CO Life & Health cheat sheet

Insurable interest must exist at the time of application (policy issue); it is not required at the time of the insured's death.

Incontestability runs 2 years from issue (restarts on reinstatement); the suicide clause also runs 2 years and limits the payout to a refund of premiums paid.

Reinstatement: allowed within 3 years of lapse; requires evidence of insurability plus overdue premiums with interest, and repayment or reinstatement of any policy loan.

Nonforfeiture options: cash surrender, reduced paid-up (smaller face, lifetime coverage), extended term (full face amount, limited duration, no further premiums).

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

Failing the 7-pay test makes a policy a MEC: loans and withdrawals are taxed gains-first and may incur a 10% penalty before age 59 1/2; a 1035 exchange is tax-free life-to-life or life-to-annuity only (not annuity-to-life).

Settlement options: interest only, fixed period, fixed amount, life income, life income with period certain, joint and survivor.

Group life conversion: 31 days after termination, no evidence of insurability, individual whole life at the attained-age premium.

Colorado free-look minimums: at least 10 days on individual life policies and at least 30 days on long-term care policies, counted from delivery.

ACA market rules: guaranteed issue, no pre-existing condition exclusions or rate-ups, and dependent coverage available to age 26.

ACA medical loss ratio: 80% for individual and small group, 85% for large group; premium above that is rebated to policyholders.

ACA plans must cover the essential health benefits, impose no annual or lifetime dollar limits on those benefits, and cap annual out-of-pocket spending.

COBRA applies to employers with 20+ employees: 18 months standard, 29 months with the Social Security disability extension, 36 months for dependents; 60 days to elect, 45 days to pay the first premium, cost up to 102%.

HIPAA limits a pre-existing condition look-back to 6 months and credits prior creditable coverage against any exclusion period; special enrollment rights follow marriage, birth, adoption, or loss of other coverage.

Medicare initial enrollment is a 7-month window (3 months before, the birthday month, 3 months after age 65); the Part B late-enrollment penalty is 10% of the premium for each 12-month delay.

Medigap open enrollment lasts 6 months from the Part B effective date for people 65 and older, is guaranteed issue with no underwriting, and cannot be used alongside Medicare Advantage.

Disability income: own-occupation pays when the insured cannot do their own job, any-occupation is stricter; the elimination period is the waiting time, residual pays a proportional benefit, and the benefit period caps total duration.

Long-term care: benefits trigger on inability to perform 2 of 6 activities of daily living or on cognitive impairment; tax-qualified policies receive favorable tax treatment.