Free NM L&H Exam Flashcards

New Mexico's independent insurance regulator. OSI licenses producers, enforces the Insurance Code, conducts market conduct oversight, and protects consumers. It is the body that issues your producer license, not the testing vendor PSI.

The New Mexico Insurance Code chapter where licensing, trade practice, and insurer regulation statutes live. Citations such as 59A-11-6 (examinations) and 59A-16-6 (twisting) appear on the state-law portion of Series 18-27.

New Mexico's combined Life, Accident & Health producer exam. 150 items, 2.5-hour time limit, 70% passing score, $75 fee per attempt. Items blend national content with New Mexico-specific statutes.

After four unsuccessful attempts at the same line of authority, a candidate must wait six months before retesting. Attempts 1-4 may be rescheduled with a new exam fee; the six-month wait triggers only after the fourth failure.

The vendor that administers New Mexico insurance exams under OSI contract. Scheduling is via PSI's NMINS portal; the $75 exam fee is paid to PSI and is separate from the NIPR license application fee.

NMAC 13.4.2.26 requires resident producers to maintain an in-state place of business accessible to the public. Nonresidents satisfy this through their home-state office and reciprocity, not by opening a New Mexico office.

A producer must report a legal name or address change to OSI within 20 days. Missing the deadline can trigger a monetary penalty and create compliance exposure under NMAC 13.4.2.26.

New Mexico does NOT require a prelicensing course for life and health applicants. Self-study is allowed, but structured prep is strongly recommended because the exam blends national content with state-specific statutes you must memorize.

Most resident producers complete 24 CE credits per two-year compliance period, split as 21 general + 3 ethics. CE cannot be carried over, and the same course may not be repeated for credit within 36 months.

Before soliciting annuities in New Mexico, a producer must complete a one-time 4-hour annuity suitability course. It supports the best-interest standard for recommending annuity products to consumers.

LTC transactions require an 8-hour initial course before sale and a 4-hour refresher each compliance period. This is in addition to the standard 24-hour CE baseline when applicable.

New Mexico producer licenses renew on the last day of the producer's birth month, every two years. Late CE carries a $50 penalty, and credits cannot be carried into the next cycle.

Inducing a policyholder to replace existing coverage through misleading comparisons or misrepresentation. New Mexico specifically targets it at NMSA 59A-16-6 and tests it as a frequent producer-conduct point.

Making false, malicious, or derogatory statements about an insurer or producer. It sits within New Mexico's unfair trade practice statutes, separate from twisting and rebating.

New Mexico bars producers from offering unfiled inducements, special favors, or rebates of premium to persuade a sale. Legitimate policy dividends and policy provisions are not rebating.

An OSI order requiring a person to stop a specified prohibited act. Violating an issued cease-and-desist exposes the producer to further enforcement action and monetary penalties.

Producers handling premium funds act in a fiduciary capacity: premiums collected for an insurer must be remitted promptly and not commingled with personal funds. Misuse triggers discipline and restitution.

A statutory safety net paying covered claims when a member insurer becomes insolvent, subject to statutory limits and conditions. Producers may NOT use guaranty coverage as a sales inducement.

The core purpose of insurance — shifting the financial consequences of a loss from the policyholder to the insurer. Insurance does not eliminate risk; it converts uncertain large losses into predictable premium payments.

As the number of exposure units grows, actual results more closely match predicted results. This is the statistical basis that lets insurers price premiums from loss predictions.

A risk must be due to chance, definite and measurable, statistically predictable, non-catastrophic to the pool, and the insured must have an insurable interest. A guaranteed profit for the insurer is NOT a requirement.

A mutual insurer is owned by its policyholders, who may receive dividends from surplus. A stock insurer is owned by shareholders who may or may not be policyholders and whose primary goal is profit for investors.

A reciprocal exchange is an unincorporated group where subscribers insure each other. An attorney-in-fact manages the daily operations — premiums, claims, and underwriting — on the subscribers' behalf.

For life insurance, insurable interest must exist at the time of application only — not at the time of loss. This differs from property insurance, which requires insurable interest at both application and loss.

Nonprofit fraternal organizations that provide insurance to members through a lodge system. They are exempt from federal income tax and operate for the benefit of members, not for profit.

An insurance policy is drafted solely by the insurer with no negotiation. Because the insured has no chance to negotiate terms, any ambiguity in the language is interpreted in favor of the insured.

Only the insurer makes a legally enforceable promise — to pay covered claims. The insured has no legal duty to keep paying premiums; if they stop, the policy simply lapses.

The values exchanged may be unequal — a small premium can trigger a large death benefit, or many premiums can result in no claim. This is acceptable because the outcome depends on chance.

Both insurer and insured must deal honestly and disclose material facts. The insured's duty is reinforced by the incontestable clause and the application's representations about health and history.

The heart of the policy that contains the insurer's promise to pay benefits — stating what is paid, to whom, and under what circumstances. Declarations, conditions, and exclusions modify or limit this promise.

The grace period lets a late premium be paid without losing coverage (commonly 30 or 31 days for life). Reinstatement revives a policy that has already lapsed, usually requiring evidence of insurability and overdue premiums.

Accumulation is the funding and growth phase where the contract builds value. Annuitization converts that value into a stream of income payments — the contract's payout phase.

An immediate annuity starts income payments within about one year of purchase. A deferred annuity builds value first and pays later, often years or decades downstream.

The annuitant is the person whose life expectancy sets the income payment size and duration. The owner holds contract rights — naming beneficiaries, taking withdrawals, surrendering — and may or may not be the annuitant.

A fixed annuity is backed by the insurer's general account and guarantees a minimum interest rate. A variable annuity uses a separate account where investment risk is borne by the contract owner, not the insurer.

A life policy that fails the 7-pay test becomes a MEC. Distributions are taxed gain-first and may trigger a 10% additional tax before age 59½, making MEC status a major suitability red flag.

Withdrawals from a nonqualified annuity are taxed gain-first (LIFO), while annuitized payments use an exclusion ratio to recover basis pro rata. The distinction drives payout-strategy recommendations.

A probationary period delays coverage at policy start for specified conditions. An elimination period is the waiting time after a disability begins before benefits are paid — they operate at different points of the claim lifecycle.

Own-occupation pays if the insured cannot perform their own occupation. Any-occupation pays only if they cannot perform any suitable occupation. Any-occ is stricter and usually cheaper.

Under mandatory health provisions, the insured must submit formal proof of loss within 90 days of the loss. The window can be extended up to one year if the insured is legally incapacitated.

The insurer steps into the insured's shoes to recover claim payments from a third party who caused the loss. It prevents double recovery and keeps premiums aligned with actual responsibility.

For a dependent child covered by both parents' plans, the plan of the parent whose birthday falls earlier in the calendar year is primary. Year of birth is irrelevant; month and day control.

Bathing, dressing, eating, toileting, transferring, and continence. LTC benefit triggers commonly require inability to perform 2 of the 6, or severe cognitive impairment.

A non-cancellable policy locks premiums and renewal through age 65 (or a stated age). A guaranteed renewable policy must be renewed but allows the insurer to raise premiums by class.

Long-term care eligibility is commonly tied to impairment in 2 of the 6 ADLs or severe cognitive impairment. The trigger determines when benefit payments actually start, not the policy's issue date.

A life policy with an LTC rider lets the insured access the death benefit for qualified long-term care. Any unused benefit still pays to beneficiaries, removing the use-it-or-lose-it concern of standalone LTC.

Social Security Disability Insurance imposes a federal five-month waiting period after the established onset of disability before benefits begin. The outline tests this as benefit-commencement timing, not as a state law.

Part A covers hospital inpatient care. Part B covers physician and outpatient services. Part D covers prescription drugs. Medigap supplements Original Medicare by filling specified cost-sharing gaps.

Medicaid is a means-tested public program for eligible low-income individuals. Medicare is primarily age-based (65+) or disability-based. They are separate programs with different eligibility rules despite similar names.

Qualifying beneficiaries who lose coverage due to termination of employment or reduced hours can continue group health coverage for 18 months. Other qualifying events (death, divorce, Medicare entitlement, loss of dependent status) trigger a 36-month continuation period.