Chapter 13 Legal Considerations

Question 1

Medicare Supplement(Medi-Gap)

Answer 1

For seniors, after their Medicare benefits have been exhausted, the only way for many seniors to be sure their medical expenses will be covered is through this. When purchasing this, seniors normally purchase this out of fear.

Question 2

What are Pretext Interviews?

Answer 2

Agents, Brokers or others who transact insurance use these to gain confidential information about prospects or clients.

Question 3

When conducting a pretext interview, someone attempts to get information by:

Answer 3

1. Pretending to be someone they are not
2. Pretending to be someone other than the person or company they are representing
3. Misrepresenting the purpose of the interview
4. Refusing to identify themselves

Question 4

Pretext Interviews are Illegal EXCEPT:

Answer 4

When an insurer is conducting a claim investigation for suspected criminal activity, fraud, misrepresentation or non disclosure.

Question 5

Annualized Commision

Answer 5

This is when insurers pay agents their first full year of commission on a policy or receipt of the application and initial check. Issues: If policy is returned or cancelled, the agent is expected to pay it back or recover any unearned premium.

Question 6

Discrimination with Applications

Answer 6

1. The application can not contain race, color, religion, national origin, ancestral or sexual preference. Allowed to ask about birthplace as long as the question is to identify and not to discriminate.

Question 7

Discrimination: HIV AND AIDS

Answer 7

Standards for underwriting life, health and disability insurance for victims of HIV & AIDS include: Mandatory standards for assessing risks to determine insurability/ Requirements for maintaining confidentiality or information, required written consent before testing.

Insurers may not use: sexual orientation, marital status, living arrangements, occupation, gender, beneficiary designation, zip codes or other territorial classification to determine whether to test for HIV.

Civil penalty mandates 1-5k.

Question 8

Discrimination: Genetic Disability Traits

Answer 8

Insurers cannot refuse to issue or renew a life or disability policy because person carriers gene assoc with hereditary disability that has caused no adverse effect on carrier.

Group policies may not require a higher premium or require a rebate from an insured with a genetic disability other than the rate required of other insureds in that group.

Insurers may not set a lower commission fee for agents or brokers who write policies for individuals with genetic disability traits.

Question 9

Can individual/group life/annuity or disability insurers refuse to insure or limit coverage or charge a different rate for physical or mentally impaired?

Answer 9

No. The only exception is based on sound actuarial principles or related to actual or reasonable anticipated experience.

Question 10

What are guidelines that every agent or broker should follow?

Answer 10

1.Place the customers’ interest first (There should never be a conflict in the agent/brokers mind as to whose interests come first)
2. Know your job and continue to increase your level of competence.
3. Identify your customer’s needs and recommend products and services those needs
4. Accurately and truthfully represent products and services (misreps are punishable by fine up to $200, or six months in prison and a license suspension of up to THREE YEARS
5. Avoid jargon(
6. Stay in touch with your customers and conduct periodic coverage reviews
7. Maintain confidentiality and protect the privacy of customer info using physical and electronic safeguards
8. Keep informed of and obey laws (3 hour ethics every 2 years)
9. Avoid unfair or inaccurate remarks about competition.