Life Agent
deferred annuity (DA)
annuitization beings in more than 1 year
title 18 section 1033 penalties
10 or 15 years in prison or a civil fine of $50,000 or amount received or offered
Plan F high deductible
$2,240 in 2018
continuing education
24 hours of CE/ license term
Violation of these Workers' Comp fraud laws shall be punished by
1, 2, 3, or 5 years imprisonment and/or a fine not exceeding the greater of $150,000 or 2x value of fraud
California (state) small group
1-100
MAGI Eligibility for cost sharing reductions *CSRs)
138%-250% of FPL
Inpatient Psychiatric care in a freestanding psychiatric hospital is limited to
190 days in a lifetime
license issued with
2-year terms
upon receipt of written demand the original or certified copies of records must be delivered to the commissioner within
30 days
all medicare supplement policies have a
30-day free-look period
Medicare part A (hospital insurance) premiums
40 credits - free 30-39 credits - $232/mo 0-29 credits - $422/mo
Part A Premiums
40 credits = free (premium-free part A) 30-39 credits ($232/mo for 2018) 0-29 credits ($422/mo for 2018)
PPACA (federal) large group
50+
Pre-existing Condition Waiting Period
6-month period after new medicare supplement policy issued (during open enrollment period) during which insurer can deny benefits for insured's out of pocket costs related to pre-existing conditions (if not creditable coverage)
Special enrollment
8-month period beginning month after employment/coverage ends, whichever happens first
Annuities
80% of annuities present value up to maximum of $250,000
Life Insurance death benefit
80% of policy's death benefit up to maximum of $300,000
Life Insurance surrender/withdrawal values
80% of policy's value up to a maximum of $100,000
records shall be made available and open to inspection or examination by the commissioner
AT ALL TIMES
CDI
California Department of Insurance
individual and small group health
an individual or small group health insurance policy shall provide all covered mental health and substance use disorder benefits small group = 1-100 employees
preferred
above average $
Applied to disability policies for hospitals, medical, and surgical expenses insurer shall not fail or refuse to
accept an application for insurance issue insurance to an applicant cancel an insurance policy renew insurance charge a higher rate or premium offer or provide different terms, conditions, or benefits place limitation on coverage on the basis of a person's genetic characteristics that may, under some circumstances, be associated with disability in that person or that person's offspring
acute care
care for conditions requiring a high level of medical monitoring and treatment covered by health insurance
Non-Participating Physician
can accept medicare assignment on a case-by-case basis
basic medial expense policies
can be stand-alone or combined into package
Business Disability Buyout Insurance
can fund buy-sell agreement
Qualifying Conditions for residual disability policy
currently earns at least 20% less than prior income be able to work full-time or part-time continue to be under a physician's care
partial disability
disability that prevents insured from engaging in some of the duties of his usual occupational OR from engaging in the occupation on a full-time basis and makes the insured eligible for a specified percentage (e.g. 50%) of his total disability benefit
the policy's daily benefit and benefit period are used to determine the lifetime benefit
daily benefit x benefit period = lifetime benefit
annuities
deals with the risk of living too long pays while living
level term
face amount remains level for the term of the policy
COB- dependent children
for a dependent child whose parents are married or are living together the plan of the parent whose birthday falls earlier in the calendar year its the primary plan
basic illustration
illustration that shows both guaranteed and non-guaranteed elements
Own-Occupation Definition of Total Disability
inability to performa the material and substantial duties
for life and disability insurance
insurable interest required to exist only at the time contract becomes effective
mutual insurance company
insurance company that is owned by its policyholders who are entitled to share in any profits through reduced premiums and policy dividends
stop-loss insurance
insurance designed to reimburse a self-insurer for losses that exceed an established retention limit dehiring the policy period
Exposure Unit
measure of loss potential used for pricing of insurance (usually $100 or $1000)
for policy owner <60, if individual life policy or annuity returned within the cancellation period, the owner will be refunded
non-variable: all premiums paid + any policy fee variable: account value + any policy fee
non-participating (non-par)
not eligible to receive dividends
Non-admitted Insurer
not entitled to transact insurance in CA by CDI
Expenses
rent/utilities claims employee salaries agent commissions
who else can get coverage?
spouse children (0-26) special needs child
if after a hearing they are found guilty
strike 1- they will pay the penalties & cease and desist from engaging in those methods, acts, or practices found to be unfair strike 2- pay $5,000 or upon to $55,000 if willful strike 3- subsequent violation of Cease & Desist Order can result in suspended pr revoked license up to 1 year
daily benefit
the max. daily amount that will be paid for LTC services
accidental means
unexpected or unforeseen cause of an accidental bodily injury. the mishap itself must be accidental, nit just the resulting injury (not the result and event have to be accidental)
non-mec
withdrawals taxed on FIFO basis policy loans taxed on FIFO
an applicant or licensee must notify the commissioner in writing
within 30 days of learning of a change in background information
fair discrimination (legal)
charging different life insurance or annuity rates based on gender or life expectancy
Unfair Discrimination
charging different life insurance or annuity rates to someone for a reason other than gender or life expectancy
Disability Income Insurance
insurance that provides for periodic payments of benefits to replace insured's income when insured is unable to work due to a covered disability
policy owner must have an insurable interested in the life of the
insured
recurring disability
policy provision that states if insured goes back to work after a disability, and then again suffers from the same disability within a short period of time (usually 3-6 months), it will be considered the same disability and elimination period waived
as of July 1, 2012, every health insurance policy must provide coverage for behavioral health treatment for
pervasive developmental disorder or autism
staff model
physician's, nurses, etc. are employees of HMO may own facilities only deals with its own HMO members
doctors services
physicians & services (outpatient & impatient) physician assistants nurse practitioners social workers physical therapists psychologists
Medicare Supplement Policies
plan A and plan B are not related to medicare plan A and plan B policies
Boycotting
refusal to enter into a business transaction with someone until he complies with certain requirements, conditions, or grants specific concessions
Beneficiary Designation change
you (the policy owner) may make a change while the insured is alive by sending a request
Guaranteed Availability of coverage
you cannot be denied coverage for any reason other than the ability to pay
reciprocal exchange
an unincorporated association overseen by an attorney-in-fact in which each member (subscriber) is an insured and insurer
mistakes happen on an application. to fix it, just make the necessary change(s)
and have the applicant/proposed insured initial the change(s)
Registered Domestic Partners
group health policies must provide equal coverage for the registered domestic partner of an employee to the same extent, and subject to the same terms and conditions, as provided to a spouse of an employee
non-cancelable
coverage cannot be canceled (coverage can usually terminate at specified age, such as 65) premiums cannot be changed
Adult Children
coverage for children covered as a dependent under a parent's group health coverage can typically remain covered through age 25 (i.e. until they turn 26 years old)
extension of benefits
coverage provided for at least 12 months following discontinuance of the plan
creditable prescription drug coverage
coverage that's expected to pay, on average, act least as much as medicare's standard prescription drug coverage could include drug coverage from: current or former employer or union individual health coverage TRICARE Indian health services department of veterans affairs
30-year term life
coverage will end at end of 30-year term insured risks outliving coverage even if renewable, premium will be incredibly expensive
agents wanting to submit applications for QHPs through covered California must first complete all
covered California agent agreements and certification requirements pass the exam with 80%+ recertification is required every 5 years following initial certification
earned surplus
funds earned by insurance company after all looses and expenses have been paid
applies to life and disability: insurers cannot refuse to accept an application or to issue or cancel a policy under conditions less favorable to the insured than in other comparable cases, except for reasons applicable alike to persons of every
gender identity/gender expression ancestry/national origin/race/color religion sex/gender
the beauty of group life
generally, no underwriting approval or evidence of insurability required if enrollment is done during plan's open enrollment period
group life
gets certificate of insurance - issued to each covered employee employer owns and controls the master policy they are in charge of enrolling employees, record keeping, and paying premiums employer & insurer are parties to group insurance contract
in-network
getting care from within the network lower deductibles, copays (if any) & coinsurance
Examples of Qualifying Life Events include
getting married or divorced, including entering into domestic partnership losing coverage through job losing coverage under parent's plan upon turning 26 years old change in residency (e.g. moving to CA from another state) having a child, adopting, foster care child becoming a citizen, national or lawfully present individual increase or decrease in income other events on case-by-case basis determined by covered CA (triggers 60-day special enrollment period)
Life & Disability Analyst Requirements
good business & general reputation licensed 5 years as Life-Only and A&H 'Fit and Proper' (ethically speaking) Pass a qualification exam Must be at least 18 years old
Original Medicare
government health Insurance Part A - hospital insurance Part B - medical insurance Part D - prescription drug coverage Medicare Supplement Insurance (medical policy) - private insurers & optional
Medicare
government health insurance primarily for 65+
Medicare
government health insurance primarily for people 65 and older
insured
subject/object of policy insured's death triggers policy death benefit to be paid out consent/insurable interest required
premium rate=
mortality - investments + expenses
business uses
retirement plans for employees
insured guilty of perjury for
signing a fraudulent claim form
the following managed health plans, in addition to being available as individual plans, can also be designed as group health plans
HMO PPO EPO POS
Implied Authority
Type of authority that is not express, but is customary and necessary so an agent can exercise express authority
Medical Loss Ratio (MLR)
a basic financial measurement used in the PPACA to encourage health plans to provide value to insureds MLR= total claims/total premiums
class designation
a beneficiary designation that groups multiple beneficiaries into one class (e.g. children) as opposed to having to list them each individually by name
home care coverage
a broad term that includes any of the following types of care when provided in the home... hone health care personal care homemaker services hospice (in the home) respite care (in the home)
types of annuities
individual and group
Medi-Cal (medicaid)
joint fed & state insurance program that provides medical, dental, and vision for low income (indigent) state pays administration costs & fed pays claims department of health care services (DHCS) finances and administers medi-cal
policies insuring two lives
joint life policy survivorship life policy
paid-up
no more premium payments have to be made on a policy
coverage provided on
per person basis
level 4
review by the medicare appeals council
underwriting requirements
will vary by insurer
MAGI eligibility for Medical-Cal (adults ages 19-64)
≤138% of FPL
MAGI eligibility for Medi-Cal (children under 19)
≤266% of FPL
Premium
the result of multiplying the applicable number of exposure units by the rate
Rider
addition to a life policy that provides some additional feature or coverage (usually requires addition premium)
cancelable
coverage can be canceled at any time by insurer with notice premiums can be increased
Fully Insured Status
fully insured status obtained when worker has 40 credits (max 4 credits/year)
flexible premium deferred annuity (FPDA)
funded with multiple premiums payments distributions begin in more than 1 year
med supp applications must include
"a rate guide is available that compares the policies sold by different insurers. you can obtain a copy of this rate guide by calling the department of insurance's consumer toll-free telephone number (1-800-297-HELP), by calling the health insurance counseling and advocacy program (HICPA) toll-free telephone number (1-800-434-0222), or by accessing the department of insurance's internet web site"
applies to life insurance and disability income insurers may not unfairly discriminate on the basis of tests of a person's genetic characteristics
"genetic characteristics" means any scientifically or medically identifiable gene or chromosome that is known to be a cause of a disease or disorder that is presently not associated with any symptoms of any disease or disorder
unlawfully acting as an insurer without a certificate of authority can result in a penalty of
$100,000 and/or up to 1 years in jail
What's different about a California Partnership LTC policy?
$100,000 lifetime benefits for every dollar that a CA Partnership LTC policy pays out in benefits... that's one more dollar that will be protected from the "spend down" requirements of Madi-Cal
Standard monthly Part B premium
$134 in 2018 but those with higher modified adjusted gross incomes pay more >85k for individual >170k for couple
premature withdrawal <59 1/2
10% IRS tax penalty applied to taxable portion of any annuity withdrawal prior to age 59 1/2
Punishment of misrepresentation
$25,000 fine and/or up to 1 year in jail, license suspend for up to 3 years and the insurer can have their certificate of authority suspended
right to cancel life policy (<60)
10-30 days return period shall not be lass than 10 days nor more than 30 days can be returned by mail or other delivery method notice must appear on front of policy jacket or cover page
the coalition against insurance fraud estimates that insurance fraud steals at least
$80 billion every year across all lines of insurance
critical illness
% of death benefit advanced if insured has a covered critical illness (e.g. cancer, heart attack, stroke, etc.)
terminal illness
% of death benefit advanced if insured terminally ill and has limited life expectancy (e.g. 6-24 months)
consumer report
*Any Written, Oral, or Other Communication* of *ANY INFORMATION by a Consumer Reporting Agency that bears on a consumer's*: - Creditworthiness; - Credit Standing; - Credit Capacity; - Character; - General Reputation; - Personal Characteristics; or - Mode of Living. that is used or expected to be used in connected with an insurance transaction
Disability policies (including Disability income) shall contain a notice of claim provisions such as follows
*Notice of claim* Written notice of claim must be given to the insurance company within 20 days after the occurrence of the event on which the claim is based
according to california state law a small group is
1-100 FT employees
PPACA (federal) small group
1-50
terms range from
1-year term life 5-year term life 10-year term life 15-year term life 20-year term life 25-year term life 30-year term life
it is unlawful to do any of the following
1. make a knowingly false or fraudulent material statement or material representation for the purpose of: obtaining or denying any worker's compensation discouraging an injured worker from claiming benefits or pursuing a claim obtaining or denying any of the benefits or reimbursements provided in the return-to-work program discouraging an employer from claiming any of the benefits or reimbursement provided in the return-to-work program 2. present a knowingly false or fraudulent written or oral material statement in support of, or in opposition to, a claim for compensation 3. knowingly assist, abet, conspire with, or solicit a person in an unlawful act under the section
an insurable interest, with reference to life and disability insurance, is...
1.an interest based upon a reasonable expectation of: pecuniary (financial) advantage through the continued life, health, or bodily safety of another person AND consequent loss by reason of that person's death or disability 2.a substantial interest engendered by love and affection in the cade of individuals closely related by blood or law
personal insurance planning process
1.identify your goals and priorities 2.gather your data 3.analyze data and create a plan 4.implement your personalized plan 5.review and monitor your plan
California (state) large group
101+
according to california state law a large group is
101+ employees
violation penalties for not including the word insurance or license number
1st offence - $200 2nd offence - $500 3rd + offence - $1,000
replacement commissions
1st year commission for a replacement LTC policy is calculated as follows replacement policy premium - original policy premium = difference in premium x 1st year commission % = adjusted agent commission if difference is ≤$0, then renewal commission will be paid
limited lines auto insurance agent needs
20 hours
Patient Protection & Affordable Care Act (PPACA)
2010 federal law that resulted in a major regulatory overhaul of the private health insurance industry and public health insurance programs in an effort to expand access to insurance coverage (aka Affordable Care Act ACA and Obamacare)
owner can rescind life settlement within
30 days of being executed by all parties and owner has received all required disclosure OR 15 days from receipt by the owner of the proceeds (i.e. money) of the life settlement... whichever is sooner
records shall be maintained for a minimum period of
5 years following policy delivery
Lifetime Reserve Days
60 additional days that medicare will pay for during your lifetime when you're in a hospital for more than 90 days. for each lifetime reserve day medicare pays all covered costs that exceed the daily copay deductibles and copays apply to each benefit period
parking lot rule
60+ normally... during the 30-day cancellation period, the premium for an individual variable life insurance policy or an individual variable annuity contract may be invested only in fixed-income investments and money-market funds
Special Enrollment Period PPACA
60-day period following a qualifying life even during which and individual can enroll in a health plan, change plans, or apply for premiums subsidies even if outside open enrollment period
initial enrollment period
7 month period surrounding 65th bday
Insurance Broker
A person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health insurance with, but not on behalf of, an admitted insurer
Investigative Consumer Report
A report similar to consumer report, but one that also provides information on the consumer's character, reputation and habits. Obtained through personal interviews with the person's neighbors, friends, associates, acquaintances, or others
10 Standardized Plans (A-N)
A-N
CIGA
CA Insurance Guarantee Association
CLHIGA
CA Life & Health Insurance Guarantee Association
training myst consist of topics related to LTC services and insurance, including:
CA regulations and requirements Available LTC services and facilities Changes or improvements in services or facilities alternatives to purchase of private of LTC insurance (these hours are part of total hours needed)
training must consist of topics related to LTC services and insurance, including
CA regulations and requirements available LTC services and facilities changes or improvements in services or facilities alternatives to purchases of private LTC insurance
Cal-COBRA
CA state law requiring non-government employers with -19 employers to extend group health benefits to covered employees and depends for up to 36 months after a qualifying event 110% for individuals covered under federal COBRA, cal-cobra may also be used to extend health coverage for a combined period of up to 36 months
with multiple license
CE courses for any of the license types can be used
Disability "The Class"
CIC 100 insurance in this state is divided into the following classes (6) Disability disability insurance includes insurance appertaining to injury, disablement or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness includes- health, long-term care, workers' comp, disability income, specified disease, medicare supplement, accident only
Casualty
Casualty licenses can transact insurance coverage against legal liability, including that for death, injury, disability, or damage to real or personal property
waiver of premium
DI policy provision that waives policy premiums while the insured is disabled as defined in the policy
HMO
DMHC (department of managed heath care)
POS
DMHC (department of managed heath care)
CDI
DOI
Commissioner
DOI
DOI
Department of Insurance
Variable insurance products are regulated by three different entities
FINRA (Financial Industry Regulatory Authority) State Dept. of Insurance SEC (Securities and Exchange Commission)
Disability Income Insurance ( 2 years or less)
Every policy of disability income insurance that is of a short-term limited duration of 2 years or less, that is issued, amended, or rented on or after July 1, 2014, and that provides disability income benefits shall provide coverage for disability caused by severe mental illnesses EX: schizophrenia, schizophrenia disorder, OCD, panic disorder, bulimia, autism, bipolar disorder, anorexia, & major depressive disorder
GLBA (Gramm-Leach-Bliley Act)
Federal law that impacts collection, disclosure, and protection of consumers' nonpublic personal information
Health Insurance Portability & Accountability Act (HIPAA)
Federal law that regulates handling of patient medical records and information
consumer privacy protection laws
GLBA Cal-GLBA-SB1 IIPPA HIPAA
distribution methods
HICAP CDI's toll-free telephone number CDI's website
Health Insurance Counseling & Advocacy Program (HICAP)
HICAP is a state and federally funded program that provides free assistance to medicare beneficiaries, their representatives (e.g. family), and people who will soon be eligible for Medicare concerning: medicare Medicare advantage (Part C) medicare supplement insurance Medi-Cal (medicaid) long-term care insurance
HICAP access
HICAP provides by phone or in person
service type plans (managed care)
HMO (health maintenance organization) PPO (preferred provider organization) EPO (exclusive provider organization) POS (point of service)
IPA model (independent practice association)
HMO contracts with a number of physicians in independent practice may also see non-HMO members
Group Model
HMO contracts with an independent group medical practice primarily provide services for HMO members
network model
HMO contracts with more than one independent group medical practice primarily provide services for HMO members
Materiality
Measure of the estimated effect that the presence or absence of an item of information may have on the accuracy or validity of a statement.
Part C
Medicare Advantage
Apparent Authority
Occurs when an agent exceeds his express authority in an action but the customer has a justifiable belief that the agent is authorized to do the act in question
open (annual enrollment)
October 15-December 7 each year can join, switch, or drop during Part D open enrollment period (coverage begins on January 1)
employer mandate
PPACA requirement employers with 50+ FTEs provide health insurance to full-time employees and their dependents or pay a penalty (employer shared responsibility payment)
employer mandate
PPACA requirement that employers with 50+ FTEs provide health insurance to FTE and their depends OR pay a penalty (employer shared responsibility payment) employer must offer minimum essential coverage that is "affordable" and that provides "minimum value" to their full-time employees (and their dependents) OR pay and employer shared responsibility payment (penalty) to the IRA
guaranteed issue
PPACA rule that requires individual and group health plans to permit enrollment regardless of the insured's health status, age, gender or other factors myst be made available during open enrollment period (and special enrollment period for those with a qualifying life event) applied to most types of health insurance that include minimum essential coverage (MEC)
Metal Tiers
PPAVA establishes four different mental tiers of coverage (bronze, silver, gold, and platinum) for individual and small group plans which represent the share of health care expenses the plan covers (actuarial value)
Explanation of Benefits (EOB)
Part D
Earned Premium
Portion of premium that represents coverage already provided and that belongs to insurer
Part D
Prescription drugs
Medicare Advantage
Private insurance Part C - combines part A, B, and usually D set up like HMOs, PPOs, and PFFSs Part D can only be added to PFFS if not included may cover claims to a different extent may reduce out-of-pocket expenses may include additional health benefits may include optional and/or value added services/benefits can't use or be sold medicare supplement insurance
Insurance Information & Privacy Protection (IIPPA)
State law that establish standards for the collection, use and disclosure of info gathered in connection with insurance transactions
CA Financial Information Privacy Act (Cal-GLBA-SB1)
State law that provides greater privacy protections for consumers' non-public personal information than does the Federal GLBA
CA Financial Information Privacy Act (Cal-GLBA-SB1)
State law that supersedes requirements of GLBA w/ stonier protections for consumers
Producer's Responsibilities
Submit completed app that accurately represents applicant's answers Perform inspections to ascertain condition of property to be insured
Individual Mandate
The PPACA individual mandate required each individual to: maintain minimum essential coverage (MEC) for each month; OR obtain an exemption; OR pay a tax penalty
Applies to Life, Annuity and Disability Benefits (Ind. or Group)
The insurer shall not refuse to insure, or refuse to continue to insure, or limit the amount, extent, or kind of coverage available to an individual, or charge a different rate for the same coverage solely because of blindness or partial blindness
Disability Types
Total- Own-Occupation Definition Total- Any-Occupation Definition Residual Permanent Partial Presumptive Total- Dual Defintion Temporary
if fiduciary funds are not handles using options above, the the fiduciary funds shall be maintained in any of the following
U.S. government bonds and treasury certificates, bonds and other obligations of this state or of any local agency or district of the state of CA certificates of deposit (DCs) repurchase agreements revenue bonds and other obligations payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the State of CA
no lapse guarantee
UL rider that guarantees policy will remain in force for a guaranteed period (e.g. insured's life) even if policy's cash value drops to zero for less than zero minimum premium will be required in order for no lapse guarantee to remain i effect loans and withdrawals typically restricted
The California department of insurance has jurisdiction over entities that provide coverages designed to pay for heath care providers' service and expenses
UNLESS the health care providers are appropriately licenses or certified by other government agencies
McCarran-Ferguson Act (Public Law 15)
a 1945 federal law that exempts business of insurance from most federal regulation, leaving insurance to be regulated primarily at the state level
Gramm-Leach-Bliley Act
a 1999 federal law with various privacy provisions that apply to companies offering consumers financial products or services regarding the collection, disclosure, and protect of consumers' nonpublic personal information
Essential Health Benefits
a comprehensive package of 10 items and services that must be included with all health insurance plans offered in the individual and small group markets, both inside and out of health benefit exchange (covered CA), as a result of the PPACA
Essential Health Benefits
a comprehensive package of 10 items and services that must be included with all health insurance plans offered in the individual and small group markets, both inside and outside of the health benefits exchanges (covered CA), as a result of the PPACA
pre-existing condition
a condition for which someone has sough medical advice, diagnosis or treatment prior to coverage beginning under a disability policy: exclude coverage for pre-existing condition(s) increase premiums decline application
Contracts of Adhesion
a contract in which one party (insurer) has substantially more power than the other (applicant/insured) in creating the contract
Conditional Contact
a contract that requires the prior performance of some condition in order to be enforceable. A conditional contract remains conditional an performance under its terms is suspended until the required condition is met
covered California for small business
a covered california program that offers small group health and dental plans for small businesses with 1-100 full-time employees (previously SHOP program) offers competitively priced health and dental insurance plans from private insurance companies 4 different levels of standardized health benefits- bronze, silver, gold, platinum 4 different levels of standardized health benefits- bronze, silver, gold, platinum full-time employees must be offered 70% participation requirement part-time employees may be offered employer must contribute at least 50% of cost towards lowest premium available for employee-coverage
per stirpes
a deceased beneficiary's share of proceeds are passed down the bloodline to his/her heirs
corridor deductible
a deductible paid after benefits from basic medical expense policy are exhausted and before benefits from a supplemental major medical policy begin
Modified Adjusted Gross Income (MAGI)
a definition of income created by the PPACA used in evaluating eligibility for Medi-Cal (medicaid) and cost sharing reductions (CSRs) MAGI= household income
Notice of Information Practices
a disclosure form provided to insurance applicants and policyholders that covers the types of personal information that may be collected, the types of sources and investigative techniques that may be used to collect such information and their rights to information privacy
Misrepresentation
a false or misleading statement (terms of a policy, benefits, dividends, financial condition of insurer, purpose of inducing a policyholder to lapse, forfit, or surrender insurance)
Misrepresentation
a false or untrue representation
surrender charge
a fee charged by a life insurer for early termination of a policy to recuperate costs incurred with issuing policy, including agent commissioner and underwriting expenses
surrender charge/period
a fee charged by a life insurer for early termination of a policy to recuperate costs which insured with issuing policy, including agent commissions and underwriting expenses
annuity
a financial contract written by an insurance company that provides for a series of payments, either for a specific period of time or for the lifetime of an individual primarily used to save money for retirement earnings accumulate tax-deferred various distribution options available
market value adjustment (MVA) annuity
a fixed annuity that can have its value adjusted up or down in reposes to changes in interest rates on bonds when annuity withdrawals exceed a certain amount or if fully surrendered (in addition to surrender charge) annuitant with MVA annuity is accepting the interest rate risk usually borne by the insurer MVA annuities will offer slightly higher interest rates compared to non-MVA annuities if MVA annuity surrendered early and bond rates have risen, then annuity value will be adjusted downward to compensate insurer for increase in bond rates
blanket insurance
a form of group disability insurance in which the insured of a class are automatically covered without specifically naming the persons covered
blanket life insurance
a form of group insurance in which the insureds of a class are automatically covered without having to apply for for enroll for the coverage
Disclosure Authorization Form
a form or statement which authorizes the disclosure of personal or privileged information about an individual to an insurance institution, agent, or insurance-support organization
self-insured plan
a group disability plan (e.g. group health) in which employer assumes the financial risks for providing benefits to its employees (aka self-funded plan) employer asks as insurer in self-insured p=lan
contributory
a group health plan in which employees pay all or part of the premiums
non-contributory
a group health plan in which employees pay no part of the premiums as they're paid entirely by the employer
contributory
a group life plan in which employees pay all or part of the premiums (75% participation requirement)
non-contributory
a group life plan in which employees pay no part of the premiums as they're paid entirely by the employer
incontestability
a group life policy shall provide that the validity of the policy shall not be contested after it has been in force for 2 years
misstatement of age
a group policy may contain a misstatement of age provision in the following form: if the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased as the correct age
risk retention group
a group self-insurance plan that is formed to provide liability coverage (no property insurance) for its owners, all of whom share a similar type of liability exposure
qualified health plan (QHP)
a health plan that meets specific guidelines as defined by the PPACA to ensure a standard level of quality. all plans offered through covered CA and federal health benefits exchanges must be QHPs
Qualified Health Plan (QHP)
a health plan that meets specific guidelines as defined by the PPACA to ensure a standard level of quality. all plans offered through covered California and federal health benefit exchanges must be QHPs
applies to life and disability: insurer shall not refuse to issue or sell or renew any life or disability insurance solely by reason of the fact that the person to be insured carries a gene which may, under some circumstances, be associated with disability in that person's offspring, but which causes no adverse effects on the carrier
a higher premium rate or charge cannot be made against the insured lesser coverage or benefits cannot be imposed upon insured
Medi-Cal (Medicaid)
a joint federal & state insurance program that provides medical, dental and vision for low income (indigent)
large group health
a large group health insurance policy shall provide all covered mental health and substance use disorder benefits large group = 101+ employees
Buy-Sell Agreement
a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business (e.g. disability), or chooses to leave the business
buy-sell agreement
a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business (living partners obligated to buy from the deceased partner's estate and they are obligated to sell to the living partner)**life insurance can be used to fund
upon receiving notice of a claim, every insurer shall immediately, but no more than 15 calendar days after receipt of the claim, provide the insured with
a legible reproduction of subdivisions (h) and (i) of Section 790.03 of the CIC along with a written notice containing the following language in at least 10-point type: website help number or go to insurance company to get it free of charge
nursing home
a licensed facility that provides nursing care to this who are chronically ill or can't do one or more ADLs
internal replacement
a life policy or annuity is replaced by a new one within the same company
formulary
a list of prescription drugs covered by a prescription drug plan (PDP) (aka drug list) insurance companies required to file annually to CMS (center for medicare and medicaid services) generally the higher the Tier the more the beneficiary has to pay at least two drugs must be included in each treatment category
mortality rate
a measure for the number of deaths in a particular population, per unit of time typically expressed in units of death per 1,000 individuals per year
federal poverty level (fpl)
a measure of income level issued annually by the department of health and human services used to determine eligibility for certain programs and benefits
reinsurance
a mechanism for spreading risk between two or kore insurers in which one insurer (reinsurer) agrees to pay for losses that exceed the other insurer's (ceding company) established retention limit
DMV Report (MVR)
a motor vehicle report (MVR) from the DMV that provides information about a driver's driving history, including traffic violations and accidents
DMV Report (MVR report)
a motor vehicle report (mvr) from the department of motor vehicles (dmv) provides information about a drivers driving history, including traffic violations and accidents
Insurance solicitor
a natural person employed to aid an insurance agent or insurance broker in transacting insurance coverage on the direct or consequential loss or damage to property of every kind (no life, disability, or health) must be appointed by a agent or broker
individual life and annuity contracts for senior citizens (60+) shall have printed on the front of the policy jacket or on the coverage page
a notice regarding the cancellation period ("free look" or "right to return" period) free look period shall not be less than 30 days can be returned to company or agent
Limited lines auto insurance agent
a person authorized to transact automobile insurance
Fiduciary
a person in a special position of trust and confidence, especially when: handling client's money & advising on financial matters
life settlement broker
a person licensed to act on behalf of an owner of a life insurance policy to negotiate a life settlement contract between the owner and a life settlement provider represents only owner, not provider owes fiduciary duty to owner paid a fee, commission or other valuable consideration by owner
spendthrift
a person who spends money recklessly or wastefully
Insurance Agent
a person who transacts insurance, other than life, disability, or health insurance, on behalf of an admitted insurer
Grace-period
a prescribed period of days after the premium due date, during which an insurance contract is in force and the premium may be paid without penalty
life insurance illustration
a presentation or depiction that includes non-guaranteed elements of a life policy over a period of years into the future
Warranty
a promise made by an insurance applicant to do certain things or to satisfy certain requirements, OR, it is a statement of fact that is declared to be true by the insurance applicant
Estoppel
a relinquishment of a right that results when someone's words or behavior cause another to rely, to his detriment, on those words or behavior. Estoppel bars a party from asserting any rights inconsistent with his words or behavior
assisted living facility (residential care facility for the elderly)
a residential living arrangement for people 60+ that provides personal care for people who need some help with activities of daily living (ADLs), but don't need the level of care that nursing homes give ambulating transferring continence toileting eating dressing bathing
Health Insurance Portability and Accountability Act (HIPAA)
a set of federal laws designed to protect the privacy of patients' medical records and other health information maintained by various 'covered entities'. Provides patients with both access to their medical records and significant control over how their personal health information is used and disclosed
comprehensive major medical policy
a single major medical contract that covers most medical expenses - deductibles, coinsurance, out-of-packet max (stop loss limit)
modified endowment contract (MEC)
a special tax qualification given to a life policy that has been funded with more money than allowed under federal tax laws (i.e. it has failed the 7 pay test) primarily concerns universal life
with respect to those employees validly insured under the prior carrier's policy on the date of discontinuance
a succeeding carrier's replacement policy shall nit reduce or exclude benefits on the basis that a condition giving rise to benefits preexisted the effective date of the succeeding carrier's policy
with respect to those employees validly insured under the prior carrier's policy on the date of discontinuance
a succeeding carrier's replacement policy shall not reduce or exclude benefits on the basis that a condition giving rise to benefits preexisted the effective date of the succeeding carrier's policy
Inspection Report
a supplement to the information in the life or disability application that an underwriter may order as part of the underwriting process that includes information such as personal information age verification employment health hazardous activities habits description of work travel financial profile income profile
inspection reports
a supplement to the information to the information in a life insurance application that an underwriter may order as part of the underwriting process that includes information such as personal information age verification employment health hazardous activities habits description of work travel financial profile income profile
lump-sum death payment
a surviving spouse or child may receive a special lump-sum death payment if they meet certain requirements for $255
monthly benefits
a survivors monthly benefit amount is based on the earnings of the person who died
Agency
a system of marketing insurance in which the insurer (principal) appoints and independent contractor (agent) to act on its behalf in selling its products and representing it to the public
coverage provided under a group disability policy must provide
a totally disabled employee benefits for covered expenses directly relating to the condition causing total disability for a period of not less than 12 months following discontinuance of the group plan by the employer (master policy owner) (extension of benefits)
Aleatory Contract
a type of contract in which performance is based upon a contingent or unknown event and that provides for unequal exchange between parties
fraternal insurer
a type of mutual insurer with some type of social organization in existence based on religion, occupation, national or ethnic heritage, etc., that makes insurance available to its members- typically life, health, or disability insurance
inactive license
a valid and current license for which all appointments (NOAs) have been terminated and, if acting as a broker, the bond required to be posted by broker has been cancelled
standard marker insurer
admitted insurer that offers rates for insured who have an average or better than average loss exposure
community-based care
adult daycare respite care (outside the home) hospice care (outside the home)
assignment
accept medicare's "approved amount" only bill beneficiary for deductibles and coinsurance submit claims directly too medicare be paid by Medicare
acceptable delivery methods
acceptable delivery of a policy starts clock ticking for the right to cancel registered or certified mail first-class mail, with a signed, written receipt of delivery personal delivery, with signed and dated delivery receipt any other reasonable means determined by commissioner
acceptable delivery methods
acceptable delivery of policy starts clock ticking for the right to cancel registered or certified mail first-class mail, with a signed, written receipt of delivery personal delivery, with signed and dated delivery receipt any other reasonable means determined by commissioner
acceptable delivery methods
acceptable delivery of the policy starts clock ticking for the right to cancel registered or certified mail first-class main, with a signed, written receipt of delivery personal delivery, with signed and dated delivery receipt any other reasonable means determined by the commissioner
limited insurance policies
accident only travel accident hospital income specified (dread) disease hospital confinement indemnity credit disability critical illness
annuity phases
accumulation phase annuitization phase (liquidation/distribution phase)
agent's are prohibited from doing any of the following with a non-admitted insurer
act as an agent advertise aid them in transacting insurance UNLESS it is a surplus line brokers (but they still have their limitations)
agents are prohibited from doing any of the following with a non-admitted insurer
act as an agent advertising aiding to transact insurance
Agent's responsibility to insurance company
act in accordance with agency contract act for benefit of insurer account for all property, including money, that comes into his possession disclose all pertinent information about applicants/insured
Agent's Responsibilities to insured/applicant
act in the best interest of applicant/insured be knowledgable about features/provisions of policies clearly explain policy coverages and features collect and account for all premiums paid by insured
prohibited acts with non-admitted insurers
acting as agent for non-admitted insurer advertising non-admitted insurer in any way aiding a non-admitted insurer to transact insurance
Activities of Daily Living (ADLs)
activities used as measures for rating an individual's need for LTC benefits ex ambulating bathing continence dressing eating toileting transferring
Parts A & B Common Exclusions
acupuncture deductibles/ coinsurance / co-payments dental care & dentures cosmetic surgery custodial care / long-term care hearing aids and hearing exams prescription drugs routine food care routine eye care/ eyeglasses routine physical exams private duty nursing first 3 pints of blood in calendar year
the persons attending a meeting with a senior shall end all discussions and leave the home of the senior immediately
after being asked to leave by the senior
no insurer shall discriminate in its claims settlement practices based upon the claimant's
age gender religion income race language territory of the property of person insured nation origin sexual orientration ancestry physical disability
premium factors
age geography tobacco use family size
Disability Income Rating Factors
age/gender job classification health (past & present) avocations (hobbies)
Process for making changes to CA Code of Regulations (CCR)
agency (CDI) must public a notice of proposed regulatory change at least 45 days prior to agency's hearing on proposed change agency (CDI) must formally adopt proposed regulatory change(s) and prepare file "rule making file" Agency (CDI) submits rule making file to CA's Office of Administrative Law (OAL) for review OAL must approve or disapprove proposed regulatory change(s) within 30 days If approved, OAL forwards rule making file to secretary of state for filing and publications in CCRs. (if not approved, OAL returns rule making file to agency (CDI) with state of reasons. Agency then has 120 days to correct deficiencies and resubmit to OAL)
claims communication
agent has 15 days to respond to the claim to the claimant agent has to immediately transmit notice of claim to insurance company insurer has 15 days to acknowledge receipt & begin investigation agent has 21 days to respond to inquiry to DOI
replacement duties
agent must present applicant with notice regarding replacement level applicant with original or copy of all printed communications used for presentation submit copy of "notice regarding replacement" with application to replacing insurer"
if effective date in not known
agent must provide circumstances under which coverage will be effective if there exists conditions precedent
Captive (exclusive) Agency agreement
agent represents only one insurer
standalone notice format 16-bold type
agent's full name/ license # mailing address / telephone #
violation of replacement rules can result in administrative penalties of
agent: 1st violation - $1,000 2nd+ violation - $5,000-$50,000 insurer: 1st violation - $10,000 2nd violation - $30,000-$300,000 commissioner may suspend or revoke the license of any person or entity that violates replacement rules
Special Lines Surplus Line Broker can do
aircraft insurance insurance on property or operations of railroads engaged in interstate commerce various types of transportation risks, including insurance against perils of navigation, transit or transportation upon hulls, freights, or disbursements
Individual DI Policy
an individual disability income policy is one that is purchased by an individual on their own and is not coverage provided through an employer
if the 60+ individual variable life policy or variable annuity returned within 30-day cancellation period, the owner will be refunded
all premiums paid + any policy fee (under parking lot rule) OR account value + any policy fee (under specific request rule)
Per CIC 1871.1, insurers and their agents, which they are investigating suspected fraud claims, shall have access to
all relevant public records that are require to be open for inspection under the government code, and any regulations thereunder
Company's responsibility to agent
allow agent to act in accordance with the terms of agent's contract pay compensation/commission agreed upon in contract indemnify agent for any losses or damages suffered occurring on account of agency relationship
guaranteed insurability rider
allows additional insurance to be purchases without evidence of insurability (E of I) at specified ages of insured and after certain qualifying events
special enrollment
allows individuals who previously declined enrollment in a group health plan to enroll for coverage in the plan regardless of the plan's open enrollment period (type 1- loss of eligibility for other coverage) (type 2- certain life events, including: marriage, birth, adoption/placement for adoption)
automatic enrollment
already receiving SS retirement benefits- automatic enrollment starting 1st day of the month individual turns 65 under 65 and disabled - automatic enrollment after receiving SS disability benefits for 24 months ASL - automatic enrollment the month SS disability benefits begin medicare card sent in mail 3 months before 65th birthday or 25th month of disability
IMPLIED DECLARATIONS
also applies to employing P&C broker-agents that file NOAs on behalf of insurance solicitors
Participating Physician
always accepts medicare assignment
essential health benefits include
ambulatory patient services (aka outpatient care) emergency services hospitalization maternity & newborn care mental health & substance use disorder services prescription drugs rehabilitative & habilitative services and devices laboratory services preventive & wellness services (incl. chronic disease management) pediatric services, incl. dental & vision care
an incomplete or deficient action notice filed with the DOI, shall require the filing of an
amended, complete action notice, together with the necessary filing fee
annual deductible
amount beneficiary must pay each year before Part D plans begin to pay its share of covered drugs deductible amounts may vary by plan, but no plan may have deductibles that is higher than $405 in 2018
copays/coinsurance
amount beneficiary must pay towards covered prescriptions after deductible satisfied
face amount
amount of insurance provided by a life policy -level, increasing, decreasing
usual, customary, and reasonable
amount paid under policy for a medical service is based on what providers in the same geographic ares usually charge for the same or similar medical service
cold lead rule #1
an advertisement or other device designed to produce leads based on a response from a potential insured that is directed towards persons 65 years of age or older shall prominently disclose that an agent may contact the applicant if that is the fact
cold lead device generation
an agent or broker who contacts a consumer as a result of receiving information generated by a cold lead device, shall immediately disclose the fact to the consumer
cold lead rule #2
an agent who makes contact with a person as a result of acquiring that person's name from a lead generating device shall disclose that fact in the initial contact with the person
life insurance creates
an immediate estate
accidental bodily injury
an injury to the body (the result of an accident), if external origin, unintentional and unforeseen by the injured person (on the result has to be accidental)
insurance services office (ISO)
an insurance advisory organization that develops policy forms (i.e. insurance policy language) for use in the standard market ISO is leading supplier of statistical, actuarial, underwriting, and claims data to insurance industry when it comes to life insurance there are no standard life policies
surplus lines broker
an insurance producer with a specialty license to place insurance with non-admitted insurers, covering risks other than aircraft and certain marine and transportation risks
Surplus Line Broker
an insurance producer with a specialty license to place insurance with non-admitted insurers, covering risks other than aircraft and certain marine and transportation risks.
Special Lines Surplus Line Broker
an insurance producer with a specialty license to place the following types of insurance with non-admitted insurers
an insurer cannot escape the condition of insolvency by being able to provide for all its liabilities and for reinsurance of all outstanding risks
an insurer must also be possessed of additional assets equivalent to such aggregate "paid-in capital" required by this code after making provision for all such liabilities and reinsurance
Fraud
an intentionally false representation or concealment of a material fact with the intent and result that it be acted upon by another party
administrator
an outside company that performs various aspects for managing and employer's group insurance plan(s), including collecting premiums and adjusting and settling claims (aka third party administrator or TPA) may collect and handle premiums may adjust and settle claims of covered employees certificate of registration from CDI required to act as an administrator
administrator
an outside company that performs various aspects of managing an employer's self-funded group insurance plan(s), including collecting premiums and adjusting and settling claims (aka third party administrator to TPA) may collect and handle premiums may adjust and settle claims or covered employees certificate of registration from CDI required to act as an administrator
HICAP is administered by the California Department of Aging
and operated locally by area agencies on aging
basic life illustration
annual MEC limit
Part B has
annual deductible coinsurance (usually medicare pays 80% and beneficiary pays 20%) there is no annual out-of-pocket maximum for part B claims
immediate annuity (IA)
annuitization begins within 1 year
life with period certain
annuity payments are made for annuitant's lifetime, but if annuitant dies before period certain is up, remaining payments made to beneficiary (the longer the period certain, the lower the annuity payment)
life-only
annuity payments made as long as the annuitant lives. payments cease upon annuitant's death. (aka pure annuity or straight annuity) provides highest payout amount because it has the least guarantees
period certain (fixed period)
annuity payments made for a fixed period of time (e.g. 5, 10, 15, 20, 25 years). if annuitant dies before the fixed period is up, remaining payments will be made to beneficiary
life income with refund option
annuity payments made for annuitant's lifetime, but if the annuitant dies before total accumulated value of annuity prior to annuitization has been paid out the beneficiary will receive the remainder
surrender charges
annuity surrender charge schedule surrender charge is in addition to any penalty that applied to withdrawals <59 1/2
joint-and-survivor annuity
annuity that covers two annuitants jointly and pays out until the last annuitant (survivor) dies
joint-life annuity
annuity that covers two annuitants jointly and stops paying out after the first annuitant dies
temporary insurance agreement
another term for a binding receipt for a life insurance application, but usually contains a dollar limit and time
section 1729.2 "background information" includes
any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty misdemeanor or felony conviction filing of felony criminal charges admin action regarding professional or occupational license a bankruptcy, only if it discharges any insurance premiums or fiduciary funds owed to any company
special needs child
any child over the age of majority who is both: incapable of self-sustaining employment by reason of an intellectual disability or physical handicap AND chiefly dependent upon the employee for support and maintenance
Condition Precedent
any event or act that must take place or be performed before the contractual right will be granted
Condition Subsequent
any event or act that serves to cancel a contractual right
proof of claim
any evidence or documentation that provides evidence of a claim that reasonably supports the magnitude or the amount of the claimed loss
types of life policies
any life insurer may issue life, disability, term, and endowment insurance on the group plan, with or without annuities, and with premium rates less than the usual rates for such insurance most common is 1-year term life (annually renewable term)
cost sharing devices
any mechanism used in a disability policy that forces insured to share in some of the costs of their covered losses deductibles copayments coinsurance
cost sharing device
any mechanism used in a disability policy that forces insured to share in some of the costs of their covered losses deductibles copayments coinsurance
reduction (loss control, loss prevention)
any method that reduces the severity of loss or likelihood of loss from occurring (e.g. sprinklers to reduce fire risk)
third party claimant
any person asserting a claim against any person or the interests insured under an insurance policy
first party claimant
any person asserting a right under an insurance policy as a named insured
claim forms provided by an insurer to any person making a claim for accident, injury, death, or other noticed or claimed loss, must include the following statement regarding false or fraudulent claims
any person who knowingly presents false or fraudulent claim for the payment of a loss is guilty of a crime and maybe be subject to fines and confinement in state prison
claimant
any person who makes a claim in attempt to recover damages sustained. (can insure someone acting on behalf of injured party, such as an attorney, adjuster, or family member)
automatic premium loan (APL)
any premium not paid by the end of its grace period will be paid by charging it as a policy loan if you requested it in writing and the maximum loan value is sufficient to cover the premium
managed care
any techniques used by insurers to contain costs capitation preventive care case management gatekeeper
replacement
any transaction in which a new individual life insurance policy or annuity is to be purchased and existing individual life insurance policy or annuity will be lapsed, forfeited, surrendered, or otherwise terminated
evidence of insurability (E of I)
anything an insurer requires from an applicant for life or disability insurance that is used to help determine whether our not the applicant qualifies for the insurance applied for: answer to applicant questions medical history questionnaire- blood sample, urine sample, hearth rate, height, blood pressure, weights electrocardiogram (ECG or EKG)
the same license may be used after a membership change in a copartnership until action taken by commissioner on application described below IF the following requirements are met
app for registration of change in membership filed within 30 days of change above application is signed by a general partner someone who exercised agency powers in old copartnership must remain in new copartnership
required signatures
applicant insured policy owner agent NOT beneficiary
illustrations must be signed and dated by both the
applicant and the agent
applicant
applies for a life insurance policy on: his own life OR on the life of another person (e.g. spouse, minor child)
consumer driven health plan (CDHP)
arrangement in which a product such as a MSA or HSA is used to pay routine healthcare expenses directly by insured with a HDHP in place to protest against a catastrophic medical expenses uses MSA (medical savings account) or HSA (health savings account) is used to pay routine healthcare expenses directly by insured + HDHP (high deductible health plan) which is used to protect against catastrophic medical expenses
split dollar life insurance
arrangement in which employer and employee 'split' the premiums, cash values and death benefits for a life policy used to retain key employees marker larger death benefit affordable can provide additional retirement income guaranteed to receive contributions
risk sharing
arrangement in which members of a group agree to collectively cover the losses of any of its members
Disability
as of June 30, 2018, the maximum coverage is $574,490
Disability Benefit Amount
as there might be income from other sources in addition to DI insurance, insurers do not want to incentivize an insured to "remain" disabled when they can really work by allowing their total income during disability to be too high DI insurers will typically only issue DI benefit amounts in the 50-70% of gross average earned income
Under original medicare, a provider has two options for reimbursement for services/goods provided to beneficiary
assignment non-assignment
homemaker services
assistance with activities necessary for a person to remain in his residence, that is provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary term under medical direction light housekeeping laundry limited personal care grocery shopping meal preparation shopping
retention
assuming all or part of a risk (i.e. self-insure). Viable strategy for small risks where cost to insure is greater than total losses sustained AND where losses are highly predictable (e.g. not carrying physical damage coverages on auto policy)
currently insured status
at least 6 credits to their name
renewal notice emailed or mailed by CDI
at least 60 days before expiration date of license
Representations may be made
at the time of or before issuance of the policy
The insurer or agent must provide a notice of information practices to an applicant no later than
at the time of policy delivery when personal information collected only from the applicant, an insured under the policy, or from public records OR at the time the collection of personal information is initiated when personal information is collected from a source other than the applicant, an insured under the policy, or public records
for life an disability insurance insurable interest is only required to exist
at the time the contract becomes effective... but does not need to exist at the time the loss occurs
conservation
attempt by existing insurer or its agent to dissuade a policy owner from the replacement of existing life insurance or annuity
an admitted insurer can transact any class of insurance for which it is
authorized by its articles or incorporation (charter) and admitted to transact by the commissioner
Medical Enrollment
automatic enrollment need to sign up
cost of living rider (COLA)
automatically increase monthly benefit amount paid out for a disability income claim in conjunction with increases in consumer price index (CPI) without requiring E of I
cost of living rider (COLA)
automatically increases policy face amount in conjunction with increases in consumer prince index (CPI) without requiring evidence of insurability (E of I) premiums will increase with increases in policy face amount
automatic increase provision
automatically increases policy's pre-disability benefit amount by a specified percentage each year (e.g. 5%) without requiring E of I
sections on a life insurance application
available products/plans app submission guidelines important forms supplemental applications forms and buyer's guide proposed insured's information plan information section owners information - if the policy owner is someone other than insured beneficiary information other coverage information comments rider on other proposed insured non-medical underwriting questions finances family history medical underwriting questions comments section for medical underwriting section for "yes" questions agreement section producer statement producer's report (agent's statement) payment information payor information checking/savings account info for premium payments authorization for account withdrawals authorization to disclose personal/medical information third party notice request form temporary life insurance agreement notice of AIDS/HIV testing and consent for testing notice regarding replacement
standard
average $$
corporation
business entity with an unlimited life and owned by stockholders
CIC & CCR identify many unethical and illegal practices
but they are not a complete guide to ethical behavior
Indemnity Type Plans
basic medial major medical with these plans insureds choose their own doctors, hospitals and other health care providers insureds usually have to pay providers out of their own pocket and then complete a claim form and submit it to insurer for payment
Principle of Indemnity
basic principle of insurance that says the goal of insurance is to restore one back to his previous condition that existed before the loss
credit
basic unit based on income used in determining whether a worker is insured under social security programs (aka quarter of coverage) 1 credit = $1,320 4 credits max/year 40 credits = "fully insured"
a qualified health plan (QHP) must
be certified by each exchange in which offered provide essential health benefits defined by PPACA be offered by a health insurance issuer that: is licensed and in good standing in each state it offered QHPs, offers at least one silver and one gold level QHP, charged same premium rate inside and outside of exchanges, and complies with regulations developed by exchanges and HHS secretary
Insurers will require an application for insurance to
be fully completed be signed by the applicant and agent include initial premium if coverage bound by agent possibly include inspection reports/pictures of property to be insured
applies to life and disability: premium price charge differentials
because of the sex of any individual when based on objective, valid, and up-to-date statistics; and actuarial data or sound underwriting practices are allowed, unless otherwise prohibited by law EXCEPTION a health insurance policy issued, amended, or renewed on or after January 1, 2011, shall not be subject to premium prices, or charge differentials because of a person's sex, gender identity or gender expression
Representations can be altered or withdrawn
before the execution of the contract, but not afterwards
Benefit Period
begins the day admitted to hospital or SNF and ends when no impatient hospital or covered skilled care in a SNF has been received for 60 consecutive days
reasons licensing app could be denied or permanent license could be suspended or revoked
being convicted (not just charged) of any felony convicted (not just charged) of a misdemeanor involving insurance law being unqualified to perform duties lacking integrity/ good business reputation lying on license app or about a policy exposed public to loss due to incompetence violated or allowed employee to violate CIC acted as agent before had insurance license submitted fraudulent educational certificate refused a professional, occupational or vocational license or had such a license suspended or revoked by any licensing authority WITH A HEARING
substandard
below average $$$
annuity beneficiary taxation
beneficiaries of an annuity will be responsible for income taxes on it. the taxation will depend on how the beneficiary takes the annuity benefits (e.g. lump sum vs. annual distributions)
Participating Claims Example (Original Medicare)
beneficiary pays deductible/coinsurance to participating physician participating physician bills CMS for approved amount CMS will send payment to provider know that the medicare claim is started when provided bills medicare
Non-Participating claims example (original-medicare- assignment not accepted)
beneficiary pays entire amount physician will bill CMS for approved amount CMS sends payment for beneficiary medicare claim is started when provider bills medicare
Rehabilitation Benefit
benefit in many DI policies that encourages a disabled insured to return to work by paying to rehabilitate him to return to his old original occupation or for some new type of work insurer may require a rehabilitation plan to be approved in writing in advance
Losses not covered
bodily injury or property damage fraudulent acts employment-related matters false advertising failure to protect clients' personally identifiable info patent infringement or theft of trade secrets
names that cannot be disapproved by commissioner
bona fide natural name Life Agents - CLU p&C Broker-Agents - CPCU
to get a medicare supplement policy, a person must have
both Medicare part A and part B
B-N (not E, H, I, J)
broader coverage plans E, H, I, and J are no longer sold, but if someone already has one they can generally keep it
whole life policy
bundled policy (not flexible- fixed)
Risk Classification
classification system used by life and disability insurers that takes into account factors such as tobacco use, high, weight, medical history, family history, occupation and hobbies to determine life insurance rates. the most common classes include: substandard (below average), standard (average), and preferred (above average)
insurers not allowed to use pretext interview UNLESS
can be used while investigating a claim where criminal activity, fraud, material misrepresentation or material nondisclosure is suspected
non-assignment
can charge more "approved amount" but no more than "limiting amount" (15% more) can bill beneficiary for entire amount of services/goods provided (but possibly limited to "limited amount") submit claims directly to medicare beneficiary will be paid by Medicare since beneficiary already paid provider
special enrollment
can join, switch, or drop medicare drug plan in certain special situations such as: move out off service area have medicaid live in an institution (e.g. nursing home)
Independent Agents
can represent one or more insurer
Property
can transact insurance coverage on the direct or consequential loss or damage to property of every kind
guaranteed renewable
cannot be cancelled premiums can be increased, but by class only
non-cancelable
cannot be cancelled premiums cannot be increased
PFFS (private fee-for-service) least restrictive
care can be received from any doctor, other health care providers, or hospital as long as they agree to treat you
PPO is in the middle
care can be received in or out of network, but beneficiary will pay higher out-of-pocket costs outside
chronic care
care for conditions of a continuous (chronic) nature and might involve medical treatment, but frequently involved non-medical care assisted living, nursing home, home not covered by health insurance
HMO is most restrictive
care must be received from within network to be covered. primary care doctor required
alternatives to doing a life settlement
cash surrender policy loan/withdrawal adjust premiums accelerated benefits
what can happen at maturity
cash value paid out creating taxable distribution some policies may have maturity extension rider
reduced paid-up
cash value used as a single premium payment to fully pay up policy with a reduced face amount
extended term
cash value used as a single premium to buy term insurance with same face amount as the whole life policy
outpatient & diagnostic services
certain blood tests urinalysis some screening tests CT scans MRIs EKGs X-rays PET scans
Group Disability Income
certificate of insurance issued to each covered employee employer owns and controls the master policy they're in charge of enrolling employees, record keeping, paying premiums. employer & insurer are parties to group insurance contract
HICAP's volunteer counselors are trained to assist with
choosing/enrolling in medicare health plans, including PDPs filing medicare claims and appeals comparing med spell and LTC policies
people eligible for medicare
citizens & legal residents 65+ in U.S. for at least 5 years permanently disabled & received SS disability for 24 months end stage renal disease Lou Gehrig's disease
Americans with Disabilities Act (ADA)
civil rights law that protects against disability-based discrimination in employment, governmental and commercial activities, transportation, and telecommunications an individual with a disability is a person who has a physical or mental impairment that substantially limits one or more major life activities employers may not fire or refuse to hire a qualified applicant who has a disability, OR who has a dependent with a disability, in order to avoid potential increases in health insurance costs
risk classification
classification system used by life insurers that takes into account factors such as tobacco use, height, weight, medical history, family history, occupation and hobbies to determine life insurance rates. the most common class include preferred standard substandard
life illustration requirements
clear label name, age, sex of insured initial death benefit company product name, generic name, and form # dividend option if applicable page # with relationship to total # of pages name of insurer name & address of agent of producer
need to sign up
close to 65 and not receiving SS retirement benefits - contact social security 3 months before turning 65 or apply online at socialsecurity.gov end stage renal disease - contact social security for assistance with enrolling
solicitation
cold calling quotes mailings
transaction of matters
collecting premiums adding new car to auto policy adding newborn to health policy address change claims
family protection policy
combines whole life policy with a level term rider to cover breadwinner
family policy
combines whole life policy with term riders to cover all family members in a single packaged policy
HMOs can be pwned by
commercial insurers local communities employers governments unions
1st year commission limit
commission limited to 200% if 2nd year commission
replacement
commissions paid for replacement med supp policy cannot be greater than renewal commission normally paid
marketing
communicates the value of a product/service to customers, for the purpose of selling it
major medical
comprehensive supplemental
SS Retirement Program
compulsory for most workers provides minimum floor of income based of earnings history fully insured status required (i.e. 40 credits) reduced retirement benefits available as early as age 62 "full retirement age" depends on worker's year of birth (earliest is 65 years old)
Insurer can rescind an insurance policy when there is
concealment, an intentional and fraudulent omission, if representation is false in material point, & the violation of a material warranty
original medicare
consists of parts A & B and is managed by the federal government (fee-for-service plan)
How it works
consumers must purchase QHP through covered California to obtain premium tax credits covered CA estimates premium tax credit and advances to insurer if you choose insurer uses premium tax credit to reduce monthly premium premium tax credit will be reconciled with federal tax return if insured opts not to take monthly credit
Express Warranty
contained in writing and made a part of the policy
separate account
contains various "mutual fund-like" accounts called sub accounts used to provide investment choices for insurer's variable insurance products separate meaning separate from insurer's General Account
Bilateral Contract
contract in which each party exchanges a promise for a promise
life settlement
contract in which life policy owner assigns ownership to provider in exchange for a sum of money that is less than policy's death benefit, but more than its cash surrender value
Life settlement
contract in which life policymaker (owner) assigns ownership to Provider in exchange for a sum of money that is less than policy's death benefit, but more than its cash surrender value
Unilateral Contract
contract in which only one party makes a promise in exchange for a specific act of the other party
qualified annuity
contribution limits will apply 10% penalty on distributions made before age 59 1/2
After-tax
contributions made with after-tax dollars
non-qualified
contributions made with after-tax dollars distributions will be partially taxed
non-qualified
contributions made with after-tax dollars distributions with be partially taxed (no contribution limits) (10% penalty on distributions <59 1/2)
Pre-tax
contributions made with pre-tax dollars
qualified
contributions made with pre-tax dollars distributions will be 100% taxable
qualified
contributions made with pre-tax dollars distributions will be 100% taxable (contribution limits will apply) (10% penalty on distributions <59 1/2)
reasons app or license could be denied/suspended/revoked without right to hearing
convicted (not just charged) of any felony convicted (not just charged) of a misdemeanor involving insurance law professional, occupational or vocational licensing app denied within last 5 years professional, occupational or vocational license revoked or suspended within last 5 years
notice to applicant regarding replacement of accident and sickness or LTC care insurance
copy signed by insured and agent/producer and submitted to insurer IF replacement is involved
A
core
stock insurance company
corporation which issues shares of stock to stockholders (shareholders/investors) who are the owners of the company and entitled to share in the profits by way of stock dividends
outline of coverage
cover page premium info disclosures charts of each plan must be provided when applicant is presented to prospective applicant and acknowledgment of receipt of the outline must be obtained from the applicant
how is HIPAA information protected
covered entities must have safeguards in place to protect your health information and ensure they do not use or disclose your health information improperly covered entities must reasonably limit uses and disclosures to the minimum necessary to accomplish their intended purpose covered entities must have procedures in place to limit who can view and access your health information as well as implement training programs for employees about how to protect your health information business associates also must put in place safeguards to protect your health information and ensure they do not use or disclose your health information improperly
Individual Life Insurance
covered one life, but survivorship and joint-life covered
travel accident insurance
covers accidental death or injury resulting from accidents occurring while a fare-paying passenger on a common carrier
skilled nursing facility care
covers full-time skilled nursing or rehabilitation staff needed to manage, observe, and evaluate one's care 100 days covered by medicare 3-day inpatient stay required
credit disability (credit health)
covers loan payment to a specific creditor of the insured if the insured becomes disabled as defined in the policy
home health care
covers part-time or intermittent skilled nursing care and/or physical therapy, speech language pathology services, and continued occupational services
home health care
covers part-time or intermittent skilled nursing care and/or physical therapy, speech-language pathology services, continued occupational services (covered under part B only if no Part A coverage)
single premium immediate annuity (SPIA)
funded with one lump sum premium payment distributions begin within 1 year flexible premium deferred annuity (FPDA)
option 1 - level death benefit UL
death benefit = basic amount less insurance has to be purchased as account value grows account value will grow faster nevus expenses will be lower compared to option 2
option 2 - increasing death benefit UL
death benefit = basic amount + account value insurance amount remains level cost of insurance (mortality) charges will be higher compared to option 1
life insurance taxation - death benefit proceeds
death benefit proceeds are not taxable to the beneficiary however... any earnings generated by the death benefit proceeds are taxable as income (periodic interest payments made to beneficiary will be taxable income)
mortality
death, especially on a large scale
mortgage (life) redemption insurance
decreasing term life insurance designed to have face amount mirror outstanding mortgage balance death benefit can be used to pay off mortgage balance
efforts to combat fraud
department of insurance has an internal fraud division (required by law) each insurance company had their own fraud units
Long-term care insurance personal worksheet
describes premiums for policy. also asks about source and amount of income and amount of savings and investments
Medicare Summary Notice (MSN)
detailed notice sent to a medicare beneficiary quarterly describing services and cost of services provided under Part A, Part B, and Part C for that quarter snapshot of recent claims annual deductible status list of health care provider visits claim status for each claim fraud information appeal claim instructions definitions & instructions
actuarial
develops rates based on the detailed analyses of: operating expenses claims estimates investment earnings estimates
agents selling accelerated death benefits must be able to describe the following differences between benefits provided under SDB and benefits provided under LTC insurance
difference between benefits afforded to an insured differences between benefit eligibility criteria whether an elimination period applied and a description of the eliminated period benefits under the ADB or LTC insurance if benefits are never needed the benefits under the ADB or LTC if benefits are needed restrictions on benefit amounts tax treatment of benefits and premiums income and death benefit considerations
Group DI Taxation
disability benefits for which the employee paid with after-tax dollars will be tax-free disability benefits for which the employer (sponsor) paid with pre-tax dollars will be taxable
disability business overhead expense
disability income policy designed to reimburse a business owner for overhead expenses up to specified amount during owner's disability
negotiations preliminary to execution
discussing benefits, terms, conditions
sickness
disease or illness
an organization ceases to exist as an entity eligible to hold a license upon
dissolution of a corporation dissolution of or change in membership of a copartnership (partnership) termination if an association exception: may continue to transact under license if certain conditions met, application filed and fees paid within 30 days
reduced premium
dividend applied to current premium in order to reduce it
cash
dividend paid out in cash to policy owner
accumulation at interest
dividend retained by insurer in a special account that earns interest (like savings account)
paid-up additions
dividend used as a single premium to purchase paid-up whole life insurance
one-year term
dividend used to purchase 1 year term policy
physician's visit expense
doctor's hospital visits doctor's office visits
Part B Benefits
doctors services outpatient & diagnostic services home health care hospice care
Utmost Good Faith
doctrine that says each party is legally entitled to rely upon the representations and declarations of the other and that each party has a duty to reveal all material information relating to the contract in question
≤49 FT employees
does not apply employer mandate
Non-Admitted Insurers
does not have to be approved ("admitted") by the state from and rates do no have to be approved does not pay into Guarantee Association CIGA will not apply to liquidation
regulation of non-admitted insurers (E&S Lines Insurers)
does not have to be approved by the state forms and rates do not have to be approved does not pay into Guarantee Association (CIGA) CIGA will not pay out in case of insurer insolvency policyholder cannot appeal to CDI
COLA
during disability
all insurers, brokers, agents, and others engaged in the transaction of insurance owe a prospective insured who is 65 years of age or older, a...
duty of honesty good faith fair dealing
every licensee and every applicant for a license shall immediately notify the commissioner (CDI or DOI) using an electronic service approved by the commissioner for any change in his or her
e-mail address residence address principal business address mailing address IMMEDIATELY
In an agency relationship
each party is deemed to have knowledge of the other
HICAP services
educational services (community education and outreach events) consumer advocacy legal assistance
Late Enrollment Penalties Part B
effective when individual does not buy part B when first eligible premium increased by an additional 10% for each full 12-month period that individual could have had part B, but didn't sign up no penalty for part b (and part a if you have to buy it) if special enrollment period applies
Late Enrollment Penalties Part A
effective when individual is not eligible for premium-free part A and does not buy Part A when first eligible premium increased by 10% at time of enrollment. increased premium will be effective for twice the number of years individual could have had part A, but didn't sign up
Insurance Commissioner
elected position by citizens of CA serves as head of department of insurance role is to enforce insurance laws 2 term max (1 term = 4yrs)
participating (par)
eligible to receive dividends
HMO exception
emergency care received outside of HMO network generally will be covered
certificate of insurance
employee gets that and it spells out what the policy is
extension of benefits may terminate when
employee is no longer totally disabled OR succeeding carrier elects to provide replacement coverage to disabled employee w/o limitation
extension of benefits may terminate when
employee is no longer totally disabled or succeeding carrier elects to provide replacement coverage to dibbled employee w/o limitation
flexible spending account (FSA)
employee-funded spending account that can be used by employee to pay for eligible medical/dental expenses determined by the employer (established by employer) employer determines - contribution limit limitations helps employee to pay for expenses not covered such as - deductibles, copays, coinsurance, OTC medications (with RX) tax-free for eligible expenses (unspent $$ forfeited to employer, if grace period applies to used funds at end of the year)
employer owns and controls master policy
employer & insurer are parties to group insurance contract enrolling employees record keeping paying premiums
single premium deferred annuity (SPDA)
funded with one lump sum premium payment distributions in more than 1 year
50+ FY employees
employer must offer minimum essential coverage that is "affordable" and that provides "minimum value" to their full-time employees (and their dependents) OR pay and employer shared responsibility payment (i.e. penalty) to the IRS
salary continuation plan
employer plan designed to provide additional supplemental retirement income to selected key executives life insurance can be used to informally fund the money row company will need to pay out promised benefits
group term life
employer- premiums it pays are tax-deductible beneficiary- death benefit is tax-free employee- up to $50,000 of coverage can be provided tax-free to employee imputed costs of coverage over $50,000 will be included in employee's income as taxable fine benefit (cost to include on W2)
health reimbursement account (HRA)
employer-funded spending account that can be used by employee to pay for eligible medical/dental expenses determined by the employer employer determines - contribution amounts, eligible medical/dental expenses rollover rules helps employee pay for expenses NOT covered such as- deductibles, copays, coinsurance, OTC medications (with RX)
high pressure tactics
employing any method of marketing having the effect of inducing the purchase of insurance through force, fright, or threat, whether explicit or implied, or undue pressure to purchase insurance
Gramm-Leach-Bliley Act Pretesting Protection
encourages financial institutions implement safeguards against pretexting (i.e. when someone tries to gain access to a consumer's personal information without authority to do so)
rules covering life insurance illustrations exist to
ensure illustrations do not mislead consumers ensure illustrations are understandable by prescribing standard formats to be followed ensure certain required disclosures are specified
State Dept. of Insurance
ensures applicable state insurance laws are being followed by insurers and consumers
An intentional and fraudulent omission in communicating information regarding a warranty by an insured
entities the insurer to rescind
Admitted Insurer
entitled to transact insurance in CA by CDI receives certificate of authority
Health Benefit Exchange
entity intended to create a more organized and competitive market by offering a choice of plans made available by commercial insurers, establishing common rules regarding offerings and pricing, and providing information to help consumers better understand the options available to them California calls its Health Benefit Exchange - covered california Individual and families & small businesses - original name was shop program and the rebranded name is covered california for small business
The purpose of the Insurance Information & Privacy Protection Act is to
establish standards for the collection, use and disclosure of information gathered in connection with insurance transactions by insurance institutions, agents or insurance support organizations maintain a balance between the need for information by those conducting the business of insurance and the public's need for fairness in insurance information practices, including the need to minimize intrusiveness establish a regulatory mechanism to enable natural persons to ascertain what information is being or has been collected about them in connection with insurance transactions and to have access to such information for the purpose of verifying or disputing its accuracylimait the disclosure of information collected in connection with insurance transactions enable insurance applicants and policyholders to obtain the reasons for any adverse underwriting decision
applies to life and disability: insurers shall not consider sexual orientation in their underwriting criterial or utilize marital status, living arrangements, occupation, sex, beneficiary designation, ZIP Codes or other territorial classification within this state, or any combination thereof for the purpose of
establishing sexual orientation OR determining whether to require a test for the presence of HIV where that testing is otherwise permitted by law
HMOs usually include coverage for prescriptions
even though not reward to by law
subsequent training
every life agent who sells annuities shall satisfactorily complete: 4 hours of training prior to each 2-year license renewal training shall consist of: CA law, regulation and requirements prohibited sales practices recognition of indicators that prospective insured may lack necessary short-term memory of judgement fraudulent & unfair trade practices
initial training
every life agent who sells annuities shall satisfactorily complete: 8 hours of training prior to soliciting individual consumers in order to swell annuities
domestic partnerships
every policy issued, amended, delivered, or renewed in California's shall provide coverage for the registered domestic partner of an insured or policyholder that is equal to and subject to the same terms and conditions as the coverage provided to a spouse of an insured or policyholder
relative value unit
every type of surgery is given a point & then in the policy there will be a conversion factor
dental insurance typically includes coverage for
exams cleanings x-rays sealants fillings root canals extractions crowns
fiduciary funds cannot be commingled with other funds
exception- additional funds can be commingled as licensee may deem prudent for the purpose of advancing premiums, establishing reserves for the paying of returns commissions (i.e. chargebacks) or for such contingencies as may arise in her business of receiving and transmitting premium funds
no rate shall be approved or remain in effect which is
excessive inadequate unfairly discriminatory no consideration shall be given to the degree of competition commissioner will consider whether rate mathematically reflects insurance company's investment income
annuity exclusion ratio when working with non-qualified annuity
exclusion ratio = IN (total contributions)/OUT (total expected payout)
RRG are
exemption from multiple-state oversight member control RRGs allowed as federal liability risk retention act limited to commercial enterprises & governmental bodies can only provide liability insurance (no property) not covered by CIGA
policy owner
exercises all policy rights select/change beneficiary transfer ownership make policy changes make policy loans/withdrawals receive policy dividends applicant/policy owner usually same
if conservation undertaken
existing insurer must within 20 days of receiving notice from replacing insurer, furnish policy owner with policy summary for existing policy
Implied Warranty
exists even though it is not in writing and does not appear to be part of the policy. It is understood without being directly stated, to be present by the parties. They are implied by law from the circumstances surrounding the contract
platinum
expect to pay 10%
gold
expect to pay 20%
silver
expect to pay 30%
bronze
expect to pay 40%
Temporary Disability
expected to fully recover
Permanent Disability
expected to last a lifetime
decreasing term
face amount decreases systematically (e.g. annually) premium usually remains constant throughout life of policy not very popular anymore due to competitiveness of level term
Covered Loss Examples
failure to procure coverage failed to adequately explain policy provision failure to adequately identity exposures failure to adequately identify exposures failure to recommend a coverage inaccurate/ incomplete information failure to provide timely notice of a claim to an insurer
claim forms provided by an insurer to any person making a claim for accident, injury, death, or other noticed or claimed loss, must include the following statement regarding false or fraudulent claims Auto Theft Claims:
false representation made on the signed claim for by the insured subject the insured to a penalty of perjury
COBRA (consolidated omnibus budget reconciliation act of 1985)
federal law requiring private employers and state and local governments with 20+ employees to expense group health benefits to covered employees and dependents for 18-36 months following any of the following qualifying events: termination (other than for gross misconduct, 18 months) reduction in work hours (18 months) employer can charge up to 100% of premium + 2% admin fee (102%)
COBRA
federal law requiring private employers and state and local governments with 20+ employees to extend group health benefits to covered employees and dependents following certain qualifying events permits a child who "ages out" of a group health plan (i.e. turns 26) to continue coverage under the group plan for up to 36 months
Family & Medical Leave Act (FMLA)
federal law that provides employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (group health benefits must be maintained during leave) birth and care of the newborn child of an employee medical leave when the employee is unable to work because of a serious health condition to care for a spouse, child, or parent with a serious health condition placement with the employee of a child for adoption or foster care
Pregnancy Discrimination Act
federal law that requires any health insurance provided by an employer to cover expenses for pregnancy related conditions on the same basis as expenses for other medical conditions pregnancy related expenses must be reimbursed in the same manner as those incurred for other medical conditions no addition or larger deductible can be imposed level of health benefits for spouses of male employees must be the same as benefits for spouses of female employees
Mental Health Parity Act (MHPA)
federal law that requires benefits for mental health conditions and substance use disorder be no more restrictive than benefits for physical health conditions when included as part of a health insurance plan copayments and coinsurance comparable to physical health services criteria for managing care no more stringent than that for physical health services annual or lifetime dollar limits can be no lower than any such limits for medical and surgical benefits PPACA (obamacare) requires most health insurance coverage sold to individuals or offered by small group health plans (1-50 employees) to cover mental health and substance use disorder benefits and comply with the MHPA limits on number of inpatient days or outpatient visits covered no more stringent than limits applied to physical health services large group health plans (51+ employees) not required to offer mental health and substance use disorder benefits, BUT most do (if offered must comply with MHPA)
ERISA (employee retirement income security act)
federal law that sets guidelines for pension companies, insurance companies and private employers in administrating most voluntarily established pension and health plans in order to protect the plan's participants and beneficiaries
buyer's guide discusses how to
find a policy that meets your needs and fits your budget decide how much insurance you need make informed decisions when you buy a policy
any person who knowingly and willfully ovations information about an individual from an insurance institution, agent, or insurance-support organization under false pretenses shall be
fined up to $10k and/or imprisoned for up to 1 year
Association CIGA
fire marine plate glass liability burglary sprinkler team & vehicle automobile aircraft miscellaneous workers' comp common carrier liability boulder & machinery
agents responsibilities
first in life to determine if person might be eligible for desired coverage submits completed application that accurately represents applicant's answers known as field underwriter and acts as eyes and ears of the insurance company
agent's responsibilities
first in line to determine if person might be eligible for desired coverage submits completed application that accurately represents applicant's answers known as a field underwriter and the agent has eyes and ears of the insurer
fixed amount
fixed amounts paid to beneficiary at specified intervals (monthly, quarterly, semi-annually, or annually) until the principal and interest are depleted
what's fueling the annuity
fixed annuity (general account) variable annuity (separate account) indexed annuity (equity-indexed annuity)
coverage provided under a group disability policy must provide a totally disabled employee benefits for covered expenses directly relating to the condition causing total disability for a period of notes than 12 months
following discontinuance of the group plan by the employer (master policy owner)
parking lot rule
for 60+ normally... during the 30-day cancellation period, the premium for an individual variable life insurance policy or an individual variable annuity contract may be invested only in fixed-income investments and money-market funds
non-discrimination
for a group life plan to receive favorable IRS tax treatment, it must NOT discriminate in favor of key employees either as to eligibility or amount or type of insurance
What's different about a California Partnership LTC policy
for every dollar that a CA Partnership LTC policy pays out in benefits... that's one more dollar that will be protected from the 'spend down' requirements of Medi-Cal
Term Life
for temporary needs because it will go away after the term
General (Open) Enrollment
for those who didn't enroll during initial enrollment period (January 1- march 31 each year & coverage begins on july 1)
Dual Eligible SNP
for those who have both medicare and medi-cal (medicaid) "dual eligibles" "medi-medis"
Initial Enrollment
for those who won't be automatically enrolled at 65 7-month period surrounding 65th birthday month
Chronic Condition SNP
for those with one or more severe or disabling chronic conditions Chronic alcohol/ drug dependence Cardiovascular disorders End-stage renal disease (ESRD) HIV/AIDS Lung disorders Mental health Neurological disorders Stroke
Coercion
forcing a person to act or think in a certain way as the result of actual or threatened physical or mental force or persuasion
action notice of appointment
form filed by an insurer that provides notice to the CDI that a licensee has been appointed to act as an agent of that insurer for a particular line or lines of insurance
rejection of inflation protection
form that must be signed by applicant if one of the inflation protection options is not purchased
vision insurance typically includes for
frames lenses annual eye examinations coverage for frames is usually limited to a specific dollar amount
mode
frequency of premium payments annually semi-annually quarterly monthly the higher the frequency, the higher the premium
broadly, dual eligibles fall into one of these groups
full benefit dual eligible partial benefit dual eligible share of costs dual eligible
guaranteed vs. non-guaranteed
guaranteed elements- the premiums, benefits, values, credits or charges that are guaranteed and determined at issue non-guaranteed elements- the premiums, benefits, values, credits or charges that are not guaranteed or not determined at issue
claims
handles and service claims for insureds and third party claimants (claim adjuster)
Workers' Comp Fraud
harms employers by contributing to the high cost of workers' comp insurance and self-insurance and harms employees by undermining the perceived legitimacy of all workers' compensation claims
irrevocable beneficiary
has a vested (current interest) in policy's death benefit policy owner must have written consent from irrevocable beneficiary to: change beneficiary surrender policy make policy loan make withdrawal (UL) do assignment (absolute/ collateral)
standards for determining recommendation suitability
has consumer been reasonable incomes of annuity features including... potential surrender period and surrender charge any potential tax penalties mortality and expense fees investment advisory fees charges for riders limitations on interest returns insurance and investment components market risk have the following questions be considered? will consumer receive a tangible net benefit is the annuity, any underlying sub accounts, and riders appropriate if an exchange or replacement, is it suitable considering surrender charges, surrender period, loss of existing benefits, increased fees, charges for riders, etc. if an exchange, will consumer benefit from product enhancements and improvements has consumer done an exchange or replacement within proceeding 60 months has consumer's suitability info been obtained
full benefit dual eligible
has medicare Parts A, B, and D and Medi-Cal coverage for medicare copays, premiums, coinsurance, & deductibles
revocable beneficiary
has no rights in policy's death benefit until after the insured dies can be changed/removed anytime policy owner wishes
share of costs dual eligible
has same benefits as full benefit dual eligible, but has to "spend down" excess income on medical expenses each month to meet medicaid income cut-offs
Why LTC Insurance
health insurance is not designed to cover ling-term care expenses. health insurance focuses more on acute care, not chronic care personal resources are often used to pay for long-term care. the problem is that personal resources can be quickly depleted because of the high cost of long-0term care don't look to medicare or Medi-Cal
high deductible health plan (HDHP)
health insurance policy that meets special federal guidelines and must be in place in order to contribute to a health savings account (HSA) or medical savings account (MSA) HDHP annual deductible must be satisfied before benefits are provided many HDHPs have a 100% coinsurance level after deductible is satisfied
What rights does HIPPA give me over my health information
health insurers and providers who are covered entities must comply with your right to: ask to see and get a copy of your health records have corrections added to your health information receive a notice that tells you how your health information may be used and shared decide if you want to give your permission before your health information can be used or shared for certain purposes (e.g. marketing purposes) get a report on when and why your health information was shared for certain purposes if you believe your rights are being denied or your health information isn't being protected, you dan file a complaint with your provider or health insurer or with the U.S. government
Covered Entities
health plans - including health insurance companies, HMOs, company health plans, and certain government programs that pay for health care (e.g. Medicare and Medicaid) most health care providers - includes most doctors, clinics, hospitals, psychologists, chiropractors, nursing homes, pharmacies, and dentists health care clearinghouses - entities that process nonstandard health information into a standard
insurer must issue policy during open enrollment regardless of applicants
health status medical conditions receipt of health care claims experience insurers may be able to use medical u/w if outside open enrollment
HMOs provide both
healthcare coverage & healthcare services
level 3
hearing before and administrative law judge
first things first! upon contacting the senior in the home, before making any statement other than a greeting, agent must state that the purpose of the contact is to talk about insurance, or to gather information for a follow-up visit to sell insurance, if that is the case, and state all of the following information
hello, my name is (name). I'm a (title) (e.g. life agent). I represent (insurer) (if known). each person attending a meeting with a senior shall provide the senior with a business card or other written identification stating: name, business address, telephone number, CA license #
A shopper's guide to LTC insurance
helps consumer understand LTC and the insurance options available to pay for it
out-of-network
higher deductibles, copays if any) & coinsurance
every person has an insurable interest in the life and health of
himself any person on whom he depends wholly or in part for education or support any person upon whose life any estate or interest vested in him depends any person under a legal obligation to him for the payment of money or respecting property or services, of which death or illness might delay or prevent the performance
Life Agent
holds life-only agent license and/or A&H agent license earn commissions for selling policies
alternatives should be explored if proceeds needed for minor's heath maintenance, education and support
name a reliable adult set up trust for child
with regard to long-term care insurance, all insurers, brokers, agents, and others engaged in the business of insurance owe a policyholder or a prospective policy holder a duty of
honesty good faith fair dealing
basic medial
hospital expense surgical expense physician's visit expense
Part A
hospital insurance
medicare parts
hospital insurance medical insurance medicare advantage prescription drug
Hospital Expense
hospital room and board lab/x-ray charges operating room
Part A Benefits
hospitalization (inpatient care) skilled nursing facility care home health care hospice care
annuity classifications
how does the money get into the annuity? when does money start to come out of the annuity?
benefit period
how long benefits will last
settlement options
how the life insurance proceeds are paid out
reasons for denying app or revoking/suspending license for organization
if a controlling person has... previously engaged in a fraudulent practice or act or conducted business in a dishonest manner shown incompetency or untrustworthiness in conduct of any business, or has exposed public to those dealing with him to the danger of loss knowingly misrepresented the terms for effect of an insurance policy or contract failed to perform a duty expressly required upon him by a provision of the CIC or has committed an act expressly forbidden by a provision of the CIC has been convicted (not just charged) of a- feeling, misdemeanor involving insurance, public offense involving fraudulent act or act of dishonesty in acceptance, custody, or payment of money or property added or abetted any person in an act or omission that would constitute grounds for suspension, revocation, or refusal of a license issued under the CIC to the person aided or abetted permitted an employee to violate any provision of the CIC violated any provision of law relating to conduct of business that could lawfully be done only under authority conferred by an insurance license
conversion period "grace period"
if employee covered under a group life policy dies during the 31-day conversion period following termination a death benefit will be paid under the group policy whether or not application for the individual policy has been made
war exclusion
if included in a life insurance policy, it excludes coverage if insured dies from any act of war
aviation exclusion
if included in a life insurance policy, it excludes coverage if insured dies in an aviation-related accident other than as a fare-paying passenger on a scheduled airline
COB- medicare beneficiary if a person is a medicate beneficiary
if medicare beneficiary has retired insurance (insurance from former employer)- medicare is primary & group health plan is secondary if medicare beneficiary is 65 of order, has group insurance based on his or his spouses's current employment, and the employer has 20 or more employees- group health plan is primary & medicare is secondary if medicare beneficiary is 65 or older, has group health insurance based on his or his spouses's current e employment, and the employer has less than 20 employees- medicare is primary & group health plan is secondary
existing relationship
if senior requests same day meeting in home, notice must be delivered prior to meeting
Suitability not satisfied
if the insurer determines that applicant does not meet its financial suitability standards OR applicant has declined to provide the information, the insurer may reject the application for LTC insurance
Enrollment in a stand alone PDP automatically terminates enrollment in medicare advantage plan if PDP included
if your medicare advantage plan include prescription drug coverage (Part D) and you join a stand-alone Medicare prescription drug plan, you'll be automatically dis-enrolled from your medicare advantage plan and returned to original medicare
Supplemental Illustration
illustration furnished in addition to basic illustration that shows only non-guaranteed elements: must be accompanied by a basic illustration non-guaranteed elements cannot be more favorable than those in the basic illustration must include statement that non-guaranteed (same statement found in basic illustrations) premiums must be same as premiums used in basic illustration
annual status report
illustration that must be sent annually by insurer to policy owners of policy types for which the insurer has designated that illustrations will be used
when does money start to come out of the annuity?
immediate annuity (IA) deferred annuity (DA)
Generally the insured will be eligible for LTC benefits under their policy if either one of the two criteria are met
impairment in two ADLs OR impairment of cognitive ability (deterioration or loss of intellectual capacity due to organic mental disease including Alzheimer's disease or related illnesses, that requires continual supervision to protect oneself or others)
After the Affordable Care Act
in 2019 you pay 25% for brand-name drags and 37% for generics while in donut hole
LTC Costs
in California, nursing home costs averaged $290/day in 2017, with the annual cost of care close to $110,000 and the cost for home health care in California is an average of $22 per hour. that's about $23,000 per years based on 4 hours per day, 5 days per week
Variable Universal Life (UL, VUL, Flexible Premium Variable Life)
in a VUL, the account value is fueled by the policy owner's sub account (separate account) choices
Additional Medical Tests
in addition the the normal requirement, an underwriter may request additional medical tests if she feels it's necessary based on proposed insured's medical history and/or coverage amount being applied for e.g. physical exam, EKG (ECG), stress tests
LTC personal worksheet
in addition to the insurer's suitability standards, agents must present the LTC insurance personal worksheet to applicant at or prior to application completed worksheet must be submitted to insurer prior to LTC app being considered
additional medical tests
in addition to the normal requirements, an underwriter may request addition medical tests if she feels it's necessary based on proposed insured's medical history and/or coverage amount being applied for
Unfair Practices
in insurance are trade practices considered to be unfair, deceptive or misleading. There are numerous laws and regulations that define unfair practices in the insurance industry. Only the commissioner may enforce provisions of Unfair Practices Act
Suitability Standards
in order to determine whether the purchase or replacement if LTC insurance is appropriate for the needs of the applicant, insurers must develop and use suitability standards that consider the applicants ability to pay for proposed coverage, the applicant's LTC needs and the advantages and disadvantages of using insurance to meet those needs, and the value, benefits, and costs of applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommenced purchase or replacement
approved amount
in original medicare, this is the amount a doctor or other provider that accepts Medicare assignment can be paid. it may be less than the normal amount a doctor or supplier charger
PPO networks
in-network out-of-network
Any- Occupation Definition of Total Disability
inability to perform the duties of any occupation by which the individual is suited by training, education or experience
may
permissive (allowed but not obligatory)
"Long-term carte insurance"
includes coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a steeling other than an acute care unit of a hospital and induces all products containing any of the following benefit types... coverage for institutional care including care in a nursing home, convalescent facility, extended care facility, custodial care facility, skilled nursing facility, or personal care home; home care coverage including home health care, personal care, homemaker services, hospice, or respite care; or community-based coverage including adult day care, hospice, or respite care
Medicare Part B enrollment @ 65 can be delayed by someone who is covered under an employer's group health plan based on the active employment of
individual spouse family member (if disabled) when individual does finally enroll for Part B, late enrollment penalty can be waived by making use of Special Enrollment Period (enroll within 8 months of group coverage of ending)
Individual Disability Income Policy
individual owns & controls their own policy
individual life
individual owns and controls their own policy
The 3 ways long-term care coverage can be issued
individual policy group coverage life policy or annuity rider
beneficiary types
individuals groups trust charity business
Intimidation
inflicting fear upon a person as the result of actual or threatened bodily injury or property damage
what info is protected by HIPAA
info your doctors, nurses, and other health care providers put in your medical record conversations your doctor has about your care or treatment with nurses and others information about you in your health insurer's computer system billing information about you at your clinic most other health information about you held by those who follow these laws
enrollment for part D
initial enrollment period open (annual) special
CA partnership LTC insurance CE requirements agents who market CA partnership LTC insurance policies must satisfy the following educational requirements
initial training (16 hours total) 8-hour LTC course (regular LOTC CE requirements) 8-hour live classroom training on CA partnership LTC ongoing training 8-hour live classroom training ever 2-year license term
CA Partnership LTC Insurance CE Requirements
initial training (16 hours total) 8-hr LTC course 8-hr live classroom, training on CA Partnership LTC ongoing training - 8-hr live classroom training every 2-year license term
Title 10 - investment chapter 5 - Insurance commissioner
inside it specifically authorizes the use of CIC
fixed period
installments are paid to the beneficiary over a fixed number of years. amount of installments is based on amount of policy proceeds, interest and length of the period chosen
surrender old, buy new
instead of that- 1035 exchange is an IRS rule that allows for the exchange of a policy to a new policy insuring the same person without having to pay tax on any investment gains earned on the original contract & taxable gain deferred into new policy
fixed product
insurance product in which premiums are invested and backed by the insurer's general account
life insurance
insurance that pays out a sum of money (i.e. death benefit) upon death of the insured person
Disability Income "The Insurance"
insurance that provides for periodic payments of benefits to replace insured's income when insured is unable to work due to a covered disability
both of these associations exist to protect
insured/claimants of an insolvent member insurer
use & file
insurer can use rates immediately, but must then file the new rate with the DOI within a specific time, typically 15 to 60 days
non-cancelable LTC
insurer cannot unilaterally: change terms of coverage decline to renew change the premium rate
person
person (individual) associations organization partnerships business trusts LLCs corporations
guaranteed renewable LTC
insurer cannot unilaterally: change terms of coverage decline to renew insurer may change the premium rates to all insureds in the same class
file & use
insurer files rates with DOI and can then use immediately (rather than waiting for approval). DOI retains to right to disapprove of the rate later, if it violates law or is deemed to be not justified
certificate of insurance
insurer information group policy # employee's name coverage amount riders/add'l coverages beneficiary principal exclusions premium not included
claim settlements
insurer must accept for deny claim within 40 days of receiving proof of loss if more time is needed to process claim, written update must be provided every 30 days claim must be paid within 30 days of acceptance of claim
indemnity basis
insurer pays a specified amount per day for a specified maximum number of days ($300/day)
reimbursement basis
insurer pays the actual cost or a stated percentage of actual cost for coverage procedures and services
general account
insurer's account into which all incoming funds are deposited (except those designated for a separate account) invested very conservatively highly regulated used to back insurer's fixed insurance policies
prior approval
insurers are required to obtain approval from DOI for rates prior to using. may have to provide justification for the desired rare change. if not disapproved within specific time (e.g. 30 or 60 days), rate is deemed approved used for most P&C business is CA
claims file & record documentation
insurers claim files, which are always subject to examination by the commissioner, must contain all documents, notes and copies of all correspondence so that pertinent events and the dates of the events can be reconstructed and the insurer's actions pertaining to the claim can be determined 1. maintain claim data so that insurer can provide- claim number, line or coverage, date of loss, date of claim payment, date of acceptance, denial or date closed w/o payment. data must be available for all open and closed files for current year and the 4 proceeding years (i.e. 5 years total) 2. record the dates insurer received, processed and transmitted or mailed every material and relevant document in the file 3. maintain hard copy files or files that are accessible, legible and capable of duplication to hard copy for the current year and the proceeding 4 years (i.e. 5 years total)
applies to life insurance and disability income
insurers must not make unfair distinctions between individuals in underwriting for the risk of HIV and AIDS marital status or known or suspected homosexuality or bisexuality of an applicant cannot be considered in determining whether to require an HIV test typically applicant's age and/or amount of insurance being applied for determine if HIV test will be required
applies to life and disability income
insurers must not make unfair distinctions between individuals in underwriting for the risk of HIV and AIDS martial status or known or suspected homosexuality or bisexuality of an applicant cannot be considered in determining whether to require and HIV test typically applicant's age and/or amount of insurance being applied for determine if HIV test will be required
pretext interview
interview where party gathering info does any of the following in attempt to obtain information about a natural person: pretends to be someone he is not pretends to represent someone he is not misrepresents true purpose of interview refuses to identify himself upon request
pretext interview
interview where the party gathering info does any of the following in an attempt to obtain information about a natural person: pretends to be someone he is not pretends to represent someone he is not misrepresents true purpose of interview refuses to identify himself upon request
stranger-originated life insurance (STOLI)
involves transfer of owner's life policy to 3rd pray in exchange for $ investors solicit individual to buy new life policy for sole purpose of eventually selling it to them THIS IS ILLEGAL
Insurance
is a contract whereby an insurer indemnifies (protects) an insured against a loss, damage, or liability arising from a contingent or unknown event
adult daycare
is a medical or nonmusical care on a less than 24 hour basis provided in a licensed facility outside the residence for persons in need of personal services, supervision, protection, or assistance in sustaining daily needs, including eating, bathing, dressing, ambulating, transferring, toileting, and taking medications
transacting insurance without a valid license
is a misdemeanor and can result in a fine of $50,000 and/or up to 1 year
pre-existing condition
is any condition that was treated or diagnosed within a 6-month loopback period before coverage started under the medicare supplement policy insurer can deny benefits for pre-existing conditions if not creditable coverage
personal care (custodial care)
is assistance with the ADLs including the instrumental ADLs can be provided by a skilled or unskilled person
Personal Lines Broker-Agent
is authorized to transact insurance on all things personal
medicare
is government health insurance primarily for people 65+
cash values
policy owner has the right to cash surrender their policy policy owner has the right to a policy loan or withdrawal
right to hearing
is usually provided to applicants and licensees before their application is revoked or suspended
Whole Life (ordinary life/straight life)
issue age-> maturity age (e.g. 100 or 121) builds cash value lasts for life (permanent) policy loans available level premiums
when inadvertent
it is a single act when adding it up
university life policy is so special because
it is unbundled (flexible) and policy holder can see exactly what is going on
Any insurer that fails the MLR test in a calendar year for all plans in a given market segment (individual or group)
it must refund excess premiums to consumers enrolled in plans in that market segment
beneficiary should not be an estate
it subjects it to probate
what is deemed a conviction for licensing purposes
judgement, plea or verdict of guilty or a conviction following a plea of no contest
level 5
judicial review by a federal district court
business uses of life insurance
key person insurance buy-sell agreements business overhead insurance deferred compensation split dollar insurance salary continuation
twisting
knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurer for the purpose of inducing any person to lapse, forfeit, surrender, terminate, or retain an insurance policy
MLR test requirements
large group plans need to have a minimum of 85% and individual and small group plans need a minimum of 80%
Rescission (rescind)
legal remedy that voids an existing contract and restores both parties to their situation prior to entering into the contract
assignment
legal transfer of ownership in a policy from one person to another owner can freely assign life policy assignment form signed by both only and new owners and must be filed with insurer (note: insurer approval not needed)
nonforfeiture options
legally required options for using the cash value of a whole life policy made available to the policy owner if they no longer want to or are able to make premium payments- reduced paid-up extended term cash surrender
benefit period
length of time a disability policy (including disability income) will pay benefits once insured becomes disabled based on time or based on age
notice of appointment terminates when
license of agent cancelled or expired license of agent becomes inactive agent quits working for insurer termination of appointment filed with CDI
Accident & Health Agent
license type which entitles the licensee to transact insurance coverage for: sickness bodily injury accidental death benefits for disability income 24-hour care coverage*
Life-Only Agent
license type which entitles the licensee to transact insurance coverage on: human lives (life insurance) benefits of endowment and annuities benefits in the event of death or dismemberment by accident* benefits for disability income*
Life Settlement Broker
licensed to act on behalf of an owner of a life insurance policy to negotiate a life settlement contract between the owner and a life settlement provider
the fundamental purpose of insurance regulatory law is to protect the public as insurance consumers and policyholders. this involves:
licensing and regulating insurance companies and other involved in the insurance industry monitoring and preserving the financial solvency of insurers regulating and standardizing insurance policies and products controlling market conduct and preventing unfair trade practices
Association CLHIGA
life annuities health
CLHIGA covered policies
life health annuities disability income long-term care
how to become a life settlement broker
life agent > 1 year - notify CDI within 10 days of first operating as a life settlement broker - submit notification form and pay fee life agent < 1 year or no license - must complete 15 hours of education related to life settlements - complete application and pay fee licensing exception - licensed attorney, CPA, or financial planner NOT required to have life settlement broker license if... retained to representing owner; AND compensation not paid directly or indirectly by the provider
Qualifying Life Event
life event under PPACA involving a change in family status, loss of other health coverage, or change in income that permits use fo the social enrollment period
annuitant
life expectancy used (usually same person as owner)
non-medical application
life insurance for which proposed insured may not be required to undergo medical examination
key person insurance
life insurance purchased by a business on the life of a key employee (e.g. CEO, Sales Manager) whose death would have adverse effects on the company (recruit and train replacement, replace lost profits, assure potential creditors)
family rider
life insurance rider that combines level term coverage in both a spouse and children
term life insurance
life insurance that pays out a death benefit if insured dies during a specific term no cash value (pure insurance) temporary (limited term) most affordable best suited to cover temporary needs: mortgage loans
applied to life insurance
life insurers shall not refuse to accept an application for insurance, refuse to issue or renew a policy, cancel a policy, or deny coverage under a policy because the applicant is, or has been, a victim of domestic violence
common disaster clause
life policy provision that states when the insured and primary beneficiary both die simultaneously and it is impossible to determine who died first, the insured will be presumed to have survived the primary beneficiary so that proceeds will be paid to contingent beneficiary (or Insured's estate if not contingent)
survivorship clause
life policy that specifies an amount of time by which a beneficiary must outlive the insured in order to receive the policy proceeds (aka time or delayed-payment clause) examples: policy proceeds will be payable to a designated beneficiary only if beneficiary is alive at the time of payment policy proceeds will be payable to a designated only if the beneficiary survives the insured by 30 days
payout options during the annuitization phase
life-only life with period certain period certain refund life joint-life joint-and-survivor
Life Agent
life-only OR accidental & health agent license OR someone with both
failure to maintain creditable prescription drug coverage after initial enrollment period ends @ 65 may result in
lifetime 1% per month premium penalty for each month without such coverage penalty applies for life or as long as beneficiary has part D coverage
suicide clause
limits insurance company's liability to a refund of premium if the insured commits suicide within 2 years of the policy's effective date
schedule of fees
list various services and what they would pay for each one
reinstatement provision
lists the requirements for insurer to consider reinstating a life policy that has lapsed due to non-payment of premium examples: written request for reinstatement can be made within two years after end of grace period (reinstatement app) E of I must be submitted along with service fee overdue premiums + interest must be submitted policy loans + loan interest must be repaid 2-year incontestability and suicide provisions start all over again
long term care rider
living needs rider that allows life policy death benefits to be advanced for long-term care expenses pays % of face amount each month for insured's LTC expenses death benefit reduced by amount paid typically LTC rider can only be attached to WL or UL policies
policy loan
loan made by insurer to policy owner that uses policy's cash value as collateral- loan interest accrues loan interest rate can be fixed or variable no fixed time for repayment upon insured's death and outstanding loan (and accused interest) will be dedicated from policy's face amount to arrive at death benefit (limit of liability) payable to beneficiary
policy loan
loan made by insurer to policy owner that uses policy's cash value as collateral- loan interest accrues, loan interest rate can be fixed for variable, no fixed time for repayment, upon insured's death any outstanding loan (and accrued interest) will be deducted from policy's face amount to arrive at death benefit (limit of liability) payable to beneficiary
UL Designed as Term (Guaranteed Universal Life) Coverage
provides coverage to a specific age chosen by insured (e.g. 90, 95, 100, 110, 121)
Cost Sharing Reductions
lower out-of-pocket health care costs, such as coinsurance, copays and deductibles in enchanted silver plans (not available with the bronze, gold, or platinum plans) enhanced silver plans provide benefits of gold or platinum plan, but at silver plan price
policies that pay fixed dollar amounts for specified diseases or other specified impairments
lump sum
policies that provide benefits for expenses incurred for an accidental injury only
lump sum
policies that provide benefits for expenses incurred for specified limited services
lump sum
False Financial Statement
making a false statement of the financial condition of an insurer with the intent to deceive
no insurer shall attempt to settle a claim by
making a settlement offer that is unreasonably low
cold lead advertising
making use of any method of marketing that fails to disclose in a conspicuous manner that: purpose is solicitation of insurance contact will be made by an insurance agent or company
capitation
managed care payment system in which a fixed amount of money per member/patient is paid (usually per month) to a physician for the delivery of health care services (commonly used in HMOs)
shall
mandatory
Credit Reports
many life and disability insurers consider an applicant's credit history during the underwriting process as they believe there is a connection between how one handle's his credit and his risk of dying early/poor health. these insurers believe that credit history is a good predictor of good health and longevity
credit reports
many life insurers consider an applicant's credit history when underwriting a life insurance application as they believe there is a connection between how one handles his credit and his risk of dying early these insurers believe that credit history is a good predictor of good health and longevity
as dental coverage is generally not included in health insurance plans for adults > 18
many purchase it as an optional add-on to their health insurance plan or separately as a stand-alone policy
as vision insurance is generally not included in health insurance plans for adults 18>
many purchase it as an optional add-on to their health insurance plan or separately as a stand-alone policy
Direct response
marketing/distribution system in which the insurer uses advertising to encourage prospective customers to contact the insurer directly to buy insurance. advertising examples include direct mail, internet advertisements, television commercials, and print marketing
divisions
marketing/sales underwriting claims actuarial
qualifying events examples
marriage having a baby
any person capable of making a contract
may be an insurer
consumer must be informed that he
may request to be interviewed is entitled to receive a copy
employer-employee
maybe you have an insurable interest
unmarried couple
maybe you have an insurable interest
basic medial expense policies are frequently written on a First Dollar Coverage basis
meaning that there is no deductible that has to be paid by the insured before the insurer begins paying for covered claims
genetic characteristics
means any scientifically or medically identifiable gene or chromosome that is known to be a cause of a disease or disorder that us presently not accosted with any symptoms of any disease or disorder
exposure unit
measure of loss potential used for pricing of insurance (usually $100 or $1000) # of exposure units x rate = premium
rating (table rating)
mechanism used in life and disability insurance for increasing premiums for higher than average risks
Cost Sharing Devices
mechanisms for making the insured share in some of the costs of their health care with the insurer ex: deductibles, copayments, coinsurance
applications for medicare supplement insurance must include specific questions designed to find out if applicant currently has in force
med supplement insurance medicare advantage plans medical (medicaid) other health insurance in force whether med supplement policy is intended to replace any other Med supplement of MA presently in force
simplified issue
medical history is considered health history questions on app large face amounts ($1) available can be more expensive insurer may still require medical exam
Part B
medical insurance
legal assistance
medicare social security elder abuse consumer fraud supplemental security income (SSI) medi-cal housing pensions nursing homes age discrimination
partial benefit dual eligible
medicare (medi-cal) pays some medicare expenses (e.g. copays, premiums, coinsurance, deductibles)
medicare prescription drug coverage (Part D)
medicare-approved optional prescription drug plans run by insured companies and other private companies PDP = prescription drug plan
level 2
reconsideration by a qualified independent contractor (QIC)
medical information bureau (MIB)
member-owned corporation that provides an "information exchange: for member life and health insurers to report and retrieve important underwriting information about insurance applicants (e.g. errors, omissions or misrepresentations made on application) MIB reports alone cannot be used for adverse u/w decisions
medical information bureau (MIB)
member-owned corporation that provides an "information exchange: for member life and health insurers to report and retrieve important underwriting information about insurance applicants (proposed insureds) MIB reports - they cannot be used alone for adverse u/w decisions
human life value approach
method of calculating amount of life insurance a family will need based on he financial loss the family could incur if the insured person were to pass away today -income, projected pay raises, household services, employment benefits
needs approach
method of calculating how much life insurance an individual or family requires to cover their needs and expenses -funeral expenses, estate & gift taxes, probate fees, medical expenses, legal fees, business buyout costs, emergency funds, mortgage/rent, debts/loans, child care, educational expenses
minor beneficiary
minor is someone under 18 insurer will not pay out to a minor beneficiary insurer will hold proceeds until child turns 18
penalty for working with non-admitted insurer
misdemeanor + $500 + $100/month agent continues the violation
penalty
misdemeanor + $500 + $100/month if the agent continues the violation
Unfair Claims Settlement Practices
misrepresenting to the claimant pertinent facts or insurance policy provision relating to any coverages at issue failing to acknowledge and act reasonably promptly upon communications with respect to claims failing to affirm or deny coverage within a reasonable time after proof of loss requirements have been submitted by insured failing to implement reasonable standards for the prompt investigation and processing of claims not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear attempting to settle a claim for less than what a reasonable person would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application compelling insured to pursue litigation to recover amounts due under a policy by offering substantially less than the amounts ultimately recovered attempting to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of, the insured, his or her representative, agent or broker directly advising a claimant not to obtain the services of an attorney failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made failing to provide promptly a reasonable explanation if the basis relied on in the insurance policy, un relation to the fact or applicable law, for the denial of a claim or for the officer of a compromise settlement failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage misleading a claimant as to the applicable statue of limitations delaying the payment or provisions of hospital, medical, or surgical benefits for services provides with respect to acquired immune deficiency syndrome (AIDS) or AIDS-related complex for more than 60 days after the insurer has received a claim for those benefits, where the delay in claims payment is for the purpose of investigating whether the condition preexisted the coverage. However, this 60-day period shall not include any time during which the insure is awaiting a reposes for relevant medical information from a health care provider
premium rate=
morbidity- investments+ expenses+ benefit period
a person cannot have
more than one medicare supplement plan
flexible premium (FP)
multiple premium payments
right to cancel (free look)
must appear on front of policy jacket or cover page if policy owner is <60 they have between 10-30 days if policy owner is 60+ they can have 30+ days
regulation of admitted insurers (standard market insurers)
must approved ("admitted") by the state must file forms and rates for approval pays into state's Guarantee Association (CIGA) CIGA may pay out in case of insolvency policy holder can appeal to CDI
Admitted Insurers
must be approved ("admitted") by state must file forms and rates for approval pays into state's Guarantee CIGA may pay out in case of insolvency
notice to applicant regarding replacement of medicare supplement coverage or medicare advantage
must be completed upon determining that a sale will involve replacement of existing medicare supplement coverage "your new policy will provide thirty days within which you may decide without cost whether you desire to keep the policy (replacement must make sense) "do not cancel your present policy until you have received your new policy and are sure that you want to keep it" agent or broker signature and applicant's signature applicant gets a copy and insurer must retain a signed copy on file
HICAP (health insurance counseling and advocacy program) Notice
must be included on all applications for med supp insurance
Plan A (core plan)
must be offered by an insurer that offers any medicare supplement policies if any other plans are offered they are in addition to plan a
3 hour course in ethics
must be part of the required 24 hours of CE needed for license renewal every 2-year period
notice regarding replacement
must be signed by both applicant and agent agent must obtain a list of all existing policies to be replaced must be presented to applicant no later than at the time of application agent must leave form with applicant
authorization to disclose personal information
must be signed by proposed insured(s) so that medical records can be released by physicians, hospitals, etc.
employees who become totally disabled while insured under a group life policy and who continue to be totally disabled on the date the policy is discontinued
must have the same conversion privilege as a terminating employee
Life & Disability Analyst
must hold both life-only agent license and A&H agent license Holds L&D Analyst license earns fees for advising clients
for any business cards, print advertisements, and written price and quotes you hand out
must include license number which must be in type size as least as large as any telephone number, address, or fax number OR in 12-point (8-point type for business cards) whichever is larger must include the word "insurance" in type size that is at least as large as the smallest telephone number OR 12-point type (8-point type for business cards), whichever is larger
internet advertisement
name as it appears on agent's insurance license, and any fictitious name(s) approved by commissioner agent's state of domicile (i.e. residence) and principal place of business license number (business number not required)
other efforts to combat fraud include
national automobile theft bureau insurance claims analysis bureau workers' comp fraud reporting arson information reporting system
Concealment
neglect to communicate that which a party knows and ought to communicate
Exceptions
newspaper subscriptions credit union members offered as a guarantee of performance of goods title, life or disability insurance to pay balance of loan
Application Alterations
no alteration of any written application for any disability policy shall be made by any person other than the applicant without his written consent... except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not be to ascribed by the applicant making any other alteration without applicant's consent is a misdemeanor
non-qualified annuity
no contribution limit 10% penalty on distributions made before age 59 1/2
Applies to disability policies for hospitals, medical, and surgical expenses
no disability insurer covering hospital, medical, or surgical expenses shall deny, refuse to insure, refuse to renew, cancel, restrict, or otherwise terminate, exclude, or limit coverage or charge a different rate for the same coverage, on the basis that the applicant or insured person is, has been, or may be a victim of domestic violence
No Free Insurance
no insurer shall participate in any plan to offer any kind of insurance or annuities as an inducement to the purchase or rental by the public of any property or services, without a separate charge to insured for such insurance. Nor shall any agent, broker, or solicitor arrange the sale of any such insurance
employee-employer
no they do not have an insurable interest
landlord-tenant
no they do not have an insurable interest
policy dividend
non guaranteed return of premium paid to a policy owner out of an insurance company's surplus (profits) premium= mortality- investment income+ expenses
excess & surplus lines insurer
non-admitted insurer that offers coverage for unique risks or insureds with poor loss history enable to obtain coverage from Standard Market Insurers
excess and surplus lines insurer
non-admitted insurer that provides property and casualty coverage when not available from insurers in the state
Long-term care policies (individual & group) shall have one of the following renewability provisions
non-cancelable guaranteed renewable
medicare supplement policies can only contain one of the following types of renewal provisions
non-cancelable guaranteed renewable
policy dividend
non-guaranteed return of premium paid to a policy owner out of an insurance company's surplus (profits)
for policy owner 60+, if individual life policy or annuity returned within the cancellation period, the owner will be refunded
non-variable: all premiums paid + any policy fee variable: parking lot rule- all premiums paid + any policy fee specific request rule- account value + any policy fee
avoidance
not performing an activity that could carry risks (e.g. not flying, not buying a business)
LTC Training Requirements
not required if not services provided to chronically ill, but is required if services are provided to chronically ill person
any notice required to be given to any person by the CIC, may be given by mail if
notice mailed to person to be notified postage prepaid notice addressed to residence or principle place of business in CA
no existing relationship
notice must be delivered no less than 24 hours and no more than 14 days prior to initial meeting in senior's home
notice of legal action
notice of an action commenced against the insurer with respect to a claim, or notice of action against the insured received by the insurer. (includes any arbitration proceeding)
agent needs to be aware of
occupation & occupational status marital status age dependents (# and type) sources of income annual income existing insurance insurance needs & objectives investment experience cost/ability to pay source of funds investment savings liquid net worth tax status/tax advantage needs need for principal preservation product time horizon
large group U/W considerations
occupational classes group size prior claims experience
Adverse Selection
occurs when insurer is confronted with the probability of loss due to risk(s) jot factored in a the time of sale because insured deliberately hides certain pertinent information ex an imbalance in an exposure group created when persons who perceive a high probability of loss for themselves seek to buy insurance to a much greater degree than those who perceive a low probability of loss
adverse selection
occurs when insurer is confronted with the probability of loss due to risk(s) not factored in at the time of sale because insured deliberately hides certain pertinent information
conduct previous to the purchase
of a policy is relevant to any action alleging breach of the duty of honesty, good faith, and fair dealing
dividends
policy owner can select/change policy's dividend option policy owner can withdraw dividend accumulations or surrender paid-up additions for their cash value
when an insurer files a notice of appointment on behalf of an applicant for an original license it shall be deemed by that act to have declared that the applicant is
of good reputation worthy of license sought IMPLIED DECLARATIONS
Fiduciary Duty
of, relating to, or inviting a confidence of trust
health insurance
off the job
OASDHI
old age (retirement) survisors disability health insurance (medicare)
social security administration programs
old age (retirement) survivors- pays benefits to certain family member of deceased worker disability health insurance (medicare) (OASDHI)
worker's comp
on the job
Why the need for disability income insurance
one in 3 working americans will become disabled for 90 days or more before age 65 more than 80% of working Americans don't have disability income insurance or aren't covered adequately the average disability absence is 2.5 years
single premium whole life policy
one large premium payment is made for a paid-up whole life policy
single premium (SP)
one lump sum premium
occupational
one that provides coverage both on & off the job
nonoccupational
one that provides coverage only off the job
Open Enrollment Period
one time only, 6 month period when a person can buy any medicare supplement policy available and can't be denied for charged more due to past or present health problems 6 month period beings when... individual is 65 or older and covered under medicare part B
modified whole life
one-time premium increase somewhere between years 3-5
dividend options
one-year term cash reduced premium accumulation at interest paid-up additions
Variable Life
opportunity to grow cash value at higher rate than might be provided by a regular whole life policy poor performance of sub accounts may result in lower death benefit and/or cash values policy owner assumes investment risk with variable products
voluntary life insurance
optional group life insurance that can be purchased by employee under an employers group life insurance plan premiums for voluntary life insurance benefits are paid by employee
future purchase option
optional rider that allows policy owner to increase monthly disability benefit by some specific amount at various ages and/or after major life events (e.g. birth of a child) without providing E of I
inflation protection
optional rider that increased the policy's benefit in order to combat the effects of inflation insurers are legally required to offer! simple inflation rider compound inflation rider future purchase options
Social Insurance Substitute Rider
optional rider that reduces monthly DI benefits on a dollar-for-dollar basis by any federal, state, or "social" benefits (aka legislative benefits) for which insured qualifies up to a certain threshold (aka Social insurance supplement rider or SIS rider)
domestic insurer
organized under CA laws (whether admitted or not)
alien insurer
organized under laws of any country other than a state in the United States
foreign insurer
organized under the laws of any state, other than CA (whether or not admitted)
every admitted insurer must maintain the following records pertaining to the activities of its agents
original application for each policy sold in CA record of premiums received for each policy all policies/ contracts sold in last 5 years commissions paid for each policy copies of all correspondence between applicant or policyholder & insurer or agent copies of any outline of coverage or disclosure required by law
coverage that satisfies the MEC requirements includes
original medicare (Part A)/ Part C (note: part B only not MEC) employer-sponsored plans (including COBRA and retiree coverage) individual plan, including QHP purchases through covered CA student health plans grandfathered health plans most state high-risk pools (dental-only or vision-only plans do not qualify)
required items given LTC applicant
outline of coverage A shopper's guide to LTC insurance Long-term care insurance personal worksheet notice to applicant regarding replacement of accident and sickness or LTC care insurance
disclosures
outline of coverage HICAP Notice notice to applicant regarding replacement of medicare supplement coverage or medicare advantage
hospice care
outpatient care not paid by medicare designed to provide palliative care, alleviate the physical, emotional, social, and spiritual discomforts of an individual who is experiencing the last phases of life due to the existence of a terminal disease and to provide supportive care to the primary care giver and the family care may be provided by a skilled or unskilled person
owner
owner annuity and exercises all ownership rights
agent's report (agent's statement)
part of a life insurance application that requires that the agent provide certain information regarding the proposed insured. it generally includes information regarding: agent's relationship to the insured data about the proposed insured's financial status, habits, general character any other information that may be pertinent to the risk being assumed by the insurance company
agent's report
part of a life or disability insurance application that requires that the agent provide certain information regarding the proposed insured. it generally includes information regarding: agent's relationship to the insured data about the proposed insured's financial status, habit, general character any other information that may be pertinent to the risk being assumed by the insurance company
required specifications for insurance policies
parties between whom contract is made property or life insured policy period risks insured against premium insured's interest in property, if not the owner
20 pay life policy
pay for 20 years
10 pay life policy
pay for ten years
owner can change
payment mode on the policy
disability income
pays a monthly benefit while the insured is disabled as defined in the policy monthly benefit is usually a % of policy's face amount (e.g. 1%) monthly benefit is paid for a set duration specific in the rider 3-6 month waiting period typical
hospital income policy
pays a specific dollar amount on a daily, weekly or monthly basis while insured is confined to a hospital (aka Hospital Confinement Indemnity) benefits paid directly to insured money can be used for anything helping for paying deductibles, copays, coinsurance, etc.
accidental death rider (AD)
pays an additional death benefit over and above based life policy when the insured dies from an accidental cause death must occur within specified time after accident (e.g. 60 or 90 days) dangerous hobbies might be excluded
social security disability insurance program (SSDI)
pays benefits to a disabled worker if worker has worked long enough and earned a sufficient number of work credits 5-month waiting period for benefits condition must interfere with basic work-related activities and prevent substantial gainful activity condition has or is expected to last at least 1 year or result in death
supplemental security income (SSI)
pays benefits to disabled adults and children who have limited income and resources who have either never worked or who haven't earned enough work credits for SSDI need-based program
Social Security Disability Insurance Program (SSDI)
pays benefits to disabled worker if the worker has worked long enough and earned a sufficient number of work credits 5 month waiting period for benefits condition must interfere with basic work-related activities and prevent substantial gainful activity condition has or is expected to last at least 1 year or result in death
joint life (first-to-die- policy)
pays out @ 1st death can provide income for surviving spouse less expensive than separate policies on each insured surviving spouse will be left without insurance can insure 2 or more business partners
survivorship life (second-to-die policy)
pays out @ 2nd death ideal for estate taxes can provide for special needs child are death of second parent 1M+ face amount is typical less expensive than separate policies on each insured
as a result off the PPACA (obamacare) all health plans offered through covered California must include embedded coverage for children's
pediatric dental benefits pediatric vision benefits pediatric = 18 & younger pediatric services, which includes dental (oral) and vision benefits, is one of the PPACA's essential health benefits
Under the PPACA all individual and small group health plans must include
pediatric dental benefits, pediatric vision benefits pediatric = 18 & younger
coinsurance
percentage participation between insured and insurer for covered expenses (after deductible satisfied)
elimination period
period of time between the onset of a disability and the time policy benefits begin being paid. (like a deductible- only measured in time, not dollars) 30 days - illness 14 days - accident
elimination period
period of time between the onset of a disability and the time policy benefits begin being paid. (like deductible- only measured in time, not dollars)
Open Enrollment Period PPACA
period of time during which an individual can enroll in a health plan, change plans, or apply for premium subsidies nov 1- dec 15
guaranteed issue period
period of time following certain changes in or loss of other health coverage in which insurers must offer someone a medicare supplement policy without medical underwriting and cover any pre-existing health conditions without waiting period ex- you have original medicare and an employer group health plan that pays after medicare pays and that plan is ending
probationary period
period of time set by an employer in a group disability plan that must pass before coverage for a new employee becomes effective (aka waiting period)
probationary period
period of time set by an employer in a group health insurance plan that must pass before coverage for a new employee becomes effective (aka waiting period)
authorization to disclose personal information
permission by applicant to release information to the insurer must be signed by proposed insured(s) so that medical records can be released by physicians, hospitals, etc.
Medicare- Medi-Cal Dual Eligible
person eligible for both medicare and Medical-cal (aka "medi-medi") people typically become dual eligibles by first being enrolled in one program and later becoming eligible for the other
person
person or individual associations organizations partnerships business trusts LLCs corporations
Life & Disability Analyst
person who provides advice on life or disability policies for a fee
be an ethical agent
place customers interest first know your job and continue to increase your level of competence recommend products and services that meet customer's needs accurately and truthfully represent products and services use simple language when possible conduct periodic coverage reviews with customers protect your confidential relationship with your client stay informed on and obey insurance laws and regulations provide exemplary service avoid unfair or inaccurate remakes about the competition
an agent with a contract to provide service for a licensed corporation may use the name of the corporation in stationery or advertisements in one of the following ways
placing business through using services of a stockholder of representing
benefits to self-insured plan
plan can be tailored to meet groups' needs not subject to state premium taxes third party administrator often used to handle administration of plan
non-qualified deferred compensation plan
plan in which employee defers the payment of a portion of his compensation (and taxation of it) to a future date, such as retirement life insurance can be used to informally fund the money row company will need to pay out promised benefits
Catastrophic Coverage
point when coverage gap ("donut hole") is satisfied and beneficiary responsible for small coinsurance or copay for the remainder of the year
Med Supp
policies issued by private insurers to help fill "gaps" in medicare coverage
Medicare Supplement Policies
policies sold by privater insurer to help fill "gaps" in coverage provided by Medicare (aka Medigap policies) copayments coinsurance deductibles exclusions
signed illustration
policy applied for same as illustrated: basic life illustration = application signed copy shall be submitted to insurer with application copy shall be provided to applicant policy issued other than as applied for: application/basic life illustration =/ life policy "revised illustration" shall be sent with policy and be signed and dated by applicant and producer no later than the time the policy is delivered copy shall be provided to insurer and policy owner
service basis
policy benefits are expressed in terms of the services provided rather than dollar maximums (-3 visits/day)
Partner Disability Income
policy designed to provide the business with benefits (cash flow) in the event that a covered business partner is unable to work due to a covered disability DI benefits can help business to... recruit and train replacement replace lost profits assure potential creditors
key person disability income
policy designed to provide the business with benefits (cash flow) in the event that the covered key employee is unable to work due to a covered disability (aka key employee disability income) CEO, CFO, COO, Founder, Top Salesperson DI benefits can help business to... recruit and train replacement replace lost profits assure potential creditors
life insurance taxation - policy dividends
policy dividends generally not taxable as they are a return of premium that's already been taxed
living benefits
policy features which allow policy owner to benefit from policy while insured still alive loans/withdrawals- no qualifying required, often competitive rate of interest, loan payments not necessary collateral assignments- type of assignment which guarantees outstanding loan balance will be paid to lender out of life policy's death benefit proceeds if insured dies. any remaining death benefit will be paid to policy beneficiaries
underwriting outcomes
policy gets issued exactly as applied for policy issued other than as applied for application declined
policy specifications page
policy identification schedule of benefits schedule of premiums schedule of insurance
cash surrender
policy is surrendered (terminated) and cash value paid to policy owner
Underwriting Outcomes
policy issued as applied for policy issued other than as applied for application declined
the following types of groups are eligible for group disability insurance
policy issued to employer covering 2 or more public or private employees policy issued to a creditor covering 10 or more debtors of that creditor master policy issued to the trustee of any self-employed individuals, all off whom have contracts with the same publisher of a newspaper for the performance of services for such publisher as independent contractors (10 lives min)
the following types of groups are eligible for group life insurance
policy issued to employer covering 2 or more public or private employees policy issued to creditor covering 10 or more debtors master policy issued to the trustee of any self-employed individuals, all of whom have contracts with the same publisher of a newspaper for the performance of services for such publisher as independent contractors (10 lives minimum)
life insurance - policy loans
policy loans are not taxable as ling as policy remains in force if the policy is not in force he could end up owing a lot of money in taxes after the CSV with 1099-R for the gain
insurable interest has to exist between the
policy owner and insured has nothing to do with applicant and beneficiary
per capita
policy proceeds are divided equally among living beneficiaries of the class note: many insurers will assume our capita if not specified in beneficiary designation. but read the fine print because different insurers do different things
interest only
policy proceeds kept in account with insurer and periodic interest payments (monthly, quarterly, semi-annually, annually) made to beneficiary
lump sum
policy proceeds paid out in one lump sum 5o beneficiary (this is usually the automatic or default settlement option when one has not been chosen by policy owner or beneficiary)
life income
policy proceeds retained by insurer and annuitized (i.e. converted to series of payments) to provide lifetime income for beneficiary
Presumptive Disability
policy provision that waives normal total disability eligibility requirements and considers insured to be totally disabled in the event of a catastrophic-type disability such as... loss of hearing, loss of sight, loss of speech, or loss of use of two limbs
Applies to disability policies for hospitals, medical, and surgical expenses Severe Emotional Disturbances of a Child
policy shall provide coverage for the diagnosis and medically necessary treatment of serious emotional disturbances of a child under the same terms and conditions applied to other medical conditions in the policy
Applies to disability policies for hospitals, medical, and surgical expenses Severe Mental Illness
policy shall provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses or an person of any age under the same terms and conditions applied to other medical conditions in the policy
lifetime benefit
pool of money available for LTC services
divisible surplus
portion of insurer's earned surplus allocated to be paid out as dividends to policyholders (typically for life and disability income policies)
Unearned Premium
portion of premium that represents the unexpired part of the policy period
Automatic Increase Provision & Future Purchase Option
pre-disability
common exclusions and limitations
pre-existing conditions elective cosmetic surgery intentionally self-inflicted injuries injuries sustained while committing criminal acts war & acts of war workers' compensation losses foreign travel
UL Designed as Term (Guaranteed Universal Life) Notice!
premium and death benefit are not flexible as with regular UL policies
graded premium whole life
premium initially increases annually for 5-10 years and thereafter remains level
certain qualified retirement plans are eligible to hold life insurance
premium payments are made with pre-tax dollars permanent life insurance purchases by the plan can be available to employee after retirement
Benefit Period
premiums are different for 2-year benefit period vs. 5-year benefit period elimination period probationary period
limited pay whole life policy
premiums are payable for specified number of years or unit a specified age
permemant life
premiums are very high (and unaffordable for many) for WL and UL policies
guaranteed renewable
premiums can be increased (by class) cannot be non-renewed prior to specified age in the policy
optionally renewable
premiums can be increased (by class) coverage can be non-renewed at insurer's option (by class) on date specified in policy
conditionally renewable
premiums can be increased (by class) coverage can be non-renewed under certain condition (e.g. job change)
Universal Life Insurance
premiums can be varied in amount premiums can be paid at anytime (with limitations) face amount can be increase (E of I may apply)
indeterminate level premiums
premiums can increase at some point usually after some initial fixed period guaranteed maximum premiums limit how high premiums can be increased
non-guaranteed level premium
premiums can increase at some point, usually after some initial fixed person no limited to how high premiums can be increased
guaranteed level premium
premiums cannot change (i.e. guaranteed) for the entire term of the policy
UL Designed as Term (Guaranteed Universal Life) Premiums
premiums guaranteed to remain level throughout life of policy (i.e. guaranteed)
Investments
premiums invested for growth
investment
premiums invested for growth
non-tax qualified LTC policies
premiums not tax deductible (after tax dollars) benefits may be taxable - easier to qualify for benefits compared to a tax-qualified policy
Level premium concept
premiums paid early on are higher than necessary so that cash value can build up allowing premiums to remain level in later years when premiums would normally be much higher due to insured's age
life insurance taxation- premiums & cash value
premiums paid for individual life policies are made with after-tax dollars cash value growth is not taxed as long as the policy is in force
continuous premium whole life policy
premiums payable for life of policy
Individual DI Taxation
premiums payments with after-tax dollars disability benefits will be 100% tax-free
level 1
redetermination by the company that handles claims for medicare
tax qualified LTC policies
premiums tax deductible (up to limit based on age) as medical expenses benefits NOT taxable - more difficult to qualify for benefit compared to non-TQ policy
An original medicare beneficiary may enroll in a
prescription drug plan if they are enrolled in Part A and/or Part B enrollment in PDP is optional
UL Policy Account Value Mechanics
prev. ending account balance premium- premium expense- monthly fee- monthly cost of insurance (morality)+ interest earned monthly fee, monthly cost of insurance, & interest earned happens on 'monthiversary'
Rate
price of insurance for each exposure unit
an affidavit (written statement by oath or affirmation) of the person who mails the noice, stating the facts of such mailing, is
prima facie evidence (i.e. accepted as correct until proved otherwise) that the notice was thus mailed
EPO
primarily CDI some DMHC
PPO
primarily CDI some DMHC
beneficiary classes
primary beneficiary contingent (successor) beneficiary tertiary (final) beneficiary
POS
primary care physician may be required to manage care and for referrals to specialists (gatekeeper) services can be received in-network & out-of-network
surgical expense
primary surgeon fee 2nd opinion asst suregons/ anesthesiologists
exception
printed material in general use which has been distributed by the insurer is not required to be part of records (e.g. sales brochures, pamphlets, etc.)
controlling person
processes power to direct management and policies or organization, whether by ownership, contract or official position within organization
no illustration used in sale or policy applied for other than as illustrated
producer shall certify to that effect in writing on a form provided by the insurer on the same form as above applicant shall acknowledge that no illustration confronting to the policy applied for was provided and than an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery this form shall be submitted to the insurer at the time of policy application if policy issued, a basic illustration conforming to policy and signed by policy owner no later than the time the policy is delivered copy of illustration shall be provide to the insurer and the policy owner
why buy an annuity
professional money management tax-deferred growth guaranteed income for life
Survivor Program
program that pays benefits to certain eligible survivors of deceased workers who paid SS taxes
discrimination protection
prohibits discrimination in group health plans against employees and their dependents based on any health factors that may have, such as: health status medical conditions, including physical and mental illnesses claims experience/history medical history genetic information disability
Underwriters
properly classify risks accept or reject risks protect insurer against adverse selection
underwriter
properly classify risks accept or reject risks protect insurer against adverse selection
Surplus Line Broker Requirements
property & casualty broker and agent license surplus lines broker license
personal uses of life insurance
provide income pay off loans final expenses supplement retirement income mortgage payoff estate taxes
intermediate nursing care
provides 24-hour custodial and basic medical care under the supervision of a registered nurse. basic medical care includes rehabilitative and recuperative care, but NOT more intensive medical procedures as with skilled nursing care
Skilled Nursing Care
provides 24-hour custodial and nursing care with registered nurse on duty who is under the supervision of a licenses physician. equipped to provide more intensive medical procedures such as intravenous therapy and feeding tubes
outline of coverage
provides a very brief description of the important features of there LTC policy in question
hospice care
provides care for a terminally ill person in a hospice doctor and that person's regular doctor certify he/she is terminally ill and has a life expectancy of 6 months or less
hospice care
provides care for terminally ill some respite care included
Residual Disability
provides coverage for a disability that causes an insured's income to fall below its pre-disability level by a specified % (e.g. 20%)
Accident Only Policy
provides coverage for the following ONLY when they result from an accident (sickness NOT covered) death dismemberment disability hospital care medical care benefits usually paid in lump sum
title 18 section 1033
provides criminal and civil enforcement provisions aimed at assisting state insurance regulators in dealing with interstate insurance fraud schemes
Intermediate Care Facility (ICF)
provides intermediate nursing care
delivery receipt
provides proof that the policy owner has received and accepted the policy provides date for beginning g of free look period signed by policy owner and agent
accidental death & dismemberment (AD&D)
provides same coverage as accidental death rider, but also pays for dismemberment schedule in policy lists amounts paid for different types of dismemberment benefits usually paid as lump sum
commissioner's annual rate guide
provides sample rates reported by all companies that offer or marker medicare supplement insurance in california (aka consumer rate guide)
skilled nursing facility (SNF)
provides skilled nursing care
Benefit Integration
provision found in many employer-provided group DI plans that reduces benefits paid by the amount received from other sources (e.g. SSDI or workers' comp)
right to terminate
provision in a health insurance contract that spells out the rules regarding the rights of both parties to terminate the contract
renewable term
provision in most term life policy that gives the policy owner the option to renew the policy at the end of its term for another term without evidence of insurability (E of I) premium will increase at each renewal based on insured's attained age
term conversion provision
provision in most term policies that allows owner to convert all or a portion of the face amount to a permanent plan for insurance without evidence of insurability (E of I) premium based on age @ conversion
term conversion provision
provision in most term policies that allows owner to convert all or a portion of the face amount to a permanent plan of insurance without evident of insurability
stop-loss provision
provision in policies with coinsurance that says insurer will pay 100% of covered expenses once insured has paid a specified maximum out-of-pocket limit for the plan year
transplant donor benefit
provision that considers the insured to be totally disabled if disability results from the transplant of her body part to another person
spendthrift clause
provision that prevents beneficiary's creditors from being able to make claims on death benefit before they are received
misstatement of age or sex
provision that says if the insured's age or sex is different from what was on the application on adjustment will be made to the coverage based on the correct age or sex
Guarantee Association
publicizing an insurer's membership in a Guarantee Association
Deceptive Information
publicizing untrue or deceptive information about a person engaged in insurance
transfer
purchasing an insurance policy so that financial impact of loss is transferred to insurance company (e.g. carrying physical damage coverages on auto policy, paying a premium to get a life insurance policy)
mortality
pure cost of insurance
Hazardous Activity Questionnaire
questionnaire applicant fills out with the activities they do that can result in injury. could lead to u/w rejecting the application or charging the applicant higher premiums
no application for insurance or insurance investigation report furnished by an insurer to its agents or employees for use in determining insurability of the applicant shall carry any identification, or requirement therefor, of the applicants
race religion ancestry national origin color sexual orientation
Morbidity
rate of sickness/disease in a population (not to be confused with mortality which is used in life insurance)
open competition
rates are "naturally" regulated by competition. insurers not required to file rates, but may be required to furnish rate schedules to DOI
state-mandated
rates are set by a state agency or rating bureau
life insurance receipt
receipt given to eligible life insurance applicants when initial premium submitted with application that provides coverage while application is being underwritten. there are two types of receipts: binding receipt- applicant -> life policy conditional receipt- provides coverage while application is being underwritten only if approved
indemnity policies and other policies that pay a fixed dollar amount per day
receive covered care -> submit claim form -> receive check from insurer
beneficiary
receives annuity proceeds if annuitant dies
tertiary (final) beneficiary
receives life policy death benefit proceeds if both primary and successor beneficiaries not living at the time of insured's death
primary beneficiary
receives life policy death benefit proceeds if living at the time of insured's death
contingent (successor) beneficiary
receives life policy death benefit proceeds if primary beneficiary not living at the time of the insured's death
beneficiary
receives policy death benefit upon insured's death consent NOT required
Adverse Underwriting Decision
refers to any of the following actions declination of insurance termination of insurance coverage failure of an agent to apply for insurance coverage with a specific insurance institution the agent represents and that is requested by an applicant (P&C) the charging of a higher rare on the basis of information which differs from that which the applicant or policyholder furnished (Life/Health/Disability) An offer to insure at higher than standard rates
Coverage Gap ("Donut Hole")
refers to point in time when the amount the beneficiary pays for prescriptions suddenly increases
market conduct regulation
refers to the state laws that regulate insurer practices regarding their divisions
FINRA (Financial Industry Regulatory Authority)
regulates brokerages selling variable products not part of the government, but does have regulatory powers over its member securities firms overseen by the SEC
commissioner takes on role of conservator
rehabilitation is the primary goal of the commissioner as conservator, however if commissioner determines that it is futile to proceed as conservator, he will liquidate and wind up the business of insurer
a group life policy may provide that the insurer is not liable, or is liable only in a reduced amount, for losses arising from conditions
relating to war or act of war relating to military or naval service relating to aviation
Cancelling or refusing to renew a policy that insures a
religious organization educational organization any other non-profit organization reproductive health services facility on the basis that one or more claims has been made during the preceding 60 months for a loss that is the result of a HATE CRIME or an ANTI-REPRODUCTIVE RIGHTS CRIME
when fiduciary funds are received by a licensee, he shall
remit premiums, less commission, and return premiums (i.e. premium refunds) received or held by him to the insurer or the person entitle to them maintain fiduciary funds at all times in a trust account in a bank or S&L in any state which is insured by the FDIC and is licensed by any state government of by the U.S. government, separate from any other account
if new license not rep'd by renewal date, agent can transact using old license fir up to 60 days as long as the following have been submitted on or before the expiration date
renewal app license renewal fee continuing education (CE) hours
renewal commissions: years 3+
renewal commission in years 3 and beyond must be same as 2nd year renewal commission
5 renewal year minimum
renewal commissions must be paid for no less than 5 renewal years
expenses
rent/utilities claims employee salaries agent commissions
in an insurance contract an implied warranty qualifies as a
representation
Life Settlement Broker
represents only owner, not provider owes a fiduciary duty to the owner paid a fee, commission or other valuable consideration by owner
grace period (life)
required contractual provision in both individual and group life policies that continues coverage under the policy for up to 60 days after premium due date when premium is not paid
grace period (disability)
required contractual provision in disability policies that continues coverage for up to X days (depends on premium mode) after premium due date is not paid weekly- if premiums paid weekly grace period must be at least 7 days monthly- if premiums paid monthly grace period must be at least 10 days all other- if premiums paid quarterly, semi-and, annually grace period must be at least 31 days
conversion privilege
required provision that allows employee, following termination for any reason, to convert group life coverage to an individual plan without E of I 31-day conversion period to turn it into an individual policy (new plan cannot be term)
Gramm-Leach-Bliley Act Safeguards Rule
requires financial institutions to develop written security plans that describe how consumers' nonpublic personal information will be protected
Gramm-Leach-Bliley Act privacy notice
requires privacy notice explaining what consumer info is collected, where shared, how used, and how protected. Must disclose right to "opt-out" if consumer chooses to not allow information to be shared
underwriting
responsible for accepting or rejecting risks based on the insurer's underwriting guidelines
SEC (Securities and Exchange Commission)
responsible for bringing stability to financial markers regulated stocks and the mutual funds and variable life and annuity sub accounts which contain them
sales
responsible for selling the compony's products and services
personal uses
retirement income protection of assets from creditors
right to cancel life policy (60+)
return period shall not be less than 30 days can be returned by mail or other delivery method notice must appear on front of policy jacket or cover page
living need
rider or feature in life policy that allows insured to utilize policy's death benefit before the insured's death. any amount advanced reduced death benefit paid to beneficiary upon insured's death (aka accelerated death benefit) terminal illness critical illness insured may take ADB benefits in a lump sum or in a periodic payments for a certain period only
Return of Premium (ROP)
rider that returns all of a portion of the premiums paid at some set period of time less any benefits paid
CA Code of Regulations (CCRs)
rules and regulations institutes by state agencies (e.g. CDI) to administer law, including those adopted by the commissioner in order to administer the CIC
coverage period
runs from jan 1-dec 31 of each year
entire contact provision
says that a copy of the application must be made part of the policy for it to be valid
example benefit structures for Surgical Expense Policies
schedule of fees relative value unit usual, customary, and reasonable
employer responsibilities
selection of coverage enrollment non-discrimination record keeping/ paying premiums
CLHIGA excluded policies
self-funded employer plans stop-loss group insurance plans
hospitalization (inpatient care)
semiprivate room & board, general nursing, hospital supplies
in the replacement situation, the replacing insurer must within 3 working days of receiving the application
send written communication to existing insurer advising or replacement and include a policy summary containing data on the proposed life insurance or annuity
agent conduct with seniors 65 and older
seniors get taken advantage of a lot :(
EPO
service only available from EPO network no primary care physician no referrals fee-for-service
HMO
services must be received from within HMO network to be covered services received outside of network are not covered use of a primary care physician that acts as a gatekeeper is common in HMOs copayment preventive care
applies to life and disability: race color national origin ancestry religion sexual orientation
shall not, by itself, constitute a condition or risk for which a higher rate, premium, or charge may be required of the insured for that insurance
The fancy PPACA name for this tax penalty is
shared responsibility payment
hazardous activity questionnaire
sheet the insured fills out about their dangerous hobbies
respite care
short-term care provided in an institution, in the home, or in a community-based program that is designed to relieve a primary caregiver in the home this is a operate benefit with its own conditions for eligibility and maximum benefit levels
agent must submit the following to an insurer as part of an application for individual life insurance or annuity
signed applicant statement "will the insurance applied for replace or change any existing insurance or annuity" (must answer yes or no) signed agent statement "do you have any knowledge or reason to believe that the insurance applied for will replace or change any existing insurance or annuity (must answer yes or no?
payment authorization form
signed by person on the account it is being pulled from
producers statement
signed by producer(s)
notice regarding replacement
signed by: applicant agent
third party notice request form
signed by: policy owner & only section 2 if they don't want to designate anyone
temporary life insurance agreement
signed by: proposed insured other proposed insured applicant if other than proposed insured applicant
authorization to disclose personal/medical information
signed by: proposed insured spouse if they are also proposed insured signature of parent if minor signature of non-minor child if proposed is non-minor
notice of AIDS/HIV testing and consent for testing
signed by: proposed insured or parent/guardian
the actions of employers who fraudulently underreport payroll or fail to report payroll for all employees to their insurance company in order to lower workers' compensation premium result in
significant additional premium costs and an unfair burden to honest employers and their employees
execution of a contract of insurance
signing a binder collecting initial premium issuing a policy
non-spouse beneficiary
since California is a community property state, if a policy owner wishes to name someone other than their spouse as primary beneficiary, spousal consent may be required
24 hour coverage benefits
single health care provider lower admin costs reduced litigation
24- hour coverage
single policy that includes both workers' compensation coverage and disability insurance coverage (cannot include life insurance)
how does the money get into the annuity?
single premium (SP) flexible premium (FP)
annuity classification possibilities
single premium immediate annuity (SPIA) single premium deferred annuity (SPDA)
home health care
skilled nursing or other professional services in the residence, including, but not limited to part-time and intermittent skilled nursing services home health aid services physical therapy occupational therapy speech therapy audiology services medical social services by a social worker
small business health insurance tax credit
small employers eligible with 25 or fewer FTW employees that pay average wage of <50k/ year pay at least 50% of health premiums for full-time employees offered covered CA for small business (SHOP) coverage to all full-time employees
guaranteed issue
small group health plans are issued on this basis they cant be declines
HMOs tend to emphasize preventive care and services
smoking cessation weight loss flu shots
An insurance institution or agent shall clearly specific those questions designed to obtain information
solely for marketing or research purposes from an individual in connection with an insurance transaction
Transact as applied to insurance includes and of the following
solicitation negotiations preliminary to execution execution of a contract of insurance transaction of matters subsequent to execution of the contract and arising out of it
Health Insurance Portability and Accountability Act (HIPAA)
special enrollment discrimination protection
Applies to disability policies for hospitals, medical, and surgical expenses if insurer denies coverage for an experimental medical procedure or plan of treatment for a claimant with a terminal illness (incurable or irreversible condition that has a high probability of causing death within one year or less), under a disability insurance policy that includes hospital, medical, or surgical coverage shall provide written notification directly to the claimant or representative, which shall include all of the following
specific medial and scientific reasons for denial and specific references to pertinent policy provisions upon which the denial is bases description of alternative medical procedures or treatments cover by the policy (if any) description of the process by which the claimant may exercise his right to appeal the denial
In the event of an adverse underwriting decision the insurance institution or agent responsible for the decision shall provide the applicant or policyholder with
specific reason(s) for adverse u/w decision in writing AND summary or rights regarding access to recorded personal information about the individual
deductible
specified dollar amount insured must pay before insurer begins to pay any benefits under a disability policy
deductible
specified dollar amount insured must pay before insurer beings to pay any benefits under a disability policy
copayment (copay)
specified dollar amount insured must pay each time a covered service is received
copayments typical in HMOs
specified dollar amount insured must pay each time a covered service is received (no or low deductible)
copayment
specified dollar amount the insured must pay reach time a covered service is received
dependents include
spouse children (at least until age 26) children of any age if: incapable of self-sustaining employment by reason of a physically or mentally disabling injury, illness, or condition AND chiefly dependent upon the employee for support and maintenance
Prescription dug plans may be purchases as either
stand-alone for those who have original medicare (Part A and/or Part B) (stand-alone cannot be purchased by someone who has HMO or PPO medicare advantage plan) or embedded for those who have medicare advantage (Part C)
buyer's guide
standardized guide from NAIC that must be given to buys of life insurance
coordination of benefits (COB)
standardized provision establishing the order in which health plans pay their claims in order to prevent duplication of coverage and overinsurance with an individual is covered by more than one health insurance plan
Dual Definition of Disability
start off using own occupation definition of total disability (usually 24 months) and then use any-occupation definition after the specified amount of time
Process for Changing the California Insurance Code (CIC)
state legislature introduces bill legislature passes bill governor approves bill bill becomes law and is added, deleted. or amended in CIC
Attending Physicians's Statement (APS)
statement of medical records of the physician who treated the proposed insured for a particular illness or disease
attending physician's statement (APS)
statement or medical records of the physician who treated the proposed insured for a particular illness or disease
consideration clause
states money and other considerations necessary foe the validation of the contract
Applications for residential real property, legal liability, life or disability insurance are allowed to include a question that asks the applicant's birthplace if
such question is used only to identify the applicant and not to discriminate against them
ERISA participants must be provided with
summary plan description (SPD) summary annual report pension benefit statement
critical illness insurance
supplemental insurance for a number of specified catastrophic diseases/illnesses listed in the policy
specified disease insurance
supplemental insurance for a specified disease of illness (e.g. cancer) (aka dread disease insurance) typically pays a fixed dollar amount to help cover expenses that may not be covered by regular health insurance (coverage for cancer is the most popular)
gatekeeper concept
system used in managed care (e.g. HMOs) in which a primary care physician helps control costs by managing a patient's treatment. PCP (gatekeeper) must authorize patient's referrals to specialists, hospitalizations, lab studies, etc.
mortality table
table that shows the rate of deaths occurring in a defined population during a selected time interval OR survival from birth to any given age
Plans K & L
take a coinsurance approach both have out-of-pocket limits to protect from catastrophic losses
Advanced Premium Tax Credits (APTC)
tax credits available under PPACA to help eligible individuals and families with low or moderate incomes afford health coverage (aka premium tax credit or premium assistance or premium subsidy) HH income (MAGI) ≤ 400% for FPL to be eligible
health savings account (HSA)
tax-advantaged medical savings account available for individuals with a high deductible health plan (HDHP) that is used to pay for qualified medical expenses contributions made with pre-tax dollars, has tax-free growth, and withdraws are tax-free if used for qualified medical expenses unused funds rolled over to future years if money is taken out for other purposes it is taxed + 10% penalty
medical savings account (MSA)
tax-advantaged medical savings account primarily for self-employed individuals with a high deductible plan (HDHP) (aka Archer MSA) no new MSAs allowed since 2007 health savings accounts (HSAs) largely replaced MSAs in California, MSA contributions are tax-deductible at state level, whereas HSA contributions are not
Tax-Deferred
tax-deferred gains will be taxed when distributed
Tax-Free
tax-free gains will never be taxed
cash surrender and maturity proceeds are
taxable to the extent that there is a gain in the policy
managed care
techniques used by insurers to contain costs capitation preventive care case management gatekeeper
Substandard Alternatives
temporary exclusion permanent exclusion commonly see exclusions on - pre-existing conditions, mental/nervous disorders, alcohol & substance abuse rating (table rating)
return of premium rider
term insurance policy (or rider) that returns all or a portion of the premiums paid over the life of the policy if the insured survives through the end of the policy's term can increase policy by up to 30% only applied to term insurance
return of premium
term insurance policy that returns all or a portion of the premium paid over the life of the policy if the insured survives through the end of the policy's term can cost up to 30% more compared to comparable term life insurance without return of premium benefit
Dependents under DOBRA
termination (other than for gross misconduct, 18 months) reduction in work hours (18 months) medicare entitlement (36 months*) divorce/ legal separation (36 months) death (36 months) loss of dependent child status (36 months)
the following are not considered to be adverse underwriting decisions
termination of an individual policy form on a class or statewide basis declination of insurance coverage solely because coverage is not available on a class or statewide basis rescission of a policy
cancellation
termination of coverage by insured or insurer during policy term
Lapse
termination of coverage due to non-payment of premium
non-renewal
termination of coverage that coincides with policy's expiration date
7-pay test
test used to determine if cumulative premiums paid in for a life policy during the first 7 years make it qualify as a modified endowment contract
Insurers can do nothing
that might suggest that their medicare supplement policies are somehow endorsed by the government
insurance laws are established by
the California state legislator
conversation
the act of the commissioner taking over an insolvent insurer's business and being vested with its assets, books and records in attempt to rehabilitate it
Field Underwriter
the agent/broker is the eyes and ears of the Insurer
limit of liability
the amount the insurer is obligated to pay our under a life policy upon the insured's death: face amount- policy loan- loan interest= limit of liability
limit (measure) of liability (net death benefit)
the amount the insurer is obligated to pay out under a life policy upon the insured's death face amount - policy loan - loan interest = limit of liability
limit of liability
the amount the insurer is obligated to pay out under a life policy upon the insured's death face amount- policy loan- policy loan interest= limit of liability (measure of liability, net death benefit)
An insurance institution, agent or insurance-support organization which discloses and personal or privileged information about an individual collected or received in connection with an insurance transaction without authorization shall be liable for the monetary damaged sustained by the individual
the court may award the cost of the action and reasonable attorney's fees to the prevailing party
when do action notice of appointment become effective
the day it is signed by the insurer
for personal lines of insurance, an agent must provide insured/applicant with
the effective date of coverage at the time of application or receipt of premium moneys
insurer
the insurance company
insuring clause
the insurer's basic promise to pay policy proceeds upon insured's death
demutualization (conversion)
the legal process whereby a mutual insurance company becomes a stock insurance company
additional reasons a permanent license may be suspended or revoked
the licensee has induced a client, whether directly or indirectly, to: cosign or make a loan, make an investment, make a gift, or provide any future benefit through a right of survivorship to the licensee, or his relatives, friends, business acquaintances, or registered domestic partners make the licensee (or his relatives, friends, business acquaintances, or a registered domestic partner) a beneficiary under the terms of any interviews or testamentary trust or the owner or beneficiary of a life insurance policy or an annuity policy make the licensee (or his relatives, or a registered domestic partner) a trustee under the terms of any intervivos or testamentary trust. (exception: if licensee is also a licensed attorney)
a licensee may at any time surrender for cancellation any license under which he or she is permitted to act in any of the capacities specified in this chapter
the licensee may make that surrender by written notice thereof delivered to the commissioner (CIC 1708)
insured status
the number of credits needed to provide benefits for survivors depends on worker's age at death. no one needs more than 40 credits to be eligible for any social security benefit. but, the younger a person is, the fewer credits they must have for family members to receive survivors benefits. but for children and a spouse who is caring for the children, survivor benefits can be paid even if they deceased worker did not have enough credits. benefits can be paid if deceased worker earned just 6 credits in the 3 years just before death.
COB- dependents/non-dependents
the pans that covers the person other than as a dependent (e.g. as an employee), is the primary plan and the plan that covers the person as a dependent is the secondary plan
Long-Term Care Insurance Personal Worksheet
the premium section of the LTC insurance personal worksheet must include the rate guide disclosure statement
rate
the price of the insurance for each exposure unit
California Insurance Code (CIC)
the primary body of laws that regulated the business of insurance in California
Minimum Essential Coverage (MEC)
the type of coverage an individual needs to have to satisfy the individual mandate requirement under PPACA. failure to maintain MEC (assuming no exemptions apply) with result in tax penalty (shared responsibility payment)
minimum essential coverage (MEC)
the type of coverage and individual needs ti gave too satisfy the individual mandate requirement under PPACA. failure to maintain MEC (assuming no exemptions apply) will result in tax penalty (shared responsibility payment)
Waiver
the voluntary and intentional relinquishment of a right, which can be expressed explicitly or implied by conduct
a fiduciary who diverse or appropriates (takes) fiduciary funds (e.g. premiums) for his own use is guilty of
theft and punishable for theft as provides by law
A risk must be insured with an admitted insurer if possible... but if it cant be
then one could be the services of a surplus line broker to try and get insurance through a non-admitted insurer
Medicare beneficiaries always have the right of appeal for any coverage decision by medicare with which they disagree
there are 5 levels to the appeals process on original medicare
an insolvent insurer is on where
there is an inability of the insurer to meet its financial obligations when due OR this is any impairment of minimum paid-in capital required in the aggregate of an insurer for the class, or classes, of insurance it transacts
universal policy lapses when
there is insufficient account value to cover monthly expenses
A late enrollment penalty may be added to Part D premium if, at any time after initial enrollment period is over
there's a period of 63 or more days in a row without Part D or other creditable prescription drug coverage
before a risk can be placed with an excess & surplus lines insurer, the surplus line broker must submit a form (diligent search report) that establishes either
three admitted insurers that write the particular type of insurance in CA have declined the risk OR that there are fewer than three admitted insurers that actually write the particular type of insurance
blackout period
time between when child turn 16 and widow(er) turns 60 when no survivor benefits are paid to the widow(er)
accumulation phase
time during which an annuity is funded (tax-deferred growth)
annuitization phase
time during which annuity is liquidated to provide income to owner
disability-insured status
to be eligible for DDSI benefits, worker generally needs 40 credits with 20 credits having been earned in the last 10 years before disability
applies to life, annuity, and disability benefits (ind. or group) insurer shall not refuse
to insure, or refuse to continue to insure, or limit the amount, extent, or kind of coverage available to an individual, or charge a different rate for the same coverage solely because of a physical or mental impairment, except where the refusal, limitation or rate differential is based on sound actuarial principles or is related to actual and reasonably anticipated experience
life insurance
to protect somebody from dying too soon pays after death
the application must be completed accurately and truthfully
to the best of the agent's ability
reasons for disapproval
too similar to name being used use of name may mislead public name states or implies licensee is an underwriter states or implies activities not allowed by license licensee has already filed and not discontinued use of more than 2 names
cost index
tool consumer can used to determine or compare the relative costs of similar policies based on several factors such as premiums, cash values and dividends. there are two main types of cost indexes- surrender cost index (measurer cost of insurance assuming policy will be surrendered) & net payment cost index (measurers cost of insurance assuming policy will not be surrendered)
lump sum
total value of annuity paid in annuitant in one lump sum. (not very popular as most people use annuities to create a guaranteed stream of income in retirement)
Equity Index
tracts the performance of a specific group of stocks representing a particular segment of the market, or in some cases an entire market
Licensee must file with the DOI
true name (individual or organization) fictitious names (DBAs) to be used
guaranteed issue
true non-medial life insurance no health history questions on app small face amount, usually WL policy more expensive than medical policies target market - seniors
All of the following practices are prohibited when working with a prospective or current medicare supplement client
twisting high pressure tactics cold lead advertising
Express (Actual) Authority
type of authority specifically given to an agent by a principle, usually in writing (but not always)
Errors & Omissions (E &O) Insurance (aka Professional Liability Insurance)
type of liability insurance designed to cover financial losses for which a professional (e.g. insurance agent) is responsible because of errors, negligence or omissions
supplemental major medical policy
type of major medical policy that is purchased in conjunction with one or more basic medical expense policies to provide broader coverage
Special Needs Plans (SNP)
type of medicare advantage plan (like HMO or PPO) that limits membership to people with specific diseases or characteristics, and tailors their benefits, provider choices, and drug formularies to best meet the specific needs of the group they serve. must provide prescription drug coverage
Medicare Select Plan
type of medicare supplement policy that provides coverage through a restricted network, like a HMO or PPO premiums can be lower as much as 8-36%
tax sheltered annuity (TSA)/ 403(b) plan
type of qualified annuity used for retirement savings plans that is only available to employees of: public education organizations (teachers) non-profit employers cooperative hospital service organizations self-employed ministers
UL Designed as Term (Guaranteed Universal Life) Cash Value
typically minimal, if any at all. focus is on premium amount that will provide coverage to specified age chosen by insured
insurers may not
unfairly discriminate on the basis of tests or a person's genetic characteristics
Accident
unforeseen and unintentional injury
insurers are not allowed to use pretext interviews
unless it is used while investigating a claim where criminal activity, fraud, material misrepresentation or material nondisclosure is suspected
specific request rule
unless the owner specifically directs that the premium be invested in the mutual funds (separate account/ sub accounts) underlying the variable life insurance policy or variable annuity contract
specific request rule
unless... the owner specifically directs that the premium be invested in the mutual funds (separate account/sub accounts) underlying the variable life insurance policy or variable annuity contract
an agent shall not cause a policy holder to replace a LTCx insurance policy
unnecessarily *3 or more LTC policies sold to a policy holder in a 12-month period is automatically deemed to be unnecessary OR that results in a decrease in benefits and increase in premium
refusal to turn over books, records, or assets after the commissioner issues a seizure order during an insolvency proceeding will result in a misdemeanor and be subject to a penalty of
up to $1,000 and/or imprisonment up to 1 year
Any violation of the Unfair Trade Practices is a misdemeanor and subject the following penalties
up to $5,000 each act up to $10,000 each act if willful
an insurance institution, agent, or insurance-support organization that violates a ceases & desist order issued by the commissioner for conduct or practice in violation of the Insurance Information & Privacy Protection Act shall be subject to one or more of the following penalties
up to a $10k fine for each violation up to a $50k fine if general business practice suspension or revocation of license if insurer or agent knew it was in violation
all licenses issued to natural persons terminate
upon the death of such person
PPO
use of a primary care physician not required referrals to see specialists not required PPO premiums typically more expensive than HMO premiums
Applies to life and disability: applications for life or disability insurance are allowed to include a question that asks the applicant's birthplace if such question is
used only to identify applicant and not to discriminate against them
instrumental ADLs
using telephone managing medications moving about outside light housekeeping laundry shopping for essentials preparing meals
Group Life Insurance
usually bought by employers on their employees and covers 2+ people
in-network PPO providers (e.g. physicians, surgeons, hospitals, etc.)
usually paid on a fee-for-service basis discounted fees pre-negotiated by PPO with in-network providers
paid-in capital
value of the insurer's assets in excess of the sum of its liability for the losses reported, expenses, taxers, and all other indebtedness and reinsurance of outstanding risks as provided by law
premiums
vary by plan Part D premiums are in addition to Part A and/or B premiums some plans include Part D and do not charge separate premiums (e.g. HMO Medicare Advantage) higher income = higher premium
Applies to disability insurers: no disability insurer may utilize any information regarding whether a beneficiary's psychiatric inpatient admission was made on a
voluntary basis or involuntary basis for the purpose of determining eligibility for claim reimbursement
waiver of monthly deduction
waives UL monthly deductions (i.e. monthly fee and cost of insurance) while the insured is disabled as defined in the policy 3-6 month waiting period typical
waiver of premium
waives policy premiums while the insured is disabled as defined in the policy 3-6 month waiting period typical
incontestability clause
waives the insurance company's rights to dispute the validity of the contract after it has been in force for 2 years
payor rider
waives the policy premiums on a juvenile policy if the payor dies or becomes disabled while the insured is under 21 premiums usually waived under insured 21 or 25
waiver of premium rider
waves policy premiums while insured is disabled as defined in the policy 3-6 month waiting period typical available on term and whole life
external replacement
when a policy is being replaced by a new company
life paid up @ age 65 policy
when you stop paying premiums at age 65
active license
where insurance license has been issued, but for a license to be active you must have notice of appointment
Permanent Life Insurance
whole life (ordinary life/straight life) variable life universal life variable universal life
jumping juvenile
whole life policy insuring a juvenile insured (<16) in which the face amount increases by 5 times when insured turns 21 years old (without E of I)
Eligible Survivors
widow or widower at any age caring for a deceased's child <16 or disabled widow or widower 60+ unmarried child <18 unmarried child up to 19 if full-time student unmarried child age 18+ with a disability that began before age 22 dependent parent(s) 62+ dependent on deceased for at least 1/2 of their support
mec
withdrawals taxed on LIFO basis 10% penalty for distributions prior to 59 1/2 (like an IRA) death benefit proceeds NOT impacted by policy's MEC status once a mec, always a mec single premium WL always a MEC
endowments
work like continuous premiums whole life policies, except that maturity age is some age less than normal maturity for a whole life policy (e.g. 100 or 121)
currently insured status
workers under age 24 need 6 credits in the last 3 years (12 calendar-quarters) workers 24 and older will need additional credits based on age at time of disability
binder
written agreement issued by a P&C insurer or broker-agent that provides coverage pending the issuance of an insurance policy binders are not used with life of disability insurance
Life & Disability Analyst Requirements with clients
written agreement- insurer might perform services for free services performed & associated fees commissions earned on sales (copy retained for 3 years)
A Disclosure Authorization Form must meet the following requirements
written in plain language provide purpose for collection persons authorized to disclose info insurance institution or agent to whom info can be disclosed nature of info authorized to be disclosed duration authorization valid individual (or rep) entitled to copy dated
Representation
written or oral response to questions on an application that applicant believes to be true to the best of his knowledge and upon which the insurer relies to issue a policy
long-term care insurance CE requirements
years 1-4 - 8 hrs/ years years 5 & after - 8 hrs/ 2 years
long-term care insurance CE requirements
years 1-4: 8 hours/ year years 5 & after: 8 hours/ 2-years initial 8 hour LTC course must be completed prior to soliciting consumers for the sale of LTC insurance training must consist of topics related to LTC services and insurance, including: CA regulations and requirements, available LTC services and facilities, changes or improvements in services or facilities, alternatives to purchase of private LTC insurance there house are part of (not in addition to) total hours needed
long-term care insurance CE requirements
years 1-4: 8 hrs/year years 5 & after: 8 hrs/ 2-yrs note: initial 8-hr LTC course must be completed prior to soliciting consumers for the sale of LTC insurance
business partners
yes you have insurable interest
parent-child
yes you have insurable interest
self
yes you have insurable interest
spouse-spouse
yes you have insurable interest
guaranteed renewability of coverage
you must be allowed to renew the health coverage (policy) regardless of health status
after successfully passing your state insurance exam
you'll need to submit an application for the appropriate insurance license(s) to the CDI. this application, along with the corresponding documentation, will be used by the CDI in determining whether or not a license will be issued
