
1. Life Insurance(49)
1.1. Term
1.1.1. DIAL
1.1.1.1. D-Decreasing Term(Mortgage Loan)FA is decreasing until mortgage paid off-FA=0
1.1.1.2. I-Increasing Term, return of premium pol
1.1.1.3. A-Annual, Renewable Term(ART)Face Amount, cheapest premium@the 1st year; Trick ART is Level Term(It means FA same but premium keeps increasing)
1.1.1.4. L-Level Term 10,20,30 years-This is the most expensive Ins
1.1.2. Types
1.1.2.1. 1.Renewable: term-to-term (Guarantee and insurability-no matter what is your pre-conditions you can renew, but always increase in premium every time you renew, based on attended age, and also require a higher premium payable at each renewal)
1.1.2.2. 2.Convertible: term-to-perm, No CV becomes CV
1.2. Whole life(WELLS)
1.2.1. Pay 2 things but get only one Simple paid FA, Immediate CV, make one lumpsum, one time.
1.2.2. Whole-Straight Whole life, CV after 3-5 years, level premium will be paid until specific old age premium equal FA
1.2.3. E- Endowment means expensive, more pay
1.2.4. L- Limited pay=10 years pay life, 20 pay life or pay at 65
1.2.5. L- Limited benefit, certain case (Cancer Pol)
1.2.6. S-Single Premium FA, Immediate CV, level death benefit make one lumpsum payment, one time.
1.3. All Life & Health Ins must have
1.3.1. Pol Face, Condition, Premium, Ins Clause, Conditions
1.4. Family Policy
1.4.1. 1.Family Maintenance Pol. WH & Level-Always 20 years(Subtract the remain for instance paid premium15 years Beni get pay only 5 years left) 2. Family Income Pol
1.5. Universal
1.5.1. Universal Life Ins-combines a saving element along with the flexible premium option
1.5.1.1. 1.Life Ins=ART(Cheapest 1st year) then increasing-cost every year. Flexible premium 2.CV CASH withdrawal until zero Partial withdraw, do not borrow the money, Partial surrender Universal Life has 2 death benefits a) FA only or Level b) FA and CASH. Target Premium COI-Corridor of Ins--Tax Advantage 5. Joint Life Insurance Joint = Pay the death if 1st person dies, the 2nd insured will get paid Joint Survivor= Pay to 2nd person
1.6. Variable
1.6.1. Same as a whole Life Ins. Except insured can choose where CV can be invested.
1.7. Joint(Both)
1.7.1. Joint = Pay the death if 1st person dies, the 2nd insured will get paid Joint Survivor= Pay to 2nd person
1.8. Interest Sensitive Pol-CV can vary based on the company perform
1.9. Payor Benefit
1.9.1. Insured died or become disable, Waive premium until child becomes adult
1.10. Modified Life Ins
1.10.1. One time increasing then level to 100 called MO-Move One
1.10.2. Graded = step-up every time (Level up as a ladder)
1.11. Annuity
1.11.1. Objective
1.11.2. Pay Options
1.11.2.1. Annuity pay: 1. Immediate: less than 12 months 2. Deferred: withdrawal greater/longer than 12 months
1.11.3. Types
1.11.3.1. 1.Straight Life Ins. 2.Life Ins w/ period certain: Example: 20 years pol. paid premium 15 years already then insured died, another 5 years still get benefit until 20 years term meet and stop. 3.Life Ins w/ Refund Options: 3.1 Installment Refund 3.2 Refund in CASH immediately
1.11.4. Benefits
1.11.4.1. Fixed Interest
1.11.4.2. Variable
1.11.4.2.1. Variable annuity-backed by life ins separate account
1.11.4.3. Fixed & Link to Index Fund Investment
1.11.4.3.1. Annuity Index are not offer a maximum interest rate that increases annually Example: the features of equity-indexed annuities a. Offers long term inflation protection b. Offers a minimum guaranteed rate c. Offers protection during a decline in the stock market
1.12. Adjustable Life Ins-PCP
1.12.1. Change P-Plan Change C-Cover Period Change P-Premium Period
2. 1. Liquidate an estate (Pay off the debt) 2. Protect insured outliving (You live longer than age in pol, not die but ran out of money for living) 3. Accumulate your money 4. Growing tax deferred, no 10% penalty from IRS when withdrawal prior age 59.5 5. Guarantee interest rate: 1.Fixed example 6%-8% CV based on the company perform.2.Variable interest 3.The systematic liquidation of sum of money
3. Long-Term Care Insurance(4)
3.1. 1. When selling a long- term care ins. Rider to an applicant, a life agent must take into consideration all of these factors EXCEPT: Attending Physician’s statement 2. Bathing is considered an activity of daily living under the long-term care pol. 3. Inflation protection-Allow periodic increases in pol benefits. 4. How many "activities of daily living" must an insured be UNABLE to perform in order to meet the chronically ill requirements of a Long-Term Care policy? Minimum of two activities of daily living such a Bathing, and driving
4. Terminology
4.1. Premium
4.1.1. The money paid by the insured to acquire a policy's benefits.
4.2. Premium rate
4.2.1. A type of changes can be made to guaranteed renewable health ins pol. Premium rate considered: Mortality, Interest, Expenses, Materiality
4.3. Conservation
4.3.1. Life Agent tries to stop the replacement of an existing Life Ins Pol
4.4. Unilateral Contract
4.4.1. Only one party(insurer) make any kind of legally enforceable promise
4.5. Moral Hazard
4.5.1. Describes the increase in probability of a loss due to an insured's dishonest tendencies.
4.6. Non-Cancelable
4.6.1. Insurer cannot increase premium or cancel the policy to insured.
4.7. Reinsurance
4.7.1. A type of insurance where an insurer transfers loss exposures from policies written for its insureds.
4.8. Indemnity Contract
4.8.1. One that restores an injured party to the condition that was present before the loss.
4.9. Indemnity
4.9.1. Hospital confinement indemnity
4.9.1.1. pays a stated amount for each day an individual is hospitalized
4.10. Insuring Clause
4.10.1. The provision states in the health ins pol about kind of benefits provided and circumstances under which they will be paid.
4.11. ESOP
4.11.1. Employee Stock Ownership Plan
4.12. Intentional Concealment
4.12.1. Rescission of the contract
4.13. Deductible
4.13.1. Example-Major Medical Expense-A cost containment measured for an emergency hospital care
4.14. Substandard
4.14.1. A highest premium for Life Ins Classification
4.15. Hazard
4.15.1. A condition that may increase the chance of a loss resulting from a given cause of loss.
4.16. Life Agent
4.16.1. An individual who transacts life, disability, or Life and accident and health ins. On behalf of an insurer.
4.17. Endowment Ins
4.17.1. Pays the face amount if the insured survives to a specified period.
4.18. Mortality rate
4.18.1. Describes the number of deaths in a year vs number of people in a selected group
4.19. Incontestability clause/Period
4.19.1. The most life insurance policies prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed (2 years)
4.20. Free Look 30 days
4.20.1. Purpose to cancel w/ in the days before pol in force.
4.21. Materiality of Concealment Rule
4.21.1. The importance of a representation is demonstrated in.
4.22. Risk
4.22.1. The potential for loss, exposure to danger, uncertainty, chance, predictable, measurable etc. Only pure risk is insurable risk. Not probability-The amount an Ins Company must pay because of insurable event.
4.22.2. Speculative(high risk loss) Risk=Gambling
4.23. Underwriting
4.23.1. The process that insurer will determine whether to issue pol to prospect or not.
4.24. Grace Period
4.24.1. Time period allows an insured’s life ins pol to remain in force (still coverage) even if the premium was not paid on the due date. This is assisted Pol owner from unintentional lapse of the contract. If insured dies during this period, still payable but deduct premium that over due.
4.25. Loss
4.25.1. An insurable event that takes place w/ results in a payment made by Ins. Company. Loss is unintentional decrease in the value of an asset due to a peril. Not probability
4.26. Lump-Sum
4.26.1. Automatic mode of settlement for life insurance policy
4.27. Morbidity
4.27.1. Describes the frequency and severity of certain illnesses and accidents
4.28. Life Broker
4.28.1. Represents an Individual wanting to sell their life policy to a third party.
4.29. Ins Solicitor
4.29.1. Anyone employed in CA to assist an insurance agent in transacting insurance.(Similar to Life Agent but different in responsibility)
4.30. Admitted carrier
4.30.1. An ins. Company entitled to transact business in CA
4.31. Permissiveness
4.31.1. May
4.32. Coinsurance
4.32.1. After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses.
5. Social Security Benefit & General Concept of Medical and Disability Insurance(4)
5.1. A worker is entitled to receive SS Disability Benefits when -Worker is under age 65(Beyond 65 is Medicare) -Work is insured for disability benefits -Disability is expected to continue for 12 months or result in death EXCEPT for worker cannot perform his or her current job, but is actively seeking other employment
5.2. Disable Worker will receive No Limit time under Worker's Compensation Medical Expense Benefits.
5.3. 1.Non-contributory group health plan-Eligible employees must participate 100% 2.An employee for ABC Corp is injured on the job. He/she will get pay from "Workers ‘Compensation"
5.3.1. SS is not eligible to a deceased worker’s dependent parents of any age
6. Q&A Life Ins(9)
6.1. Q&A in Life Ins session: 1) Non-medical life ins, still required to answer medical questions on the application. 2) Life Ins Pol limit of liability is FA of pol. 3) Employee has not to provide proof of insurability once employer terminated (to exercise the conversion privilege). Ex-employee must pay premium for the converted policy, and it must take place w/ in 31 days. 4) Group Life Ins: COI, Conversion Privilege, Master Pol 5) Participating Life Ins Pol=Contract that allows the policyowner to receive a share of surplus in the form of policy dividends 6) Accidental death rider, If an insured dies because of an accident, the rider will provide additional coverage. 7) Life Ins creates an immediate estate means when the insured dies, a death benefit is paid. 8. Key person ins-cover business losses due to the death of a key employee. 9) When calculating life ins. Premium rates, which component would an agent’s commission fall under INSURER’s EXPENSES
7. Medical Expense Insurance(45)
7.1. Q&A(44)
7.1.1. 1.Buy-Sell Plans are typically funded by Life Ins and Disability Ins. 2. Coordination of Benefits, Health Ins Provision solved over insurance 3. Insurance contract is a contract that involves one party which indemnifies another when a loss arises from an unknown event. 4. Primary objective of Ins regulation-Ins code enforcement, licensing agents, protect policy owners EXCEPT Interpret policy provisions 5.Fully insured workers are eligible for retirement benefits under Social Security 6.Disabiliy by SS definition is-Unable to engage in any substantial grateful activity 7.SS: Individual w/ 6 credits of coverage during the previous 13-quarter period is considered to be currently insured. 8. The year insured was born is one of the factors effects the SS normal retirement age. 9. At what age is surviving spouse without dependents eligible for SS survivor benefits- 60 10. An individual that has 40 quarters of coverage, for Social Security purposes, is considered to be a fully insured. 11. A contributory group insurance plan: Part of the premium is paid by the employee 12. Rescinding the contract (Contract cancellation) is the insurer entitled to when deliberate concealment is committed by the insured. 13. CA Ins code defines “Pol” as a written contract. 14. HiCAP-Health Ins Counseling Advocacy Program is NO COST, NO FEE, NO CHARGE In CA, the elderly can receive information about health-related issues from HiCAP 15. Publishing a mag where one of the advertisers is an insurer is not considered to be an act of ins solicitation. 16. The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount Its paid-in capital. 17. Minimum participation standards exist for group health insurance plans in order to Prevent Adverse Selection (Suicide Clause) 18. What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? Notice of appointment must be submitted to the Commissioner. 19. CA Department of Ins has jurisdiction over PPO, HMO, Life & Health Ins companies but not Medicare because Medicare is belonging to Federal Government. 20. An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed an unfair method of competition. 21. Insurer cannot deny the claims, after 2 years paid premium by insured even finding misstatement made on the health pol application. 22. Primary Care Physician acts as the gatekeeper in a Health Maintenance Organization (HMO) 23. Preferred Provider Organization (PPO)- Coverage for care received from a network provider, you must pay more than care if you receive care from a non-network provider 24. Travel overseas with spouse not covered by FMLA-Family and Med Leave Act 25. Employer pays the entire premium for Workers’ for “ Workers’ Compensation Coverage” 26. The California Insurance Code allows an individual 10 and 30 days to cancel a life policy for a full-refund.Free Look 27. Which of the following acts is NOT a Federal offense committed by an insurance agent-Misrepresentation on an insurance application. 28. MRMIP (Major Risk Medical Insurance Program) is a CA state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing condition and waiting list based on the date an individual’s application is received. 29. Both the Federal and state governments jointly finance Medi-Cal 30. Pre-Existing Condition Insurance Plan (PCIP) was created by the PPACA for people rejected by private health insurers due to pre-existing conditions. An entity to which individuals and small businesses can have access to affordable health coverage. 31. According to the California Ins Code, Max penalty per violation for anyone who unwilling commit unfair method of competition is $5,000 32. How long must life agents, keep their transaction records? 5 years 33. Mr. ABC has a health ins pol, that has been in force beyond the incontestable period. The insurer has discovered the fraudulent statement was made on application. Insurer no need to pay anything on a claim. 34. Law of large numbers: The more times an event is repeated, the more predictable outcome becomes. 35. FMLA continues to be enrolled during the taking leave. 36. Roth iRA-non deductible contributions, and tax-free distributions. 37. A representation may be altered or withdrawn only before the insurance is in effect. 38. Which of the following is NOT a required uniform provision in individual health policies? Change of occupation. 39.Benefits can be adjusted once, insurer found out misstatement of the insured’s age. 40. PPACA, the medical enrollment tier that has 80% actuarial value is called GOLD. PPACA, an adult can be covered by a parent’s health care plan until age 26 41. CA ins code: “Ins is a Contract” 42. Most US Ins companies belong to the MIB (Medical Information Bureau) 43. Binding receipts always provide insurance which starts from the date of receipt 44. Which of the following does the California Insurance Code NOT require an insurance policy to specify? Insurer's financial rating
7.2. Med Exp Pol, will typically cover Injuries caused by accidents.
7.3. Medicare
7.3.1. Medicare-funded by Federal payroll and self-employment taxes Medicare Part A: Eligible when turn 65 Cover hospice (Hospital stay) Not included doctor’s services Cover the expense for skilled nursing facility care Medicare Part B: Insured pays 20% after deductible Benefits for diagnostic tests and X-rays performed on an outpatient basis. (No hospice) Cover doctors’ services (Doctor Visits) Medicare Part C Prescription Drug Coverage Medicare Supplement: Cover medical costs that Medicare doesn’t cover Claim expenses are submitted to Medicare by health care provider A chance of Loss or No Loss is a Pure Risk Chance of Loss-Hazard 2nd -to-die Policy covers a handicapped child who relies on the parents. Once one dies or both.
7.4. 1.An insured qualify for stop-loss coverage when the claims exceed a specified limit in a set period. 2.Which of statement is NOT true: The insurer continues coverage after a new elimination period.
7.5. Provisions Life Ins.
7.5.1. 1.Dividend option (CRAPO)
7.5.1.1. C-CASH take it in CASH, non-taxable R- Reduction of Premium (Next year premium reduce) A-Accumulated an interest (Interest is taxable) P- Paid up addition: Purchase or add additional pol, increase your Face amount O- Purchase One year term always Face amount equal CV
7.5.2. 2. Non-forfeiture options(CV)
7.5.2.1. 1.Cash Surrender-Take the CASH
7.5.2.2. 2.Reduce Paid-up-in this case you desire to use CV to purchase the other Pol but lower FA
7.5.2.3. 3.Extended Term-Use CV to purchase Term Life Pol same FA of original Whole Life Pol
7.5.3. Settlement Option (How insured get pay death benefit)C-L-I-F-F
7.5.3.1. C-CASH (Lump sum) L-Life Income I-Interest only (Receive only the monthly investment proceeds, immediate income) F-Fixed amount (Beni choose amount/Ins. Company gives period. F-Fixed period (You and Beni choose period and Ins Company pays amount)
7.5.4. Note: question ask which one is not: Ans-Extended Term
7.5.5. Under the Payment of Claims provision, benefits typically payable after proof of loss is received IMMEDIATELY
7.5.6. Rider Pol-Not free, you need more pay more
7.5.7. Life Policy Riders(4)
7.5.7.1. Return of Premium
7.5.7.2. Long-Term Care
7.5.7.3. Child Term
7.5.7.3.1. 1. Family Pol. a) Family Maintenance- Whole Life(WL)Level Term b) Family Income- WL decrease term always, example: xxxx 1.Conversion of child's coverage to permanent insurance NOT requires evidence of insurability 2.Additional children can be added at no cost 3.Adopted children can be covered 4.Term insurance is used for the children's rider.
7.5.7.4. Accelerated Death Benefit
7.5.7.5. Family Income
7.5.7.6. Waiver of Premium
7.5.7.6.1. Life Ins Pol’s waiver of premium when insured becomes totally disabled, at least 6 months disability, and stop waiver at age 65
7.5.7.6.2. Payor Benefit-Waived the premium until a child becomes adult
7.5.7.7. Accidental Death
7.5.7.7.1. When an accidental death benefit is added to a whole life policy, it won’t affect the policy's cash value
7.5.7.8. Guaranteed Insurability
8. General Insurance(40)
8.1. Benefits
8.1.1. -Reduces the uncertainty of loss exposures -Makes a loss whole again -Source of investment funds -Ins is not eliminate the Risk
8.2. MEC
8.2.1. MEC =Modified Endowment Contract will be 10% tax penalty when taking a loan against this pol prior age 59 ½ MEC had been written after 1988 that fails to pass the 7-pay test
9. Disability Income Insurance(4)
9.1. Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay? $5,000 due to benefits will kick in after 30 days.
9.2. Serve the same as a deductible=Elimination Period
10. CA CDI
10.1. FMLA-12 Weeks Unpaid for Maternity Leave
10.2. Life Agent vs Broker vs Solicitor
10.3. PCIP-Created by CA to help local who has been rejected from private health insurers due to pre-existing conditions.
10.4. MRMIP-For CA Resident only
10.4.1. Major Risk Medical Insurance Program
10.5. Lance Manyon Insurance Services
10.5.1. The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation
10.6. Life Agent License Renewal
10.6.1. 1: Complete California Insurance License Continuing Education 2: Apply for California Insurance License Renewal 3.Pay the California Insurance License Renewal Fee (Pay the renewal fees via Sircon or NIPR by credit card $188)