Free PA Life & Health Exam Flashcards

The state agency that regulates Pennsylvania insurers and producers, headed by the Insurance Commissioner. PID enforces the Insurance Code (Title 40), licenses producers, examines insurers, and handles consumer complaints. The Commissioner is appointed by the Governor, not elected.

Pennsylvania's principal insurance statute. Title 40 codifies producer licensing, unfair trade practices, replacement, guaranty association protections, and insurer solvency. Most PA-specific exam questions cite a Title 40 rule even when the statute number is not given.

Effective April 29, 2025, Act 146 of 2024 eliminated Pennsylvania's 24-hour pre-licensing education requirement for resident life, accident, health, and P&C applicants. Candidates may now register for the PSI exam without completing any classroom or online prelicense course.

The Pennsylvania resident insurance producer license costs $55 in application fees paid to PID (typically through NIPR). PSI charges $43 for a single-line Life or Accident & Health exam and $53 for the combined Life, Accident, and Health exam. A fingerprint background check costs roughly $22-$24.

Pennsylvania resident producers must complete 24 hours of approved CE every 2-year renewal period, including at least 3 hours of ethics. License renewal occurs on the producer's birthday every other year. Missing the deadline causes the license to lapse with no automatic grace period.

A Pennsylvania producer whose license has lapsed because of incomplete CE may reinstate without re-examination by applying within 12 months of expiration and completing all missing CE. After 12 months, the producer must re-take the licensing exam.

Effective June 20, 2022, Pennsylvania adopted the revised NAIC Suitability in Annuity Transactions Model Regulation #275. A producer recommending an annuity must act in the consumer's best interest based on documented suitability information and complete a one-time 4-hour annuity training course before solicitation.

When replacing life insurance or an annuity in Pennsylvania, the producer must complete a Notice Regarding Replacement, deliver it at or before application, list every policy being replaced, and provide a signed copy to the replacing insurer, which must notify the existing insurer within five business days.

Pennsylvania requires a minimum 10-day free-look on individual life and annuity policies, extending to 30 days for applicants age 65 or older. Replacement transactions add a separate 20-day unconditional refund window from policy delivery that runs concurrently with the free-look.

The Pennsylvania Life and Health Insurance Guaranty Association protects PA policyholders if a member insurer becomes insolvent. PLHIGA is funded by assessments on solvent member insurers and cannot pay more than the original insurer's contractual obligation.

Per insured per insolvency, PLHIGA pays up to $300,000 in life insurance death benefits (with $100,000 of that in net cash surrender value), $250,000 for annuity present value, $300,000 for disability/long-term care, and $500,000 for basic health benefit plans (major medical).

Pennsylvania producers may not use PLHIGA protection as a sales inducement or mention the association in advertising or solicitation. The guaranty fund is a safety net, not a selling point; violating this rule is an unfair trade practice.

Title 18 Section 4117 makes insurance fraud a criminal offense in Pennsylvania, ranging from misdemeanor to third-degree felony depending on loss amount. Producers must report suspected fraud and may be sanctioned for failure to do so. The Insurance Fraud Prevention Trust Fund finances enforcement.

A state program that pairs qualifying private LTC insurance with Medicaid asset-protection. Each $1 paid out by an approved LTC policy lets the insured keep $1 of countable assets above Medicaid's normal limit when later applying for PA Medicaid long-term care.

Stranger-originated life insurance — issuing a policy on a person's life for the benefit of a third party with no insurable interest — is prohibited in Pennsylvania. Title 40 voids contracts that lack insurable interest at issue and treats STOLI promotion as a fraudulent insurance act.

Pennsylvania's CHIP provides comprehensive health coverage for uninsured children under 19 who are not eligible for Medical Assistance. Pennsylvania residency is required. Coverage tiers (free, low-cost, full-cost) depend on household income relative to federal poverty level.

Pure death-benefit life insurance for a stated term (10, 20, 30 years or to age 65). Premiums are low because there is no cash value. Coverage ends when the term expires unless the policy is renewable or convertible to permanent insurance.

Permanent life insurance with level premiums payable for life, a guaranteed death benefit, and a cash value that grows at a guaranteed minimum rate. Also called straight life or ordinary life. Premium and death benefit do not change after issue.

Flexible-premium permanent life insurance. The owner may adjust premium amount and death benefit within policy limits. Cash value earns interest at a current declared rate, with mortality and expense charges deducted monthly. Policy can lapse if cash value cannot cover charges.

Permanent life insurance combining UL flexibility with separate-account investment subaccounts. Cash value and death benefit vary with investment performance. VUL is a security; the producer must hold a FINRA Series 6 or 7 plus a state variable contracts authority to sell it.

Universal life whose cash value crediting is linked to an external index (often the S&P 500) subject to a participation rate, cap, and floor (often 0%). IUL is not a security because cash value is not in separate accounts.

An optional rider that waives policy premiums if the insured becomes totally disabled, usually after a 6-month waiting period, until disability ends or the insured reaches a stated age. The death benefit and cash value continue to build as if premiums were paid.

Allows the insured to receive a portion of the death benefit (typically 25-100%) while still living if diagnosed with a qualifying terminal illness (commonly 12-24 months to live), chronic illness, or critical illness. Amounts paid are deducted from the eventual death benefit.

Lets the policyowner buy additional life insurance at stated ages or life events (marriage, birth) without proving insurability. Each option is for a fixed face amount and must be exercised within a short window or it is lost.

States that the policy plus the attached application constitutes the entire contract between the insurer and the owner. No oral statement, side letter, or insurer rule binds the parties unless it is physically part of the contract.

After a life policy has been in force for two years from issue during the insured's lifetime, the insurer cannot contest the policy on the basis of material misstatements in the application, except for nonpayment of premium and (in some states) fraud.

A statutory window — typically 31 days for life policies — after a premium due date during which coverage remains in force despite nonpayment. If the insured dies during the grace period, the unpaid premium is deducted from the death benefit.

A lapsed life policy may be reinstated within a stated period (commonly 3-5 years) by paying all back premiums with interest, providing evidence of insurability, and repaying any outstanding loans. A new 2-year contestable period begins on reinstated coverage.

Limits the death benefit to a return of premiums paid if the insured dies by suicide during the policy's initial exclusion period (almost always 2 years from issue). After the exclusion period ends, the policy pays the full death benefit for suicide.

If a primary beneficiary dies before the insured, that beneficiary's share passes to their children (descendants) by branch of the family tree. Latin for 'by the roots.' Contrasts with per capita, which divides only among surviving named beneficiaries.

A named beneficiary whose designation cannot be changed without the beneficiary's written consent. The policyowner also loses the right to assign the policy, take loans, or surrender for cash without that consent.

When the insured and primary beneficiary die in the same accident and the order of death is uncertain, the common disaster clause presumes the insured survived the beneficiary so proceeds pass to the contingent beneficiary or estate.

Pays the beneficiary a periodic income for life. Variants include straight life (highest payment, ends at death), life with period certain (guaranteed minimum payment period), and joint and survivor (continues to a second person).

An IRC Section 1035 tax-free transfer between similar contracts: life-to-life, life-to-annuity, annuity-to-annuity, or annuity-to-long-term-care. Cost basis carries to the new contract. A 1035 cannot go from an annuity to life insurance.

A life insurance contract that fails the IRS 7-pay test because premiums in the first seven years exceed the level premium that would fund the policy. MEC withdrawals and loans are taxed LIFO (gain first) plus a 10% penalty before age 59 1/2.

An immediate annuity is funded with a single premium and begins payments within 12 months (often called a SPIA). A deferred annuity has an accumulation phase before payments begin; deferred annuities may be fixed, variable, or indexed.

Accumulation is the pay-in/growth phase of a deferred annuity, where premium contributions grow tax-deferred. Annuitization converts the accumulated value into a stream of periodic income payments under one of the contract's settlement options.

Hospital insurance covering inpatient hospital stays, skilled nursing facility care (up to 100 days after a qualifying hospital stay), hospice, and limited home health care. Most beneficiaries pay no premium because they paid Medicare payroll taxes for 40+ quarters.

Medical insurance covering physician services, outpatient hospital care, durable medical equipment, and preventive services. Requires a monthly premium (income-adjusted) and has an annual deductible plus 20% coinsurance after the deductible is met.

Federal law standardizes Medicare Supplement plans into letter-labeled benefit packages (currently A, B, D, G, K, L, M, N for new enrollees; C and F closed to those who became eligible after 1/1/2020). Each plan letter has identical benefits at every insurer.

A one-time 6-month window starting the month an applicant is both age 65 and enrolled in Medicare Part B. During this period, insurers must issue any offered Medigap plan with guaranteed issue and cannot charge more for health conditions.

HMO: in-network only, PCP referral required. PPO: in- and out-of-network, no referrals. EPO: in-network only but no PCP referral. POS: combines HMO referral process with limited out-of-network coverage. HMO and EPO restrict providers; PPO and POS give more flexibility at higher cost.

Federal COBRA continues group health coverage for: 18 months after job loss or hour reduction; 29 months if SSA-disabled within 60 days of qualifying event; 36 months for dependents on death, divorce, child aging out, or Medicare entitlement of employee. Employee pays up to 102% of premium.

For 2026, the IRS limits HSA contributions to $4,400 for self-only coverage and $8,750 for family coverage. Account holders age 55 or older who are not on Medicare may add a $1,000 catch-up. HSA pairs with a high-deductible health plan (HDHP).

For 2026, the IRS limits Health Flexible Spending Account elective deferrals to $3,400 per employee. Dependent Care FSAs are capped at $7,500 per household. Health FSAs are use-it-or-lose-it, although employers may allow up to $680 carryover in 2026.

An employer-sponsored plan that lets employees pay for qualified benefits (health premiums, HSA, FSA, dependent care) with pre-tax payroll dollars. Elections are locked for the plan year except for qualifying life events (marriage, birth, job change, divorce).

The Employee Retirement Income Security Act of 1974 sets federal minimum standards for most private-sector employer health and retirement plans: fiduciary duty, plan documentation, summary plan description, reporting, and participant claim and appeal rights.

The Health Insurance Portability and Accountability Act limits group plan pre-existing condition exclusions, gives 'creditable coverage' credit for prior insurance, and prohibits discrimination based on health status. HIPAA also creates federal protections for protected health information (PHI).

Own occupation: insured is disabled if unable to perform the duties of their specific occupation, even if able to work elsewhere — pays longer, costs more. Any occupation: insured is disabled only if unable to work in any occupation suited to their training and experience.

Elimination period: the waiting period (commonly 30, 60, 90, or 180 days) after disability onset before benefits begin, similar to a deductible measured in time. Benefit period: the maximum length of time benefits will be paid (e.g., 2 years, 5 years, to age 65, lifetime).