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1KEY REMINDERS - Schedule Exam with PSI AND FLASH APP
2
3INSURANCE CONCEPTS & PRINCIPLES
4
5RISK - 2 Types - Pure and Speculative , Uncertainty of a loss occuring.
6
7PURE - Risk that only involves possiblity of loss, no chance of gain. (ARE INSURABLE)
8
9SPECULATIVE - Involves a chance of loss, unlike Pure Risk, Carries a Chance of Gain. (Gambling and Investing / Not Insurable)
10
11PERIL - Cause of Loss (Fire, Theft, Storm)
12
13HAZARDS - ANything that increases the chance of a loss occuring (Physical, Moral, Morale) 
14
15PHYSICAL HAZARD - Physical condition surrounding a person or property that increases the chance of loss.
16(CAR WITH BAD BRAKES, BAD HEALTH, HOUSE WITH BAD ROOF)
17
18MORAL HAZARD - Increase in the chance of loss because of the insured dishonesty (Lying, Cheating, Arson)
19
20MORALE HAZARD - Increase in the chance of loss resulting from the insured worrying less or having an attitude of indifference about loss because of having insurance. (CARELESS WITH ITEM TO GET INSURANCE CLAIM)
21
22LAW OF LARGE NUMBERS - Used for statistical prediction of losses so accurate rates can be determined.
23(THE LARGER THE NUMBER OF INDIVIDUAL, BUT SIMILAR RISKS COMBINED INTO A GROUP, THE MORE CERTAINTY AS TO THE NUMBER OF LOSSES WITHIN THAT GROUP)
24
25LAW OF LARGE NUMBERS EXAMPLE - PREDICTS NUMBERS FOR A LARGE GROUP NOT INDIVIDUAL!
26
27LOSS EXPOSURE - Any situation that involves a risk of loss. (Property, Liability, Personal(HUMAN), Personnel Loss)
28
29PROPERTY LOSS EXPOSURE - Risk of loss to ones propert due to theft or destruction.
30
31LIABILITY LOSS EXPOSURE - risk of having to pay for injuries to another person or for damage to anothers property.
32(WHEN YOU PAY FOR DAMAGES TO OTHER PERSON OR PROPERTY)
33
34PERSONAL LOSS EXPOSURE - An individuals or familys risk of financial loss due to injury, sickness, death or unemployment 
35
36PERSONNEL LOSS EXPOSURE - Risk faced by a business due to the death, disability, retirement or resignation of a key employee.
37
38CHARACTERISTICS OF IDEALLY INSURABLE RISK(LARGE CHUMP)
39-Large Group (LARGE ENOUGH GROUP SO ENOUGH PREMIUMS CAN BE COLLECTED AND ACCURATELY DETERMINED)
40-Cannot be Catastrophic
41-Loss Must Create Economic Hardship
42Risk of losses insured must be uncertain, accidental, and due to chance.
43-Must be measurable and definite
44-Insured losses must be statistically Predictable.
45
46INSURABLE INTEREST - Having a legal and economic interest in the safety or preservation of the person or property.
47
48PRINCIPLE OF INDEMNITY - Basic Principle of insurance that says the goal of insurance is to restore one back to his previous condition that existed before the loss. (PLANE CRASHES INTO YOUR CAR, YOU LIVE, THEY RESTORE WHAT YOU HAD)
49
50UNDERWRITING: Analyze & Evaluate Risks, Accept or Reject Risks, Protect against Adverse Selection
51
52ADVERSE SELECTION - The tendency of people on the higher end of the risk scale to seek out insurance more aggressively
53
54PROFITABLE DISTRIBUTION OF EXPOSURES - Principle where insurers accept risks spread over a wide geo area in order to reduce exposure to catastrophic losses that could occur to risks located close to eachother.
55
56INSURANCE(CIC 22) - Insurance is a contract whereby an insurer idemnifies / protect an insured against loss, damage, or liability arising from a contingent or unknown event.
57
58INSURABLE EVENTS (CIC 250) - Any contingent or unknown event, wheter past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against. 
59
60--------------------------------------------------------------------------------------------
61CONTRACT LAW (SECTION I)
62
63CONTRACT LAW - The body of law that governs contract enforcement (DEAL WITH AGREEMENTS VOLUNTARILY , OWED TO SPECIFIC PERSON)
64
65TORT LAW - The body of law that governs breaches of duties that exist as a matter of law, not arising from a breach of contract. (NON CONTRACTUAL, MATTER OF LAW , OWED TO EVERYONE)
66
67CONTRACT - Agreement between two or more parties enforceable by law (CONTRACT LAW)
68"CONTRACT IS IN THE CLOC" - FOUR ELEMENTS OF A CONTRACT
69--Competent Parties - Legal Age, Mentally Competent, Not Intoxicated
70--LEGAL PURPOSE - Contract must be formed for a legal purpose. Can not go against public policy.
71--OFFER&ACCEPTANCE - One party must make an offer and the other party must accept that offer.
72--CONSIDERATION - Something that is done or promised in return for contractual promise. 
73
74
75INSURANCE POLICY - The written instrument in which a contract of insurance is set forth. (MUST BE WRITTEN)
76
77ALEATORY - Type of contract which involves an unequal exhange between the parties also based on unknown or contingent events. 
78
79ADHESION - One party writes contract and other party must accept it with very little input or as is.
80
81CONDITIONAL CONTRACT - Certain conditions must be met by one party before other party required to perform.
82
83UTMOST GOOD FAITH - Each party should be able to rely on the statements or representations made by the other.
84
85UNILATERAL - Only one party to contract has made enforceable promise. (INSURER , INSURED PAYS, INSURER HAS TO LIVE UP TO CONTRACT)
86
87PERSONAL - Contract that requires connection with individual on some level.(EX. MUST OWN HOUSE FOR HOMEOWNERS INSURANCE TO COVER LOSS)
88
89INDEMNITY - Restores one back to same condition that existed prior to loss. (NOT SUPPOSE TO BE LIKE WINNING THE LOTTERY, JUST PUTS YOU BACK IN SAME POSITION BEFORE YOU EXPERIENCED A LOSS.)
90
91POLICY REQUIREMENTS:
92P roperty and Person Insured
93Insurable Interest
94Perils (RISK INSURED)
95Policy Period
96Premium
97
98--------------------------------------------------------------------------------------------------------------------------------
99CONTRACT LAW (SECTION II)
100
101RECISSION - Legal remedy that voids an existing contract and restores both parties to their situation prior to entering into the contract.
102
103
104WHEN INSURER CAN RESCIND - An intentional and fraudulent omission by the insured to communicate information of matters proving or tending to prove falsity of a warranty, entitles the insurer to rescind.
105
106If a representation is false in a material point, whether affirmative or promissory, the insurer can rescind the contract from the time the representation becomes false.
107
108REPRESENTATIONS - Written or Oral response on an application for insurance upon which an underwriter relies to issue a policy. (STATEMENT YOU BELIEVE TO BE TRUE, TO BEST OF YOUR KNOWLEDGE)
109
110-A representation as to the future is a promise, unless it is merely a statement of a belief or an expectation.
111
112--REPRESENTATION CAN BE ALTERED OR WITHDRAWN BEFORE THE EXECUTION OF THE CONTRACT, BUT NOT AFTERWARDS. 
113
114
115MISREPRESENTATION - A false or untrue representation.
116
117--REPRESENTATION IS FALSE WHEN IT FALLS TO CORRESPOND WITH ITS ASSERTIONS OR STIPULATIONS
118
119CONCEALMENT - Neglect to communicate that which a party knows and ought to communicate.
120
121
122MISREPRESENTATION VS CONCEALMENT 
123Missrepresentation - Statement is made that is FALSE
124Concealment - Silence maintained when there is obligation to speak.
125
126MATERIALITY - If any of the following questions can be answered in the affirmative (YES) regarding information that is either misrepresented or concealed, then that information is MATERIAL.
127-- IS THE INFORMATION ENOUGH TO INFLUENCE A DECISION BY EITHER PARTY AS WHETER OR NOT TO ENTER INTO A CONTRACT?
128-- DOES THE INFORMATION AFFECT OR INFLUENCE INSURABILITY OR THE RISK INVOLED
129-- DOES THE INFORMATION CREATE ANY DISADVANTAGES TO EITHER PARTY IN ENTERING THE CONTRACT?
130
131--MATERIALITY OF CONCEALMENT IS THE RULE USED TO DETERMINE THE IMPORTANCE OF A REPRESENTATION (MISREPRESENTATION) 
132
133
134FRAUD - An intentionally false representation of concealment of a material fact with the intent and result that it be acted upon by another party.
135
136--INFO THAT DOES NOT NEED TO BE COMMUNICATED IN A CONTRACT ;
137 Known Information, 
138Information that should be known, 
139Information the other party waives, 
140Info that is not material to the risk.
141
142
143MATTERS OF OPINION - A party to a contract of insurance is NEVER bound to communicate information solely based on his own personal judgement for a matter in question. 
144(PERSONAL OPINIONS NEVER REQUIRED TO BE COMMUNICATED)
145
146
147WARRANTIES - Not a major part of ife and Health Insurance, Important in Marine Insurance.
148--Statement made on an application that is warranted as true in all respects. 
149--Must be literally true for contract to be binding.
150
151
152REPRESENTATIONS VS WARRANTIES
153REPRESENTATION - Statement you believe to be true to the best of you knowledge.
154WARRANTY - Must be literally true for contract to be binding.
155
156WARRANTIES - Violation of a material warranty, on the part of either party, entitles the other to rescind.
157
158EXPRESS WARRANTIES - A warranty is an express warranty when it is contrained in writing and made part of the policy.
159
160IMPLIED WARRANTIES - Do not pertain to life and health insurance, apply to marine insurance.
161
162IMPLED WARRANTIES - Type of warranty in marine insurance that exists even though it is not writing (EXPRESS).
163-Seaworthiness
164-Cargoworthiness
165-Portworthiness
166-Legality
167
168--REPRESENTATION  = IMPLIED WARRANTIES (FREEBIE)
169--REPRESENTATION = WRITTEN OR ORAL
170--REPRESENTATION = Implied Warranty
171--Implied Warranty = Written Or ORAL
172---------------------------------------------------------------------------------------------------------------------------------
173
174DISTRIBUTION SYSTEMS
175
176AGENCY, DIRECT RESPONSE, MGA , HOME SERVICE
177
178AGENCY - Most popular distribution system , insurance company appoints agents to sell its products. 
179--Principal Appoints Agents
180--Principal Deemed to Have knolwedge of Principle
181--EACH PARTY DEEMED TO HAVE KNOWLEDGE OF OTHER PARTY.
182
183EXCLUSIVE VS INDEPENDENT
184EXCLUSIVE - Agrees to be appointed by one company, can only sell that companys products.
185(STATEFARM, ALLSTATE)
186
187INDEPENDENT - Can be appointed to sell multiple companies products (OWN AND CONTROLL ACCOUNTS) (CAN TAKE ALL CLIENTS AND MOVE TO OTHER INSURANCE COMPANIES) (OWN BUSINESS)
188
189DIRECT RESPONSE - Marketing System where sales are made without face-to-face meeting between prospect and salesperson(KIOSKS,MEDIA ADVERTISE, MAIL, INTERNET, PHONE)
190(GIECO - DIRECT RESPONSE)
191
192MANAGIN GENERAL AGENT (MGA) (GA) - Insurance company authorizes to handle part or all of insurers business in a given territory. (BUSINESS PERSON, FIRM, PARTNERSHIP)
193-MARKETING
194-NEGOTIATING REINSURANCE
195-PREMIUM COLLECTIONS
196-CLAIMS
197-UNDERWRITING
198-APPOINTING & SUPERVISING AGENTS
199
200MGA - ACts as an agent and produces and underwrites gross direct written premium equal to or more than 5% of the policyholder surplus as reported in the insurers last annual statement.
201
202MGA - Adjusts or pays claims in excess of an amount determined by Commisioner
203
204MGA- Negotiates and binds ceding reinsurance on behalf of the insurer
205
206HOME SERVICE - Distribution system in which an agent collects premiums and provides service at policy owners home within an assigned territory.
207
208
209DISTRIBUTION SYSTEMS - AGENCY, DIRECT RESPONSE, MGA, HOMESERVICE
210
211NON - INSURANCE SPONSORS - Companies that are not insurers (BANKS, CREDIT CARD COMPANIES) that routinely sell insurance to their customers.
212
213
214-------------------------------------------------------------------------------------------------------
215
216PRODUCERS (SECTION I)
217
218TYPES OF PRODUCERS - LIFE ONLY AGENT, ACCIDENT AND HEALTH AGENY , PROPERTY BROKER AGENT, CASUALTY BROKER AGENT, PERSONAL LINES AGENT, SOLICITOR, Life and DISABILITY ANALYST
219
22020 CLASSES of INSURANCE;
221Life (ANNUITIES)
222Fire
223Marine
224Title
225Surety
226Disabilty (MEDICAL OR HEALTH, DISIABILITy INCOME, LONG TERM CARE, MEDICARE SUPPLEMENT)
227Plate Glass
228Liability
229Workers Comp
230Common Carrier Liability
231Boiler Machinery
232Burglary
233Credit
234Sprinkler
235Team and Vehicle
236Mortgage
237Aircraft
238Mortgage Guarantu
239Insolvency
240Legal Insurance
241Miscellaneous
242
243
244LIFE ONLY AGENT - Can transact only the class of life, life insurance and annuities.
245
246ACCIDENT AND HEALTH AGENT - Can transact anything that falls into class of disability; medical/health, disability income, long term care, medicare supplements.
247
248LFIE AGENT ;
249-HOLD JUST A LIFE ONLY LICENSE
250-HOLD ACCIDENT AND HEALTH LICENSE
251-HOLD BOTH LIFE AND ACCIDENT AND HEALTH LICENSE
252
253PROPERTY BROKER AGENT / CASUALTY BROKER - Authorized to transact insurance coverage on the direct or consequential loss or damage to property of every kind.
254
255CASUALTY BROKER - AUTHOERIZED to transact insurance coverage against legal liability, including that for death, injury, disability, or damage to real or personal property.
256
257SOMEONE WHO HOLDS PROPERY AND CASUALTY LICENSE = FIRE & CASUALTY BROKER AGENT
258
259Life-Only Agent - 1 Class of Insurance (LIFE) (LIFE INSURANCE AND ANNUITIES_
260Accident and Health Agent - DISABILITY INSIRANCE
261PROPERTY AND BROKER - LOSS TO PROPERY
262CASUALTY AGENT - INSURANCE WITH CASUALTIES.
263
264
265BROKER AGENT - INSURANCE BROKER - Works on behalf on client , represents client to insurers , paid broker fee by client, does NOT act on behalf on insurer.
266
267
268INSURANCE AGENT - Appointed by insurers, represents insurers, paid commission by insurer.
269
270
271Fire and Casualty Broker Agent 
272-Insurance Agent - has Propert and/or Casualty Broker Agent License
273- Insurance Broker - has property and/or casualty Broker - Agent License 
274-Life Agent - has only Life- ONly Agent and/or A&H Agent License
275
2763 TYPES OF AUTHORITY;
277-EXPRESS(ACTUAL) - Type of authority given to an agent by a principal, usually in writing but not always. (CONTRALS SPELLS OUT AGENT CAN SELL SPECIFIC TYPE OF INSURANCE LIKE CAR INSURANCE)
278-IMPLED - Type of authority that is NOT expressed, but is customary and necessary so agent can exercise express authority.
279-APPARENT - Occurs when an agent exceeds his express authority in an action but the customer has justifiable belief that the agent is authorized to do the act in question.
280
281
282CONCURRENT LICENSE - A license that includes two or more licenses.
283
284
285TRANSACT - Inorder to transact insurance, one must have a valid license.
286TRANSACT;
287Solicitation (BUSINESS TACTICS TO GET MORE CUSTOMERS)
288NEGOTIATIONS PRELIMINARY TO EXECUTION OF A CONTRAC
289Discussing Benefits/terms/conditions
290Execution of A CONTRACT  (SIGNING THE CONTRACT)
291Transaction of matters subsequent to execution of the contract and arising out of it. (SERVICING)
292DOING ANYTHING ABOVE REQUIRES A INSURANCE LICENSE!
293
294TRANSACTING W/O License - Transacting insurance without a valid license is a misdemeanor and can result in a fine of 50,000$ and/or up to 1 year in jail!
295
296INSURANCE SOLICITOR - Person Appointed by P&C Broker, Agent to aid in transacting insurance (EXCEPT LIFE, DISABILITY OR HEALTH)
297-SOLICITOR HOLDS P&C LICENSE
298-APPOINTING P&C BROKER - AGENT MUST HAVE PERMANENT LICENSE.
299
300LIFE SOLICITOR / A&H SOLICITOR - NO SUCH THING AS A LIFE SOLICITOR , OR ACCIDENT AND HEALTH SOLICITOR.
301
302PERSONAL LINES AGENT - F&C BROKER AGENT SUBTRACTING DISABILITY AND COMMERCIAL = PERSONAL LINES AGENT (CANNOT SELL LIFE INSURANCE) (JUST LIKE AN F&C CANT SELL LIFE INSURANCE)
303
304LIFE AND DISABILITY ANALYST - License that's available, not that popular, only around 40 of them in the entire state of california. Its a person who provides advice on life or disability policies for a fee.
305-Good Business and General Reputation
306-Licensed 5 Years as Life ONLY AND A&H
307-Fit and Proper (ETHICALLY)
308-Pass a qualification exam
309-Must be 18 years
310
311LIFE ANALYST FEES 
312-Written Agreement - Insurer might perform services for free - services performed and associated fees - commissions earned on sales
313-Must retain copy for 3 years!
314
315
316LIFE AGENT VS LIFE ANALYST
317LIFE AGENT - Life - Only Agent And/Or Accident and Health Agent License , Earns Commission for selling
318LIFE ANALYST - Life and Disability License, Earns Fees for Advising Clients, Must hold Life only and A&H Licenses
319
320--------------------------------------------------------------------------------------------------------------
321
322PRODUCERS (SECTION II)
323
324NOTICE OF APPOINTMENTS - Form completed by insurer and submitted to DOI that grants permission for a license to act as an agent of and sell a particular line of insurance on behalf of that insurer. (EFFECTIVE ON DATE SIGNED BY INSURER.)
325
326INSURACE AGENT - AGENTS ARE APPOINTED, BROKER ARE NOT
327- P&C BROKER AGENT DEEMED to be acting as insurance agent (VS insurance broker) For insurers by whom a Notice of Appt. Has been filed.
328
329LIFE ONLY AGENT - SHALL NOT ACT AS AGENT OF LIFE INSURER UNLESS NOA HAS BEEN FILED , EXCEPTION : CAN SUBMIT LIFE APP WITH INSURER WITH WHICH NO APPOINTED. IF INSURER ACCEPT APP, IT SHALL APPOINT AGENT WITHIN 14 DAYS!
330
331DISABILITY INSURANCE - INCLUSED HEALTH, DI INCOME, LTC, MED SUPP
332-A&H AGent Must BE Appointed prior to selling disabilty products of insurer.
333
334IMPLED DECLARATIONS - When an insurer or employing broker or agent files a Notice of Appointment on Behalf of an individual, who at the same time is applying for an insurance license, they are in essence declaring the following about the applicant : GOOD REP, WORTHY OF LICENSE
335
336APPOINTMENT TERMINATION - License Cancelled or Expired, License Inactive, Agent Quits, Termination of Appointment Filed.
337
338
339INACTIVE LICENSE - APPOINTENTS= 0 = INACTIVE LICENSE
340-Renewal App
341-Renewal Fees Paid
342-Continuing Education
343
344DENIAL OF LICENSE (WITH HEARING) - Reasons an application for insurance license could be denied with right to hearing! 
345-Unqualifies to perform duties
346-Lacks Intergrity / Good Business Reputation
347-Lied on License Application or ABout Insurance Policy
348-Exposed public to loss due to incompetence.
349-Violated or Allowed employee to violate CIC
350-Acted as agent before having insurance license
351-Submitted fraudulent education certificate.
352-Convicted (NOT CHARGE) OF ANY FELONY
353-CONVICTED (NOT CHARGED) OF A MISDEMEANOR INVOLVING INSURANCE LAW!
354
355
356WITH OUT RIGHT TO HEARING
357-Convicted (NOT CHARGED) OF ANY FELONY
358-Convicted (NOT CHARGED ) OF MISDEMEANOR INVOLVING INSURANCE LAW
359- License App Denied withing las 5 years
360- License revoked or suspended within last 5 years
361
362APPLICANT OR LICENSEE MUST NOTIFY THE COMMISSIONER IN WRITING WITHIN 30 DAYS of LEARNING of a CHANGE in BACKGROUND INFORMATION. 
363-Any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or beach of fiduciary duty.
364-Misdemeanor or felony conviction
365-Filing of felony criminal charges
366-Admin action regarding professional or occupational license
367-Bankruptcy discharging an obligation regarding insurance premiums or fiduciary funds owed to any company
368
369NOLO CONTENDERE (NO CONTEST) - A conviction following a plea of NOLO CONTENDERE is deemed to be a conviction.
370GUILTY , INNOCENT , OR NOLO COTENDERE (NO CONTEST)
371
372RESTRICTED LICENSE - special license in which holder has no property right in it and it may be suspended or revoked without a hearing or cause.
373
374Errors&Omissions INSURANCE - type of liability insurance designed to cover finacial losses for which a professional responsible because of errors, negligence or omissions.
375(INSURANCE AGENTS AND BROKERS, REAL ESTATE AGENTS, ACCOUNTANTS, CPA, NOTARIES, ARCHITECTS!)
376
377Errors and Ommisions - Covers Errors, Negligence, and Omissions.
378-Carry Deductable
379-Typical Deductable 500-1000$+
380-1 million $ in coverage
381-EXCLUDED - Criminal Acts and Unfair Trade Practices 
382-E&O Polices are not Standardized = EQUAL
383
384
385NO FREE INSURANCE! - Free insurance not allowed, cannot be offered as incentive to purchase some other item 
386
387NAME FILING REQUIREMENTS
388LICENSEE MUST FILE WITH THE DOI :
389-True Name
390-Fictitious Names (DBAs)
391
392REASONS FOR NAME DISAPPROVAL ; Too similar to name being used, name states licensee is an underwriter, imples activities not allowed by license or misleads public., 2 names maximum!
393
394NAMES THAT CANNOT BE DISAPPROVED BY THE DOI ! -
395-Bona Fide Natural Name ( BORN FIRST AND LAST)
396-LIFE AGENTS - CLU - Chartered Life Underwriter 
397- F&C Broker Agents - CPCU - Chartered Property and Casuality Underwriter
398
399Use of Name - An agent with a contract to provide service for a licensed corporation may use the name of the corporation in stationery or advertisements in one of the following ways;
400-Smith and Associates (PLACING BUSINESS THROUGH) XYZ INS CORP 
401-Smith and Associates (USING SERVICES OF) XYZ INS CORP 
402-Smith and Associates (A STOCKHOLDER OF) XYZ INS CORP
403-Smith and Associates(REPRESENTING) XYZ INS CORP
404
405CHANGE OF ADDRESS - Any change in email address on file with the DOI must be reported as well! THIS MUST BE REPORTED IMMEDIATELY!
406
407RECORDS
408-Upon Receipt of written demand
409-Original or Certified Copies (DELIVERED TO DOI in 30 DAYS MAX)
410-Records shall be made available for inspection or examination by the commissioner at ALL TIMES!
411-MAINTAINED FOR A MINIMUM PERIOD OF 5 YEARS! 5 YEARS!
412
413
414Life and Disability Records
415-Original Application
416-Premium Received
417-All Policies Sold in the last 5 years
418-Commissions paid for each policy
419-Copies of all correspondence between policy owner & insurer/agent
420-Copies of written comparisons of benefits
421-Copies of Outline of Coverage
422
423
424---------------------------------------------------------------------------------------------------------------------------------
425
426PRODUCERS (SECTION III)
427
428LICENSE RENEWAL - Comes up every 2 years
429RENEWAL DATE - Renewal Notice emailed or mailed by DOI 60 Days
430-If new license no rec'd by renewal date, agent can transact using old license for up to 60 days as long as the following have been submittied ;
431-RENEWAL APP
432-LICENSE RENEWAL FEE
433-CE HOURS
434
435LICENSE CANCELLATION - License issues to a natural person terminated upon death
436-Licensee may cancel her/his license at anytime
437-Agent sends license to DOI to Cancel
438-If license is in employeers posession agent writes notice to DOI to cancel
439
440ORGANIZATIONAL LICENSE TERMINATION
441- An organization ceases to exist as an entity eligible to hold a license upon :
442--Dissolution of a Corporation
443--Dissolution of a Co-Partership
444--Termination of an Association
445EXECPTION : May continue to transact under license if conditions met and application is filed and fees paid within 30 days
446
447CHANGE IN CO PARTERSHIP
448The same license may be used after a membership change in co-partnership if following requirements are met:
449-Notice filed within 30 days and signed by General Partner
450-Someone who excercised agency powers must remain in new co-partnership
451-NOT NECESSARY TO RETURN OLD LICENSE WITH SIG OF ORIGINAL MEMBERS TO THE COMMISSIONER.
452
453LICENSE NUMBER ON DOCUMENTS
454-Print Advertisements
455-Business Cards
456-Price Quotations
457(MUST BE SAME SIZE AS TELEPHONE NUMBER, ADDRESS OR FAX NUMBER)!
458
459
460FIDUCIARY - A person in a special position of trust and confidence, especially when:
461-Handling Clients Money , Advising Financial Matters
462-A Fudiciary who diverts or appropriates (TAKES) fiduciary funds for his own use is guilty of THEFT!
463
464
465FIDUCIARY DUTIES - Agents must maintain fiduciary funds on california business in a trustee bank account in CALIFORNIA!
466ACCOUNTS YOU SHOULD HAVE - PERSONAL BANK, BUSINESS BANK, TRUSTEE BANK FOR PREMIUMS
467-Main reason for seperate trustee account, funds cannot be commingled with other funds
468--Exception - Commission funds may be commingled with trust account funds in order to advance premiums at a later time.
469
470
471
472LIFE AGENT CE REQUIREMENTS - 24 HRS / License Term 2 Years EDUCATION
473
474LIFE ONLY AGENT AND OR A&H AND HOLDS PROPERTY BROKER AGENT AND OR CASUALTY BROKER AGENT - 24HRS / License Term 2 YEARS Courses for ANY of the licenses can be used!
475
476
477 LONG TERM CARE INSURANCE REQUIREMENTS - 1 -4 years junior agent , LTC 8 HRS/ YR , CA PARTNERSHIP LONGTERM CARE 4 YEARS / Year , 5+ Years Senior Agent 8hrs / 2 years for CA Partnership Long Term As well, These hours are part of not in addition to total hours needed
478
479ANNUITIES AND ETHICS CE REQUIREMENTS - Required ONLY if agent sells 4hrs/ 2 year license term , 8 hr course must be completed prior to initially selling
480
481ETHICs - Required of ALL LICENSES - 4 hrs / 2 year license ter,
482-THESE HOURS ARE PART OF NOT IN ADDITION TO TOTAL HOURS NEEDED
483
484
485PREMIUM FINANCING - PolicyOwner borrows money to pay a premiyum on an insurance policy and pays interest on the borrowed funds 
486
487AGENT DISCLOSURES - Finance Charges (APR, if applicable) , Lender Information, Agents Compensations, Cost without finance charges (COST OF PREMIUM)
488-AGENT MUST MAINTAIN RECORDS OF ALL PREMIUM FINANCE TRANSACTIONS FOR 3 YEARS!
489
490
491APPLICATION ALTERATIONS
492-Applicants written consent required for agent/insurer to alter application.
493-Applicants initials on app constitute written consent
494-Alterations without written consent are a misdemeanor.
495-Insertions may be made by insurer for administrative purposes only in such a manner as to cleary indicate that such inserstions are not to be ascribed(ATTRIBUTED) to the applicant. (ANY ADDITION MARKKING NEED TO BE MADE CLEAR IF THE APPLICANT DIDNT MAKE THEM!)
496
497ETHICS - Place Customers Interest First, Know your job and continue to increase your level of competence, recommend products and services that meet customers needs, accurately and truthfully represent products and services, use simple language when possible
498-Conduct periodic coverage reviews with customers
499-Protect your confidential relationship with your client
500-staty informed on and obey insurance laws and regualtions
501-Provide exemplary service
502-Avoid unfair or inaccurate remarks about the competition
503
504CIC and CCR Identify many unethical and illegal practices but they are not a complete guide to ethical behavior.
505
506CIC - CA insurance code CCR = CA CODE OF REGULATIONS
507
508PROHIBITED CONDUCT - INTERSTATE COMMERCE - Federal law prohibits an individual convicted of dishonesty, breach of trust, or a violation of the Act, to continue working in insurance affecting interstate commerce unless written consent has been requested and received by the DOI.
509-10 - 15 years
510-50,000$ FINE
511
512INTERNET ADVERTISEMENTS 
513-MUST INCLUDE:
514-Name as it appears on the license and any fictious names approved by commisioner
515- State of Domicle and Principal Place of Business
516-License Number
517-AGENT RESPONSIBLE FOR INFO ON SITE
518
519
520----------------------------------------------------------------------------------------------------------------------------------
521
522INSURERS
523
524Who may be an insurer / Person - Any person capable of making a contract may be an insurer.
525-Person
526-Associations
527-Organizations
528-Partnerships
529-Business Trusts
530-LLCs
531-Corporations
532
533ADMITTED INSURER - Entitled to transact Insurance in CA by DOI
534NON ADMITTED INSURER - NOT Entitled to Transact insurance in CA
535
536ADMITTED INSUER - Can transact any class of insurance for which it is authorizaed by its articles of Incorporation and Admitted to Transact by the Commissioner.
537
538TRANSACTING W/O Certificate of AUTHORITY;
539- 100,000$ FINE and/or Up to 1 Year in JAIL
540
541NON ADMITTED INSURERS PROHIBITED ACTS
542-Acting as agent for non admitted insurer
543-Advertising a non-admitted insurer in anyway
544-Aiding a non-admitted insurer to transact insurance
545EXCEPTION : Surplus Lines Brokers ARE allowed to work with non-admitted insurers
546
547DOMESTIC - Incorporated in CA
548FOREGIN - Incorporated in Another State
549Alien - Incorporated Outside of the US
550-CERTIFICATE OF AUTHORITY REQUIRED FOR ALL 3 TYPES of INSURERS
551
552
553OPERATING DIVISIONS
554-Marketing / Sales
555-Underwriting
556-Claims - Responsible for handling claims
557-Actuarial
558
559ACTUARIAL - Develop rates based on detailed analysis of ;
560-Mortality and morbidity tables
561-Operating Expenses
562-Claims Estimates
563-Investment Earning Estimates
564
565
566REINSURANCE - a mechanism for spreading risk between two or more insurers in which one insurer agrees to pay for losses that exceed the other insurers established retention limit
567
568
569REINSURANCE BENEFITS;
570Protection from Catastrophic Losses
571Acceptance of LARGER RISKS
572Minimize Capacity Problems
573
574
575POST CLAIMS Underwriting - attempting to deny coverage on a disability policy after a claim has been received due to the insurers failure to complete medical underwriting before issuing the policy.
576
577
578STOCK INSURANCE COMPANY - Corporation which issues shares of stock to stockholders who are the owners of the company and entitled to share in the profits by way of stock dividends.
579
580
581CORPORATION - Business entity with an unlimited life and owned by stockholders. (DOESNT REALLY EVERY DIE OUT)
582
583MUTUAL INSURANCE COMPANY - Corporation which is owned by its policy holders who are entitled to share in any profits through reduced premiums and policy dividends.
584
585DEMUTUALIZATION(CONVERSION) - The legal process in which a mutual company becomes a stock company.
586
587RECIPROCAL EXCHANGE - An unincorporated association overseen by an attorney-in-fact in which each member (SUBSCRIBER) is an insured and insurer. (TRIPLE A AAA is a RECIPROCAL EXCHANGE)
588
589LLOYDS of LONDON - An association that acts as a market regulator and furnishes procedurual and physical facilities for its members.
590
591FRATERNAL INSURER - A type of mutual insurer with some type of social organization in existence based on religion, occupation, national or ethnic heritage, etc. that makes life and health insurance available to its members.
592EXAMPLES ;
593Teachers Life Insurance Society
594Catholic Famile Life Insurance
595Sons of Norway
596Mennonite Mutual Aid
597Independed Order of Foresters
598
599
600FINANCIAL REPORTING
601- Every Year Send Financial Reports
602- Provide Data on Liabilities, Income, Expendesures, Balance Sheet, New Business and Total Premiums. 
603
604
605INVESTMENT of ASSETS by INSURERS
606-General Investments
607-Real Estate Investments
608-Excess Funds Investments
609-Addition Investments
610-Rules Regarding investment of assets only pertain to insurers domiciled in CA and are meant to ensure that insurers invest in prudent and responsible manner so that policy holders are claimants are protected.
611
612---------------------------------------------------------------------------------------------------------------------------------
613
614MARKET REGULATION (SECTION I)
615
616CA INSURANCE CODE (CIC) - The primary body of laws that regulates the business of insurance in CALIFORNIA. 
617-Insurance Primarily Regulated at State Level
618-Insurance laws establish by the State Legislature
619
620CIC; State Legislature intruduces bill >> Legislature passes bill >> Govenor Approves BIll >> Bill Becomes Law
621
622POLICY PROVISION INTERPRETATION - KNow that the interpretation of policy provisions is NOT a primary objective of Insurance Regulation.
623-Judicial Branch - Renders Decisions on Meaning of Policy Provisions.
624
625INSURANCE COMMISSIONER - ELECTED by Citzens of CA - HEAD OF DEPT. of INS. (DOI) , Enforces LAW , Can Only server 2 terms max , 1 term = 4 years.
626
627Commissioner = DOI
628
629
630SHALL & MAY ;
631
632SHALL - Mandatory
633MAY - PERMISSIVE / OPTIONAL
634
635
636NOTICE BY MAIL - Any notice required to be given to any person by the CIC, may be given by mail if;
637-Notice Mailed to Person to be Notified
638-Postage Prepaid
639-Notice ADdressed to Residence or Principal Place of Business in CA
640
641
642CA CODE OF REGULATIONS (CCR) - Rules and regulations instituted by state agencies to administer law, including those adopted by the commissioner in order to administer the CIC.
643-CIC specifically authorized use of CCR
644
645NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) - association made up of all the state insurance commissioners
646-Protect public interest
647-Promote competitive markets
648-Promote Reliability of INsurers
649-Support and improve state regulation of insuramce
650--ALTHOUGH HIGHLY INFLUENTION NAIC HAS NO AUTHORITY OR JURISDICTION OVER THE STATES
651
652
653MARKET CONDUCT REGULATION - Refers to the laws that regulate insurer practices regarding; Sales, Underwriting, Rate-Making, and Claims Handling.
654
655UNFAIR TRADE PRACTICES - Laws and Regulations that define and regulate insurance define and regulate insurance trade practices that are considered to be unfair, deceptive or misleading.
656 PROHIBITS - Misrepresentation , Deceptive Information (PUBLICIZING UNTRUE OR DECEPTIVE INFO ABOUT A PERSON ENGAGED IN INSURANCE), boycotting (REFUSAL TO ENTER INTO A BUSINESS TRANSACTION WITH SOMEONE UNTIL HE COMPLIES WITH CERTAIN REQUIREMENTS, CONDITIONS, OR GRANTS SPECIFIC CONCESSIONS), Coercion (FORCING A PERSON TO ACT OR THINK IN A CERTAIN WAY AS THE RESULT OF ACTUAL OR THREATENED PHYSICAL OR MENTAL FORCE OR PERSUASION.
657
658
659UNFAIR TRADE PRACTICES;
660INTIMIDATION - Inflicting fear upon a person as the result of actual or threatened bodily injuriey or property damage.
661FALE FINANCIAL STATEMENT - Making a false statement of the financial condidtion of an insurer with the intent to deceive.
662UNFAIR DISCRIMINATION - Charging different rates to someone for a reason other than sex or life expectancy, not legal
663GUARANTEE ASSOCIATION
664
665FAIR DISCRIMINATION - Charging different rates based on sex and life expectancy (MEN PAYS MORE THAN A WOMEN, LEGAL PRACTICE, HAS TO BE SUPPORTED BY SCIENCE)
666
667
668California Life and Health Insurance Guarantee Association (CLHIGA)((FDIC)) - Statutory entity to which admitted insurers must belong created to prove protection for life, annuity and health policyholders of member insurers that become insolvent.
669
670LIFE POLICY - LESSER OF ; 80%; OR 300$k(Death Benefits); OR 100k$ (Cash Surrender Value)
671ANNUITIES - LESSER OF ; 80%; OR 250$k
672HEALTH - LESSER OF; ACTUAL COVERED CLAIMS OR 200$k
673BENEFITS paid on PER LIFE BASIS (NOT PER POLICY)
674
675WHATS COVERED BY CLHIGA?
676-Life Policies Indiviual and Group
677-Annuities Ind and Group
678-Health Ind and Group
679-Disability Income
680-Accident and Sickness
681-Long Term Care
682
683Whats NOT COVERED BY CLHIGA?
684-Self Funded Plans
685Stop-Loss Group Plans
686-Admin Services Only Contract
687-HMO's
688
689DONT ADVERTISE CLHIGA! - Insurers are NOT allowed to advertise membership in Guarantee Association!
690
691
692CLAIMANT - Any person who makes a claim in attempt to recover damages sustained. (CAN INCLUDE SOMEONE ACTING ON BEHALF OF J+INJURED PARTY, SUCH AS AN ATTORNEY, ADJUSTER, OR FAMILY MEMBER)
693
694FIRST PARTY CLAIMANT - Any Person Asserting a right under an insurance policy as a named Insured.
695
696THIRD PARTY CLAIMANT - Any Person asserting a claim against any persno or the interests insured under an insurance policy.
697
698
699NOTICE OF LEGAL ACTION - Notice of an action commenced against the insurer with respect to a claim, or notice of action aganist the insured received by the insurer. (INCLUDES ANY ARBITRATION PROCEEDING)
700
701PROOF OF CLAIM - Any evidence or documents that provides evidence of a claim and that reasonable supports the magnitude or the amount of the claimed loss.
702(INVOICE FOR AUTOMOBILE, JEWELERLY APPRAISAL, ABULANCE SERVICES)
703
704INSURERS CLAIM FILES, WHICH ARE ALWAYS SUBJECT TO EXAMINATION BY THE COMMISSIONER, MUST CONTAIN ALL DOCUMENTS, NOTES AND COPIES OF ALL CORRESPONDENCE SO THAT PERTINENT EVENTS AND THE DATES OF THE EVENTS CAN BE RECONSTRUCTED AND THE INSURERS ACTIONS PERTAINING TO THE CLAIM CAN BE DETERMINED.
705
7061. Maintain Data so That Insurer Can Provide;
707-Claim Number
708-Line of Coverage
709-Date of Loss
710-Date of Claim Payment
711-Date of Acceptance, Denial, Or Date Close W/O Payment
712
713*Data must be available for all open and closed files for current year and the 4 preceding years (5 yrs total)
714
7152. Record the Dates insurer receied, processed and transmitted or mailed every material and relevant document in the file.
716
7173. Maintain Hard Copy Files or Files that are Accessible, Legible and Capable of Duplication to Hard Copy For the Current Year and the Preceding 4 years (5 yrs total).
718
719
720Duties Upon Rceipt of Communications ;
721CLAIMANT 
722
723NO INSURER SHALL ATTEMPT TO SETTLE A CLAIM BY MAKING A SETTLEMENT OFFER THAT IS UNREASONABLY LOW.
724
7251 ) Misrepresenting to claimant pertinent fact or insurance policy provisions relating to any coverages at issue.
7262 ) Failing to acknowledge and act reasonably promptly upon communications with respect to claims
7273 ) Failing to affirm or deny coverage within a reasonable time after proof of loss requirements have been submitted by insured.
7284 ) Failing to implement reasonable standards for the prompt investigation and processing of claims.
7295 ) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
7306 ) Attempting to settle a claim for less than what a reasonable person who have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application
7317 )Compelling insured to pursue litigation to recover amounts due under a policy by offering substantially less than the amounts ultimately recovered.
7328 ) Attemtping to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of, the insured, his or her representative, agent or broker.
7339 ) Directly advising a claimant not to obtain the services of an attorney
73410 ) Failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of coverage under which payment has been made.
73511) Failing to provide promptly a reasonable explanation of the basis relied on the insurance policy, in relation to the facts or applicable law. for the denial of a claim or for the offer of a compromise settlement.
73612 ) Failing to settle claims prompltly, where liabilityhas become apparent, under one portion of the insuracne policy coverage in order to influence settlements under other portions of the insurance policy coverage.
73713 ) Misleading a claimant as to the applicable statue of limitations
73814 ) Delaying the payment or provision of hospital, medical, or surgical benefits for services provided with respect to acquired immune deficiency syndrome (AIDS) or AIDS - related complex for more than 60 days after the insurer has received a claim for those benefits, where the delay in claim payment is for the purpose of investigating wheter the condition preexisted the coverage. However, this 60 day period shall not include anytime during which the insurer is awaiting a response for relevant medical info from a health care provider.
739
740
741UPON receiving a notice of a claim, every insuerer shall immediately, but no more than 15 calender days after receipt of the claim, provide the insured with a legible reproduction of subdivision (h) and (i) of Section 790.03 of the CIC along with a written notice containing the following language in at least 10 point type font. 
742
743
744STANDARS FOR PROMPT , FAIR & EQUITABLE SETTLEMENTS ;
745Claimant proof of loss >> Insurer
746Insurer >> Needed to proccess claim, written an update in about 30 days or less CLAIM MUST BE PAID WITHIN 30 DAYS OF ACCEPTANCE
747
748PENALTIES 
749-Any violation of the Unfair Trade Practicies is a misdemeanor and subject to the following penalities;
7505000$ each act
75110000$ each act if willful
752License Revoked
753When the issance, amendment, renewing or servicing of a policy is inadvertant all of those acts shall be considered a single act for the purpose of determing the number of violations.
754
755
756CEASE and DESIST ORDER - Issued by the DOI Ordering to refrain from an activity the 1st time someone is found guilty of violating the Insurance Code.
757
758Violation of Ceast and Desist Order 5000$ NON WILLFUL and 55,000$ WILLFUL
759
760
761INSURANCE INFORMATION AND PRIVACY PROTECTION ACT - Establishes guidelines that insurers must follow regarding the collection, usage and disclosure of any information that is obtained about an insured for an insurance transaction.
762
763
764MARKETING / RESEARCH QUESTIONS
765
766What is your date of birth? (USEFUL FOR MARKETING/RESEARCH, NEEDED for UW)
767What is your race? (NOT NEEDED FOR UW, ONLY USE FOR MARKETING AND RESEARCH)
768
769PRETEXT INTERVIEW - Interview in which the party gathering information;
770-refuses to reveal identity
771-pretends to represent someone else
772-misrepresent true purpose of interview
773*INSURERS NOT ALLOWED TO USE!
774
775ADVERSE UNDERWRITING DECISION - Refers to any of the following actions taken by an insurer;
776-Declingin an application
777-Terminating Coverage
778-Increasing a premium based on info not provided by applicant
779
780ADVERSE UW DECISION RULES 
781-Adverse UW Decision CANNOT BE BASED ON;
782-Previous Adverse UW DECISION
783-cannot be based gathered from support organization (info must be verified by insurer)
784-cannot be based on inquiry regarding possible coverage for a claim.
785
786PENALTIES VIOLATING RULES - Shall be fined up to 10,000$ or up to prison for 1 year or both, if someone violates a cease and disit order may be subject to 10,000$ + fine or a fine of not more than 50,000$ if fines have occured in frequency, or suspension of the license.
787
788
789GRAMM-LEAH-BLILEY-ACT (GLBA) -
790Made it legal for Banks and Insurance companies to consolidate.
791
792
793GLBA Components;
794FINANCIAL PRIVCAY RULE - Requires consumer Privacy Notice explaining what consumer info is collected, where shared, how used, and how protected.
795Must disclose right to opt out if consumer chooses to not allow info to be shared.
796
797SAFEGUARDS RULE - Requires financial insititutions to develop written security plan that describes how consumers nonpublic personal info will be protected.
798
799PRETEXTING PROTECTION - Encourages financial institutions implement safeguards against pretecting (WHEN SOMEONE TRIES TO GAIN ACCESS TO A CONSUMERS PERSON INFO WITHOUT AUTHORITY EXAMPLE PHISHING)
800
801
802CA FINANCIAL INFO PRIVACY ACT
803GLBA - FEDERAL LEVEL
804CIPA - STATE FEDERAL LEVEL
805NOTE WORTHY DIFF - The selling or sharing of consumer info with outside company or 3rd party.
806GLBA can OPT OUT, CIPA OPT IN before they have info shared.
807
808
809CAL - GLBA -- refers to updated pricacy regulations made to the CIC in 2003 in order to incorporate regulations required by the GLBA
810CAL GLBA Affected insurance producers business in sever ways;
811New security requirements
812How client files are secured
813how firms market, collect, and share consumer info with 3rd parties
814Implementation of hybrid version of opt out and opt in system with enhanced privacy requirements
815
816--------------------------------------------------------------------------------------------------
817
818Market Regulation SECION II
819
820
821PROHIBITTED DISCRIMINATION PRACTICES -
822INSURERS CANNOT REFUSE AN APPLICATION OR TO ISSUE INSURANCE UNDER LESS FAVORABLE CONDITIONS BECAUSE OF;
823RELIGION
824RACE
825NATIONIAL ORIGIN
826ANCESTRY
827Sexual Orientation
828Genetic Characteristics
829Physical / Mental Impairments which do not increase risk.
830
831ARE ALLOWED TO ASK an applicants birthplace but cannot discriminate.
832
833INSOLVENCY - Inability of insurer to meet its financial obligations when due
834
835INSOLVENCY - ANY IMPAIRMENT OF MINIMUM PAID IN CAPITAL
836
837PAID IN CAPITAL - Amount by which assets exceed liabilities.
838
839An insurer cannot escape the condition of insolvency by being able to provide for all its liabilities and for reinsurance of all outstanding risks.
840
841An insurer must also be possessed of additional assets equivalent to such aggregate paid in capital required by this code after making provison for all such liabilities and reinsurance.
842
843
844CONVERVATION - the act of the commissioner taking over an insolvent insurers business and being vested with its assets books and records in an attempt to rehabilitate it.
845
846
847SEIZURE ORDER VILOATION PENALTY -REFUSAL to turn over books records or assets after commissioner issues seizure order during an insolvency proceeding will be guilty of a misdemeanor and subject to;
8481,000$ and or 1 year in jail
849
850LIQUIDATION - If commissioner determines that it is futile to proceed as conservator, he will liquidate and wind up the business of insurer.
851
852FRAUD 
853-Staged Auto Accidents
854-Health Care Fraud
855-False property loss claims
856-workers comp fraud
857-arson
858-fake life insurance claims
859
860The Coalition against insurance fraud estimates that in 2006 of about 80 billion dollars was lost in the us due to insurance fraud.
861
862
863EFFORT TO COMBAT FRAUD 
864DOI - INTERNAL FRAUD DIVISION
865INSURANCE COMPANY - FRAUD UNIT
866
867National Automobile Therft Bureau
868Insurance Claims Analysis Bureau
869Workers Comp Fraud Reporting
870Arson Info Reporting System
871
872FRAUDULENT CLAIM FORMS;
873INSURED GUILTY OF PERJURY FOR SIGNING FRAUD CLAIM FORM (LYING UNDER OATH)
874
875PUNISHMENT FOR FRAUD;
876-1,2,3,or 5 years in prison and or 150,000$ or 2x value of fraud.
877
878------------------------------------------------------------------------------------------------------------------------
879
880
881LIFE INSURANCE BASICS
882
883
884INSURER - INSURANCE COMPANY 
885INSURED - SUBJECT OF THE INSURANCE POLICY 
886PREMIUM - THE MONEY A POLICYOWNER PAYS TO AN INSURER FOR THE PROTECTION THAT IS PROVIDED BY AN INSURANCE POLICY.
887
888
889EVIDENCE oF INSURABILITY - any statement or proof of insureds physical condition and/or other factual information affecting his acceptance for insurance.
890-Application
891-Physical Exam / Insurers Expense - Blood , Urine, Saliva Samples (EVIDENCE)
892
893
894WHOS WHO IN LIFE INSURANCE
895APPLICANT - Applies for a policy on own life or on life of another.
896POLICYOWNER (POLICYHOLDER) - Excercises ownership rights. (USUALLY SAME PERSON AS APPLICANT, BUT NOT ALWAYS)
897INSURED  - Subject of policy , (DEATH TRIGGERS DEATH BENEFIT) (CONSENT AND EVIDENCE REQUIRED)
898BENEFICIARY - Receives death benefit (CONSENT NOT REQUIRED)
899
900
901APPLICATION
902LIFE INSURANCE APPLICATION
903-GENERAL INFORMATION (NAME, DOB, ADDRESS, MARTIAL STATUS, GENDER, INCOME, POLICY TYPE, ETC)
904HEATH INFO (RECENT MED VISITS, FAMILY HISTORY, RECENT DRUGS, HOBBIES)
905AGENTS REPORT (IF HE KNOWS THE PERSON INSURED, IF THE AGENT KNOWS ANYTHING DISCLOSED ON APPLICATION THAT CAN AFFECT THE INSUREDS ABILITY TO BE INSURED.
906
907PERSONAL vs BUSINESS USES
908PERSONAL USES - Income for family, mortgage, credit cards, car loans, final expenses, med bills, retirement supplement
909
910BUSINESS USES - Key Person Life, Buy - Sell Insurance
911KEY PERSON INSURANCE - Life insurance purchased by a business on the life of a key employee whose death would have adverse effects on the company.
912-Recruit and train replacement
913-Replace lost profits
914-Assure potential creditors
915
916BUY-SELL INSURANCE - life insurance purchased to fund a Buy-Sell agreement.
917KEY PERSON AND BUY SELL INSURANCE ARE USES OF INSURANCE NOT TYPES OF INSURANCE.
918
919SPLIT DOLLAR LIFE INSURANCE (BUSINESS USE) - arrangement in which employer and employee 'split' the premiums, cash values and death benefits for a life policy, usuall a permanent type of life policy. 
920-Used to retain key employees
921-Makes larger death benefit affordable can provide add in retirement income.
922
923MEASURE LIABILITY - the amount the insurer is obligated to pay upon the insureds death.
924-FACE AMOUNT  MINUS POLICY LOAD MINUS LOAN INTEREST EQUALS MEASURE OF LIABILITY 
925	EXAMPLE - 150,000$ - $4000 - $1000 = 145,000$ (MEASURE OF LIABILITY or NET DEATH BENEFIT)
926
927
928INSURABLE INTEREST IS REQUIRED AT THE TIME OF APPLICATION ONLY.
929--** IF INSURABLE INTEREST IS SEVERED AFTER POLICY ISSUED, IT WILL NOT AFFECT THE POLICY
930
931INSURABLE INTEREST -- WHO?
932POLICYOWNER - INSURED
933SELF - SELF (POLICY OF A POLICY THAT INSURES OWN LIFE)
934SPOUSE - SPOUSE (INSURES LIFE OF SPOUSE)
935SIGNIFICANT OTHERS ( INSURES BOYFRIEND OR GIRLFRIEND, UNDER CERTAIN CIRCUMSTANCES)
936PARENT - CHILD - (CAN DEFINATELY INSURE CHILD)
937EMPLOYER - EMPLOYEE (EMPLOYER INSURES EMPLOYEE)
938EMPLOYEE - EMPLOYER (CAN NOT INSURE AN EMPLOYER)
939LANDLORD - TENANT (CAN NOT INSURE AN INTEREST WITH TENANT)
940PARTER - PARTNER (ENSURES BUSINESS PARTNER TOO BUSINESS PARTNER, LOSS OF BIZ PART DEVISTATING FINANCIAL IMPACT)
941
942
943INSURABLE INTERST - HOW MUCH?
944IF 100k on husband wife may do up to around 1,500,000$ for a insurance claim on dead spouse.
945
946
947MEASURE OF LIABILITY				INSURABLE INTEREST
948750k				<		1.5m
9491.5m				=		1.5m
95010m				>  		1.5m
951	Measure of Liability can be LESS THAN OR EQUAL to Insurable interest, but not GREATER THAN
952
953FIRST STEP (PLANNING STEP_ = DEFINE FINANCIAL OBJECTIVES 
954	How much life insurance should I have?
955
956HUMAN LIFE VALUE APPROACH - Income, Projected Pay Raises, Household Services, Employment Benefits
957
958Versus 
959
960NEEDS APPROACH - Funderal Expenses, Legal Fees / Taxes, Business Buyout, Probate Fees, Medical Expenses, Emergency funds, Mortgage / Rent, Credit Cards / Loans,  Education Costs.
961
962MORTALITY - Death rate in a given population. 
963
964MORTALITY TABLE - Estimates number of deaths within a population based on age and sex.
965
966AGE			NUMBER LIVING		DEATHS IN YEAR
9670			100000				708
96810			98509				119
96920			96650				173
970-			-				-	
971100			0				0
972
973
974
975
976"LIFE INSURANCE CREATES AN IMMEDIATE ESTATE" MUTAL AND ANNUITIES AND 401ks cant create an immediate estate only life insurance,
977ESTATE - Everything you own ,  Passes to your heirs when you die.
978
979INTESTATE - When a person dies without having created a will to direct the disposition of his assets (estate), he said to have died in intestate.
980
981
982AVOIDANCE - Not perfrming an activity that could carry risk.
983REDUCTION - Methods that reduce the severity of loss or likelihood of loss from occuring.
984RETENTION - Assuming all or part of risk (SELF INSURE). Viable strat for small risks where the cost of insuring would be greater than the total losses sustained. 
985TRANSFER - Purchasing insurance policy so that financial impact of loss is transferred to insurance company.
986
987----------------------------------------------------------------------------------------------------------------------
988
989TERM LIFE AND WHOLE LIFE
990*LONGER THE TERM, HIGHER THE PREMIUM, SHORTER TERM, SHORTER PREMIUM*
991
992TYPES OF LIFE POLICIES
993
994TERM LIFE - Most Basic, Temporary (1 yr, 5yr, 10yr, 15yr, 20yr, 25yr, 30yr), May or may not be renewable! No Cash Value (GOOD FOR SOMEONE WHO NEEDS LARGE AMOUNT OF INSURANCE FOR A SHORT PERIOD OF TIME)
995
996FACE AMOUNT(DEATH BENEFIT) - amount of insurance provided by a life policy.
997
998RENEWABLE TERM- type of term life policy that gives the policyowner the option to renew the policy at the end of its term for another term without Evidence.
999
1000INCREASING TEM - Face amount increases systematically , level premiums, 
1001
1002DECREASING TERM - Decreasing Face Amount, Face Amount Decreases Systematically, Premium Decrease with Face Amount
1003
1004WHOLE LIFE - 'overcharges' in earlier years so premiums can remain level in later years.
1005-Face Amount Guaranteed
1006-Cash Value Guaranteed
1007-Premium Guaranteed
1008
1009POLICY LOAN - An advance of money available to the police owner from a policys cash value.
1010-Interest Accrues
1011-Interest rate specified in policy (FIXED or VARIABLE)
1012-No Fixed Time For Repayment
1013-Outstanding Loan and Accrued interest deducted from death benefit.	
1014
1015UNIVERSAL LIFE
1016
1017VARIABLE LIFE
1018
1019
1020TWO CATEGORIES;
1021
1022TERM			PERMANENT
1023			WHOLE LIFE
1024			PERMANENT LIFE
1025			ORDINARY LIFE
1026			UNIVERSAL LIFE 
1027
1028Convertible Term
1029
1030TERM CONVERSION PROVISION - Provision in most term policies that allow owner to convert a permanent plan of insurance without evidence of insurability.
1031
1032SPECIAL WHOLE LIFE (WL) POLICIES
1033MODIFIED WL 			GRADED PREMIUM WHOLE LIFE
1034PREMIUMS UP TO 50% LOWER	Premium Increases Annually for 5-10 Years
1035Premium increase  between yr 3-5	Premium Remains level after a series of increases.
1036
1037LIMITED PAY WHOLE LIFE
1038CONTINUOUS PREMIUM WHOLE LIFE POLICY - Premiums Payable Through Age 100
1039LIMITED WHOLE LIFE POLICIES - Premiums payable for specified number of years or until specified age.
1040
1041SINGLE PREMIUM LIFE - VERY LARGE ONE TIME PAYMENT FOR A POLICY
1042
1043PAID-UP = No More Premiums Due, POLICY PAID.
1044
104510 PAY LIFE - Paid up after 10 years of premiums paid.
104620 PAY LIFE  - PAID up after 20 years of premiums paid. 
1047
1048LIFE PAID UP @ 65 - Premiums Paid up Until AGE 65, AGE 65 Premiums Paid up No MORE PAYMENTS
1049
1050WL PREMIUM COMPARISON
105110 PAY LIFE HIGHEST PREMIUM
105220 PAY LIFE LOWER PREMIUMS
1053LIFE PAID UP AT 65 LOWEST PREMIUMS, SPREAD OUT OVER 40 YEARS+
1054
1055JOINT LIFE (FIRST TO DIE);
1056- Pays out @ 1st Death
1057- Can provide Income for Suriving Spouse
1058- Less Expensive than Seperate Policies on each insured.
1059
1060SURVIVORSHIP LIFE (SECOND to DIE or LAST to DIE)
1061-Pays out @ 2nd Death
1062-Ideal for Estate Taxes
1063-$1m+ Face Amount 
1064-Less Expensive Than Seperate Policies on Each Insured.
1065
1066ENDOWMENTS - work like continuous premium Whole Life policies, except that maturity age is some age less than 100.
1067-Kill Two Birds with One Stone.
1068-Death Benefit and Addition Funds to be Used for Retirement.
1069
1070
1071
1072ENDOWNMENTS 	@65	VS		WHOLE LIFE
1073500k					500k
1074
1075Cash Value must be 500k at age 65		Cash Value must be at 500k at age 100
1076
1077TERM LIFE ADVERTISEMENTS to 55+ Must;
1078-Distinguish Basic from Supplemental Insurance Benefits
1079-Disclose Limitation, Exceptions, or Reductions
1080-Disclose any condition affecting continued insurability
1081-Discloe any benefit changes resulting from age
1082-Disclose any premium changes resulting from age
1083*Conversion Options NOT Required to be disclosed
1084"POLICY BENEFITS AND LIMITATIONS SHOULD BE CAREFULLY EXAMINED PRIOR TO PURCHASE"
1085
1086-------------------------------------------------------------------------------------------------------------------------------------
1087
1088UNIVERSAL LIFE INSURANCE AND VARIABLE LIFE
1089UNIVERSAL(FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE) - 
1090
1091
1092UL DEATH BENEFIT FLEXIBILITY
1093YEAR	AGE	COST	1000s	TOTAL COST
10941	30	$0.10	100	$10
10952	31	$0.12	100	$12
10963 	32	$0.15	200	$30
10974	33	$0.19	200	$38	
1098
1099BUNDLED vs UNBUNDLED
1100
1101WHOLE LIFE - Bundled , Pays Fixed Premium, No Idea How Premium is Split Up.
1102UNIVERSALE LIFE - Unbundled, You Know where premium is split, flexible unlike bundled
1103
1104
1105FIXED PRODUCT - Product in which premiums are invested and backed by the insurers General Account.
1106
1107GENERAL ACCOUNT - Insurance Companies Overall Investment Account
1108-Investment account used for insurers fixed products
1109-Very Conservative
1110-Highly Regulated
1111
1112
1113VARIABLE LIFE
1114-Seperate Account 
1115-Hedge Inflation
1116-Risk Assumed by Policy Holder
1117-SEC / Securities and Exchange Commission
1118Agents who wish to sell variable insurance products must also be licensed by the SEC.
1119
1120
1121SEPERATE ACCOUNT - Contains various mutal fund like accounts called sub accounts used to provide investment choices for insurers variable products.
1122
1123XYZ SEPERATE ACCOUNT EX
1124Small/Mid Cap Equity	Large Cap Equity
1125Small Cap Equity Index	Large Cap Equity Index	
1126International Equity	Stock and Bond Balanced
1127International Equity Index	Bond
1128Fixed Account Interest Rate	Money Market
1129
1130VARIABLE UNIVERSAL LIFE POLICY - 
1131
1132EQUITY INDEX - essentially an imaginary portfolio of stocks (EQUITIES) that represents the general price movement of the stocks that make up the portfolio. 
1133
1134Types of ULs
1135FIXED - General Account
1136EQUITY INDEXED - S&P 500
1137VARIABLE - Seperate Account
1138
1139FIXED UL - Account value perfomance tied to a current rate of interest that is paid from insurers general account.
1140
1141EIUL - Account Performance tied to an equity index, such as the S&P 500
1142
1143VARIABLE UL - Account Performance tied to insurers seperate account; Agent must have SEC license in addition to life agent license to sell variable products.
1144
1145
1146-----------------------------------------------------------------------------------------------
1147LIFE POLICY RIDERS
1148
1149RIDERS (ENDORSEMENT) - Addition to life policy that provides some additional feature or coverage (requires additional premium)
1150-Waiver of Premium
1151-Accidental Death and Death
1152-Accidental Death Benefit
1153-Waiver of Monthly Deduction
1154-Disability Income
1155-Cost of Living
1156-Payor Coverage
1157-Acidental Disimemberment
1158-Long Term Car
1159-Guaranteed Insurability
1160
1161WAIVER OF PREMIUM - Wavies premium if insured disabled
1162-3-6 Months waiting period
1163-Availabe on Term and Whole Life
1164
1165WAIVER OF MONTHLY DEDUCTION - Available on Universal Life
1166-Waives monthly deductions if insured disabled
1167
1168TERM RIDERS;
1169-Term Rider on Principal Insured
1170-Term Rider on Additional Insured (EG. Spouse)
1171-Childrens Term Rider (CTR)
1172
1173
1174PAYOR COVERAGE - Available on Juvenile Policies (insured < 16)
1175-Payor writer waives premium if payor dies or becomes disabled
1176-Premiums waived until insured 21
1177
1178DISABILITY Income RIDER;
1179-Pays monthly benefit while insured is disabled
1180-Monthly benefit % of Face Amount
1181-3-6 Month Waiting period is typical before writer pays benefits
1182
1183
1184
1185ACCIDENTAL DEATH (AD);
1186-Pays additional death benefit when insured dies accidentally
1187-Death must occur within specified time after accident (eg. 60 or 90 days_
1188-Dangerous hobbies might be excluded (Skydiving)
1189
1190
1191Accidental Death and Dismemberment - Covers AD and Dismemberment
1192-Schedule lists amounts paid
1193-Benefits usually paid as lump sum
1194
1195PRINCIPAL SUM - 100% of coverage of AD&D coverage amount
1196
1197CAPITAL SUM - Less than 100% of coverage of AD&D coverage amount
1198EXAMPLE CHART ; https://gyazo.com/e88e324d4bab67bff072679a7861f5cc
1199
1200COST OF LIVING RIDER (COLA) - Automatically increases face amount with increases in consumer price index (CPI) without requiring Evidence of Integrity.