Arkansas Life & Health cheat sheet

Insurance transfers risk from an individual to a pool of similarly exposed insureds; insurable risks generally must be measurable, accidental, and not catastrophic to the pool.

Utmost good faith requires both parties to disclose material facts; concealment, material misrepresentation, and fraud can allow the insurer to rescind or deny coverage.

A valid contract requires offer, acceptance, consideration, legal purpose, and competent parties; in insurance, the application is usually the offer and policy issuance is acceptance.

Indemnity restores the insured to the pre-loss financial position; valued contracts pay a stated amount regardless of the actual loss amount.

Adhesion means the insurer drafts the contract; ambiguities generally are construed against the insurer.

Aleatory means performance depends on chance, so the values exchanged by the parties may be unequal.

A producer acts as the insurer's agent for solicitation and policy delivery and owes a fiduciary duty to remit premiums promptly and keep accurate records.

Errors and omissions coverage protects producers against negligence claims; a surety bond guarantees faithful performance and is not professional liability insurance.

Continuing education and timely license renewal are conditions of maintaining producer authority.

Whole life provides level premiums, a permanent death benefit, cash value, and guaranteed insurability; term insurance has no cash value and expires at the end of the term.

Universal life separates cost of insurance, expenses, and cash value; premiums are flexible and underfunding can cause the policy to lapse.

Variable life and variable universal life are securities; cash value is invested in subaccounts and the producer needs both insurance and securities registration.

Policy loans reduce cash value and the death benefit if unpaid; interest accrues and outstanding loans can cause lapse.

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

Dividend options include cash, premium reduction, accumulation at interest, paid-up additions, and one-year term insurance.

The incontestability clause usually bars the insurer from contesting the policy for misrepresentation after two years; nonpayment of premium is still contestable.

Common life riders include waiver of premium, disability income, accidental death, guaranteed insurability, term riders, and child riders.

Annuities accumulate funds and then pay income; annuitization converts accumulated value into periodic payments for life or a stated period.

Indemnity plans reimburse covered expenses; managed care plans such as HMOs, PPOs, POS plans, and EPOs use provider networks and utilization controls.

A deductible is the insured's out-of-pocket amount before insurer payment; coinsurance is the insured's percentage share after the deductible.

A copayment is a fixed dollar amount for a covered service; an out-of-pocket maximum caps covered in-network costs for the benefit period.

Coordination of benefits determines which plan pays first when an insured has coverage under more than one plan and prevents duplicate payment.

Health policy provisions commonly include entire contract, grace period, reinstatement, incontestability, claim forms, proof of loss, and legal actions.

Disability income insurance uses an elimination period, benefit period, and definition of disability such as own occupation or any occupation.

Medicare consists of Part A hospital insurance, Part B medical insurance, Part C Medicare Advantage, and Part D prescription drug coverage.

COBRA allows qualified beneficiaries to continue group health coverage for a limited time after a qualifying event, usually at their own expense.

Long-term care insurance commonly triggers benefits when the insured cannot perform a specified number of activities of daily living or has cognitive impairment.

The Arkansas Insurance Department regulates insurers, producers, and insurance transactions and enforces the Arkansas Insurance Code.

The Arkansas Insurance Commissioner is appointed by the Governor and has authority to investigate, fine, suspend, revoke, and issue cease-and-desist orders.

Arkansas producer licenses renew biennially; continuing education generally requires 24 credit hours per two-year term, including 3 hours of ethics.

Twisting, rebating, misrepresentation, false advertising, and unfair claim settlement are prohibited unfair trade practices.

Life insurance policies in Arkansas commonly provide a free-look period of at least 10 days after delivery for the owner to return the policy for a refund.

Life insurance policies commonly include a 30-day grace period; health policy grace periods are set by the policy and applicable Arkansas rules.

Replacement of life insurance requires disclosure and comparison notices so the buyer can evaluate surrender charges, new contestability, and new suicide periods.

The Arkansas Life and Health Insurance Guaranty Association pays covered claims of insolvent insurers up to statutory limits and is not a guarantee of insurer solvency.

Insurance fraud, including false claims and material application misstatements, can result in civil and criminal penalties under Arkansas law.