Kansas Insurance Life and Health Pre-Study Course Latest Update Graded A+

Kansas Insurance Life and Health Pre-Study Course Latest Update Graded A+ Producer An individual and/or an entity authorized in writing (through a company contract) by a lawfully qualified insurance company to transact, negotiate, or effect contracts of insurance on behalf of that insurance company. Resident Producer A person that resides in a state and is licensed to "transact insurance business" for at least one insurer in that same state. Non-Resident Producer A producer that is licensed in their home state (where they reside) & has written permission (a non-resident license) to sell in a state in which they do not live. The Commissioner of Insurance Primary purpose is to enforce insurance code, 4 year term, administers or regulates existing laws that have ALREADY been passed by the Legislature. Does not make or change laws, but does have the power to make reasonable rules or regulations to ensure existing laws are being followed. Commissioner's Fines $1,000 for each unintentional act, $2,000 for each intentional act Fines of a Cease and Desist order 6/mo period up to $1,000 per violation up to a max of $10,000 unintentional, $5,000 per violation up to $50,000 intentional Continuing Education In order to keep your license, you must complete your continuing education requirements. Your CE must be completed every two years (Biennium) by your birthday. 12 hours for life and health. Misrepresentation of Policies and Applications by Producers If a producer knowingly gives false information or untrue comparisons of any policy's benefits, advantages, or dividend schedule of either an existing policy or the one that the producer is trying to sell; this also includes any misinformation about any company's financial condition or its reserves. Twisting The practice of misleading clients towards one's own insurance coverage. Insurance Company Advertising Compliance The insurance company must submit a letter of compliance to the Kansas Insurance Department as condition for advertising in Kansas stating that the company agrees to comply with Kansas laws pertaining to insurance regulations. Advertisements should be submitted to your company for approval prior to being used. The information used in the advertisement is then kept on file at the insurance company for inspection by the Kansas Insurance Department for a period of at least 4 years. Rebating and Inducements It is considered unfair competition if the producer gives something of value (not specified in the policy) to a prospect to induce them to buy from you, like concert tickets or a portion of your commission. Defamation Making maliciously critical, slanderous, or derogatory statements in order to injure a person or company's reputation is illegal. A producer cannot make false statements about other companies or producers in order to convince someone to buy insurance. Boycott, Coercion, and Intimidation A producer or agency cannot FORCE a person to buy from the producer through coercion or intimidation. A common real life scenario might be this: an individual needs a loan for a home. It would be illegal for the bank to force the individual to buy insurance from the same bank to qualify for the loan. The bank can require insurance, but cannot FORCE you to buy from them. Disclosure of Information Relating to Adverse Underwriting Decisions If an underwriter determines that the applicant for insurance is uninsurable or must be charged a higher premium because of present risks and hazards, the underwriter must disclose information for reasons of denial or the need for extra premium within 21 days of request for coverage. Redlining Redlining is the practice of not selling insurance to those who live in the low-income, high-crime areas of town. It is considered to be a form of unfair discrimination. Insurance Consulting Once an individual is licensed as a producer, they would be able to earn commissions from sales and also charge a consultant fee for their professional advice. As an insurance consultant, there must be a written agreement between the producer and client disclosing all fees before the advice is given. Splitting Commissions A producer can split commissions with other producers that work in other offices for other companies so long as both are licensed in the same class of insurance. i.e. Life, Health, Property, Casualty, etc. Complaint Record It is required by the Kansas Insurance Department that all insurance companies must maintain a record of written complaints by category on a calendar year basis, showing disposition of complaints such as resolved, pending, or under investigation. Kansas Life and Health Guaranty Association Act limits Life Insurance $300,000 in death benefits; $100,000 in net surrender value. Annuities $250,000 in present value. Health insurance $100,000 in benefits. Insurance companies pay dues to be a member of Kansas Insurance Guaranty Association (KIGA) Required membership. KIGA is responsible if an insurance company goes bankrupt. CANNOT advertise this fact. Who should have an insurance license and who can qualify for a license. Anyone transacting Insurance Business, including quoting rates, discussing policy provisions and coverage's, or signing the producer's name on insurance applications is required to be licensed in insurance. You have to be at least 18, are of good business reputation, and worthy of a license. Under order of the Kansas Insurance Commissioner, the Kansas Insurance Department may issue which of the following: warrants, binder, orders, insurance contracts orders The Insurance Commissioner can inspect a company's reserves no more than: once every five years and anytime it is deemed necessary Underwriting The method used to reduce and in some cases avoid risk. Before an individual or group can transfer their risk to the insurance company, an underwriter must first determine if the individual or group requesting the insurance is insurable. Underwriter An individual who works for the insurance company and is in charge of determining if a given risk is insurable for the insurance company (insurer.) Risk is the chance of losing something of value, such as your life, health or property. Adverse Selection Insurer's must reduce their risk by eliminating as many "bad" risks as possible. Ex/tobacco using 95 year old male who likes to skydive Representations Statements made by the applicant on their application. These statements are about the past and present, not the future. They are believed to be true but not guaranteed to be true. Misrepresentations Do not usually void an insurance contract, unless it places the company in an extremely bad position or is material to the claim Warranty are the statements provided by the insurer in the contract or coverage. Represents the insured's promise that something is guaranteed to be true and that they will or will not do something in the future. Become part of a contract and can void a contract if breached. Concealment can void a contract. The failure to disclose a known fact. In order to void a contract it must be intentional and material to the contract. An example would be failure to admit a lifelong heart condition. Fraud another matter that will void a contract. the use of fraudulent statements or the act of fraudulent conduct in connection with a loss will void coverage. Four risk classifications in both life and health insurance underwriting: Preferred, standard, substandard, and declined Rate Up Age has to do with the lifestyle and physical condition of the applicant. (24 yr old female with lifestyle of 39 year old female) Flat extra rate up temporary increase that can be changed when the condition or situation no longer exists (individual who has a higher premium for smoking, but stops smoking for an extended period of time, rating can be removed) Tabular rate permanent increases for chronic long term health conditions such as diabetes graded death benefits decrease of dollar amount of coverage instead of increasing the premium (ex/individual w/cancer who would like to buy life insurance w/ a face amount of $10,000. Instead of a high premium, the rating would allow the insurer to gradually increase the death benefit as time progresses. like insurer might pay $1000 if the insured lived a year, $2,o00 if the insured lived two years, etc. restrictive riders a.k.a. elimination riders, used to eliminate coverage for health conditions, hazardous occupations or hobbies, ex/a life insurance policy will pay out except in the case where the death occurred while the insured was racing a car. These can be permanent or temporary depending on the policy. insurable interest responsibility of the producer to establish, the purchaser of insurance must be in a position to lose something of value should a loss occur. For example a spouse dying would be the loss of a provider, housekeeper, caregiver, etc. you are allowed to back date an applicant's age up to 6 months HIPPA consent Health Insurance Portability and Accountability Act, requires a consent form to be signed by the insured before a doctor can release medical information to the insurer STOLI'S and IOLI's Stranger Originated life Insurance while IOLI stands for Investor Originated Life Insurance, BOTH ARE ILLEGAL. They go against the rules of insurable interest. They involve the purchase of very large amounts of life insurance on seniors. Viatical Settlement Company business firms that are not insurance companies. (the viatee) purchases life polices from chronically or terminally ill individuals (the viator) at a discount from the face value. the arrangement is called viatication. chronically ill an individual is unable to perform at least two activities of daily living (ADL's) including eating, toileting, transferring, bathing, dressing, or continence. Terminally ill an individual has an illness or sickness that can be reasonably be expected to result in death in 24 months or less risk retention when a group of individuals or businesses that have similar exposure to loss pool their resources and self-insure against specific risks or losses self-insuring these individuals or entities will systematically set aside an amount of money into a reserve to pay claims rather than pay premiums to an insurance company to cover them for a loss Receipts serve two purposes 1) to provide evidence that a payment has been made 2) to provide coverage until the application is approved two types of receipts 1) conditional and 2) binding binding receipt coverage takes effect immediately from the date of application. the insurance company can cancel or reject the binder if the producer made a mistake, however coverage is in effect until the binder is canceled or the policy is issued. binding receipts are normally used with ___ only policies accident conditional receipt coverage does not take effect unless a condition is met two types of conditional receipts 1) insurability conditional receipt & 2) approval conditional receipt insurability conditional receipt the coverage is in effect at the time the receipt is given if the applicant/insured is insurable approval conditional receipt coverage is not provided until the application is approved when money isn't taken at the time of application it's called submit for approval with submit for approval situations a receipt is not issued and there is no coverage until the delivery of the policy premium mode a policy holder has options when it comes to how frequently they pay their premium ... annually, semi-annually, quarterly or monthly actuary a person responsible for determining the premiums to be charged for insurance four elements must be present for a contract to be considered a legal contract the agreement, the consideration, competent parties, and legal form the agreement the offer and acceptance the consideration the binding force of any contract in order for it to have legal status. an exchange of giving something of value competent parties in order for a contract to be legal the applicant cannot be a minor, intoxicated or insane legal form if the contract between 2 parties is for an illegal purpose than the contract is unenforceable by law aleatory the unequal exchange of value within a contract... ex/a $900 premium for $150,000 in coverage unilateral means that the policy is one sided where only one party makes an enforceable promise (the insurer promises to pay claims) contracts of adhesion insurance contracts are vague and contain ambiguities ex/"fun run" "speed contest" certificate of authority outlines what type of insurance company is allowed to market and sell within that state's borders domestic insurer is structured under the laws in which their home office resides foreign insurer ex/ home office in in Kansas but is doing business in Oklahoma stock companies owned by their stockholders and are publically traded on the stock exchanges. they can also be held by small groups of investors and sometimes even families. led by a board of directors that are elected by their stockholders. mutual companies owned by their policy holders, led by a board of directors, elected by policy owners Fraternal Benefit Society an insurer that is usually unincorporated, organized under a special section of the state insurance code and are characterized by a lodge or social system. they do not have capital stock and can only sell to their members