UT Life & Health cheat sheet

Insurable interest must exist at the time the policy is issued (not at death); without it the life contract is void or voidable.

Face amount is set by human life value (discounted future earnings) or needs analysis (income replacement, debt, education, final expenses).

Net premium = mortality cost + expense loading; for permanent policies a reserve/cash value component is added. Older age, poor health, tobacco use and hazardous occupation raise cost.

Level premium concept: the insured overpays mortality cost in early years, and that excess builds the cash value/reserve that offsets rising mortality cost later.

Three distinct roles: the owner controls all contract rights, the insured is the life measured, the beneficiary receives the death benefit; any two or three may be the same person.

Death proceeds paid to a named beneficiary are generally received free of federal income tax; interest paid after the death is taxable to the recipient.

Modified endowment contract: a policy that fails the 7-pay test is taxed like an annuity, so loans and withdrawals are taxed LIFO plus a 10% penalty before age 59½.

Transfer-for-value rule: selling or assigning a policy to a non-exempt party makes the death benefit taxable as ordinary income to the buyer.

Business purposes: key person indemnification, buy-sell funding, split dollar, deferred compensation. Personal purposes: estate liquidity, mortgage protection, income replacement.

Term insurance provides pure death protection with no cash value and expires without benefit; forms are level, decreasing, increasing and annually renewable term (ART).

Convertible term may be exchanged for permanent coverage without new evidence of insurability; conversion may be priced at attained age or original age.

Whole life charges a level premium to the endowment age (typically 100 or 121), guarantees the death benefit and a cash value schedule; participating policies may pay non-guaranteed dividends.

Limited-pay whole life (20-pay, life paid-up at 65) compresses premiums into fewer years, producing higher premiums and faster cash value growth.

Universal life is flexible-premium with an adjustable face amount; credited interest is current vs. guaranteed minimum, and monthly cost of insurance is deducted. Option A = level death benefit; Option B = increasing death benefit.

Indexed universal life credits interest by an external index subject to a floor (often 0%), a cap, and a participation rate.

Variable life and variable universal life place cash value in a separate account with investment risk on the owner; sale requires a state insurance license plus FINRA registration and prospectus delivery.

Survivorship (second-to-die) coverage insures two lives and pays on the second death, used for estate tax liquidity and estate planning.

Modified/graded premium and juvenile policies start at a lower cost and step up to standard premium or face amount later.

Entire contract clause: the policy plus the attached application are the whole agreement, and only an authorized company officer can modify it.

Incontestability: after two years from issue the insurer cannot rescind for misrepresentation or concealment; nonpayment of premium remains contestable.

Grace period (commonly 30 or 31 days on life policies) keeps coverage in force for an unpaid premium; coverage continues if death occurs during the grace period, with the premium deducted.

Misstatement of age or sex adjusts the death benefit to the amount the premium paid would have purchased at the correct age/sex; it is not grounds for rescission.

Suicide clause (typically two years) limits the death benefit to a return of premiums paid; reinstatement restarts contestable and suicide periods.

Nonforfeiture options on lapse or surrender: cash surrender, reduced paid-up insurance, extended term insurance.

Dividend options: take cash, reduce premium, accumulate at interest, buy paid-up additions, or buy one-year term; dividends are a return of premium and are not guaranteed.

Settlement options: lump sum, interest only, fixed period, fixed amount, and life income (straight life, life with period certain, refund life).

Common riders: waiver of premium, guaranteed insurability, accidental death/dismemberment, return of premium, accelerated death benefit, long-term care, child/other-insured term.

Deferred annuities have an accumulation phase (interest crediting, surrender charges, a free-withdrawal percentage) followed by an annuitization/payout phase.

Immediate annuities begin payments within one payment period after a lump-sum purchase, with no meaningful accumulation phase.

Fixed annuities guarantee a minimum interest rate; indexed annuities credit an index subject to cap, floor and participation rate; variable annuities hold a separate account and require a securities license and prospectus.

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

Payout options: straight life (highest income, ends at death), life with period certain, installment refund, joint and survivor. Any guarantee reduces the periodic payment.

Roles: the annuitant is the measuring life, the owner controls the contract and can name a beneficiary, and the beneficiary receives any death benefit during accumulation.

Nonqualified annuity contributions are after-tax and growth is tax-deferred; withdrawals before 59½ are taxable plus a 10% penalty, with exceptions (death, disability, annuitization).

Qualified annuities (IRA/employer plan based) have no exclusion ratio because contributions were pre-tax; the entire payout is ordinary income.

Annuity suitability and replacement review focus on surrender charges, bonus recapture, liquidity needs and time horizon.

Beneficiary types: primary and contingent; revocable (owner may change freely) vs. irrevocable (change requires the beneficiary's written consent).

Per stirpes divides a deceased beneficiary's share among that beneficiary's own heirs; per capita divides equally among surviving named beneficiaries.

Common disaster/simultaneous death provisions and the Uniform Simultaneous Death Act decide who is deemed to have survived, preventing double administration.

Class designations (e.g., 'children of the insured') and minor beneficiaries generally require a guardian, trust, or custodial arrangement because insurers will not pay a minor directly.

Spendthrift clause protects proceeds from the beneficiary's creditors; facility-of-payment clauses let the insurer pay a relative up to a small limit when no valid beneficiary exists.

Underwriting sources: the application, MIB, attending physician statement, paramedical/medical exam, inspection or consumer report, prescription database; HIV testing requires written informed consent.

Application answers are representations, not warranties; a material misrepresentation permits rescission only during the contestable period, while fraud may be pursued beyond it.

Conditional receipt provides coverage from the application or exam date only if the proposed insured meets the insurer's underwriting requirements; agents cannot bind coverage.

Risk classifications: preferred, standard, substandard (table-rated), postpone, decline; the rating is applied as a debit to mortality cost.

Cost-sharing order: premium, then deductible, then coinsurance or copays, until the out-of-pocket maximum caps the insured's annual liability.

Coinsurance clause: after the deductible the insurer pays a fixed percentage (commonly 80%) of covered charges and the insured pays the balance up to a stop-loss amount.

Deductible structures: calendar-year individual, per-cause, family aggregate, and embedded family (a single member's expenses can satisfy the family deductible; commonly capped at three deductibles).

Health policy anatomy: declarations page, insuring clause, definitions, exclusions, conditions, and attached riders/endorsements.

NAIC mandatory uniform provisions include entire contract, time limit on certain defenses (2 years), grace period, reinstatement, notice of claim (20 days), claim forms (15 days), proof of loss (90 days), time of payment (30 days), payment of claims, physical exam/autopsy, legal actions (3 years), change of beneficiary.

Optional uniform provisions include change of occupation, misstatement of age, other insurance with this insurer, unpaid premium, and war exclusion.

A probationary/waiting period delays payment for specified conditions (e.g., maternity or dental) after the issue date.

Premium rating factors for health coverage: age, sex, health status where permitted, occupation, geographic area, family composition, and group size/participation.

Fully insured plans must follow state benefit mandates; self-funded ERISA plans are generally exempt from state mandates and follow federal rules.

HMO: prepaid care, assigned primary care physician acting as gatekeeper, in-network only except emergencies, generally no deductible and small copays.

PPO: network providers paid at a higher benefit level; out-of-network care is covered at a reduced reimbursement, usually with a separate deductible.

POS: hybrid plan using in-network HMO-style care with a PCP referral required to access out-of-network benefits.

HDHP with HSA: high deductible paired with a tax-advantaged HSA; contributions are pre-tax, roll over, and are portable; deductible and out-of-pocket limits are indexed annually.

Disability income: short-term (13–26 weeks) and long-term (to age 65); own-occupation vs. any-occupation definitions; benefit typically 60–70% of income and is taxable when the employer pays the premium.

Group insurance: master policy issued to the employer, certificate issued to each employee; noncontributory plans require 100% participation, contributory plans commonly 75%.

COBRA: continuation of group coverage for 18 months (36 months for disability or certain qualifying events) at the group rate plus a 2% administration fee.

ACA metal tiers by actuarial value: bronze 60%, silver 70%, gold 80%, platinum 90%; essential health benefits have no annual or lifetime dollar limits.

Other products: hospital indemnity, critical illness, accident, long-term care, Medicare supplement, dental/vision, and short-term medical.

Common exclusions: self-inflicted injury, war or act of war, illegal acts, work-related injury covered by workers' compensation, cosmetic surgery, and experimental/investigational treatment.

The ACA bars pre-existing condition exclusions, waiting periods over 90 days, and annual/lifetime limits on essential health benefits in individual and small-group plans.

HIPAA group rules: 6-month look-back period, exclusion period up to 12 months (18 for late enrollees), offset by creditable coverage.

Coordination of benefits sets the order of payment: the primary plan pays its allowable amount, the secondary pays the balance up to its limit; the birthday rule assigns children's claims.

Benefit limits may be internal (per day, per service, per visit), based on usual, reasonable and customary charges, or expressed as annual/lifetime maximums where permitted.

Riders and endorsements add or restore benefits: maternity, dental, vision, prescription drug, waiver of premium, long-term care, supplemental accident.

Utilization management gates payment: preauthorization, concurrent review, case management, second surgical opinions, and step therapy.

Rescission of individual coverage for misrepresentation requires a showing of intentional fraud and 30 days' advance written notice under ACA rules.

Medicare eligibility: age 65 with 40 quarters of Medicare-taxed work (premium-free Part A), or under 65 after 24 months of SSDI benefits, or ESRD/ALS.

Parts: A hospital (inpatient, skilled nursing after a hospital stay, hospice), B medical (physicians, outpatient, supplies, premium with income-related surcharge), C Medicare Advantage, D prescription drug.

Initial Enrollment Period is 7 months: the 3 months before the 65th-birthday month, that month, and the 3 months after; the Annual Enrollment Period runs October 15–December 7 with January 1 effective dates.

Medicare Supplement (Medigap) open enrollment is a 6-month window beginning the month a person is 65 and enrolled in Part B; policies are standardized by letter.

Medicaid is a joint federal–state, income- and asset-tested program (MAGI for most groups) and is the primary payer of long-term nursing home care; CHIP covers children.

FICA: 6.2% employee and 6.2% employer for OASDI up to the annual wage base; 1.45% each for Medicare with no wage cap; an additional 0.9% applies to high earners.

Social Security full retirement age is 66 to 67 by birth year; claiming at 62 permanently reduces the benefit, while delayed retirement credits add 8% per year to age 70.

Forty credits (about 10 years of covered work) are required for retirement benefits; spousal benefit up to 50% of the worker's PRA and survivor benefits are available.

The earnings test withholds benefits before full retirement age; workers' compensation and unemployment insurance are separate social insurance programs.

A producer must hold a Utah license for the specific line of authority and be appointed by the insurer before soliciting business or collecting premium.

Licenses must be renewed on time; producers complete continuing education each license term, including ethics hours, and must report criminal prosecutions or administrative actions taken by other jurisdictions.

Unfair trade practices include misrepresentation, twisting, rebating, false advertising, defamation, boycott/coercion, commingling of funds, sliding, and churning.

Rebating - offering anything of value not specified in the policy as an inducement to buy - is prohibited.

Premiums collected belong to the insurer or applicant, not the producer; they must be held in a fiduciary/trust capacity and kept separate from personal funds.

The insurance commissioner enforces the code through market conduct examinations, cease-and-desist orders, license suspension or revocation, fines, and restitution.

Insurance fraud is a criminal offense investigated by the department and prosecuted with the Attorney General; good-faith reporting of suspected fraud carries immunity.

The Utah Life and Health Insurance Guaranty Association pays covered claims if a member insurer becomes insolvent, subject to statutory limits such as $300,000 in death benefits and $100,000 in net cash surrender value.

Replacement of existing life or annuity coverage requires a signed replacement notice and comparison disclosure to the applicant and notification to the existing insurer.