Alaska Life & Health cheat sheet

Alaska producer licenses are biennial; renewal requires 24 continuing education hours per two-year term, including at least 3 hours of ethics.

A producer must hold a current license for the specific line of authority (life, health, etc.) before soliciting, negotiating, or selling that product; commissions may be paid only to licensed producers.

An insurer must appoint a producer with the Alaska Division of Insurance before the producer may transact business on that insurer's behalf.

Producers hold premiums and funds collected on an insurer's behalf in a fiduciary capacity; commingling those funds with personal or business funds is prohibited.

Alaska's unfair trade practice statutes prohibit misrepresentation, false advertising, rebating, twisting, and unfair claim settlement practices.

Producers must notify the Division of Insurance of a change of address and of administrative actions or criminal prosecutions taken against them, generally within 30 days.

The Alaska Life and Health Insurance Guaranty Association covers up to $300,000 in life death benefits, $100,000 in life cash surrender value, and $250,000 in annuity present value per insured per member insurer.

The Alaska Division of Insurance, headed by a Director, administers and enforces Title 21 of the Alaska Statutes.

Elements of an insurable risk: a large number of similar exposure units, accidental loss, measurable and definite loss, losses that are not catastrophic to the insurer, and calculable probability of loss.

Risk is the uncertainty of loss; peril is the cause of loss (fire, illness); hazard is a condition that increases the chance or severity of loss (moral, morale, physical).

Pure risk involves only loss or no loss and is insurable; speculative risk involves the chance of gain and is not insurable.

Methods of handling risk: avoidance, retention, sharing, transfer (insurance), and loss reduction or prevention.

Principle of indemnity restores the insured to approximately the pre-loss financial position; life insurance is a valued contract and is an exception to strict indemnity.

Insurance contracts are aleatory (unequal exchange), unilateral (only the insurer makes an enforceable promise), contracts of adhesion (written by the insurer), and require utmost good faith.

The law of large numbers lets insurers predict losses more accurately as the number of similar exposure units increases.

Adverse selection is the tendency of higher-risk applicants to seek or retain coverage; underwriting and exclusions are used to control it.

Insurable interest must exist at the time of application or policy issue; it need not continue until the insured's death.

A material misrepresentation on the application makes the contract voidable by the insurer if the insurer relied on it; concealment of a material fact has the same effect.

Conditional receipt: coverage is effective from the date of the completed application and initial premium only if the proposed insured proves insurable under the insurer's rules.

If the initial premium is not collected with the application, the producer typically collects it at delivery along with a signed statement of continued good health.

Policyowner rights include naming and changing beneficiaries, surrendering the policy, taking loans, and assigning the contract, unless an irrevocable beneficiary has been named.

Beneficiary levels: primary, contingent (secondary), and tertiary; a class designation (e.g., 'children of the insured') pays surviving members equally.

Per stirpes divides a deceased beneficiary's share among that beneficiary's descendants; per capita divides the estate equally among surviving named beneficiaries.

Underwriting sources include the application, paramedical or medical examination, attending physician statement, MIB report, and consumer reports subject to the Fair Credit Reporting Act.

Term insurance provides pure death protection with no cash value; it is renewable (no evidence of insurability) and convertible (to permanent coverage).

Whole life is permanent coverage with level premiums, guaranteed cash value, and maturity (endowment) at age 100 or 121.

Limited-pay whole life (20-pay, paid-up at 65, single premium) compresses premium payments while keeping lifetime coverage.

Universal life is flexible-premium and adjustable-benefit; the policy is unbundled into mortality, expense, and interest components, with a minimum guaranteed rate.

Universal life Option A is a level death benefit (pure insurance decreases as cash value grows); Option B is an increasing death benefit (face amount plus cash value).

Variable life and variable universal life invest cash value in a separate account; the owner bears investment risk and the producer needs a securities registration plus a prospectus.

Indexed universal life credits interest based on an external index subject to a floor (often 0%) and a cap or participation rate.

Modified and graded premium whole life charge lower premiums in early years, with premiums increasing in later years or a graded death benefit.

Incontestability: after the policy has been in force two years from issue, the insurer generally cannot contest it for misstatements on the application except for nonpayment of premium.

Suicide clause limits the insurer's liability to a refund of premiums if death by suicide occurs within the first two years (typically).

Misstatement of age or sex causes the death benefit to be adjusted to the amount the premium paid would have purchased at the correct age or sex.

Grace period (commonly 30 or 31 days) keeps coverage in force after a missed premium; reinstatement is generally allowed within 3 years with evidence of insurability and payment of overdue premiums plus interest.

Nonforfeiture options: cash surrender, reduced paid-up insurance, and extended term insurance.

Dividend options: cash, reduce premium, accumulate at interest, paid-up additions, and one-year term.

Settlement options: lump sum, interest only, fixed period, fixed amount, and life income (straight life, life with period certain, life with refund).

Common riders: waiver of premium, disability income, accidental death and dismemberment, guaranteed insurability, child term, term rider, and accelerated death or long-term care benefits.

An annuity is a contract that liquidates an accumulated sum into a stream of income; it protects against living too long (longevity risk).

Parties: owner (holds contractual rights), annuitant (life whose survival measures payments), and beneficiary (receives any remaining benefit at death).

Accumulation phase builds value; annuitization phase converts value into periodic payments.

Premium structures: single premium or flexible premium; payout timing: immediate (payments begin within one payment interval) or deferred.

Fixed annuities guarantee a minimum interest rate; variable annuities invest in a separate account with investment risk on the owner; indexed annuities credit interest by index formula with a floor.

Payout options: life only (highest payment), life with period certain, installment refund, cash refund, and joint and survivor.

Surrender charges commonly apply in early years; withdrawals before age 59½ may incur a 10% federal income tax penalty on the taxable portion.

Section 1035 exchange allows tax-free transfer of a life policy or annuity to a new annuity or life policy.

Death proceeds paid to a named beneficiary are generally income-tax free; proceeds are included in the insured's gross estate if the insured held incidents of ownership at death.

Cash value grows tax-deferred; policy loans are not taxable while the policy remains in force, but a lapse with an outstanding loan can create taxable gain.

Dividends are treated as a return of premium until cumulative dividends exceed total premiums paid, after which they are taxable.

Modified endowment contracts (failing the 7-pay test) are taxed LIFO on distributions and may incur a 10% penalty before age 59½.

Transfer-for-value: selling a policy for valuable consideration makes death proceeds taxable to the buyer, with exceptions for transfers to the insured, a partner, a partnership, or a corporation of which the insured is a shareholder.

Group term life coverage above $50,000 generates imputed income using the IRS Table I rate.

Business uses: key person insurance, buy-sell (entity purchase or cross-purchase), split-dollar plans, executive bonus (Section 162), and deferred compensation.

Retirement vehicles: IRAs, Roth IRAs, 401(k)s, and annuities; distributions before age 59½ are generally subject to a 10% penalty with limited exceptions.

A group master contract is issued to the employer, trustee, or association; covered members receive certificates of insurance as evidence of coverage.

Group underwriting evaluates the entire group rather than individuals, using group size, industry, age and sex mix, and past claims experience.

Noncontributory plans generally require 100% participation of eligible employees; contributory plans typically require at least 75%.

Employees usually must be actively at work on the effective date; group plans generally require no individual evidence of insurability at initial enrollment.

Conversion privilege lets a terminating member convert to an individual policy without evidence of insurability, typically within 31 days of coverage ending.

Portability allows a member to continue group coverage by paying premiums directly to the insurer, usually at higher group rates.

Other group benefits include group disability income, dental, vision, accidental death and dismemberment, and group long-term care.

Imputed income to the employee equals the Table I cost of coverage exceeding $50,000 minus any employee contributions.

Indemnity (fee-for-service) plans pay a share of covered charges with a deductible and coinsurance; managed care plans control cost through networks and utilization review.

HMO: prepaid plan, primary care gatekeeper, capitation payments, generally no coverage outside the network except emergencies.

PPO: network discounts, no gatekeeper, higher cost sharing for out-of-network care; POS plans combine HMO and PPO elements; EPO plans have no out-of-network benefits.

Cost-sharing terms: deductible, coinsurance (percentage of covered cost), copayment (fixed dollar amount), and out-of-pocket maximum.

Coordination of benefits determines primary versus secondary payer; for dependent children of parents with separate plans, the birthday rule generally applies.

ACA market rules: guaranteed issue, no preexisting condition exclusions, essential health benefits, no annual or lifetime dollar limits, and dependent coverage to age 26.

ACA metal tiers: Bronze 60%, Silver 70%, Gold 80%, Platinum 90% of allowed costs paid by the plan.

HSA eligibility requires a qualifying high-deductible health plan; contributions are deductible, growth is tax-deferred, and qualified withdrawals are tax free.

Own-occupation definition pays when the insured cannot perform the duties of their own occupation; any-occupation is stricter and pays only if unable to perform any job for which reasonably suited.

Elimination period is the waiting time before disability benefits begin; a longer elimination period lowers the premium.

Benefit period options range from one or two years to age 65 or lifetime; benefit amounts typically replace 50–70% of pre-disability income.

Residual (partial) disability benefits pay a proportional amount when income loss is partial; presumptive disability pays full benefits for specified losses such as loss of sight or two limbs.

Renewability: noncancelable guarantees both premium and renewal; guaranteed renewable guarantees renewal but allows premium increases by class; conditional renewable allows the insurer to cancel.

Long-term care benefit triggers: unable to perform 2 of 6 activities of daily living for at least 90 days, or severe cognitive impairment.

LTC policy features include daily or monthly benefit maximums, elimination period, inflation protection, home care and respite care benefits, and guaranteed renewability.

Tax-qualified LTC premiums are deductible as medical expenses within age-based limits, and benefits are received income-tax free up to the per diem limit; partnership programs add Medicaid asset protection.

Mandatory uniform provisions include entire contract, time limit on certain defenses (2 years), grace period, reinstatement, notice of claim (20 days), claim forms (15 days), proof of loss (90 days), time of payment of claims (30 days), and legal actions (typically 3 years).

Grace period in individual health policies: 7 days for weekly premiums, 10 days for monthly, and 31 days for other modes; group plans generally allow 31 days.

Reinstatement of a lapsed health policy usually requires evidence of insurability and payment of overdue premiums; a new contestable period may apply to new claims.

ACA consumer protections include guaranteed issue, no rescission absent fraud, internal and external appeals, preventive services without cost sharing, and summary of benefits coverage.

Medical loss ratio rule requires insurers to spend at least 80% (individual and small group) or 85% (large group) of premium on medical care and quality, or issue rebates.

COBRA applies to employers with 20 or more employees and provides 18, 29, or 36 months of continuation coverage at the employee's expense.

Medicare: Part A hospital insurance, Part B medical insurance (premium-based), Part C Medicare Advantage, and Part D prescription drug coverage; eligibility generally begins at age 65 or after 24 months of Social Security disability.

Medicaid is a joint federal-state program with income-based eligibility; CHIP covers children in families with incomes too high for Medicaid; TRICARE covers uniformed services members and dependents.