Types of LIFE insurance plans and policies:No Standard Policies differences in client needs and wants, no one applicant is identicalTerm Insurance - Temporary life insurance that is generally designed to afford coverage for a limited number of years. The policy includes no cash value and can be described as pure protection.Level Term Insurance A term life insurance policy characterized by a level death benefit every time coverage is renewed. The premium will increase at each renewal as well. Coverage is usually renewable up to a specified age such as 70.Decreasing Term Insurance decreasing face amount of death benefit each year, premium remains level. A type of temporary or pure protection characterized by a reducing face amount each year. The cost for this coverage remains constant. Sometimes called mortgage redemption or mortgage protection insurance since it is primarily used in conjunction with a debt or loan.Return of Premium Term Insurance provides the advantage of buying less costly term insurance with the potential to receive 100% of premiums paid, if insured lives to end of the policy periodWhole Life Insurance provides death benefit for the whole of ones life or to age 100. Combination of death benefit protection (term insurance) with cash value. Level death benefit and premium. Can be referred to as straight life, continuous premium life, permanent life insurance of ordinary life. Endowment a whole life policy that, following an endowment period, pays a stated amount to the insured. If the insured dies during the endowment period, the face amount of the policy is paid to the primary beneficiary.Straight Life Policy combination of death protection plus a cash value. The maximum fixed interest rate that can be charged by an insurer for apolicy loanby the contract owner is currently 8%. Policies may include an adjustable policy loan interest rate.Limited Pay Whole Life same characteristics as straight or continuous premium whole life except there is a limited payment period; instead of paying to age 100. A plan of life insurance under which the premiums are payable for a specified number of years after which the policy remains in effect for life without any additional payments. However, the policy still does not mature until age 100.Single Pay Whole Life fully funded with one payment. Provides death benefit coverage until death or age 100Modified Whole Life Policy - characterized by a lower premium during the initial years of the contract to make it more affordable for the policy owner. The premium then increases after this introductory period and remains level for the life of the contract.Graded Premium Whole Life Policy premiums less in years 1 to 5, increase each year for a number of years, remain higher for the remainder of policy term.Enhanced ordinary whole life (economatic/extraordinary) face amount/death benefit reduces each year. Dividends used to offset decrease via Paid-up additions or one-year term. Guaranteed death benefit in early years of contactIndeterminate Premium Whole Life low premium for stated period of time. Future premiums based on insurers investment performance. Premium may increase or decrease, but can never exceed a guaranteed maximumCurrent Assumption Whole Life (Interest Sensitive Whole Life) non-traditional, low premium/ cost life policy. Utilizes current interest rates: low premium type: which can be reconfigured by insurer. High premium type: with an optional pay-up provisionIndexed Whole Life non-traditional face amount increases with CPI. Policyowner assumes risk by paying higher annual premium to offset increasing death benefit. Insurer assumes risk by charging higher than normal annual premium, in anticipation of offsetting increasing death benefit.Ordinary Life Insurance - Insurance policies of $1,000 or multiples thereof that provide coverage for the entire life of the policyholder and for which the premiums are payable until death. It is also referred to as whole life insurance, straight life insurance, or continuous premium life, and is different from term insurance in that it includes a cash value build-up.Equity Indexed Life Insurance universal life product that offers all the benefits and flexibility of universal life. Cash values are interest rate driven. Interest provided on account is determined by changes in the underlying equity stock index account, most commonly S&P 500 or the minimum guarantee amount.Flexible Premium PoliciesAdjustable Life permanent policy with all characteristics of whole life except it includes: an Adjustment Provision whereby the actual death benefit can be adjusted. The premium or face amount may be adjusted up or down, increasing the death benefit almost always requires underwriting. It can also alter the: 1) type of coverage (term or whole life), 2) premium payment period, 3) premium payment, 4) protection timeframe. Universal Life plans nontraditional type of insurance also known as Flexible Premium Adjustable Life. Policyowner can change the coverage amount.1) Combination of Annuity Renewable Term (ART) and a Cash Value Fund2) Death Benefit can be altered up or down3) Owner can over-fund the contact, thus lowering or eliminating the need for premium, as long as cash value is present.4) Owner determines the target premiums at the time of application . Target premiums are used to pre-determine amount of coverage or cash value accumulation.5) Partial cash value withdrawals are allowed6) Considered a transparent policy because it has an unbundled premium. The owner receives annual statement indicating the breakdown of: premiums, death benefit, mortality charges, expenses, and cash values7) Find a guaranteed interest rate as well as current rate. The higher of the two rates will be credited to the cash value. 8) 2 death benefit options. Option A provides a level death benefit. Option Boffer level benefit plus cash valueSEC Regulated PoliciesVariable Life has all the characteristics or ordinary whole life, with on distinct difference, the cash value is directed into separate account or sub-accounts and invested in stocks, bonds, mutual funds etcVariable universal - a permanent life insurance contract. The cash value of the policy is invested in the stock market, so it may also be described as an investment product as well.Specialized PoliciesFamily Income Policy - A policy that combines a whole life policy with a decreasing term rider in order to provide a death benefit together with monthly income payments to the beneficiary. Monthly income payments are made only from the date of death until the maturity date of the contract. Then the lump-sum part of the whole life coverage is paid.Family Maintenance Policy - This type of policy combines whole life insurance and a level term rider. It provides for the payment of a monthly income during a stated period of years once the insured dies. The monthly income is payable from the date of death to the end of the preselected period. The payment of the face amount of the policy is payable at the end of the preselected period.Family Policy - A policy covering the entire family. Whole life insurance covers the primary insured (i.e., breadwinner) with varying amounts of level term on the rest of the family.Joint Life (First to Die) covers two or more people under one contract. When the first insured dies, death benefit is paid to the beneficiary. Policy ends upon first death.Survivorship Life (Last to Die) covers two or more people under one contract. No benefit payable upon death of first person. Death benefit payable after last person dies.Juvenile Life policy placed on the life of a child. Used for burial expenses or to protect the childs insurability or to begin a savings plan for their child.Credit Life Insurance protects a lender against the premature death of a borrower before the latter party has the opportunity to pay off a debt or loan.buy-sell agreement - An agreement between partners in a business or between an owner and a key employee. The agreement provides for the continuation of the business when, for example, one of the partners dies. The remaining partners "buy out" the interest of the deceased partner by paying an agreed-upon amount of funds to the deceased's survivors. Life insurance is generally used to fund or support the agreement.

Provisions in LIFE insurance policies:Incontestable clause - insurer to void a policy already issued if it finds that the owner or insured engaged in material misrepresentation especially concerning health history. (1737)Payment of Premium (Premium paying provision) premiums must be paid to an insurer or its reps in order for coverage to be provided Grace period provision if the payment is not received by the 31st day after its due, coverage will lapse.Reinstatement provision if a policy lapses because premiums are not paid, many life contracts allow reinstatement as long as it is requested within three years after the policy lapse.Ownership Provision - This is a provision in a life insurance policy that identifies the owner rights in the contract. The policy owner possesses the right to name or change the beneficiary, select the premium payment mode, or assign one or more rights to another party. In a whole life policy the owner also has the right to borrow against the cash value and receive dividends.Assignment Provision - The act of transferring ownership rights of a life insurance policy by the owner to a third party (i.e., the assignee). If all rights and the entire contract are assigned to another party, an absolute assignment has occurred. If one or some of the rights in the policy are transferred to another party but not all, a collateral or conditional assignment has taken place.Entire Contact policyowner is entitled to the policy, application and any riders, waivers or endorsements which constitutes the entire contractConversion Option Provision allows the policyowner the right to make changes in the type of policy owned. Allows the policyowner to convert.Modification Provision any changes made to the contract must be endorsed and attached to the policy. It also states that only an officer of the insurer or authorized home office personnel posses the authority to make any changes or modifications, or waive a policy provision.Free Look Provision the owner possesses the ability to review the contract for a specified period of days. She can change her mind about keeping the policy and return it to the insurer within 10 days of the delivery date.Exclusion Provision war and aviation are excluded from life insurance.Beneficiary provision allows the policyowner to designate the person who will receive the death benefit revocable beneficiary policyowner may change the beneficiary at any time and requires a form irrevocable beneficiary beneficiary designation cannot be altered with the permission from beneficiarySpendthrift provision protects a beneficiary from creditors. Prevents any entity from attaching a lien or any other encumbrance to the policy proceeds when the beneficiary leaves proceeds with the insurer. Trusts can be named as a beneficiaryFacility of Payment permits the insurer to pay another party who paid for the funeral expenses of the deceased insured.Insuring Clause - The policy provision that describes the scope and limits of the coverage afforded. It also identifies the parties to the contract and the annual premium.Consideration clause Exchange of Values premium paid and his or her representations regarding health history which appear in the application.Settlement option provision - Methods by which a beneficiary may choose to receive life insurance policy proceeds.Suicide Clause a provision specifying that in the event the insured commits suicide within two years from the date the policy was issued, the insurers liability is limited to the payment of a single sum equal to the premiums actually paidNon-forfeiture options 1) surrender for cash 2) extended level term insurance allows to purchase a policy with a identical term death benefit for as long a period of time that the cash value amount will provide coverage for. 3) paid up permanent insurance allows a policyowner to use existing cash value from the surrendered policy to purchase a smaller, fully paid-up whole life policy with a smaller face amount or death benefit.Cash Value ProvisionsPolicy Loan Provision A loan made by an insurer to a policy owner under his or her policy permanent insurance policy. A policy loan is not taxable. However, if the whole life plan has been designated as a modified endowment contract, such a loan will be subject to taxation.An insurer may delay the request for a policy loan for up to 6 months.Automatic Premium Loan authorizes insurer to borrow from the cash value to pay unpaid premium after grace period expires

Contract OptionsNon-forfeiture Values - Benefits required by law to be made available to the policy owner in the event that he surrenders the policy by discontinuing premium payments. These values state that the owner will not forfeit or lose all that he has invested in the policy. Also referred to as non-forfeiture options, they include surrender for cash the cash value that exceeds premiums paid is considered taxable extended term insurance - allows to purchase a policy with a identical term death benefit for as long a period of time that the cash value amount will provide coverage for. reduced paid-up insurance - allows a policyowner to use existing cash value from the surrendered policy to purchase a smaller, fully paid-up whole life policy with a smaller face amount or death benefit.Dividend options in a participating life insurance policy: Receive the dividend in cash tax free Use it to reduce the premium Accumulate at Interest dividends placed in a separate account, insurer pays interest (taxable); dividend tax-free Apply it to purchase paid-up additional amounts of life insurance pay additional for whole life policies and will increase overall death benefit (inflation offset) Paid-up option apply the dividend directly to cash value to attempt to pay the policy earlier than expected one year term insurance use value of dividend to purchase a on year term policyCash; Reduce Future Premium; Accumulate at Interest; Paid-up Permanent Additions; Paid-up Option; One Year Term CRAPPO Settlement Options (5 death benefit options)1. Lump Sum tax-free2. Fixed Period fixed # of payments over a specific timeframe. primary concern is having income for definite period3. Fixed amount specific dollar amount for indefinite amount of time. Primary concern monthly income / dollar amount4. Interest Only death benefit proceeds are left with insurer, only interest is paid to beneficiary. Beneficiary receives guaranteed interest rate and has the right to withdraw anytime.5. Life Income single premium immediate annuity. Several payout options from which to choose from. (Ch. 7)

Types of Life Riders:Waiver of premium prevents policy lapse upon disability of policyowneraccelerated benefits rider - This rider may be added to a life insurance policy that permits the policy owner to "accelerate" or receive a certain percentage of the death benefit while the insured is still alive when he or she has been diagnosed with a terminal illness. Whatever amount is paid to the owner under the rider is subtracted from the face amount when death occurs and the remainder is paid to the designated beneficiary.long-term care rider - Attached to a life insurance policy and allows for the payment of a percentage of the death benefit if an individual is not terminally ill but requires long-term care.Dependent or family rider - added to a life insurance policy specifically to provide coverage for dependents of the primary insured. Dependent riders may cover a spouse, children or dependent parents. A family rider, for instance, may cover the primary insured's spouse and children (natural and adopted).accidental death Indemnity Rider provides an additional death benefit if cause of death is accidental. Death must occur within 90 days after the accident, added premium, death benefit called principal sumGuaranteed insurability allows child to purchase future insurance without evidence of insurability without a medical exam.cost of living adjustment rider for disability income and long-term care policies. Will increase the disability benefit each year as determined by the CPI or a specific percentage listed in the contract itself. (1342) Automatically increase death benefit based upon CPI.Return of Premium Rider an increasing term rider is added to a term or permanent policy, which increases death benefit in proportion to premiums paidReturn of Cash value an increasing term rider is added to a permanent whole life policy, increases the death benefit equal to the Cash Value accumulation increase each year.Payor rider - A rider that provides for the waiver of premiums on a policy covering a child following the death or the total disability of the adult owner (i.e., premium payor).Increasing Term Insurance Rider - characterized by an increasing amount of term life coverage each year. There are two primary types, including a return of premium rider and a return of cash value rider.living benefits rider Attached to a life insurance policy and allows for the payment of a percentage of the death benefit for terminally ill insureds. Normally there is no cost for this rider.Viatical settlement - This is a transaction where the owner of a life insurance policy decides to sell the contract to a viatical settlement company (i.e., a viatical settlement provider). This company buys the contract for a percentage of the face amount from the policy owner. The provider or company then changes the name of the beneficiary to itself since it is the new owner of the contract. When the insured dies, the provider receives the death benefit. The amount paid to the policy owner is a percentage of the face amount in the contract (e.g., 85% of the face amount). The owner is allowed to accelerate a portion of the death benefit while he is still alive when they have been diagnosed with a terminal illness. A viatical settlement is one of three ways in which to accelerate benefits. The other two include an accelerated benefit rider and a long-term care rider added to a life insurance policy. The amount paid to the viator is free from federal tax.

Types of annuities:Qualified Annuity - tax deferral of interest and contributions that are tax-deductible.Nonqualified Annuity - description is based upon the fact that interest or earnings paid into the contract are tax-deferred and the contributions to the contract are not tax deductible.fixed minimum rate guaranteed or a predetermined amount of income every month to the annuitant. Limits policy owners risk and insurer assumes risk. fixed amount option pays a specified dollar amount per month to the annuitant. If the recipient dies before the accumulated value has been paid out, the balance is paid to thebeneficiaryin the same monthly installments. (1616)variable annuity - contributions (to its subaccount) are maintained in the insurer's separate asset account and credited with a specific number of accumulation units. These units are used to determine the annuity owner's interest in the separate account and ultimately, the value of the investment. When the annuity enters the pay-out phase, the accumulation units are converted into annuity (i.e., income) units. straight life - pays income for life. Theoretically, this protects the individual against outliving his or her income. Outliving one's income is also called superannuation. (1594)life with period certain income for life, with survivor benefit if annuitant dies before end of term or designated period.Life with 20 years certain if annuitant dies within the 20 years the beneficiary receives the remaining as installment refund remainder of monthly income, or cash refund lump sum paymentAnnuity certain pays an income for a stated period of time only. Does not guarantee income for life. Single premium annuity lump sum payment. Tax-deferredFlexible or periodic premium periodic premiums that may be variable are paid until policy owner wishes to begin receiving income at retirement time.immediate annuity - This is a type of annuity contract that pays a monthly income commencing one, three, six, or twelve months after purchase. This type of contract must be funded with a lump-sum or single premium.deferred annuity - A classification of an annuity where income payments commence more than one year after the payment of the first (or single) premium to the insurer, usually at retirement.tax-sheltered annuity - This is a type of qualified plan that receives tax deferral through a salary reduction. Those eligible for this type of plan include educational employees, clergymen and women, employees of non-profit organizations and employees of charitable organizations. This may also be referred to as a tax-deferred annuity.joint and last survivor - An annuity issued on the lives of two or more persons that is payable as long as the survivor lives.installment refund - The same as a cash refund annuity, except that money is refunded in installment payments and the insurer makes payments to the designated beneficiary until the total of the payments made to the annuitant and the beneficiary equals the consideration paid.level premium premium remains constant throughout the life of a policycash refund - A life annuity contract which provides that upon the death of the annuitant, a beneficiary will receive a lump-sum payment that represents the difference between the amount the annuitant paid to the insurer and the total income payments received by the annuitant.Market value adjusted or Modified Guaranteed annuity - This type of annuity shifts some but not all of the investment risk from the insurer to the policy owner since the annuity account value will fluctuate as market interest rates fluctuate. It is a single premium deferred annuity that allows the contract owner to lock in a guaranteed interest rate over a specified maturity period. These annuity contracts pass along more risk to the policy owner.equity-indexed annuity - This is a type of fixed or non-variable annuity. The contract pays a guaranteed minimum interest rate and account assets are tied to an index such as Standard & Poor's. If the index is higher than the guaranteed rate each year, the contract owner receives the greater return. If the index is lower than the guaranteed rate, the contract owner receives the minimum guaranteed rate.

Qualified Retirement Plans ch9This is a retirement type vehicle that receives favorable tax treatment. Contributions to the plan are tax-deductible while earnings credited are tax-deferred. In order to be classified as a qualified plan according to IRS guidelines, the plan must (1) be in writing, (2) must be communicated to all employees, (3) cannot discriminate against any employees and (4) must provide survivor benefits, (5) it must be provided for the benefit of employees and their dependents and (6) must provide survivor benefits.Employee contributions to a qualified plan and earnings received are exempt from current taxation, but will become taxable when eventually received by the employee as retirement income. This would also include employer contributions being taxed when received. Distributions prior to age 59 1/2 are not deductible from gross earnings, nor does an employer receive a tax-deduction when the employer receives a benefit. The employer deduction takes place when and if they make a contribution into the employee program. Rollover must be within 60 days of the withdrawal. An employer must follow established vesting rules that conform to state standards where the policy originates. An employer cannot make its own schedule. Employees contributions are 100% vested from the first contribution. Employer contributions are vested over a pre-determined and state approved period of time, which is usually defined by years of service.Individual Retirement Account (IRA) individuals who have earned income. Sold by banks, insurance companies and investment firms. An annuity can fund an IRA. Contributions cannot exceed $5,000 per yearEducation IRA (Coverdell Savings Account) provide college funding with a non-deductible contribution of $2,000.Section 529 Savings Plan state provided investment plan that provides families with a federal tax-free method to save money for college.Roth IRA all individuals who have earned income, subject to certain income eligibility. Tax-free gains if account is five years old and owner is 59.5 or dies or becomes disabled, or first time home purchase. It does not require that the owner begin to make minimum distributions prior to age 70.5 and allows an owner to leave behind accumulated value a as a legacy to future generations.Nonqualified Plan - This is a type of retirement plan that permits tax deferral of interest but contributions are not tax-deductible. The reason for the latter is due to the fact that the employer sponsoring the plan may legally discriminate and provide the plan for specific employees only, such as highly paid executives.Simple Plan - is a savings incentive match plan for employees who work for small employers. Contributions to the plan are tax-deductible to the employer making them. An employer will be eligible to contribute if he or she has no more than 100 employees who received at least $5,000 each in compensation for the preceding year. A Simple Plan may be used if no other qualified plan is present. An employer is also required to match any elective contributions by an employee on a dollar-for-dollar basis up to a limit of 3% of the employee's compensation. (1518)Keogh Plan a non-corporate retirement plan of self-employed persons and partnerships. This plan may be arranged as either a defined benefit or defined contribution plan. Simplified Employee Pension aka an employer sponsored IRA with an expanded contribution rate. It is a defined contribution plan for a small business. 401k Plan available for employees of profit companies. Salary reduction/pre-tax contribution. Can be invested in different investment vehicles on a tax deferred basis and is taxable upon withdrawal.403(b) Plan available for employees of non-profit companies.457 Deferred Compensation employees of a municipality like a city or town. Different from 401k and 403b because it is owned by the employer.Defined Contribution Plan - This is an employee benefit plan under which each participant's benefits are based solely upon the contributions made to the participant's account. The amount of the contributions will determine the future benefit at retirement.Profit Sharing Plan part of a defined contribution plan. Annual profits shared among employees with no guarantee of paymentPension Plan retirement plan that calculates benefit based upon years of service and income averages.Employee Stock Ownership Plan (ESOP) defined contribution plan that provides employer stock to employee based upon their income and profits of a company.Defined Benefit Plan A employee benefit retirement plan that uses a definite formula to determine the exact benefit amount. Employer contributions to the plan are actuarially determined. The benefit to be paid in the future will determine the amount of the contributions. It is a combination of the employees length of service and an average of their yearly income

Group Life Insurance Concepts ch9 and 15Conversion Option upon termination an employee can convert group policy to individual policy within 31 days of termination. Attained or actual age determines the whole life premium. No medical exam or underwriting process.Group Premium Payment Non-Contributory employer pays all premium, must cover 100% of employees Contributory employee pays all or part of premium and must cover 75% of employee. Protects against adverse selection.Group Insurance Taxation Employer paid premiums are deductible to employer as a business expense Death benefit is received tax-free Cost of first $50,000 group life is tax-exempt to employee Cost of coverage (employer paid) for death benefit that exceeds $50,000 will be taxable as ordinary income to employee (this is the premium paid for coverage exceeding $50,000)Premium Structures: Experience Rating actual claim experience of actual group will affect future premium. The tendency of a disproportionate number of poor risks to seek or buy insurance or maintain existing insurance in force (i.e., the selection against the insurance company). Sound underwriting reduces adverse selection. Community rating used for smaller groups, use of identical premium rates for all subscribers in a community regardless of loss experience Rating factors: demographics, industry, location, carrier history, medical history of group, contributory or non-contributory, participation rate of employees and dependentsMarketing: Doctrine of Comity state in which the contract is accepted or delivered is the state that possesses regulatory jurisdictionSmall Employer Medical Expense employer with 2 to 50 employees. Must offer medical expense coverage to all eligible employees. Preexisting conditions cannot be excluded. Must offer at least two medical plan optionsAlternative Funding:1. Modified Fully Insured Plansa. Premium delay arrangements employer can defer payment beyond normal 30 day grace period to 60 or 90 days. Use premiums for other purposes and/or earn more interestb. Reserve reduction arrangements similar to premium delay. After 1 year, employer can retain amount of premium equal to claim reserve.c. Retrospective rating arrangements insurer charges lower than expected premium. If claims exceed premiums paid, employer is assessed an additional fee at end of year that justifies actual claims.2. Partially Self-Funded plansa. Stop-loss coverage plan is self-funded to a stated dollar amount. Insurer assumes losses beyond a predetermined stop loss amount. Large employer onlyb. ASO Contracts employer pays 100% of claims but hires paid third party to provide administrative services. More cost effective. Pays claims from employer created bank account.c. 501 (c) (9) Trust Voluntary Employee Benefit Account. Provide for a tax-deductibility of employee contributions, tax-deferred growth of any earnings and tax-free benefits.3. Fully self-funded (self-administered) plans (Fully Employer-Funded)a.

Individual and Group Medical Expense Policies (health insurance) ch15Service Plans HMO, PPO, BC/BS Contract between hospitals & doctors Prepaid benefitIndemnity Basic, Major Medical Fee for service benefit, usual customary and reasonableMedical Expense Policies Premiums are not deductible, benefits are not taxable Employer paid group premiums are deductible to the employer, benefits received tax-free by employee1. Basic first dollar plan. No deductible, low overall limits, specific benefits per category of coverage Daily Board and Room (DBR) Miscellaneous/Ancillary Expenses Surgical Expense Coverage added premium Physicians expense added premium2. Major Medical protects against catastrophic losses with much higher benefits High coverage limits; deductibles: front end, pay first; co-insurance; blanket coverage; stop loss; inside limitations Exclusions: war, cosmetics, routine dental, workers compensation, intentional, self inflicted injuries, care at government facility, LTC, and private nursing3. Comprehensive major medical combines basic medical and major medical Corridor deductible deductible that exists after basic has paid, and before major medical pays Supplemental major medical eliminates deductible, so more expensiveDental Insurance Scheduled (Basic) Plan no deductibles or co-payments and include first dollar coverage Non-Scheduled (Comprehensive) Plan most common, includes deductibles and co-payments Diagnostic and preventative services Basic services such as fillings and oral surgery at 80% Major services such as crowns, orthodontics, facial reconstruction at 50% Combination Plans Diagnostic/Preventative services Basic dental plans generally include coverage for X-rays, cleanings and fluoride treatments. Restorations or fillings can be added to the plan if desired. Routine dental care is not covered by medical plans, disability income and other types of accident and health policies. Categories Restorative filings and crowns Oral surgery Endodontics root canals and treatment of pulp within teeth Periodontics perimeter care of tissue surrounding teeth Prosthodontics dentures, bridgework, implants Orthodontics braces Probationary period is designed to reduce adverse selection and the claims associated with pre-existing conditionsLimited Policies specific risks (11): hospital indemnity, accident only, AD&D, Cancer or Specified Disease Policies, travel accident, blanket policy, credit disability/life, diagnostic and preventative care, prescription drug, vision care, scheduled benefits Managed Care (Medical Cost Containment) helps control increasing medical costs and delivery of healthcare Method available: (1) controlled access to providers Gatekeeper approach, (2) case management, (3) preventative care, (4) risk sharing, (5) quality care, (6) alternative delivery systems

Senior Citizen and Special Needs ch16Social Security (ch9) Old Age Survivors Disability Health Insurance (OASDHI) Benefits: Medicare, Retirement Benefits, Lump Sum Death Benefit ($255), disability benefits, survivors benefits, dependent benefits (paid until age 18) Funding: FICA payroll tax employer and employee: 7.65% each self employed: 15.3% Fully Insured = they paid 40 quarters or 10 years; entitled to retirement and survivors benefits. Fully and Disability Insured = 40 quarters with 20 of the last taken place immediately prior to their disability Currently Insured = 6 of the last 13 Quarters paid (Survivors Benefit only) Primary Insurance Amount calculation that factors FICA contribution averages and determines the amount of retirement or disability benefit. Benefits are based upon contribution. Blackout Period - The time during which a surviving spouse stops receiving Social Security survivors benefits (when the youngest child is no longer eligible for benefits) and begins receiving Social Security retirement benefits.Disability Benefit Under Social Security Very restrictive: unable to engage in any gainful employment whether that employment exists in ones immediate area. Disability is expected to last 12 months or result in death 5 month waiting period, benefit begins in 6th month Benefit based on Primary Insurance Account

Medicare 2 part federal health insurance designed for people age 65 and older and eligible for Social Security benefits and have certain disabilities, including Renal Kidney disease requiring dialysis. They are also eligible if they are under 65 who have been receiving Social Security disability for more than 24 months Part A Hospital Insurance automatic upon age 65 Includes inpatient hospitalization for 60 days less the per-benefit period deductible, skilled nursing only, home health care following hospital confinement, 210 days of hospice care, Common charges include room and board, x-rays, lab tests, meals, nursing services and inpatient drugs John pays the deductible amount for the first 60 days in the hospital, a daily coinsurance charge for days 61 through 90, and an increased daily coinsurance charge for days 91 through 110, if the lifetime reserve days are used Part B Supplemental Medical Insurance (SMI), must enroll and pay monthly premium which is deducted from social security check Includes: (1) physicians and surgeons services, (2) home health services even if the insured has not been in the hospital, (3) diagnostic lab tests, surgical dressings, splints, and medical equipment, and (4) outpatient services and office visits Enrollment starts during 7 month period after they turn 65, can delay it if they are still employed and covered. Annual deductible amount = $135 Approved and Reasonable Charge rate set, and the amount paid by Medicare in for Part B pays 80% of all approved charges Exclusions: expenses incurred for routine foot care, eye exams, hearing exams, eyeglasses, hearing aids, routine dental care or dentures, routine cosmetic surgery and routine physical exams. Part C Medicare Advantage Program Offers expanded benefits through private carries, as an alternative to Medicare A&B. Requires an additional premium Enrollment is within 6 months of turning 65 and must be currently enrolled in Part A&B. Part D Prescription Drug Plan Includes deductibles and co-payments. 7-month Open Enrollment and Medicaid beneficiaries automatically enrolled Eligible: over 65, kidney failure, ALS, Medicaid beneficiaries Standard Plans available where there are no private plans $35/month premium, $310/year annual deductibleMedigap Policies / Medicare Supplements Purpose provide benefits not provided by Medicare and are sold by private commercial insurers must be written on at least a guaranteed-renewable-for-life basis. Although rare, it is possible for such plans to include a non-cancellation provision. Plans D,G,I and J = short term personal care services Plans E and J = preventative screening Plans K and L = co-pay of 50% and 75% respectively Plans F and J = high deductible option 12 Requirements - 30 day free look 6 months enrollment

Long Term Care (LTC) Purpose chronic benefits; provide medical and personal service for assistance with Activities of Daily Living (ADL) after 90 days Sold as Individual or Group plan, or as rider to Life Insurance policy Reimbursement basis pays provider of service directly Indemnity basis pays insured directly There are generally two standard options that may be purchased including return of premium and guarantee of insurability. 4 Major Levels: Skilled nursing care 24 hour series, highest level of care and cost intermediate nursing care occasional nursing and rehabilitation care in an approved facility custodial care non-medical care - daily life: eating, dressing, bathing; does not need a trained medical pro home health care - all of above except in patients home Other Benefits: Assisted Living Care Respite Care provide breaks for major caregiver Hospice Care for terminally ill. Covers pain management but not curative measures Adult Care - live at home but whose family members are not able to remain at home during the day to provide needed care. The care provided at an adult day care center is similar to that provided by home health care. Adult day care centers sometimes provide transportation to and from the center as well. Excludes: intentionally self-inflicted injuries, treatment for drug addiction or alcoholism, mental and nervous disorders, attempted suicide, medical treatment payable by the government, or illness due to war. Shared Care couples who are insured with same company can pool benefits from each others policies No long-term carepolicymay be issued by an insurer unless it offers a non-forfeiture benefit option to the applicant. Free Look is 30 days Must provide benefits for 12 months Tax deductible if paid by employer Riders available guaranteed insurability allow owner to increase value of policy return of premium If LTC is never needed inflation protection most common is increase daily value by 5%. The insurer determines what inflationary options must be provided in the contract non-forfeiture allows policyowner to buy a LTC contract with reduced benefit Reduced paid-up non forfeiture allows company to calculate previously paid premiums in determining fully paid up for life LTC policy with smaller overall benefits in order for an LTC policy to be "qualified", the plan cannot pay expenses that are reimbursable by Medicare, can only provide LTC services, include a renewal provision of guaranteed renewable or better, cannot include a cash value or any sort, and must include at least five activities of daily living. (1115)Medicaid Public assistance based on need or very limited income or savings Hospital and doctor costs, lab and x-rays, early diagnosis for children under 21, family planning, nursing home care, benefits provided by a Federal Health Center clinic, and certified midwives and nurse practitioners

Cost Containment - or cost savings methods provide medical plans with controlled access of providers,preventive care, hospitalization alternatives, second surgical opinions,risk sharingand preadmission testing.

Business Plans ch10Split-dollar life insurance - not a type oflife insurance policy. It is a business arrangement that a firm embarks upon in order to provide life insurance coverage to an employee. This arrangement must be funded with a whole life policy. Business Continuation (Buy-Sell) makes money available to purchase deceased partners beneficiaries interest. There is a pre-arranged purchase price contractual agreement to sell. Entity Plan = agreement between corporate owners. Cross-Purchase Plan = agreement between partners only (N-1 x N) = # of policiesDeferred Compensation non-qualified plan. Between employer and employee. Portion of current compensation is deferred to later date.Salary Continuation employer funded. Employer agrees to continue salary after retirement in exchange for consultative services.Corporate Owned Life Insurance change of insured provision. Allows to change named insured and is less expensive due to lower fees and commissions.Executive Bonuses (Section 162 Bonus Plans) use compensation bonuses to purchase life insurance.

Accident and Health Insurance Includes: ch12 +15 Accident and Health (3 primary forms) Disability Income provides income should the insured become disabled (either by injury or illness) and become unable to earn a paycheck Medical Expense Insurance pays hospital and doctor bills resulting from injury or illness Long Term Care pays for cost of Nursing Home Care and other related Senior Care Accident and Sickness Sickness Only Medical Disability Income Accident Only Travel Accident Long Term Care Medicare Supplement Accidental Death and Dismemberment (AD&D) Dental/Vision/Prescription Limited Policies (cancer only)Replacement Considerations ch 12 Things that need to be carefully considered are: policy exclusions, definitions, waiting periods Waiting/elimination period time at the beginning of each new disability where no benefit is paid. Longer the period of time insured goes without benefit, the less expensive the policy. Increasing elimination period, decreases the premium of the policy. Probationary period one time event at issuance of policy, during which time coverage for illness is not covered. (usually 30 days) Existing coverage should never be terminated until the new policy has been approved and issued. If this happened there would be a gap in coverage

Insurance Providers: ch12 Private Companies Health Maintenance Organizations (HMO) alternative for fee for service. Preventative care with a wide variety of preventative programs like annual exams, immunizations, mammograms, and well baby care. Enrollees/members are make a pre-paid premium. gate-keeper philosophy. Closed Panel Blue cross/ Blue shield blue cross = hospital benefits; blue shield = physician expenses. Limited geographically, operates on a service basis, members are considered subscribers Preferred provider organization (PPO) enters into contractual agreements with hospitals and doctors. Employees/Insureds will pay a lower deductible or co-pay. Preferred Provider Agreement establishes an exchange for services provided with discount pricing to increase volume of business Point of Service Plan - managed care provides benefits of an HMO and PPO Employer-sponsored plans employer self-funds up to a specific dollar amount per person. Used as a method to reduce costs and insurance premiums but with a high deductible Government Multiple Employer Trust (MET) vehicle used by small employers who group together Multiple Employer Welfare Association (MEWA) method for small employers to band together with other similar groups to buy group insurance CHAMPUS aka Tricare provides health care benefits for dependents of military personnel

COBRA ch13

Provisions in Accident and health plans: ch17non-cancelable - one that may not be cancelled as long as the premium is paid on a timely basis. In addition, no policy language or benefits can be altered nor does the premium increase. guaranteed renewable - one that cannot be cancelled nor have its benefits modified as long as premiums are paid on time. However, thepremiummay be increased on a class basis. For example, if the policy in question is adisabilitypolicy, the class is occupational. (1426)conditionally renewablecoordination of benefits - A provision found in group health policies specifying how benefits will be paid when other health insurers cover an insured. designed to prevent an insuredfrom profiting on a health insuranceclaim. An insurer will usually inquire whether an applicant is covered by any otherhealth insuranceplan. This allows the insurer to determine which plan is primary and secondary. (1421)waiver of premium provision (health) - included in some policies that exempts the insured from the payment of premiums after he has been totally disabled for a period of at least 90 consecutive days. This varies from the life insurance waiver, which is 180 days.No Loss, No Gain Provision - is that claims should be paid neither more liberally nor less liberally than if no transfer of coverage had taken place. A No Loss, No Gain provision is also referred to as a prior coverage credit. (1224)

12 A&H mandatory uniform policy provisionsgrace period protects from unintentional lapse due to their failure to pay the premiumreinstatement The act of restoring a lapsed life insurance policy to its original status. Normally, reinstatement involves payment of back premiums with interest, payment of all policy loans and providing evidence of insurability within a specified time. It must occur within three years of the due date of the defaulted premium. Statements on the reinstatement provisions are contestable for another two years.notice of claim policyowner must notify insurer of loss within 20 days after loss occurred. claim form - known as the "proof of loss form" provision, it requires that an insurer send a claim form to the insured within 15 days after it has been notified of the covered illness or accident. (1394)proof of loss policyowner has 90 days from date of loss to submit proof of loss to insurerlegal actions insured can seek legal action against insurance agency if they feel they have been denied a claim. No sooner than 60 days after proof of loss has been provided.entire contract policyowner is entitled to the policy, application and any riders, waivers, endorsements time limit on certain diseases insurer may challenge misstatements on an application, but only during the first 2 years of the policy. Must be material misrepresentations. Same as Incontestable Clause in Life Insurance.time payment of claims claim must be paid immediately upon proof of loss. Disability claims must be paid at least monthlypayment of claims unless assigned to hospital or doctor, claim is paid to insuredphysical exams and autopsy insurer has the right to conduct to determine validity of claim. Insurance company pays the costchange of beneficiary owner of contract can change beneficiary at any time unless it he is irrevocable.

Disability Insurance Concepts (ch14)1) presumptive Disability a type of total and permanent disability upon loss of sight, hearing, speech and loss of limb use. Paid even though insured is still working.2) Loss of earnings test Short term disability policyElimination period - the purposes of an elimination period, as in a disability income policy, is to lower the cost of coverage to a policyowner. It also reduces the risk to an insurer and thus provides a lower premium to the consumer.Workers Compensation Any payment received from Workers' Compensation or any other type of social insurance would reduce the benefit being paid by the group insurance plan.

Disability Provisions Relation of earnings to Insurance - A provision in the policy that permits the insurer to reduce the monthly income disability benefits payable if the insured's total income from benefits exceeds either his current monthly earnings or his average monthly earnings during the two-year period immediately preceding the disability.

TYPES of risks for an underwriter:Preferred risk considered to be in perfect healthStandard risk normal health. The classification of a person applying for life, health, and/or disability income insurance who fits the physical, occupational, and life style standards (four DWI convictions is not a standard life style) on which normal premium rates are based.Substandard risk risk that has a much greater potential for loss and would e the risk least likely to be assumed by an insurer. Usually includes a higher premiumDeclined risk a substandard risk. This is an individual whose application for coverage was rejected by an insurance company.Speculative risk - This is a type of risk that presents the chance for gain or loss. It is not legal to insure such risks (e.g., betting on a race).

participating policies - A life insurance policy that entitles the policyholder to share in the divisible surplus of the insurer through dividends.group credit plan - benefits payable for loss are always payable back to the originator of the loan, meaning the bank or the creditor

receipts:unconditional (binding) receipt - This receipt indicates that the proposedinsuredis covered immediately as of the date of the receipt for a specified period of time. If theapplicationis approved byunderwriting, coverage continues beyond this period. (1948approval receipttentative receiptinsurability receipt conditional receipt - A form, normally required to be signed by the agent and given to the prospective owner at the time a new application is completed. The issuing of a receipt is subject to individual company rules. Most require that the agent collect an initial premium and most usually grant some level of limited coverage, under special conditions, before issuance of the policy. Without a valid Conditional Receipt, no coverage is in force until the policy is issued, delivered, and accepted (initial premium paid).

waiver - To voluntarily relinquish or abandon a known right under an insurance contract. This is a legal principle that protects the consumer if an insurer waives its rights under an insurance contract. A common type of waiver occurs when an insurer makes a mistake or fails to enforce a policy provision.Estoppel - This is a legal principle that protects an insured if the insurer or its producers make an error and later the insurer attempts to deny a claim. For instance, a producer makes a false representation to an applicant who relies on the statement. Later, harm is caused to the policy owner when a claim is denied because of this reliance. The insurer will then be "estopped" or prevented from denying the claim.Warranty and representation - Most State laws specify that all statements by the applicant on the application are considered to be representations and not warranties. A warranty must be absolutely and literally true. A breach of warranty may be sufficient to void the policy whether or not the warranty is material and whether or not such breach of warranty had contributed to the loss. A representation need only be substantially true to the best of the applicant's knowledge. Generally, a representation is considered to be fraudulent if it relates to a situation that would be material to the risk and that the applicant made with fraudulent intent.

Modified Endowment Contract - This is a whole life policy that fails to satisfy a seven pay test. When a policy owner overfunds the contract, attempting to use the policy as a short-term investment vehicle, the policy will be designated for tax purposes as a MEC. This means that any cash distributions from the contract will be subject to taxation. In addition, if the withdrawal is made prior to age 59 1/2 , the policy owner will be subject to an age based penalty of 10%.

Hazard - This is a condition present that increases the chance of a possible loss. There are three primary types of hazards including physical hazards (e.g., faulty wiring in a building), moral hazards (i.e., dishonest or criminal activities) and morale hazards (e.g., leaving keys in the ignition, carelessness).

Medical Information Bureau-#38 The Medical Information Bureau (MIB) is an organization that stores information concerning the health history of life insurance applicants. Its purpose is to help the insurer avoid high-risk applicants for insurance.-The primary purpose of the MIB data is to allow the insurer to avoid high-risk applicants by comparing recently collected information against the historical data of the applicant. It has nothing to do with information regarding the malpractice history of the reporting doctor.

Taxation ch8 Domestic insurers be audited at least every fifth year to ensure solvency. When funds are withdrawn from anannuitycontract during the accumulation period, the amount received may be taxable on a last-in, first-out basis. In addition, if the withdrawal is made prior to age 59 1/2, a penalty may be assessed as well. (1563) Disability - Whatever percentage of the totalpremiumis paid by the employer, that same proportion of benefits paid to theinsuredis taxable. Premiums paid on an individual disability policy are tax-free. (2055) A taxable event occurs after the surrender of a whole lifepolicyif the surrender value exceeds the cumulative total of premiums paid. The gain would be taxable asordinary income. Employer-paid premiums are deductible to the employer as a tax deduction. This would be true for all premiums paid for all employees regardless of tenure. (1237) Premiums paid for an individuallife insurancepolicyare considered an individual expense and are not tax-deductible. Thedeath benefitis paid to a designatedbeneficiaryincome-tax-free. (1540) Interest credited tolife insuranceproceeds, when left with an insurer, is taxable asordinary income. Theprincipal(i.e., proceeds) is income-tax-free to thebeneficiary. (1533) Estate types of property that are included in an insureds estate for federal estate tax purposes include: the value of the insureds residence, the death benefit amount of an owned life insurance policy, and the value of a mutual fund owned by the insured. Most property owned by an insured is included in one's estate at death including the face amount of a life insurance policy even though the proceeds are paid to a beneficiary income-tax-free. Qualified Plans employer contributions are tax deductible to employer. Employee contributions are tax-deductible to employee. Growth of the account accumulates tax deferred. Benefits are taxable upon withdrawal. Sole proprietors can deduct 100% of the premiums paid for their medical benefits