IA Life & Health cheat sheet

Pure risk (loss or no loss only) is insurable; speculative risk (chance of gain or loss) is not insurable.

Elements of a valid insurance contract: offer and acceptance, consideration, legal purpose, and competent parties.

Insurable interest in life insurance must exist at policy issue; in property/casualty lines it must exist at the time of loss.

Life insurance is a valued contract paying the stated face amount; health insurance is a contract of indemnity reimbursing actual loss.

Aleatory means the values exchanged are unequal and contingent on chance; unilateral means only the insurer makes an enforceable promise; conditional means benefits depend on stated conditions.

Contract of adhesion: the insurer drafts the terms, so ambiguities are construed in favor of the insured (contra proferentem).

Breaches of utmost good faith: misrepresentation (false statement of a material fact), concealment (silence about a material fact), and fraud (intent to deceive).

Representations must be substantially true; warranties must be literally true; a material misrepresentation supports rescission of the contract.

Peril is the cause of loss; hazards are physical (health, occupation, hobby), moral (dishonest intent), or morale (careless attitude).

Core policy provisions: entire contract, free look (10 days), grace period (30 or 31 days), reinstatement (typically 3 years), incontestability (2 years), suicide (2 years), misstatement of age or sex.

Entire contract clause: the policy plus the attached copy of the application constitute the whole agreement; only an authorized officer can modify it in writing.

Nonforfeiture options on cash-value policies: cash surrender, reduced paid-up insurance, and extended term insurance.

Dividend options: cash, reduce premium, accumulate at interest, paid-up additions, and one-year term; dividends are not guaranteed and are not taxable until they exceed total premiums paid.

Settlement options: lump sum, interest only, fixed period, fixed amount, and life income (straight life, life with period certain, refund life, joint and survivor).

Policy loans accrue interest; an unpaid loan plus interest reduces both the cash value and the death benefit.

Term insurance provides pure death protection with no cash value; whole life is permanent with level premiums and guaranteed cash value.

Variable life cash value is held in a separate account and fluctuates with investment results; it is a security and requires a prospectus.

Beneficiary rules: primary is paid first and contingent only if the primary predeceases; revocable designations may be changed by the owner, irrevocable ones require beneficiary consent; per stirpes divides by branch, per capita by person.

Cost-sharing sequence: premium, then deductible, then coinsurance or copay, then the out-of-pocket maximum, after which the insurer pays 100 percent of covered charges.

Renewability scale: optionally renewable (insurer may cancel or refuse renewal), conditionally renewable (refusal only for stated reasons), guaranteed renewable (no cancellation, class rate increases allowed), noncancellable (no cancellation and no rate increase).

Disability income benefits are usually 60 to 70 percent of predisability income; premium is driven by the benefit period, elimination period, and definition of disability.

Residual or partial disability pays a reduced proportional benefit; presumptive disability pays the full benefit for loss of sight, hearing, speech, or two limbs.

AD&D pays the principal sum for accidental death and a capital sum (a stated percentage) for dismemberment; death must result from accidental injury, typically within 90 days.

COBRA continuation periods: 18 months for termination or reduced hours, 29 months when disability exists at termination, 36 months for death, divorce, or loss of dependent status.

Managed care models: HMO (closed panel, PCP gatekeeper, prepaid), PPO (contracted network, no gatekeeper), POS (hybrid with in-network and out-of-network benefits).

Long-term care benefits trigger when the insured cannot perform 2 of 6 ADLs (bathing, dressing, toileting, transferring, eating, continence) or has a cognitive impairment.

Group health taxation: employer-paid premiums are deductible to the employer and excluded from employee income; benefits are tax free, while individually paid premiums are deductible only above the medical expense threshold.

A person must hold an Iowa producer license with the proper line of authority before soliciting, negotiating, or selling insurance.

An insurer must appoint a producer and file that appointment with the Iowa Insurance Division; termination of the appointment is also reported to the Commissioner.

Iowa producers must report a change of name or address within 30 days and complete 24 hours of approved continuing education every two years, including 3 hours of ethics.

Premiums collected by a producer are held in a fiduciary capacity; commingling premium funds with personal funds is prohibited and grounds for license action.

Prohibited unfair trade practices include misrepresentation, false advertising, twisting, rebating, coercion, intimidation, unfair discrimination, and defamation of an insurer.

Iowa life policies carry a 10-day free look, a grace period of at least 30 days, a 2-year incontestability period, and a 2-year suicide exclusion, plus a required replacement notice when an existing policy is being replaced.

The Commissioner of Insurance heads the Iowa Insurance Division and may hold hearings, issue cease and desist orders, impose penalties, suspend or revoke licenses, and seek conservatorship of impaired insurers.

The Iowa Life and Health Insurance Guaranty Association protects policyholders of insolvent insurers up to $300,000 in life death benefits, $100,000 in net cash surrender value, and $250,000 in annuity present value.

Insurance fraud is a criminal offense; suspected fraudulent applications and claims are reported to the fraud bureau of the Iowa Insurance Division.