GA Life & Health common mistakes
GA Life & Health · Understand the traps and how to avoid them.
Treats the state guaranty association as the answer to every policyholder-protection question - selecting the guaranty fund as the payer when the dispute is with a solvent, in-force insurer.
Both the insurance department and the guaranty association are taught as 'protecting policyholders,' so the two blur under time pressure, and any stem containing 'claim denied' or 'insurer failed' pulls the candidate toward the guaranty fund.
What to do instead
Sort entities by trigger before reading the answer choices: guaranty association = insurer insolvency only; Commissioner/Department of Insurance = licensing, market conduct, unfair trade practices, complaints; NAIC = drafts model laws, does not enforce. If no insolvency appears in the stem, eliminate every guaranty-association answer.
Labels every false statement about a policy as 'misrepresentation' and misses 'twisting' when the stem describes inducing a policyholder to lapse, surrender, or replace a policy through a misleading comparison.
Twisting is misrepresentation plus a specific consequence (the existing coverage is dropped), and candidates apply only the first half of the definition.
What to do instead
Run a two-part test on any unfair-trade-practice item: is there a false or misleading statement, AND did an existing policy get dropped or replaced? Both = twisting. Statement alone = misrepresentation. Comparing policies with intent to disparage = defamation of an insurer.
Computes coinsurance on the full billed charge instead of on the amount remaining after the deductible, or applies the copay before the deductible.
Stems supply the allowed charge, deductible, coinsurance percentage, and copay all at once, and the most familiar term wins the order of operations.
What to do instead
Write the chain out before calculating: allowed charge → deductible → coinsurance on the remainder → copay → benefit maximum. Practice with non-round deductibles so the order of operations is visible in the arithmetic.
Places insurable interest at the wrong moment for life insurance - denying a death claim because the owner and insured later divorced, or because the beneficiary had no insurable interest in the insured.
Property-casualty logic (interest must exist at the time of loss) leaks into life questions, where interest is only tested at application.
What to do instead
Tag by line: life = insurable interest required at application and must exist then; it can never be created by the policy itself, and a later change in relationship does not void the contract. Property/casualty = interest required at the time of loss.
Cannot distinguish the nonforfeiture options - says extended term 'keeps the policy in force for life,' or that reduced paid-up coverage lasts only for the original term.
The two names describe the opposite of what they deliver: extended term is temporary but keeps the original face amount; reduced paid-up is permanent but for a smaller face amount.
What to do instead
Build a three-row table (cash surrender / reduced paid-up / extended term) with columns for what the owner receives, how long coverage lasts, and whether coverage continues. Anchor on 'paid-up = permanent, extended = temporary.'
Applies the two-year incontestability clause to every defect - denies an otherwise valid claim because the insured misstated age or sex, or assumes nothing in the application can ever be revisited after two years.
All policy 'problems' get filed under one two-year rule, and the separate treatment of age/sex misstatement and the fraud exception is never drilled.
What to do instead
Memorize the carve-outs: misstatement of age or sex is never grounds to void - the benefit is adjusted to what the premium would have bought; nonpayment of premium is always contestable; and in many states including Georgia a fraudulent misrepresentation in the application may still be contested after the contestability period, so check the state rule before choosing 'policy is incontestable.'
Treats the entire annuity payout as taxable, or forgets the 10% federal penalty on pre-59½ withdrawals from the taxable gain portion of a nonqualified annuity.
Annuities are filed mentally as 'tax-deferred retirement money,' so basis and gain are never separated before the tax question is answered.
What to do instead
Split every annuity dollar first: basis (already-taxed money) versus gain. Annuitized payments use the exclusion ratio (basis portion tax-free); lump-sum withdrawals from a nonqualified contract come out gain-first (LIFO) and the gain is ordinary income. Only then ask the owner's age to test for the 10% penalty.
Misfiles a contract as a security or as a non-security product - calling a fixed indexed annuity a security, or recommending a variable annuity to a client whose stated goal is guaranteed principal.
Every annuity shares the same contract chassis and similar marketing names, so candidates classify by name rather than by risk placement.
What to do instead
Two-question sort for any annuity: (1) Is the contract value tied to a separate account? (2) Does the owner bear the downside risk? Yes/yes = variable, requires securities registration and a prospectus; insurer guarantees the floor = not a security. Answer suitability items by matching the contract's risk placement to the client's stated objective.
Applies the wrong coordination-of-benefits order - makes the plan of the older parent primary for a dependent child, or lets a non-custodial parent's plan pay first when a court decree says otherwise.
Candidates substitute the intuitive 'older person' or 'higher earner' rule for the actual birthday rule and forget the decree override.
What to do instead
Default sequence: the plan covering the person as employee/subscriber is primary for that person's own care; for a dependent child with two covered parents, the birthday rule governs (the parent whose birthday falls earlier in the calendar year, not the older parent); a court order or divorce decree overrides the birthday rule; Medicaid pays last.
Collapses Medicare's separate enrollment windows into one - states that Medicare can only be elected during the annual election period, or that a Medigap policy can be bought with guaranteed issue after the six-month Medigap open enrollment ends.
Three distinct windows (initial enrollment, annual election, Medigap open enrollment) are taught close together and are recalled as a single 'open enrollment' concept.
What to do instead
Draw the timeline before answering: initial enrollment period = the seven months around the month the person turns 65; Medigap guaranteed-issue window = six months beginning the month the person is 65 and enrolled in Part B; annual election period = October 15 to December 7 for Part D and Medicare Advantage changes. Identify which window the stem is describing before selecting.