Life Insurance Basics
19%of exam
Life Policies + Annuities
19%of exam
Health Insurance
38%of exam
SC All-Lines Law
14%of exam
SCDOI LicensingCE RulesUnfair PracticesGuaranty AssociationProducer Conduct
SC Life + Health Law
9%of exam
Life ProvisionsReplacementAnnuity SuitabilityMedicare SupplementLTC Partnership
Quick Facts
- Exam
- InsSC-LAH03
- Items
- 140 (130 scored + 10 pretest)
- Time
- 150 minutes
- Pass
- Scaled 70
- Fee
- $59 per attempt
- Vendor
- Pearson VUE
- Regulator
- SCDOI (Title 38)
- Pre-license
- Not mandated
SC Life Time Limits
10 free look | 31 grace | 2yr contest
Free look: 10 daysGrace: 31 daysIncontestability: 2 yearsSuicide: 2 years
Term vs Whole Life
Term
- Temporary
- No cash value
- Lowest premium
Whole life
- Permanent
- Guaranteed cash value
- Level premium
Pure protection vs permanent
Life Product Picker
- Temporary need, low cost→Term life(No cash value)
- Mortgage protection→Decreasing term(Face declines)
- Lifetime, fixed premium→Whole life(Guaranteed cash value)
- Flexible premium→Universal life(Adjustable death benefit)
- Market growth potential→Variable life(Securities license)
- Two lives, estate→Survivorship(Pays second death)
Insurance Principles
- Pure risk
- Loss or no loss
- Speculative risk
- Not insurable
- Adverse selection
- Bad risks seek coverage
- Law of large numbers
- Predicts group losses
- Insurable interest
- Required at application
- Indemnity
- Restore, no profit
- Underwriting
- Risk selection + classing
- Reinsurance
- Insurer's insurance
Contract Characteristics
- Aleatory
- Unequal value exchange
- Adhesion
- Take it or leave it
- Unilateral
- Only insurer promises
- Conditional
- Conditions must be met
- Utmost good faith
- Honest disclosure both sides
- Representation
- Believed-true statement
- Warranty
- Guaranteed-true statement
- Concealment
- Hiding material fact
Life Policy Types
- Term
- Temporary, no cash value
- Whole life
- Permanent, fixed premium
- Universal life
- Flexible premium, adjustable
- Variable life
- Subaccounts, securities license
- VUL
- Flexible plus subaccounts
- Endowment
- Pays at maturity
- Decreasing term
- Mortgage protection
- Survivorship
- Pays on second death
Standard Life Provisions
- Free look
- Return for refundSC 10 days
- Mail-order free look
- Direct-response policySC 30 days
- Grace period
- Late premium, stays activeSC 31 days
- Incontestability
- No contest after 2 years
- Suicide clause
- Refund only, first 2 years
- Reinstatement
- Restores lapsed policy
- Misstatement of age/sex
- Benefit adjusted, not voided
- Entire contract
- Policy plus application
Nonforfeiture Options
Cash | Reduced paid-up | Extended term
Cash: surrender valueReduced paid-up: smaller policyExtended term: same face
Fixed vs Variable Annuity
Fixed
- Guaranteed rate
- Insurer bears risk
- No securities license
Variable
- Subaccount performance
- Owner bears risk
- Securities license
Guaranteed floor vs market upside
Common Life Riders
- Waiver of premium
- Disability waives premium
- Accidental death
- Pays multiple of face
- Guaranteed insurability
- Buy more, no exam
- Accelerated benefit
- Terminal illness advance
- Term rider
- Adds temporary coverage
- Child rider
- Covers all children
- Return of premium
- Refunds at term end
- Payor benefit
- Juvenile, payor dies
Nonforfeiture + Dividends
- Cash surrender
- Take cash, end policy
- Reduced paid-up
- Smaller paid policy
- Extended term
- Same face, limited time
- Automatic premium loan
- Cash value pays premium
- Cash dividend
- Check to owner
- Paid-up additions
- Buys more coverage
- Accumulate at interest
- Left with insurer
- Dividends
- Return of premium, untaxed
Settlement Options
- Lump sum
- Full amount, tax-free
- Interest only
- Insurer holds principal
- Fixed period
- Set years, varying amount
- Fixed amount
- Set amount, varying time
- Life income
- Paid for lifetime
- Life with period certain
- Guaranteed minimum payout
- Joint and survivor
- Pays two lives
Annuity Classification
- Immediate
- Payout within one year
- Deferred
- Accumulation then payout
- Fixed
- Guaranteed minimum rate
- Variable
- Subaccounts, securities license
- Indexed
- Tied to market index
- Single premium
- One lump deposit
- Flexible premium
- Varying deposits
- Accumulation phase
- Money grows tax-deferred
- Annuitization phase
- Converted to income
Disability Definitions
Own occ easier | any occ stricter
Own occ: your jobAny occ: any jobResidual: partial loss
HMO vs PPO
HMO
- PCP gatekeeper
- Referrals required
- In-network only
PPO
- No referral
- Out-of-network allowed
- Higher cost
Control vs flexibility
Health Plan Picker
- Any provider freedom→Indemnity(Highest cost)
- Lowest cost, gatekeeper→HMO(PCP referral)
- Flexibility, no referral→PPO(Network discount)
- HMO plus out-of-network→POS(Hybrid)
- Tax-advantaged savings→HSA + HDHP(Portable)
- Lost group coverage, 20+→COBRA(18 months)
- Small SC group ends→SC continuation(COBRA fallback)
Health Plan Types
- Indemnity
- Fee-for-service, any provider
- HMO
- Network, PCP gatekeeper
- PPO
- Network, no referral
- POS
- HMO with out-of-network
- EPO
- Network only, no referral
- Copay
- Flat fee per service
- Coinsurance
- Shared percentage
- Major medical
- Broad, high-limit coverage
LTC Benefit Trigger
2 of 6 ADLs, 90+ days, or cognitive
Bathe, dress, transferToilet, eat, continence2 of 6 triggers pay
Cancelable vs Guaranteed Renewable
Cancelable
- Insurer ends anytime
- Rate can change freely
- Least secure
Guaranteed renewable
- Insurer must renew
- Class-only rate change
- Insured controls
Insurer power vs insured control
Consumer Accounts + ACA
- HSA
- Needs HDHP, portable
- HRA
- Employer funded only
- FSA
- Use it or lose it
- HDHP
- High deductible plan
- ACA EHB
- Ten essential benefits
- Guaranteed issue
- No health-based denial
- FFM
- SC uses HealthCare.gov
- Rating factors
- Age, tobacco, area, family
Medicare vs Medicaid
Medicare
- Age 65 or disabled
- Federal program
- Not income-based
Medicaid
- Low income
- State plus federal
- Asset-tested
Age/disability vs financial need
Disability Income
- Elimination period
- Waiting before benefits
- Own occupation
- Can't do your job
- Any occupation
- Can't do any job
- Residual benefit
- Partial disability income
- Benefit period
- How long benefits pay
- COLA rider
- Inflation-adjusted benefit
- Notice of claim
- Within 20 days
- Proof of loss
- Within 90 days
Long-Term Care
- LTC free look
- 30 days
- LTC pre-existing
- 6-month look-back max
- Guaranteed renewable
- LTC must offer
- 2-of-6 ADL test
- Triggers chronic-illness benefit
- ADLs
- Bathe, dress, transfer, toilet, eat, continence
- Inflation protection
- LTC must offer option
- Partnership LTC
- Medicaid asset disregard
- TQ benefits
- Income-tax-free payout
Medicare + Government
- Part A
- Hospital, mostly premium-free
- Part B
- Doctor, monthly premium
- Part C
- Medicare Advantage
- Part D
- Prescription drugs
- Medigap
- Standardized Plans A-N
- Medicaid
- Income-based, state + federal
- Medigap OEP
- 6 months, age 65 + B
- Plans C and F
- Closed to post-2020 eligibles
Group + Federal Rules
- COBRA
- 18 months, 20+ employees
- SC state continuation
- Smaller-group fallback
- HIPAA
- Portability, privacy
- Guaranteed renewable ACA
- Nonpay/fraud/exit only
- Internal appeal
- First denial-dispute step
- External review
- Independent reviewer
SC Guaranty Limits
Life 300 | Annuity 300 | Health 500
Life death: $300kAnnuity PV: $300kDI/LTC: $300k eachHealth plan: $500k
Twisting vs Churning
Twisting
- Misrepresent to replace
- Often different insurer
- Deceptive comparison
Churning
- Same insurer recycled
- Repeated replacement
- Commission driven
Both are prohibited ITPA violations
SC Compliance Picker
- Insurer becomes insolvent→SCLAHIGA(Up to statutory limits)
- Existing policy terminated→Replacement notice(At application)
- Recommend an annuity→Best-interest file(Doc the basis)
- Renew the license→24 CE hours(3 ethics)
- First resident applicant→Fingerprinting(IdentoGO, one-time)
- Sell LTC policy→Approved training(Before soliciting)
SC Licensing + Exam
- SCDOI
- Regulates SC insurance
- Director
- Governor appoints, Senate confirms
- Title 38
- South Carolina Insurance Code
- McCarran-Ferguson
- States regulate insurance
- Fingerprinting
- IdentoGO, resident one-time
- Apply via NIPR
- Within 12 months of passing
- Retake
- 24-hr wait, 6x per year
- Age requirement
- At least 18
SC CE Rule
24 hours | 3 ethics | birth-month renewal
Total: 24 hoursEthics: 3 hoursCarryover: 18 max65+/25yr: exempt
Agent vs Broker
Agent
- Represents insurer
- Authority from company
- Binds via apparent authority
Broker
- Represents insured
- Engaged by buyer
- Shops the market
Loyalty runs to whoever they represent
SC Continuing Education
- Total CE
- 24 hours biennially
- Ethics
- 3 hours, no carryover
- Per line minimum
- 8 hours each line
- Carryover cap
- 18 hours max
- Renewal date
- Birth month, odd/even parity
- Senior exemption
- Age 65+ and 25+ yrs licensed
- LTC training
- 8 hr once, then 4hr/24mo
- Annuity training
- One-time 4-hour course
SC Unfair Trade Practices (ITPA)
- Misrepresentation
- False policy statements
- Rebating
- Unfiled premium inducement
- Twisting
- Misrepresent to replace
- Churning
- Same insurer, commission-driven
- Unfair discrimination
- Same class, different rate
- Defamation
- False competitor statements
- Commingling
- Mixing premium with personal funds
- ITPA enforcement
- Director only, no private suit
SC Guaranty Limits (SCLAHIGA)
- Life death benefit
- $300,000 per life
- Cash surrender value
- $300,000 within life cap
- Annuity present value
- $300,000 per contract
- Disability income
- $300,000 per individual
- Long-term care
- $300,000 per individual
- Health benefit plans
- $500,000 per individual
- Aggregate basis
- Per life, per insolvent insurer
- Sales inducement
- Prohibited use, always
SC Free-Look Picker
- Standard agent-sold life→10 days(From delivery)
- Mail-order life→30 days(No agent involved)
- Standard annuity→10 days(Reg 69-29)
- Replacement annuity→20 days(Reg 69-12.1)
- LTC policy→30 days(Title 38 Ch. 72)
- Medigap policy→30 days(Bold first-page notice)
SC Life-Specific Law
- Title 38 Ch. 63
- Individual life provisions
- Replacement reg
- Regulation 69-12.1
- Replacement notice
- Left at application
- Replacement contestability
- New 2-year period
- Creditor exemption
- Named beneficiary protected
- Estate beneficiary
- Not creditor-protected
- Charity insurable interest
- Irrevocable naming required
SC Annuity + Health Law
- Best-interest reg
- S.C. Reg. 69-29 (NAIC 2020)
- Annuity free look
- 10 days standard
- Annuity replacement free look
- 20 days (Reg 69-12.1)
- Medigap free look
- 30 days, bold notice
- Duplicate Medigap
- Prohibited unfair practice
- LTC Act
- Title 38, Chapter 72
- HMO law
- Title 38, Chapter 33
- SERFF
- SC rate/form filing system
Common Traps
Free look vs grace period
Free look cancels new policy ≠ Grace covers late payment
Suicide clause payout
Within 2 years: premium refund ≠ After 2 years: full face
Misstatement of age
Benefit adjusted ≠ Never voids the policy
Twisting vs churning
Twisting: different insurer ≠ Churning: same insurer
Director selection
SC Director is appointed ≠ Not elected by voters
SC exchange type
SC uses HealthCare.gov ≠ No state-based exchange
Guaranty as a sales pitch
Coverage exists by law ≠ Using it to sell is banned
Medigap C and F
Pre-2020 eligibles keep them ≠ Post-2020 eligibles cannot buy
Own vs any occupation
Own occ pays easier ≠ Any occ pays stricter
Last Minute
- 1.140 items, 150 min, pass 70
- 2.50 life, 50 health, 30 law
- 3.SC law: 18 all-lines, 6+6
- 4.Fee $59; retake wait 24h
- 5.No SC pre-license education required
- 6.IdentoGO fingerprinting: one-time, residents
- 7.Apply via NIPR within 12 months
- 8.CE 24 hrs/2yr, 3 ethics
- 9.Free look 10 days (30 LTC)
- 10.Guaranty $300k life, $500k health
- 11.Annuities: NAIC best-interest standard
- 12.SC Insurance Director appointed, not elected
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