NM Law + Regulation
10%of exam
OSI + SuperintendentLicensingCE + TrainingUnfair PracticesGuaranty Limits
General + Federal
7%of exam
RiskContract ElementsInsurer TypesFCRAUSC 1033/1034
Life/Health Basics
16%of exam
Insurable InterestField UnderwritingRisk ClassesMIBHuman Life Value
Life Policies
9%of exam
TermWhole LifeUniversalVariableGroup Life
Provisions + Riders
13%of exam
Free LookIncontestabilityNonforfeitureSettlement OptionsRiders
Annuities
8%of exam
AccumulationAnnuitizationFixedVariableIndexed
A&H Provisions
7%of exam
Uniform ProvisionsProof of LossRenewabilityElimination PeriodClaims
Disability Income
4%of exam
Own OccupationAny OccupationPresumptiveBenefit PeriodBusiness DI
Medical + Group
16%of exam
Medicare + LTC
5%of exam
Medicare PartsMedigapMedicaidLTC ADLsLevels of Care
Taxation
5%of exam
Death BenefitMEC1035 ExchangeExclusion RatioHSA
Quick Facts
- Exam
- Series 18-27
- License
- Life, Accident & Health
- Items
- 150
- Time
- 2h 30m
- Pass
- 70%
- Fee
- $75
- Prelicensing
- None required
- Regulator
- NM OSI
- Vendor
- PSI (NMINS)
NM Guaranty Limits
Death 300, cash 100, annuity 250, health 500.
Death: $300KCash: $100KAnnuity: $250KHospital: $500K
Replacement vs Twisting
Replacement
- Policy swap
- Can be legal
- Disclosure required
Twisting
- Misleading swap
- Illegal practice
- 59A-16-6
Disclosure vs deception
NM Compliance Picker
- Passed exam→Apply NIPR(Within 12 months)
- Insurer uses you→Appointment(Authorization)
- Renew license→24 CE credits(3 ethics)
- Sell annuities→4-hour training(One-time)
- Sell LTC→8-hour course(Plus refresher)
- Hold premiums→Fiduciary account(No commingling)
NM Regulator + OSI
- OSI
- NM insurance regulator
- Superintendent
- Enforces Insurance Code
- PSI
- Exam vendor (NMINS)
- NIPR
- License application portal
- Chapter 59A
- NM Insurance Code
- COA
- Insurer certificate authority
NM Licensing Rules
- Minimum age
- 18 years
- Prelicensing
- None required
- Fingerprints
- Resident background check
- Address change
- Report in 20 days
- Apply window
- Within 12 months
- Renewal
- Biennial by birth month
- Appointment
- Insurer authorizes producer
NM CE + Training
- CE total
- 24 credits biennial
- Ethics
- 3 of 24
- Annuity training
- 4-hour one-time
- LTC initial
- 8-hour course
- LTC refresher
- 4-hour each cycle
- Late CE
- $50 penalty
- Carryover
- Not allowed
NM Unfair Practices
- Twisting
- Misleading replacement churn59A-16-6
- Misrepresentation
- False policy facts59A-16-4
- False advertising
- Deceptive promotion59A-16-5
- Defamation
- False insurer attack59A-16-10
- Rebating
- Unfiled sale inducement59A-16-16
- Boycott/coercion
- Restraint of trade59A-16-19
- Unfair claims
- Bad-faith settlement59A-16-20
NM Producer Conduct
- Fiduciary duty
- Premium trust duty59A-12-22
- Commingling
- Prohibited with personal
- Shared commission
- Licensed producers only59A-12-24
- Cease-and-desist
- OSI stop order59A-16-27
- Fraud Act
- Insurance fraud statute59A-16C
- Privacy
- Consumer information rules13.1.3
NM Guaranty Limits
- Death benefit
- $300,000
- Cash value
- $100,000
- Annuity value
- $250,000
- Hospital/medical
- $500,000
- Disability income
- $300,000
- LTC benefits
- $300,000
- Sales pitch
- Prohibited use
Contract Traits
CUAA: conditional, unilateral, adhesion, aleatory.
Conditional dutiesOne promiseInsurer draftedUnequal exchange
Mutual vs Stock
Mutual
- Policyholder owned
- Pays dividends
- Nonprofit direction
Stock
- Shareholder owned
- Pays dividends to owners
- Profit driven
Policyholders vs shareholders
General Insurance Concepts
- Risk
- Chance of loss
- Peril
- Cause of loss
- Hazard
- Increases loss chance
- Adhesion
- Insurer drafts contract
- Aleatory
- Unequal value exchange
- Utmost good faith
- Honest full disclosure
- Indemnity
- Restore, no profit
- Consideration
- Premium plus statements
Insurer Domicile
Domestic home, foreign other state, alien abroad.
Domestic: this stateForeign: other US stateAlien: other country
Federal Laws
- FCRA
- Consumer report rules
- USC 1033/1034
- Prohibited-person consent
- Do Not Call
- Solicitation limits
- GLBA
- Financial privacy
- HIPAA
- Health privacy portability
- ACA
- Essential health benefits
Underwriting + Basics
- Insurable interest
- At application only
- Human life value
- Income-replacement method
- Needs approach
- Sum future obligations
- Field underwriting
- Producer gathers info
- MIB
- Fraud-prevention database
- Preferred
- Best risk class
- Standard
- Average risk
- Substandard
- Higher premium risk
Term vs Whole
Term
- Temporary
- No cash value
- Lower premium
Whole
- Permanent
- Cash value
- Fixed premium
Temporary vs permanent
Life Product Picker
- Temporary need→Term(Lowest premium)
- Falling debt→Decreasing term(Mortgage)
- Lifetime plus cash→Whole life(Fixed premium)
- Flexible premium→Universal life(Adjustable)
- Market growth okay→Variable life(Separate account)
- Two insureds→Survivorship(Second death)
Life Policy Types
- Term
- Temporary, no cash
- Level term
- Level face amount
- Decreasing term
- Falling face amount
- Whole life
- Permanent plus cash
- Limited pay
- Short premium period
- Universal life
- Flexible premium
- Variable life
- Separate account risk
- VUL
- Flexible plus variable
- Group life
- Master contract coverage
Standard Provisions
- Free look
- Refund review period
- Grace period
- Late-pay window
- Incontestability
- Two-year challenge limit
- Reinstatement
- Restore lapsed policy
- Entire contract
- Policy plus application
- Misstatement of age
- Adjust benefit amount
- Assignment
- Transfer ownership rights
- Common disaster
- Beneficiary survival clause
Options + Riders
- Cash surrender
- Take cash value
- Reduced paid-up
- Smaller permanent policy
- Extended term
- Same face, temporary
- APL
- Automatic premium loan
- Waiver of premium
- Disability waives premium
- ADB
- Accidental death extra
- GIR
- Future purchase guarantee
- Accelerated benefit
- Early terminal payout
Owner vs Annuitant
Owner
- Holds rights
- Names beneficiary
- Takes withdrawals
Annuitant
- Measuring life
- Sets payout size
- May not own
Rights vs measuring life
Annuity Picker
- Income now→Immediate(Annuitize)
- Income later→Deferred(Accumulate)
- Guaranteed rate→Fixed(General account)
- Market upside→Variable(Securities license)
- Index-linked growth→Indexed(Caps and floors)
- Tax-free swap→1035(Like-kind)
Annuity Concepts
- Accumulation
- Funding growth phase
- Annuitization
- Income payout phase
- Owner
- Holds contract rights
- Annuitant
- Measuring life
- Immediate
- Income within year
- Deferred
- Grows, pays later
- Fixed
- Guaranteed, general account
- Variable
- Separate account risk
- Indexed
- Index-linked crediting
A&H Claim Order
Notice, forms, proof, payment.
Notice: 20 daysForms: 15 daysProof: 90 daysPayment: prompt
Renewable vs Noncancelable
Guaranteed renewable
- Must renew
- Rates by class
- No individual cut
Noncancelable
- Must renew
- Premium locked
- Strongest for insured
Rate change vs locked
A&H Uniform Provisions
- Notice of claim
- Within 20 days
- Claim forms
- Insurer sends 15 days
- Proof of loss
- Within 90 days
- Time of payment
- Claims paid promptly
- Legal actions
- 60 days to 3 years
- Grace period
- Late premium window
- Guaranteed renewable
- Must renew, rates change
- Noncancelable
- Renew, premium locked
Own-occ vs Any-occ
Own occupation
- Own job
- Broader coverage
- Higher premium
Any occupation
- Any suitable job
- Stricter test
- Lower premium
Broad vs strict
Disability Income
- Own occupation
- Own job only
- Any occupation
- Any suitable job
- Total disability
- Cannot work
- Residual
- Reduced earnings benefit
- Presumptive
- Loss of sight/limbs
- Elimination period
- Benefit waiting time
- Benefit period
- Payment duration
- Business overhead
- Covers office expense
HMO vs PPO
HMO
- PCP gatekeeper
- Network focus
- Referral likely
PPO
- More choice
- Out-network possible
- Higher cost
Gatekeeper vs choice
Health Plan Picker
- Provider freedom→PPO(Out-network option)
- Gatekeeper model→HMO(PCP referral)
- Blend of both→POS(HMO plus PPO)
- Lost income→Disability(Income benefit)
- Custodial care→LTC(ADL trigger)
- Medicare gaps→Medigap(Supplement)
Medical Plans + Cost
- Major medical
- Broad coverage
- HMO
- Network plus gatekeeper
- PPO
- Preferred network choice
- POS
- HMO/PPO blend
- Deductible
- Paid before plan
- Coinsurance
- Shared percentage
- Copay
- Fixed visit charge
- Stop-loss
- Out-of-pocket cap
Group + COBRA
- Group contract
- Master policy
- Certificate
- Member coverage proof
- Noncontributory
- Employer pays all
- Contributory
- Employee shares cost
- COBRA 18
- Job loss, hours
- COBRA 36
- Death, divorce, dependent
- Conversion
- To individual policy
- Coordination
- Avoids double payment
Medicare ABCD
A hospital, B medical, C Advantage, D drugs.
A: hospitalB: doctorsC: privateD: drugs
Medicare vs Medicaid
Medicare
- Age 65 or disability
- Federal program
- Not income-based
Medicaid
- Means-tested
- Low income
- State-federal
Age vs income
Medicare + LTC
- Part A
- Hospital inpatient
- Part B
- Physician, outpatient
- Part C
- Medicare Advantage
- Part D
- Prescription drugs
- Medigap
- Fills Medicare gaps
- Medicaid
- Means-tested program
- LTC trigger
- 2 of 6 ADLs
- Care levels
- Skilled, intermediate, custodial
Six ADLs
Bathing, dressing, eating, toileting, transferring, continence.
2 of 6 triggers LTCOr cognitive impairmentSkilled careCustodial care
Taxation Rules
- Death benefit
- Income-tax-free
- Cash value growth
- Tax-deferred
- Dividends
- Return of premium
- MEC
- Taxed gain-first (LIFO)
- Annuity gains
- LIFO if nonqualified
- Exclusion ratio
- Basis recovery portion
- 1035 exchange
- Tax-free like-kind swap
- HSA
- Triple tax advantage
Common Traps
Owner vs insured
Owner controls ≠ Insured is life
Twisting vs replacement
Twisting misleads ≠ Replacement discloses
Rebating vs dividend
Rebate illegal inducement ≠ Dividend policy return
Probationary vs elimination
Probationary at start ≠ Elimination before benefits
Medicare vs Medicaid
Medicare age/disability ≠ Medicaid income-based
Guaranty as pitch
Protects insolvency ≠ Never a sales tool
Life insurable interest
Only at application ≠ Not at death
Own-occ vs any-occ
Own-occ broader ≠ Any-occ stricter
Last Minute
- 1.150 items, 2.5 hours
- 2.Passing score 70 percent
- 3.Exam fee $75
- 4.No prelicensing course required
- 5.Four attempts then six months
- 6.OSI regulates; PSI tests
- 7.CE 24 credits, 3 ethics
- 8.Annuity training 4 hours
- 9.Life insurable interest at application
- 10.Twisting is illegal replacement
- 11.Guaranty never a sales pitch
- 12.Proof of loss 90 days
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