NH Life & Health common mistakes
NH Life & Health · Understand the traps and how to avoid them.
Treats 'twisting' and 'replacement' as interchangeable when a stem describes inducing a policyholder to drop an existing policy.
Both involve moving a policyholder away from an existing policy, so candidates match on the scenario instead of the prohibited act.
What to do instead
Define twisting as misrepresentation or incomplete comparison used to induce lapse, surrender, or forfeiture; define replacement as a transaction replacing existing life insurance or annuity, which triggers disclosure and notice requirements.
Assumes premiums collected from applicants belong to the producer until remitted, or mixes them with personal funds.
Candidates focus on commission timing and overlook the producer's fiduciary handling duty.
What to do instead
Treat premiums as held in a fiduciary capacity for the insurer, keep them separate from personal funds, and avoid commingling; explain that commingling is prohibited even if the premium is later remitted.
Labels a health plan as 'indemnity' when the stem says it pays a fixed dollar amount for a specified loss regardless of actual expense.
Candidates use 'indemnity' as a generic word for insurance rather than distinguishing reimbursement from valued benefits.
What to do instead
Match indemnity to reimbursement of actual loss up to the benefit limit; match valued/fixed-benefit to a stated sum paid for a specified event regardless of the actual charge.
Gives policy rights to the insured instead of the owner when asked who may change the beneficiary, borrow cash value, surrender, or assign a life policy.
The insured and owner are often the same person in examples, so candidates stop separating the roles.
What to do instead
Map ownership rights to the policyowner unless an irrevocable beneficiary limits them; identify the insured only as the person whose life is insured.
Chooses extended term when the stem asks for the nonforfeiture option that provides a lower face amount with no further premiums for life.
Both nonforfeiture options stop premium payments, and candidates remember 'no more premiums' without the face-amount/duration distinction.
What to do instead
Use reduced paid-up for a lower face amount with lifetime coverage; use extended term for the original face amount for a limited term.
Says the incontestability clause bars every claim after two years, including a claim for unpaid premium or a policy exclusion.
Candidates memorize 'two years' as a blanket cutoff and ignore what the clause actually contests.
What to do instead
Limit incontestability to material misrepresentation in the application after the contestable period; keep nonpayment, policy exclusions, and separate suicide/misstatement-of-age provisions outside that blanket rule.
Says all annuity income is taxable after annuitization because the owner paid premiums with after-tax dollars.
Candidates remember that annuity gains are tax-deferred and then overcorrect to 'everything is taxable.'
What to do instead
For a nonqualified annuity, apply the exclusion ratio to separate return of basis from taxable gain in annuitized payments; treat qualified annuity payments as generally fully taxable.
Uses the typical life insurance grace period for a health policy question, or assumes health coverage continues indefinitely after a missed premium.
Grace period is memorized as one number and then transplanted across contract types.
What to do instead
Identify the contract type first; do not import the life rule into health. Use the health policy/state grace rule in the stem and note that coverage or claim payment can be affected after the grace period ends.
Calculates coinsurance on the full allowed charge before subtracting the deductible, or treats a copayment as coinsurance.
Candidates rush the arithmetic and mix the fixed-dollar copay with the percentage coinsurance.
What to do instead
Subtract the deductible from the allowed charge first, apply the insurer/insured coinsurance percentages to the remaining base, then add the deductible and any amount above the allowed charge; keep copay as a fixed dollar amount.
Assumes the plan with the larger benefit or the policy held longer is primary when two group health plans coordinate benefits.
Candidates apply general 'bigger/longer' intuitions instead of COB order-of-benefit rules.
What to do instead
Use COB status rules: the active employee plan generally pays before COBRA or retiree coverage; for dependent children use the birthday rule unless a court order applies; apply Medicare secondary-payer rules for active large-group coverage.