Chapter 1 – Ethics	1
The Importance of Ethics	1
Fiduciary	2
Example	3
Insurance Includes Financial Goals & Financial Decisions	4
Informed Insurance Choices Based on Sound Financial Information	5
Part-Time Insurance Producers	6
Competency	7
Example	7
Education	9
Common feedback	9-11
Example	11
Writing the Policy	12
Example	12
Health Questions	13
Proper Terminology	14
Commingling Funds	15
Example	15
When the Prospect Stick with “No”	17
Why is it Important to be an Ethical Insurance Producer?	18
Equal Application of Ethical Behavior	19
Making Choices	19
Jobs Replaced by Technology	20
Ethics Beyond Philosophers	21
Unfair discrimination & Disparate impact	22
Discrimination Under State Insurance Laws	23
Being Ethically Responsible Benefits Consumers	24
Thinking of Others	25
Social Media & its Effect on Insurance	26
Public Perception	28
It is Easier to Pass Laws than Enforce Ethics	30
Mores	31
Is it Apple to Apples or Apples to Oranges?	33
Recommending Lapsing Policies Rather than Formally Replacing Them	34
Example	34
Example	35
Example	36
Can Ethics or Morality Actually be Regulated?	37
Liability, E&O Insurance & Financial Planning Insurance Activities	39
Conflict of Interest	40
Negligence	41
In Conclusion	43

Chapter 2 – Insurance Risk: Floods, Tornados, Earthquakes, Disability, Death, & Ill Health	45
Life’s a Gamble	45
Defining Risk	45
Comfort Level Regarding Uninsured Loss	46
Insurance Can Protect Against Living Too Long	47
Insurance Risks, Perils & Hazards	48
Insurable Exposures	49
Chance of Loss	49
Morale & Moral Hazards	49
Law of Large Numbers	50
Types of Risk	50
Pure & Speculative Risk	51
Investment Risk	52

Chapter 3 – Protection Through Insurance	53
Of course, We Sell of Peace of Mind	53
Statistics	53
Insure the Big Things	54
You Get What You Pay For	55
Big Deductibles Are Usually Good	56
Medical Insurance	56
Medicaid Beneficiaries	58
Change is Inevitable	58

Chapter 4 – Life Insurance	60
Creating an Estate with the Help of Life Insurance	60
Trading Premiums for Family Security & Future Protection	61
Two Basic Insurance Terms: Premium & Peril	62
Hoping Good Luck Wins, but Hedging the Best with Insurance	62
Nearly all Good Financial Plans Involve Life Insurance	63
What’s the Insurance For?	64
Beneficiary Payout Options	65
Estate Planning Should Incorporate Procedures, Not Necessarily Products	65
Providing for Others through Insurance & Appropriate Planning	66
Using Financial Discipline & Insurance to Achieve Security	66
Clarifying Client Goals Prior to Recommending Insurance Products	67
Basic Goals of Life Insurance	68
Life Insurance Can be Used for More than Just Death Benefits	69
Trust Beneficiaries	69
Types of Life Insurance	70
An Estate Planning Tool	71
Term Insurance: No Cash Values, Just Coverage	71
Whole Life Insurance: The Granddaddy	72
Endowment Insurance Policies: Forced Savings	72
Universal Life: Separating Expenses	73
Variable Life Insurance Policies have Few Guarantees	73
Survivorship Life Insures Two or More People	75
Single Premium Whole Life	75
Buy-Sell Agreements	76
Anti-Money Laundering	77
Anti-Money Laundering Program & Suspicious Activity Reporting Requirements for Insurance Companies	77
1. Why is the Financial Crimes Enforcement Network issuing a regulation requiring insurance companies to establish anti-money laundering program?	77
2. Does the final rule apply to all insurance companies	78
3. What are “covered products”?	78
4. Which insurance products are not “covered products” pursuant to the rule?	79
5. Does the final rule require insurance agents and brokers to establish anti-money laundering program?	79
6. What are the requirements for an anti-money laundering program?	80
A compliance officer who is responsible for ensuring that the program is implemented effectively.	81
Policies, procedures and internal control.	81
Ongoing training of appropriate persons concerning their responsibilities under the program.	81
Independent testing to monitor and maintain an adequate program.	82
7. Is an insurance company required to train all of its employees in-house? What about the training of brokers and agents?	82
8. What resources are available to help an insurance company to establish an adequate program?	82
9. When must we implement our Anti-Money Laundering Program?	83
10. Should insurance companies continue to file Form 8300 – Report of Cash Payments Over $10,000 Received in a trade or Business?	83
11. Are insurance companies required to file Suspicious Activity Reports as a part of their anti-money laundering programs?	83
12. What are examples of suspicious activities with regard to insurance products?	84
13. How should suspicious activity involving variable insurance products funded by separate accounts that meet the definition of a “mutual fund” be reported?	84
14. Are insurance brokers and agents required to file suspicious activity reports?	84
15. Are joint Suspicious Activity Report filings permissible?	85
16. If an insurance company files a Suspicious Activity Report voluntarily, will it be protected from civil liability?	86
17. May we disclose that a Suspicious Activity Report was filed? What if we receive a civil subpoena?	86
18. Certain financial institutions participate in information sharing pursuant to section 314(b) of the USA PATRIOT Act and Financial Crimes Enforcement Network regulations at 31 CFR 103.110. May insurance companies now participate in that information sharing?	87
Insurance Company Ratings Matter	87
Admitted Assets	88
Consolidated Assets	88
Investment Grade Issues	88
Owner’s Equity	88
Contingency Reserves	89
Unassigned or Permanent Surplus	89
Common Stock	89
Additional Paid-Up Capital	89
Mandatory Securities Valuation Reserve	89
Capital Ratio	89
Net Premium Income	90
Surplus Reinsurance	90
Due Diligence	91

Chapter 5 – Disability Insurance	93
The Unrecognized Danger: Disability	93
Avoiding Excess Insurance Coverage	94
Approaching the Disability Subject	94
Income Loss Affects the Pocketbook	95
Self-Employed Need to Protect Themselves	96
Major Life Activities Disruption from Disabilities	97
Longevity Affects Life Insurance Company Projections	98
Protecting Business Partners from Each Other’s Disability with Insurance	101
Qualifying for Business Disability Buyout Insurance	102
Selling Disability Policies Requires Specialized Knowledge	103
Disability is Often Under-Insured	103
Policy Waiting Periods	103
Durational Periods in Policies	104
“Disability” in Policy Definitions are Extremely Important	104
Group Disability Policies	105
Physical Examinations for Underwriting Policies in COVID19 Times	105
Renewability	106
Policy Underwriting	106

Chapter 6 – Long Term Care Insurance	107
Nursing Home Protection	107
Long-Term Care Policy Defined	108
Tax-Qualified Plans	110
Medical Necessity & Cognitive Impairment	111
Activities of Daily Living (ADL)	111
Non-qualified Plans – 7 ADLs	112
Tax-qualified Plans – 6 ADLs	112
Benefit Triggers	113
IRS Notice 97-31	114
State Law versus Federal Law	115
Covered Benefits for the Chronically Ill	116
Partnerships Long-Term Care Contracts	117
Making Benefit Choices	119
Several buying decisions	120
Daily Benefit Options	121
Expense-Incurred and Indemnity Methods of Payment	122
Determining Benefit Length	122
Asset Protection in Partnership Policies	123
Policy Structure	123
Home Care Options	124
Inflation Protection	124
Simple & Compound Interest	125
Elimination Periods in LTC Policies	125
Policy Type	126
Preexisting Periods in Policies	126
Prior Hospitalization Requirements for Medicare’s Skilled Care	127
Nonforfeiture Values	128
Waiver of Premium in Insurance Policies	128
Unintentional Lapse of Policy	129
Policy Renewal Features	129
LTC Policies Must be Affordable for Many Years	130
Minimum Partnership Requirements	130
Benefit Duplication	131
Partnership Publication	131
Adequate Policy Benefits	131
Look-Back Periods	133
Application	134
Market Needs	135
Part A (In-Patient Care)	135
Part B (Medicare Care)	136
Under Either Part A or Part B	137
Part D Prescription Drug Benefits	137
Medicaid is a Grant Program	137
Policy Pricing	138
Example	139
Notice to Buyer	139
Policy Schedule	140
Home Care & Community-Based Care	140
Bed Reservation	141
Waiver of Premium	141
Alternative Plan of Care	142
Policy Exclusions	142
Age Misstatements on the Application	143
Third-Party Notification of Premium Nonpayment	144
When Premiums Are Not Paid on Time	144

Chapter 7 - Annuity Best Interest Training Course	146
Changing Times	146
Investment Objectives	148
Annuities are One of the Oldest Known Investments	149
The Reinsurance Network	150
Common Annuity Objectives	150
Retirement Funding	150
Wealth Accumulation	150
Payout Options such as Lifetime Income	150
Delay of Taxation	151
Determining the Right Products	151
Annuity Product Differences	152
Annuities are used for Several Financial Objectives	152
Safety of Investment in Fixed Rate Annuities	152
Tax-Deferred Annuity Accumulation	153
Funding Retirement with an Annuity Income Stream	153
Structured Settlements	153
Probate Avoidance	154
Old Money; New Money	154
Annuity Participants	154
The Insurer	154
The Contract Owner	155
The Annuitant	155
The Beneficiary	156
Types of Annuities	156
Maturity Dates	157
Annuity Income Options: Take Income Now or Later	157
Immediate Annuities	157
Example	157
Deferred Annuities	158
Split Annuities	158
Premium Payment Methods	158
Single Premium Annuities	158
Flexible Premium Annuities	158
Annuity Type Based on Policyowner Risk	159
Variable Annuities	159
Fixed Annuities	160
Declared Rate Fixed Annuities	160
Fixed Equity Indexed Annuities (EIA)	161
Two-Tiered Annuities	161
A Closer Look at Fixed Rate Annuities	162
Annuitization	164
Why Annuitize?	165
A Closer Look at Fixed Equity Indexed Annuities	167
Accumulation & Distribution Phase	167
A Closer Look at Variable Annuities	169
Variable Annuity Annual Expenses	170
Funding Variable Annuities	171
Variable Annuity Death Benefit	171
Contract Provisions Affect Consumers	171
Annuity Surrender Values & Penalties	172
Guaranteed Rates of Return	174
Interest Crediting Methods	175
Important Consideration	176
Simple versus Compound Interest	176
Equity Index Annuity Crediting	177
Equity Participation Rates	178
EIA Averaging	179
EIA Caps	179
EIA Spreads, Margins & Administrative Fees	179
Withdrawing Annuity Funds	180
Annuity Benefit Payout Options	180
Example	181
Nonhuman Payees Under a Settlement Option	182
Lifetime Income Payout Option	182
Life Annuity, Period Certain Payout Option	183
Joint-and-Last-Survivor Payout Option	183
Required Distribution	184
Taxation	184
Exclusion Ratio	185
Qualified and Non-qualified Annuity Annuitization	185
NAIC Model Law Section 4. Exemptions	186
ERISA and Tax-Favored Retirement Plans	186
Using Annuities in Tax-Favored Retirement Plans	187
IRS Requirements for Annuity Funding	188
Taxation of Qualified Annuity Distributions	188
Financial Sound Insurers	189
The Insurance Company or Companies Utilized	190
Insurance Producers Can Only Sell Products Allowed	190
Full Client Disclosure on Insurers	191
Best Interest Standards	191
NAIC Model Law Section 6. Duties of Insurers and Producers	191
Determining the Best Interest of the Consumer	193
NAIC Model Law Section 5. Definitions	193
Asking the Right Questions to Develop a Consumer Profile	194
When a Recommendations is Not Possible Due to Lake of Information	195
NAIC Model Law Appendix B	196
Ramifications of Refusing to Provide Personal Information	196
Sales Practices	197
NAIC Model Law Section 6. Duties of Insurers and Producers (4)	197
NAIC Model Law Appendix C	198
Deceptive Sales Practices Forbidden	199
NAIC Model Law Section 6. Duties of Insurers and Producers (D)	199
NAIC Model Law Section 6. Duties of Insurers and Producers (3)	200
Recordkeeping	200
NAIC Model Law Section 9. Recordkeeping	200
NAIC Model Law Section 6. Duties of Insurers and Producers (2)	201
Identifying Best-Interest Issues	202
Emergency Situations Not Foreseen by the Consumer	203
It is Not a Liquidity Issue but Rather a Best Interest Issue	204
The Care Obligation	205
The Application	205
Placing the Consumer’s Needs Before the Producer’s Needs	205
Product Exchanges & Replacements	205
Product Replacement with Best Interest in Mind	206
Exchanges or Replacements Within the Preceding 60 Months	206
NAIC Model Law Section 6. Duties of Insurers and Producers (j)	206
Annuity Replacement in General	207
The Annuitant’s Death	208
Annuity Tax-Deferred Status & Other Taxation Issues	208
Tax-Deferral Exception	209
1035 Exchanges	210
Annuity Gifts	210
Other Tax Issues	210
Annuities Are (Sometimes) Protected Assets	210
Mortality Tables	211
Insurance Producer Compensation Disclosure Forms	212
NAIC Model Law Appendix A	213
Sometimes Recommendations are Not Possible	215
NAIC Model Law Section 6. Duties of Insurers and Producers (B)	216
Basic Insurer Information Requirements	216
NAIC Model Law Section 6. Duties of Insurers and Producers (C)	217
Definitions for Annuity Products under Model Law	219
NAIC Model Law Section 5. Definitions	219

Chapter 8 – Earthquake Insurance	222
Legal Definition of Earthquake	222
Naturally Occurring Earthquakes: Fault Types	224
Few Insurers Offer Earthquake Policies	228
Factors Affecting the Buying Decision	228
Earthquake Insurance	230
Damage Ratio (DR)	230
Who Should Purchase Earthquake Coverage?	232
Buying Policies is a Personal Choice	232
The First Reason People Should Buy Earthquake Insurance	232
The Second Reason People Should Buy Earthquake Insurance	232
The Third Reason People Should Buy Earthquake Insurance	232
Exclusions or Limitations in Earthquake Policies	233
Fire, Land, Vehicles, Pre-Existing Damage	233
External Water Damage	234
Masonry and Brick Veneer	234
Determining Insurance Amounts	234
Policy Deductibles	235
Example	236
Policy Cost	237
Coverage Nationally	239
Risk Perception	240

Chapter 9 – Auto Insurance	241
The Insurance Contract	241
Underwriting Auto Risk	242
Sustainable insurance	243
Auto Insurance	244
Six Policy Components	245
Rising Premium Rates	246
Insuring a New Vehicle	247
Classic Cars	248
Delivery Drivers	249
RV Insurance	249
Motorcycle Insurance	250
Mechanical Breakdown Insurance (MBI)	251
Foreign Travel	252
Pay-As-You-Go Policies	253
Safe Drivers Pay Less for Insurance	254
A New Issue: Legalized Marijuana	256
Distracted Driving	259
Oh Lord, Protect Us from Teen Drivers	262
Accidents are caused by	262
Affordable Coverage	264
Risks are stated in one of three ways	266
Same format	267
Four Types of Hazards	268
No-fault coverage	269
Policy Components: Three Standard Parts	270
Conditions in an Auto Policy	271
Family Automobile Policy	273
Auto Liability Insurance	274
Several ways to judge the amount of coverage needed	275
Property Damage Liability Insurance	276
Medical Auto Insurance	276
Personal Injury Protection (PIP)	277
Collision Insurance	277
Comprehensive Coverage	278
Auto Insurance for School-Sanctioned Events	279
Uninsured & Under-Insured Motorists Coverage	279
Driving Uninsured: No-Pay-No-Play Laws	280
Towing & Service or Rental Car Reimbursement	281
Wage Loss & Substitute Services Coverage	281
Determining Auto Insurance Rates	281
Several factors determine risk	281-282
When an Auto Accident Occurs	283
No-Fault Insurance	284
Policy Deductibles	285
Broad Form Auto Insurance: Insuring Just the Driver	286
Insuring Above All Other Liability Policies	287
Reviewing Issued Policies for Correctness	288
Policy Layout	288
Negligence Laws	288
Three Types of Negligence	289
Loss-Adjustment Provisions	290
Notice of Loss	290
Processing an Automobile Claim	290

Chapter 10 – Protecting Our Homes	294
Homes are Sometimes the Major Asset	294
Renter’s Insurance	294
Homeowner’s Insurance	295
Two Sections	295
Property Exposures	296
Liability Exposures	296
Updating Coverage	297
Market & Replacement Value	297
As a Recap	298
80 Percent Coverage Required	298
Fire & Allied Coverages	299
Three Forms of Homeowner’s Coverage	300
Section I of Form #1 (HO-1)	300
Section II of Form #1	302
Form #2 (HO-2)	302
Form #3 (HO-3)	302
Policy Conditions	303
Rates for Fire Insurance	304
Insurable Conditions	304
Form #4 (HO-4) Renter’s Insurance	305
Form #5 (HO-5)	305
Form #6 (HO-6)	306
Form #8 (HO-8)	306
Exceptions in the Homeowner’s Policy	307
Exceptions in Liability Coverage	308
Natural Disasters	308
Moratorium on Insurance	310
Volcanoes	311
Hurricanes & Tornadoes	311
Personal Property	312
Insuring What Needs Insured; Inventories	313

Chapter 11 – The Unusual	315
Just About Anything can be Insured	315
Unusual Types of Issued Policies	316
Civilian Space Tourism	316
Asteroid/Meteor Insurance	317
Body Parts Insurance	318
Chancel Liability Insurance	319
Immaculate Conception Insurance	319
Alien Abduction Insurance	319
Spook safe Insurance for Ghosts, Poltergeists & Abnormal Phenomena	319
Love (Romance) Insurance	319
Multiple Births Insurance	320
Sports Fan Insurance & Fantasy Football Insurance	320
Taco Insurance	321
Horse Reproductive Organ Insurance	321
Pet Insurance	321
Ransom Insurance	323
Sensory Insurance	324
Talent Insurance	324
Touring Caravan Insurance	325
Wedding Insurance	325
Replacement Insurance	328
Other Oddities	328
Unusual Insurance Claims	328
Motor Insurance Quotes from Claim Forms	329

United Insurance Educators, Inc.

Phone: (253) 846-1155

Email: mail@uiece.com