Team

You took the first step when you joined Primerica. Now, you’re here to take the next step: becoming life licensed. Your life license is real, tangible evidence of your desire to make a difference. Having this license gives you a shot at not only creating financial freedom for your family, but it also gives you the chance to change a lot of lives.
As you’re going through pre-licensing, I encourage you to think about why you’re doing this. Maybe you’re here because you want some extra money each month to pay down debt or to boost your savings. Maybe you want to be able to give your kids the things you never had as a child. Maybe you want to make sure no family is left unprotected in the event of the death of a breadwinner.
Whatever your reason for starting this journey, let that be your motivation for passing the exam. Remember, in this business YOU are in control of your future. I believe if you put your mind to it, put in the work and take advantage of the incredible support your upline, Licensing Specialist, and POL provide, you
CAN pass your exam.
Don’t worry if it’s been a while since you’ve been studying. We’re going to teach you exactly what you’ll need in order to get your license and to start making your dreams happen. The rest is up to you.
I believe you’ve got this! Let’s get started!
Glenn Williams
CEO, Primerica

1. Field Underwriter – the agent who solicits the sale, meets with the client and completes the application
2. Disclosure at point of sale – every applicant must be given a written disclosure statement providing basic information about the cost and coverage of the insurance being solicited; must be given at the time the application is signed
3. Application white-out
– the basic source of information used in the risk selection process
Part I: General Info.
Part II: Medical Info.
Part III: Agent’s Report
4. Required Signatures
Agent = field underwriter
Proposed Insured = applicant
Policyowner = if different from the proposed insured (third-party ownership)
5. Changes in Application insurance application are
- Made by applicant only and initialed or new application completed; never erase or use
6. Consequences of incomplete
Applications - m ay delay processing of application; insurer may return the application for completion.
Incomplete applications -insurer waives right to information if policy issued with incomplete information
7. Warranties and
Representations – a warranty is an absolutely true statement; a representation is a statement that is believed to be true to the best of one’s knowledge. Answers on an considered to be representations
1. Underwriting – risk selection and classification process
2. Insurable Interest – possibility of financial loss; your own life, family members, business partners, key employees, financial obligations/lender. Must exist at the time of application but not at death
1. Coverage Begins - when policy is delivered unless premium is prepaid
2. Conditional Receipt
– coverage begins day of application or day of medical exam, whichever is later, IF insured is insurable at the risk category applied for
3. Reports Used by Underwriters
Consumer Report – general report on finances, character, work, hobbies, and habits done by independent firm/reporting agency.
Investigative Consumer Reports are similar but include interviews with friends and associates
Medical Information - Attending
Physician’s Statement (APS) done by client’s physician; Paramedical report – done by paramedic or registered nurse
Medical Information Bureau
(MIB) – nonprofit trade organizations funded by member companies that collect adverse medical information from insurers.
Protects against fraud and holds down insurance costs
Medical Examinations and Lab
Tests including HIV applicant
- if a medical examination is needed, it is at the insurer’s expense; insurer must disclose the use of HIV testing and obtain written consent from the
Fair Credit Reporting Act federal law that establishes
– procedures for reporting agencies to ensure that information is confidential, relevant, and properly used; protects consumers against the circulation of inaccurate or obsolete information; also gives the consumer the right to know what was in a consumer report
4. Risk Classifications
Preferred – better than average, lower premium
Standard – average
Substandard – poorer than average risk, rated premiums
3. Statement of Good Health – may be required if premium is not collected until policy delivery
4. Agent Responsibilities policy delivery
5. STOLI (Stranger-Originated
Life Insurance) and IOLI
(Investor Originated Life
Insurance) – polices that are purchased with the intent of selling them to make a profit; insurable interest does not exist
: at
- explain the policy and its provisions, riders and exclusions; explain any ratings and, answer questions
6. Replacement - terminating or allowing an existing policy to lapse and obtaining a new one; producers and insurers must take special steps to help policyowners make informed decisions about replacement
7. USA Patriot Act – in response to the 9/11/01 terrorist attacks, the
Patriot act was passed to fight and prevent terrorist activities; requires banks and financial institutions
(including insurers) to establish anti-money laundering standards and report any suspicious activity
Suspicious Activity Report
(SARS) – procedures and plans must be in place to deal with any suspicious activity such as money laundering or terrorism financing; deposits involving $5,000 or more must be reported to if the activity is suspicious

Annually Renewable
Term
Renewable
(Option to renew)
Convertible
(Option to convert)
Limited Pay
Single-Premium
Adjustable Life
Life Insurance Policies
Term Life
Level Term
Decreasing Term
Return of Premium Term
Increasing Term
Whole Life
Ordinary (Straight) Life
Description
Pure protection, lasts for a specific term, most insurance for the least premium

Coverage stays the same for the specified period

It pays a benefit only if the insured dies during the term

Coverage gradually decreases at predetermined times

Best used when the need for protection declines from year to year, ex.
Mortgage and Credit Insurance

Insurer returns premiums paid at end of term if no death benefit has been paid

May not return premium in the first few years of the policy

Beneficiaries may receive death benefit only

The most basic form of life insurance

Policy renews each year without proof of insurability

Premiums increase yearly due to attained age

Usually limited to a certain number of renewals or to a certain age

The death benefit increases at specific times

It is usually purchased as an increasing term rider
Special Features of Term Life

Guaranteed renewable before the policy terminates without evidence of insurability

Premiums increase at renewal based on attained age

Can be renewed for a limited number of times or to a certain age, usually 65

The option to convert from a term life policy to a whole life policy without evidence of insurability

Conversion must usually be done within a certain time or by a specific age

Everything is guaranteed (face amount, premium, and cash value) until death or age 100

Cash value is dependent upon the face amount, amount of premiums and how long the policy has been in force

Basic policy, level death benefit

The insured pays premiums for life or until age 100

Premiums are paid until a certain age or time (Ex, 20 Pay Life, Life paid up at 65)

Although premiums are paid up, coverage remains to age 100
Premiums paid in one lump sum and coverage continues to age 100

Three parts that are all adjustable (flexible); coverage, premium, and type of plan

The Insured chooses two and the insurer one

Flexibility in plan type means, for example, the insured may have term to age
65 then change to whole life as needs change

Universal Life
Variable Whole Life
Variable Universal Life
Interest-Sensitive Whole
Life
Equity-indexed Life
Joint Life (First-to-die)
Survivorship Life
(Second-to-die)
Interest/Market Sensitive Life Policies

2 things flexible: Premiums & Face Amount

2 Rates of return on cash value o Guaranteed Minimum Rate OR o Current Rate (set by insurer)

2 Death benefits o Option 1
– death benefit = cash value plus decreasing term; has a corridor to protect policy from becoming a MEC o Option 2 – death benefit = the face amount plus the cash value

Cash Value invested in the separate account and are NOT guaranteed

Policyowner assumes the risk of the investment

Requires 2 licenses to sell / dually licensed & regulated o State Life Insurance License / regulated by State DFS o FINRA License / regulated by SEC

Chance to keep pace with inflation

Level Premium but Face Amount can vary based on performance

Blending of Universal and Variable life

Premium flexibility

Cash value investment control

Death benefit flexibility

Also known as current assumption whole life
 Premiums may vary based on the insurer’s experience with investment and death benefits

Cash value may also vary
Face amount increases based on the performance of an equity index, such as the S&P 500 with a guaranteed minimum interest rate and fixed premiums
Combination Plans and Variations

2 or more insureds on the same policy

The policy pays the death benefit when the FIRST insured dies

Less expense than individual policies since the ages are averaged

2 or more insureds on the same policy.

The policy pays the death benefit when the LAST insured dies.

Annuity Characteristics

Designed to provide income for a number of years

Not life insurance, but sold by life insurance companies

A method to liquidate an estate or a large sum of money

Use mortality tables that reflect a longer life expectancy than life insurance
Parties

Owne r – purchaser of the annuity who has all rights to the annuity

Annuitant – person who receives the benefit payments from the annuity and on whose life expectancy the annuity is written; may or may not be same as the owner

Beneficiary – person who receives the benefits if the owner dies during the accumulation phase
(either amount paid in or cash value, whichever is greater)
Accumulation vs. Annuitization Period

Accumulation period o liquidation period
Pay-in period o Interest earned on a tax-deferred basis

Annuitization, Annuitization period or o Pay-out period o Payments to the annuitant
How are premiums invested?
Fixed Annuities

Interest rates guaranteed

Invest in general account

Level benefit payment amount

Risk (insurance company assumes)

Do not keep up with inflation
Variable Annuities

Premiums invested in separate account

Interest rate is not guaranteed

Premiums purchase accumulation units (like shares in the separate account) which become a set number of annuity units at annuitization; the value of each unit fluctuates based on the investments

Two licenses (insurance & securities)

Regulated by FINRA/SEC
Indexed Annuities (also called Equity Indexed
Annuities)

Fixed annuity invested on a more aggressive basis to aim for higher returns

Guaranteed minimum interest rate with a current interest rate tied to a familiar equity index such as the S&P 500

Less risky than a variable annuity but expected to earn a higher interest rate than a fixed annuity
How can premiums be paid?

Single Premium - one lump sum

Periodic Premium - same payment frequency; accumulate funds for retirement o Level Premium – fixed payment amount o Flexible Premium
– amount and frequency of installments varies
When do benefits begin?
Immediate vs. deferred annuities

Immediate Annuity - payment begins within 12 months

Deferred Annuity - payment begins after 12 months
Single Premium Immediate Annuity (SPIA)

Single premium payment only
Deferred annuities

Single premium (SPDA) or flexible premiums
(FPDA)

Provisions Options Riders
Rights and obligations Choices regarding a policy
Provisions

Entire Contract

Insuring Clause

Consideration

Payment of Premium

Grace Period

Reinstatement

Incontestability

Misstatement of Age and
Nonforfeiture Options



R
E
C educed Paid-up xtended Term ash Surrender
Dividends and Dividend
Options






Gender
Owner’s Rights
Assignment o o
Collateral
Absolute
Free Look
Exclusions
Suicide
Policy Loan o Automatic Premium Loan o Withdrawals or Partial
Surrenders

C ash

R eduction of Premium

A ccumulate at Interest

P aid-up Additions

Paid-up Insurance

O ne-year Term
Settlement Options (CLIFF)

Cash (Lump-sum)

Life Income

Interest Only

Fixed-Period Installments

Fixed-Amount Installments
Add or modify coverage
Riders

Waiver of Premium

Waiver of Premium with
Disability Income

Payor Benefit (juvenile insurance)

Accelerated (Living)
Benefits o Long Term Care

Other Insureds/ Term
Riders

Accidental Death and/or
Accidental Death and
Dismemberment

Guaranteed Insurability

Return of Premium Rider
16

Entire Contract

Entire Contract = Policy + Copy of Application +
(riders)

No changes can be made to the policy unless the insurer and the policyowner agree and the change is affixed to the policy
Misstatement of Age and Gender
Insurer can adjust the amount of the benefit when a claim is made to the amount the premium would have purchased at the correct age or gender
Assignments
Transfer partial or complete policy ownership: o Collateral = temporary (secure a loan) o Absolute = permanent (sell policy)
Insuring Clause

Basic agreement between the insurer and the insured
 Insurer’s promise to pay benefits

Located on the face page of the policy along with other vital information about the policy
Free Look

Days to look over policy and return

Full refund of premium paid

Starts when policyowner receives the policy

In FL, new policy - 14 days; replacement policy -
30 days
Consideration

Both parties must provide something of value, or consideration , for the contract to be valid

Policyowner/insured makes statements on the application and agrees to pay premium

Insurer promises to pay benefits specified in the contract
Exclusions
Risks the policy will not cover (or may charge a higher premium to cover); common exclusions are aviation, hazardous occupations or hobbies, and war or military service
Payment of Premium

When the premiums are due, how often they are to be paid, and to whom they are to be paid

Premiums must be paid in advance

Mode – frequency of premium payments; monthly, quarterly, semi-annual, or annual

Premiums are most often level , but can be flexible for policies like universal life
Grace Period

Time following the due date the policyowner has to pay premium before policy lapses

Usually 30-31 days

Required grace period in FL is 30 days
Reinstatement
3 years to do 4 things: o Payback all back due premium o Pay interest on all back due premiums o Payback any loans (if cash value policy) o Provide evidence of insurability
Suicide
Death benefit will not be paid if insured commits suicide with in the first 2 years after the policy is issued (will return premium paid); will pay benefit after 2 years
Policy Loan

Found only in policies that contain cash value

Face amount will be reduced by the outstanding loan amount at the time of death

Insurer must give 30 days written notice if a policy is about to lapse because a loan and the accrued interest exceeds the cash value

Insurers may defer policy loan requests for up to 6 months

Will be subtracted from death benefit if not repaid

The maximum Interest rate on a policy loan in FL is not more than 10% per year
Automatic Premium Loan

Insurer takes loan from cash value to pay premium when grace period ends without receiving payment

Guards against unintentional lapse

Payment of premium loan request are paid immediately
Incontestability

Prevents denial of a claim due to misleading statements made on the application after the policy has been in force for 2 years

Claim can be denied if misleading information is discovered within the first 2 years

Does not apply to statements about age, sex or identity
Owner’s Rights
Owner has all rights to the policy; naming and changing the beneficiary, receiving the living benefits, selecting a benefit payment option, and assigning the policy
Withdrawals or Partial Surrenders

Only allowed in universal life policies

May be a charge for withdrawals and a limit to the amount that can be withdrawn

May be subject to taxes
17

Beneficiaries can be

Individuals - most often used

Businesses – key employees, creditors

Trusts
– legal arrangement for ownership; trustee has fiduciary responsibility

Estates - if no beneficiary is designated, the estate becomes the beneficiary. The estate may be intentionally designated to help with federal estate taxes

Charities
– churches, educational institutions, hospitals, nonprofits, etc.

Minors – may present some legal problems in signing a valid receipt; a guardian may need to be appointed or a trust may need to be established and the benefits paid to the trustee.

Classes – policyowner designates a class or group of individuals as beneficiaries instead of by individual name (i.e., my children, business partners)
Primary
Contingent
First person(s) named to receive proceeds (death benefit)
All beneficiaries listed after primary

Secondary - next in line after primary

Tertiary - third in line after the secondary beneficiary
Will not receive death benefits unless the primary beneficiary has predeceased the insured
If no beneficiaries are alive upon the death of the insured, the benefit is paid to the insured’s estate
Revocable Policyowner can change beneficiary at any time
Irrevocable Policyowner cannot change beneficiary without written consent from the irrevocable beneficiary. (All owner’s rights require the consent of the beneficiary if the beneficiary is irrevocable)
Common Disaster Clause

(Provided under the Uniform Simultaneous Death Law)

If it cannot be determined who died first in a common accident, it is assumed that the primary beneficiary died first and the death benefit will either be paid to the contingent beneficiary, if one is named, or the insured’s estate

The primary beneficiary must die within 14-30 days of the insured for the benefit to be paid to the contingent beneficiary
18

Waiver of Premium

Waives premium if insured becomes totally disabled

90 – 180 day waiting period before benefit begins / expires at age 60 or 65
Waiver of Premium with Disability Income

Similar to waiver of premium

Pays a monthly income for the duration of the disability

Usually a small percentage of the face value

Has a waiting period before benefits begin
Payor Benefit (Juvenile Insurance)
If the payor (policyowner of a juvenile policy, usually a parent or guardian) becomes disabled or dies, the insurer will pay premiums until the child reaches a specified age, usually 21 or 25, and can convert the policy to an individual; policy
Accelerated (Living) Benefits

Allows for early payment of a portion of the death benefit

The insured must suffer from a terminal illness or condition that requires extensive medical intervention or treatment, or confinement in a long-term care facility

Usually pays a percentage of the face amount or a certain dollar limit

Will reduce the death benefit by the amount paid for the accelerated benefit
Long Term Care

Pays a monthly income to help cover the cost of health care while the insured is confined to a nursing home or convalescent home

Usually a small percentage of the face amount

Will reduce the death benefit if used

Can be either a rider or a separate policy
Other Insureds/Term Riders

Other insureds - Term insurance added to a base policy to cover a spouse, their children or any additional insured

Term Riders - Add additional temporary coverage at a reduced cost on the primary insured when added to a whole life or term policy
Accidental Death and/or Accidental Death and Dismemberment (AD&D)

Usually pays double or triple indemnity if death occurs due to an accident as defined in the policy

Death must usually occur within 90 days of the accident

The amount paid for accident death is called the principal amount (face amount)

AD&D pays a lump sum called the capital sum for the loss of a qualifying body part (a hand, eye, arm, or leg)

The capital sum is usually half the amount paid for accidental death
Guaranteed Insurability

Allows for purchase of additional insurance at specified future dates or events without evidence of insurability

Additional coverage is purchased at the insured’s attained age

Usually expires at age 40
Return of Premium

Increasing term added to a whole life policy that provides that if death occurs prior to a given age, not only is the death benefit payable to the beneficiary, but all premiums paid up until that time will be returned as well

Usually expires at a specified age, such as 60
19


Cash value cannot be forfeited (lost)

Nonforfeiture guarantees are required by law to be included in the policy
Reduced Paid-up Insurance - use the cash value to buy a reduced face amount policy of the same type for the life of the policy (until death or maturity)
Extended Term - use the cash value to buy a policy that is the same face amount but term insurance (common automatic option); the term policy expires when the money runs out
Cash – surrender the policy for cash; if the cash value exceeds the premiums paid, the excess is taxable as ordinary income; a surrender charge may apply (decreases over time)

Methods to pay the death benefit to the beneficiary

Policyowner selects an option at application but can change it at any time

Beneficiary cannot change the option if one has been selected; if one has not been selected, then the beneficiary can select one
Cash Payment (Lump Sum)
Most common; not taxable to beneficiary
Life Income
Pays guaranteed installments as long as the recipient lives; payment amount is based on recipient’s life expectancy and amount of principal. Each payment is made up of principal and interest; interest is taxable. Any remaining principal is forfeited to the insurer upon death
Interest Only
Temporary option until proceeds are paid out; most flexible option. Interest rate is usually guaranteed; interest is taxable
Fixed-period Installments
Proceeds and interest paid in equal amounts over chosen period of time. Length of time determines the dollar amount of payments
Fixed-amount Installments
The dollar amount is chosen to be paid in equal portions until it runs out; the amount of each payment determines the length of time

Mutual companies (participating policies)

Return of excess premiums

Not taxable

Not guaranteed
Cash - check
Reduction of Premium - use to reduce the next premium due
Accumulation at Interest - dividends are accumulated and invested by the insurer; the amount of interest earned is specified in the policy and the interest earned is taxable; the dividends can be withdrawn at any time
Paid-up Additions - dividends are used to buy single premium paid-up coverage to add to the policy (automatic option); increases the face amount of the policy which, in turn, accumulates cash value and pays dividends
Paid-up Insurance - dividends, and interest, are held and accumulated by the insurer and used to pay the policy up early; reduces the length of time premiums must be paid
One-year Term - dividend is used to buy one- year term to increase the face amount of policy; if the insured dies, the beneficiary would receive both the original face amount and the additional term death benefit
20

Third-Party Ownership
Group Life Insurance
Conversion Privilege
Contributory vs.
Noncontributory
Qualified Plan
Characteristics
When the insurance policy is owned by someone other than the insured; usually for minors or business insurance
Group Life

Written for a group, usually employee-employer, but other groups may be eligible

Usually in the form of annually renewable term

Evidence of insurability is usually not required

Participants receive a certificate of insurance; the plan sponsor receives master policy contract

The cost of the coverage is based on the average age of the group and the ratio of men to women

31 days to convert from group to an individual policy without evidence of insurability

During the 31 day period the individual is still covered by the group plan

New individual policy face amount will be equal to group amount, but at a higher premium because of attained age

Can convert to any form of insurance offered by the insurer, except term

If death occurs during the 31 days period, group insurance will pay death benefit

Noncontributory – employer pays all the premiums; 100% of eligible employees must participate

Contributory – premiums are shared between employer and employee;
75% of eligible employees must participate
Retirement Plans
Qualified plans are approved by the IRS and include such benefits as deductible contributions and tax deferred growth. To receive tax advantaged IRS treatment, qualified plans must be:

For the exclusive benefit of the employees and their beneficiaries

Formally written and communicated to the employee

Does not discriminate in favor of highly paid employees

Not geared exclusively toward the prohibited group

Permanent

Approved by the IRS

Have a vesting requirement
10% penalty for monies withdrawn before age 59 ½ Withdrawals
Individual Retirement Plans
Individual Retirement
Account - IRA (Traditional
IRA)

Contributions must be in earned Income up to the IRS specified maximum and are tax deductible

Pretax contributions can be made up to age 70 ½

A married couple can contribute double the individual amount, even if only one spouse has earned income, but the money must be kept in 2 separate accounts

There is a 6% penalty for excess contributions

Participants age 50 and over can make catch up contributions

Distribution must begin by age 70
½

Contributions and earnings grow tax-deferred until withdrawn

10% penalty for monies withdrawn before age 59 ½
25

Roth IRA
Rollovers and Transfers
Plans for Employers
Self-employed Plans
Small Employer or Self- employed Plans
Employer Plans

Contributions are made with after-tax dollars

Contributions must be made with up to 100% of earned income up to the
IRS specified maximum
 Contributions can continue past age 70 ½ and distributions do not have to begin by age 70 ½

There is also an excess contribution penalty of 6%

Money in the account grows tax deferred until withdrawn

Tax free distributions can begin once the owner reaches age 59 ½ and the account has been open for 5 years

10% penalty for monies withdrawn before age 59 ½
Rollovers

Distribution made payable and sent to the plan participant

20% withholding tax

Must be reinvested in a qualified plan within 60 days to avoid taxes.
Transfers

Distribution from one plan administrator to another plan administrator

No tax withheld
Keogh (HR10)

For Self-Employed Individuals or partners

Must work full or part-time and own at least 10% of the business

Contribution limits or 100% of earned income

Withdrawals must begin no later than age 70 ½
Simplified Employee Pension Plans (SEP)

Employee establishes and maintains an IRA to which the employer contributes
 Employer contributions are not included in the employee’s gross income

SEP contributions can be much larger than IRA contributions (IRS established dollar limit or 25% of the employees compensation, whichever is less)
SIMPLE Plans (Savings Incentive Match Plan for Employees)

Plan for small businesses with no more than 100 employees

Participants must have received at least $5,000 in compensation the previous year

The employer must not have a qualified plan currently in place

Employees can defer a specific amount each year and the employer matches it, dollar for dollar, up to an amount equal to 3% of the employee’s annual compensation

Taxes are deferred on contributions and earnings until withdrawn
Profit Sharing Plan

Portion of company profits shared with employees

Contributions only in years of profit

Contributions must be systematic and substantial
401(k)

Contributions withheld from salaries on a pretax basis up to a certain dollar limit

Company can match on either a dollar for dollar or percentage basis

Participants age 50 and above can make catch up contributions

Employee can take a loan against their 401k due to hardship
26

Plans for Nonprofit
Organizations and Public
School Systems
Nonqualified Plans
Personal Insurance Needs
403(B) Tax Sheltered Annuities (TSA)

Qualified plan for certain nonprofit organizations [501(c)(3) organizations] and employees of public school systems

Contributions made by employer or employee through salary reduction

Same catch up and contributions limits as 401(k)’s

Do not have the tax advantages of qualified plans

No limit or requirement on contributions

Can discriminate in favor of voluble employees

Contributions are taken from after-tax money

Examples of nonqualified plans o Individual Annuity o Deferred Compensation Plans o Split dollar insurance agreement o Executive bonus plans
Life Insurance Needs and Analysis/Suitability

Survivor protection

Cash accumulation

Liquidity

Estate creation

Estate conservation
Business Insurance Needs Key person

Life insurance policy that guards against financial loss due to death of a key employee who has special knowledge, skills or business contacts

Business is the applicant, owner, and beneficiary of the policy

The death benefit can be used to keep the business going and replace the key employee

Premiums are not tax deductible, but death benefit is received tax free

The key employee must give permission for the coverage
General Rules
Individual Policy
Business Owned
Group Life
Surrenders
Life Insurance Tax Treatment

Premiums are not tax deductible

Death benefit is tax free if paid in a lump sum to a named beneficiary

If death benefit is paid in installments, the interest earned is taxable

Cash value grows tax deferred

Not subject to income tax even if it exceeds premium paid

Only interest earned is taxable

Tax deductible as a business expense

First $50,000 are not taxable to the employee

If the business is the named beneficiary of the policy, the premiums are not tax deductible

Cash value on a business owned policy or employer policy grows tax deferred and is taxed only on the interest earned when withdrawn

Death benefit is tax free if paid in a lump sum to a named beneficiary

Tax deductible as a business expense

Premium paid on the first $50,000 is not taxable to the employee

Death benefit is tax free if paid in a lump sum to a named beneficiary
If the policy is surrendered and the cash value received is more than the amount of premium paid, gain is taxed as ordinary income
Loans are never taxable Policy Loan
Accelerated Death Benefit a Not taxable
Estate Taxation May be included in insured’s estate and subject to federal estate taxes
Policy Dividends Not taxable; dividends on a participating policy are a return of premium
27

Modified Endowment
Contract (MEC)
Benefits Provided
Insured Status
Blackout Period

Any life insurance policy failing the seven-pay test (develops cash value faster than a seven-pay whole life policy)

MECs lose the tax advantages of a regular life policy

Once a policy becomes a MEC, it will always be a MEC

Surrenders come out Last In First Out (LIFO)

10% penalty for surrenders prior to age 59 ½
Social Security Benefits and Taxes

Disability

Survivor

Retirement

Fully insured – 40 quarters of coverage (10 years of work) entitled to receive Social Security retirement, Medicare, and survivor benefits

Currently insured (or partially insured) – 6 quarters of coverage during a
13-quarter period; only entitled to some benefits
The period of time between the time the youngest child turns 16 and the time the surviving spouse reaches retirement or turns 60 when there are no benefit payments
28

Transacting Insurance
Domestic Insurer
Foreign Insurer
Alien Insurer
Stock Insurers
Mutual Insurer
Fraternal Life Insurance
Organizations/Fraternal
Benefit Societies
Certificate of Authority
Admitted/Authorized
Insurer
Nonadmitted/
Unauthorized Insurer
Insurers

Solicitation or inducement to purchase insurance (presenting)

Preliminary negotiations toward the sale of insurance (take app)

Effectuation of a contract of insurance (issue & deliver policy)

Transaction of matters subsequent to effectuation of a contract of insurance or arising out of it (servicing the client after the sale)
Home Office is Domiciled (incorporated; chartered) in the same State where policies are being sold

Home Office is located in a different State than where policies are being sold.

It is considered a foreign insurer in all States and Territories other than its home State

Home Office is chartered in any country other than the United
States

It is considered an alien insurer in ALL States & Territories

Owned and controlled by Stockholders

Stockholders have voting rights (elects Board of Directors)

Sell NonPar & Par Policies

Dividends are a share of profit and ARE taxable

Incorporated insurer without permanent capital stock

Owned and controlled by its policyowners

Policyowners have voting rights (elects Board of Directors)

Sell ONLY Participating Policies

Dividends are a return of premium and are NOT taxable

Operates as a Corporation, Society or Association

Is for the benefit of its members and beneficiaries

Not for Profit; Lodge System; Ritualistic; Elected form of
Government

Life Insurance is in the form of a Certificate of Membership instead of a policy (Group Insurance)

Issued by the Office of Insurance Regulation

Company is Authorized, Licensed, Admitted or certified

Unauthorized, Non-Admitted, Non-Certified or Unlicensed not allow to sell policies in the state (do not come under the jurisdiction of the state of Florida)

Licensed and authorized to transact business in Florida

Gets a Certificate of Authority

Does not come under the jurisdiction of the CFO & Office of
Insurance Regulation with regard to o examination of its financial soundness o examination and approval of types of coverages offered o advertising through the mail

If found guilty of aiding and abetting a nonadmitted insurer, 3 rd degree felony; Liability for all unpaid claims; suspension or revocation of all insurance licenses
Legal reserve requirement Insurers must maintain enough funds in the RESERVE account to cover future liabilities to policyowners; as promised in the insurance
29

Who administers
Insurance Laws in
Florida?
contract
Purpose of regulation
Who Administers the Insurance Laws of Florida?

Public Interest = Public Trust (Consumer Protection)

Financial importance of Insurance industry on the National
Economy

Technical character of insurance contracts requires expert control
The Chief Financial Officer (CFO), the Financial Services
Commission and the Office of Insurance Regulation
Chief Financial Officer
Duties
Department of Financial Services

Independently elected
 Member of the Governor’s cabinet

Head of the Department of Financial Services

Member of the Financial Services Commission

Administers regulation of insurance agents, insurance fraud, and insurance consumer protection

Enforces the Insurance Code and carries out those duties set forth by the code
Financial Services Commission
Composed of
Duties
Governor, Chief Financial Officer (CFO), Attorney General,
Commissioner of Agriculture
Supervises the Office of Insurance Regulation and the Office of
Financial Regulation
Office of Insurance Regulation (OIR)
Appointed by the Financial Services Commission Commissioner of the
Office of Insurance
Regulation
Powers and Duties
Examination
Investigation

Insurance company regulation, including: licensing, rates, policy forms, market conduct, claims, certificates of authority and solvency.
 The CFO and the OIR have the right to examine insurer’s books and records at least once every 5 years or as frequently as deemed appropriate

The cost of the examination is the responsibility of the insurer being examined

DFS and OIR may investigate any person who has violated or is violating the Insurance Code

The DFS can investigate the accounts, records and insurance affairs of any agent adjuster, insurance agency or other person subject to it’s jurisdiction

The OIR can investigate the accounts, records, and transactions of insurers and or any company that involved in doing business with a domestic insurer

Any individual who willfully obstructs an investigation is guilty of a misdemeanor
Office of Financial Regulation (OFR)
Head of the Office of Financial Regulation Commissioner of
Financial Regulations
Powers and Duties

Responsible for all activities of the Financial Services Commission
30

Investigation
Persons Required to be
Licensed
Scope of a License
License Types
Insurance Agencies
License Process
Financial related to regulation of banks, credit unions, other financial institutions, finance companies, and the securities industry

Includes a Bureau of Financial Investigation that investigates wrongdoing, and may refer suspicious violations of criminal law to state or federal law enforcement of prosecuting agencies

Has the power to conduct investigations concerning Florida financial institutions codes or rules adopted by the Commissioner

Failure to comply with a subpoena or order will result in a contempt of court and costs for the investigation are assessed against the person being investigated
Agent/Agency Licensing & Appointment

FL law requires any individual who solicits insurance to hold a valid license issued by the Department of Financial Services
 A life agent’s license covers all classes of life insurance except limited credit

No agent shall transact business for any line for which they do not have a current license or appointment from an authorized insurer

Agent
– general lines agent, life agent, health agent, or title agent

Public Adjuster – any person who, for compensation, prepares, completes or files an insurance claim form for an insured or third- party claimant; may also be a compensated person who aids in negotiating or effecting the settlement of claims

All-lines Adjuster – a self-employed person who works for insurers or adjusting firms to ascertain and determine the amounts of claims, losses or damages payable under contracts and attempt to settle those claims

Agency – a business location at which an individual, firm, partnership corporation, association or other entity engages in any activity that by law can only be performed by a licensed insurance agent; does not include and insurer or adjuster

Unaffiliated agent – a licensed agent not appointed by any insurer, but is self-appointed; acts as an independent consultant for a fee that must be established through a written contract with the parties involved

Any business location at which an individual engages in any activity for which an agent’s license is required must be licensed

A licensed agent must be designated to be in full-time charge of each licensed agency location and is deemed the “Agent in
Charge”.

Branch locations can have the same Agent in Charge providing they are present when activities requiring licensure are occurring

Branch Locations are not required to be licensed if they transact business under the name and the federal tax identification of the licensed agency (effective October 15, 2015)

File a written application, completed under oath and signed by the applicant; the application must include full name, age, social security number, residence address, business address, mailing address, contact phone numbers, and email address
31

Examination Process
Transferring a License
Continuing Education
30 days

Meet the required qualifications

Pay all application fees (non-refundable) in advance to the department

Provide proof of completion or in process of completing prelicensing, if required

If an applicant is denied a license based on the application, the applicant must wait 30 days from the date of denial before applying again

An exam application may be submitted either before or after submitting the license application to the department

An exam application must be accompanied by the exam fee

A notice containing the time and place of the examination will be emailed to the applicant

The exam will be held at a designated test site and will take place as soon as reasonably possible

Any applicant who fails to appear, fails to complete or fails the exam may repay the required fee and retake the exam

The department may require a licensee with a lapsed or suspended license to pay the exam fee and retake the exam before the license is renewed or reinstated

The license exam may not be taken by an applicant more than 5 times in a 12-month period

A license in good standing can be transferred from another state as long as it is in the same line of authority and has been active for at least one year prior to relocation

The agent must become a resident of Florida and submit an application and the appropriate fees within 90 days

Every 2 years each licensed agents in Florida must complete 24 hours of Continuing Education in order to renew their license and appointment

As part of the 24 hours of Continuing Education, each licensee must complete a 5 hour update course that is specific to the license held.(Additional: 3 hour Suitability in Annuities & Life)

This 5 hour course must also cover law updates, ethics, disciplinary needs, product suitability, and other related topics required by the Department

Agents who have been licensed for more than 6 years must complete 20 hours of Continuing Education every 2 years, including the 5 hour update course

Excess hours earned may be carried over to the next compliance period

The Department may grant a CE extension of up to 1 year if good cause is shown

A nonresident agent may use the hours earned in his home state to meet the Florida CE requirement if the home state has reciprocity with Florida
Reporting of Actions
Agents MUST notify Dept. of Financial Services of change of name, address, business address, telephone number or email
32

30 days
Appointment
Renewal and Termination of Appointments

Being found guilty, or pleading guilty, or nolo contendere (“no contest”) to a felony or a crime punishable by imprisonment of 1 year or more in any jurisdiction

Any administrative action taken by any government or other regulatory agency that relates to insurance, securities, or activities involving fraud, dishonesty, untrustworthiness, or breach of fiduciary duty
Appointments

The licensed individual must be properly appointed by an insurer to transact insurance

Appointment means the authority given by an insurer or employer to transact insurance or adjust claims on behalf of an insurer or employer

Agent has 4 years (48 months) to have a license appointed; if not appointed in that time, license terminates
 An agent’s appointment remains in effect until revoked, suspended or terminated

The insurer is responsible for renewing the appointment and paying the fee

Late renewal requests must be accompanied by a late filing fee paid by the insurer, not the licensee

Insurers may require appointees to take training and education to be appointed, but these cannot be continuing education courses

Insurers cannot appoint or renew licenses that have not met the continuing education requirement
Activities by an agent
Suspension, Termination, Revocation of License

Unlawful Rebating which may result in the revocation or suspension of an agent’s license

Twisting

Misrepresentation of a policy, agent or insurer

Excessive Controlled Business

Fraud

Violating any ruling of the CFO

Violating any provision of Florida Insurance Law

Incompetence or untrustworthiness

Violating the Code of Ethics

Sale of an unregistered security

Representing an unauthorized insurer

Sliding

Felony conviction
Fiduciary Capacity
Agent Regulation

A fiduciary is someone in a position of trust; often in a position of
Commissions financial trust

Agents are legally obligated to treat applicants and insureds in an ethical manner

It is illegal for insurance producers to commingle premiums collected from applicants with their own personal funds

Agents are compensated by a commission which is a percentage of the initial (first year) and subsequent premiums

Commissions may only be shared with another Licensed and
33

Appointed Agent
Controlled Business Selling insurance only to yourself or people you know or persons they or their spouses are in business with

Cannot exceed 50% of the aggregate commissions and compensation received within a 12-month period
Record Keeping Agents are required to maintain records of transactions for three (3) years.
Rule 69B-215 F.A.C. Code of Ethics
– Life Underwriters (For AGENTS)
Code of Ethics
 “Right & Wrong” /appropriate & inappropriate behavior by agents

Both NAIFA and HAHU issue their own

Incorporated into FL State Laws under Rule 69B-215

Violation of Ethic Laws can result in license suspension or
Scope
Twisting
Churning
Florida Life and Health
Guaranty Association revocation

Business of insurance is a public trust in which all agents have a common obligation to work together in serving the best interests of the insuring public

External replacement ; Illegally inducing any person to lapse, forfeit, surrender, convert an existing policy to replace it with another insurer’s policy *Fine can be up to $75,000 per violation
Replacing policies within the same company, often by the same producer in order to generate commissions. Also, using policy values in an existing policy to purchase another policy or contract with the same insurer. *Fine can be up to $75,000 per each willful violation
Insurance Guaranty Fund

Guaranty Associations protect policyowners, insureds, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetency and insolvency of insurers

Payment limits are set by state law

The association is funded by its members through assessments

The aggregate liability of the FL Life and Health Guaranty
Association may not exceed the following o $100,000 in total net cash and cash withdrawal value for life insurance o $250,000 in net cash surrender and cash withdrawals for deferred annuities o $300,000 for all benefits including cash value, with respect to any one life
Misrepresentation
Unfair Marketing Practices
Untrue, deceptive or misleading information in regard to the terms of an insurance contract, insurance company, insurance agent including the financial standing of any insurer.

Omission of a material fact: o Innocent misrepresentation of a material fact is grounds to void a contract. Misrepresentations of immaterial facts makes contract voidable.

Examples of misrepresentation: Guaranteeing policy dividends;
Using inaccurate numbers on a Chart; false information about provisions or contract terms; Using the term “Vanishing
Premiums”, Implying “Flexible Premium” policies will fund
34

False Advertising
Rebating
Coercion
Sliding
Churning themselves after the Initial premium is paid

Any form of communication used to broadcast information that is untrue, deceptive or misleading that applies to the business of insurance or anyone connected with it

False advertising usually includes misrepresenting key facts and information about an insurer or a policy

Any inducement offered in the sale of an insurance product that is not specified in the policy

Both the offer and the acceptance of a rebate are illegal

In FL, rebates must be reflected on the rebate schedule and cannot be unfairly discriminatory

Agents are required to maintain a copy of all rebate schedules for the most recent 5 years
To impose ones will on another. To say to a client that they must buy one product in order to qualify for another. A prime example of coercion is a loan officer who claims you must buy mortgage life insurance in order to qualify for the loan.
Representing to an applicant that a specific ancillary coverage or product is either:

Required by law when it is not

Included in the policy at no charge when there is a charge

Charging without the applicants informed consent
Replacing policies within the same company, often by the same producer, in order to generate commissions. Also, using policy values in an existing policy to purchase another policy or contract with the same insurer. Churning is also called internal replacement and is prohibited unless the agent can prove it is in the best interest of the applicant
Twisting Misrepresentation by an agent to induce a policyowner to lapse an existing policy in order to switch insurers. Also called external replacement. Twisting is prohibited
Defamation False or maliciously critical statement of another person, product or business calculated to injure
Unfair Discrimination Knowingly making or permitting any unfair discrimination between individuals with regards to the business of insurance
Unfair Claims Settlements

Any form of misrepresentation of pertinent facts

Agent and insurer must acknowledge claim promptly

Insurer must process the claim in a timely manner

Insurer cannot delay the benefit payment

Insure must provide a reasonable explanation in writing if there is a reason for denial
Fraud
Knowingly making a false or fraudulent application for any license or violating any provision of the Insurance Code
Intentional deception (lie) that results in injury, for financial gain
Penalties and Fines

License Denial, Suspension, Revocation, Refusal and a fine of not less than $500 nor more than $3500, and/or imprisonment for not more than 6 months for each violation

In addition to a fine, CFO may assess an amount equal to the amount of commission the agent earned
35

Failure to answer a subpoena or order of the
CFO
Violating a Cease and
Desist Order
Aiding and Abetting an
Unauthorized Insurer
Acting as an Insurer without proper license
Twisting or Churning
Forging signatures on an application or policy- related document
Fraud against the Public
Fraudulent insurance claims and applications
Obstructing a DFS or OIR investigation

Contempt of court

$1,000 fine

Administrative penalty of up to $50,000

Suspension or revocation of the license or certificate of authority, and/or

Any other relief as provided in the Insurance Code

Conviction of a third-degree felony

Liability for all unpaid claims

Suspension or revocation of all insurance licenses

Conviction up to a third-degree felony

Liability for all unpaid claims

Suspension or revocation of all insurance licenses

First degree misdemeanor

Administrative fine of $5,000 each if non-willful

Aggregate fine $50,000 for non-willful violations

Administrative fine of $75,000 each if willful

Aggregate fine $$250,000 for all willful violations

Third-degree felony

$5,000 fine for each if non-willful violation

Aggregate fine $50,000 for non-willful violations

$75,000 if willful violation

Aggregate fine $$250,000 for all willful violations

CFO can turn the matter over to the Attorney General for prosecution

Third degree felony

Misdemeanor
36

Specific regulations of which agents should be aware
Buyer’s Guide and Policy
Summary
Solicitation regulations
Annuity suitability
Senior Consumers
Prohibited practices for marketing of life insurance policies
Marketing Practices

Florida Life Insurance Solicitation Law – information and procedures required when proposing life insurance to a prospective buyer

Florida Replacement Rule – requirements and procedures to be followed when a prospective buyer will be replacing existing insurance with new insurance

Code of Ethics of the Florida Association of Insurance and
Financial Advisors – established an outline of appropriate and inappropriate business behavior for insurance agents; establishes the activities of agents as one of public trust
Disclosure

The Buyer’s Guide and Policy Summary must be given to the applicant no later than the time the application is signed o The Buyer’s Guide contains generic information about life insurance policies o The Policy Summary is a written statement that describes the elements of the policy, and includes the key features, conditions and restrictions of the policy
Life Insurance Solicitation
 Provides buyers with information that will buyer’s select the most appropriate policy, understand the features of the policy, and evaluate the costs of comparable policies

Life insurance solicitation regulations does not apply to annuities, credit life, group life, variable life policies and life policies issued in connection with pension and welfare plans
Prohibited Practices

Using misleading terms such as financial planner, investment advisor, financial consultant or similar terms to imply that an agent is engaged in an advisory business in which compensation is not related to sales

False information and advertising
– insurers may not make, publish, circulate before the public any advertisement or statement with respect to the insurance business that is untrue, deceptive or misleading

Advertising gifts
– an insurer or its’ agents cannot give any item for the purpose of advertising that has a value of more than $25.

Free insurance – offering free life insurance for either the sale or purchase of personal property is prohibited

To ensure that annuity transaction are in the best interest of the consumer, producers must make a reasonable effort to obtain relevant information from the consumer and evaluate the following factors: age, annual income, financial and tax status, investment objectives, liquidity needs and liquid net worth, intended use of annuity, financial experience, and risk tolerance

A senior consumer is anyone age 65 or older

The insurer or agent has no obligation to the senior consumer if the
43

consumer refuses to provide relevant information as requested

Annuities sold to senior consumers may not contain a surrender or deferred sales charge for a withdrawal for more than 10% of the amount withdrawn

Agents and insurers must maintain records on recommendations and sales of products to senior consumers for 5 years after the transaction is completed
Replacement
Florida Replacement Rule Sets forth the requirements and procedures to be followed by insurers and agents when making a proposal for the replacement of a life insurance product
Definition of Replacement Any transaction in which an existing policy is

Lapsed

Surrendered

Converted to reduced paid-up or continued as extended term

Reissued with a reduction in Cash Value

Converted so that either the amount or coverage period is reduced

Used in a financed purchase
Replacing insurer
Existing insurer
Duties of Agents
Duties of Replacing
Insurers
The company that issues the new policy
The company whose policy is being replaced

Provide the applicant a “Notice Regarding Replacement” signed by both the agent and the applicant; leave a copy with the applicant

Obtain a list of all existing policies/annuities being replaced

Leave copies of Notice, all sales proposals or other sales material with the applicant

Submit a copy of the signed Notice to the replacing insurer along with the application

Notify existing insurer immediately of the receipt of an application for policy replacement and provide a copy of the Notice Regarding
Replacement and information on the replacing policy

If requested by the applicant, send a Comparative Information Form containing information about the proposed policy within 5 working
Products exempt from replacement rules days of receiving the application
 Provide a buyer’s guide and policy summary prior to accepting the applicant’s initial premium unless the policy contains a free-look period of at least 10 days

Keep copies of replacement notices, statement, any sales material, and the application in the Producer’s file for that applicant for at least
3 years
Duties of existing insurers

Provide policyowner with a policy summary of the existing policy within 10 days of receiving the Notice and information that the existing policy is being replaced

Keep replacements notifications received for at least 3 years or until the next regular examination by the Insurance Department, whichever is later

Industrial insurance

Credit Life Insurance

Group Life Insurance

Variable Life and Variable Annuities

Every policy issued in
Florida must specify
Free Look
Grace Period
Secondary Addressee
Policy Loans
Nonforfeiture options
Spendthrift Clause

A contractual change is being made to an existing policy with the same insurer

Existing policy is nonconvertible term with 5 years or less left and the term cannot be renewed
Florida Specific Policy Clauses and Provisions

Names of the parties in the contract

Subject of the insurance

Risks insured against

Effective date and period of coverage

Premium

Conditions pertaining to the insurance

Form numbers and edition dates of all endorsements attached to the policy
Life insurance and annuities have a 14-day free look period in Florida

30 day grace period is required in Florida

Insurers may impose an interest charge of up to 8% for the number of days elapsing before the premium is paid

If insured dies during the grace period, the death benefit is paid out minus any premiums due plus up to 8% interest from the benefit

Protects elderly insureds

Coverage for those age 64 or older that has been in force for at least 1 year cannot lapse for nonpayment of premiums after the end of the grace period without notification to the policyowner and a secondary addressee (if provided by the policyowner) of the impending lapse

If the policy has a grace period of more than 51 days, the policyowner must be notified of the lase at least 21 days before the end of the grace period

Florida Law specifies that insurers can charge no more than 10% interest on policy loans

Adjustable loans interest rates may not exceed the higher of either the published monthly average for the month ending 2 months before the date the rate is determined, or the rate used to compute the cash surrender value on the policy plus 1% per year

The paid-up nonforfeiture benefit becomes effective if the premium has been in default for at least 1 year unless another option is selected within 60 days after the due date of the premium

If the policy is surrendered within 60 days of the premium due date
(after premiums have been paid for 3 years on ordinary insurance and 5 years in industrial policies), the insurer will pay the cash surrender value

If the policy is paid-up under the nonforfeiture benefit, the insurer will pay the cash surrender amount if surrendered within 30 days after the policy anniversary date

Insurers can defer the payment of cash surrender values for up to 6 months after demand with surrender of a policy

Protects beneficiaries from the claims of their creditors or the policyowners creditors

Protects proceeds still being held by the insurer that have not yet

Designation of
Beneficiaries
Policy Settlement
Characteristics
Competent Parties
Prohibited Provisions
Number of members required to form a group
Eligible Groups been paid to the beneficiary, such as in the case of fixed-amount or fixed-installment options

Does not apply to lump sum payments

Proceeds paid to an estate become part of that estate and are subject to creditors

If the former spouse of the policyowner is the designated beneficiary, the designation will be void at the time of divorce or declared invalid by court order if the designation was made prior to the divorce

Life agents cannot be designated as beneficiaries unless the agent is placing coverage on a family member (controlled business)

Settlement of the policy must be made upon the death of the insured and proof of receipt of death

If the settlement is a lump sum, the payment must include interest at an annual rate equal to or greater than the Moody’s Corporate Bond
Yield Average-Monthly Average Corporate as of the day the claim was received

The insurer has the power to hold policy proceeds as agreed in wiring between the insurer and the policyholder. The funds can be held in the insurer’s general account

Parties entering into an insurance contract must be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol

The minimum legal age for entering into a life insurance or annuity contract in Florida is 15

Insurers may not issue policies in groups according to age

Insurers may also not issue policies that contain annual endowments such as founder’s policies or coupon-bearing policies

The Certificate of Authority of any insurer who violates this provision will be revoked
Group Life

Sponsoring organization/employer holds the Master Contract
(policyholder)

Members receive a Certificate of Insurance

Individual coverage amounts must be determined according to nondiscriminatory rules

Group life is usually written as annually renewable term

Rates and coverage are based on group underwriting

Evidence of insurability is usually not required if participants enroll during the open enrollment period

Coverage amounts over $50,000 are taxable to the employee

Group must exist for a purpose other than to purchase insurance

Individual members of the group must have the right to convert to individual coverage without evidence of insurability should they leave the group
Florida law requires that a group plan must provide coverage to more than one person under one policy

Employee groups – offered to both active and retired employees

Debtor groups – to be eligible, the group must have at least 100 new persons a year

Florida Required
Provisions

Labor Union groups – must include all of the members of the union

Trustee Groups – the Trust is policyholder o 2 or more employers/unions join together to provide benefits to their employees

Association groups – must have at least 100 members o Must be in active existence for at least 2 years o Have regular meetings at least annually

Credit Union Groups – policy must be issued for the benefit of all eligible members of the credit union

Other groups receiving special approval from the Department

Grace period – 31 days

Incontestability period – 2 years

Entire Contract, Representations vs. Warranties – a copy of the application must be attached to the policy; statements on the application are representations and not warranties

Insurability – insurer reserves the right to require an applicant to provide evidence of insurability as a condition to coverage

Misstatement of age – premiums and/or benefits may be adjusted if the age of the insured has been misstated

Payment of benefits – death benefits must be paid to the beneficiary designated in the policy

Certificate of Insurance – the insurer issues the policyholder to provide each insured an individual certificate of insurance

Conversion on termination of eligibility – each individual has the right to convert to individual coverage without evidence of insurability within 31 days

Conversion on termination of policy – if the policy itself is terminated, every insured who has been covered for at least 5 years, and their covered dependents, is entitled to convert to individual coverage subject to the same conditions and limitations as the group policy

Death pending conversion – if the insured dies during the
Conversion Privilege conversion period before an individual policy becomes effective, the claim is payable under the group policy

Must convert within 31 days

Can convert to any type of individual coverage (except term)

Proof of insurability is not required

The face amount will be the same as the group coverage but the premium will be higher since the individual policy will be issued at the insured’s attained age
Coverage for dependents
 Group coverage must be extended to include the employee’s spouse and dependent children

The amount of coverage for the dependent may not exceed the amount of coverage for the insured employee
Assignment of Proceeds

The individual covered under the group policy may make an assignment of all or part of incidents of ownership including, but not limited to, ownership, the conversion privilege, and the naming of beneficiaries

1)
Step 1) Simulate Your Exam:
After you have finished the Chapters and Quizzes, Simulate Your Exam. You must score at least 70% on the exam simulation. This is a combination of the quizzes, there are 100 questions. You have Two Hours to complete the exam. You will be provided the right answers once all questions are completed. Study this review** Take the simulator again until you pass with a 70%.
You Must Not use your notes during the Exam, you will sign an affidavit attesting that you did not use any notes during the exam.
In order to receive your Pre-Licensing Certificate from the state, you must complete the Certificate Exam with a 70%.
2) Immediately after passing the exam simulation, click "Get Certificate" on the main menu and follow the instructions. Be sure to verify your name, address and that all the information is correct. You will need to sign an affidavit attesting that you completed the course as directed. You will not get credit for
completing the course until you do this. If you do not complete this step within
16 days of passing the exam, then you will need to take the exam again.
3) Print your certificate of completion from the website .
Step 2) Guarantee Your Exam:
1) Take this test & pass with a 75% *10* days BEFORE taking your test
(this ensures that if perhaps you don’t pass on your first attempt, your second attempt will be paid for by the company).
Step 3) Schedule your state Exam:
1) Register online with Pearson Vue at www.pearsonvue.com
or call
(888)274-2020 and pay $42. Life exam fee. This will be refunded as soon as you take the exam.
2) Select: “Fla Dept. of Financial Services” then “New Users, create
an account.” The exam requested is: FLA LIFE and Annuity (incl
Variable Contracts) (0214) and exam code InsFL-Life01 for Life.
You’ll receive a confirmation number to take to the exam.
3) Schedule Live Scan Fingerprinting appointment: www.L1enrollment.com/FLinsurance . For Agency Name, choose
Insurance-Agent. Payment type, choose BILLING, then FLB00I009.
Print email confirmation and take with you to fingerprint appt.
4) You can get your fingerprints done either before or after the exam, bring the confirmation page when you take the exam,
5) Study before the test, use your Quiz4Life app as a refresher
…...and PASS YOUR EXAM!
Great job at achieving your state insurance License!