Cheat sheet
Life & Health Cheat Sheet
Insurance Principles
- Not published of exam
- Risk Contracts Underwriting Insurable Interest Provisions
Life Insurance
- Not published of exam
- Term Whole Life Universal Life Riders Beneficiaries
Health Insurance
- Not published of exam
- Medical Plans Disability LTC Medicare Managed Care
Annuities
- Not published of exam
- Accumulation Annuitization Fixed Variable Payouts
Regulation + Ethics
- Not published of exam
- Licensing Replacement Suitability Twisting Rebating
Quick Facts
- Exam L&H
- Body State DOI
- Questions CA 75 or 150
- Time Varies by state
- Pass CA 60%, IL scaled 70
- Scope National concepts
- State law Varies
Insurance Principles PR
- Risk Chance of loss
- Pure risk Loss/no loss
- Speculative risk Gain/loss possible
- Hazard Increases loss
- Peril Cause of loss
- Indemnity Restore financially
- Insurable interest Valid loss stake
Contract Traits PR
- Aleatory Unequal exchange
- Adhesion Insurer drafted
- Unilateral One enforceable promise
- Conditional Duties must occur
- Utmost good faith Full honesty
- Representations True statements
- Warranty Guaranteed truth
Life Products LI
- Term ends; whole stays.
- Term: temporary Whole: permanent UL: flexible VUL: market
Term vs Whole LI
Term
- Temporary
- No cash value
- Lower premium
Whole
- Permanent
- Cash value
- Fixed premium
- Rent vs own
Life Product Picker LI
- Temporary need → Term ( Low premium )
- Lifetime guarantee → Whole life ( Cash value )
- Flexible premium → Universal life ( Adjustable )
- Investment risk → Variable life ( Securities )
- Estate planning → Survivorship ( Second death )
- Mortgage need → Decreasing term ( Declining face )
Life Products LI
- Term Temporary death benefit
- Whole life Permanent fixed premium
- Universal life Flexible premium
- Variable life Securities risk
- VUL Flexible + separate
- Joint life First death pays
- Survivorship Second death pays
UL vs VUL LI
UL
- Flexible premium
- Interest crediting
- General account
VUL
- Flexible premium
- Separate accounts
- Securities license
- Interest vs market
Life Provisions LI
- Grace period Late-pay window
- Incontestability Challenge limit
- Suicide clause Early exclusion
- Reinstatement Restore lapsed policy
- Assignment Transfer rights
- Free look Refund review
- Beneficiary Receives proceeds
Riders + Options LI
- Waiver premium Disability waiver
- ADB Extra accident death
- Guaranteed insurability Future purchase
- Accelerated benefit Early death benefit
- Cash surrender Take cash
- Reduced paid-up Smaller permanent policy
- Extended term Same face temporary
Medicare ABCD HE
- A hospital, B medical, C bundle, D drugs.
- A: hospital B: doctors C: Advantage D: drugs
HMO vs PPO HE
HMO
- PCP gatekeeper
- Network focus
- Lower cost
PPO
- Provider choice
- Out-network
- Higher cost
- Gatekeeper vs choice
Health Plan Picker HE
- Lowest network cost → HMO ( Gatekeeper )
- Provider flexibility → PPO ( Out-network )
- Network only → EPO ( No referrals )
- HSA wanted → HDHP ( High deductible )
- Hospital coverage → Part A ( Medicare )
- Drug coverage → Part D ( Medicare )
Health Plans HE
- HMO Gatekeeper network
- PPO Preferred network
- EPO Network only
- POS Referral blend
- HDHP HSA eligible
- Deductible Before plan pays
- Coinsurance Cost percentage
- Out-of-pocket Annual limit
Advantage vs Medigap HE
Part C
- Private alternative
- Parts A/B
- Often networked
Medigap
- Supplement policy
- Original Medicare
- Pays gaps
- Replace vs supplement
Medicare Map HE
- Part A Hospital insurance
- Part B Medical insurance
- Part C Medicare Advantage
- Part D Prescription drugs
- Medigap Supplement gaps
- Medicaid Need-based aid
- CHIP Children coverage
Deductible vs Coinsurance HE
Deductible
- First dollars
- Annual amount
- Before sharing
Coinsurance
- Percentage
- After deductible
- Shared cost
- Before vs after
Disability + LTC HE
- Own occupation Cannot perform job
- Any occupation Cannot perform work
- Elimination period Waiting period
- Benefit period Payment duration
- ADLs Daily living tasks
- LTC trigger ADL/cognitive need
- Inflation rider Benefit grows
Annuity Flow AN
- Pay in, then pay out.
- Accumulation Annuitization Payout Surrender
Annuity Picker AN
- Income now → Immediate ( Annuitize soon )
- Income later → Deferred ( Accumulation )
- Guarantee needed → Fixed ( General account )
- Market upside → Variable ( Separate account )
- Index crediting → Indexed ( Cap/floor )
- Lifetime income → Life option ( Longevity )
Annuity Types AN
- Immediate Income starts soon
- Deferred Income later
- Fixed Guaranteed interest
- Variable Separate accounts
- Indexed Index-linked crediting
- Single premium One payment
- Flexible premium Multiple payments
Ethics Line RE
- Suitability first; commissions never first.
- Client need Disclosure Replacement care
Twisting vs Rebating RE
Twisting
- Misleading replacement
- Policy switch
- False comparison
Rebating
- Illegal inducement
- Premium return
- Unlisted benefit
- Lie vs gift
Ethics + Regulation RE
- Twisting Misleading replacement
- Churning Commission replacement
- Rebating Illegal inducement
- Suitability Appropriate recommendation
- Fiduciary Trust duty
- Replacement Existing policy swap
- CE License education
Common Traps
Agent vs broker
- Agent represents insurer ≠ Broker represents client
Hazard vs peril
- Hazard increases risk ≠ Peril causes loss
Owner vs beneficiary
- Owner controls policy ≠ Beneficiary receives proceeds
Fixed vs variable
- Fixed is guaranteed ≠ Variable has risk
Part C vs Medigap
- Part C replaces ≠ Medigap supplements
Twisting vs churning
- Twisting uses lies ≠ Churning seeks commissions
Last Minute
- 1. State law changes exact rules
- 2. Life needs insurable interest
- 3. Term = temporary coverage
- 4. Whole = permanent cash value
- 5. Variable products need securities license
- 6. Annuities protect longevity risk
- 7. HMO = gatekeeper
- 8. PPO = choice
- 9. Medigap supplements Original Medicare
- 10. Rebating is an illegal gift