NY Life & Health cheat sheet

New York insurance producers must be licensed by the New York Department of Financial Services to solicit, negotiate, or sell life or health insurance.

A producer acts in a fiduciary capacity when handling premiums; commingling premium funds with personal or business funds is prohibited.

Twisting, rebating, and misrepresentation of policy terms are prohibited market-conduct practices.

Replacement of life insurance triggers disclosure duties; the producer must provide required replacement notices and compare the existing and proposed policies.

State insurance regulation rests on the McCarran-Ferguson Act; ERISA preempts state law for many employer-sponsored benefit plans.

The New York Department of Financial Services conducts market-conduct examinations and may impose fines, license suspension, or revocation for violations.

Producers must report administrative actions, criminal convictions, and changes affecting license status as required by New York law.

Advertising and sales materials must be truthful, not misleading, and must comply with New York illustration and disclosure rules.

Risk is uncertainty about loss; pure risk has only loss or no-loss outcomes, while speculative risk includes the chance of gain.

Insurable interest in life insurance must exist at policy issue; it need not continue until death for the death benefit to be paid.

Indemnity restores the insured to approximately the pre-loss financial position; life insurance is valued rather than strictly indemnity because life value is not measurable.

Insurance contracts are aleatory, contracts of adhesion, unilateral, and conditional.

Utmost good faith requires disclosure of material facts; concealment or material misrepresentation can allow rescission.

Adverse selection is the tendency of higher-risk people to seek insurance; underwriting and exclusions help control it.

A peril is the cause of loss; a hazard increases the chance or severity of loss, such as physical, moral, or morale hazard.

Loss frequency is how often losses occur; loss severity is the size of those losses.

Underwriting classifies risk using age, sex, health, occupation, hobbies, and family history; higher mortality risk generally means a higher premium.

Premium components include mortality cost, interest or earnings assumptions, and expense loading; mortality and expenses increase premiums, while interest assumptions reduce them.

The policyowner controls ownership rights such as beneficiary designation, loans, surrender, assignment, and dividend elections unless the policy is irrevocably assigned.

A primary beneficiary receives proceeds first; a contingent beneficiary receives proceeds if the primary beneficiary dies before the insured.

A revocable beneficiary can be changed by the owner without consent; an irrevocable beneficiary generally must consent to a change.

Per capita distribution divides proceeds equally among living named beneficiaries; per stirpes divides a deceased beneficiary's share among that person's descendants.

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

A juvenile policy may be owned by a parent or guardian, with ownership transferring at the age specified in the policy.

Term life provides coverage for a specified period and generally has no cash value; it may be renewable and/or convertible.

Whole life provides permanent coverage with guaranteed premiums, cash value, and a stated face amount; it may pay dividends if participating.

Universal life separates mortality and expense charges from cash value; premiums are flexible and cash value earns interest subject to policy charges.

Variable life cash value is held in separate accounts and fluctuates with investment performance; it requires a securities license in addition to a life license.

Group life uses a master policy issued to an employer or association; covered persons receive certificates and may have evidence-of-insurability limits.

Industrial life is small-face-amount permanent coverage with frequent premium collection; fraternal life is offered through a lodge or society.

Decreasing term has a face amount that declines over time, often used for mortgage protection; increasing term has a face amount that rises.

Return-of-premium term refunds premiums if the insured survives the term and generally costs more than level term.

The incontestability clause generally prevents the insurer from contesting a policy for misrepresentation after two years from issue, except for nonpayment.

A grace period allows premium payment after the due date; life policies commonly provide 30 or 31 days, and coverage remains in force during grace.

Reinstatement restores a lapsed policy on evidence of insurability and payment of overdue premiums and interest, often within three to five years.

A suicide clause limits payment to return of premium if death by suicide occurs within a specified period, commonly two years.

A free-look period lets the owner return a new policy for a refund; New York life policies generally provide a 10-day review right.

Policy loans accrue interest and reduce the death benefit or cash value if unpaid; loans are not taxable unless the policy lapses or is surrendered.

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

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

A waiver of premium rider keeps the policy in force without premium payment if the insured becomes totally disabled after the elimination period.

An annuity is a contract that pays an income stream; the accumulation phase builds value and the payout phase distributes it.

An immediate annuity begins payouts within one payment interval; a deferred annuity accumulates value before payout begins.

A fixed annuity guarantees principal and a minimum interest rate; a variable annuity value depends on separate-account investments.

An indexed annuity credits interest based on an index with caps, participation rates, and floors.

Annuitization converts account value into periodic payments; payout options include life, life with period certain, joint and survivor, and period certain.

The exclusion ratio determines the taxable portion of annuity payments by dividing investment in the contract by expected return.

Surrender charges may apply to early withdrawals; withdrawals before age 59½ generally incur a 10% federal tax penalty on taxable amounts.

A beneficiary receives remaining annuity value at death; a spousal beneficiary may have continuation options.

A death benefit paid to a named beneficiary is generally received free of federal income tax.

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

On surrender or lapse, gain above basis is taxed as ordinary income; basis generally equals premiums paid less withdrawals and dividends.

Modified endowment contract status removes favorable tax treatment; distributions are taxed last-in, first-out and may incur a 10% penalty before age 59½.

Personal life insurance premiums are not deductible; employer-provided group life coverage above $50,000 may create imputed income for the employee.

The death benefit may be included in the insured's gross estate if the insured held incidents of ownership at death.

Dividends on participating policies are generally not taxable until cumulative dividends exceed premiums paid.

Employer-paid group life premiums are deductible by the employer as a business expense, subject to limits.

Qualified plans receive tax deferral and employer deductions; they must meet ERISA and Internal Revenue Code eligibility, vesting, and funding rules.

A 401(k) allows employee salary deferrals; traditional contributions reduce current taxable income, while Roth 401(k) contributions are after-tax.

IRA contributions may be deductible depending on income and workplace plan coverage; Roth IRA contributions are after-tax with tax-free qualified withdrawals.

A SEP IRA is employer-funded; a SIMPLE IRA allows employee deferrals plus employer contributions for small employers.

Distributions before age 59½ generally incur a 10% penalty unless an exception applies; required minimum distributions apply after the applicable age.

Life insurance uses include income replacement, mortgage protection, estate liquidity, business buy-sell funding, and key-person protection.

A buy-sell agreement funded by life insurance provides for purchase of a deceased owner's interest from heirs or the estate.

Key-person insurance is owned by a business on a key employee to protect against financial loss caused by that person's death.

Executive bonus and split-dollar arrangements provide selective benefits; tax treatment depends on the arrangement's structure.

Health insurance provisions include deductibles, coinsurance, copayments, waiting periods, benefit periods, and elimination periods.

Disability income replaces part of earned income; benefit periods and definitions of disability determine payout duration.

Coordination of benefits prevents duplicate payment when a person has multiple health plans by applying primary and secondary rules.

Pre-existing condition exclusions are limited by law; New York individual and small-group health markets use guaranteed issue and community rating.

The New York Disability Benefits Law requires employers to provide statutory short-term disability coverage for eligible off-the-job disability.

New York Paid Family Leave provides wage replacement for bonding, family care, and military family events and is separate from disability benefits.

Health insurance policies must include mandated benefits and consumer protections required by New York law and the Affordable Care Act.

Subrogation lets an insurer recover costs from a third party responsible for an injury, generally limited to the insured's recovery.

Grace period and reinstatement rules affect continuity of health coverage; claims during grace are handled according to policy terms.