CIC Life & Health cheat sheet

Level premium term: premium stays constant for the term; the death benefit is paid only if death occurs during the term, and no cash value accrues.

Whole life: guaranteed level premium, guaranteed death benefit, and guaranteed cash value schedule; policy loans reduce both cash value and death benefit if unpaid.

Universal life: unbounded flexible premium with a cost-of-insurance deduction from the account value; underfunding or rising COI can cause the policy to lapse unless a no-lapse guarantee applies.

Variable life and variable annuities are securities: cash value is held in separate accounts, the owner bears investment risk, and sale requires both a life license and FINRA registration.

Annuity payout options: life only pays the largest income; life with period certain guarantees payments for a stated number of years; joint and survivor continues while either annuitant lives.

Annuity accumulation vs. payout: accumulation units measure the value of the account during deferral; annuity units measure the payout during annuitization.

Settlement options on a life policy: lump sum, interest only, fixed period, fixed amount, and life income; the insurer retains proceeds until distributed.

Grace period is typically 30 or 31 days; coverage stays in force and the premium may be deducted from any claim paid during the grace period.

Incontestability clause: after two years from issue, the insurer cannot contest the policy for misrepresentation on the application except for fraud or nonpayment of premium.

Buy-sell agreement funded with life insurance: on a partner's death the insurer pays the beneficiary, who uses the proceeds to buy the deceased owner's interest at a price set in the agreement.

Entity-purchase plan: the business owns and is beneficiary of the policies, pays premiums, and buys the deceased owner's shares; the surviving owners then own the whole business.

Cross-purchase plan: each owner owns policies on the other owners and buys the interest directly; more policies are needed as owners increase, but surviving owners receive a stepped-up basis.

Key person insurance: the business owns the policy, is beneficiary, and receives proceeds income-tax free; premiums are not deductible because the payout is tax-free.

Split-dollar arrangement: premium and death benefit are divided between an employer and employee; the employee's economic benefit is taxable income each year.

Group term life: employer-paid coverage up to $50,000 of death benefit is excluded from employee income; coverage above $50,000 creates imputed income under IRC Section 79.

Deferred compensation funding: corporate-owned life insurance cash value is a business asset subject to creditor claims, and interest is not currently deductible.

Business continuation valuation: a buy-sell price formula should be reviewed periodically; a fixed price must be updated, while a formula or appraisal method adjusts automatically.

Section 162 executive bonus: the employer pays a premium on a policy the employee owns; the premium is deductible to the business and taxable income to the employee.

Major medical cost sharing: deductible is paid first, then coinsurance applies to the covered balance, then the out-of-pocket maximum caps the insured's annual share.

Coordination of benefits: primary plan pays first; the secondary plan pays the lesser of the remaining balance or what it would have paid as primary, so benefits never exceed 100% of the charge.

COBRA: employers with 20 or more employees must offer continuation for 18 months after termination or reduced hours, and 36 months for dependents after death, divorce, or Medicare eligibility of the covered employee.

Disability income: short-term plans typically pay 60-70% of income for 13 to 26 weeks; long-term plans commonly pay 60% after a 90-day elimination period and may offset Social Security.

Own-occupation vs. any-occupation disability definition: own-occupation is broader and more costly; any-occupation pays only when the insured cannot perform any job for which they are reasonably suited.

Medicare: Part A hospital coverage is premium-free with 40 quarters of work; Part B medical coverage charges a monthly premium; Part D covers outpatient prescription drugs.

HSA eligibility requires a qualifying high-deductible health plan, no other disqualifying coverage, and not being enrolled in Medicare; contributions are pre-tax and roll over.

Workers compensation is no-fault and exclusive remedy: it pays medical costs and a portion of lost wages regardless of fault, and employees generally cannot sue the employer.

HIPAA portability limits pre-existing condition exclusions for creditable coverage and guarantees availability and renewability of group coverage.

Commercial property: coinsurance requires the insured to carry a limit of at least the stated percentage of value; a lower limit reduces the loss payment proportionally.

Business income coverage pays net income plus continuing expenses during the period of restoration, starting after the waiting period (commonly 72 hours).

Commercial general liability: Coverage A covers bodily injury and property damage; Coverage B covers personal and advertising injury; Coverage C covers medical payments.

Occurrence vs. claims-made CGL: occurrence covers injury that happens during the policy period; claims-made covers claims reported during the period, subject to the retroactive date.

Commercial auto symbols determine which vehicles are covered; Symbol 1 designates any auto, while Symbol 7 covers specifically described autos only.

Personal lines HO-3 covers the dwelling on an open-peril basis and personal property on a named-peril basis; HO-5 covers both on an open-peril basis.

Personal auto: liability pays third-party damages; collision pays damage to the insured vehicle regardless of fault; comprehensive pays non-collision losses such as theft, fire, or hail.

Insurance company operations: underwriting selects and classifies risk, claims handles investigation and settlement, and reinsurance transfers part of the risk to another insurer.

Agency management: an agency's retention ratio equals policies in force at year-end minus new policies, divided by policies in force at the start of the year.

Commercial property: coinsurance requires the insured to carry a limit of at least the stated percentage of value; a lower limit reduces the loss payment proportionally.

Business income coverage pays net income plus continuing expenses during the period of restoration, starting after the waiting period (commonly 72 hours).

Commercial general liability: Coverage A covers bodily injury and property damage; Coverage B covers personal and advertising injury; Coverage C covers medical payments.

Occurrence vs. claims-made CGL: occurrence covers injury that happens during the policy period; claims-made covers claims reported during the period, subject to the retroactive date.

Commercial auto symbols determine which vehicles are covered; Symbol 1 designates any auto, while Symbol 7 covers specifically described autos only.

Personal lines HO-3 covers the dwelling on an open-peril basis and personal property on a named-peril basis; HO-5 covers both on an open-peril basis.

Personal auto: liability pays third-party damages; collision pays damage to the insured vehicle regardless of fault; comprehensive pays non-collision losses such as theft, fire, or hail.

Insurance company operations: underwriting selects and classifies risk, claims handles investigation and settlement, and reinsurance transfers part of the risk to another insurer.

Agency management: an agency's retention ratio equals policies in force at year-end minus new policies, divided by policies in force at the start of the year.