OH Life & Health cheat sheet

The Ohio Department of Insurance licenses producers, insurers, and adjusters and enforces state insurance law.

A resident Ohio producer license requires prelicensing education, a passing exam, an application, and appointment by an insurer before soliciting business.

Ohio producers generally complete 24 continuing education hours every two-year license term, including at least 3 hours of ethics.

An insurer must appoint a producer and report appointment or termination to the Ohio Department of Insurance; a producer may not act for an insurer without appointment.

Premium funds held by a producer are fiduciary funds; commingling premium with personal funds is prohibited and can lead to license revocation.

Unfair trade practices include misrepresentation, twisting, rebating, coercion, boycott, and false advertising; penalties can include fines and license suspension.

The Ohio Life and Health Insurance Guaranty Association pays covered claims within statutory limits when a member insurer becomes insolvent.

Replacement of life insurance requires disclosure and comparison to the existing policy so the applicant can make an informed decision.

Knowingly submitting a false insurance claim is insurance fraud and can result in criminal penalties and license action.

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

Pure risk involves only loss or no loss and is insurable; speculative risk involves possible gain and is generally not insurable.

Insurable interest must exist at policy inception for life insurance and at the time of loss for most property insurance.

Indemnity restores an insured to the pre-loss financial position; life insurance pays a stated face amount rather than indemnifying exact loss.

The law of large numbers lets insurers predict losses across large groups; adverse selection is the tendency of higher-risk people to seek coverage.

Insurance contracts are contracts of adhesion, aleatory, unilateral, and conditional and require utmost good faith from both parties.

Risk management techniques include avoidance, retention, reduction, and transfer; insurance is a transfer technique.

Reinsurance transfers risk from a primary insurer to a reinsurer; the primary insurer retains part of the risk.

Moral hazard involves dishonesty, morale hazard involves carelessness, and physical hazard is a tangible condition that increases risk.

Life insurance premiums are based mainly on mortality, interest earnings, and expense loading; net premium excludes expense loading.

Level premiums remain constant while mortality cost rises with age; reserves are liabilities set aside for future policy obligations.

Insurable interest is required when the life policy is applied for; a beneficiary does not need insurable interest in the insured.

Underwriting classes include preferred, standard, substandard, and declined; ratings consider medical history, occupation, hobbies, and finances.

Policyowner rights include naming beneficiaries, taking loans, surrendering, assigning the policy, and selecting settlement options.

A conditional receipt can provide coverage beginning on the application or medical exam date if the proposed insured meets insurability conditions.

A free-look period lets the policyowner return a newly delivered policy for a refund within the time stated in the policy.

Replacement occurs when a new life policy replaces existing coverage; the applicant must receive replacement disclosure and comparison information.

The Medical Information Bureau is an underwriting information exchange, not a credit bureau, and applicants have rights under the Fair Credit Reporting Act.

Term life insurance provides a death benefit for a specified period, usually has no cash value, and may be renewable or convertible.

Whole life insurance is permanent coverage with guaranteed premiums, guaranteed cash value, and a guaranteed death benefit.

Limited-pay whole life and single-premium whole life compress premium payments into a shorter period than the insured's lifetime.

Universal life has flexible premiums and an adjustable death benefit; cash value earns credited interest and is reduced by cost of insurance and charges.

Variable life and variable universal life invest cash value in separate subaccounts, require a securities license, and require a prospectus.

Indexed universal life credits interest linked to a market index with a cap, participation rate, and floor; it is not a direct stock investment.

Endowment policies pay the face amount at maturity if the insured survives; they are uncommon because of tax treatment.

Modified and graded premium whole life policies charge lower premiums early and higher premiums later.

Decreasing term is often used for mortgage protection; increasing term and return-of-premium term provide different death benefit patterns.

The entire contract clause makes the policy, attached application, and endorsements the complete agreement; the insurer cannot incorporate outside documents by reference.

The incontestability clause generally prevents the insurer from contesting the policy for material misrepresentation after two years from issue.

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

Reinstatement usually requires evidence of insurability plus overdue premiums and interest; a new contestable period can apply to reinstatement statements.

A misstatement of age or sex provision adjusts the death benefit or premium to what the correct age or sex would have purchased.

The suicide clause generally limits payment to return of premium if death by suicide occurs within the stated period, commonly two years.

Nonforfeiture options include cash surrender, reduced paid-up insurance, and extended term insurance if a whole life policy lapses after cash value develops.

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

Common riders include waiver of premium, disability income, accidental death benefit, guaranteed insurability, child term, long-term care, and accelerated death benefit.

An annuity is a contract that pays periodic income; the owner controls the contract, the annuitant's life measures payments, and the beneficiary receives death benefits.

The accumulation phase builds contract value; annuitization converts value into income.

An immediate annuity begins payments within one payment interval; a deferred annuity begins payments at a later date.

A fixed annuity guarantees principal and a declared interest rate; a variable annuity uses separate accounts and requires a securities license and prospectus.

An indexed annuity credits interest linked to an index subject to caps, participation rates, and floors.

The exclusion ratio divides investment in the contract by expected return to determine the tax-free portion of each annuity payment.

Payout options include life only, life with period certain, joint and survivor, fixed period, fixed amount, and refund life.

Surrender charges and market value adjustments can apply to early withdrawals; many contracts allow a limited free withdrawal.

A 1035 exchange can move an annuity to another annuity or a life policy to an annuity without current taxation.

Individual life insurance premiums generally are not tax deductible; employer-paid group life premiums may be deductible as a business expense.

Life insurance death benefits are generally free of federal income tax to the beneficiary, but interest paid on proceeds is taxable.

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

Non-MEC life withdrawals are taxed first as return of basis, then as gain; a policy lapse with outstanding loan can create taxable gain.

A modified endowment contract fails the seven-pay test; distributions are taxed income first and may incur a 10% penalty before age 59 1/2.

Annuity contributions are not deductible; annuity growth is tax-deferred, and withdrawals are generally taxed income first.

Annuity distributions before age 59 1/2 may incur a 10% federal penalty unless an exception such as death, disability, or annuitization applies.

Life insurance proceeds are included in the insured's estate if the insured held incidents of ownership at death; an irrevocable trust can remove them.

The transfer-for-value rule can make a purchased life policy's death benefit taxable, subject to exceptions such as certain transfers to the insured or a partner.

Health insurance pays medical expenses or replaces income; indemnity plans pay benefits, while managed care plans use networks and care coordination.

A deductible is the amount the insured pays before benefits begin; coinsurance is a percentage share; a copay is a fixed dollar amount.

The out-of-pocket maximum caps covered cost sharing in a plan year, after which the insurer generally pays 100% of covered benefits.

A preexisting condition exclusion limits coverage for conditions existing before coverage; HIPAA and ACA rules restrict such exclusions.

Coordination of benefits determines which plan pays first when a person has multiple health coverages and prevents duplicate payment.

HMOs generally require a primary care physician and referrals; PPOs allow out-of-network care at higher cost; POS plans combine features.

Utilization review includes preauthorization, concurrent review, and case management to control costs and approve appropriate care.

HIPAA protects health information privacy and portability; the ACA requires essential health benefits and restricts lifetime and annual limits.

Rescission is cancellation of a health policy for material misrepresentation, subject to applicable contestability and notice rules.

Disability income insurance replaces part of earned income, commonly 60% to 70%, and benefits are based on the insured's income.

Own-occupation disability pays when the insured cannot perform their own occupation; any-occupation pays when unable to perform any gainful occupation.

The elimination period is the waiting time before benefits begin; the benefit period is the maximum duration of benefits.

Longer elimination periods and shorter benefit periods reduce disability income premiums.

Residual or partial disability benefits pay a reduced amount when the insured returns to work but earns less because of disability.

Recurrent disability provisions treat a relapse within a stated period as continuation of the prior claim, often without a new elimination period.

Social Security and workers compensation benefits may offset disability income benefits; nonoccupational policies exclude work-related injuries.

Accidental death and dismemberment insurance pays for accidental death or specified losses; critical illness insurance pays a lump sum for a covered diagnosis.

Medical expense plans cover hospital, surgical, and physician costs; hospital indemnity plans pay a fixed daily or per-admission benefit.

A group health master policy is issued to an employer or association; participants receive certificates summarizing coverage.

Group underwriting considers group size, industry, participation level, prior claims, and experience rating.

A contributory group plan requires employees to pay part of the premium and usually requires a minimum percentage of eligible employees to participate.

A noncontributory group plan is paid entirely by the employer and generally requires 100% participation of eligible employees.

COBRA requires employers with 20 or more employees to offer continued group health coverage after qualifying events, generally for 18 or 36 months.

A conversion right lets a person leaving group coverage convert to an individual policy within a stated period, often without evidence of insurability.

HIPAA limits preexisting condition exclusions and protects portability; the ACA imposes community rating and essential health benefit rules.

Coordination of benefits and subrogation determine payment order and recovery when other coverage or third parties are involved.

Self-funded ERISA plans are employer-funded and often administered by a third-party administrator; state insurance mandates may not apply in the same way.

Medicare Part A is hospital insurance; Part B is medical insurance; Part C is Medicare Advantage; Part D is prescription drug coverage.

Medicare eligibility generally begins at age 65 with sufficient work history, or earlier for certain disabilities or end-stage renal disease.

The initial enrollment period for Medicare is generally seven months, beginning three months before the month of eligibility.

Part A is premium-free with 40 quarters of work; Part B has an income-related premium and late enrollment penalties can apply.

Medigap supplements Original Medicare cost sharing but cannot be used with Medicare Advantage; Medigap open enrollment generally lasts six months.

Medicare Advantage plans are private plans that provide Medicare Part A and B benefits, often through networks, and may include Part D.

Part D has deductibles, cost sharing, and catastrophic protection with an annual out-of-pocket cap.

Medicaid is a joint state-federal program for low-income people; dual-eligible beneficiaries qualify for both Medicare and Medicaid.

Other coverages include CHIP, TRICARE, VA benefits, workers compensation, and ACA marketplace plans with possible premium subsidies.