Your FREE Life & Health Insurance Flashcards 2026 – 250+ Cards

A genuine financial/emotional stake in another's continued life. For life insurance it must exist only at the time of application (inception), not at death.

The tendency of higher-than-average risks to seek or keep insurance more than good risks. Underwriting and risk classification control it.

Pure risk = chance of loss or no loss only (insurable). Speculative risk = chance of loss, no loss, OR gain (e.g. gambling) and is NOT insurable.

The larger the pool of similar risks, the more accurately the insurer can predict losses. It makes premium pricing possible.

A stock insurer is owned by shareholders and issues nonparticipating policies. A mutual insurer is owned by its policyowners and issues participating (dividend-paying) policies.

A representation is a statement believed true to the best of one's knowledge. A warranty is guaranteed absolutely true. Life applications are treated as representations.

The intentional failure to disclose a material fact the insurer would need to evaluate the risk. Material concealment can void the policy.

A contract where the dollars exchanged are unequal and depend on an uncertain event — one party may receive far more than they paid (insurance is aleatory).

Only one party (the insurer) makes a legally enforceable promise. The insured can stop paying premiums without breaching.

A 'take-it-or-leave-it' contract drafted by one party (the insurer). Ambiguities are interpreted in favor of the insured.

Both parties must deal honestly and disclose all material facts. Insurance relies on it because the insurer can't verify every detail upfront.

An applicant with greater-than-average risk who is still insurable, charged a higher (rated) premium.

Preferred = lower-than-average risk, lowest premium. Standard = average risk, standard premium.

A nonprofit clearinghouse where member insurers share coded medical/risk information to detect fraud and material omissions. Underwriters check it during underwriting.

A report from the applicant's own doctor that the underwriter may request to clarify a medical history on the application.

Waiver: voluntarily giving up a known right. Estoppel: being barred from asserting a right because of prior conduct the other party relied on.

Insurance restores the insured to their prior financial position, no better — they shouldn't profit from a loss. (Life uses 'valued contract,' not strict indemnity.)

Insurance an insurer buys from another insurer to transfer part of its risk, spreading large or concentrated exposures.

Admitted (authorized): licensed by the state and backed by its guaranty fund. Non-admitted (surplus lines): not licensed in the state; used when admitted markets won't write the risk.

The producer's role in gathering accurate information, completing the application correctly, and screening risks before submitting to the insurer's underwriters.

Underwriting classifies risk using mortality tables; preferred/select lives reflect better-than-average mortality and lower premiums.

A false statement that affects underwriting and is material can let the insurer rescind the policy during the contestable period.

An illegal arrangement where a party with no insurable interest initiates a policy intending to profit on a stranger's death — barred by insurable-interest rules.

Information that would affect the insurer's decision to issue a policy or set the premium. Misstating or concealing it can void coverage.

The value exchanged: the applicant's premium and statements, and the insurer's promise to pay. One of the required elements of a valid contract.

Both parties must be legally capable — of legal age, sound mind, and not under the influence — for the contract to be valid.

The contract's objective must be lawful; insuring an illegal activity is unenforceable. Insurable interest supports legal purpose in life insurance.

The applicant's completed application (with premium) is usually the offer; the insurer's issuance as applied for is the acceptance, forming the contract.

Statements in life/health applications are treated as representations (good-faith), not warranties, so an innocent error generally won't void the policy.

If an insurer accepts late premiums repeatedly, it may be estopped from later denying a claim for late payment.

The application, the producer's report, the MIB, attending physician statements, medical exams/paramedical, and consumer/inspection reports.

Preferred, standard, substandard (rated), or declined — based on the applicant's mortality/morbidity risk.

A producer assembles all required forms and disclosures up front so the application is complete, reducing back-and-forth and speeding underwriting.

Concealment is staying silent about a material fact; misrepresentation is actively stating something false. Both can void coverage if material.

Mortality is the incidence of death (used to price life insurance); morbidity is the incidence of sickness/disability (used to price health insurance).

Insurance spreads the cost of individual losses across a large pool of policyholders, so the unpredictable loss of a few is funded by the many.

An employer has insurable interest in a key employee; partners have it in each other for buy-sell purposes; a creditor has it in a debtor up to the loan amount.

Temporary, pure protection for a set period with no cash value. Coverage ends when the term expires if no death claim. The lowest-cost way to buy a given death benefit.

Permanent insurance with a level premium, guaranteed level death benefit, and guaranteed cash value that endows at age 100/121.

A window after policy delivery (commonly 10 days) to examine the policy and return it for a full premium refund, no questions asked.

Permanent insurance with a flexible premium and an adjustable death benefit (Option A level / Option B increasing); cash value earns a current interest rate.

Permanent insurance whose cash value is invested in separate-account subaccounts the owner directs. The owner bears the investment risk; a securities (FINRA) license is required to sell it.

Pays the policy's premiums for the insured during a qualifying total disability, keeping coverage in force without the insured paying.

The party who receives the death benefit only if the primary beneficiary has predeceased the insured.

After the policy has been in force ~2 years, the insurer can no longer contest or void it for misstatements on the application (except fraud/nonpayment in many states).

Lets a terminally ill insured collect part of the death benefit early from the issuing insurer; the remainder is reduced by what was paid.

Selling an existing life policy to a third-party provider for cash (less than the face). The buyer becomes owner/beneficiary — different from an ADB, which the insurer pays.

A period after a premium due date (commonly 30/31 days) during which the overdue premium can be paid and the policy stays in force.

Lets a lapsed policy be restored within a set time (often 3 years) by paying back premiums with interest and providing new evidence of insurability.

A life policy overfunded faster than the 7-pay limit. Loss of favorable tax treatment: withdrawals/loans are taxed LIFO (gains first) with a possible 10% penalty before 59½.

The IRS test that determines a MEC: if cumulative premiums in the first 7 years exceed the net level premiums needed to pay the policy up in 7 years, it's a MEC.

Ways the death benefit (or surrender) is paid out: lump sum, interest only, fixed period, fixed amount, and life income.

What a whole life owner can do with built-up cash value at surrender: cash surrender value, reduced paid-up insurance, or extended term insurance (the default).

Uses the cash value as a single premium to buy a smaller, fully paid-up policy of the same type that lasts for life.

Uses the cash value to buy paid-up TERM insurance for the SAME face amount for as long as the cash will support it. The automatic default if none is chosen.

Cash, reduce premium, accumulate at interest (interest is taxable), paid-up additions, or one-year term.

Lets the insured buy additional coverage at set future dates/ages without new evidence of insurability.

Term insurance whose face amount declines over the term while the premium stays level. Often used to cover a falling mortgage balance.

Term that renews each year without new evidence of insurability; the premium increases each year as the insured ages.

Combines UL's flexible premium/adjustable death benefit with variable's subaccount investing. Owner bears the risk; needs a securities license to sell.

Excludes death by suicide within the first 1-2 years; the insurer refunds premiums instead. After the period, suicide is a covered claim.

If the insured's age or sex was misstated, the death benefit is adjusted to what the premium paid would have bought at the correct age/sex — the policy is not voided.

An optional provision that automatically borrows from the cash value to pay an overdue premium, preventing the policy from lapsing.

Lets the owner borrow against the cash value of a permanent policy. Unpaid loans plus interest reduce the death benefit.

The policy plus the attached application constitute the entire contract; nothing not attached is part of it, and the insurer can't change it after issue.

The provision stating the insurer's basic promise to pay the death benefit on the insured's death, subject to the policy terms.

If the insured and primary beneficiary die in the same event and order of death is unclear, the insured is presumed to have survived, so proceeds go to the contingent beneficiary.

Protects death-benefit proceeds left with the insurer from a beneficiary's creditors and prevents the beneficiary from assigning or commuting them.

Revocable: the owner can change the beneficiary anytime. Irrevocable: the beneficiary's written consent is needed to change it or to take certain policy actions.

Per stirpes: a deceased beneficiary's share passes to their heirs (by branch). Per capita: surviving named beneficiaries split equally (by head).

A lump-sum death benefit paid to a named beneficiary is generally received income-tax-free.

Cash value grows tax-deferred. Gains are taxed only if withdrawn above the cost basis (premiums paid) or if the policy is surrendered/becomes a MEC.

The difference between the death benefit and the cash value. As cash value grows, the insurer's net amount at risk shrinks.

Pays the face amount at a set maturity date if the insured is living, or as a death benefit if they die first. Most modern endowments are taxed unfavorably (MEC-like).

Whole life paid up over a set period (e.g. 20-pay or paid-up at 65); premiums are higher but stop early while coverage lasts for life.

A whole life policy fully funded by one lump-sum premium at issue, with immediate substantial cash value (often a MEC).

Option A: level death benefit (face stays the same; net amount at risk decreases). Option B: increasing death benefit (face + cash value; net amount at risk stays level).

Par policies (usually from mutual insurers) pay policy dividends; nonpar policies (usually stock insurers) do not.

If a life policy is sold/transferred for value, the death benefit may lose its income-tax-free status (with exceptions for certain transfers).

Returns the premiums paid (often on a term policy) if the insured survives the term, in exchange for a higher premium.

On a juvenile policy, waives premiums if the adult premium-payer dies or becomes disabled, keeping the child's coverage in force.

Pays an extra amount (often double indemnity) if death results from a covered accident within a set time. Does not pay for natural death.

Each month the insurer deducts the cost of insurance and expenses from the UL cash value; if cash value can't cover it, the policy may lapse.

Named individual; a class ('my children'); or the insured's estate (which subjects proceeds to probate and possibly creditors).

Absolute: a permanent, full transfer of ownership. Collateral: a temporary, partial transfer of policy rights as security for a loan.

The premium based on payment frequency (annual, semiannual, quarterly, monthly). More frequent modes cost slightly more in total.

Dating a policy earlier than the application (up to ~6 months) to give the insured a lower premium based on a younger age.

A policy on a child, typically owned by a parent/guardian, often with a payor rider that waives premiums if the payer dies or is disabled.

A combination policy: permanent insurance on the breadwinner plus term riders covering the spouse/children, often paying income to the family.

Term that can be exchanged for a permanent policy without evidence of insurability, within a set conversion period.

Term that can be renewed at the end of the term without new evidence of insurability; the premium rises at each renewal.

Whole life with lower premiums in the early years that step up to a higher level later, easing early affordability.

Cash value is the policy's living value; surrender value is the cash value minus any surrender charges and outstanding loans.

On death, the beneficiary receives the face amount (death benefit). The cash value is part of, not added to, the death benefit in a standard whole life policy.

A policy on which no further premiums are due but coverage continues — e.g. via limited-pay design or the reduced paid-up nonforfeiture option.

Policy dividends are a non-taxable return of premium. But interest earned when dividends accumulate at interest IS taxable.

The insurer holds the death benefit and pays only the interest to the beneficiary; the principal stays with the insurer until a later election.

Fixed-period: choose how LONG payments last (amount varies). Fixed-amount: choose the dollar AMOUNT per payment (number of payments varies).

Pays the beneficiary an income for life (an annuitized payout), with options like life-only or life with period certain.

Gives the insurer ~2 years to investigate and challenge material misstatements or fraud before the incontestability clause closes that door.

Optional exclusions that deny or limit the death benefit for deaths from acts of war or non-commercial aviation.

Pay overdue premiums plus interest, provide evidence of insurability, and repay/reinstate any policy loan. A new contestable period typically begins.

Adds level term coverage on the insured's children to the base policy, usually convertible to permanent insurance without evidence of insurability.

Adds term coverage on a spouse or another family member to the base policy at a lower cost than a separate policy.

Proceeds go through probate (delay, cost, public record) and may be exposed to the insured's creditors — usually avoided by naming a person.

A pure endowment pays only if the insured survives to a date (nothing on early death) — historically rare; modern endowments combine survival and death benefits.

Joint life pays on the FIRST death of two insureds. Survivorship pays on the SECOND death — popular for estate-tax planning.

Whole life whose cash value growth (and sometimes premium) reflects current interest rates, while keeping whole-life guarantees.

Universal life whose cash value interest is linked to an index with a floor and cap — more upside potential than fixed UL, with downside protection.

A contract that converts a sum of money into a stream of income, protecting the owner against outliving their assets (longevity risk).

A retirement account funded with after-tax dollars; qualified withdrawals in retirement are entirely tax-free. No upfront deduction.

An annuity invested in separate-account subaccounts; the owner bears the investment risk and the payout varies with performance. Requires a securities license to sell.

An annuity that credits a guaranteed minimum interest rate; the insurer bears the investment risk and guarantees the principal.

Credits interest linked to a market index (e.g. S&P 500) with a guaranteed floor (often 0%) so principal is protected. Caps/participation rates limit the upside.

A tax-free exchange of one life/annuity/LTC contract for another like-kind contract under IRC Section 1035, deferring tax on the gain.

Accumulation (pay-in): premiums grow tax-deferred. Annuitization (pay-out): the value is converted into an income stream.

Immediate (SPIA): a single premium starts income within ~1 year. Deferred: income is delayed to a future date, allowing tax-deferred growth first.

Pays the largest monthly income for the annuitant's lifetime, but stops at death with nothing to heirs. The greatest longevity protection.

Pays for life, but guarantees payments for at least a set period (e.g. 10 years); if the annuitant dies early, a beneficiary receives the remaining certain payments.

Both guarantee the annuitant gets back at least the premium paid. Cash refund pays the remainder as a lump sum to the beneficiary; installment refund continues payments.

Pays an income for two lives; payments continue (often reduced) to the survivor after the first annuitant dies.

The portion of each annuity payment that is a tax-free return of cost basis vs taxable interest, used during annuitization of a nonqualified annuity.

Growth is tax-deferred; withdrawals are taxed LIFO (gains out first), and a 10% IRS penalty may apply before age 59½.

Qualified: IRS-approved, pre-tax contributions, tax-deferred growth (e.g. 401(k), traditional IRA). Nonqualified: after-tax contributions, only the growth is tax-deferred.

Contributions may be tax-deductible and grow tax-deferred; withdrawals in retirement are taxed as ordinary income. RMDs apply.

Owner controls the contract and pays premiums; annuitant's life measures the payout; beneficiary receives any death benefit.

A declining penalty fee for withdrawing more than the free amount during the early surrender period of a deferred annuity.

If the annuitant dies soon after annuitizing a life-only option, the insurer keeps the remaining principal — the trade-off for the largest monthly payment.

During pay-in, premiums buy accumulation units. At annuitization they convert to a fixed number of annuity units whose dollar value varies with the subaccounts.

If the annuitant/owner dies during accumulation, the beneficiary receives at least the premiums paid (or current value if higher) — many contracts guarantee principal.

A federal tax penalty on the taxable portion of an annuity, IRA, or qualified-plan withdrawal taken before age 59½ (with exceptions).

Mandatory minimum withdrawals that must begin from most qualified plans/traditional IRAs at the required age, taxed as ordinary income. Roth IRAs are exempt for the owner.

Employer-sponsored qualified retirement plans for small businesses; contributions are pre-tax and grow tax-deferred.

A tax-sheltered annuity/retirement plan for public school and certain nonprofit employees; pre-tax contributions grow tax-deferred.

Pays income only for a fixed number of years regardless of life — not based on a life. The opposite of a pure life annuity.

The cap limits the maximum credited rate; the participation rate sets what percent of the index gain is credited. Both protect the insurer and limit upside.

A fixed deferred annuity guarantees principal plus a minimum interest rate during accumulation; a variable annuity does not guarantee principal.

Single-premium: funded by one lump sum. Flexible-premium: funded by ongoing, varying deposits during accumulation (must be deferred).

Roth contributions are after-tax; qualified Roth distributions (account 5+ years and age 59½) are entirely tax-free, including earnings.

Lets the owner surrender a fixed annuity without a surrender charge if the credited rate falls below a stated level.

Allows withdrawing a set percentage (often 10%) of the annuity value each year without a surrender charge.

Life insurance protects against dying too soon; an annuity protects against living too long (outliving assets). They are mirror images.

An unpaid waiting period after a disability begins (often 30/60/90 days) before disability benefits start — a 'time deductible.' Longer period = lower premium.

Hospital insurance: inpatient hospital, skilled nursing after a qualifying stay, hospice, and limited home health. Usually premium-free (payroll-tax funded).

Medical insurance: doctor visits, outpatient and preventive care, durable medical equipment. Requires a monthly premium; pays ~80% after the deductible.

Medicare Advantage — a private plan that replaces Original Medicare (A+B), usually bundling Part D drug coverage and extra benefits.

Optional outpatient prescription drug coverage sold by private insurers; added to Original Medicare or built into most Part C plans.

Own-occ pays if you can't do YOUR job (more generous). Any-occ pays only if you can't do ANY job for which you're suited (stricter, cheaper).

A tax-advantaged account paired with a qualified High-Deductible Health Plan (HDHP). Triple tax advantage: deductible contributions, tax-free growth, tax-free qualified withdrawals.

Lets qualified beneficiaries keep employer group health coverage after a qualifying event (commonly 18 or 36 months) by paying up to 102% of the full premium.

The maximum length benefits are paid once the elimination period ends (e.g. 2 yr, 5 yr, or to age 65). It defines how long, not how much.

Pays a reduced benefit proportional to lost income when the insured can work but earns less due to disability.

Certain severe losses (sight, hearing, speech, two limbs) are automatically presumed total disability, paying benefits even if the insured can still work.

If the EMPLOYER paid the premiums, benefits are taxable. If the INDIVIDUAL paid with after-tax dollars, benefits are tax-free.

Disability coverage that reimburses a business owner's ongoing business expenses (rent, utilities, staff) while the owner is disabled — not personal income.

A business owns and is the beneficiary of coverage on an essential employee, to offset the loss if that person dies or is disabled.

A funded agreement (often with life/disability insurance) under which surviving owners buy a deceased or disabled owner's business interest.

HMO: lower cost, must use in-network providers and a primary-care gatekeeper/referrals. PPO: more flexibility, in- and out-of-network, no referral needed (higher cost).

Point-of-Service: a hybrid — uses an HMO-style PCP/referral for the lowest cost but allows out-of-network care at a higher cost like a PPO.

Deductible: what you pay before the plan pays. Coinsurance: a percentage you share after the deductible (e.g. 80/20). Copay: a flat fee per visit/service.

Rules preventing a person covered by two plans from collecting more than 100% of the loss; one plan is primary, the other secondary.

Covers custodial/skilled care (nursing home, assisted living, home care) when a person can't perform Activities of Daily Living. Benefits trigger on ADL loss or cognitive impairment.

Eating, bathing, dressing, toileting, transferring, and continence. Inability to do (usually) 2 of 6 is a common LTC benefit trigger.

Standardized private policies (lettered plans) that fill Original Medicare's gaps — deductibles, coinsurance, copays. Cannot be used with a Medicare Advantage (Part C) plan.

A joint federal-state, means-tested program providing health coverage to low-income individuals. Eligibility is based on income/assets, unlike Medicare (age/disability).

Under the Affordable Care Act, insurers must offer coverage regardless of health and cannot exclude pre-existing conditions.

Ten categories of care ACA-compliant plans must cover, including preventive care, maternity, mental health, prescription drugs, and hospitalization.

ACA requires plans offering dependent coverage to allow adult children to stay on a parent's plan until age 26.

A provision delaying coverage for a condition treated before the policy began. ACA bars these on major medical, but they still appear on some non-ACA products.

Documents prior coverage so a new health plan can credit it against any pre-existing condition limitation, protecting people who change jobs.

Group covers a group under one master contract (employer is policyholder; members get certificates). Individual is underwritten and owned by one person.

The document a group member receives summarizing their coverage; the employer/trust holds the actual master policy.

Lets a departing group member convert to an individual policy without evidence of insurability, within a set time after leaving the group.

A waiting period at the start of a new policy during which certain conditions (often sickness) are not covered.

Guaranteed renewable: insurer must renew but can raise premiums by class. Noncancelable: insurer must renew AND cannot raise the premium.

The insurer may decline renewal only for stated conditions (e.g. the insured reaching a certain age), not for declining health.

The insurer may refuse to renew or add restrictions at a policy anniversary or premium due date, at its option.

A mandatory provision (like life's incontestability) limiting how long the insurer can contest the policy for misstatements — typically 2-3 years.

Increases the disability benefit (or face amount) over time to keep pace with inflation.

Comprehensive coverage for large medical expenses (hospital, surgery, physician) with a deductible, coinsurance, and an out-of-pocket maximum.

The annual cap on what an insured pays in cost-sharing; after it's reached the plan pays 100% of covered charges.

An employer account funded with pre-tax salary deferrals for qualified medical/dependent-care costs; generally 'use it or lose it' within the plan year.

An employer-funded account that reimburses employees for qualified medical expenses; the employer owns the funds.

You must be covered by a qualified High-Deductible Health Plan, have no other disqualifying coverage, and not be enrolled in Medicare or claimed as a dependent.

An LTC policy meeting federal standards: premiums may be deductible (within limits) and qualified benefits are received tax-free.

A state program that lets an LTC policyholder protect assets equal to benefits paid when later qualifying for Medicaid.

A 7-month window around the 65th birthday month (3 before, the month of, 3 after) to first enroll in Medicare.

Parts A and B together — the federal fee-for-service program a beneficiary can pair with a Medigap and a stand-alone Part D plan.

Social Security provides a small lump-sum death benefit and survivor income, and Social Security Disability Insurance (SSDI) pays workers disabled long-term — a base layer insurance supplements.

Keeps a health/disability policy in force without premium payments while the insured is totally disabled.

Treats a disability that recurs within a set time (often 6 months) as a continuation of the prior claim, so a new elimination period isn't required.

Probationary: early period excluding sickness. Elimination: waiting period before benefits start. Benefit period: how long benefits last.

A departing group member typically has 31 days to convert to an individual policy without evidence of insurability.

A set period when eligible members can enroll or change group coverage; limiting enrollment to this window controls adverse selection.

For active employees 65+, the employer group plan is often primary and Medicare secondary; rules depend on employer size.

Pays a fixed dollar amount per day of hospitalization regardless of actual charges — a supplemental, not comprehensive, coverage.

Accident-only pays only for losses from accidents; comprehensive health/disability also covers sickness.

Pays a lump sum on diagnosis of a specified serious illness (e.g. cancer, heart attack, stroke), used to fill gaps in major medical.

States the insurer's promise to pay benefits for covered losses and identifies the type of coverage.

Mandatory UPPL provisions set when notice of claim, claim forms, and proof of loss must be furnished (e.g. proof of loss within 90 days).

An insured generally cannot sue before 60 days after proof of loss, nor after 3 years (varies), giving a window to resolve claims.

An employer benefit plan letting employees choose among taxable and pre-tax benefits (often including an FSA).

An employer pays claims from its own funds rather than buying insurance, often with stop-loss coverage; governed by ERISA, not state insurance law.

Funds the buyout of a permanently disabled owner's business interest by the other owners, typically after a long elimination period.

A disability rider that pays a benefit if the insured fails to qualify for, or receives reduced, Social Security disability benefits.

A fixed per-member, per-month payment to providers regardless of services used — the core payment model of an HMO.

The primary care physician in an HMO who coordinates care and must refer the member to specialists for coverage.

A managed plan that, like a PPO, needs no referrals but, like an HMO, covers only in-network care (except emergencies).

Group and many individual health plans must automatically cover a newborn or newly adopted child for a period after birth/placement.

Federal law requiring that mental health/substance-use benefits be no more restrictive than medical/surgical benefits in covered plans.

A permanent premium surcharge added for each 12-month period a person delayed Part B without qualifying coverage.

An income-based subsidy that lowers Marketplace premiums for eligible enrollees who don't have affordable employer coverage.

Bronze, Silver, Gold, Platinum — describe how an ACA plan splits costs (actuarial value). Bronze = lowest premium/highest cost-share; Platinum = the reverse.

The ACA rule requiring insurers to spend a minimum share of premium (80%/85%) on claims and quality, refunding the difference.

An unfair trade practice: using misrepresentation to induce a client to replace an existing policy to their detriment.

Giving a client any inducement (cash, gift, or value) not stated in the policy to buy insurance. Illegal in most states even if offered to all.

Given when a premium is paid with the application; coverage begins on the application/exam date IF the applicant is found insurable as applied for.

Express = written into the agency contract. Implied = reasonably needed to carry out express authority. Apparent = authority a third party reasonably believes the agent has.

Twisting: misrepresentation to replace a policy at ANOTHER insurer. Churning: replacing a policy WITHIN the same insurer using the policy's own values, to the client's detriment.

Making false or misleading statements about a policy's terms, benefits, or an insurer's financial condition.

Making false, malicious statements that harm the reputation of an insurer or another producer.

Using physical or economic force to compel a person to buy insurance or restrain competition.

A producer holding client funds (premiums) must keep them separate from personal/business funds and remit them promptly. Mixing them is illegal commingling.

The state official who regulates insurance: issues and revokes licenses, examines insurers, holds hearings, and enforces the insurance code.

Rules requiring disclosure and documentation when a new policy replaces an existing one, protecting the consumer from unsuitable replacement.

Producers must have reasonable grounds that an annuity recommendation fits the client's needs, finances, and objectives — heightened for seniors (NAIC best-interest standard).

Ongoing coursework producers must complete (hours and ethics requirements set by each state) to renew a license.

Federal law making it a crime for someone convicted of a felony involving dishonesty to work in insurance without written consent (a 1033 waiver).

Requires financial institutions, including insurers, to protect nonpublic personal financial information and give privacy notices with opt-out rights.

Professional liability coverage protecting a producer against claims of negligence or mistakes in their professional services.

The authorization an insurer files to allow a licensed producer to sell its products; required before a producer can act for that insurer in many states.

Requires that applicants be notified when consumer/investigative reports are used and gives them the right to know what's in them.

Consumer disclosure documents that must be delivered (often at or before delivery) so the applicant can compare policies and understand costs.

On a replacement, the producer must provide notice; the replacing insurer must give the existing insurer a chance to conserve the policy.

Hard fraud: deliberately faking a loss/claim. Soft fraud: padding a legitimate claim or misstating facts to get coverage/lower premiums.

A state fund that pays covered claims (within limits) when an admitted insurer becomes insolvent. Producers may not advertise its protection as a sales inducement.

Many states extend the free look (e.g. to 20-30 days) when a policy or annuity replaces an existing one, giving extra protection.

Age, income, financial situation/needs, objectives, liquidity needs, risk tolerance, and existing holdings the producer must consider before recommending an annuity.

Variable life, variable universal life, and variable annuities are securities — selling them requires both an insurance license and a FINRA securities registration.

Federal law setting standards for private employer benefit plans (reporting, disclosure, fiduciary duties). Self-funded plans are governed by it.

'Producer' is the modern license term. An agent legally represents the insurer; a broker represents the client/buyer.

Resident: licensed in your home state. Nonresident: licensed in another state via reciprocity. Temporary: short-term license (e.g. to service a deceased producer's book).

Fraud, misrepresentation, felony conviction, mishandling funds, rebating, or violating the insurance code can lead to discipline by the Commissioner.

An order from the Commissioner directing a person to stop a specific act found to violate insurance law.

The National Association of Insurance Commissioners — develops model laws/regulations states adopt; it standardizes (but does not directly enforce) insurance regulation.

Federal law leaving insurance regulation primarily to the states unless a federal law specifically addresses insurance.

Insurance ads must be truthful and not misleading; the insurer is responsible for its producers' advertising of its products.

Borrowing to pay insurance premiums; producers must disclose and follow rules so it isn't used to disguise rebating or unsuitable sales.

The existing insurer's effort to keep (conserve) a policy after being notified that a producer intends to replace it.

Insurers selling covered products (e.g. annuities, permanent life) must maintain AML programs and report suspicious activity under the Bank Secrecy Act.

Producers must honor the National Do Not Call Registry and state rules when soliciting by phone.

Commissions may be shared only between properly licensed producers; sharing with an unlicensed person is generally prohibited.

Because twisting harms consumers, it can lead to fines, license suspension, or revocation under the unfair trade practices act.

Deliver the policy promptly, explain its provisions and any rating, collect outstanding premium and a delivery/health statement, and start the free look.

Premiums a producer collects belong to the insurer/insured and must be held in trust and remitted — never commingled or used personally.