Life’s Risks

Table of Contents

 

Chapter 1: Insuring from the Beginning

1

 

The Patient Protection & Affordable Care Act of 2010

1

 

Background

1

 

The Act’s Reforms

1

 

Not all Elements of the Affordable Care Act Implemented

2

 

Pregnancy and the ACA

2

 

Other Elements of the ACA

4

Chapter 2: Recognizing Life’s Risks

8

 

Critical Illness Insurance

8

 

The Early Years

11

 

529 College Savings Plans

14

 

Types of Plans: Savings Plans, Prepaid College

14

 

Benefits of 529 Savings Plans

15

 

Sport Insurance and Group Event Insurance

16

 

Sports Insurance Programs

16

 

Special Event Coverage

17

 

Travel Insurance; Trip Cancellation Coverage

20

 

Credit Card Insurance

23

 

Terrorism Insurance

25

 

Defining “Act of Terrorism”

25

 

TRIA

26

 

President Bush Signed the Act

27

 

The Role of Terrorism Insurance

27

 

Policy Restrictions

29

 

Business Interruption Insurance

29

 

Workers’ Compensation and Other Coverage

30

 

Coverage under Terrorism Insurance

30

 

     Domestic Terrorism/Hate Crimes

36

 

Common Insurance Coverage

39

 

Life Insurance

39

 

Health Insurance

40

 

Long-Term Disability Insurance

40

 

Automobile Insurance

41

Chapter 3: Life Insurance

42

 

Basic Concepts

42

 

Determining Size of Life Insurance Policies

43

 

Calculating Expenses

44

 

Debt Repayment

44

 

Coming to a Conclusion

45

 

Insurance Companies Measure Risk

46

 

What Type of Life Insurance is Appropriate?

47

 

What Will the Insurance Cost?

47

 

Term Insurance

48

 

Permanent Insurance

52

 

Universal Life Insurance Policies

55

 

Universal Life Evolution

56

 

How Do Universal Life Policies Compare to Traditional Plans?

57

 

The Life Insurance Contract

59

 

Defining the Contract

60

 

Policy Application

61

 

Policy Ownership

62

 

Preventing Money Laundering Activities

62

 

Policy Features & Provisions

62

 

Premiums

63

 

Policy Options

63

 

Dividend Options

63

 

Settlement Options

64

 

State Required Provisions

66

 

Incontestability

66

 

Misstatements in the Application

67

 

Deferment Clause

67

 

Nonforfeiture

67

 

Loan Values

68

 

Grace Periods and Reinstatement

68

 

Allowed Policy Provisions/Suicide/Aviation/War

69

 

General Provisions

70

 

Deduction of Indebtedness and Premium Refund

70

 

Change of Beneficiary

70

 

Assignment

71

 

Beneficiary Designations

71

 

Policy Payments

73

 

Cash Values

73

 

Dividends/Proceeds/Special Clauses

74

 

Contract Use

76

 

Group Insurance Principles

76

 

Eligible Groups / Single Employer Groups

76

 

Multiple Employer Trusts/Unions, Associations & Other Groups

77

 

Creditor-Debtor Groups

77

 

Underwriting Advantages

78

 

Keeping Current with Business Needs

79

 

Informed Consumers

80

 

Providing Quotes

80

 

Contract Participants: The Insurer and The Insured

82

 

The Insurance Contract

82

 

Underwriting and Rating

83

 

Finance

83

 

A Public Interest

84

 

Key Person Insurance

84

 

Buy-and-Sell Agreements

85

 

The Key Person Principle

86

 

Insurable Interest for Life Insurance

87

 

Health Insurance on Key Employees and Owners

88

 

The Small Company’s Exposure

90

 

Loss of the Small Business Owner

90

 

Insuring Entities

94

 

Private and Government Insurance

94

 

Private Insurers

94

 

Life Insurers

95

 

Property and Liability Insurers

95

 

Government Insurers: Voluntary and Compulsory

96

 

Mutual Companies

97

 

Assessment Mutuals

97

 

Non-Assessable Mutuals

99

 

Conversions

100

 

Reciprocal or Inter-Insurer Associations

100

 

Stock and Mutual Underwriting

102

 

Factory Mutuals

102

 

Superior Agents and Brokers

103

Chapter 4: Health Insurance

106

 

The Patient Protection and Affordable Care Act

106

 

Long-Term Care Policies (LTC)

114

 

Defining Policy Benefits

115

 

Care Levels

119

 

What Benefit Levels Should be Recommended?

120

Chapter 5: Disability Insurance

124

 

Defining Disability

124

 

Who Needs Disability Coverage?

125

 

Insuring 100% of Income

126

 

Determining Coverage Levels

126

 

Waiting Periods

128

 

Benefit Longevity

128

Chapter 6: Auto Insurance

130

 

The Automobile Insurance Policy

130

 

Underwriting Risk

131

 

Six Policy Components in Auto Insurance

131

 

Rising Premium Rates

132

 

Insuring a New Vehicle

133

 

Insuring Classic Cars

134

 

Delivery Drivers

136

 

RV Insurance

137

 

Motorcycle Insurance

137

 

Mechanical Breakdown Insurance (MBI)

138

 

Car Rentals During Foreign Travel

139

 

Pay-As-You-Go Policies

140

 

Safe Drivers Pay Less for Auto Insurance

140

 

A New Issue for Insurers: Legalized Marijuana

142

 

Distracted Driving

144

 

Teenage Drivers

147

 

Affordable Coverage

149

 

     Perils & Hazards

153

 

Reading the Auto Policy

155

 

Conditions in an Auto Policy

156

 

     Family Automobile Policy (FAP)

158

 

Auto Liability Insurance

159

 

Property Damage Liability Insurance

161

 

Medical Auto Insurance

161

 

No-Fault Insurance

162

 

Personal Injury Protection (PIP)

164

 

Collision

164

 

Comprehensive Coverage

165

 

Auto Insurance for School-Sanctioned Events

166

 

Uninsured and Under-Insured Motorists Coverage

166

 

Driving Uninsured: No-Pay, No-Play Laws

167

 

Towing and Service or Rental Car Reimbursement

168

 

Wage Loss and Substitute Services Coverage

168

 

Determining Auto Insurance Rates

168

 

When an Auto Accident Occurs

170

 

Broad Form Auto Insurance

170

 

Insuring Above All Other Liability Policies

172

 

Single-Limit Policies/Split-Limit Policies

172

 

Umbrella Policies

173

 

Judging Liability Insurance Amounts

173

 

Property Damage/Wage Loss & Substitute Services

174

 

Reviewing an Issued Policy for Correctness/Negligence Laws

174

 

Three Types of Negligence

175

 

Loss-Adjustment Provisions

175

 

Notice of Loss/Processing an Automobile Claim

176

 

Auto Insurance Fraud

178

Chapter 7: Homeowner’s Insurance

182

 

Renter’s Insurance

182

 

Insuring Your Home

182

 

Section I of Form #1

186

 

Form #2

188

 

Form #3

188

 

Form #4

190

 

Form #5

190

 

Form #6

191

 

Form #8

191

 

Exceptions

192

 

Natural Disasters

193

 

Volcanoes/Hurricanes and Tornadoes

195

 

Personal Property

196

 

Umbrella Insurance

197

 

Homeowner’s Liability Insurance

199

 

Old Problems and New Trends: Assignment of Benefits

201

Chapter 8: Annuities

206

 

Defining an Annuity

206

 

Annuity Choices: Joint & Survivorship/Guaranteed and Life-Time/Level Annuities

207

 

Capital-Back Annuities/Escalating Annuities/Inflation-Linked Annuities/Enhanced Annuities

208

 

Annuity History

209

 

Annuity Terminology

212

 

Annuity Basics

216

 

Choosing Between Fixed and Variable Annuities

216

 

Choosing Between a Lifetime Annuity and Term Annuity

217

 

Company Financial Strength

219

 

Annuity Extras: Principal Protection/Cost of Living Protection

219

 

The Ups and Downs of Annuities

220

 

Tax Efficiency/Supplementing Other Retirement Income

220

 

Reasons to Buy an Annuity/Reasons to Avoid Buying Annuities

221

 

Making the Right Annuity Choices

222

 

Multiple Annuity Choices

223

 

Annuities for Retirement

224

 

Everyone is Living Longer these Days

225

 

Putting Off Retirement

225

 

Fixed Rate Annuities

227

 

How Fixed-Period Annuities Work

227

 

Variable Annuities

229

 

Annual Expenses

229

 

Funding Variable Annuities/Variable Annuity Fees

230

 

Variable Annuity Death Benefit/Surrender Fees/Early Withdrawal/Taxation

231

 

Equity-Indexed Annuities

231

Chapter 9: Anti-Money Laundering

233

 

Terrorism Produces Insurer Risk

233

 

Legal Requirements Adopted

234

 

Broker-Dealer Requirements

236

 

AML Program Requirements

237

 

Know Your Customer (KYC)

239

 

Compliance

239

 

Suspicious Activity Reports Filing Requirements

240

 

Agents Must Now be Vigilant

240

 

A Global Problem

242

 

Covered Products

243

 

9 Identified Money Laundering Methods

244

 

Money Laundering Indicators Not Unique to Insurance Products

247

 

Policyholder Characteristics and Behaviors

248

 

A Known Criminal or Criminal Associate or Relative

249

 

Erratic or Abnormal Use of Policies/High Premiums Compared to Verifiable Income

250

 

Lack of Concern for Charges or Costs

250

 

Undue Interest in Payout Options/Change of Beneficiary

251

 

Insurance on Assets that Appear Inconsistent with Income/Early or Suspicious Claims

251

 

Product Characteristics and Maintenance

253

 

Customer Due Diligence (CDD)

254

Chapter 10: Identity Theft Insurance

257

 

Identity Theft Defined

258

 

Mortgage Fraud

262

 

Civil Liability for Mortgage Fraud

263

 

Identity Theft and Assumption Deterrence Act (October 1998)

263

 

Factors for Consideration

264

 

Technical Amendments to Title 18, United States Code

264

 

Insurance Identity Theft/When Insurance Theft Occurs

265

 

Insurance Statistics

256

 

Sample Policy

267

Chapter 11: Debt Affects Insurance

275

 

Debt Affects Premium Rates

275

 

Changing the Spending Pattern

278

 

When 20% is not actually 20%

282

Chapter 12: Employment Practices Liability Insurance

284

 

Potential Interview Mistakes

285

 

Negligent Hiring Liability

286

 

A Policy Overview

288

 

Do Employers Really Need EPLI?

290

 

Low Cost Protection

293

 

New Technology Firms/All Companies are Vulnerable

294

 

Educating the Employers

295

Chapter 13: Ethical Insurance Practices

297

 

Ethic Subject Matter for Continuing Education

297

 

Meeting Education Requirements in a Timely Manner

298

 

The Doctrine of Utmost Good Faith (Breach of Utmost Good Faith)

300

 

Duty of Disclosure

300

 

Representations and Warranty/Representations/Warranty

301

 

Action Taken by Insurer Against a Breach

302

 

Principle of Waiver and Estoppel

302

 

Guaranty Associations

302

 

Knowledge of the Product

308

 

Ethics from an Agent’s Standpoint: Introducing narrator Harry Bobs

309

 

It is a Matter of Perspective

310

 

Establishing Ethical Goals

312

 

Why Be Ethical?

314

 

Following the Laws

315

 

Ethics in the Workplace

316

 

The Same by Any Name

317

 

Putting the Past into the Future

318

 

Personal Values

318

 

Companies Set Guidelines

321

 

Promoting Ethical Behavior

326

 

Is It Possible to Teach Ethical Behavior to Others?

328

 

What is the Scope of Ethics?

329

 

What Does it Take to be a Moral Person?

330

 

What Quality of Work do you Want to Perform?

331

 

What do I Want my Legacy to be?

331

 

The Leaders of the Pack

331

 

What are our Responsibilities to Other Moral Persons?

333

 

Objectivist Ethics

335

 

Holding on to our Ethical Code

336

 

Looking the Part

341

 

Courtesy/Mores

342

 

Mores are Established Patterns of Action to which an Individual is Expected to Conform

343

 

Education

346

 

Getting Education in a Timely Manner

347

 

Product Knowledge

348

 

Laying Out Policy Benefits and Limitations

349

 

Policy Replacement

351

 

Why Agents Replace their Own Business

352

 

When Agents Allow Misconceptions

353

 

When the Client Thinks the Premiums are too High

354

 

Obtaining Proper Application Signatures/Keeping in Touch After the Sale

354

 

Selling “Fast Buck” Items

355

 

Commingling Funds/The Professional

356

 

Preparing for Tomorrow

357

 

Due Diligence

358

 

Legal Versus Moral

366

 

Last page:

369

 

 

United Insurance Educators, Inc.

8213 – 352nd Street East

Eatonville, WA  98328

 

(253) 846-1155

Email:  mail@uiece.com