CISR Life & Health cheat sheet

Insurable interest must exist at policy issue; a person has it in their own life without limit, and in another's life only if financial loss would follow that person's death.

Applicant, policyowner, insured, and beneficiary are distinct roles; one person may hold several roles, but the owner controls all policy rights while the insured's life is what is covered.

Underwriting classifies risk as preferred, standard, substandard, or declined, based on age, sex, health history, occupation, avocations, and tobacco use.

Mortality tables give the probability of death at each age; insurers use them to price mortality cost, while morbidity tables price health-related claims.

Premium components are mortality cost, interest/expense assumptions, and loading; a premium that rises each year to match increasing mortality cost is a yearly renewable term structure.

Field underwriting duties: complete the application accurately, report known material facts, collect the initial premium if required, and deliver the policy with a signed delivery receipt.

An agent's authority comes from express powers in the agency contract, implied powers needed to carry out those duties, and apparent authority created by the insurer's own conduct.

Fiduciary duty means premiums and policyholder funds are held in trust for the insurer; commingling personal and insurer funds is prohibited.

A false statement on the application is material only if the insurer would have acted differently had it known the truth; material misrepresentation can void coverage.

Level term: face amount and premium stay fixed for the stated term; no cash value; cheapest per dollar of death benefit at younger ages.

Decreasing term lowers the face amount over time while premium stays level; it is often paired with a mortgage or other declining debt.

Increasing term raises the face amount over the term; renewable term guarantees the right to continue coverage without new evidence of insurability, at a higher premium.

Convertible term lets the insured exchange term coverage for a permanent policy without proving insurability; the conversion privilege usually has a time limit and a maximum age.

Whole life: level premium paid for life or to a stated age, guaranteed cash value, guaranteed death benefit, and policy loans against cash value.

Limited-pay whole life (for example 20-pay or paid-up at 65) compresses premiums into fewer years; coverage stays in force for life after the last premium.

Universal life separates the policy into a cash-value account and a cost-of-insurance charge; it is interest-sensitive, and a no-lapse guarantee is a separate rider with its own conditions.

Variable life and variable universal life place cash value in separate accounts tied to subaccounts; the owner bears investment risk, and the producer needs a securities license.

Indexed universal life credits interest based on an external index subject to a participation rate, cap, and floor; the floor protects against index losses but not against charges.

Beneficiary designations: primary is paid first; contingent is paid only if no primary survives; per capita divides equally among survivors while per stirpes passes a deceased beneficiary's share to that beneficiary's heirs.

Incontestability clause bars the insurer from contesting the policy for misrepresentation after it has been in force a set period (commonly two years) from issue.

Suicide clause limits payout to a refund of premiums if death by suicide occurs within the stated period; after that period the full death benefit is payable.

Grace period allows the premium to be paid late while coverage continues; if death occurs in the grace period, the unpaid premium is deducted from the benefit.

Nonforfeiture options apply when a permanent policy with cash value is surrendered or lapses: cash surrender, reduced paid-up insurance, or extended term insurance.

Policy loan interest accrues against cash value; if the loan plus interest equals the cash value, the policy lapses, and any unpaid loan reduces the death benefit.

Automatic premium loan uses cash value to pay an overdue premium at the end of the grace period, keeping the policy in force.

Dividends are a return of divisible surplus on participating policies; they are not guaranteed and may be taken as cash, used to reduce premium, accumulate at interest, or buy paid-up additions.

Settlement options: lump sum, interest only, fixed period, fixed amount, and life income; a life income with period certain guarantees payments for a minimum number of years.

Major medical policies carry a deductible, coinsurance, and an out-of-pocket maximum; the insurer pays its coinsurance share after the deductible, and the insured's cost sharing stops at the maximum.

Indemnity (fee-for-service) plans pay a percentage of usual, customary, and reasonable charges and let the insured see any provider; managed care plans use networks and cost controls.

HMO model: members use network providers, a primary care physician coordinates care, referrals are required for specialists, and care is prepaid; emergency care is covered.

PPO model: in-network and out-of-network benefits differ, no referral is needed for specialists, and out-of-network care is covered at a lower reimbursement rate.

POS plans blend HMO and PPO features: a primary care physician gatekeeper for in-network care, but out-of-network benefits are available at higher cost.

Coordination of benefits: when a person is covered by two group plans, the primary plan pays first and the secondary plan pays up to the allowable charge, never producing a profit.

Disability income insurance replaces a percentage of earned income, commonly 60-70 percent; benefits are limited by an elimination period and a benefit period, and own-occupation definitions pay more readily.

Long-term care insurance covers custodial care such as bathing and dressing; benefit triggers typically require inability to perform a set number of activities of daily living or cognitive impairment.

Accidental death and dismemberment pays a principal sum for accidental death and a stated fraction for loss of a limb or sight; it is not a substitute for comprehensive health or life coverage.

ERISA sets minimum standards for private employer benefit plans, including fiduciary duties, reporting, and disclosure; it does not mandate that an employer offer health coverage.

COBRA continuation: group health coverage must be offered to qualified beneficiaries after a qualifying event; the beneficiary generally pays up to 102 percent of the group premium.

HIPAA limits preexisting-condition exclusions and portability rules for group coverage, sets privacy and security standards for protected health information, and guarantees renewability in the individual market.

The ACA requires guaranteed issue and no preexisting-condition exclusions, allows dependent coverage to age 26, bans annual and lifetime dollar limits on essential health benefits, and requires coverage of preventive services without cost sharing.

ACA metal tiers reflect actuarial value: bronze about 60 percent, silver about 70 percent, gold about 80 percent, and platinum about 90 percent of covered costs paid by the plan.

Consumer-driven health plans pair a high-deductible health plan with a tax-advantaged account: an HSA requires an HDHP and is portable and owned by the employee, while an HRA is funded by the employer and not portable.

HSA funds roll over year to year, earn interest tax free, and can be used for qualified medical expenses after leaving the employer; FSA funds are use-it-or-lose-it with limited carryover or grace period options.

A high-deductible health plan for HSA eligibility has statutory minimum deductibles and maximum out-of-pocket limits that are adjusted annually by the IRS.

Federal law also touches life insurance through taxation: death benefits are generally income-tax free to the beneficiary, while cash-value growth inside a policy is tax deferred until withdrawal.

Medicare Part A covers inpatient hospital care, skilled nursing facility care after a qualifying hospital stay, hospice, and some home health; it is financed by payroll taxes and most people pay no premium.

Medicare Part B covers physician services, outpatient care, durable medical equipment, and preventive services; it has a monthly premium and an annual deductible with 20 percent coinsurance.

Part C (Medicare Advantage) is an alternative to Original Medicare delivered by private plans that must cover everything Parts A and B cover; many include Part D drug coverage and may use networks.

Part D covers outpatient prescription drugs through private plans; the coverage gap structure and out-of-pocket cap are set by federal law and change periodically.

Medigap (Medicare supplement) policies are sold by private insurers to fill gaps in Original Medicare such as the Part B coinsurance; they do not work with Medicare Advantage.

Initial enrollment period for Medicare is the seven-month window around the 65th birthday: three months before, the birthday month, and three months after.

A person who delays Part B without creditable employer coverage may face a late enrollment penalty added to the premium for as long as Part B is held.

Medicare does not cover most long-term custodial care; it pays for skilled care only for a limited period after a qualifying inpatient stay.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicaid may pay Medicare premiums and cost sharing and covers long-term services that Medicare excludes.