may be defined as the transfer of risk from one party to another through a legal contract

the person who has the possibility of suffering a large financial loss

which means the policies restore insureds to the financial position they enjoyed before the insured loss

Types of Insurance Companies

in the broadest of terms, insurance companies are typically classified as private/commercial and government.

Stock Companies – Nonparticipating

Stock insurance company is a private organization, organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders).

Stock Companies – Nonparticipating

(Stock insurance companies issue nonparticipating insurance policies. They do not allow policyholders to participate in the company's profits.

Mutual Companies - Participating

Anyone purchasing insurance from a mutual insurer is both a customer and an owner Mutual companies are referred to as participating companies because the policyowners participate in dividends.

Policy dividends represent a refund of the portion of premium remaining after the company has set aside the necessary reserves and has made deductions for claims and expenses.

allow policyholders to participate in the company by electing the board of directors and receiving dividends from the divisible surplus.

not allow to policyholders to participate in elections or dividends and instead aim to increase profit for the shareholders.

Strong Assessment Mutual Insurers Pure Premium

A pure assessment mutual company operates on the basis of loss-sharing by group members. No premium is payable in advance. Instead, each member is assessed a portion of the losses that occur.

Strong Assessment Mutual Insurers Advanced Premium

An advance premium assessment mutual charges a premium at the beginning of the policy period. If the original premiums exceed the operating expenses and losses, the surplus is returned to the policyholders as dividends.

Risk Retention and Risk Purchasing Groups

is a mutual insurance company formed to insure people in the same business, occupation, or profession This type of group is formed for the primary purpose of retaining or pooling risks.

organized on the basis of ownership by their policyholders. With reciprocal insurers, it is the policyholders who insure the other policyholders' risks. Each policyholder assumes a share of the risk brought to the company by others. (Attorney Handeled)

Reinsurers and Retention Limits

Reinsurance is an arrangement by which an insurance company transfers a portion of an assumed risk to another insurer.

The company transferring the risk

A typical reinsurance contract between two insurance companies, which involves an automatic sharing of the risks assumed.

Service providers sell medical and hospital care services to their subscribers, not insurance, in return for a premium payment. Benefits are in the form of services provided by the hospitals and physicians participating in the plan.

health maintenance organization, For a fixed periodic premium paid in advance of any treatment, subscribers are entitled to the services of specific physicians and hospitals contracted to work with the HMO.

Under the usual PPO arrangement, a group desiring healthcare services (e.g., an employer or a union) will obtain price discounts or special services from certain select health care providers in exchange for referring its employees or members to them.

Fraternal Benefit Societies

To be a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes ritualistic work, and maintain a representative form of government with elected officers. must be formed for reasons other than obtaining insurance.

Lloyd's function is to gather and disseminate underwriting information, help its associates settle claims and disputes, and, through its member underwriters, provide coverages that might otherwise be unavailable in certain areas.

Rather than transfer risk to an insurance company, a self-insurer establishes a self-funded plan to cover potential losses. Large companies often use Self-insurance for funding pension plans and some health insurance plans

People who represent insurance company (Independent represent multiple)

1945 McCarran and Ferguson Act

Although the government has control to regulate the insurance industry, it wouldn't if it runs effectively and adequately by the states. (Can be up to 10,000 dollars)

1970 Fair Credit Reporting Act

Provides individuals privacy protection and fair and accurate credit reporting (Can be up to 5000 dollars)

OverSight of the Insurance Industry

The National Association of Insurance Commissioners is an organization composed of insurance commissioners from all 50 states, the District of Columbia and the four US territories. The NAIC is responsible for resolving insurance regulatory problems and

State Gurantee Associations

State Guarantee associations protect policy owners in the event of any insurance company going out of business, becoming insolvent or the in ability to pay claims.

Independent Rating Services

Credit rating agencies rate or grade the financial strength and stability of insurance companies (Ratings are based on claims, reserves and company profits) (AM Best, Standard and Poor, Moody's, Fitch

The purpose of insurance is to provide financial protection against losses that may be incurred due to a chance happening or event such as death, illness, or accident.

Insurance is based on sharing of risk amongst a large pool of a people, the larger the number of people, the more predictable the actual losses will be. These principles form the foundation upon which insurance is based and allows successful operation

Speculative risk involves the opportunity for either a loss or gain. Speculative risk is not covered by insurance companies

A situation that can only result in a loss there is no opportunity for financial gain. Pure risk is the only type of risk that is insurable

Five ways to handle a risk

Avoidance, Reduction, Sharing, Retention, Transfer

Simply Avoiding as many risk as possible

Since we cannot avoid risk entirely we often attempt to lessen the possibility of a loss by taking action to reduce the risk.

When a group of individuals or businesses with similar exposures share the losses that occur within that group, A reciprocal insurance exchange is a formal risk sharing arrangement

Also know as self insurance, is when individuals have the financial ability to fund losses by themselves when they occur.

The most effective way to handle risk, the risk is transferred to another party insurance is the most common of transferring risk from an individual or group to an insurance company

Elements of Insurable Risk

Not all risks is insurable, insurance companies will insure only pure risk, The risk must be due to chance, it cannot be catastrophic and must be randomly selected

An event or condition that increases the probability of an insured loss

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk.

Contract law defines a contract as a legallyIns binding agreement between two or more parties, where a promise of benefits is exchanged for a consideration

Insurance Contract must have four elements

Offer and Acceptance, Consideration, Legal purpose, Competent Parties

An offer is made when the applicant submits application, the offer is accepted after it has been approved by the underwriters

A consideration is something of value that each party gives to the other, the consideration on the part of the insured is the payment of premium, the insurance company consideration is a promise to pay in the event of a loss

An insurance contract must be legal, must have written consent

The must be of legal age, mentally capable of understanding the terms, and not under the influence of drugs or alcohol

Special Features of insurance contracts

Aleatory, Adhesion, Unilateral, Personal Contract, Conditional, Valued or Indemnity, Utmost Good faith, Warranties, Representation, Concealment, Insurable interest, Agent Authority

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Insurance Exam

Question	Answer
insurance	may be defined as the transfer of risk from one party to another through a legal contract
insurerin	the person who has the possibility of suffering a large financial loss
indemnify	which means the policies restore insureds to the financial position they enjoyed before the insured loss
Types of Insurance Companies	in the broadest of terms, insurance companies are typically classified as private/commercial and government.
Stock Companies – Nonparticipating	Stock insurance company is a private organization, organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders).
Stock Companies – Nonparticipating	(Stock insurance companies issue nonparticipating insurance policies. They do not allow policyholders to participate in the company's profits.
Mutual Companies - Participating	Anyone purchasing insurance from a mutual insurer is both a customer and an owner Mutual companies are referred to as participating companies because the policyowners participate in dividends.
divisible surplus	Policy dividends represent a refund of the portion of premium remaining after the company has set aside the necessary reserves and has made deductions for claims and expenses.
Participating	allow policyholders to participate in the company by electing the board of directors and receiving dividends from the divisible surplus.
Non Participating	not allow to policyholders to participate in elections or dividends and instead aim to increase profit for the shareholders.
Strong Assessment Mutual Insurers Pure Premium	A pure assessment mutual company operates on the basis of loss-sharing by group members. No premium is payable in advance. Instead, each member is assessed a portion of the losses that occur.
Strong Assessment Mutual Insurers Advanced Premium	An advance premium assessment mutual charges a premium at the beginning of the policy period. If the original premiums exceed the operating expenses and losses, the surplus is returned to the policyholders as dividends.
Risk Retention and Risk Purchasing Groups	is a mutual insurance company formed to insure people in the same business, occupation, or profession This type of group is formed for the primary purpose of retaining or pooling risks.
Reciprocal Insurers	organized on the basis of ownership by their policyholders. With reciprocal insurers, it is the policyholders who insure the other policyholders' risks. Each policyholder assumes a share of the risk brought to the company by others. (Attorney Handeled)
Reinsurers and Retention Limits	Reinsurance is an arrangement by which an insurance company transfers a portion of an assumed risk to another insurer.
ceding company	The company transferring the risk
reinsurer	the company assuming the risk
Treaty Reinsurance	A typical reinsurance contract between two insurance companies, which involves an automatic sharing of the risks assumed.
Service Providers	Service providers sell medical and hospital care services to their subscribers, not insurance, in return for a premium payment. Benefits are in the form of services provided by the hospitals and physicians participating in the plan.
HMO	health maintenance organization, For a fixed periodic premium paid in advance of any treatment, subscribers are entitled to the services of specific physicians and hospitals contracted to work with the HMO.
PPO	Under the usual PPO arrangement, a group desiring healthcare services (e.g., an employer or a union) will obtain price discounts or special services from certain select health care providers in exchange for referring its employees or members to them.
Fraternal Benefit Societies	To be a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes ritualistic work, and maintain a representative form of government with elected officers. must be formed for reasons other than obtaining insurance.
Lloyd's of London	Lloyd's function is to gather and disseminate underwriting information, help its associates settle claims and disputes, and, through its member underwriters, provide coverages that might otherwise be unavailable in certain areas.
Self-Insurers	Rather than transfer risk to an insurance company, a self-insurer establishes a self-funded plan to cover potential losses. Large companies often use Self-insurance for funding pension plans and some health insurance plans
Agent	People who represent insurance company (Independent represent multiple)
1945 McCarran and Ferguson Act	Although the government has control to regulate the insurance industry, it wouldn't if it runs effectively and adequately by the states. (Can be up to 10,000 dollars)
1970 Fair Credit Reporting Act	Provides individuals privacy protection and fair and accurate credit reporting (Can be up to 5000 dollars)
OverSight of the Insurance Industry	The National Association of Insurance Commissioners is an organization composed of insurance commissioners from all 50 states, the District of Columbia and the four US territories. The NAIC is responsible for resolving insurance regulatory problems and
State Gurantee Associations	State Guarantee associations protect policy owners in the event of any insurance company going out of business, becoming insolvent or the in ability to pay claims.
Independent Rating Services	Credit rating agencies rate or grade the financial strength and stability of insurance companies (Ratings are based on claims, reserves and company profits) (AM Best, Standard and Poor, Moody's, Fitch
Nature of Insurance	The purpose of insurance is to provide financial protection against losses that may be incurred due to a chance happening or event such as death, illness, or accident.
Law of Large Number	Insurance is based on sharing of risk amongst a large pool of a people, the larger the number of people, the more predictable the actual losses will be. These principles form the foundation upon which insurance is based and allows successful operation
Speculative Risk	Speculative risk involves the opportunity for either a loss or gain. Speculative risk is not covered by insurance companies
Pure Risk	A situation that can only result in a loss there is no opportunity for financial gain. Pure risk is the only type of risk that is insurable
Five ways to handle a risk	Avoidance, Reduction, Sharing, Retention, Transfer
Avoidance	Simply Avoiding as many risk as possible
Reduction	Since we cannot avoid risk entirely we often attempt to lessen the possibility of a loss by taking action to reduce the risk.
Sharing	When a group of individuals or businesses with similar exposures share the losses that occur within that group, A reciprocal insurance exchange is a formal risk sharing arrangement
Retention	Also know as self insurance, is when individuals have the financial ability to fund losses by themselves when they occur.
Transfer	The most effective way to handle risk, the risk is transferred to another party insurance is the most common of transferring risk from an individual or group to an insurance company
Elements of Insurable Risk	Not all risks is insurable, insurance companies will insure only pure risk, The risk must be due to chance, it cannot be catastrophic and must be randomly selected
Hazard	An event or condition that increases the probability of an insured loss
Peril	The cause of a loss
Adverse Selection	People with higher loss exposure have the tendency to purchase insurance more often than those at average risk.
Insurance Contract	Contract law defines a contract as a legallyIns binding agreement between two or more parties, where a promise of benefits is exchanged for a consideration
Insurance Contract must have four elements	Offer and Acceptance, Consideration, Legal purpose, Competent Parties
Offer and Acceptance	An offer is made when the applicant submits application, the offer is accepted after it has been approved by the underwriters
Consideration	A consideration is something of value that each party gives to the other, the consideration on the part of the insured is the payment of premium, the insurance company consideration is a promise to pay in the event of a loss
Legal Purpose	An insurance contract must be legal, must have written consent
Competent Parties	The must be of legal age, mentally capable of understanding the terms, and not under the influence of drugs or alcohol
Special Features of insurance contracts	Aleatory, Adhesion, Unilateral, Personal Contract, Conditional, Valued or Indemnity, Utmost Good faith, Warranties, Representation, Concealment, Insurable interest, Agent Authority
Aleatory	That there is not an equal exchange of value, the pruemiums paid by the insure are small, while the insurance pays the bigger loss
Adhesion	"Take it or leave it" agreements prepared by only the insurance company with no negotiations or changes
Unilateral	Is a one sided agreements in which the insurance company is legally bound to do anything
Perosnal Contract	Insurance contracts are personal contract between an individual and the insurance company (cannot transfer ownership without insurance company's written consent
Conditional	Insurance contracts are conditional, because certain conditions must be met by all parties when a loss occurs
Valued or Indemnity	Life insurance is a valued contracts, that pays a stated amount
Utmost Good Faith	Implies there'll be no fraud and the utmost good faith, both insurance company and policy owner must be able to rely on one another.
Warranties	Statements that are guaranteed to be true and are a part of the legal contract.
Representation	Statements believed to be true to best of one knowledge but they are not guaranteed to be true. Are the answers for the applicant for insurance. Untrue statements misrepresentation
Concealment	Is a legal term for the international withholding of information which is crucial in making a decision. Results in inaccurate underwriting.
Insurable Interest	Most important aspect for establishing legal contract, to purchase owner must face the possibility of losing money or something of value when a loss happens,
Agent Authority	An agent is a licensed insurance producer to represent insurance, is giving authority to perform acts for the insurance company. Three types of insurance authority Express, Implied, Apparent
Express	Authority granted to the agent by the principal, (insurance company
Implied	Authority not expressed or written into the agent contract, but is assumed by express authority
Apparent	Authority is the appearance or assumption of authority given based action or words of the principal
Waiver	The act of voluntarily giving up legal right, claim or privilege
Estoppel	Legal processed used to prevent a party from reclaiming a right or privilege that was already waived (Legal consequence of waiver)
Parol Evidence Rule	Prevent a party from changing the meaning of a written contract by trying to introduce oral or written statements made before the formation of the contract
Term Life Insurance	Temporary life insurance for specified period of time. provides coverage for a specific period of time (Pure Life Insurance) Greatest amount of coverage for the lowest premium (Provides pure death protection) No cash value nor living benefits
Pure death protection	If the insured dies during the policy term, the policy pays a death benefit to the beneficiaries,
Three basic types of term coverage	Level term insurance, increasing term insurance, decreasing term insurance amount of increase is set as a percentage,
Level term insurance	Most common temp life insurance Level refers to death benefit that does not change
increasing term insurance	Feature level premiums and a death benefit that increases each year
decreasing term insurance	Feature a level premium and a death benefit that decreases every year (Commonly used when the amount of protection needs to decrease over a period of time to ensure the payment of a mortgage) It decreases as the outstanding loan decreases each year
Special features of term policies	Most are renewable, convertible, whole life
Renewable	Allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability, premiums will only be based on insured age
Convertible	Allows the policy owner the right to convert the coverage to a permanent whole life insurance without evidence of insurability, premium is only based on current age
Whole life	Permanent life insurance, remains in effect to the age 100 if premium is paid, provides lifetime protection and includes savings elements known as cash value, created by payment of premiums is scheduled to = the face amount of the policy higher premiums
Key Characteristics of Whole Life Insurance	Level Premiums
Level Premiums	Based on the age of individual when purchased stays the same throughout the whole policy
Level Death Benefit	Guaranteed and remains level for the entire lifetime of the policy
Cash Value	Accumulation of payment of premiums is scheduled to = the face amount of the policy by age 100
Living Benefits	Can borrow against the cash value while the policy is in effect or can receive the cash value when the policy is surrendered
Three basic types of whole life insurance	Straight whole life, limited pay whole life, single premium whole life
Straight Whole Life	known as continuous premium whole life is a basic whole life policy, set premium for the duration
Limited Pay Whole Life	designed so that the premium of the coverage will be payed before the age of 100, usually look like 20 years of pay, or life paid up at 65 where the coverage is payed by the age of 65
Single Premium whole life	One time lump sum payment is made which will provide benefit to the insured at age 100, the policy is completely paid up and will generate cash value immediately
Rights of ownership	Specifies the policy owner right to transfer ownership of the policy
Absolute Assignment	Involves transferring all rights of ownership to another person or entity the new policy does not have to an insurable interest
Collateral Assignment	Involves a transfer of partial rights to another person usually done to secure loan Temporary assignment once paid goes back to policy owner
Standard Policy Provisions	Not set standard of policy provision but NAIC (National Association of Insurance) does create uniformity amongst life insurance policies
Entire Contract Provision	Stipulates that the policy and a copy of application along with any riders or amendments makeup the entire contract
Insuring Clause	Companies agreement and promise to pay the death benefit
Consideration Clause	Policy owner promise to make premium payments
Free look Provision	Free look at policy for a specific number of days, starts when policy owner receives the policy from insurance company in the mail or delivered by agent
Grace period provision	Grace period is period of time after the premium is due usually 30 days purpose to protect policy owner over unintentional lapse of policy
Reinstatement Provision	Allows a lapse policie to be back in force, but will have to provide evidence of insurability, pay all back premiums with interest, and may be required to pay outstanding loans
Policy Loan Provision	Found in policy that contain cash value the policy owner is allowed equal to available cash value,
Incontestable Clause	Prevents the insurance company from denying a claim because of incorrect information or a concealment of facts after the policy has been enforced for two years
Suicide Provision	Protects insurance companies using against suicide for a quick payment, if suicide is committed in first two year insurance will not pay death benefit
Misstatement of Age or Sex Provision	Age and sex are important factors in figuring premiums this allows insurance company to adjust the policy at any time due to misstatement
Automatic Premium Loan Provision	Added to contract with cash value for no additional charge, special type of loan that prevents the unintentional lapse of a policy due to the nonpayments Uses cash value to pay premium
Exclusions	The types of risks that an insurance policy will not cover, common exclusions war, aviation (Non commercial pilots), Hazardous Occupations or Hobbies, Commission of a Felony, Suicide
Non Forfeiture Options	(What you do with policy after insurer does not want it anymore) Cash Surrender option, Reduce Paid-Up, Extended Term
Cash Surrender Option	take the cash value
Reduce Paid Up Option	The cash value is used to purchase a paid up whole life policy with smaller and reduce face amount of policy no premiums are due but interest will build
Extended Term Option	Purchase a new term policy will have same face value amount as original will last for set period of time, there will not be any premium payments due
Dividends	Are paid only on to participating policies, they have five options when receiving dividends Take in cash, Apply to premium payments, apply to accumulate interest, buy paid up additions, (which is a whole life policy, purchase one year term insurance
Policy Riders	Added to policy and ride along, no independent value, added to help customize policy, policy riders are not free and is added to premium
Guaranteed Insurability Rider	Allows the insured to purchase additional coverage at specific future dates, without evidence of insurability, the new premiums will be calculated only on the person age
Waiver of premium rider	Waves the premium if insured becomes disabled, Coverage remains in force until insured is able to work, if they are never able to return to work premiums will still be covered expires at age of 65
The cost of living rider	Automatically increases the amount of insurance without evidence of insurability, face value may increased by cost of living factor tied to inflation index such as the consumer price index
A securities license is required for a life insurance producer to sell	Variable Life insurance
What is a corridor in relation to a universal life insurance policy	the difference between the policy death benefit and cash value
Which of these riders will pay a death benefit if the insured spouse dies	Family term insurance riders
Which of these is not subject to income tax under a modified endowment contract (MEC)	Death Benefit
A life insurance policy is subject to a contract interest rate is referred to as
Which feature makes universal life policy different from a whole life policy	A flexible premium schedule
Variable life insurance and universal life insurance are very similar which of these features are held exclusively by variable universal life insurance	Policyowner has the right to select the investment which will provide the greatest return
Calculating Premiums	Mortality, Interest, and Expense
Mortality	the rate of death "mortality tables"
Interest	Insurance company invest their money to earn interest lowers premium rates
Expense	Loading Charge
Death Benefit Proceed	called settlement options methods used to pay to beneficiary cannot be changed once selected, options lump sum cash (not tax), interest only (pays only interest to beneficiary), fixed period option, fixed amount option, life income option
1035 Exchange	Certain exchanges of policies may occur in a nontaxable exchange (1035 Internal Revenue Code)
Beneficiaries	Very few restrictions on who may be named as a beneficiary the decision is up to the owner Could be individuals, business, trust, estates, or charities
Primary Beneficiary	Has first claims to proceeds may be more than one
Secondary Beneficiary	Called the contingent or tertiary has second claim they do not receive anything if primary is still living
Per Stirpes	means by the bloodline distributes benefits of the beneficiary who died before to heirs
Per Capita	means by the head evenly distributes benefits to all beneficiaries
Changing of Beneficiaries	Revocable may change anytime and without consent, Irrevocable policy owner may not change the beneficiary without written consent beneficiary
Special Situation	Uniform Simultaneous Death Act, the law will assume that the primary beneficiary died first in a common disaster. Spendthrift Trust Clause prevent reckless spending of benefits requiring the benefits to be paid in fixed installments
over the course of a year which premium payment mode is most expensive	monthly
Life insurance Agents role in underwriting process	Involved firsthand in the underwriting process and often source of underwriting information themselves. All Agents should know, and understand the purpose and process of underwriting
Purpose of Underwriting	The process in which an insurance company determines wether o not a particular applicant is insurable and if so, what premium to charge, includes applicants health current and past, lifestyle, and hobbies/habits
Underwriting process	Differ from companies but all have the three basic components General Information, Medical Information, the agents report
General Information	Includes general questions (name, age, birth date, address, gender, income, martial status, and occupation
Medical Information	Includes present health, recent medical visits, the medical status of living relatives, and the cause of death of relatives
The Agent Report	Provides agent personal observation (Most important information)
Medical Information Bureau	The MIB is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical information
Consumer reports	Written and oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources
Investigative Consumer Reports	Similar to consumer reports (collected information wise) primary difference information is obtained through investigation through interviews with associates friends and neighbors
Fair Credit Reporting Act	If they are declined or denied coverage under the fair credit reporting act they have the right to know what was in the report and will be provided with the name and address or the reporting agency
Risk Classification	After underwriting is looked at the underwriter must then determine the risk or rating classification to be used in deciding whether or not the applicant should pay a high or lower premium , there are three ratings standard, substandard, preferred
Standard	Are entitled to insurance protection without extra rating or special restrictions (considered an average risk)
Substandard	People who are no acceptable at standard rates because of a physical condition, person or family history of diseases, occupation, or dangerous habit (Referred to as Rated because they could be rated up to a higher premium)
Preferred	People who meet certain requirements (applicant is considered to be in superior physical condition with healthy lifestyles and habits) qualify for lower premiums
Field Underwriting Procedures Responsibility for agent Agent is called field underwriter (dealing with potential insured first hand)	Responsibilities include proper solicitation of applicant, prevent adverse selection, complete application, obtain required signatures, collect intial premium, delivering polciy, issue a receipt
Conditional Receipt	Given after the collection of the first premium is collected
Backdating	Sometimes it is possible to lower the premium
Group life insurance	Is a plan that provides coverage to more than one person, under one policy is usually written for employee employer groups also written as renewal term insurance (evidence of insurability is not required if enrolled in open period)
Group Life Insurance Participants	Participants do not have access or control over policy instead they receive certificates indicating they are included in the coverage
Non Contributory	When an employer pays all of the premiums, insurance require 100% of eligible employees be in the plan
Contributory	When the premiums for group insurance are shared between the employer and employees, insurance requires 75% of eligible employees be included in the plan
Features of Group Insurance	Most cases the employee company who is the master policyholder selects the coverage
Group life policies musty contain conversion provision that allows individual insured members to convert to individual plan without evidence of insurability. Most group conversion provision require that the conversion be made to a whole life
Rules that apply to conversion	The death of the policy owner, termination of the master policy, disability of the policy owner There may be a required minimum number of people in a group plan
Group Life characteristics	Evidence of insurability is usually not required unless the person is enrolled outside the normal period, the cost of the coverage is based on the average age of the group and ratio to men to women
Taxation of Group Life Plans	Premiums taxed deductible to the employer as a business expense, if business is named beneficiary of life insurance premiums the business pay not tax deductible (Key employee insurance, stock redemption/entity purchase agreement, split dollar insurance)
Other forms of group life insurance	Franchise life insurance, group credit life, Blanket life insurance
Group credit life	Decreasing term insurance issued to creditors to cover the lives of people who have outstanding loans
Blanket Life Insurance	Covers a group of people exposed to a common hazard (No one is specifically named on the policy or furnished with certificate insurance they are covered only for specific hazard stated in the policy
a non-contributory health insurance plan can help the insurer	avoid adverse selection
Purpose of an Annuity	An annuity provides income for a specific number of years or for life (Protect a person from outliving their money) Not life insurance but a way of accumulating money and liquidating an estate
Annuity Owner	Purchaser of the annuity
Annuitant	Receives payment from annuity
Accumulation Period	Know as the pay in period is the period of time over which the annuitants makes premium payments into the annuity also premium payments earn interest on a tax deferred basis
Annuity Period	(Also known as the annuitization period or liquidation period) The time during the money has accumulated is converted into income payments
Annuity Funding	A single payment (lump sum) Periodic payments, are paid in installments over a period of time Also be classified as income payments as the annuity comes in
Immediate Annuity	Purchased with a single lump sum payment and provides income payments that start within one year from the date of purchase
Deferred Annuity	Annuity which income payment began after the first year
Annuity Payout Options	Specify how annuity funds are paid out and determines how it is distributed
Straight Life Income Option	Will pay a specific amount for the remainder of the annuitants life this provides highest monthly benefit for a individual annuity, payments stop after annuitants death
Life with Period Certain	Another annuity pay out that is contingent on the annuitant dying, payments are guaranteed for lifetime and for a specified period for beneficiary
Fixed Annuities	Provide a fixed guarantee pay out, payments do no vary from one payment to another
Variable Annuities	Serves as a hedge against inflation, is variable because there is not a guarantee of payments, and payments vary (Is considered a security, is regulated by Securities and Exchange Commision (SEC) (Agents selling variable annuities must have security ID
Accumulation Units	Is the pay out phrase for variable annuities
Annuity Taxes	A portion of each annuity benefit payment is taxable and a portion is not (portion that is not taxable is called anticipated return of the principal paid in also know as the cost base) (Portion that is taxable is interest earned known as Tax Base)
an immediate annuity has been purchased with a single premium	1 month
Social Security	Knowns as old age survivors disability insurance, it is the federal program designed to protect eligible workers and their dependents against financial loss due to old age, disability, or death with a few exceptions
Who is covered	Provides disability income benefits for those who qualify, individuals must have proper insured status, meet the definition of disability and satisfy the waiting the waiting period,
In order to be considered totally disabled under Social Security, one's disability has to meet the following defintion	the disability must result from a medically determinable physical or mental impairment that is expected to result in early death or has lasted or is expected to last for a continious period of 12 months
Old Age Benefit	provides a lifetime benefits starting at the age 65 or a reduced benefit at the age 62 the amount is based on workers average earning during their working years
Spouse Benefit	Also known as survivor benefits allow a spouse and dependent children to receive benefits from a deceased worker
The period in which there are no social security benefits for the surviving spouse is called	Blackout Period
Qualified Plans	Retirement Plans for exclusive benefit of employees and beneficiaries, provide tax benefits must be approved by IRS, plans must be permanent in writing, can be defined contributions or benefits, cannot be paid highly paid employees executives,
Features of qualified plans	Employer contributions are tax-deductible as a business expense, contributions are made with pre tax dollars, interest is tax deferred until withdrawal
Non Qualified Plans	They do not have to be approved by IRS and can discriminate in favor of certain employes , contribution are non tax deductible and interest is tax deferred until withdrawal is made
Tax Benefits of Qualified Plans	Employee contributions are made with pre tax dollars, with interest being tax deferred, employees only pay on amount withdrawn
Withdrawal and Taxation	Withdrawals by the employee are treated as a taxable income, withdrawals made prior of the age 59 1/2 are hit with a 10% penalty, but at age 70 1/2 you must withdrawal if not 50% is taxed
The employee retirement income security act (ERISA)	Was enacted to provide minimum benefit standards for pension and employee benefits (Fiduciary, responsibility, reporting, disclosing practices, and vesting rules)
Vesting Rules	Determine how participants achieve ownership of contributions made by employers two types (Cliff Vesting and Graded Vesting)
Defined Benefit Plans	Pay a specified benefit amount upon retirement, based on the employees length of service and earnings max is 195,000 (Funded by individual and group deferred annuities
Defined Contribution Plans	Do not specify the exact benefit amount until distribution begins, (Most popular plans profit sharing, stock bonus or money purchase plan)
Qualified Plans for small employers	Simplified employee pension plan (SEP) mix of an IRA and profit sharing plan, each employee has their own IRA employer makes payments, but the employer may deduct up to 25% of the total contributions made
Savings Incentive Match Plan for employees	Also known as simple ( available to small business less than 100 employees) employer makes tax-deductible premium equal to 2% of eligible compensations or matches up to 3% (fully vested immediately)(early withdraws are subject to 25% penalty)
Keogh Plans	Also HR-10, are for self employed persons may be defined contributions or defined benefit plans contributions are tax deductible and dividends are tax deferred
Individual Retirement plans	IRA establish to save for retirement
Traditional IRA	allow for an individual to contribute a limited amount of money per year, the interest earned is tax deferred unless withdrawn (indexed annual) (withdrawals made prior 59 1/2 are a 10% penalty, but at age 70 1/2 you must withdrawal if not 50% is taxed
Roth IRA	Designed to give qualified withdrawals tax free contributions are the same as Traditional IRA but are not tax deductible, qualified withdrawals must occur after fiver years in event of death or disability, first time homebuyer, or at the age of 59 1/2
Taxation Benefits	Contributions made with taxed dollars are not taxed upon withdrawal, tax deferred interest is taxable upon withdrawal
Rollovers	Transfer of one qualified plan to another, are taxable at 20% unless new funds are deposited into a new IRA or qualified plan within 60 days of distribution
an example of a tax qualified retirement plan would be	defined contribution
Erica can start to receive distributions from her IRA without a tax penalty at the age of	59 1/2
Determining Life Insurance needs	Individuals seeking life insurance may need assistance trying to establish how much coverage is appropriate, based on their ability to pay the premium (Two basic approaches, Human Life Value Approach and the needs approach)
Human Life Value Approach	Gives the insured an estimate of what would be lost to the family in the event of the premature death (Calculates individual life value, insured wage's, inflation, and the number of years till retirement)
Needs Approach	Based on predicted needs of the family after the premature death of insured (Factors consider final expenses, income, mortgage, and education)
Individual Uses of Life Insurance	Planning for survivor protection requires careful examination of current assets and liabilities as well as determine what the needs of survivors may be (As insurance producer it is our responsibility to assist in developing the program
Three income periods most insureds are exposed to	Viatical Settlements
Viatical Settlements	Allow someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds before their death (Viators the owners of the original policy receive a percentage of the policy face value from a policy buyer
Business Use for Life Insurance	serves as a protection for employees and beneficiaries (Key Person Insurance and Buy-Sell Plans)
Key Person Insurance	A business can lose business because of the death of a key employee, key person insurance prevents just that, Key person is insured and business is policy owner who would receive death benefits
Buy-Sell Plans	A buy sell agreement is a legal contract that determines what will be done with a business in the event that an downer dies or becomes disabled (Business Continuation Agreement)
Types of Buy Sell Agreements Used for Partnership and Corporation	Cross Purchase Method, Entity Purchase Method, Stock Purchase Method, Stock Redemption Method
Employee Benefit Plan	Split Dollar Plan, Deferred Compensation Plan, Salary Continuation Plan
Split Dollar Plan	(a life insurance plan in which an employer and employee share the cost of premium) intended to make employee stay with employer
Deferred Compensation Plan	(Arrangement for employer to make future payments after retire).
Salary Continuation Plan	(same as Deferred Compensation Plan except employee must work for company until retire)
Health insurance refers to the broad field of insurance plans that provide protection against the financial consequences of illness, accident, injury and disability
There are 3 basic categories of health coverage	Medical Expense Insurance, Disability Income Insurance, Accidental Death and Dismemberment Insurance
Medical Expense Insurance	Standard health care insurance (Includes plans that cover hospital care, surgical expense, doctor visits, and outpatient care, along with other basic medical expenses
Disability Income Insurance	Provides replacement income when wages are lost due to a disability, does not cover medical expenses associated with disability but provides a income flow
Accidental Death and Dismemberment Insurance	Provides beneficiaries with a lump sum death benefit in event of accidental death, it also pays a living benefit for dismemberment
Health Insurance is designed to provide coverage for accident and sickness
Premium factor	Premiums can be paid annually, semi- annually, quarterly or monthly (factors interest, expense, types of benefits, morbity, age, sex, occupation)
Business Needs	Disability income policies are used to protect business (three types of disability income policies disability buy-sell,
Disability Buy-Sell	A legal agreement that specifies how a business, will pass between owners when one of the owners dies or becomes disabled
Business Overhead Expense Insurance	Sold to small business owners who must continue to meet overhead expenses such as rent, utilities, and payroll to reimburses business owners for the actual overhead expenses while business owner is disabled but does not pay salary
Disability Buy-Out	Specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase the business of the disabled partner
Pre existing conditions	An individual may be excluded from group coverage for up to a year for any conditions in which the individual sought treatment 6 months prior to enrollement date
Maternity Benefits	any policy of health insurance that provides coverage for maternity care must also cover the service of certified nurse-midwives, and services of licensed birth centers, the insurance company cannot limit the length of stay for maternity or newborns
Cobra	Cobra requires employers with 20 or more employees to extend group health coverage to terminated employees and their families
Franchise Health Plans	Provides health coverage for small groups whose numbers are too small to qualify for true group insurance
Tax treatment of group plans	Employers are entitled to take a tax deduction for premium contributions they make to an employee group health plan as log as the contributions represent ordinary and necessary business expense
Mark continues working after the age of 65 and is covered through his employer's group health plan.	Medicare is the secondary payer
the purpose of the coordination of benefits provision in group accident and health plan is to	avoid overpayment claims
When can a group health policy renewal be denied according to the Health Insurance Portability and Accountability Act (HIPAA)?	when contribution or participation rules have been violated
Under a disability income policy, which provision would be payable if the cause of an injury is UNEXPECTED and ACCIDENTAL	accidental bodily injury provision
When are group disability benefits considered to be tax-free to the insured	When the recipient pays the premiums
which of the following does coordination of benefits allow	Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid
in an employer-sponsored contributory group diablillty income plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at	60% of the benefit
Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the	employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan
which of the following is ineligible to participate in a section 125 plan	An S-Corp owner with greater than 2% share
Service Providers	Receives premium payments from a subscriber in return for providing benefits, including services provided by hospitals and physicians (People who use a provider are usually not billed for their care due to them paying their premiums
Blue Cross Blue Shield Is an organizations that has a contractual agreement with many physicians and hospitals (they are voluntary not-for-profit health care org.)	(not an insurance company) (pre paid plan each subscriber pays a set fee for service)(considered to be a service plan benefits are paid to physicians and hospitals)( rating; larger groups & community for small groups and individuals)
HMO Most operate in a group exclusively enrollment system, each member pays a premium wether or not they use the service,	By having service prepaid members are encouraged to see doctors to more likely take preventive measures for insurers health protecting their investment to avoid costly procedures
Laws and regulations to start an HMO	Obtain certificate of authority, obtain valid healthcare provider certificate, meet capital and surplus minimum, deposit 10K to the rehabilitation & administrative expense fund, become member of State's health maintenance organization consumer assistance
PPO Is a group of physicians and hospitals that contract with the employers, insurers, or third-party organizations to provide medical care services at reduced fee	Differ from HMO by not providing care on a prepaid basis (physicians are paid a fee for service) and subscribers are not required to use physicians or facilities that have contracts with the PPO
Medicare Is a federal medical expense insurance program for people age 65 and older	Benefits are also available to anyone regardless of age who has been entitled to disability income benefits for two years or has chronic kidney disease or end stage renal disease (Administered by Center for Medicare and Medicaid Services division USDHHS
Four Parts of Medicare	Medicare Part A, Medicare part B, Medicare part C, Medicare part D
Medicare Part A	helps pay for inpatient hospital care in skilled nursing facility, hospice, or home healthcare.
Medicare part B	Pays for doctor services and variety of other medical services and supplies that are not covered by hospital insurance (Most services needed by permanent kidney failure) (Optional and offered to everyone in part B)(declined have to wait to reapply)
Medicare part C	Know by medical choice or medicare advantage optional (need to be eligible for Medicare advantages enrollees must also be enrolled in Medicare part A & B) provided by an approved health maintenance organization or preferred provider organization
Medicare part D	Optional Coverage that access to private prescription drug plans,
Medicaid Is a federal and state funded program for those whose income and resources are insufficient to meet the cost of necessary medical care	Federal government provides about 56 cents for every Medicaid dollar spent and the state government provides the balance
Medicare Part A does not pay for medical benefits provided for treatment in a skilled nursing facility beyond	100 days
How much does Medicare Part B pay for physician fees	80%
Part A hospital expense coverage provided under Medicare is automatically made available to each of the following EXCEPT	A 70 - year old NOT eligible for SS
Which of the following is NOT taken into consideration when determining eligibility for Medicare benefit	income
A medical provider that accepts Medicare Assignment must	accept payment based upon a defined Medicare schedule as payment in full
Maria is a Preferred Provider Organization (PPO) subscriber and received care from an out-of-network provider. Which of the following is the likely result?	care is covered but at a lower percentage compared to treatment from an in-network provider
Which of these will typically authorize treatment from a specialist	Gatekeeper
Disability Income Insurance	Designed to replace lost income in the event of premature or short term disability, (vital component of a comprehensive insurance program) (Van be individual or a group)
Disability Income Benefits	Policies are valued contracts or stated amount contracts. (Amount of benefit pay is based on applicants net earned income) (high income 65%, low income 85%)(Or a flat amount method) benefit must be large enough so the insured can maintain their lifestyle
Disability Income Policy Provison	Probationary Period, Elimination Period, Benefit Period, Delayed Disability, Recurrent Disability
Probationary Period	Is a waiting period often 10-30 days from the policy issue date (are not paid) (applies only to sickness)
Elimination Period	Purpose is to eliminate coverage for short-term disabilities being that they are returning to work soon (30-180 days)
Benefit Period	The length of time one receives benefits after elimination period has been satisfied (Most policies offer benefit periods of 1 year, 2 years, 5 years, to age 65, and some offer lifetime benefits) The longer the benefit period the higher the premium
Delayed Disability	Describes a situation in which the individual is not disabled immediately but as time passes, the person becomes totally disabled, most policies will stay pay benefits if disability occurs within a specific number of days after accident or sickness
Recurrent Disability	Specifies the period of time usually within 3-6 months during which the recurrence of an injury or illness, will be considered as a continuation of a prior period of disability
Disability Income Rides	Waiver of Premium Rider
Waiver of Premium Rider	Waives the premium for the policy if the insured becomes totally disabled, coverage remains enforced until they are able to return to work (6 month waiting period from time of disability until first premium is waived)(expires when insured reaches age 65)
Cost of living adjustment rider (COLA)	Help protect against inflation (under this rider insured monthly benefit will be increased automatically once claim payments have begun (increase is on an annually basis
Guaranteed insurability rider	Also known as Future Increase Option (allows insured to increase benefit level to a specific predetermined amount at certain times or on certain occasions without proof of insurability (generally increased at ages 25, 28, 31, 34, 37, and 40)
Typically, Long-Term Disability benefits are coordinated with which benefit plan	Social Security
What percentage of a participant's income are group long-term disability benefit amounts typically limited to	60%
Medical expense insurance	Provides financial protection against the cost of medical care for accidents and illness (Coverage may be provided to hospital care, physicians service, surgical expenses, diagnostic, and laboratory services, drugs, nursing, and other necessary procedure
Basic Medical Expense Policies	Hospital Expense,
Hospital Expense	Coverage covers hospital room and board, and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital (no deductible and limits on room and board are set)
Surgical Expense	Commonly written in conjunction with hospital expense policies, pays for surgical services whether it is in or outside the hospital (includes surgeon fees, anesthesiologist, and operating room
Relative value scale	When used, each surgical procedure will be assigned a number of points that are relative to the number of points assigned to the maximum benefit
Basic Medical Expense Also referred to as Physicians Nonsurgical expense coverage, however benefits are limited to visits to patients confined in hospital	It covers emergency accident benefits, maternity benefits, mental and nervous disorder care, hospice care, home health care, outpatient care, and nurses expense
Major Medical Expense Plans As opposed to limited coverage available under the Basic Medical Expense Policies, offer a broad range of coverage under one policy	Covers comprehensive coverage for hospital expenses, includes room and board, miscellaneous, nursing and physician services, catastrophic medical expense protection, benefits for prolonged injury or illness, (deductible, coinsurance requirement
Two common types of major medical policies	Supplemental Major Medical Policies and comprehensive major medical policies
Supplemental Major Medical Policies	Used to supplement the coverage payable under a basic medical expense policy (after the basic policy pay the supplemental
Comprehensive major medical policies	A combination of basic expense coverage and major medical coverage sold as one coverage (cover practically all medical expenses, hospital, physicians, surgical, nursing, drugs, and laboratory test) deductible, coinsurance requirement
Deductibles	with major medical insurance the insured is required to satisfy a deductible before benefits are payable (depending upon the specific policy, the deductible may be a flat, corridor, or integrated deductible
Coinsurance	A requirement found in major medical policies that require the insured to participate in the payment of some of the expenses, typically percentage of payment required by the insured 20% and the insurance company pays 80%
Stop Loss	major medical policies contain a stop-loss feature to limit amount of expense the insured may be exposed to in a policy year, often it will state that after the insured paid a specific amount toward covered expenses, insurance company will pay 100%
Pre existing conditions	Most policies when first issued contain a limitation on pre-existing conditions, these limitations apply to all pre-existing conditions, whether or not the insured declared them on the application (usually waiting period
Health Savings Account (HSAs)	Designed to help individuals save for qualified health expenses, are tax deductible (is used to pay for out of pocket medical expenses) contributions by employer are not included in the individuals taxable income
Pre existing conditions	Most policies when first issued contain a limitation on pre-existing conditions, these limitations apply to all pre-existing conditions, whether or not the insured declared them on the application (usually waiting period
Health Savings Account (HSAs)	Designed to help individuals save for qualified health expenses, are tax deductible (is used to pay for out of pocket medical expenses) contributions by employer are not included in the individuals taxable income
Hospital Indemnity/Fixed rate policy	Provides a specific amount on a daily, weekly or monthly basis while the insured is confined to a hospital
Limited benefit policies	there are a variety of health insurance policies providing limited coverage for specific accidents or sickness (ex. limited risk
Limited Risk	Known as dread disease a limited risk policy provides a variety of benefits for cancer or heart disease (benefits are usually paid as a scheduled, fixed dollar amount for specific events or medical procedure, such as hospital confinement or chemotherapy
Critical Illness	Policy pays a lump sum to insured upon diagnosis and survival of a critical illness (owner must survive the illness for a certian period time typically 30 to 90 days
Dental Plans Important feature (not found in medical expense insurance ) they cover diagnostic and preventive care such as teeth cleaning and fluoride treatment	is a form of medical expense health insurance that covers treatment, care and prevention of dental disease and injury to insured teeth
Which of the following statements is NOT true regarding a Critical Illness Plan	Coverage is limited to a single devastating disease
Medicare Supplement Policies	Referred to Medigap, policies issued by private insurance companies that are designed to fill in some of the gaps in medicare (they cover deductibles, copayments requirements, benefit periods (sold by private insurers & HMOS)
Standard Medicare Supplement Plans	To standardize the coverage provided under Medicare supplement policies, the NAIC has developed standard Medicare supplement benefit plans which are identified with letter A (benefits found in plan A must be offered in all plans)
Long-Term Care Insurance	Can be marketed as individual policies, group policies, or as riders to life insurance policies, they provide coverage for individuals who are no longer able to live independent (Covers 3 levels of care skilled nursing, intermediate, and custodial care)
Taxation The IRS sets annual limits for that and any premium above those limits will not be considered a medical expense, and therefore cannot be taxed	Long-term care premium payments are deductibles as a medical expense, to the extent that when added to all other unreimbursed medical expenses, the total exceed 7.5% of the taxpayer adjusted gross income (there is a limit on the amount of premium deduct)
State Partnership Programs The partnership between LTC coverage and Medicaid works by disregarding some or all assets of applicants for medicaid who have exhausted private LTC benefits	LTC partnerships allow those who have exhausted or at least used some of their private LTC benefits to apply for medicaid coverage without having to meet the same mean-testing requirements
A Medicare Supplement basic benefit is	the first 3 pints of blood per year
The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of coverage.	1
Respite care is able to provide	Temporary Relief to the patients primary caregiver
The uniform individual accident and sickness policy provision law Developed by the National Association of Insurance Commissioners (NAIC)	Has been adopted in all states, establishes standard provisions that are to be included in all individual health insurance policies purpose of these provisions is to define the rights and duties of both the insurance company and policyholder
12 Mandatory Provisions that are required to be a part of all Health Insurance Contracts	Entire contract, time limit on certain defense, grace period, reinstatement, notice of claim, claim forms, proof of loss, time payment of claims, payment of claims, physical examination and autopsy, legal actions, change of beneficiary
11 optional health provisions that may be a part of a health insurance contract	Change of occupation, misstatement of age, conformity with state statutes, other insurance in this insurer, insurance with other insurers, relation of earnings to insurance, unpaid premiums, cancellation, illegal occupation, intoxicants and narcotics
Other Health Insurance Policy Provisions	Insuring clause, consideration clause, conversion privilege for dependents, free look provision
Common Health Insurance Exclusions or Restrictions	War or act of war injuries, intentionally self inflicted injuries, maternity benefits can be added for an additional premium
Renewability Provisions	Policy will also define the insurance company and the insured's right to cancel or renew coverage, each policy should be carefully examined to figure out which renewal provisions are in place
Renewability Provisions	Cancellable Policies, Optionally renewable policies, conditionally renewable policies, guaranteed renewable policies, and non cancellable policies.
written notice of a claim must be given to the insurer	must given before 20 days
Kathy pays a monthly premium on her health insurance policy. How long is her grace period	10 days
States that have "no loss no gain" laws require a replacing policy to	pay for ongoing claims under the policy it replaces
What amount will be paid under a policy where the insured misstated his/her age	An amount the premium would have purchased at the correct age
The time limit for filing claim disputes is addressed in which provision of an accident and health policy	Legal Actions
An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before	Brining legal actions against the insurer
Underwriting Criteria	Prime considerations are age, gender, occupation, physical conditions, avocations, moral and morale hazards, financial status of applicant
Tax Treatments of Premiums and Benefits	Disability Income Insurance, Medical Expense Insurance, Managed Care
Disability Income Insurance	Premium payments on personally owned disability income policies are not tax deductible
Medical Expense Insurance	Or long term care insurance, premiums are paid by the individual policyholder are tax deductible as a medical expense
Managed Care	A strategy used by some health insurance companies in an attempt to contain rising health care cost by influencing which and how much health care is used
An insured was injured as an innocent bystander when someone committed a felony. The insurer is	Liable for the loss
Which of the following is considered to be a point of service (POS) plan	Managed Care Plan
Premium mode is a term used to describe the	Frequency of the premium payment
How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes	Not tax deductible
One of the most important considerations when replacing health insurance would be the	Exclusion on a new policy
The gatekeeper's role when used by an HMO is	obtaining referrals to specialists from primary care physicians
In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned	Concurrent Review
Which of the following is NOT an example of utilization review	ongoing inspection of accident prone individuals
Office of Insurance Regulation Mission is to ensure that insurance companies licensed to do business in a state are financially viable, operate within the laws and regulations of the insurance industry	Offers insurance policy products at fair and adequate rates which do not unfairly discriminate against the buying public
Unauthorized Entities The state regulation of insurance is in the public interest	One of the insurance regulators larger concerns is with unauthorized entities transacting insurance in the state
The states reason for concern	Potential for criminal activity within the insurance business, adverse economic impact on authorized insurers, potential for unpaid claims due to dishonesty
Marketing practices	Agent Responsibilities, be familiar with all state insurance regulations (Notice of Replacement, Free look, and buyers guide)
Notice of Replacement	The purchase of such policy will replace an existing life insurance policy the replacement rule applies
Free Look (mandated in most states)	Allows an insured a specified number of days from delivery of policy to look over a new policy and return it for a full refund if dissatisfied
Buyers Guide The insurer must provide a buyers guide along with a policy summary to any possible client before accepting the applicants initial premium or upon the client request	Provides basic information about policies, this document explains how a buyer should go about choosing the amount and type of insurance to buy, and how a buyer can save money by comparing the cost of similar policies.
Agent Ethics	Licensed agents may no submit application to an insurance company without the following (Insurance company name of first page, agents license number)
Group Life Certificate Must contain	group policy number, description the insurance protection, names of the insured, beneficiaries, and dependents, rights and conditions
A producer's license CANNOT be revoked without	a hearing given to the producer
The free look period provided in a life insurance policy usually	10 days
According to the Affordable Care Act, what is the maximum amount an individual can contribute to a Flexible Savings Account	2500

Created by: EliasNR

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