NV Life & Health cheat sheet

State insurance departments, headed by a commissioner, enforce the state insurance code and license insurers, producers, and adjusters.

The NAIC drafts model laws and regulations for states to consider adopting; it has no direct regulatory or enforcement authority.

An insurer must hold a certificate of authority to be an admitted insurer in a state; nonadmitted insurers may write business only through surplus lines mechanisms.

Producers hold premiums in a fiduciary capacity: funds may not be commingled with personal funds and must be remitted to the insurer promptly.

Twisting (inducing a lapse through misrepresentation) and churning (replacement solely to generate commissions) are prohibited unfair trade practices.

Rebating - offering anything of value not stated in the policy to induce a sale - and unfair discrimination between similar risks are illegal in most states.

Unfair claim settlement practices include failing to act promptly on claims, refusing to pay without a reasonable investigation, and misrepresenting policy provisions.

Insurable interest must exist at the time of application; a contract issued with no insurable interest is void.

State guaranty associations pay covered claims of insolvent admitted insurers up to statutory limits; they do not guarantee investment results or prevent market losses.

Risk is uncertainty about loss; peril is the cause of loss; hazard is a condition that increases the chance or severity of loss.

Insurable risks are pure (loss or no loss), accidental, measurable, and pooled across many similar exposure units; speculative risks are not insurable.

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

Life and health policies are unilateral (only the insurer makes an enforceable promise), aleatory, conditional, and contracts of adhesion.

Utmost good faith requires disclosure of material facts; concealment, breach of warranty, or material misrepresentation can support rescission.

Waiver is the intentional surrender of a known right; estoppel bars the insurer from later asserting a right when the insured relied on the waiver to their detriment.

The law of large numbers holds that actual losses approach predicted losses as the number of similar exposure units increases, enabling accurate rate setting.

Adverse selection is the tendency of higher-risk applicants to seek coverage; underwriting and group eligibility rules are designed to control it.

Risk management techniques are avoidance, retention, reduction, sharing, and transfer; reinsurance transfers risk from a ceding insurer to a reinsurer.

Insurable interest and the proposed insured's written consent are required at application; the policyowner, who holds all contractual rights, may be different from the insured.

Field underwriting duties include accurate fact-gathering, delivering the policy, collecting the initial premium, and obtaining a statement of good health when required.

Risk classifications are preferred, standard, substandard (rated), and declined; ratings reflect mortality or morbidity above the insurer's average.

Premium components are mortality or morbidity, interest (earnings assumption), and expense; a higher assumed interest rate or lower expense assumption lowers premium.

A conditional receipt provides coverage from the application date only if the applicant proves insurable; a binding receipt provides coverage regardless of insurability.

Term insurance provides pure protection with no cash value and may be renewable (no new evidence of insurability) and convertible to permanent coverage.

Whole life provides level premiums, guaranteed cash value, and coverage to the maturity age or death; limited-pay and single-premium versions compress the payment period.

Universal life unbundles the policy into flexible premium, adjustable death benefit, interest-credited cash value, and monthly cost-of-insurance deductions.

Variable life cash value is invested in a separate account and fluctuates; the producer needs a securities registration and the buyer must receive a prospectus.

Policy structure includes the insuring clause, entire contract provision, free-look right, consideration clause, exclusions, and signatures of the officers and owner.

Level term keeps a constant face amount for the term; decreasing term declines and is often matched to a mortgage; increasing term rises over time.

Annually renewable term has a premium that increases each year with attained age while the face amount stays level, with no new evidence of insurability.

Ordinary whole life charges a level premium for life, builds guaranteed cash value, and endows at the maturity age stated in the contract.

Limited-pay whole life (for example 20-pay or paid-up at 65) uses higher annual premiums to finish payments in fewer years; single premium is fully paid at issue.

Universal life death benefit Option A is a level amount, so rising cash value reduces the amount at risk; Option B equals the specified amount plus the cash value.

Variable and variable universal life place cash value in a separate account with no guaranteed minimum cash value; a securities license and prospectus are required.

Equity-indexed universal life credits interest based on an index subject to a participation rate, a cap, and a floor, with principal protected by the general account.

Survivorship (second-to-die) coverage pays on the last death and is used for estate planning; joint life pays on the first death.

The grace period (commonly 31 days on life policies, 7 to 10 days on health policies) keeps coverage in force after a missed premium due date.

The incontestability clause bars the insurer from contesting the policy for misrepresentation after two years in force, except for nonpayment of premium.

Misstatement of age or sex does not void the contract; the benefit is adjusted to the amount the premium actually paid would have purchased.

Reinstatement requires back premiums with interest, evidence of insurability, and payment within the stated period; a new contestable period may apply.

Nonforfeiture options on lapse are cash surrender, reduced paid-up insurance, and extended term insurance.

Settlement options are lump sum, interest only, fixed period, fixed amount, and life income (with period certain or refund/cash refund features).

Dividend options are cash, reduce premium, accumulate at interest, paid-up additions, and one-year term; dividends are a return of premium, not taxable income up to basis.

Common riders include waiver of premium, disability income, accidental death and dismemberment, guaranteed insurability, cost-of-living, return of premium, child term, and long-term care.

A revocable beneficiary may be changed by the owner without consent; an irrevocable beneficiary must consent, and a common disaster clause or the Uniform Simultaneous Death Act governs the order of death.

Two phases: accumulation (premiums paid, value grows tax-deferred) and annuitization or payout (income is paid to the annuitant).

An immediate annuity is bought with a single premium and begins payments within one payment period; a deferred annuity starts payments at a later date.

Fixed annuities guarantee a credited rate; variable annuities invest in a separate account and payments fluctuate; indexed annuities credit interest by formula with caps and floors.

Payout options: life only (largest payment, ends at death), life with period certain, joint and survivor, and installment or refund arrangements.

Exclusion ratio equals the investment in the contract divided by the expected return; that fraction of each payment is a tax-free return of basis.

Surrender charges and market value adjustments apply to withdrawals above the free-withdrawal amount during the surrender period.

Qualified plans include IRA, Roth IRA, 401(k), 403(b), SEP, and SIMPLE plans; distributions before age 59½ generally incur a 10 percent penalty plus income tax, with listed exceptions.

SECURE 2.0 set the required minimum distribution beginning age at 73, rising to 75 for individuals born in 1960 or later.

Roth IRA contributions are not deductible, qualified withdrawals are tax free, and the original owner is not subject to lifetime required minimum distributions.

Cost-sharing terms: deductible (paid before benefits), copay (flat fee per service), coinsurance (insured's percentage share), and out-of-pocket maximum (cap on cost sharing).

HMO: closed panel of network providers, a primary care gatekeeper, required referrals, and capitated physician payment, with no nonemergency out-of-network benefits.

PPO: negotiated network discounts, no referral requirement, and out-of-network coverage at a reduced benefit level.

POS plans blend HMO and PPO features (gatekeeper in network, out-of-network option); EPO plans cover network providers only but require no referrals.

ACA marketplaces require guaranteed issue, prohibit preexisting-condition exclusions, cover essential health benefits, provide preventive care at no cost, and allow dependent coverage to age 26.

Metal tiers reflect actuarial value: bronze about 60 percent, silver 70 percent, gold 80 percent, and platinum 90 percent of covered costs paid by the plan.

Medicare Part A covers hospital care, Part B covers medical services, Part C is Medicare Advantage, and Part D covers prescription drugs; Medigap supplements original Medicare.

Supplemental coverages include hospital indemnity, specified disease or critical illness, accident, dental, vision, and short-term medical plans.

Coordination of benefits makes the primary plan pay first and the secondary plan pay the remaining balance, with nonduplication provisions preventing overpayment.

Disability income replaces a portion of earned income, typically 50 to 70 percent; benefit period, elimination period, and the definition of disability drive cost.

Own-occupation is the broadest and most expensive definition of disability; any-occupation is stricter and less expensive.

Residual or partial disability pays a proportionate benefit when income loss is partial; a presumed disability provision waives the income test for specified losses.

Occupational coverage pays for both work-related and non-work-related disability; nonoccupational coverage excludes work-related disability.

Group eligibility typically requires active-at-work status, a waiting period, and an open enrollment window; contributory plans commonly require 75 percent participation.

Group underwriting evaluates the group as a whole - size, industry, age and gender mix, and prior claims experience - and generally waives individual evidence of insurability.

COBRA continuation runs 18 months for termination or reduced hours, 29 months when disability precedes the event, and 36 months for dependents after divorce, death, or Medicare eligibility.

ERISA governs most employer-sponsored health plans; HIPAA provides portability and privacy protections; FMLA provides unpaid, job-protected leave.

Group term life is commonly a multiple of salary, usually offers a conversion privilege at termination, and often includes accidental death and dismemberment coverage.

IRC Section 101(a): death proceeds paid to a beneficiary are generally free of federal income tax but are included in the insured's gross estate if the insured held incidents of ownership.

Cash value accumulates tax-deferred; policy loans are generally not taxable while the policy stays in force, but a lapse with an outstanding loan creates taxable income.

A modified endowment contract fails the seven-pay test, so distributions are taxed income-first and a 10 percent penalty applies before age 59½.

Dividends are treated as a return of premium and are tax free until cumulative dividends exceed the owner's cost basis.

Section 1035 allows a tax-free exchange of a life policy, annuity, or qualified long-term care contract for a like-kind contract.

Individual life and health premiums are not deductible; employer-paid premiums are deductible to the business and excluded from employee income.

Employer-provided group term life coverage above 50,000 dollars produces imputed income to the employee, computed with IRS Table I rates.

Disability benefits are taxable when the employer paid the premiums and tax free when the employee paid with after-tax dollars.

Annuity withdrawals are taxed income-first until gains are exhausted; annuitized payments use the exclusion ratio, and self-employed health insurance premiums may be deductible above the line.