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The course chapters, content, and the Exam Breakdown will mostly remain the same. The following are content additions to supplement your existing text:

LIFE

Annuities

C. Uses of Annuities

Long-Term Care Rider

A long-term care (LTC) rider can be added to an annuity as a supplement for an additional premium. With this rider, the policyowner receives both the income provided by the annuity, as well as the long-term care benefit, should that become necessary.

The application for the LTC rider is medically underwritten. In addition, the insurer will consider the applicant’s current health condition, genetic factors, potential hazardous behaviors, and age in determining the amount of premium needed for the rider. Therefore, the cost of a long-term care rider would vary widely from one person to another. The premiums paid for the rider are not tax deductible, so the benefits will be received tax free.

In order for the benefit to begin, a physician must certify that the annuitant is unable to perform at least 2 of the 6 activities of daily living (as prescribed under federal law) for at least 90 days:

1. Bathing independently;
2. Dressing independently;
3. Eating (feeding yourself);
4. Transferring (being able to walk at least very short distances);
5. Toileting independently; and
6. Continence – the ability to control your bladder and bowel functions.

HEALTH

Accident and Health Basics

D. Limited Policies

3. Types of Limited Policies

Dental

Usually dental insurance distinguishes among several classes of dental expenses, and provides somewhat different treatment for each.

Routine and preventive maintenance is covered up to an annual maximum without a deductible or copayment. This coverage benefit usually includes routine examinations and teeth cleaning once a year, and perhaps full-mouth X-ray once every 3 years. (The absence of a deductible and copayment is intended to encourage preventive maintenance.)

Routine and major restorative care includes treatments for cavities, oral surgery, bridges and dentures. These procedures are covered up to a specific maximum, subject to an annual deductible per insured family member and a coinsurance.

Orthodontic care, if included, will have a separate maximum and a separate deductible, which may differ from the deductible for restorative care.

I. Required, Uniform and General Provisions

Coinsurance

Most major medical policies include a coinsurance provision that provides for the sharing of expenses between the insured and the insurance company. After the insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses, typically 80%, with the insured paying the remaining 20%. Other coinsurance arrangements exist such as 90/10; 75/25; or 50/50. The larger the percentage that is paid by the insured, the lower the required premium will be. The purpose of the coinsurance provision is for the insurance company to control costs and discourage overutilization of the policy.

Probationary Period

The probationary period provision states that a period of time must lapse before coverage for specified conditions goes into effect. This provision is most commonly found in disability income policies. The probationary period also applies to new employees who must wait a certain period of time before they can enroll in the group plan. The purpose of this provision is to avoid unnecessary administrative expenses in cases of employee turnover.

Elimination Period

The elimination period is a type of deductible that is commonly found in disability income policies. It is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. The longer the elimination period, the lower the cost of coverage.

Medical Plans

C. Cost Containment in Health Care Delivery

Preauthorization

Preauthorization is a cost-containment measure requiring that the insured obtain approval from the insurer before getting an expensive surgery, referred to a specialist, or nonemergency healthcare service.

A second opinion is a separate assessment of a patient by a different medical professional who will then affirm or modify the patient's diagnosis and treatment plan.

G. Health Insurance Exchange

Each state is required to set up and maintain Affordable Insurance Exchanges, referred to as Marketplaces. These exchanges either serve individuals and small businesses separately, or have a combined exchange to serve both individual and small business clients under one organization. In states that have chosen not to build their own Marketplace, a Federally-Facilitated Marketplace (healthcare.gov) is available that helps with comparison shopping tools, eligibility, enrollment, plan management, and consumer support. Coverage may be purchased through the Marketplace's call center, website, or by postal mail.

Under the proposed regulations, states that choose to set up an Exchange for Small Business Health Options Program (SHOP) must adopt the federal standards for the program or have a state law or regulation that implements the federal standards. Each state will establish insurance options for small employer participation. A SHOP is intended to give small employers the same purchasing power that large employers have, the opportunity to make a single monthly payment, and the ability to offer a choice of plans.

PPACA defines small employers as those with at least one but not more than 100 employees. Since 2017, states have been allowing large employers to purchase coverage through SHOP exchanges.

Insurance exchanges may or may not have open enrollment periods for small employers, but must admit small employers whenever they apply for coverage.

Qualified Plans

State insurance exchanges offer coverage through qualified health plans (QHPs). Qualified health plans may not have pre-existing condition limitations, lifetime maximums, or annual limits on the dollar amount of essential health benefits.

A health plan's status as a qualified health plan will be based on the following characteristics of the plan:

• Benefit design;
• Marketing practices;
• Provider networks, including community providers;
• Plan activities related to quality improvement; and
• The use of standardized formats for consumer information.

Trained and certified professionals who help on exchanges are called navigators. Navigators help educate consumers seeking coverage under the Affordable Care Act. Their duties include

• Conducting public awareness campaigns regarding the availability of qualified health plans;
• Distributing impartial information about the enrollment process and the availability of tax credits;
• Helping consumers enroll in qualified health plans;
• Referring consumers who have questions, grievances or complaints to the proper agencies; and
• Providing information in a manner appropriate to the consumer.

While navigators assist consumers in the enrollment process, they do NOT enroll consumers in a qualified health plan, nor do they select a plan for the consumer. They are also not responsible for determining a consumer’s eligibility.

Before aiding consumers, navigators complete comprehensive federal training and undergo criminal background checks, and state training and registration (when applicable).

Premium Tax Credit

Advance payments of the premium tax credit, or APTC, is a tax credit that can help individuals afford coverage bought through the Marketplace. These tax credits can be used right away to lower the monthly premium costs for insurance. If the insured qualifies, he or she may choose how much advance credit payments to apply the premiums each month, up to a maximum amount. If the amount of advance credit payments for the year is less than the tax credit due, the insured will get the difference as a refundable credit when the insured files the federal income tax return. If the advance payments for the year are more than the amount of the credit, the insured must repay the excess advance payments with the tax return.

APTC is paid on a sliding scale, from 100% of FPL to 400% of FPL. It is generally calculated based on attested projected annual income for the upcoming coverage year. Maximum APTC is calculated with reference to income and applicable second lowest cost silver plan.

Cost-Sharing Reduction

A cost-sharing reduction (CSR), also called extra savings, provides a discount to the amount an insured will pay for deductibles, copayments and coinsurance. Once the Marketplace application has been filled out, an applicant is able to determine their eligibility for tax credits or a CSR. A CSR is only applicable to insureds that have selected a Silver plan.

Included in CSRs is a lower out-of-pocket maximum. After the out-of-pocket maximum has been reached, the insurance plan will cover 100% of covered services.

Members of a federally recognized tribe or shareholders of an Alaska Claims Settlement Act (ANCSA) Corporation may be eligible for additional cost-sharing reductions.

Federal Tax Considerations for A&H Insurance

Consumer Driven Plans

Flexible Spending Accounts (FSAs)

A Flexible Spending Account (FSA) is a form of cafeteria plan benefit funded by salary reduction and employer contributions. The employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes. Then, during the year, the employee can be directly reimbursed from this account for eligible health care and dependent care expenses. FSA benefits are subject to annual maximum and "use-or-lose" rule. This plan does not provide a cumulative benefit beyond the plan year.

There are 2 types of Flexible Spending Accounts: a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account (subject to annual contribution limits) to help pay for dependent's care expenses which makes it possible for an employee and his or her spouse to continue to work.

An FSA is exempt from federal income taxes, Social Security (FICA) taxes and, in most cases, state income taxes, saving 1/3 or more in taxes. If the plan favors highly compensated employees, the benefits for the highly compensated employees are not exempt from federal income taxes.

Child and dependent care expenses must be for the care of one or more qualifying persons:

• A dependent who was under age 13 when the care was provided and who can be claimed as an exemption on the employee's Federal Income Tax return;
• A spouse who was physically or mentally not able to care for himself or herself; or
• A dependent who was physically or mentally not able to care for himself or herself and who can be claimed as an exemption (as long as the person is earning gross income less than an IRS-specified amount).

Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves.

The insured may change benefits during open enrollment. After that period, generally, no other changes can be made during the plan year. However, the insured might be able to make a change under one of the following circumstances, referred to as qualified life event changes:

• Marital status;
• Number of dependents;
• One of dependents becomes eligible for or no longer satisfies the coverage requirements under the Medical Reimbursement plan for unmarried dependents due to attained age, student status, or any similar circumstances;
• The insured, the insured's spouse's or qualified dependent's employment status that affects eligibility under the plan (at least a 31-day break in employment status to qualify as a change in status);
• Change in dependent care provider; or
• Family medical leave.

The IRS limits the annual contribution for Dependent Care Accounts to a specified amount that gets adjusted annually for cost of living. This is a family limit, meaning that even if both parents have access to flexible care accounts, their combined contributions cannot exceed the amount.

Flexible Spending Accounts (FSAs) allow consumers to take pre-tax dollars from their paycheck and deposit them in an FSA with their employer. Consumers then submit receipts for healthcare-related expenses for reimbursement, up to a specific amount set by the employer under IRS regulations. FSAs are financially advantageous for consumers because pre-tax dollars are used to pay for healthcare-related expenses.

High-Deductible Health Plans (HDHPs)

High-deductible health plans (HDHPs) are often used in coordination with Medical Savings Accounts (MSAs), Health Savings Accounts (HSAs), or Health Reimbursement Accounts (HRAs). The high-deductible health plan features higher annual deductibles and out-of-pocket limits than traditional health plans, which means lower premiums. Except for preventive care, the annual deductible must be met before the plan will pay benefits. Preventive care services are usually first dollar coverage or paid after copayment. The HDHP credits a portion of the health plan premium into the coordinating MSA, HSA, or HRA on a monthly basis. The deductible of the HDHP may be paid with funds from the coordinating account plan.

High-deductible health plans (HDHPs) are taxed in the same manner as other traditional health plans.

The course content and the Exam Breakdown will mostly remain the same. The following are content additions to supplement your existing text:

PROPERTY

Property Insurance Basics

C. Common Policy Provisions

Contribution by Equal Shares

A loss is paid under contribution by equal shares when 2 or more insurers issue policies on the same loss at the same level. Each insurer (primary or excess) contributes an equal amount to the loss settlement until the loss is paid, or until each insurer has exhausted its limits of insurance, whichever comes first.

Duty to Defend

In addition to the promise to pay all sums that the insurer becomes legally obligated to pay, liability coverage includes a promise to defend the insured in any lawsuit involving the type of liability insured under the coverage. Once the limit of the liability has been paid, the insurer has no further obligation to defend an insured.

Commercial Package Policy

B. Commercial Property

Earthquake

The Earthquake and Volcanic Eruption endorsement modifies commercial property policies and adds coverage for the perils of earthquake and volcanic eruption (eruption, explosion, or pouring forth of a volcano). The volcanic eruption coverage provided by the other cause of loss forms is limited to above ground type volcanic action, clearly excluding ground shock waves. All earthquake shocks or volcanic eruptions occurring within any 168-hour period are considered one earthquake or explosion.

The limit of insurance for earthquake/volcanic eruption is an annual aggregate limit, and is the most the insurer will pay for the total of all loss or damage in a 12-month period. Coinsurance condition within the policy cannot apply to the earthquake coverage.

CASUALTY

Property and Casualty Insurance Basics

A. Principles and Concepts

Credit Information (Insurance Score)

An insurance risk score, or insurance credit score, is a point system used by insurance underwriters to predict risk and possibility of claims, and determine charges for premiums. Insurance credit scoring is primarily used in homeowners and personal auto insurance.

C. Common Policy Provisions

Pro Rata

Pro rata is a provision found in some property insurance policies that provides for the sharing of loss with other insurance that may be written on the same risk in the same proportion as their limits of insurance bear to the total of coverage of all policies covering the risk, whether collectible or not.

Claim Settlement Options

At the time of loss, the insurer's loss payment options, or claim settlement options, include paying the least of the following:

• The value of the lost or damaged property;
• The cost of repairing or replacing the lost or damaged property;
• The cost of taking all or part of the property at an agreed or appraised value; or
• The cost of repairing, rebuilding or replacing the property with other property of like kind and quality.

  Arbitration

  Arbitration is a method of casualty claim settlement used when the insured and insurer cannot agree on how to settle a claim. The settlement is submitted to an arbitrator, or multiple arbitrators, whose decision may or may not be binding on both parties dependent on state law.

  Auto Insurance

  A. Personal Auto Policy

  Selected Endorsements

  Rental Coverage

  The Rental Reimbursement endorsement is only available if the policy includes Other Than Collision coverage. This endorsement will reimburse the insured for rental charges incurred because the covered auto is out of use due to a covered loss.

  B. Commercial Auto

  Selected Endorsements

  Broad Form Products

  The Broad Form Products Coverage endorsement changes the liability coverage on a form. The defective products exclusion is made ineffective. Other than auto coverage in garage operations coverage applies a $250 deductible to the per accident limit.

  Employees as Insureds

  The employees as insureds endorsement will provide the insured's employees additional protection while using a vehicle not owned, hired, or borrowed for the insured business, if, for example, an employee uses a personal vehicle to run an errand for the insured business owner. Employees are not covered under the commercial auto coverage part while using their own vehicles in the course of business due to one of the exceptions listed in the permission clause in the Who is an Insured section of the policy.

  Other Coverages and Options

  B. Specialty Liability Insurance

  Employee Benefits

  Employee Benefits Liability Coverage is a Commercial Liability Umbrella policy which pays for the liability expenses caused by the mistakes or errors of an insured under the policy. The policy applies to damages only if there is an act, error or omission and it was negligently committed in the administration of the employee benefits program. Therefore, negligence must be proven for the policy to pay. The act must have occurred during the policy period, after the retroactive date or during the Extended Reported Period.

  The coverage does NOT apply to the following:

• Dishonest, fraudulent, criminal or malicious acts by the insured;
• Bodily injury, property damage, or personal and advertising injury;
• Failure to perform a contract by an insurer;
• Insufficiency of funds;
• Inadequacy of performance of investment;
• Workers compensation, unemployment compensation, social security and similar laws;
• Damages covered by the Employee Retirement Income Security Act of 1974 (ERISA);
• Claims for available benefits;
• Taxes, fines or penalties; and
• Employment-related practices.

The limit of insurance for the Commercial Liability Umbrella Policy is paid on an aggregate basis with a sublimit for each employee. Each employee limit is the most it will pay for any one employee, including damages sustained by the employee's dependents and beneficiaries.

The policy may also be written as an endorsement to a Businessowners Coverage Form and the limits and deductible will be stated differently in this policy.

Internet Liability and Network Protection

The ISO has recently introduced a new line of insurance that covers cyber risks, called the Internet Liability and Network Protection Policy. The policy includes 5 separate agreements listed below:

1. Website publishing liability — provides coverage against Internet-related publishing perils, including libel, and copyright, trademark, or service mark infringement;
2. Network security liability — protects the policyowner against claims for failing to maintain the security of `a computer system;
3. Replacement or restoration of electronic data — covers the cost of replacing or restoring data lost due to a virus, malicious instruction, or denial-of-service attack;
4. Cyber extortion — covers expenses, including ransom payments, incurred from extortion threats; and
5. Business income and extra expense — provides coverage for expenses incurred as a result of an extortion threat or e-commerce incident.

Each agreement offers its own aggregate limit of coverage, subject to an overall policy limit. Defense expenses are included within the policy limits. All coverage is written on a claims-made basis, and allows the additional of endorsements for worldwide protection.

C. Fidelity and Surety Bonds

Suretyship

A personal surety bond is one in which an individual needs to make a financial guarantee to a third party, and needs a friend or family member to post the money for them. This is done for a fee or interest. Personal sureties are not regulated by the government.

A corporate surety bond is a surety bond issued by corporation licensed under state insurance laws.

Public Official Bond

A public official bond may be required by law, or it may be voluntary. A bond required by law may be statutory and due to a written law passed by the legislature. It may also be required by a common law based on previous court rulings. A public official bond may also be voluntarily obtained by the public official. A statutory bond is obtained from the government entity. A non-statutory bond uses a generic public official form.

A public official individual bond is written in the name of a single public official. The guarantee is limited to the actions of the named individual.

A named schedule bond is issued to an employer, and attached to the bond is a list, or schedule, of names of employees or public officials to be covered by the bond. A specific amount of dollar coverage is assigned to each employee. The named schedule bond is used for a group of public officials, such as a school board or city council.

A position schedule bond is also issued to an employer, but rather than insuring individuals by name, attached to this bond is a schedule of positions. A specific amount of dollar coverage is assigned to each position. Turnover is often the reason a position schedule bond is chosen over the individual or named schedule bonds.

Fiduciary Bond

A fiduciary is a court-appointed individual who handles the business of a ward, another individual who is not able to personally handle his or her business. If there is a minor or incapacitated person involved, the fiduciary is called a guardian or conservator. If there is a death involved, the executor, who is specifically named in the will of the deceased, handles the deceased’s business affairs.

The statute, court, or will may require that the fiduciary be bonded. The fiduciary bond guarantees that the fiduciary will handle all business affairs in the best interest of the ward or estate, or as prescribed by the statute, court, or will.

Probate

Probate bonds are filed in probate court that has the jurisdiction over those requiring a fiduciary. The probate bond requires the fiduciary to discharge all the duties as required according to law. The court oversees the fiduciary’s actions on behalf of the ward or estate.

Equity

The difference between a court of law and a court of equity is the remedy. A court of law can used a jury to award monetary damages in the event of a judgment. A court of equity will judge on fiduciary decisions involving wills, divorces, probate, guardianships, adoptions, and class-action suits. In equity, the remedy is an injunction or decree by the judge that will direct someone to do something or stop doing something. An injunction or restraining order limiting how close a defendant can be to a plaintiff is an example of an equity remedy.

A judgment of a monetary sum to a defendant that the plaintiff is found to owe is decreed by a court of law. Most states have merged the courts of law and equity. A few states still maintain separate courts, and the remedy will determine which court will rule.

Federal Bankruptcy Court

Federal courts have sole jurisdiction over bankruptcy cases. Individuals and businesses that can no longer pay their creditors can find help in the federal bankruptcy court. Bankruptcy laws will help them liquidate, redistribute, or restructure. A court-appointed fiduciary can be assigned for the benefit of the creditors in a bankruptcy case.