Health Insurance & Annuities 

 January 10, 2022


  1. Basic Principles of Life, Health Insurance and Annuities
  2. Nature of Insurance; Risk, Perils and Hazards
  3. Legal Concepts of the Insurance Contract
  4. Life Insurance Policies, Provisions, Options and Riders
  5. Life Insurance Premiums, Proceeds and Beneficiaries
  6. Life Insurance Underwriting and Policy Issue
  7. Group Life Insurance
  8. Annuities
  9. Social Security
  10. Retirement Plans
  11. Uses of Life Insurance
  12. Health and Accident Insurance
  13. Health Insurance Providers
  14. Disability Income Insurance
  15. Medical Expense Insurance
  16. Private Insurance Plans for Seniors
  17. Health Insurance Policy Provisions
  18. Health Insurance Underwriting
  19. Michigan Laws and Rules Pertinent to Insurance

Chapter #1 Summary

  • Insurance : The Transfer of RISK [legal contract] (accumulation of funds).
  • Benefits : A contract of indemnity whose primary purpose is to pay off financial losses and reimburse the insured. // Evolved to: produce a Practical Solution to economic uncertainties and losses.
  • Companies that are selling more than one line of insurance [multi-line insurers].
  • Life Insurance create instant state, no death timeline.
  • 2 Types of Insurance: Private & Government.
  • Stock Insurance Company : Issues a Nonparticipating Insurance Policy.
  • Nonparticipating Policies : Aims Only at Increasing Profit for the Shareholders.
  • Mutual Companies are referred to as PARTICIPAITING companies [dividends].
  • Participating Policies : allow policyholders to participate in electing board and also receive Divisible Surplus.
  • Divisible Surplus : Amount paid to policyowners after setting aside expenses.
  • Pure Assessment Mutual Company : delegates loss-sharing to group members.
  • Risk Retention Group [Risk Purchasing Group] : Only Has to be licensed in 1 State but may insure members in any State.
  • Lloyd's Of London : Syndicate of Companies & Individuals underwriting insurance individually.
  • Ceding Company : The Insurance Company transferring the risk. 
  • Reinsurer : The Insurance Company assuming the risk.
  • Primary Insurer : The Insurance Company that transfers its loss exposure to another insurer.
  • Captive Insurer : Insurer Insuring Parents Firm's loss exposure
  • Surplus Lines : None Traditional Insurance Market.
  • Industrial Insurance : Relatively small face amounts with weekly paid premiums.
  • Underwriting Department : Responsible for reviewing applications, conducting investigations to gain additional information about applicants, assigning risk classifications & approving or declining an application.
  • Claims Department : is responsible for processing, investigating, and paying claims for losses incurred by insureds.
  • Actuarial Department : Calculates policy rates, reserves, and dividends and makes other applicable statistical studies and reports focusing on morbidity and mortality tables.
  • Career Agents [Captive] & Independent Agents.
  • Career Agencies : Branches of Major Stock & mutual insurance companies contracted to represent an insurer [specific area].
  • Rating Service Company : To Determine The Financial Strength of the industry's insurers.
  • Reserves : Accounting Measurement Obligation to Policy Owners.
  • Liquidity : Company's ability to make unpredictable payouts to policyowners.

* 1868 Paul v. Virginia : This case, which the U.S. Supreme Court decided, involved one state's attempt to regulate an insurance company domiciled in another state.

* 1944 U. States v. SEUA : In the Southeastern Underwriters Association case, the Supreme Court ruled that the insurance industry is subject to a series of Federal Laws, many of which conflicted with existing state laws. As such, insurance is a form of interstate commerce to be regulated by the federal government.

* 1945 McCarran-Ferguson Act : This law made it clear that the states continued regulation of insurance was in the publics best interest. However, it also made possible the application of federal antitrust laws to the extent that [The insurance business] is not regulated by state law.

* 1958 Intervention by the FTC : In 1958 the Supreme Court held that the McCarran Ferguson Act disallowed such supervision by the FTC, a federal agency. Additional attempts have been made by the FTC to force further Federal Control, but none have been successful.

* 1959 Intervention by the SEC : The Supreme Court ruled that Federal securities laws applied to insurers that issued variable annuities and, thus, required these insurers to conform to both SEC and state regulations. The SEC regulated variable life insurance.

* 1970 Fair Credit Reporting Act : Requires fair and accurate reporting of information about consumers, including applications for insurance. Insurers must inform applicants about Any Investigations that are being made upon completion of the application.

* 1994 U. States Code (USC) Section 1033 & 1034.
According to 18 U.S.C. 1033 & 1034 : It is a criminal offense for an individual who has been convicted of a felony involving dishonesty or breach of trust to willfully engage or participate (in any capacity) in the business of insurance without first obtaining a "Letter of Written Consent to Engage in the Business of Insurance" from the regulating insurance department of the individual's state of resistance.

* 1999 Financial Services Modernization Act. :  In 1999 Congress passed the Financial Services Modernization Act, which repealed the Glass Steagall Act. Under this new legislation, commercial banks, investment banks, retail brokerages and insurance companies can now enter each other's lines of business.

* 2001 Uniting & Strengthening America by Providing Appropriate Tools Required to Intercept & Obstruct Terrorism Act. : The Patriot Act, which amends the Bank Secrecy Act (BSA), was adopted in response to the September 11, 2001, terrorist attacks. The Patriot Act is intended to strengthen U.S. measures to prevent, detect, and deter terrorists and their funding. The act also aims to prosecute international money laundering and the financing of terrorism. These efforts include anti-money laundering (AML) tools that impact the banking, financial, and investment communities.

* 2003 Do Not Call Implementation Act. : The Do Not Call Registry allows consumers to include their phone numbers on the list to which telemarketers cannot make solicitation calls.

* 2010 Patient Protection & Affordable Care Act (PPACA) : Often shortened to the Affordable Care Act (ACA), it represents one of the most significant regulatory overhauls and expansions of health insurance coverage in U.S. history.

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