OR Life & Health cheat sheet

The Oregon Insurance Division is a division of the Department of Consumer and Business Services; its administrator is the Insurance Commissioner, appointed by the DCBS Director.

A producer must hold a resident license for the line sold (life, health) before soliciting, and the insurer must appoint the producer before business is submitted.

Oregon requires 24 continuing education credit hours every two years, including at least 3 hours of ethics.

Rebating - giving anything of value not specified in the policy to induce a sale - is prohibited and can result in license suspension or revocation.

Twisting (misrepresenting a policy to induce replacement) and misrepresentation of policy terms are unfair trade practices.

Premium funds collected by a producer are held in a fiduciary capacity; commingling with personal funds is prohibited.

Replacement of existing life insurance requires the producer to deliver a notice regarding replacement to the applicant and submit it to the replacing insurer.

The Commissioner may examine insurers and producers, issue cease-and-desist orders, impose fines, and revoke or suspend licenses.

Oregon requires a free look period of at least 10 days during which a newly delivered life policy may be returned for a full premium refund.

Insurance transfers risk from an individual to a pool of similar risks; the insurer assumes the financial consequences of covered losses.

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

Life insurance is a valued contract, not a contract of indemnity - the insurer pays the face amount rather than reimbursing a measured loss.

Insurance policies are contracts of adhesion; ambiguity is construed against the insurer that drafted the language.

An aleatory contract exchanges unequal dollar values that depend on an uncertain event.

Representations are believed true to the best of the applicant's knowledge; warranties are guaranteed true; material misrepresentation can void coverage.

Waiver is the voluntary surrender of a known right; estoppel prevents a party from denying a right after the other party relied on its conduct.

Under the entire contract clause, the policy plus the attached application constitute the whole agreement; outside documents are not incorporated.

Parol evidence rule: prior or oral agreements cannot alter a fully integrated written policy.

Net death benefit = face amount minus any outstanding policy loan and accrued interest.

Three premium factors: mortality (increases cost), interest (decreases cost), and expenses (increase cost).

Insurable interest must exist at policy inception, not at the time of death.

Human life value measures the present value of future earnings; the needs approach sums survivor income, debts, education costs, and final expenses.

Premium modes are annual, semiannual, quarterly, and monthly; total annual outlay rises as the payment interval shortens.

Policyowner rights include changing a revocable beneficiary, taking policy loans, surrendering, assigning, and selecting settlement options.

Per stirpes distributes a deceased beneficiary's share to that beneficiary's heirs; per capita divides the share equally among living beneficiaries.

A reserve is the amount an insurer must hold to meet future obligations; it grows over time in a permanent policy.

Term insurance provides pure death protection for a stated period and builds no cash value.

Renewable term guarantees continued coverage without new evidence of insurability; convertible term allows exchange to permanent coverage without evidence.

Whole life charges a level premium to the insured's death, builds guaranteed cash value, and endows at age 100 or 121.

Limited-pay whole life (20-pay, paid-up at 65) compresses premiums into fewer years but remains paid up for life.

Universal life has flexible premiums and an adjustable death benefit; monthly cost of insurance and expenses are deducted from cash value, which earns current interest.

UL Option A (level) keeps a level death benefit while cash value rises inside it; Option B (increasing) adds cash value to the death benefit.

Variable life and variable universal life hold cash value in separate-account subaccounts; the producer needs a securities registration and must deliver a prospectus.

Indexed universal life credits interest based on an external index subject to a floor, a cap, and a participation rate.

Survivorship (second-to-die) coverage pays on the death of the last insured and is used primarily for estate planning.

Incontestability: after two years in force, the insurer cannot contest the policy for misrepresentation, except for nonpayment of premium.

Suicide clause: death by suicide within two years of issue results in return of premiums rather than payment of the face amount.

Grace period is typically 30 or 31 days after a due date; coverage continues, and any unpaid premium is deducted from the death benefit.

Reinstatement requires evidence of insurability and payment of overdue premiums with interest, generally within three years of lapse.

Nonforfeiture options: cash surrender, reduced paid-up, and extended term.

Dividend options: cash, reduce premium, accumulate at interest, paid-up additions, and one-year term.

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

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

An automatic premium loan uses available cash value to pay an overdue premium, preventing unintentional lapse.

Annuities liquidate a sum of money over time; life insurance creates an estate, while an annuity distributes it.

Deferred annuities have accumulation and payout phases; immediate annuities begin payout within one payment period of purchase.

Fixed annuities guarantee a declared rate; variable annuities use separate-account subaccounts and shift investment risk to the owner; indexed annuities credit index-linked interest with a floor.

Exclusion ratio = investment in the contract ÷ expected return; that percentage of each payment is a tax-free return of basis.

Withdrawals before age 59½ from nonqualified annuities generally incur a 10% federal penalty plus ordinary income tax on gains.

Surrender charges follow a declining schedule, and many contracts permit a free withdrawal amount each year.

Qualified annuities funded with pre-tax dollars have no exclusion ratio; the entire payment is taxable.

A 1035 exchange moves an annuity or life policy to another contract without current taxation.

Guaranteed living benefits (such as GMIB or GMWB) provide minimum income or withdrawal guarantees for an additional fee.

Underwriting classifications are preferred, standard, substandard (table-rated), and declined.

Underwriting information sources include the application, medical or paramedical exams, attending physician statement, MIB, prescription history, and inspection reports.

Death proceeds paid to a named beneficiary are generally income-tax free; interest paid on delayed settlement is taxable.

Cash value grows tax-deferred; gain on surrender above cost basis is taxed as ordinary income.

A policy failing the 7-pay test is a modified endowment contract; loans and withdrawals are taxed income-first with a 10% penalty before age 59½.

Transfer-for-value: a policy sold for consideration loses the income-tax-free death benefit unless an exception applies (insured, partner, partnership, or a corporation in which the insured is a shareholder or officer).

Proceeds are included in the insured's gross estate if the insured held incidents of ownership at death.

Personal life premiums are not deductible; employer-paid group term coverage is deductible to the employer and excluded from employee income up to $50,000 of coverage.

Health insurance is a contract of indemnity: benefits reimburse actual expenses up to policy limits, unlike life insurance.

Cost-sharing elements: deductible, coinsurance (a percentage of covered expense), copayment (a flat fee), and out-of-pocket maximum.

The elimination (waiting) period is the time before benefits begin; a longer elimination period lowers the premium.

Renewability types from least to most favorable to the insured: cancellable, optionally renewable, conditionally renewable, guaranteed renewable, noncancellable.

Coordination of benefits uses primary and secondary rules to prevent duplicate payment; the plan covering the person as an employee is usually primary.

A pre-existing condition is an injury or illness for which medical advice or treatment was received before coverage began; lookback and exclusion periods are state-regulated.

The consideration clause states that the insured's consideration is the premium plus the statements in the application.

Individual health policies typically include a 10-day free look; group certificates generally have none.

Claim provisions set duties for notice of claim and proof of loss and limit the time to bring legal action, commonly two to three years.

Own-occupation definition pays if the insured cannot perform their own job; any-occupation pays only if unable to perform any job for which reasonably suited.

Benefit amounts are usually 60–70% of pre-tax income, with total benefits from all sources capped below 100% to preserve the incentive to work.

Residual (partial) disability pays a pro rata benefit when the insured returns to work at reduced income.

Occupational coverage includes work-related injury; nonoccupational coverage excludes it and coordinates with workers' compensation.

Business disability policies include business overhead expense, key employee disability, and disability buy-out.

An accident is a sudden, unforeseen, external event; a sickness must be diagnosed and treated.

AD&D: the principal sum pays for accidental death or double dismemberment; the capital sum (often 50% of principal) pays for loss of one limb or the sight of one eye.

Elimination periods commonly run 30, 60, 90, 180, or 365 days; longer periods reduce premium.

HMO: members must use network providers, a primary care physician acts as gatekeeper, and providers may be paid by capitation.

PPO: negotiated network rates with out-of-network benefits at higher cost-sharing and no gatekeeper requirement.

POS: a hybrid plan with a gatekeeper for in-network care and an option to go out of network at higher cost.

EPO: network-only coverage with no out-of-network benefits except emergencies.

Utilization management includes preauthorization, concurrent review, case management, and discharge planning.

The ACA requires guaranteed issue, no pre-existing condition exclusions, dependent coverage to age 26, essential health benefits, and a medical loss ratio of 80% or 85%.

ACA premium tax credits are available through the Marketplace based on household income and the cost of the benchmark silver plan.

The federal individual mandate penalty was reduced to $0, though some states impose their own coverage requirement.

Medicare Advantage (Part C) combines Part A and Part B benefits, often with Part D, and limits annual out-of-pocket costs.

The employer holds the master policy and each participant receives a certificate of insurance.

Group underwriting evaluates the characteristics of the group rather than individuals; actively-at-work rules substitute for individual evidence of insurability.

Contributory plans generally require at least 75% participation; noncontributory plans require 100% of eligible employees.

Eligibility often includes a waiting period and full-time status, commonly 30 or more hours per week.

COBRA applies to employers with 20 or more employees: 18 months for termination or reduced hours, 29 months for disability, 36 months for other qualifying events, at up to 102% of premium.

Group life conversion lets a terminating employee convert group term coverage to an individual policy without evidence of insurability, at a higher premium.

Group disability benefits are often integrated with Social Security and workers' compensation through offsets.

Self-funded plans are governed by ERISA and are generally exempt from state-mandated benefits; fully insured plans must meet state mandates.

Medicare Part A covers inpatient hospital, limited skilled nursing, hospice, and some home health, funded through payroll taxes.

Part B covers physician and outpatient services for a monthly premium; Part C is Medicare Advantage; Part D covers prescription drugs.

The initial enrollment period is the seven-month window around the 65th birthday; late Part B enrollment can trigger a permanent premium penalty.

Medigap policies are standardized by letter (A, B, D, G, K, L, M, N); Plans C and F are no longer sold to those newly eligible after January 1, 2020.

Medigap open enrollment lasts six months beginning the month the person is 65 and enrolled in Part B, with guaranteed issue regardless of health.

Medicare pays primary and Medigap secondary; a Medigap policy cannot be used with Medicare Advantage.

Long-term care policies pay when the insured cannot perform a specified number of activities of daily living or has a cognitive impairment.

Medicaid is income- and asset-tested, covers long-term nursing home care, and is the payer of last resort.

Benefits from a tax-qualified long-term care policy are tax-free up to an indexed per-diem limit.

Employer-paid health premiums are deductible to the employer and excluded from the employee's taxable income.

Disability benefits are taxable to the extent the employer paid the premiums; benefits are tax-free if the employee paid with after-tax dollars.

Self-employed individuals may deduct health insurance premiums for themselves and dependents above the line, limited to earned income.

Medical expenses are deductible only when itemized and when unreimbursed costs exceed 7.5% of adjusted gross income.

HSA contributions are deductible, growth is tax-free, and qualified distributions are tax-free; the account must be paired with a qualifying high-deductible health plan.

Long-term care premiums are deductible within age-based limits, and benefits up to the per-diem cap are received tax-free.

Critical illness and accidental death benefits are generally received income-tax free because the insured paid the premiums.

Employer-provided group term life coverage above $50,000 creates taxable imputed income using IRS Table I rates.

Workers' compensation is a no-fault, state-regulated system paying medical costs and partial wage replacement for work-related injury or illness.

Social Security disability requires a disability expected to last at least 12 months or result in death, with a five-month waiting period before benefits begin.

FMLA provides up to 12 weeks of unpaid, job-protected leave for eligible employees of employers with 50 or more workers.

Hospital indemnity, critical illness, cancer, and accident policies pay fixed benefit amounts regardless of actual expenses incurred.

Dental and vision plans typically use separate deductibles, annual maximums, and fee schedules.

Usual, customary, and reasonable (UCR) reimbursement limits payment to prevailing charges in a geographic area.

HIPAA privacy rules restrict the disclosure of protected health information without patient authorization.

Individual health coverage sold under ACA rules is guaranteed renewable and includes a free look period for the buyer.