
An accelerated benefit is a life insurance provision or rider that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.
Which of the following is a generally acceptable title for a producer to use in describing himself at the beginning of a sales presentation? A-Investment advisor B-Financial planner C-Producer D-All of the above
C. Before beginning a sales presentation, producers must give prospects the full name of the company they represent and say that they are acting on behalf of that company. Terms such as financial planner, investment advisor, and financial consultant are prohibited, unless the producer is generally engaged in the advisory business and is not compensated as related to sales.
The Illinois Life and Health Insurance Guaranty Association is obligated to pay covered claims only if under the amount of
Claims under $300,000 are covered by the Illinois Insurance Guaranty Association.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association. Though it is illegal to advertise, the statement is still true and would not be considered a misrepresentation.
What is the difference between viatical settlements and accelerated death benefits?
Viaticals are funded by a third party, and Accelerated Death benefits are provided by the insurer that issued the original policy. Viatical Settlements allow someone living with a life-threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed, before their death. Viatical settlements are separate contracts in which the insured sells the death benefit to a third party at a discounted rate.
conservation
a legally acceptable attempt by the existing insurer or its producers, or by a broker to dissuade a current policyowner from the replacement of existing life insurance or annuity.
How soon must the insurer pay a death benefit claim after receiving the proof of death?
2 months. A provision on settlement upon proof of death mandates that a settlement must be made no later than 2 months after the receipt of proof of death.
Replacement
Replacement means any transaction in which new life insurance or a new annuity is to be purchased and it is known or should be known to the proposing producer that by reason of the transaction, existing life insurance or annuities have been or will be 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.
Buyer's Guide
The Buyer's Guide is a document that contains and is limited to the language contained in the appendix of the Illinois regulation or language approved by the Director. It describes the differences among different types of policies and outlines the features and the advantages and disadvantages of each type.
What is the maximum percentage of the face amount of a life insurance policy that can be paid in an acceleration of benefits?
The occurrence of any one of the covered conditions set forth in Illinois law may result in the payment of an accelerated benefit of up to 75% of the face amount of the policy.
The policy loans provision states that the insurer must advance to the policyowner a sum up to the policy's cash value after the full amount of premiums have been paid for how long?
The policy loans provision states that the loan can be paid after a full 3 years of premium payments.
Illinois Life and Health Insurance Guaranty Association
-nonprofit legal entity to protect the insured and their beneficiaries against insolvent or impaired insurers -provides coverage for life and health insurance policies, annuity contracts, and health or medical care service -guarantees the payment of benefits and the continuation of coverage -maintains 2 separate accounts: Life insurance (+annuities) and Health insurance -supervised by the Director -subject to provisions of the Illinois Insurance Code
The Life Solicitation Rule applies to what?
The life solicitation rule applies to all life insurance sales, including fraternal benefit life insurance, but not to credit life, group life, franchise life, variable life, annuities, and life insurance in pension and employee benefit plans subject to ERISA.
To which of the following policies would the state regulation on illustrations NOT apply? A-A group life policy B-A term policy C-An individual variable life policy D-A whole life policy with a guaranteed death benefit of $20,000
C. The life insurance illustrations regulation applies to all individual and group policies except variable life insurance; individual and group annuity contracts; credit life insurance; or life insurance policies and certificates with guaranteed scheduled death benefit of $10,000 or less, or illustrated death benefit of less than $15,000.
In the state of Illinois, a viatical settlement contract must contain an unconditional right to cancel. How long does this right remain in effect?
30 days from the date the contract is executed. A 30-day unconditional right to cancel from the date the contract is executed must be included in a viatical settlement contract. A 15-day unconditional right to cancel applies to the date of the receipt of the viatical settlement proceeds.
Which entity ultimately decides if an advertisement is complete and truthful?
The Director has the power to determine whether an advertisement is clear, truthful, and complete.
An agent wants to include an illustration written by his insurance company. Which of the following best describes the conditions under which she may use the illustration?
The illustration must stay exactly as it is. If an agent uses the illustrations of an insurer, they must first be approved, and the agent may not alter the illustrations in any way.
What is the name of the insured who enters into a viatical settlement?
Viator means the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract.
A new life insurance policy is derived from a policy that was recently terminated. Which of the following terms best describes this policy?
"Replacement" is a sale that results in existing insurance coverage that has been terminated in any way. Replacement can also occur under other circumstances, as well.
Under what conditions must an insured sign a Notice Regarding Replacement of Life Insurance or Annuity form?
When replacing a policy with a different insurer that is under different ownership than the current company. If an insured wants to replace his or her policy with another policy provided by a different insurer, the insured must sign a Notice Regarding Replacement of Life Insurance or Annuity form, unless the new insurer is under the same ownership as the old insurer. This notice warns the applicant to get all the facts before deciding to replace existing coverage. The policies proposed for replacement must be entered on the form.