CT Life & Health cheat sheet

Insurance is regulated primarily at the state level; the Connecticut Insurance Department enforces state insurance statutes and regulations.

An insurer must hold a certificate of authority from the state to transact insurance; unauthorized insurers are generally prohibited.

Producers must be licensed for the lines they sell and appointed by the insurer; licenses must be renewed and kept current.

Connecticut producers generally complete 24 continuing-education hours every two years, including ethics hours.

Premiums and client funds held by a producer are fiduciary funds; commingling with personal funds is prohibited.

Prohibited unfair trade practices include rebating, twisting, misrepresentation, coercion, and false advertising.

State guaranty associations provide limited protection to policyholders when a licensed insurer becomes insolvent.

Market-conduct exams review sales and claims practices; financial exams review insurer solvency.

Producers must report changes and disciplinary actions to the commissioner as required by state law.

Risk is uncertainty about loss; insurance transfers pure risk, not speculative risk.

Insurable risks are ideally accidental, measurable, large in number, and not catastrophic.

Law of large numbers: larger pools improve prediction of losses and stabilize premiums.

Adverse selection occurs when higher-risk applicants buy insurance disproportionately; underwriting controls it.

Indemnity restores the insured to approximately the pre-loss financial position, not profit.

Insurable interest is a financial or emotional stake; for life insurance it must exist at application.

Utmost good faith requires honest disclosure; concealment of material facts can affect coverage.

Hazards increase chance of loss: physical, moral, and morale.

Reinsurance transfers part of an insurer's risk to another insurer.

Insurable interest for life insurance must exist at policy inception, not necessarily at death.

Premiums reflect mortality, interest/earnings, and expenses; gross premium includes expenses, net premium does not.

Mortality tables estimate death rates by age and sex; morbidity tables estimate illness/disability rates.

More frequent premium modes (monthly, quarterly) generally produce a higher total annual cost than annual payment.

The face amount is the death benefit; cash value is a separate policy value in permanent contracts.

Underwriting may use medical exams, attending physician statements, prescription checks, and MIB reports.

Conditional receipt provides temporary coverage subject to insurability and policy conditions.

Policyowner rights include naming beneficiaries, assigning the policy, surrendering it, and taking loans.

Beneficiary designations can be primary/contingent and revocable/irrevocable; per stirpes divides by branch.

Term insurance provides pure death protection for a set period and normally has no cash value.

Renewable term lets the insured renew without proof of insurability; premiums increase with age.

Convertible term lets the insured exchange term coverage for permanent coverage, often without evidence of insurability.

Whole life is permanent, has level premiums, guaranteed cash value, and may pay dividends if participating.

Universal life has flexible premiums, adjustable death benefit, cash value, and cost-of-insurance charges.

Variable life uses separate-account investments; the owner bears investment risk and the product is a security.

Indexed universal life credits interest based on an index, subject to caps, floors, and participation rates.

Survivorship (second-to-die) life pays on the death of the last insured and is often used for estate planning.

Juvenile life insures a child and may include a guaranteed insurability option.

Grace period: premium may be paid after due date without immediate lapse; typically 30-31 days for life.

Incontestability: after two years, insurer generally cannot contest for misstatement except nonpayment.

Suicide clause: death by suicide within two years typically returns premiums rather than paying the face amount.

Misstatement of age or sex adjusts the death benefit to what the premium would have purchased at the correct age/sex.

Reinstatement usually requires evidence of insurability, payment of overdue premiums with interest, and occurs within a set period.

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

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

Settlement options include lump sum, interest only, fixed period, fixed amount, and life income.

Common riders: waiver of premium, accidental death, guaranteed insurability, child term, and accelerated death benefit.

Annuity contracts accumulate funds and then pay periodic income; they are primarily retirement vehicles.

Immediate annuities begin payments soon after purchase; deferred annuities have an accumulation phase.

Fixed annuities guarantee a minimum interest rate; the insurer bears investment risk.

Variable annuities invest in separate accounts; the contract owner bears investment risk and receives a prospectus.

Indexed annuities credit interest based on an index with caps, floors, and participation rates.

Payout options include life only, life with period certain, joint and survivor, fixed period, and fixed amount.

Surrender charges and market value adjustments may apply to early withdrawals.

Annuity income is taxed using the exclusion ratio until basis is recovered.

A 1035 exchange can move annuity or life policy values to a new contract without current taxation.

Death benefits paid to a beneficiary are generally free of federal income tax.

Cash value inside a life policy grows tax deferred; policy loans are generally not taxed while the policy remains in force.

Surrendering a policy creates taxable gain to the extent cash value exceeds basis (premiums paid).

A modified endowment contract (MEC) fails the seven-pay test; withdrawals/loans are taxed LIFO with possible 10% penalty.

Personal life insurance premiums are generally not deductible; employer-owned COLI has deduction limits.

Annuity contributions are not deductible; growth is tax deferred and withdrawals are generally taxed LIFO.

Annuity withdrawals before age 59½ may incur a 10% federal penalty unless an exception applies.

Life insurance proceeds are included in the insured's estate if the insured owned the policy or held incidents of ownership.

Transferring a policy may create a gift tax issue based on fair market value.

Health insurance can be indemnity (fee-for-service) or managed care (HMO, PPO, POS, EPO).

HMOs usually require a primary care physician and referrals; PPOs allow out-of-network care at higher cost.

A deductible is the amount paid before benefits begin; coinsurance is a percentage share after deductible.

A copayment is a fixed dollar amount for a covered service; out-of-pocket maximum caps annual cost sharing.

Coordination of benefits determines primary and secondary payers when multiple plans cover a person.

Group health underwriting often considers group size, industry, and participation; individual underwriting considers health history.

ACA plans are guaranteed issue and cannot exclude pre-existing conditions for most major medical coverage.

Disability income replaces part of earned income; long-term care covers custodial or skilled care.

Medicare is federal; Medicaid is state-federal; COBRA and state mini-COBRA provide continuation coverage.

Health policies include entire-contract, free-look, grace-period, reinstatement, and claims provisions.

Incontestability in health insurance generally limits insurer challenges after two years, except fraud or nonpayment.

A pre-existing condition limitation restricts coverage for conditions treated before the policy began, subject to law.

An elimination period is a waiting period before disability benefits begin; a probationary period delays coverage for sickness.

Renewability clauses include cancelable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancellable.

Guaranteed renewable policies can raise premiums by class but cannot cancel the individual; noncancellable cannot raise premiums or cancel.

Disability policies define total disability as own occupation or any occupation, often with different time periods.

Claims provisions set notice, proof-of-loss, and payment timeframes; insurers may require authorization for certain services.

Conversion and continuation rights let insureds keep coverage after group eligibility ends, subject to policy terms.

The Connecticut Insurance Department licenses insurers and producers and enforces state insurance laws.

Connecticut individual life policies generally provide a 10-day free-look period after delivery.

Connecticut life policies must include a grace period of at least 30 days for premium payment.

Life policies become incontestable after two years from issue, except for nonpayment of premium.

Connecticut's mini-COBRA law generally extends group health continuation coverage for small employers for up to 18 months.

Connecticut Paid Leave provides up to 12 weeks of paid family and medical leave, funded by payroll contributions.

Connecticut requires autism spectrum disorder coverage and mental health/substance use parity in health plans.

Producers selling annuities must complete annuity training and follow suitability/best-interest standards.

Long-term care insurance producers must complete initial and continuing training requirements.