Insurance laws and rules
What an insurer he's getting a replacement how long is the free look period
20 days after delivery
long is a temporary license valid for ?
180 days
Entire contract
A Provision That the Policy and the application shall constitute the entire contract between the parties
Group health certificates
A group health certificate must contain a summary of policy features and benefits
Fines Because a person committed an unfair method of competition, act, or practice in violation of insurance laws
A penalty up to $5000 per violation, but no more than $50,000 total over six month period. if the person did not know or reason we should not have known, the penalty is up to $1000 per violation, but no more than $10,000 in a six month period. Any person who violates a cease and desist order, or other order issued by the commissioner, will be subject to a penalty up to $10,000
Group life and employment termination
A person covered by a group policy also has the right to convert such coverage to an individual policy within the conversion. Within 31 days Without proving insurability. If this rate is exercise, the employees are responsible for the payment of the premium.
Shared commissions
A producer made Sherri a commission with another producer when the other producer is license in the same line of business
Definition of small employer
A small employer is defined as one that employs between 2 to 50 Employees
Federal Estate Tax
A tax cost typically associated with death is the federal estate tax
Federal estate tax
A tax cost typically associated with death is the federal estate tax
Viatical Settlement
An arrangement that allows someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds when and where they are most needed, before death. Proceeds of the viatical settlement contract could be subject to the claims of creditors
Producer
An individual appointed by insurance company that represent the company and presents policies on his behalf is called a producer
What is needed by the insurance company in order to sell insurance in Pennsylvania
Certificate of authority issued by the department of insurance
Controlled businesses
Controlled businesses can be defined as policies written on people that the license producer has direct influence over: Including family, employers, and /or any company to which the producer has stock control
What can happen if somebody is found in violation of an insurance law
Deny, suspend, refuse to renew, or revoke the persons producer license assess a civil penalty up to $5000 for each violation Issue a cease and desist order
Producer disclosure requirements
Describes the services to be Provided, and provides full disclosure of the fee to be paid to the insurance producer by the insurance consumer
AIDS/HIV testing
For underwriting an insurance policy, insurers may require proposed insurance to undergo an HIV test, but only in conjunction with other medical test. The basis for requiring an HIV test cannot be the proposed insured's sexual orientation. Then sure must obtain written consent from the proposed insured In order to conduct the HIV test
General account vs separate account
General account : Is designated for insure who deposits premiums from policy it under rights and from which it funds day today operations of the business. The general account does not dedicate collateral to a specific policy and it said treats all funds in aggregate. Separate account: Is a privately managed investment account owned by investor seeking to manage a pool of individual assets. Separate accounts are typically opened through a brokerage or financial advisor. They may also be held at a bank or opened with an insurance company. Several accounts are typically use for variable life or variable annuity products
Solvency
I life insurance company is financially impaired (insolvent) it does not have the minimum reserves, referred to as "net value," +50% company capital on hand. When this happens, the company is prohibited from issuing New policy until funds equal liabilities.
Reinstatement
If a health policy is reinstate it after it had labs for non-payment, there is a waiting period of 10 days before I claim covering sickness will be covered. Injury sustained from an accident, however, will be covered immediately. Lapse individual life insurance may be reinstated at any time within three years
Representations
If the application is made part of the policy, the policy shall contain a provision that the statements in the application, in the absence of fraud, are considered representations
Accelerated Death Benefits
In Pennsylvania, payment on an accelerated death benefit may not be less than 25% of the total death benefit
Personal identifiable information
Information from a consumer report Account balance information and payment history Information and consumer provides to a licensee in an insurance application Information license he collects through an Internet cookie ( An information - collecting device from a web server
What is NOT considered personally Identifiable financial information
Information such as blind data that does not include names and addresses A list of names and addresses of customers of an entity that is not a financial institution Health information
Commissions and fees
Insurers may pay commissions to producers. Unlicensed persons may not receive commissions, with the following exceptions renewal or deferred commissions to retired producers, and referrals. A producer may charge a fee to consumers as long as the fee is disclosed in advance in writing. However, producers cannot charge a fee for an application for insurance
Commissions and Fees
Insurers may pay commissions to producers. Unlicensed persons may not receive commissions, with the following exceptions: Renewal or deferred commissions to Retired producers, and referrals.
false advertising
It is an illegal practice to falsely advertise insurance products or services in anyway. This includes making false statements about the financial condition of an insurer
Address change
Licensees must report a change of address to the insurance department within 30 days
How often do licenses have to be renewed?
May be renewed every two years with faith, renewal application, and proof of completing continuing education credits during this year period. A lapse license may be reinstated within 12 months of the renewal date
Illustrations
Our charts, crafts, and numerical data that depict the non-guaranteed elements of a policy overtime. Non-guaranteed elements are premiums, benefits, values, credits, or charges Under a policy of life insurance that are not guaranteed or not determine when the policy is issued. A life insurance illustration showing future premiums being paid out of non-guaranteed values must disclose that the policy owner may need to resume premium payments depending on actual results.
Fiduciary Responsibility
Producers have a fiduciary responsibility for all funds collected from clients. Producers must not mingle these phones with her own personal funds. However, producers are not required by law to open A separate bank account for such funds
Examination of books and records
The commissioner may examine the business affairs, books, records, documents, and computer files of any producer to determine the producers financial condition and whether the producer is abiding by insurance loss. The commissioner must conduct a financial Examination of each ensure license in Pennsylvania at least once every five years
A producer who sells insurance on the premises of a financial institution, such as a bank, must provide the following disclosures at or before a consumer submit an application for insurance:
The contract is not a deposit The contract is not issued by the FDIC federal deposit insurance corporation or any other agency or instrumentality of the federal government. The contract is not guaranteed by the financial institution or an affiliated insured depository institution The contract is subject to investment risk, including potential loss of principle, when appropriate
Policy loan in PA
The maximum fixed interest rate charge by insurers is 8% in Pennsylvania A policyowner Cannot borrow against the cash value unless policy has been in force for three years. If policy owner fails repay the loan, the policy will not be avoided. The company has the right to deduct from the death benefit any outstanding loan balances when the insured dies
personal liability
The producer of an insurer can be personally liable for committing acts which are prohibited in the agency contract
How long must insurers maintain files of client records and policy replacements
Three years
Lapsed individual life insurance may be reinstated at anytime within
Three years
Twisting
Twisting involves deceptive act of inducing a policy owner two laps, forfeit, or surrender life insurance policy for the purpose of replacing it with another policy with a different company. This action is not in the insured's best interest.
Life and Health Guaranty Association
Used to rehabilitate insolvent, financially incapacitated insurers. For any one person, the guaranty Association will provide 300,000 in life insurance death benefits $100,000 in cash surrender value 300,000 in health insurance claims $300,000 in present value in it already benefits The life and health guaranty Association is funded by insurance companies through assessments
cease and desist order
When the commissioner believes a producer entity has broken an insurance law, the commissioner has the authority to issue a cease and desist order at a hearing. Any person or Entity found to be in violation of an insurance law will be notified by the insurance department. The notice will specify the nature of the violation and a hearing date at least 10 days later
Gramm-Leach-Bliley Act of 1999
allows business combinations (e.g. mergers) between commercial banks, investment banks, and insurance companies, and thus permits these institutions to compete in markets that prior regulations prohibited them from entering.
Stranger-Originated Life Insurance (STOLI)
is a life insurance arrangement in which a person with no relationship to the insured (a stranger) purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies. In other words, STOLIs are financed and purchased solely with the intent of selling them for life settlements.
incontestability
A Provision that the policy term shall be in incontestable after it has been in force for a period of two years from a state of issue ( unless the purpose for taking out the coverage was fraud)
Buyer's Guide
A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision.
Assumed names
A producer must report to the commissioner if he/she will be conducting business under an assumed name
Postnatal care
According to Pennsylvania law, post natal care must be delivered within 48 hours of discharge
Fair Credit Reporting Act
Act that protects privacy of background information and ensures that information supplied is accurate.
rates
Insurance companies are required by law to charge premium rates that are not excessive, in adequate, or unfairly discriminatory. Insurers must file their rates with the insurance department. A rate filing is subject to a 30 day waiting period before it becomes effective.
Illegal Inducement
It is an Illegal practice to offer anything of value (example stocks, bonds, securities, property, dividends, profits, money) other than as explicitly stated in the policy, as an inducement to purchase a contract of insurance
Misrepresentation
It is an illegal practice to mislead or misrepresent any fact about an insurance policy- such as policy terms , benefits, value, cost, effective date, or existence of a contract of insurance
Dafamation
It is illegal practice to make any public statement or advertisement that contains false information or unsubstantiated Criticisms about an insurance company
Rebating
It is illegal to offer a premium Ruby or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance
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 you, and formally approved by, the commissioner. Once submitted, the commissioner has 30 days to approve or disapprove the policy forms
Agency Termination
No insure may terminate an agency's contract without providing at least 90 days prior written notice stating the reason for the action, to both agent and the commissioner of insurance. An agent has 30 days from receipt of the termination notice to request in writing that commissioner review the insurers actions and determine whether the insurers actions complies with the law. Insurers must make a reasonable attempt to rehabilitate agents before terminating them. No insurance may terminate it's contract without an agent do solely to adverse claims experience. When an insurer notifies an agent that the insured is terminating the agents contract, the insurer must offer to continue such agents policies for 12 months from the effective date of the termination. Under a separate administrative action, the insurance commissioner may: spend or revoke the violators license refuse to issue or renew a violators license for up to one year Impose a civil penalty up to $500 per violation
Backdating
Policies cannot be backdated more than six months from the date of issue. The point of backdating a policy is to make it effective at an earlier date to preserve a slightly lower premium at that reduced age.
Exemption from creditors
Proceeds from my life insurance policy are Protected from any claims by a creditor of the insured as long as there is a named beneficiary
Continuing Education
Producers must complete 24 hours of continuing education every Two years in order to renew their license. In Pennsylvania, commissioner is responsible for continuing education course content approval
Pennsylvania continuing education
Producers must complete 24 hours of continuing education every to yours in order to renew their license out of the 24 hours, three must be an ethics coursework. In Pennsylvania, the commissioner is responsible for continuing education course content approval
commissioner
The primary duty of the insurance commissioner is to see that laws are properly executed and enforced the commissioner is appointed insurance by the governor to a for year term.
Fraud and False Statements penalty
This includes embezzling money from insurance company, Misappropriating Insurance premiums, and writing threatening letters to insurance offices. It is illegal to lie, falsify, or conceal information orally or in writing from a federal official. There's also includes interstate insurance business who engages in intentional unfair or deceptive insurance practices, over values and insurance product in a financial report or document presented to a regulatory official The punishment for violation is a fine up to $50,000, imprisonment up to 15 years, and or license revocation an individual convicted of a felony including dishonesty me engage in the business of insurance only after receiving written consent from the state insurance regulatory agency and a 1033 waiver
1035 exchange
When an existing life insurance policy is assigned to another ensure for a new contract, the transaction may be treated for tax purposes as 1035 exchange
Policy Summary
provides specific information about the policy purchased, such as the premium and benefits and coverage of the policy applied for.
