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LIFE:

Introduction

Exam Breakdown – revised exam breakdown

Kansas Life Insurance Examination

95 Total Questions (84 scored, 11 pretest)

Time Limit: 90 minutes

Passing Score: 70%

Completing the Application, Underwriting, and Delivering the Policy

Gramm-Leach-Bliley Act (GLBA) Privacy

The Gramm-Leach-Bliley Act stipulates that in general, an insurance company may not disclose nonpublic personal information to a nonaffiliated third party except for the following reasons:

The Gramm-Leach-Bliley Act requires 2 disclosures to a customer (a consumer who has an ongoing financial relationship with a financial institution):

The customer must also receive an annual privacy disclosure, and have the right to opt out, or choose not to have their private information shared with other parties.

Types of Policies

E. Annuities

Payout Options

Annuity payment options specify how annuity funds are to be paid out. They are very similar to the settlement options used in life insurance that determine how the policy proceeds are distributed to the beneficiaries.

Life Contingency Options - Pure Life vs. Life with Guaranteed Minimum

The life annuity will pay a specific amount for the remainder of the annuitant’s life. With pure life, also known as life-only or straight life, this payment ceases at the annuitant's death (no matter how soon in the annuitization period that occurs). This option provides the highest monthly benefits for an individual annuitant. Under this option, while the annuity payments are guaranteed for the lifetime of the annuitant, there is no guarantee that all the proceeds will be fully paid out.

Under the life with guaranteed minimum settlement option, if the annuitant dies before the principal amount has been paid out, the remainder of the principal amount will be refunded to the beneficiary. This option is also called refund life. It guarantees that the entire principal amount will be paid out.

There are two types of refund life annuities:

Note, however, that any unpaid annuity benefits following the death of an annuitant are taxable when paid to the beneficiary.

Life with period (term) certain is another life contingency payout option. Under this option, the annuity payments are guaranteed for the lifetime of the annuitant, and for a specified period of time for the beneficiary. For example, a life income with a 20-year period certain option would provide the annuitant with an income while he is living (for the entire life). If, however, the annuitant dies shortly after payments begin, the payments will be continued to a beneficiary for the remainder of the period (for a total of 20 years).

Single Life vs. Multiple Life

Single life annuities cover one life, and annuity payments are made with reference to one life only. Contributions can be made with a single premium or on a periodic premium basis with subsequent values accumulating until the contract is annuitized.

Multiple life annuities cover 2 or more lives. The most common multiple life annuities are joint life, and joint and survivor.

Joint Life

Joint life is a payout arrangement where two or more annuitants receive payments until the first death among the annuitants, and then payments stop.

Joint and Survivor

The joint and survivor arrangement is a modification of the life income option in that it guarantees an income for two recipients that neither can outlive. Although it is possible for the surviving recipient(s) to receive payments in the same amount as the first recipient to die, most contracts provide that the surviving recipients will receive a reduced payment after the first recipient dies. Most commonly, this option is written as “joint and ½ survivor” or "joint and 2/3 survivor,” in which the surviving beneficiary receives ½ or 2/3 of what was received when both beneficiaries were alive. This option is commonly selected by a couple in retirement. As with the life income option, there is no guarantee that all the proceeds will be paid out if both beneficiaries die shortly after the installments begin.

Annuities Certain (Types)

In contrast with life contingency benefit payment options, annuities certain are short-term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated.

With fixed-period installments, the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be, based on the value of the account and future earnings projections. This option pays for a specified amount of time only, whether or not the annuitant is living.

With fixed-amount installments, the annuitant selects how much each payment will be, and the insurer determines how long the benefits will be paid by analyzing the value of the account and future earnings. This option pays a specific amount until funds are exhausted, whether or not the annuitant is living.

Life Policy Provisions, Riders and Options

A. Policy Provisions

7. Beneficiary Designations

Designation by Class

A class of beneficiary is using a designation such as "my children." This term can be vague if the insured has been married more than once, has adopted children, or has children out of wedlock.

An example of a class that is less vague is "children of the union of Jane Smith and James Smith." Many insurers encourage the insured to name each child specifically and to state the percentage of benefit they are to receive.

When naming beneficiaries, it is most prudent to be specific by naming each individual and by designating the exact amount to be given for that individual. Two class designations are available for use when an insured chooses to "group" the beneficiaries: per capita and per stirpes. Per capita, meaning by the head, evenly distributes benefits among the living named beneficiaries.

Per stirpes, meaning by the bloodline, distributes the benefits of a beneficiary who died before the insured to that beneficiary's heirs.

B. Policy Riders – additional riders

Disability Income

With the disability income rider, in the event of disability the insurer will waive the policy premiums and pay a monthly income to the insured. The amount paid is normally based on a percentage of the face amount of the policy to which it is attached.

Cost of Living

The cost of living rider addresses the inflation factor by automatically increasing the amount of insurance without evidence of insurability from the insured. The face value of the policy may be increased by a cost of living factor tied to an inflation index such as the Consumer Price Index (CPI).

Taxation, Retirement, and Other Insurance Concepts – chapter has been renamed as “Retirement and Other Insurance Concepts”

Viatical Settlements – topic deleted from the General Knowledge outline

Kansas Rules and Regulations Pertinent to Life Only

G. Viatical Settlements

Licensing

Individuals, providers, and other entities must be licensed to act as viatical settlement providers. Applications for viatical settlement provider licenses must include a $1,000 licensing fee.

The Commissioner will issue a license if the licensing fee and application information have been submitted and the Commissioner finds that the applicant

Viatical settlement providers must report new or revised information about officers, 10% or more of stockholders, partners, directors, members or designated employees within 30 days of the change.

Renewal

The viatical settlement provider's license expires every year on the anniversary date. To renew a license, a renewal fee of $500, along with renewal forms approved by the Commissioner, must be submitted prior to the anniversary date. If the renewal fee and renewal forms are not submitted before the expiration date, the license will expire.

Suspension, Revocation, Refusal to Issue or Renew

A viatical settlement provider or viatical settlement broker's license may be revoked, suspended or nonrenewed if the Commissioner finds that the provider or broker has

The Commissioner must conduct a hearing before a license is revoked, suspended or refused.

Reporting Requirements

A licensee must file with the Commissioner, on or before March 1 of each year, an annual statement containing any information deemed necessary by the Commissioner. This includes, but is not limited to, the aggregate face amounts and life settlement proceeds of policies settled during the preceding calendar year.

PROPERTY AND CASUALTY

The following are content additions to supplement your existing text unless otherwise indicated. Please note that the Property Only and Casualty Only Exam Breakdowns include minor changes. Please consult your online course for the updated breakdowns.

Introduction

Exam Breakdown – revised exam breakdown

Kansas Property, Casualty and Allied Lines Insurance Examination

154 Total Questions (140 scored, 14 pretest)

Types of Property Policies

B. Commercial Lines

Cyber First-Party Coverage

With an ever-growing reliance on technology, it is no surprise that cyberattacks and data breaches are more common than ever. Businesses that obtain and store personal, financial, or otherwise sensitive data are prone to extortion and fraud. To protect businesses and consumers, cyber insurance is made available to businesses, designed to lessen the financial impact resulting from cyberattacks and data breaches.

Cyber security insurance is broken into the following coverage types:

Examples of losses covered by a first-party cyber policy include:

Types of Policies, Bonds, and Related Terms

B. Automotive: Personal Auto and Business Auto

2. Commercial Auto

Mobile Equipment Endorsement

Under the business auto coverage form, mobile equipment is covered for liability insurance when being carried or towed by a covered auto. If a land vehicle that fits the definition of mobile equipment, but because of where or how it is being used becomes subject to compulsory insurance as if it were an auto, an insured could potentially have a coverage problem. For example, a bulldozer is required to have compulsory insurance because to get from one part of a job site to another, it must drive on a public road. If the insured has a Symbol 7 (Specified Auto) listed on the Declarations, that bulldozer would need to be included on the insured's vehicle schedule to be covered for liability. If it is not listed, a solution would be to use this endorsement. The bulldozer would be specifically described in the endorsement and granted coverage.

Covered autos liability coverage does not apply to bodily injury, property damage, or covered pollution cost or expense resulting from the operation of any machinery or equipment that is on, attached to, or part of any of the covered autos.

F. Professional Liability

Liquor Liability

Liquor liability (also known as dram shop liability) refers to the exposure that bars, restaurants, and other similar establishments face due to the selling, distributing, manufacturing, or serving of alcoholic beverages. Liquor liability provides protection in the event of action brought against the insured for selling liquor to a customer who is later involved in an accident and suffers bodily injury or property damage.

Businesses of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages all may have liability exposure to actions under state or local statutes that establish responsibilities for those injuries arising from the distribution or use of alcoholic beverages and causing injuries to the user or caused to others by the user.

Businessowners Policy (BOP) – please refer to the online course for complete text (“Types of Casualty Policies, Bonds, and Related Terms” chapter)

Kansas Statutes, Rules and Regulations Common to All Lines

E. Property and Casualty Insurance Guaranty Association Act

The Guaranty Association is run by the board of directors selected by member insurers and approved by the Commissioner.

If a property or casualty insurer is declared insolvent and placed into liquidation, the Association provides insurance coverage for Kansas residents. In such cases, the Association will pay claims arising within 30 days after the determination of an insurer's insolvency. The amount paid cannot exceed $300,000 per claim, except for covered claims arising out of a workers compensation policy, which are paid the full amount. The Association will not be obligated to pay a claimant an amount in excess of the obligation of the insolvent insurer.

The Association will allocate member insurers amounts necessary for the purpose of paying these obligations. Each insurer will be notified of their assessment no later than 30 days before it is due. No insurer may be assessed an amount greater than 2% of that insurer's direct written premiums in the previous year.

The existence of the Guaranty Association cannot be used in marketing or selling insurance.

Kansas Statutes, Rules and Regulations Pertinent to Casualty Only

B. Uninsured and Underinsured Motorist Coverage

An insurer may exclude or limit uninsured motorist coverage if

• The insured is occupying or struck by an uninsured vehicle or trailer owned or provided for the insured's regular use;
• The uninsured vehicle is owned by a self-insurer or government entity;
• There is no reliable evidence of physical contact with an uninsured vehicle;
• Workers compensation benefits would apply;
• A suit is brought against the uninsured motorist without notice to the insurer; or
• Personal injury benefits would apply.

The term uninsured motor vehicle includes an insured motor vehicle where the liability insurer is unable to make payment because of insolvency.