Iowa Life & Health Insurance License, Practice Exams

Four Iowa-licensed producers ask the division whether the continuing education rules apply to them. One is a nonresident who lives in a state that has its own continuing education requirement for producers. One is a resident who holds qualification in the surety and credit lines and nothing else. One is a licensed attorney. One spent most of the continuing education term on full-time active duty in the armed forces of the United States. Under IAC 191 chapter 11, which of them are outside the rules, and does any of them have to do anything to get there?

1. All four are outside the rules, and two of them must produce something to establish it. The nonresident is outside if the state or district of residence has a continuing education requirement for insurance producers. The surety and credit producer is outside without condition. The attorney is outside on submitting proof of completion of continuing legal education for the appropriate calendar years during the continuing education term and otherwise complying with the producer licence renewal procedures. The service member is outside on submitting evidence of the service. ✓
2. Only the nonresident and the service member are outside the rules. The nonresident is outside because the requirement of the state of residence governs, and the service member is outside on submitting evidence of the active duty. The surety and credit producer and the attorney are both inside: a line qualification does not excuse a resident from the credit requirement, and a producer who happens to be an attorney must complete the same credits as any other resident, continuing legal education being approved by a different body and directed at the practice of law.
3. All four are outside the rules and none of them has to submit anything. The rules list five categories to which they do not apply, and a producer who answers the description of a listed category is outside them from that moment; the division establishes the fact from its own licensing records at the time of renewal, and a producer asked to prove an exclusion may decline, because every one of the five exclusions is unconditional on its face.
4. Only the surety and credit producer and the attorney are outside the rules, and neither of them need submit anything to get there. A nonresident is inside the Iowa rules whatever the home state requires, because 11.1(1) adopts these rules for resident and nonresident insurance producers alike, and a producer on active duty is inside them too, military service being a ground on which to seek an extension of the continuing education term rather than an exclusion from the requirement.

Why: Rule IAC 191—11.1(3) is a list of five, and the drafting matters as much as the list: some entries are unconditional and some carry a condition the producer must satisfy. THESE RULES DO NOT APPLY TO: A NONRESIDENT PRODUCER WHO RESIDES IN A STATE OR DISTRICT HAVING A CONTINUING EDUCATION (CE) REQUIREMENT FOR INSURANCE PRODUCERS. A RESIDENT PRODUCER WHO HOLDS QUALIFICATION IN THE SURETY OR CREDIT LINES OF AUTHORITY. LICENSED ATTORNEYS WHO ARE ALSO PRODUCERS WHO SUBMIT PROOF OF COMPLETION OF CONTINUING LEGAL EDUCATION FOR THE APPROPRIATE CALENDAR YEARS DURING THE CE TERM AND OTHERWISE COMPLY WITH THE PRODUCER LICENSE RENEWAL PROCEDURES SET FORTH IN 191-CHAPTER 10. A PRODUCER WHO SERVES FULL-TIME IN THE ARMED FORCES OF THE UNITED STATES OF AMERICA ON ACTIVE DUTY DURING A SUBSTANTIAL PART OF THE CE TERM AND WHO SUBMITS EVIDENCE OF SUCH SERVICE. And a fifth the stem does not raise: A RESIDENT PRODUCER WHO HOLDS QUALIFICATION ONLY FOR A CROP INSURANCE LINE OF AUTHORITY AND WHO COMPLIES WITH SUBRULE 11.3(8). The attorney and the service member each have something to submit and the third option deletes both submissions, which is the trap. The nonresident exclusion turns on what the STATE OF RESIDENCE requires, not on what the producer chooses, so the fourth option is wrong to put nonresidents inside; 11.1(1) does say the rules are adopted FOR RESIDENT AND NONRESIDENT INSURANCE PRODUCERS, but 11.1(3)'a' then takes most nonresidents back out again. The surety and credit exclusion is unconditional and the crop exclusion is not, which is worth holding side by side. Note also what the attorney entry does NOT say: it does not excuse the attorney from renewing, only from these rules - THE ATTORNEY MUST OTHERWISE COMPLY WITH THE PRODUCER LICENSE RENEWAL PROCEDURES, which live in 191-Chapter 10 and are keyed in module 02 of this bank.

A point-of-service (POS) health plan is best described as:

1. A plan that provides absolutely no benefits for any care received out of network
2. A hybrid using HMO or PPO features chosen at the time of care ✓
3. A government plan available only to low-income families and their children
4. A supplement designed to pay the cost-sharing gaps in Original Medicare

Why: A POS plan blends HMO and PPO features: lower cost in-network with a gatekeeper, but out-of-network care is allowed at higher cost.

A life insurance company's certificate of authority in Iowa has been revoked. Its producer, not knowing this, collects a premium from a prospect for a new policy. What does Iowa Code 511.17 provide about the arrangement and about what the payer can recover, and from whom?

1. All such contracts are null and void, and all payments of premium or assessments advanced or made on account of any such policy may be recovered from the company, and in addition the plaintiff may recover an equal amount as liquidated damages together with a reasonable fee for the plaintiff's attorney. The agent who received the money is not liable: an agent who takes a premium in ignorance of a revocation has done nothing wrong and holds the money for a disclosed principal, so the remedy lies against the company whose authority was revoked and whose duty it was to stop its producers writing, and it would be a harsh rule that made a producer personally answerable for a fact the producer had no means of knowing.
2. All such contracts are voidable at the option of the payer, who may elect instead to affirm the arrangement and hold the company to the policy, and all payments of premium or assessments advanced or made on account of any such policy may be recovered from the company or its agent to whom payment was advanced or made, or from both of them. There is no provision for liquidated damages or for an attorney fee anywhere in the section: the payer who rescinds is restored to the position the payer occupied before the payment was made and no more, a penal recovery being something the legislature confers in express words where it intends it, and nothing in this section speaks of damages, of doubling, or of the costs of bringing the action.
3. All contracts, promises and agreements made by any person to or with the company concerning any premium, policy or certificate of new business after the revocation of its certificates or denial of authority to do business are null and void, and all payments of premium or assessments advanced or made by any person on account of any such policy, certificate of new business, or upon any arrangement for one, may be recovered from the company or its agent to whom payment was advanced or made, or from both of them, and in addition the plaintiff may recover an equal amount as liquidated damages together with a reasonable fee for the plaintiff's attorney. ✓
4. All such contracts are null and void, and all payments of premium or assessments advanced or made on account of any such policy may be recovered from the company or its agent to whom payment was advanced or made, or from both of them, together with an equal amount as liquidated damages, but only where the person making the payment knew or ought to have known of the revocation.

Why: Iowa Code 511.17 is one sentence and it is one of the sharpest remedies in the Iowa insurance code: ALL CONTRACTS, PROMISES, AND AGREEMENTS MADE BY ANY PERSON TO OR WITH ANY SUCH COMPANY OR ASSOCIATION CONCERNING ANY PREMIUM, POLICY, OR CERTIFICATE OF NEW BUSINESS, AFTER THE REVOCATION OF ITS CERTIFICATES OR DENIAL OF AUTHORITY TO DO BUSINESS, SHALL BE NULL AND VOID, AND ALL PAYMENTS OF PREMIUM OR ASSESSMENTS ADVANCED OR MADE BY ANY PERSON ON ACCOUNT OF ANY SUCH POLICY, CERTIFICATE OF NEW BUSINESS, OR UPON ANY ARRANGEMENT THEREFOR, MAY BE RECOVERED FROM SUCH COMPANY OR ASSOCIATION, OR ITS AGENT TO WHOM PAYMENT WAS ADVANCED OR MADE, OR FROM BOTH OF THEM, AND IN ADDITION THERETO PLAINTIFF MAY RECOVER AN EQUAL AMOUNT AS LIQUIDATED DAMAGES, TOGETHER WITH A REASONABLE FEE TO PLAINTIFF'S ATTORNEY FOR SERVICES IN THE CASE. Four things. The contracts are NULL AND VOID, not voidable at the payer's option - the third option's softening, which matters because a void contract cannot be affirmed and no policy comes into existence at all. Recovery lies against THE COMPANY, OR ITS AGENT, OR BOTH: the producer who took the money is personally exposed, which the second option argues away on grounds that are humane and are not the statute. There is no knowledge requirement anywhere in the section, on either side - the fourth option adds one for the payer, and the second assumes one for the agent; the section operates on the bare fact of revocation or denial. And the remedy is DOUBLE plus costs of suit: the premium back, AN EQUAL AMOUNT AS LIQUIDATED DAMAGES, and A REASONABLE FEE TO PLAINTIFF'S ATTORNEY. Note the trigger words NEW BUSINESS, which appear twice: the section is aimed at a company that keeps writing after its authority has gone, not at the servicing of business already on the books. That is the same distinction chapter 508 draws when it says, in 508.14(2) and again in 508.15, that a defaulting company's RIGHT TO TRANSACT FURTHER NEW BUSINESS IN THIS STATE SHALL IMMEDIATELY CEASE.

An Iowa life insurance company wants to issue funding agreements. It asks what a funding agreement is, whether issuing one counts as doing insurance business, whether it is a life insurance policy or an annuity, and to whom it may be issued. What does Iowa Code 508.31A provide?

1. A funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom it is issued. Because the payments are not contingent on mortality or morbidity, issuing one is NOT doing insurance business and the agreement is not regulated as insurance; it is instead a deposit-type contract which the section authorises a life company to write alongside its insurance business, and this is why the section has to say expressly that it is neither life insurance nor an annuity nor other insurance authorised by section 508.29. It may be issued to a person authorised to engage in an insurance business, to a person funding certain listed benefits or programmes, and to a non-natural person with assets of at least twenty-five million dollars or one providing collateral security for securities registered with the federal securities and exchange commission.
2. A funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom it is issued. Issuing one is deemed to be doing insurance business, but a funding agreement does not constitute life insurance, an annuity, or other insurance authorised by section 508.29, and does not constitute a security as defined in section 502.102. It may be issued to a person authorised to engage in an insurance business or a subsidiary of one, to a person for the purpose of funding certain listed benefits, activities, government programmes, claim settlements or institutional programmes, to a non-natural person with assets of at least twenty-five million dollars, and to a non-natural person for the purpose of providing collateral security for registered securities. ✓
3. A funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom it is issued. Issuing one is deemed to be doing insurance business, and a funding agreement constitutes an annuity for all purposes of this chapter, an accumulation of funds followed by payments at future dates being the shape of an annuity whatever the contract is called, which is why the section places it under the same reserve and valuation machinery. It may be issued to a person authorised to engage in an insurance business or a subsidiary of one, to a person for the purpose of funding certain listed benefits, activities, government programmes, claim settlements or institutional programmes, and to a non-natural person with assets of at least one million dollars, that being the threshold the section fixes for an institutional holder.
4. A funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts based on the mortality or morbidity contingencies of the person to whom the funding agreement is issued. Issuing one is deemed to be doing insurance business, but a funding agreement does not constitute life insurance, an annuity, or other insurance authorised by section 508.29, and does not constitute a security as defined in section 502.102. It may be issued to any person, natural or otherwise, the section imposing no test of the holder's assets and no restriction on the purposes for which the funds may be accumulated, so that an individual may buy one on the same terms as an institution provided the total amount of the agreement is not less than one million dollars, and the amounts credited under it are guaranteed only upon reasonable assumptions as to investment income and expenses.

Why: Iowa Code 508.31A(1) does four things in three sentences. A LIFE INSURANCE COMPANY ORGANIZED UNDER THIS CHAPTER MAY ISSUE FUNDING AGREEMENTS. THE ISSUANCE OF A FUNDING AGREEMENT UNDER THIS SECTION IS DEEMED TO BE DOING INSURANCE BUSINESS. That second sentence is the one the second option inverts, and the inversion is attractive because the definition that follows removes every insurance-like contingency: 'FUNDING AGREEMENT' MEANS AN AGREEMENT FOR AN INSURER TO ACCEPT AND ACCUMULATE FUNDS AND TO MAKE ONE OR MORE PAYMENTS AT FUTURE DATES IN AMOUNTS THAT ARE NOT BASED ON MORTALITY OR MORBIDITY CONTINGENCIES OF THE PERSON TO WHOM THE FUNDING AGREEMENT IS ISSUED. NOT BASED - the fourth option reverses that too. The legislature's answer is that the absence of contingency does not take the product out of insurance regulation, and it says so expressly. Then the three negatives: A FUNDING AGREEMENT DOES NOT CONSTITUTE LIFE INSURANCE, AN ANNUITY, OR OTHER INSURANCE AUTHORIZED BY SECTION 508.29, AND DOES NOT CONSTITUTE A SECURITY AS DEFINED IN SECTION 502.102. The third option makes it an annuity; it is expressly not one. Section 502.102 is not in this corpus and nothing here states what it defines a security to be - only that a funding agreement is declared to fall outside it, the same declaration that 508.32(4) and 508.32A(2) make for two other instruments. Subsection 2 lists who may receive one: a person authorised by a state or foreign country to engage in an insurance business or a subsidiary; a person funding ERISA employee benefit plan benefits, the activities of a section 501(c) tax-exempt organisation, a programme of a government or instrumentality, an agreement providing periodic payments in satisfaction of a claim, or A PROGRAM OF AN INSTITUTION WHICH HAS ASSETS IN EXCESS OF TWENTY-FIVE MILLION DOLLARS; A PERSON OTHER THAN A NATURAL PERSON THAT HAS ASSETS OF AT LEAST TWENTY-FIVE MILLION DOLLARS; and a non-natural person providing collateral security for securities registered with the federal securities and exchange commission. TWO separate twenty-five-million tests, on two different persons - the fourth option opens the list to anybody and the third cuts one figure to a million, which is the wrong home for that number: paragraph 'b' provides that a funding agreement issued under subparagraph (1), (2) or (3) SHALL BE FOR A TOTAL AMOUNT OF NOT LESS THAN ONE MILLION DOLLARS. Paragraph 'c' requires that amounts be guaranteed or credited only UPON REASONABLE ASSUMPTIONS AS TO INVESTMENT INCOME AND EXPENSES AND ON A BASIS EQUITABLE TO ALL HOLDERS OF FUNDING AGREEMENTS OF A GIVEN CLASS. And subsection 3 fixes the priority in an insolvency: A FUNDING AGREEMENT IS A CLASS 2 CLAIM UNDER SECTION 507C.42, SUBSECTION 2 - what that section provides is not stated here, because it is not in this corpus.

Three short sections give the Iowa commissioner particular jobs: one about selling life insurance to military personnel, one about small employers, and one about adopting outside standards by reference. What do they provide?

1. The commissioner has authority to adopt rules related to the sale of life insurance, including the servicemembers' group life insurance program, as may be necessary to protect military personnel located on a United States military installation in this state but not personnel located elsewhere in the state. The commissioner shall assist employers with fifty or fewer employees with implementing and administering plans under section 125 of the Internal Revenue Code and shall provide information about that assistance on the division's internet site. Rules that adopt a standard by reference to an outside publication are subject to the ordinary requirements of the rulemaking chapter without exception.
2. The commissioner has authority to adopt rules related to the sale of life insurance, other than the servicemembers' group life insurance program, as may be necessary to protect military personnel located either on a United States military installation or elsewhere in this state. The commissioner shall assist employers of any size with implementing and administering plans under section 125 of the Internal Revenue Code, including medical expense reimbursement accounts and dependent care accounts, and shall publish information about that assistance on the division's internet site; the section fixes no employee threshold at all, the duty running to a thousand-employee manufacturer on the same terms as to a five-person shop. Rules that adopt a standard by reference to certain actuarial, accounting and national association of insurance commissioners publications are exempt from one requirement of the rulemaking chapter.
3. The commissioner has authority to adopt rules related to the sale of life insurance, other than the servicemembers' group life insurance program, as may be necessary to protect military personnel located either on a United States military installation or elsewhere in this state. The commissioner shall assist employers with twenty-five or fewer employees with implementing and administering plans under section 125 of the Internal Revenue Code, including medical expense reimbursement accounts and dependent care accounts, and shall provide information about that assistance on the division's internet site. Rules that adopt a standard by reference to certain actuarial, accounting and national association of insurance commissioners publications are exempt from a requirement of the rulemaking chapter. ✓
4. The commissioner has authority to adopt rules related to the sale of life insurance, other than the servicemembers' group life insurance program, as may be necessary to protect military personnel located either on a United States military installation or elsewhere in this state. The commissioner shall assist employers with twenty-five or fewer employees with implementing and administering plans under section 125 of the Internal Revenue Code, including medical expense reimbursement accounts and dependent care accounts. The exemption from the requirements of the rulemaking chapter extends to any standard which the commissioner adopts by reference to any outside publication whatever, provided only that the publication relied upon is clearly identified somewhere in the text of the rule which adopts it.

Why: Iowa Code 505.27A provides that NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE, THE COMMISSIONER OF INSURANCE SHALL HAVE THE AUTHORITY TO ADOPT SUCH RULES RELATED TO THE SALE OF LIFE INSURANCE, OTHER THAN THE SERVICEMEMBERS' GROUP LIFE INSURANCE PROGRAM UNDER 38 U.S.C. PT. II, CH. 19, SUBCH. III, AS MAY BE NECESSARY TO PROTECT MILITARY PERSONNEL LOCATED EITHER ON A UNITED STATES MILITARY INSTALLATION OR ELSEWHERE IN THIS STATE AND TO CARRY OUT THE PROVISIONS OF THIS TITLE. Two exactnesses: the federal servicemembers' programme is carved OUT, and the protection reaches personnel ON A BASE OR ELSEWHERE IN THIS STATE - the second option reverses both. Iowa Code 505.31 provides that THE COMMISSIONER OF INSURANCE SHALL ASSIST EMPLOYERS WITH TWENTY-FIVE OR FEWER EMPLOYEES WITH IMPLEMENTING AND ADMINISTERING PLANS UNDER SECTION 125 OF THE INTERNAL REVENUE CODE, INCLUDING MEDICAL EXPENSE REIMBURSEMENT ACCOUNTS AND DEPENDENT CARE ACCOUNTS, and that THE COMMISSIONER SHALL PROVIDE INFORMATION ABOUT THE ASSISTANCE AVAILABLE TO SMALL EMPLOYERS ON THE INSURANCE DIVISION'S INTERNET SITE. The threshold is in the statute, so the third option's claim that there is none is wrong, and the figure is twenty-five rather than fifty. Iowa Code 505.35 provides that RULES ADOPTED BY THE COMMISSIONER PURSUANT TO CHAPTER 17A THAT ADOPT A STANDARD BY REFERENCE TO ANOTHER PUBLICATION OR PORTION THEREOF ARE EXEMPT FROM THE REQUIREMENTS OF SECTION 17A.6, SUBSECTION 5, with respect to two closed groups: PROFESSIONAL STANDARDS OF PRACTICE AND MEMBERSHIP REQUIREMENTS ESTABLISHED BY THE ACTUARIAL STANDARDS BOARD, THE AMERICAN ACADEMY OF ACTUARIES, THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, OR THEIR SUCCESSOR ORGANIZATIONS; and six named publications of the national association of insurance commissioners - the VALUATION MANUAL USED TO ESTABLISH PRINCIPLE-BASED RESERVES FOR THE LIFE INSURANCE INDUSTRY, the ACCOUNTING PRACTICES AND PROCEDURES MANUAL, the FINANCIAL EXAMINERS HANDBOOK, the FINANCIAL ANALYSIS HANDBOOK, the ANNUAL/QUARTERLY FINANCIAL STATEMENT BLANK AND INSTRUCTIONS, and the MODEL LAWS, REGULATIONS, AND GUIDELINES. Because the list is closed, the fourth option's extension to any publication whatever is wrong. What section 17A.6(5) requires is a matter for chapter 17A, which is not in this corpus.

Annuity suitability standards require the producer to:

1. Sell variable annuities only to applicants who are older than sixty-five years
2. Always recommend the annuity that pays the producer the highest available commission
3. Have reasonable grounds to believe the annuity fits the buyer ✓
4. Provide a written guarantee of the annuity's future investment performance

Why: Suitability requires a reasonable basis to believe the recommendation meets the consumer's needs and financial situation.

An Iowa member insurer is about to deliver an annuity contract to a contract owner. Its compliance officer asks what must accompany the contract, what the accompanying document has to warn the owner about, and how long the insurer must keep proof that it was delivered.

1. A summary document must be made available on request but need not be delivered with the contract; its disclosure must state the types of policies the association covers; and the insurer must retain evidence of compliance for five years from the date of delivery of the contract, that being the period for which the association's own records are kept, after which the burden of showing that the document was never furnished passes to the contract owner, who must then establish that the omission caused the loss complained of before the association will treat the contract as covered.
2. A summary document must be delivered at the same time as the contract, and its delivery operates as a guarantee that the contract is covered by the association in the event of the member insurer's impairment or insolvency; the insurer must retain evidence of compliance for as long as the contract remains in effect and for two years afterwards.
3. A summary document describing the general purposes and current provisions of the chapter must be delivered at the same time as the contract; its disclosure must prominently warn that the association may not cover the contract or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in this state; and the insurer must retain evidence of compliance for as long as the contract remains in effect. ✓
4. A summary document must be delivered at the same time as the contract; its disclosure must prominently warn about the limits of coverage; but a contract owner who does not receive the document acquires rights against the association greater than those stated in the chapter, which is the sanction the chapter attaches to a failure to deliver it.

Why: Iowa Code 508C.18A(1)“a” forbids a member insurer to deliver a policy or contract in Iowa unless a summary document describing the general purposes and current provisions of the chapter, containing a disclosure complying with subsection 2, is delivered AT THE SAME TIME. Paragraph “b” additionally makes it available on request, so availability supplements delivery rather than replacing it. Paragraph “c” is the answer to the third option: the distribution, delivery, contents or interpretation of the summary document DOES NOT GUARANTEE that the policy or its owner is covered. Paragraph “d” is the answer to the fourth: failure to receive a summary document gives the owner, certificate holder, enrollee or insured NO GREATER RIGHTS than those stated in the chapter — the reverse of what that option asserts — and the document is revised by the association and approved by the commissioner as amendments require. Subsection 2 requires a clear and conspicuous disclosure on the face of the document, in a form and content the commissioner establishes, which must state the name and address of the association and the Iowa insurance division; prominently warn that the association may not cover the policy or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in this state; state the types of policies covered; state that the insurer and its agents are prohibited by law from using the existence of the association for sales, solicitation or inducement; state that the owner should not rely on association coverage when selecting an insurer; explain the rights and procedures for complaining of a violation; and give such other information as the commissioner directs. Subsection 3 requires the insurer to retain evidence of compliance for as long as the policy or contract remains in effect.

An Iowa producer is the subject of a child support recovery unit action and, separately, lets a required notification to the division go unfiled for two months. Under IAC 191 chapter 10, what was he obliged to report, and what does the late notification cost?

1. He must report to the division any actions required to be reported by Iowa Code section 522B.16, but a child support or state debt matter is not among them: those actions come to the division from the issuing agency by certificate of noncompliance rather than from the producer, so no reporting duty falls on him. A producer who fails to provide any notification required by chapter 522B or by these rules within the required time must pay a late fee of $100 for each notification unless otherwise ordered.
2. He must report to the division any actions required to be reported by Iowa Code section 522B.16, and all CSRU or centralized collection unit actions taken under Iowa Code chapter 252J or 272D together with all court orders entered in such actions. A producer who fails to provide a required notification within the required time must pay a late fee of $50 for each notification unless otherwise ordered, and a business entity which fails to make a required notification pays no late fee, the fee provision applying to individual producers only.
3. He must report to the division any actions required to be reported by Iowa Code section 522B.16, and all CSRU or centralized collection unit of the department of revenue actions taken under or in connection with Iowa Code chapter 252J or 272D together with all court orders entered in such actions; failure to file the reports the rule requires is a violation of the chapter and subjects producers to penalty. A producer who fails to provide any notification required by chapter 522B or by these rules within the required time must pay a late fee of $100 for each notification unless otherwise ordered. ✓
4. He must report to the division any actions required to be reported by Iowa Code section 522B.16, and all CSRU or centralized collection unit actions taken under Iowa Code chapter 252J or 272D. A producer who fails to provide a required notification within the required time must pay a late fee of $100 in total however many notifications were missed, the fee being a single sanction for the producer's overall failure to keep the division properly informed of the producer's affairs rather than a charge which is levied separately on each single item of information the producer failed to supply in time.

Why: Rule IAC 191—10.13 has three short subrules. By 10.13(1), A PRODUCER MUST REPORT TO THE DIVISION ANY ACTIONS REQUIRED TO BE REPORTED BY IOWA CODE SECTION 522B.16 - a pointer to the statute, which is keyed at IA-PC-SL-0062 in the Iowa P&C bank and is not described here. By 10.13(2), A PRODUCER MUST REPORT TO THE DIVISION ALL CSRU OR CENTRALIZED COLLECTION UNIT OF THE DEPARTMENT OF REVENUE ACTIONS TAKEN UNDER OR IN CONNECTION WITH IOWA CODE CHAPTER 252J OR 272D AND ALL COURT ORDERS ENTERED IN SUCH ACTIONS. That duty is the producer's own and it exists alongside the certificate of noncompliance route in 10.21, which is what the second option confuses it with: the agency certifies to the division AND the producer reports. 10.2 defines CSRU as the CHILD SUPPORT RECOVERY UNIT. What chapters 252J and 272D provide is not stated - neither is in this corpus - and the item keys only the rule's own reporting duty. By 10.13(3), FAILURE TO FILE REPORTS REQUIRED BY THIS RULE IS A VIOLATION OF THIS CHAPTER AND WILL SUBJECT PRODUCERS TO PENALTY PURSUANT TO RULE 191-10.20(522B). The late fee itself is in rule IAC 191—10.20(5): a producer who fails to provide any notification required either by Iowa Code chapter 522B or by this chapter, INCLUDING BUT NOT LIMITED TO NOTIFICATION OF A CHANGE OF ADDRESS, NOTIFICATION OF CHANGE OF NAME, OR NOTIFICATION OF ADMINISTRATIVE CRIMINAL ACTION, within the required time MUST PAY A LATE FEE OF $100 FOR EACH NOTIFICATION unless otherwise ordered. It is one hundred dollars, not fifty, which the third option changes; it is PER NOTIFICATION rather than a single sanction, which the fourth option changes; and the same subrule imposes the same hundred-dollar per-notification fee on A BUSINESS ENTITY THAT FAILS TO MAKE A NOTIFICATION TO THE DIVISION AS REQUIRED BY RULE 191-10.18(522B), which the third option denies. This $100 is one of four in the chapter and the other three are on quite different subjects - the insurer contact-person fees in 10.15(7) and 10.16(5) and the reinstatement fee in 10.26(5).

A payor benefit rider, common on juvenile policies, provides that:

1. The child's coverage automatically doubles at age 21 with no new evidence of insurability
2. Premiums are waived if the premium-paying adult dies or becomes disabled ✓
3. The adult payor receives the policy's face amount as a death benefit if the insured child dies first
4. The policy pays a cash bonus at college graduation

Why: If the adult paying premiums on a child's policy dies or becomes disabled, the payor benefit rider waives the premiums until the child reaches a stated age.

A resident Iowa producer holds life and health qualifications and is coming to the end of a continuing education term. How many credits must the producer complete, what must some of them be in, and what has to happen by when for the requirement to be satisfied?

1. A minimum of 36 credits for the term in courses approved by the division, three of which must be in the subject of ethics; and by the end of the last business day of the producer's continuing education term the producer must have completed the courses, proof of completion being something the division obtains from the continuing education providers' rosters rather than from the producer, so that a producer who has genuinely finished the credits in time is compliant whether or not any document has reached the division by that day, and a producer whose provider files a roster late is not in default.
2. A minimum of 18 credits for the term in courses approved by the division, three of which must be in the subject of ethics; and by the end of the last business day of the producer's continuing education term the division must have received from the producer proof of completion of the courses.
3. A minimum of 36 credits for the term in courses approved by the division, three of which must be in the subject of ethics; and by the end of the last business day of the producer's continuing education term the division must have received from the producer proof of completion of the courses. ✓
4. A minimum of 36 credits for the term in courses approved by the division, six of which must be in the subject of ethics; and the proof of completion must reach the division within 30 days after the end of the producer's continuing education term.

Why: Rule IAC 191—11.3(1) carries all three parts in three sentences: EVERY LICENSED RESIDENT PRODUCER MUST COMPLETE A MINIMUM OF 36 CREDITS FOR EACH CE TERM IN COURSES APPROVED BY THE DIVISION. THREE OF THESE CREDITS MUST BE IN THE SUBJECT OF ETHICS. BY THE END OF THE LAST BUSINESS DAY OF THE PRODUCER'S CE TERM, THE DIVISION MUST RECEIVE FROM THE PRODUCER PROOF OF COMPLETION OF THE CE COURSES. Three points are examinable and each is a distractor here. First, 36 is the general figure. The chapter's other credit total, 18, is not an alternative for anybody: 11.3(8) gives it only to A RESIDENT PRODUCER WHO ONLY HOLDS QUALIFICATION FOR A CROP INSURANCE LINE OF AUTHORITY, and a producer with life and health qualifications is not that producer, so the third option is wrong. Second, THREE credits of ethics, not six. Third, and least obvious, the duty is a RECEIPT duty on the producer and not a completion duty - THE DIVISION MUST RECEIVE FROM THE PRODUCER - so the second option's reading, that finishing in time is enough and the paperwork is the providers' problem, inverts the rule. Providers do have their own roster duty under 11.10(8) and it runs to the division's outside vendor by the tenth day of the month following completion, but that duty sits on the provider and does not discharge the producer's. The deadline is THE LAST BUSINESS DAY OF THE CE TERM, with no grace period after it, so the fourth option's thirty days is an invention. Note finally the words IN COURSES APPROVED BY THE DIVISION: credits from an unapproved course are not credits at all, and rules 11.5 and 11.9 are how a course and a provider become approved.

An Iowa insurer is working out which of the ordinary life insurance chapters apply to its separate accounts and to the variable contracts relating to them, and what those contracts must contain. It also asks who regulates the issuance and sale of variable contracts. What does Iowa Code chapter 508A provide?

1. Except for section 508.37 and section 509.2, subsection 1, and except as otherwise provided in chapter 508A, all pertinent provisions of chapters 508, 509, 511 and 522B apply to separate accounts and the contracts relating to them. Any individual variable life insurance contract delivered or issued for delivery in this state shall contain nonforfeiture provisions appropriate to such a contract; any group variable life insurance contract shall contain a grace provision appropriate to such a contract; and the reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognise the variable nature of the benefits provided and any mortality guarantees. Notwithstanding any other provision of law, the commissioner has SOLE authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules and regulations as may be appropriate. ✓
2. ALL PERTINENT PROVISIONS OF CHAPTERS 508, 509, 511 AND 522B APPLY TO SEPARATE ACCOUNTS AND THE CONTRACTS RELATING TO THEM WITHOUT EXCEPTION, so that a variable life insurance contract must satisfy the Standard Nonforfeiture Law for Life Insurance in section 508.37 like any other life contract; that is why chapter 508A imposes no nonforfeiture standard of its own on an individual variable contract. Any group variable life insurance contract shall contain a grace provision appropriate to such a contract, and the reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognise the variable nature of the benefits provided, no separate recognition being given to any mortality guarantees the contract may carry. The commissioner has sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of the chapter.
3. Except for section 508.37 and section 509.2, subsection 1, and except as otherwise provided in chapter 508A, all pertinent provisions of chapters 508, 509, 511 and 522B apply to separate accounts and the contracts relating to them. Any individual variable life insurance contract delivered or issued for delivery in this state shall contain nonforfeiture provisions appropriate to such a contract; any group variable life insurance contract shall contain a grace provision appropriate to such a contract; and the reserve liability shall be established in accordance with actuarial procedures that recognise the variable nature of the benefits and any mortality guarantees. THE COMMISSIONER'S AUTHORITY OVER THE ISSUANCE AND SALE OF VARIABLE CONTRACTS IS CONCURRENT WITH THAT OF THE STATE SECURITIES REGULATOR, a variable contract being at once an insurance contract and a security in which the holder bears the investment result, so a company must clear its forms and its sales practices with both regulators before it may offer them.
4. Except for section 508.37 and section 509.2, subsection 1, all pertinent provisions of chapters 508, 509, 511 and 522B apply to separate accounts and the contracts relating to them. ANY INDIVIDUAL VARIABLE LIFE INSURANCE CONTRACT SHALL CONTAIN A GRACE PROVISION appropriate to such a contract; ANY GROUP VARIABLE LIFE INSURANCE CONTRACT SHALL CONTAIN NONFORFEITURE PROVISIONS appropriate to such a contract; and the reserve liability shall be established in accordance with actuarial procedures that recognise the variable nature of the benefits provided. The commissioner has sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules as may be appropriate.

Why: Iowa Code 508A.5 is the bridge between chapter 508A and the rest of the life insurance code, and its opening words are the point: EXCEPT FOR SECTION 508.37 AND SECTION 509.2, SUBSECTION 1, AND EXCEPT AS OTHERWISE PROVIDED IN THIS CHAPTER, ALL PERTINENT PROVISIONS OF CHAPTERS 508, 509, 511, AND 522B SHALL APPLY TO SEPARATE ACCOUNTS AND CONTRACTS RELATING THERETO. TWO named exclusions, and the first of them is the Standard Nonforfeiture Law for Life Insurance. The second option deletes that exclusion and reasons that chapter 508A therefore says nothing of its own about nonforfeiture; the section says the opposite in its very next sentence - ANY INDIVIDUAL VARIABLE LIFE INSURANCE CONTRACT, DELIVERED OR ISSUED FOR DELIVERY IN THIS STATE, SHALL CONTAIN NONFORFEITURE PROVISIONS APPROPRIATE TO SUCH A CONTRACT. The two go together: the ordinary nonforfeiture law is disapplied precisely because its machinery assumes fixed guaranteed values, and a substitute standard - APPROPRIATE TO SUCH A CONTRACT - is imposed in its place. What section 508.37 or section 509.2, subsection 1, provides is not stated here; they are named and not described. Note which requirement attaches to which kind of contract, because the fourth option swaps them: NONFORFEITURE provisions for an INDIVIDUAL variable life contract, a GRACE provision for a GROUP one. And the reserve rule: THE RESERVE LIABILITY FOR VARIABLE CONTRACTS SHALL BE ESTABLISHED IN ACCORDANCE WITH ACTUARIAL PROCEDURES THAT RECOGNIZE THE VARIABLE NATURE OF THE BENEFITS PROVIDED AND ANY MORTALITY GUARANTEES - the second limb, ANY MORTALITY GUARANTEES, is what the second and fourth options drop, and it matters because the variable nature of a benefit does not make the mortality promise variable. Iowa Code 508A.4 answers the last part and does so in unusually strong terms: NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE COMMISSIONER OF INSURANCE SHALL HAVE SOLE AUTHORITY TO REGULATE THE ISSUANCE AND SALE OF VARIABLE CONTRACTS, AND TO ISSUE SUCH REASONABLE RULES AND REGULATIONS AS MAY BE APPROPRIATE TO CARRY OUT THE PURPOSES AND PROVISIONS OF THIS CHAPTER. SOLE, and NOTWITHSTANDING ANY OTHER PROVISION OF LAW - which is precisely what the third option waters down to a concurrent jurisdiction. Chapters 508, 509, 511 and 522B are all in this corpus and none of their contents is stated here; 508 and 511 are the spine of module 05 of this bank and 522B of IA P&C module 02.

The ownership provision of a life policy establishes that the policyowner has the right to:

1. Name the beneficiary, take loans, and surrender the policy ✓
2. Only pay premiums, with no other rights over the contract
3. Receive the death benefit even while the insured is still living
4. Change the insurer's underwriting decision after the policy is issued

Why: The owner holds the contractual rights (naming beneficiaries, loans, surrender, assignment); the owner and the insured may be different people.

State guaranty association protection may NOT be:

1. Used by producers as a selling point in advertising ✓
2. Subject to statutory coverage limits
3. Available to policyholders of an insolvent insurer
4. Funded by assessments on member insurers

Why: Using guaranty fund protection to induce a sale is prohibited; the fund exists to protect policyholders of insolvent insurers, within limits.

A newly approved Iowa continuing education provider keeps tripping over the chapter's vocabulary. How long is a single credit? When does the clock on a producer's term start and stop? Does putting a self-study course online make it something other than self-study? And what has to appear on the list of attendees the provider sends in after a course has run? Which account of those four terms is right?

1. One 'credit' is 50 minutes of instruction or reading material in an acceptable topic. A 'CE term' is the calendar year, so that a producer's credits are counted from January to December whenever the licence happens to have been issued. A 'self-study course' consists of a self-study manual and a comprehensive examination, but an online course is a separate category and is not self-study. A 'roster' lists all licensed attendees at an approved course and includes the Iowa course number, the National Producer Number, the date the course was completed and the actual number of credits each producer earned, and is the same document as the attendance record, which is the record attendees sign at the time of entrance to the course and which the provider keeps in place of a roster where a course is delivered online.
2. One 'credit' is 50 minutes of instruction or reading material in an acceptable topic. A 'CE term' begins either on the date when a new producer's insurance licence is issued or on the date after the expiration date of an existing producer's licence, and ends on the following licence expiration date. A 'self-study course' consists of a self-study manual and a comprehensive examination, and may be an online course. A 'roster' lists all licensed attendees at an approved course and includes the Iowa course number, the National Producer Number, the date the course was completed and the actual number of credits each producer earned. ✓
3. One 'credit' is 60 minutes of instruction or reading material in an acceptable topic. A 'CE term' begins on the date when a producer's licence is issued and ends on the following licence expiration date. A 'self-study course' consists of a self-study manual and a comprehensive examination, and may be an online course. A 'roster' lists all licensed attendees at an approved course and includes the Iowa course number and the date the course was completed.
4. One 'credit' is 50 minutes of instruction in an acceptable topic, reading material not counting toward credit. A 'CE term' begins either on the date when a new producer's insurance licence is issued or on the date after the expiration date of an existing producer's licence, and ends on the following licence expiration date. 'Proctored' means supervision by a disinterested third party only, a CE provider being an interested party for this purpose. A 'roster' lists all licensed attendees at an approved course.

Why: Rule IAC 191—11.2 opens by importing the definitions in 191-1.1 and 191-10.2 and then adds its own. CREDIT MEANS CONTINUING EDUCATION CREDIT. ONE CREDIT IS 50 MINUTES OF INSTRUCTION OR READING MATERIAL IN AN ACCEPTABLE TOPIC - fifty, not sixty, which is the third option's error, and READING MATERIAL COUNTS, which is the fourth option's error. CE TERM MEANS THE PERIOD OF TIME THAT BEGINS EITHER ON THE DATE WHEN A NEW PRODUCER'S INSURANCE LICENSE IS ISSUED OR ON THE DATE AFTER THE EXPIRATION DATE OF AN EXISTING PRODUCER'S LICENSE AND THAT ENDS ON THE FOLLOWING LICENSE EXPIRATION DATE: two possible start dates, one for a new licence and one for a continuing one, and the term is tied to the licence and not to the calendar, which is the second option's error. SELF-STUDY COURSE MEANS AN EDUCATIONAL PROGRAM THAT CONSISTS OF A SELF-STUDY MANUAL AND COMPREHENSIVE EXAMINATION. A SELF-STUDY COURSE MAY BE AN ONLINE COURSE - so online delivery does not make a course something other than self-study. ROSTER MEANS A LISTING OF ALL LICENSED ATTENDEES AT AN APPROVED COURSE AND INCLUDES THE IOWA COURSE NUMBER, THE NATIONAL INSURANCE PRODUCER REGISTRY (NIPR) NATIONAL PRODUCER NUMBER (NPN), THE DATE THE COURSE WAS COMPLETED, AND THE ACTUAL NUMBER OF CREDITS EARNED BY EACH PRODUCER; four elements, and the third option drops two of them. The roster is NOT the attendance record: ATTENDANCE RECORD MEANS A RECORD ON WHICH A CE PROVIDER REQUIRES ATTENDEES OF A CE COURSE TO SIGN IN AT THE TIME OF ENTRANCE TO THE COURSE. One is signed by the attendee on the way in and kept by the provider; the other is compiled by the provider afterwards and sent to the division's vendor. Finally, PROCTORED OR INDEPENDENTLY PROCTORED MEANS THE SUPERVISION BY A CE PROVIDER OR DISINTERESTED THIRD PARTY OVER THE CONDUCT OF A PRODUCER WHILE THAT PRODUCER IS COMPLETING AN EXAMINATION THAT IS PART OF A SELF-STUDY CE COURSE - the provider itself may proctor, which is what the fourth option denies.

An immediate annuity is characterized by income payments that begin:

1. On the contract anniversary after the annuitant turns 59 1/2
2. Within one payment interval of purchase (generally within a year) ✓
3. After a deferral period of at least ten accumulation years
4. Once the annuitant submits satisfactory proof of insurability

Why: A single-premium immediate annuity (SPIA) starts payments within one payment period — usually within 12 months — of the lump-sum purchase.

Concealment in the context of an insurance application is best described as:

1. A statement guaranteed by the applicant to be literally true
2. A clause that voids coverage after two years in force
3. An honest answer that later turns out to be incorrect
4. The deliberate withholding of a known material fact ✓

Why: Concealment is the intentional failure to disclose a known material fact that would affect underwriting.

An Iowa insurer must send a policyholder notice that a life insurance contract is being cancelled. It asks how the notice may lawfully be delivered, whether a mailing service counts as proof of mailing, and whether it can use email. What does IAC 191 chapter 30 provide?

1. For the notice to be effective the insurer must deliver it within thirty days before the cancellation takes effect, either in person or by mail through the U.S. Postal Service to the person's last-known address. The use of U.S. Postal Service Intelligent Mail fulfils any requirement for certified mail or certificate of mailing as proof of mailing. And if the insurer receives the commissioner's approval of a manner of electronic delivery under the division's rules, the approved manner satisfies the requirements of the rule.
2. For the notice to be effective the insurer must, within the time frame established by law, or such reasonable time in advance and as governed by contract, deliver it either in person or by mail through the U.S. Postal Service to the person's last-known address, and the mailing must be by certified mail or with a certificate of mailing; a tracked mailing service is not a substitute, since what the requirement calls for is evidence created by the postal service at the time of mailing and retained by the sender, and a service that merely tracks an item after it enters the mail stream does not supply that. Electronic delivery is not available for a notice of this kind.
3. For the notice to be effective the insurer must, within the time frame established by law, or such reasonable time in advance and as governed by contract, deliver it to the person to whom notice is required to be provided either in person or by mail through the U.S. Postal Service to that person's last-known address. The use of U.S. Postal Service Intelligent Mail fulfils any requirement for certified mail or certificate of mailing as proof of mailing. And if the insurer receives the commissioner's approval of a manner of electronic delivery under the division's rules, the approved manner satisfies the requirements of the rule. ✓
4. For the notice to be effective the insurer must, within the time frame established by law, or such reasonable time in advance and as governed by contract, deliver it to the person to whom notice is required to be provided either in person or by mail through the U.S. Postal Service to that person's last-known address, or by electronic mail to the person's last-known electronic address without any approval being required. The use of U.S. Postal Service Intelligent Mail fulfils any requirement for certified mail or certificate of mailing as proof of mailing.

Why: Rule IAC 191—30.9(3), DELIVERY, provides that FOR ANY NOTICE OF CANCELLATION, NONRENEWAL OR TERMINATION BY AN INSURER IN CONTRACTS SUBJECT TO APPROVAL BY THE COMMISSIONER PURSUANT TO IOWA CODE SECTION 508.25 TO BE EFFECTIVE, AN INSURER MUST, WITHIN THE TIME FRAME ESTABLISHED BY LAW, OR SUCH REASONABLE TIME IN ADVANCE AND AS GOVERNED BY CONTRACT, DELIVER THE NOTICE TO THE PERSON TO WHOM NOTICE IS REQUIRED TO BE PROVIDED EITHER IN PERSON OR BY MAIL THROUGH THE U.S. POSTAL SERVICE TO THE LAST-KNOWN ADDRESS OF THE PERSON TO WHOM NOTICE IS REQUIRED TO BE PROVIDED. THE RULE FIXES THE METHOD AND NOT THE PERIOD. There is no notice period anywhere in rule 30.9: the period comes from whatever law or contract governs the particular notice, which is what the words WITHIN THE TIME FRAME ESTABLISHED BY LAW, OR SUCH REASONABLE TIME IN ADVANCE AND AS GOVERNED BY CONTRACT are doing, and the second option's thirty days is an invention. The rule then makes a tracked mailing sufficient: THE USE OF U.S. POSTAL SERVICE INTELLIGENT MAIL FULFILLS ANY REQUIREMENT FOR THE CONTRACTS SUBJECT TO APPROVAL BY THE COMMISSIONER PURSUANT TO IOWA CODE SECTION 508.25 AND FOR NOTICES REQUIRED BY RULE 191-16.24 OR 191-92.6 FOR CERTIFIED MAIL OR CERTIFICATE OF MAILING AS PROOF OF MAILING. The third option denies that, with reasoning about what proof of mailing means that the rule simply overrides. Subrule 30.9(4) handles email: NOTWITHSTANDING THE REQUIREMENTS OF SUBRULE 30.9(3), IF AN INSURER RECEIVES, PURSUANT TO 191-SUBRULE 4.24(2), APPROVAL FROM THE COMMISSIONER OF A MANNER OF ELECTRONIC DELIVERY OF A NOTICE FOR CANCELLATION, NONRENEWAL OR TERMINATION OF A POLICY, THE APPROVED MANNER SHALL SATISFY THE REQUIREMENTS. So electronic delivery IS available - the third option denies it - but only in a manner the commissioner has approved, which the fourth option dispenses with. Subrule 30.9(1)'b' defines NOTICE OF CANCELLATION, NONRENEWAL OR TERMINATION to include an insurance company's termination of a policy at the end of a term or before the termination date, a decision or intention not to renew, and - for contracts subject to approval under Iowa Code section 508.25 - notices of cancellation, nonrenewal or termination of life insurance or annuities, notice of replacement of life insurance required of a producer by rule 191-16.24, and notice of termination of universal life contracts required of the company by rule 191-92.6. What rules 191-16.24, 191-92.6 and 191-4.24 require, and what Iowa Code section 505B.1 or chapter 554D provides, is not stated here.

A market value adjusted (MVA) annuity differs from a standard fixed annuity because, on early surrender, its value:

1. Is exactly the premiums paid, free of any surrender charge
2. Is raised by a bonus rate if the contract is surrendered in its first year
3. Is moved automatically into a variable separate account before payout
4. Is adjusted up or down depending on how interest rates have moved ✓

Why: An MVA annuity applies a market value adjustment at surrender — increasing or decreasing the value based on interest-rate changes since issue.

An Iowa applicant turned sixty-five in March and enrolled for benefits under Medicare Part B with effect from the first day of that month. In June she applies for a Medicare supplement policy. She has been continuously covered under creditable coverage for the previous eight months with no break. The issuer wishes to rate her up for a chronic condition and to apply a preexisting condition exclusion.

1. It may do both: the open enrollment protection reaches only an applicant who applies before attaining age sixty-five, so an application made in the months after the birthday is underwritten in the ordinary way and may carry both a rated premium and a preexisting condition exclusion of up to six months.
2. It may not rate her up, but it may apply a preexisting condition exclusion for the first six months, because the open enrollment rule bars health-based pricing and issuance decisions while leaving the exclusion of preexisting conditions untouched, whatever creditable coverage the applicant brings with her.
3. It may do neither: the application falls inside the six-month open enrollment window, in which an issuer may not deny or condition issuance or effectiveness, or discriminate in pricing, because of health status, claims experience, receipt of health care or medical condition; and because she has at least six months of continuous creditable coverage the issuer may not exclude benefits based on a preexisting condition. ✓
4. It may rate her up, but it may not apply a preexisting condition exclusion, because the six-month window governs only the crediting of prior coverage against a new exclusion period and says nothing about the premium an issuer may charge an applicant whose health makes the risk dearer than the standard risk of the same age, that being left to the loss ratio standards governing Medicare supplement rates.

Why: IAC 191—37.21(1) fixes the window: the protection covers an application submitted prior to or during the six-month period beginning with the first day of the first month in which the individual is both sixty-five years of age or older and enrolled for benefits under Medicare Part B. Both conditions were met in March, so the window runs from the first of March and a June application is inside it. Within the window no issuer may deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, or discriminate in its pricing, because of the health status, claims experience, receipt of health care or medical condition of the applicant, and every policy and certificate currently available from the issuer must be made available to qualifying applicants without regard to age. Subrule 37.21(2) then deals with the exclusion. A “continuous period of creditable coverage” is a period of creditable coverage with no break greater than sixty-three days. Paragraph “b”: an applicant qualifying under 37.21(1) who has at least six months of continuous creditable coverage as of the date of application may not have benefits excluded on the basis of a preexisting condition. Paragraph “c” handles the applicant with less than six months by reducing any exclusion period by the aggregate creditable coverage. Subrule 37.21(3) preserves a six-month preexisting condition exclusion in the cases 37.21(2) does not reach, except as rules 191—37.33 and 191—37.36 provide.

An Iowa long-term care insurer determines that the benefit trigger in an insured’s policy has not been met and writes to say so. The insured wants to challenge the determination, and asks what the written notice was required to tell her, how long she has to start an internal appeal, and who inside the insurer will decide it.

1. The notice had to state only the reason for the determination, independent review being described to the insured after rather than before the internal appeal; she has thirty days after receiving the notice to request the internal appeal in writing; and the appeal may be decided by the same individual who made the initial benefit trigger determination.
2. The notice had to state the reason for the determination, describe the insurer’s internal appeal process, and state her right after exhausting that process to independent review; she has sixty days after receiving the notice to request the internal appeal in writing; and the appeal must be decided by someone other than whoever made the initial determination. ✓
3. The notice had to state the reason and describe the internal appeal process; she has sixty days to request the internal appeal; and the insurer may take as long as it reasonably needs to decide it, the chapter fixing an outside date only for the independent review that follows once the insurer’s internal appeal process has been exhausted by the insured.
4. The notice had to offer independent review immediately, because the chapter makes the insurer’s internal appeal optional at the insured’s election; she has one year from the date of the notice in which to elect either route; and any internal appeal she does elect must be decided by a panel drawn from outside the insurer and approved in advance by the commissioner.

Why: Iowa Code 514G.109(1) requires a clear written notice carrying three things: the reason the insurer determined the benefit trigger was not met; the insurer’s internal appeal process provided under the policy; and the insured’s right, after exhaustion of that internal appeal process, to have the determination reviewed under the independent review process in section 514G.110. Independent review is therefore sequenced after the internal appeal, not offered in parallel. Subsection 2, paragraph “a” gives the insured sixty days after receiving the notice to request an internal appeal in writing with any supporting information, requires the appeal to be considered by an individual or group of individuals designated by the insurer who are not the same individuals who made the initial determination, and requires the appeal to be completed and written notice of the decision sent within sixty days of the insurer’s receipt of all necessary information. Paragraph “b” lets the insurer describe any further internal appeal rights it offers but does not require it to offer any. Paragraph “c” requires a written description of the right to request independent review once the internal process is exhausted and no new information has been supplied. Subsection 3 deems notices under the section received within five days after the date of mailing. Do not confuse the sixty days here with the separate sixty days in IAC 191—39.23, which is the period within which an issuer must give a written explanation of a denied claim after a written request.

An approved Iowa continuing education provider submits a request to have a course approved. The request is missing part of the required information. A second provider holds an approval for the same course from another state's insurance division. A third provider has just had a course approved and is scheduling the dates it will run. What does IAC 191 chapter 11 provide for each of these three?

1. The incomplete request will be held by the division and the provider invited to supply the missing information within 30 days, the request keeping its original filing date once the gap is made good. The division must accept another state's approval of a course as adequate evidence that the course is eligible for approval in Iowa and must award the same number of credits that state awarded, on the provider submitting the NAIC uniform form demonstrating that approval. Within 30 days of course approval the provider must inform the division or its vendor of the dates and locations the course will be offered.
2. The incomplete request will be returned as incomplete. The division may deem another state's approval of a course adequate evidence that the course is eligible for approval in Iowa and may award the same number of credits that state awarded, the provider having to submit the NAIC uniform form demonstrating the other state's approval. The dates and locations on which an approved course will be offered are filed with the roster after the course has run, there being no advance filing of dates, and a provider that offers an approved course on a date the division did not know about in advance commits no violation of these rules and is at risk only if the roster itself is late.
3. The incomplete request will be returned as incomplete. Another state's approval of a course has no effect in Iowa and the course must be reviewed here from the beginning, the division having no power to borrow another regulator's judgment about a course it has not itself examined or to adopt the number of credits that regulator awarded. Within 30 days of course approval the provider must inform the division or its vendor of the dates and locations the course will be offered, and failure to file them on time subjects the provider to penalty and to suspension or rescission of the course approval.
4. The incomplete request will be returned as incomplete. The division may deem another state's approval of a course adequate evidence that the course is eligible for approval in Iowa and may award the same number of credits that state awarded, the provider having to submit the NAIC uniform form demonstrating the other state's approval. Within 30 days of course approval the provider must inform the division or its vendor of the dates and locations the course will be offered, and failure to file them on time subjects the provider to penalty and to suspension or rescission of the course approval. ✓

Why: Three subrules of IAC 191—11.5 answer the three parts. 11.5(3) is one sentence: REQUESTS FOR COURSE APPROVAL THAT DO NOT INCLUDE ALL REQUIRED INFORMATION WILL BE RETURNED AS INCOMPLETE. Returned, not held pending a cure, so the second option's thirty-day invitation is invented - and the practical consequence is severe, because 11.5(4) requires the request AT LEAST 30 DAYS PRIOR TO THE BEGINNING OF THE COURSE and a returned request has to be refiled inside that window. 11.5(9): THE DIVISION MAY DEEM THE APPROVAL OF A CE COURSE BY ANOTHER STATE'S INSURANCE DIVISION AS ADEQUATE EVIDENCE THAT A COURSE IS ELIGIBLE FOR APPROVAL IN IOWA AND MAY AWARD THE SAME NUMBER OF CREDITS FOR THE COURSE AWARDED BY THE OTHER STATE. THE CE PROVIDER MUST SUBMIT THE NAIC UNIFORM FORM DEMONSTRATING THE OTHER STATE'S APPROVAL. MAY twice - it is a permission the division has, not a right the provider has, so the second option's MUST ACCEPT is too strong and the fourth option's flat refusal is too weak; and the provider still has to file something, on the same NAIC uniform form that 11.5(2) requires for an ordinary approval request. 11.5(10): WITHIN 30 DAYS OF COURSE APPROVAL, CE PROVIDERS MUST INFORM THE DIVISION OR ITS VENDOR, AS DIRECTED BY THE DIVISION, OF THE DATES AND LOCATIONS THAT THE COURSE WILL BE OFFERED. FAILURE TO TIMELY FILE THE DATES AND LOCATIONS SUBJECTS THE CE PROVIDER TO PENALTY AND SUSPENSION OR RESCISSION OF COURSE APPROVAL. This is the chapter's third thirty-day period and it runs FORWARDS from approval, unlike the two in 11.5(4) which run backwards; it is also the only filing duty in rule 11.5 that carries its own sanction on its face, which is what the third option deletes. The roster duty the third option leans on is real but is a different duty in a different rule: 11.10(8) requires rosters of attendees AFTER a course, by the tenth day of the following month, and it does not absorb the advance filing of dates and locations. Note the words AS DIRECTED BY THE DIVISION - whether the filing goes to the division or to a vendor is the division's call, consistent with 11.12, under which THE DIVISION MAY ENTER INTO A CONTRACTUAL ARRANGEMENT WITH A QUALIFIED OUTSIDE VENDOR TO ASSIST THE DIVISION WITH ANY OR ALL CONTINUING EDUCATION SERVICES.

An Iowa insurer is working out which of its business falls under the Uniform Individual Accident and Sickness Act. It writes individual sickness policies, a blanket policy for a school, and it has been approached by a fraternal order that admits only steeplejacks and by a religious order. It also asks whether 'accident and health' and 'accident and sickness' mean different things. What does Iowa Code 514A.1 provide?

1. A POLICY OF ACCIDENT AND SICKNESS INSURANCE includes a policy or contract covering insurance against loss resulting from sickness, or from bodily injury or death by accident, or both, and for the purposes of the chapter that phrase is INTERCHANGEABLE WITHOUT DEVIATION OF MEANING with 'policy of accident and health insurance' or 'policy of accident or health insurance'. The chapter applies to ALL INDIVIDUAL policies of such insurance written by Iowa or non-Iowa companies or associations duly licensed under chapter 508, 515 or 520, and societies, orders or associations licensed under chapter 512B writing sickness and accident policies PROVIDING BENEFITS FOR LOSS OF TIME. Orders, societies or associations which admit to membership ONLY persons engaged in one or more crafts or hazardous occupations in the same or similar lines of business, and their auxiliaries, are NOT subject to the chapter, nor is any religious order. ✓
2. A policy of accident and sickness insurance includes a policy or contract covering insurance against loss resulting from sickness, or from bodily injury or death by accident, or both. 'ACCIDENT AND HEALTH' IS A NARROWER TERM THAN 'ACCIDENT AND SICKNESS': a policy described as an accident and health policy covers only medical expense, while an accident and sickness policy reaches loss of time as well, and the chapter uses the two phrases to mark that distinction. The chapter applies to all individual policies of such insurance written by Iowa or non-Iowa companies or associations duly licensed under chapter 508, 515 or 520, and societies, orders or associations licensed under chapter 512B writing sickness and accident policies providing benefits for loss of time. Orders, societies or associations admitting to membership only persons engaged in one or more crafts or hazardous occupations in the same or similar lines of business, and their auxiliaries, are outside the chapter, as is any religious order.
3. A policy of accident and sickness insurance includes a policy or contract covering insurance against loss resulting from sickness, or from bodily injury or death by accident, or both, and for the purposes of the chapter that phrase is interchangeable without deviation of meaning with 'policy of accident and health insurance' and 'policy of accident or health insurance'. The chapter applies to all individual AND ALL BLANKET OR GROUP policies of such insurance written by Iowa or non-Iowa companies or associations duly licensed under chapter 508, 515 or 520 and by societies, orders or associations licensed under chapter 512B, the chapter being the general accident and sickness law of the state rather than a law about one form of contract. Orders, societies or associations admitting to membership only persons engaged in one or more crafts or hazardous occupations in the same or similar lines of business are outside it, as is any religious order.
4. A policy of accident and sickness insurance includes a policy or contract covering insurance against loss resulting from sickness, or from bodily injury or death by accident, or both, and the phrase is interchangeable with 'policy of accident and health insurance' and 'policy of accident or health insurance'. The chapter applies to all individual policies of such insurance written by companies licensed under chapter 508, 515 or 520 and by societies licensed under chapter 512B writing loss-of-time policies. A CRAFT OR HAZARDOUS-OCCUPATION ORDER IS SUBJECT TO THE CHAPTER IN THE SAME WAY AS ANY OTHER ASSOCIATION, the exemption in the section being confined to religious orders, since a membership drawn entirely from a hazardous trade is exactly the population the required policy provisions were written to protect. The chapter likewise reaches a blanket or group policy written by any of the named companies, the word INDIVIDUAL in the scope subsection describing the individual who is insured rather than the form of the contract.

Why: Iowa Code 514A.1 does three things in three subsections. Subsection 1 defines the subject matter and then does something unusual and useful: FOR THE PURPOSES OF THIS CHAPTER THE WORDS 'POLICY OF ACCIDENT AND SICKNESS INSURANCE' ARE INTERCHANGEABLE WITHOUT DEVIATION OF MEANING WITH THE WORDS 'POLICY OF ACCIDENT AND HEALTH INSURANCE' OR THE WORDS 'POLICY OF ACCIDENT OR HEALTH INSURANCE'. The three phrases are one phrase. The second option builds a distinction between them that the subsection expressly forecloses, and candidates fall for it because the exam outline itself uses 'accident and health' while the chapter is titled in terms of accident and sickness. Subsection 2 sets the scope and the word that matters is INDIVIDUAL: THIS CHAPTER APPLIES TO ALL INDIVIDUAL POLICIES OF SUCH ACCIDENT AND SICKNESS INSURANCE WRITTEN BY IOWA OR NON-IOWA COMPANIES OR ASSOCIATIONS DULY LICENSED UNDER CHAPTER 508, 515, OR 520 AND, SOCIETIES, ORDERS, OR ASSOCIATIONS LICENSED UNDER CHAPTER 512B WRITING SICKNESS AND ACCIDENT POLICIES PROVIDING BENEFITS FOR LOSS OF TIME. The third option sweeps blanket and group policies in, and section 514A.8 puts them expressly out - ANY BLANKET OR GROUP POLICY OF INSURANCE is one of the four things the chapter does not apply to. That is why the school's blanket policy is governed by IAC 191 chapter 35 rather than by this chapter. Note also the qualifier on the 512B limb: it reaches those societies only where the policies provide benefits FOR LOSS OF TIME. Subsection 3 carries two exemptions and the fourth option deletes the first: ORDERS, SOCIETIES OR ASSOCIATIONS WHICH ADMIT TO MEMBERSHIP ONLY PERSONS ENGAGED IN ONE OR MORE CRAFTS OR HAZARDOUS OCCUPATIONS IN THE SAME OR SIMILAR LINES OF BUSINESS AND THE SOCIETIES OR AUXILIARIES TO SUCH ORDERS SHALL NOT BE SUBJECT TO THE PROVISIONS OF THIS CHAPTER NOR SHALL ANY RELIGIOUS ORDER BE SUBJECT TO THE PROVISIONS OF THIS CHAPTER. Read the craft exemption carefully - it turns on ADMITTING ONLY such persons, so a general association with some steeplejacks in it is not exempt. CORPUS NOTE: chapters 508, 515 and 512B are on disk; chapter 520 is not. The item keys the list as section 514A.1 gives it and says nothing about what any of those chapters provides.

An Iowa health maintenance organization has not filed its annual report for the preceding calendar year by the statutory deadline. The commissioner gives the organization written notice of the failure, and the organization files nothing for a further three weeks. Its chief financial officer asks what consequences the chapter attaches.

1. A single administrative penalty of one hundred dollars for the late filing, with no daily accrual of any kind, because the chapter treats the annual report as a reporting formality and reserves its financial sanctions for a failure to maintain the surety bond or deposit that guarantees performance of the organization’s obligations to its enrollees, a bond the commissioner may call in whenever a required filing is more than sixty days overdue.
2. An administrative penalty of five hundred dollars only, the daily accrual being available against a limited service organization but not against a health maintenance organization, and the certificate of authority remains in force until the commissioner has held the hearing that must precede any refusal to renew a certificate under the chapter.
3. An administrative penalty of five hundred dollars for the late filing, plus an additional penalty of one hundred dollars for each day the failure continues beyond ten days after the date of the notice, and the commissioner shall refuse to renew the certificate of authority, whereupon the right to transact new business immediately ceases until compliance. ✓
4. No penalty at all until the commissioner has first suspended the certificate of authority after notice and hearing, because the annual report provisions of the chapter are enforced solely through the administrative procedures for suspension and revocation, and the monetary penalties in the chapter reach only false representation in advertising.

Why: Iowa Code 514B.12 stacks three consequences. Subsection 3 imposes a five hundred dollar administrative penalty on an organization that fails to file the report timely. Subsection 4 lets the commissioner give notice of the failure, and if the organization does not file and comply within ten days of the date of that notice, an additional one hundred dollars accrues for each day the failure continues. Subsection 2 is the sharpest: the commissioner “shall refuse to renew” the certificate of authority of an organization that fails to comply with the section, and the right to transact new business in this state immediately ceases until it has complied. All penalties go to the treasurer of state for deposit as provided in section 505.7. The report itself is due on or before the first day of March, must be verified by at least two of the principal officers, and must carry financial statements certified by a certified public accountant or independent public accountant, any material changes in the information submitted with the certificate application, and the enrollment, year-end enrollee and termination counts. Note the parallel deadline in section 514B.3B: a certificate expires on the June 1 succeeding its issue, and the renewal application is itself due on or before March 1 with its own five hundred dollar penalty. Section 514B.33(4) applies both 514B.3B and 514B.12 to limited service organizations as well, so the daily accrual is not confined to one kind of organization.

An insurer newly licensed to transact life insurance in Iowa asks whether membership in the Iowa life and health insurance guaranty association is something it may elect, and how the association organises the money it collects from its members.

1. Membership is not elective: all member insurers are and remain members as a condition of their authority to transact insurance or health maintenance organization business in this state, and for administration and assessment the association maintains four accounts — a health account, a life insurance account, an annuity account, and an unallocated annuity contract account. ✓
2. Membership is elective for an insurer writing only life insurance, and the association maintains two accounts — one for life insurance and one for health insurance — with annuity business assessed against whichever of the two the board of directors determines to be the closer analogue to the contracts the insolvent insurer actually wrote.
3. Membership is not elective, but the association maintains a single general account into which all assessments are paid and from which all covered claims are met, the separation of lines being achieved instead through the allocation formula that the board applies when it calls a class B assessment against the membership.
4. Membership is not elective, and the association maintains three accounts — health, life insurance and annuity — with unallocated annuity contracts assigned to the annuity account unless the contract is owned by a governmental retirement plan, in which case the contract is excluded from the association’s accounts altogether and from its coverage, the plan trustee being remitted to the federal pension benefit guaranty corporation instead.

Why: Iowa Code 508C.6(1) creates a nonprofit legal entity known as the Iowa life and health insurance guaranty association and makes membership compulsory: all member insurers “shall be and shall remain members of the association as a condition of their authority to transact insurance or health maintenance organization business in this state”. The same subsection requires four accounts for administration and assessment — health, life insurance, annuity, and unallocated annuity contract — and draws the line between the last two by reference to governmental retirement plans: the annuity account INCLUDES annuity contracts owned by a governmental retirement plan or its trustee established under section 401, 403(b) or 457 of the Internal Revenue Code but otherwise EXCLUDES unallocated annuities, while the unallocated annuity contract account excludes contracts owned by such a plan. So those contracts are placed in an account rather than put outside the chapter. The association performs its functions under the plan of operation established under section 508C.10 and exercises its powers through the board of directors established in section 508C.7, and by 508C.6(2) it is subject to the immediate supervision of the commissioner and to the applicable provisions of the insurance laws of this state.

An Iowa insurer wants to deliver group life insurance certificates to its group policyholders electronically rather than on paper. Under IAC 191 chapter 30, on what conditions will the insurer be deemed to comply?

1. It must take appropriate and necessary measures to ensure that the system for furnishing the certificates results in actual receipt of transmitted information by group policyholders, which may be done only by using return-receipt electronic mail features, that being the single method the rule specifies and the only one that produces a record of receipt the division can inspect; the electronic documents must contain the same content and appear in reasonably the same format as the certificates previously approved by the commissioner; each group policyholder must be given notice, electronically or in writing, of the fact that the certificate will be furnished electronically, of the significance of the certificate and of the group policyholder's obligations under the rule, and of the group policyholder's right to request and receive a paper copy of the document for each participant; and upon request of any group policyholder the insurer must furnish paper copies free of charge, so that the group policyholder may provide them to participants who have requested them.
2. It must take appropriate and necessary measures to ensure actual receipt of the transmitted information by group policyholders, by return-receipt electronic mail features, by periodic reviews or surveys to confirm receipt, or by any other method approved by the commissioner; the electronic documents must contain the same content and appear in reasonably the same format as the certificates previously approved by the commissioner; and each group policyholder must be given notice of the fact that the certificate will be furnished electronically, of the significance of the certificate and of the group policyholder's obligations under the rule. There is no obligation on the insurer to furnish paper copies at all: the rule places the paper-copy obligation on the group policyholder in its dealings with participants, and an insurer that has delivered electronically to the group policyholder has discharged its own duty in full, the printing of copies for individual members being a matter between the group policyholder and its own people.
3. It must obtain the written consent of each group policyholder to electronic delivery before delivering any certificate electronically, a consent being what the uniform electronic transactions Act requires before a document the law says must be delivered may be sent by electronic means at all; the electronic documents must contain the same content and appear in reasonably the same format as the certificates previously approved by the commissioner; each group policyholder must be given notice of the fact that the certificate will be furnished electronically, of the significance of the certificate and of the group policyholder's right to request and receive a paper copy of the document for each participant; and upon request of any group policyholder the insurer must furnish paper copies of the group insurance certificate that was delivered electronically, so that the group policyholder may provide them to participants who have requested them, the insurer being entitled to treat the group policyholder's consent as covering every participant in the plan until that consent is withdrawn in writing.
4. It must take appropriate and necessary measures to ensure that the system for furnishing the certificates results in actual receipt of transmitted information by group policyholders - which may be done by using return-receipt electronic mail features, by periodic reviews or surveys to confirm receipt, or by any other method approved by the commissioner; the electronic documents must contain the same content and appear in reasonably the same format as the certificates previously approved by the commissioner; each group policyholder must be given notice, electronically or in writing, of the fact that the certificate will be furnished electronically, of the significance of the certificate and of the group policyholder's obligations under the rule, and of the group policyholder's right to request and receive a paper copy of the document for each participant; and upon request of any group policyholder the insurer must furnish paper copies so that the group policyholder may provide them to participants who have requested them. ✓

Why: Rule IAC 191—30.8(3), ELECTRONIC DELIVERY - INSURANCE COMPANIES, provides that THE INSURER WILL BE DEEMED TO COMPLY WITH THE REQUIREMENTS OF IOWA CODE SECTION 509.2(7) IF THE GROUP INSURANCE CERTIFICATE IS DELIVERED TO THE GROUP POLICYHOLDER ELECTRONICALLY AND IF - and then FOUR lettered conditions, all of which must be met. Paragraph 'a' requires APPROPRIATE AND NECESSARY MEASURES TO ENSURE THAT THE SYSTEM FOR FURNISHING GROUP INSURANCE CERTIFICATES RESULTS IN ACTUAL RECEIPT OF TRANSMITTED INFORMATION BY GROUP POLICYHOLDERS, and gives three ways of doing it - USING RETURN-RECEIPT ELECTRONIC MAIL FEATURES; PERIODIC REVIEWS OR SURVEYS TO CONFIRM RECEIPT OF THE TRANSMITTED INFORMATION; OR ANY OTHER METHOD APPROVED BY THE INSURANCE COMMISSIONER. Three routes, the last open-ended; the second option allows only the first. Paragraph 'b' requires THE SAME CONTENT AND REASONABLY THE SAME FORMAT AS THE CERTIFICATES PREVIOUSLY APPROVED BY THE INSURANCE COMMISSIONER. Paragraph 'c' is a notice with FOUR contents: the fact of electronic delivery, THE SIGNIFICANCE OF THE CERTIFICATE, THE GROUP POLICYHOLDER'S OBLIGATIONS UNDER THIS RULE, and THE GROUP POLICYHOLDER'S RIGHT TO REQUEST AND RECEIVE A PAPER COPY OF THE DOCUMENT FOR EACH PARTICIPANT. Paragraph 'd' is the one the third option denies: UPON REQUEST OF ANY GROUP POLICYHOLDER, THE INSURER FURNISHES PAPER COPIES OF THE GROUP INSURANCE CERTIFICATE THAT WAS DELIVERED TO THE GROUP POLICYHOLDER ELECTRONICALLY, SO THAT THE GROUP POLICYHOLDER MAY PROVIDE THEM TO PARTICIPANTS THAT HAVE REQUESTED PAPER COPIES. The chain runs insurer to group policyholder to participant, and each link has to be able to produce paper. NOTE WHAT SUBRULE 30.8(3) DOES NOT SAY: the words FREE OF CHARGE appear nowhere in it, though they appear twice in subrule 30.8(4), which governs the group policyholder's delivery to participants - the second option imports them to the wrong side of the chain. Note also that there is no consent requirement anywhere in the subrule, only notice; the fourth option adds one. What Iowa Code section 509.2(7) itself requires is not stated here, and neither is anything in chapter 554D, the uniform electronic transactions Act, which subrule 30.8(1) names as permitting the arrangement.

A community college and a commercial training company each hold approval as Iowa continuing education providers. The division decides to audit one course from each of them and the audit of the commercial company's course turns up material differing from what was submitted for approval. Both providers also want to know who sets the fees they pay. What does IAC 191 chapter 11 provide about audits and fees?

1. The division may audit any course and the cost of the audit is charged to the provider, except that governmental bodies such as community colleges and universities are not charged for the cost of an audit. Any discrepancy between the materials submitted for approval and the content found at the audit, or any evidence of noncompliance, may subject the provider or the instructor to administrative sanctions including fines. The fees for approval and renewal of providers and courses and for registration of instructors are set by the outside vendor retained by the division, subject to the division's approval, and course approval fees are nonrefundable. ✓
2. The division may audit any course and the cost of the audit is charged to the provider in every case, no class of provider being exempt and a community college standing on the same footing as a commercial training company. Any discrepancy between the materials submitted for approval and the content found at the audit, or any evidence of noncompliance, may subject the provider or the instructor to administrative sanctions including fines. The fees for approval and renewal of providers and courses and for registration of instructors are set by the outside vendor retained by the division, subject to the division's approval.
3. The division may audit any course and the cost of the audit is charged to the provider, except that governmental bodies such as community colleges and universities are not charged for the cost of an audit. A discrepancy between the materials submitted for approval and the content found at the audit may subject the provider to administrative sanctions, but an instructor is never exposed to sanction, which is why the chapter puts the duty to secure a qualified and competent instructor on the provider instead. The fees for approval and renewal are set by the division itself and course approval fees are refundable where a course is disapproved.
4. The division may audit a course only where it has first received a complaint about that course, and the cost of the audit is charged to the provider unless the audit finds no discrepancy, in which case the division bears it. Any discrepancy between the materials submitted for approval and the content found at the audit may subject the provider or the instructor to administrative sanctions including fines. The fees for approval and renewal of providers and courses are set by the outside vendor retained by the division, subject to the division's approval.

Why: Rule IAC 191—11.13 is one paragraph and every clause of it is examinable: THE DIVISION MAY AUDIT ANY CE COURSE. THE COST OF THE AUDIT WILL BE CHARGED TO THE CE PROVIDER. ANY DISCREPANCIES BETWEEN THE MATERIALS SUBMITTED FOR APPROVAL TO THE DIVISION AND THE CONTENT FOUND AT THE AUDIT, OR ANY EVIDENCE OF NONCOMPLIANCE WITH THESE RULES, MAY SUBJECT THE CE PROVIDER OR INSTRUCTOR TO ADMINISTRATIVE SANCTIONS, INCLUDING IMPOSITION OF FINES. GOVERNMENTAL BODIES, SUCH AS COMMUNITY COLLEGES AND UNIVERSITIES, SHALL NOT BE CHARGED FOR THE COST OF AN AUDIT. ANY course - no complaint is needed, which is the fourth option's error - and the cost falls on the provider whatever the audit finds, with one exception for governmental bodies that the second option deletes. The exception is about the AUDIT cost only; it does not touch the course review fee, which 11.5(6) puts on the PRODUCER where an unapproved college, university or governmental agency course is submitted for credit after the event. Note that the sanction reaches THE CE PROVIDER OR INSTRUCTOR - the instructor is named in the rule, which is what the third option denies, and the provider's separate duty under 11.10(1) to ENSURE THAT EACH CLASSROOM COURSE IS CONDUCTED BY A QUALIFIED AND COMPETENT INSTRUCTOR sits alongside that exposure rather than replacing it. Rule 191-11.14 handles the money: THE FEES FOR APPROVAL AND RENEWAL OF CE PROVIDERS, CE COURSES AND REGISTRATION OF INSTRUCTORS SHALL BE SET BY THE OUTSIDE VENDOR RETAINED BY THE DIVISION AND ARE SUBJECT TO APPROVAL BY THE DIVISION. COURSE APPROVAL FEES ARE NONREFUNDABLE. THE DIVISION MAY CHARGE A FEE FOR OTHER SERVICES. The vendor sets them and the division approves them - a two-stage arrangement the third option flattens - and the fees are nonrefundable, including where the course is disapproved, which is the other half of the third option's error. The vendor's existence is discretionary throughout: 191-11.12 provides that THE DIVISION MAY ENTER INTO A CONTRACTUAL ARRANGEMENT WITH A QUALIFIED OUTSIDE VENDOR TO ASSIST THE DIVISION WITH ANY OR ALL CONTINUING EDUCATION SERVICES, and nothing in this corpus says whether one is retained at present.

In a variable annuity, the assumed interest rate (AIR) is used to:

1. Benchmark whether each payout rises or falls during the annuity period ✓
2. Set the surrender charge percentage that applies in each year of the withdrawal charge period
3. Guarantee the separate account a fixed minimum return in every year of the payout period
4. Determine the commission credited to the selling registered representative each year

Why: The AIR is a benchmark: if separate-account performance exceeds the AIR, the next variable payment rises; if it lags, the payment falls.

Two of the prohibitions in IAC 191 chapter 14 turn on technical tests defined in the definitions rule: an illustration must be 'self-supporting' and, except for policies that can never develop nonforfeiture values, must not be 'lapse-supported'. What are those two tests?

1. A self-supporting illustration is one of a policy form for which it can be demonstrated that, using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the tenth policy anniversary - or the fifteenth for second-or-later-to-die policies - the accumulated value of all policy cash flows equals or exceeds the total policyowner value available. A lapse-supported illustration is one of a policy form failing that test under a modified persistency rate assumption using the persistency rates underlying the disciplined current scale for the first ten years and 100 percent policy persistency thereafter.
2. A self-supporting illustration is one of a policy form for which it can be demonstrated that, using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary - or the twentieth for second-or-later-to-die policies, or upon policy expiration if sooner - the accumulated value of all policy cash flows equals or exceeds the total policyowner value available. A lapse-supported illustration is one of a policy form failing that test under a modified persistency rate assumption using zero policy persistency for the first five years, on the footing that a form which only works if early buyers abandon it is being subsidised by them, and the test therefore strips out the early lapses altogether rather than assuming that everybody who survives the first five years stays for ever.
3. A self-supporting illustration is one of a policy form for which it can be demonstrated that, using experience assumptions underlying the currently payable scale, for all illustrated points in time on or after the fifteenth policy anniversary the accumulated value of all policy cash flows equals or exceeds the total policyowner value available. A lapse-supported illustration is one failing that test under a modified persistency rate assumption using the persistency rates underlying the currently payable scale for the first five years and 100 percent policy persistency thereafter.
4. A self-supporting illustration is one of a policy form for which it can be demonstrated that, using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary - or the twentieth for second-or-later-to-die policies, or upon policy expiration if sooner - the accumulated value of all policy cash flows equals or exceeds the total policyowner value available. A lapse-supported illustration is one of a policy form failing that test under a modified persistency rate assumption using the persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter. ✓

Why: Rule IAC 191—14.4 defines both tests and they are built one on top of the other, which is why they are keyed together. SELF-SUPPORTING ILLUSTRATION MEANS AN ILLUSTRATION OF A POLICY FORM FOR WHICH IT CAN BE DEMONSTRATED THAT, WHEN USING EXPERIENCE ASSUMPTIONS UNDERLYING THE DISCIPLINED CURRENT SCALE, FOR ALL ILLUSTRATED POINTS IN TIME ON OR AFTER THE FIFTEENTH POLICY ANNIVERSARY OR THE TWENTIETH POLICY ANNIVERSARY FOR SECOND-OR-LATER-TO-DIE POLICIES (OR UPON POLICY EXPIRATION IF SOONER), THE ACCUMULATED VALUE OF ALL POLICY CASH FLOWS EQUALS OR EXCEEDS THE TOTAL POLICYOWNER VALUE AVAILABLE. FOR THIS PURPOSE, POLICYOWNER VALUE WILL INCLUDE CASH SURRENDER VALUES AND ANY OTHER ILLUSTRATED BENEFITS AMOUNTS AVAILABLE AT THE POLICYOWNER'S ELECTION. Fifteen and twenty, not ten and fifteen (second option), and the assumptions are those underlying THE DISCIPLINED CURRENT SCALE, not the currently payable scale (fourth option) - which matters, because the disciplined current scale is the one tied to ACTUAL RECENT HISTORICAL EXPERIENCE. In plain terms the test asks whether the money the form actually takes in will cover what the illustration promises to hand back, from the fifteenth year onwards. LAPSE-SUPPORTED ILLUSTRATION MEANS AN ILLUSTRATION OF A POLICY FORM FAILING THE TEST OF SELF-SUPPORTING AS DEFINED IN THESE RULES, UNDER A MODIFIED PERSISTENCY RATE ASSUMPTION USING PERSISTENCY RATES UNDERLYING THE DISCIPLINED CURRENT SCALE FOR THE FIRST FIVE YEARS AND 100 PERCENT POLICY PERSISTENCY THEREAFTER. The mechanism is the point and the third option inverts it: the test does NOT strip out early lapses - it keeps the real persistency rates for five years and then assumes NOBODY EVER LAPSES AGAIN. A form that passes the self-supporting test only because a stream of later policyholders is expected to walk away and forfeit value will fail once that stream is switched off, and that is precisely what a lapse-supported illustration is. Rule 14.6(2) prohibits both: EXCEPT FOR POLICIES THAT CAN NEVER DEVELOP NONFORFEITURE VALUES, USE AN ILLUSTRATION THAT IS 'LAPSE-SUPPORTED'; OR USE AN ILLUSTRATION THAT IS NOT 'SELF-SUPPORTING'.

An Iowa insurer sells contracts used to fund an employer-established plan covered by ERISA, and separately sells contracts into an arrangement funded solely by employee contributions where the employees may choose among three annuity providers and a producer solicits individual employees. It also sells registered variable annuity contracts. What does IAC 191 chapter 16 provide about each?

1. Policies or contracts used to fund an employee pension or welfare benefit plan covered by ERISA are exempt. But the rules DO apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether pretax or after-tax, and where the insurance company has been notified that plan participants may choose from among two or more annuity providers or policy providers and there is a direct solicitation of an individual employee by an insurance producer - so the second arrangement is inside. Registered contracts are exempt from the requirement to provide illustrations or policy summaries in two named provisions; premium or contract contribution amounts and identification of the appropriate prospectus or offering circular are required instead. ✓
2. Policies or contracts used to fund an employee pension or welfare benefit plan covered by ERISA are exempt, and so is any arrangement funded by employee contributions, whether or not participants may choose among providers and whether or not a producer solicits individuals; the plan-funding exemption is drawn by reference to the kind of plan being funded rather than by reference to how the plan is sold, so an insurer need only ask what the money is funding and not how it was gathered, nor whether the employee had any choice of provider, nor who approached whom. Registered contracts are exempt from the requirement to provide illustrations or policy summaries; premium or contract contribution amounts and identification of the appropriate prospectus or offering circular are required instead.
3. Policies or contracts used to fund an employee pension or welfare benefit plan covered by ERISA are exempt. The rules do apply to policies or contracts used to fund an arrangement funded solely by employee contributions where participants may choose among two or more providers and there is a direct solicitation of an individual employee by a producer. Registered contracts are wholly exempt from the replacement rules, the federal securities laws governing what their buyers must be told instead.
4. Policies or contracts used to fund an employee pension or welfare benefit plan covered by ERISA are within the rules; the plan-funding exemption reaches only governmental and church plans, governmental and church welfare benefit plans, and deferred compensation plans of a state or local government or tax-exempt organisation. The rules apply to an arrangement funded solely by employee contributions where participants may choose among two or more providers and there is a direct solicitation by a producer. Registered contracts are exempt from the requirement to provide illustrations or policy summaries in two named provisions; premium or contract contribution amounts and identification of the appropriate prospectus or offering circular are required instead.

Why: Rule IAC 191—16.23(1)'f' is the plan-funding exemption and it is drafted as a list followed by a clawback. EXCEPT AS NOTED BELOW, POLICIES OR CONTRACTS USED TO FUND: AN EMPLOYEE PENSION OR WELFARE BENEFIT PLAN THAT IS COVERED BY THE EMPLOYEE RETIREMENT AND INCOME SECURITY ACT (ERISA); A PLAN DESCRIBED BY SECTION 401(A), 401(K) OR 403(B) OF THE INTERNAL REVENUE CODE, WHERE THE PLAN, FOR PURPOSES OF ERISA, IS ESTABLISHED OR MAINTAINED BY AN EMPLOYER; A GOVERNMENTAL OR CHURCH PLAN DEFINED IN SECTION 414 OF THE INTERNAL REVENUE CODE, A GOVERNMENTAL OR CHURCH WELFARE BENEFIT PLAN, OR A DEFERRED COMPENSATION PLAN OF A STATE OR LOCAL GOVERNMENT OR TAX-EXEMPT ORGANIZATION UNDER SECTION 457 OF THE INTERNAL REVENUE CODE; OR A NONQUALIFIED DEFERRED COMPENSATION ARRANGEMENT ESTABLISHED OR MAINTAINED BY AN EMPLOYER OR PLAN SPONSOR. ERISA plans are squarely on that list, which the fourth option denies. Then the clawback, and it is the point of the item: THESE RULES SHALL APPLY TO POLICIES OR CONTRACTS USED TO FUND ANY PLAN OR ARRANGEMENT THAT IS FUNDED SOLELY BY CONTRIBUTIONS AN EMPLOYEE ELECTS TO MAKE, WHETHER ON A PRETAX OR AFTER-TAX BASIS, AND WHERE THE INSURANCE COMPANY HAS BEEN NOTIFIED THAT PLAN PARTICIPANTS MAY CHOOSE FROM AMONG TWO OR MORE ANNUITY PROVIDERS OR POLICY PROVIDERS AND THERE IS A DIRECT SOLICITATION OF AN INDIVIDUAL EMPLOYEE BY AN INSURANCE PRODUCER FOR THE PURCHASE OF A CONTRACT OR POLICY. THREE conditions, all of which must hold: employee money only, a choice of two or more providers of which the company has been notified, and direct solicitation of an individual employee by a producer. The stem's second arrangement satisfies all three. The second option removes the clawback altogether on reasoning about administrability that the drafter did not accept - and the logic of the clawback is plain: where the employee is choosing and paying and a producer is selling, the transaction looks like an ordinary individual sale however the plan is labelled. 16.23(2) deals with registered contracts, which 16.22 defines as A VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY SUBJECT TO THE PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT OF 1933: REGISTERED CONTRACTS SHALL BE EXEMPT FROM THE REQUIREMENTS OF PARAGRAPH 16.26(1)'B' AND SUBRULE 16.27(2) WITH RESPECT TO THE PROVISION OF ILLUSTRATIONS OR POLICY SUMMARIES; HOWEVER, PREMIUM OR CONTRACT CONTRIBUTION AMOUNTS AND IDENTIFICATION OF THE APPROPRIATE PROSPECTUS OR OFFERING CIRCULAR SHALL BE REQUIRED INSTEAD. A NARROW exemption from two named provisions with a substitute obligation, not the wholesale exemption the third option asserts. What ERISA, the Securities Act of 1933 and the named Internal Revenue Code sections provide is not stated here; none is in this corpus.

Four of the terms defined for the unclaimed life insurance section describe the people and the accounts it operates on: 'account owner', 'authorized person', 'retained asset account' and 'annuity'. Which set of definitions matches Iowa Code 507B.4C?

1. 'Account owner' is the owner of a retained asset account wherever resident. 'Authorized person' is a policy owner, insured, annuity owner, annuitant, or account holder, as applicable. 'Retained asset account' is an interest-bearing account set up by an insurer in the name of the beneficiary of a policy or annuity upon the death of the insured. 'Annuity' is an annuity contract issued in this state, but does not include one used to fund an employment-based retirement plan or program where the insurer takes direction from the plan sponsor or plan administrator.
2. 'Account owner' is the owner of a retained asset account who is a resident of this state. 'Authorized person' is a beneficiary named under a policy, annuity or retained asset account. 'Retained asset account' is an account set up by an insurer in the name of the beneficiary of a policy or annuity upon the death of the insured, whether or not it bears interest. 'Annuity' is an annuity contract issued in this state, with no exclusion.
3. 'Account owner' is the owner of a retained asset account who is a resident of this state. 'Authorized person' is a policy owner, insured, annuity owner, annuitant, or account holder, as applicable. 'Retained asset account' is an interest-bearing account set up by an insurer in the name of the beneficiary of a policy or annuity upon the death of the insured. 'Annuity' is an annuity contract issued in this state, but does not include one used to fund an employment-based retirement plan or program where the insurer takes direction from the plan sponsor or plan administrator. ✓
4. 'Account owner' is the owner of a retained asset account who is a resident of this state. 'Authorized person' is a policy owner, insured, annuity owner, annuitant, or account holder, as applicable. 'Retained asset account' is an interest-bearing account set up by an insurer in the name of the beneficiary of a policy or annuity upon the death of the insured, an account of that kind being one the beneficiary opens with the insurer in place of taking a lump sum, so that the account is created only where the beneficiary has been found and has elected that method of settlement. 'Annuity' is an annuity contract issued in this state, but does not include one used to fund an employment-based retirement plan or program where the insurer takes direction from the plan sponsor or plan administrator.

Why: Four definitions from Iowa Code 507B.4C(2), and each carries a limit that a candidate who paraphrases will drop. Paragraph 'a': 'ACCOUNT OWNER' MEANS THE OWNER OF A RETAINED ASSET ACCOUNT WHO IS A RESIDENT OF THIS STATE. The residence condition is in the definition itself, which the second option removes - and it matters, because it is one of the few places where this section turns on where a person lives rather than on where a contract was issued. Paragraph 'c': 'AUTHORIZED PERSON' MEANS A POLICY OWNER, INSURED, ANNUITY OWNER, ANNUITANT, OR ACCOUNT HOLDER, AS APPLICABLE UNDER A POLICY, ANNUITY, OR RETAINED ASSET ACCOUNT. FIVE roles, and a BENEFICIARY IS NOT ONE OF THEM - the third option's error, and the most consequential mistake available on this section. The whole search duty in 507B.4C(3) runs on the possible death of an AUTHORIZED PERSON, that is, of the person whose death triggers a payment; the beneficiary is the person the insurer then has to go and find. Read the two roles the wrong way round and the section makes no sense. Paragraph 'i': 'RETAINED ASSET ACCOUNT' MEANS AN INTEREST-BEARING ACCOUNT SET UP BY AN INSURER IN THE NAME OF THE BENEFICIARY OF A POLICY OR ANNUITY UPON THE DEATH OF THE INSURED. INTEREST-BEARING is part of the definition, which the third option drops. The fourth option's addition - that such an account exists only where the beneficiary has been found and has elected it - is not in the text, and the section plainly contemplates the opposite, since 507B.4C(3)'a' requires an insurer to run its RETAINED ASSET ACCOUNTS against the death master file exactly as it runs its policies, which would be pointless if every such account belonged to someone already located. Paragraph 'b': 'ANNUITY' MEANS AN ANNUITY CONTRACT ISSUED IN THIS STATE. 'ANNUITY' DOES NOT INCLUDE ANY ANNUITY CONTRACT USED TO FUND AN EMPLOYMENT-BASED RETIREMENT PLAN OR PROGRAM WHERE THE INSURER TAKES DIRECTION FROM THE PLAN SPONSOR OR PLAN ADMINISTRATOR. The exclusion is conditional on who gives the directions, not on the mere fact that the contract funds a retirement plan, and the third option denies the exclusion exists.

Under the Affordable Care Act, individual major medical plans generally must:

1. Require a medical exam before an applicant can be issued coverage
2. Impose a lifetime dollar maximum on all essential health benefits
3. Charge higher premiums to applicants with chronic health conditions
4. Cover essential health benefits and not exclude pre-existing conditions ✓

Why: ACA-compliant plans must cover essential health benefits, be guaranteed issue, and cannot exclude or rate up for pre-existing conditions.

An Iowa continuing education provider has a course whose approval period is about to run out. Since the course was approved the provider has rewritten a substantial part of its content. What does IAC 191 chapter 11 require the provider to do, and what does the rewrite do to its options?

1. The provider must apply for renewal of each course with the division or its outside vendor before the 24-month approval period expires, and the substantial change makes no difference to the route: a renewal application asks the provider to describe any changes made during the approval period, and the reviewer decides on that description whether to renew the approval or to require a complete review, so that the provider is never obliged to choose the complete review for itself and a course whose content has changed is renewed unless and until the reviewer says otherwise.
2. The provider must apply for renewal of each course with the division or its outside vendor before the 24-month approval period expires; but because a substantial change has been made to the content of a previously approved course, that course is not eligible for renewal and must be submitted for a complete review. ✓
3. The provider need do nothing before the period expires. A course approval lapses automatically at the end of the 24-month period and a provider that wishes to keep offering the course simply submits it for a complete review afterwards; the substantial change is relevant only to the number of credits the reviewed course will carry.
4. The provider must apply for renewal of each course with the division or its outside vendor before the 24-month approval period expires, and the substantial change means the course is ineligible for renewal; the course may not be submitted for review again until the 24-month period has run out, so it cannot be offered in the interval.

Why: Rule IAC 191—11.7 is two sentences and each carries one of the two halves of this item. PRIOR TO EXPIRATION OF THE 24-MONTH APPROVAL PERIOD, A CE PROVIDER MUST APPLY FOR RENEWAL OF EACH COURSE WITH THE DIVISION OR ITS OUTSIDE VENDOR. MUST, and PRIOR TO EXPIRATION, so the third option's do-nothing-and-refile-later position is wrong; and the timing is sharpened by 11.5(4), which requires a renewal request AT LEAST 30 DAYS PRIOR TO THE END OF THE 24-MONTH APPROVAL PERIOD. The 24 months come from 11.5(11): CE COURSES APPROVED BY THE DIVISION MAY BE OFFERED FOR A 24-MONTH PERIOD FOLLOWING THE DATE OF APPROVAL. The second sentence of 11.7 is the trap: IF A CE PROVIDER MAKES A SUBSTANTIAL CHANGE TO THE CONTENT OF A PREVIOUSLY APPROVED COURSE, THAT COURSE WILL NOT BE ELIGIBLE FOR RENEWAL AND MUST BE SUBMITTED FOR A COMPLETE REVIEW. The disqualification is automatic on the fact of the substantial change; it is not a discretion the reviewer exercises after reading a renewal application, which is what the second option constructs. Nor is there any waiting period - the fourth option's idea that the course must sit out the rest of the term before it can be reviewed appears nowhere, and would make no sense against 11.5(4), which contemplates a fresh approval request AT LEAST 30 DAYS PRIOR TO THE BEGINNING OF THE COURSE at any time. The practical shape of the rule is therefore: renewal is the cheap route and it is open only to a course that has not substantially changed; change the course substantially and the provider is back at the beginning of rule 11.5, filing on the NAIC uniform form, at least thirty days before the course next runs. The rule does not define SUBSTANTIAL and this corpus contains no definition of it, so nothing is said here about where the line falls.

An Iowa insurer is auditing which of its transactions the replacement rules reach. Its list includes credit life insurance; a group annuity with no direct solicitation of individuals by a producer; group life used to fund formal prepaid funeral contracts; an application to the existing insurer exercising a conversion privilege; new coverage whose cost is borne wholly by the insured's employer; the replacement of a non-convertible five-year term policy that cannot be renewed; and structured settlement annuities. Which are exempt?

1. All of them except the group annuity. Unless otherwise specifically included, the rules do not apply to transactions involving credit life insurance; group life insurance and annuities used to fund formal prepaid funeral contracts; an application to the existing insurer when a contractual change or a conversion privilege is being exercised; new coverage whose cost is borne wholly by the insured's employer or by an association of which the insured is a member; existing non-convertible term life that will expire in five years or less and cannot be renewed; and structured settlement annuities. A group annuity is within the rules however it is sold, since the exemption for group business is confined to group LIFE insurance and an annuity sold to members of a group is capable of being replaced in exactly the way an individual one is, whether or not any insurance producer solicited the individual member who happens to hold it.
2. All of them. Unless otherwise specifically included, the rules do not apply to the listed transactions, and the exemption for immediate annuities is general: an immediate annuity is exempt whether it is purchased with proceeds from an existing contract or with proceeds from an existing policy, since what makes it exempt is the nature of the annuity rather than the source of the money used to buy it.
3. All of them except the transaction with the existing insurer. Unless otherwise specifically included, the rules do not apply to credit life insurance; group life insurance or group annuities where there is no direct solicitation of individuals by a producer; group life and annuities funding formal prepaid funeral contracts; new coverage whose cost is borne wholly by the insured's employer; existing non-convertible term life expiring in five years or less that cannot be renewed; and structured settlement annuities. An application to the existing insurer is within the rules, because a replacement by the same company is the transaction most likely to be concealed from the policyholder and the one in which the policyholder is least likely to be given a comparison with what is already held.
4. All of them. Unless otherwise specifically included, the rules do not apply to transactions involving credit life insurance; group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer; group life insurance and annuities used to fund formal prepaid funeral contracts; an application to the existing insurer when a contractual change or a conversion privilege is being exercised; proposed life insurance replacing life insurance under a binding or conditional receipt issued by the same company; certain plan-funding policies; new coverage whose cost is borne wholly by the insured's employer or by an association of which the insured is a member; existing non-convertible term life that will expire in five years or less and cannot be renewed; immediate annuities purchased with proceeds from an existing CONTRACT; and structured settlement annuities. ✓

Why: Rule IAC 191—16.23(1) lists ten exempt classes, opening UNLESS OTHERWISE SPECIFICALLY INCLUDED - words worth noticing, because two of the ten are then partly clawed back. Every class in the stem is on the list. Paragraph 'b' exempts GROUP LIFE INSURANCE OR GROUP ANNUITIES WHERE THERE IS NO DIRECT SOLICITATION OF INDIVIDUALS BY AN INSURANCE PRODUCER, and then says what direct solicitation is not: it SHALL NOT INCLUDE ANY GROUP MEETING HELD BY AN INSURANCE PRODUCER SOLELY FOR THE PURPOSE OF EDUCATING OR ENROLLING INDIVIDUALS OR, WHEN INITIATED BY AN INDIVIDUAL MEMBER OF THE GROUP, ASSISTING WITH THE SELECTION OF INVESTMENT OPTIONS OFFERED BY A SINGLE INSURER IN CONNECTION WITH ENROLLING THAT INDIVIDUAL. Group annuities ARE within the exemption, which the second option denies. The paragraph then claws back one channel: GROUP LIFE INSURANCE OR GROUP ANNUITY CERTIFICATES MARKETED THROUGH DIRECT-RESPONSE SOLICITATION SHALL BE SUBJECT TO THE PROVISIONS OF RULE 191-16.28. Paragraph 'd' exempts AN APPLICATION TO THE EXISTING INSURER THAT ISSUED THE EXISTING POLICY OR CONTRACT WHEN A CONTRACTUAL CHANGE OR A CONVERSION PRIVILEGE IS BEING EXERCISED; OR WHEN THE EXISTING POLICY OR CONTRACT IS BEING REPLACED BY THE SAME INSURER PURSUANT TO A PROGRAM FILED WITH AND APPROVED BY THE COMMISSIONER. The fourth option puts that back inside on a plausible-sounding argument about concealment; the answer is in the words of the exemption itself - a CONTRACTUAL CHANGE or a CONVERSION PRIVILEGE is something the existing contract already gives the owner, and a same-insurer replacement programme has been filed with and approved by the commissioner. Paragraph 'i' is the one the third option gets wrong, and it is drafted with unusual care: IMMEDIATE ANNUITIES THAT ARE PURCHASED WITH PROCEEDS FROM AN EXISTING CONTRACT. IMMEDIATE ANNUITIES PURCHASED WITH PROCEEDS FROM AN EXISTING POLICY ARE NOT EXEMPTED FROM THE REQUIREMENTS OF THIS CHAPTER. Contract to contract is exempt; POLICY to contract is not - because cashing in a life policy to buy an immediate annuity is a real replacement of life cover, and the rule says so in terms. The other exemptions are credit life; group life and annuities funding formal prepaid funeral contracts; proposed life insurance replacing life insurance under a binding or conditional receipt issued by the same company; the plan-funding exemption in paragraph 'f'; new coverage whose cost is BORNE WHOLLY BY THE INSURED'S EMPLOYER OR BY AN ASSOCIATION OF WHICH THE INSURED IS A MEMBER; the five-year non-convertible non-renewable term exemption; and structured settlement annuities.

An Iowa producer uses a basic illustration in a sale and the policy is applied for as illustrated. A second application is taken with no illustration at all. A third policy is issued on different terms from those applied for. What does IAC 191 chapter 14 require in each case, and how long must the insurer keep the papers?

1. Where the policy is applied for as illustrated, a copy of the signed illustration must be submitted to the insurer at the time of policy application and a copy provided to the applicant. Where no illustration is used, or the policy is applied for other than as illustrated, the producer must certify to that effect in writing on a form provided by the insurer, and a conforming basic illustration is sent with the policy. Where the policy is issued other than as applied for, a revised basic illustration labelled 'Revised Illustration' is sent with the policy. The insurer retains the papers for three years from the date of application, that being a fixed and readily administrable period which does not depend on the company knowing when a policy issued long ago finally went off the books, and it retains them whether or not a policy was issued, since the certification that no illustration was used is precisely the document a later examination of the company's market conduct would most want to see and the one most easily lost if nothing at all obliges the company to keep it.
2. Where the policy is applied for as illustrated, a copy of the signed illustration must be submitted to the insurer at the time of policy application and a copy provided to the applicant. Where no illustration is used, or the policy is applied for other than as illustrated, the producer must certify to that effect in writing on a form provided by the insurer, on which the applicant acknowledges that no conforming illustration was provided and that one will be provided no later than at policy delivery; that form goes to the insurer at the time of application, and a conforming basic illustration is sent with the policy and signed no later than the time the policy is delivered. Where the policy is issued other than as applied for, a revised basic illustration labelled 'Revised Illustration' is sent with the policy and signed and dated no later than the time the policy is delivered. The insurer retains the papers until three years after the policy is no longer in force, and need retain nothing if no policy is issued. ✓
3. Where the policy is applied for as illustrated, a copy of the signed illustration must be submitted to the insurer at the time of policy application and a copy provided to the applicant. Where no illustration is used, or the policy is applied for other than as illustrated, the producer must certify to that effect in writing on a form provided by the insurer, on which the applicant acknowledges that no conforming illustration was provided and that one will be provided no later than at policy delivery; that form goes to the insurer at the time of application, and a conforming basic illustration is sent with the policy. Where the policy is issued other than as applied for, a revised basic illustration labelled 'Revised Illustration' is sent with the policy and signed and dated no later than the time the policy is delivered. The insurer retains the papers until five years after the policy is no longer in force - the same period the replacement rules impose on the signed replacement notices generated in the very same sale - and need retain nothing if no policy is issued.
4. Where the policy is applied for as illustrated, a copy of the signed illustration must be submitted to the insurer within thirty days of policy delivery, the application file being assembled after the sale rather than at the moment of it. Where no illustration is used, or the policy is applied for other than as illustrated, the producer must certify to that effect in writing on a form provided by the insurer, on which the applicant acknowledges that no conforming illustration was provided. Where the policy is issued other than as applied for, a revised basic illustration labelled 'Revised Illustration' is sent with the policy but need not be signed or dated by anyone, the applicant having already signed the original illustration and the revision being the insurer's own document. The insurer retains the papers until three years after the policy is no longer in force, and must retain the producer's certification even where no policy is ever issued, that certification being the only record that the sale was made without an illustration at all.

Why: Rule IAC 191—14.9 has four subrules covering three situations and one retention period. 14.9(1) covers the ordinary case: IF A BASIC ILLUSTRATION IS USED... AND THE POLICY IS APPLIED FOR AS ILLUSTRATED, A COPY OF THAT ILLUSTRATION, SIGNED IN ACCORDANCE WITH THESE RULES, SHALL BE SUBMITTED TO THE INSURER AT THE TIME OF POLICY APPLICATION. A COPY SHALL ALSO BE PROVIDED TO THE APPLICANT. At the time of APPLICATION, not thirty days after delivery - the fourth option's error. The same subrule covers the third situation: IF THE POLICY IS ISSUED OTHER THAN AS APPLIED FOR, A REVISED BASIC ILLUSTRATION CONFORMING TO THE POLICY AS ISSUED SHALL BE SENT WITH THE POLICY... SHALL BE LABELED 'REVISED ILLUSTRATION' AND SHALL BE SIGNED AND DATED BY THE APPLICANT OR POLICYOWNER AND PRODUCER OR OTHER AUTHORIZED REPRESENTATIVE OF THE INSURER NO LATER THAN THE TIME THE POLICY IS DELIVERED. The revised illustration IS signed, which the fourth option excuses. 14.9(2) covers the second situation and it is a two-signature form: the producer CERTIFIES that no illustration was used or that the policy was applied for other than as illustrated, and ON THE SAME FORM THE APPLICANT SHALL ACKNOWLEDGE THAT NO ILLUSTRATION CONFORMING TO THE POLICY APPLIED FOR WAS PROVIDED AND SHALL FURTHER ACKNOWLEDGE AN UNDERSTANDING THAT AN ILLUSTRATION CONFORMING TO THE POLICY AS ISSUED WILL BE PROVIDED NO LATER THAN AT THE TIME OF POLICY DELIVERY. 14.9(3) deals with illustrations sent by mail and supplies a safe harbour: the insurer's obligation IS SATISFIED IF IT CAN DEMONSTRATE THAT IT HAS MADE A DILIGENT EFFORT TO SECURE A SIGNED COPY OF THE NUMERIC SUMMARY PAGE, and THE REQUIREMENT TO MAKE A DILIGENT EFFORT SHALL BE DEEMED SATISFIED IF THE INSURER INCLUDES IN THE MAILING A SELF-ADDRESSED POSTAGE PREPAID ENVELOPE WITH INSTRUCTIONS FOR THE RETURN OF THE SIGNED NUMERIC SUMMARY PAGE. The identical safe harbour appears in the replacement rules for a direct-response notice. 14.9(4) is the retention rule and both halves matter: the papers are RETAINED BY THE INSURER UNTIL THREE YEARS AFTER THE POLICY IS NO LONGER IN FORCE - three, not five (third option), and measured from the END of the policy, not from application (second option, whose administrability argument is a real one that the drafter did not accept) - and A COPY NEED NOT BE RETAINED IF NO POLICY IS ISSUED, which the second option also reverses. Note that the FIVE-YEAR retention periods in the replacement rules are a different duty on different documents.

The McCarran-Ferguson Act established that the insurance business is primarily regulated by:

1. A single federal insurance agency in Washington
2. International treaty organizations and trade bodies
3. The individual states ✓
4. The Internal Revenue Service and the U.S. Treasury

Why: McCarran-Ferguson (1945) affirmed that regulation of insurance is left to the states, except where federal law specifically applies.

An Iowa insurer is designing an individual policy it wants to call 'guaranteed renewable'. It also wants to terminate the spouse's coverage when the insured's coverage ends, to require a nursing home admission within seven days of hospital discharge before extended care benefits attach, and to treat a disability recurring after eight months as a new disability. What does IAC 191—36.6, subrule 1, provide?

1. The term GUARANTEED RENEWABLE may be used only in a policy the insured has the right to continue in force by the timely payment of premiums until the age of 65 or to eligibility for Medicare, during which period THE INSURER MAY MAKE NO CHANGE OF ANY KIND, INCLUDING NO CHANGE IN PREMIUM RATES BY CLASSES - a fixed price for the life of the contract being what the word GUARANTEED promises the buyer and what distinguishes the label from an optionally renewable policy. The policy shall not provide for termination of the spouse's coverage solely because of the occurrence of an event specified for termination of the insured's coverage, other than nonpayment of premium, and shall provide that on the insured's death the covered spouse becomes the insured. Policies providing skilled, convalescent or extended care benefits following hospitalization shall not condition the benefits upon admission to the nursing facility within a period of less than 14 days after discharge. A recurrent disability provision may not specify that a recurrent disability be separated by a period greater than six months.
2. The term GUARANTEED RENEWABLE may be used only in a policy the insured has the right to continue in force by the timely payment of premiums until the age of 65 or to eligibility for Medicare, during which period the insurer may make changes in premium rates by classes but has no right to make unilaterally any other change in any provision. The policy shall not provide for termination of the spouse's coverage solely because of an event specified for termination of the insured's coverage, other than nonpayment of premium, and shall provide that on the insured's death the covered spouse becomes the insured. Extended care benefits may not be conditioned on admission to the nursing facility within a period of less than 14 days after discharge. A RECURRENT DISABILITY PROVISION MAY SPECIFY ANY SEPARATION PERIOD THE INSURER CHOOSES, the length of the period being a matter of benefit design disclosed in the outline of coverage rather than a matter the subrule regulates. A policy providing skilled, convalescent or extended care benefits following hospitalization may in addition require admission to the nursing facility within any period the insurer specifies, and accidental death and dismemberment benefits are payable only where the loss occurs within 90 days from the date of the accident AND the insured has been totally disabled throughout that period.
3. The term GUARANTEED RENEWABLE may be used only in a policy the insured has the right to continue in force by the timely payment of premiums UNTIL THE AGE OF 65 OR TO ELIGIBILITY FOR MEDICARE, during which period the insurer has no right to make unilaterally any change in any provision - EXCEPT THAT THE INSURER MAY MAKE CHANGES IN PREMIUM RATES BY CLASSES; and the terms may not be used WITHOUT FURTHER EXPLANATORY LANGUAGE. Such a policy SHALL NOT PROVIDE FOR TERMINATION OF COVERAGE OF THE SPOUSE SOLELY BECAUSE OF THE OCCURRENCE OF AN EVENT SPECIFIED FOR TERMINATION OF COVERAGE OF THE INSURED, OTHER THAN NONPAYMENT OF PREMIUM, and shall provide that ON THE INSURED'S DEATH THE COVERED SPOUSE BECOMES THE INSURED. Policies providing skilled, convalescent or extended care benefits following hospitalization SHALL NOT CONDITION THE BENEFITS UPON ADMISSION TO THE NURSING FACILITY WITHIN A PERIOD OF LESS THAN 14 DAYS AFTER DISCHARGE. A recurrent disability provision is permitted, PROVIDED NO PROVISION SHALL SPECIFY THAT A RECURRENT DISABILITY BE SEPARATED BY A PERIOD GREATER THAN SIX MONTHS. ✓
4. The term GUARANTEED RENEWABLE may be used only in a policy the insured has the right to continue in force by the timely payment of premiums until the age of 65 or to eligibility for Medicare, during which period the insurer may make changes in premium rates by classes but no other unilateral change, and the term may not be used without further explanatory language. The policy shall not provide for termination of the spouse's coverage solely because of an event specified for termination of the insured's coverage, other than nonpayment of premium; HOWEVER ON THE INSURED'S DEATH THE POLICY TERMINATES AS TO EVERY PERSON COVERED BY IT, the contract having been written on the insured's life and the spouse's cover being derivative of his. Policies providing skilled, convalescent or extended care benefits following hospitalization shall not condition the benefits upon admission to the nursing facility within a period of less than 30 DAYS after discharge from the hospital, and a recurrent disability provision may not specify that a recurrent disability be separated by a period greater than six months.

Why: IAC 191—36.6, subrule 1, carries fourteen lettered general rules that apply across every category of coverage in the chapter, and four of them decide this item. Paragraph 'b' distinguishes the two renewal labels, and the distinction is the whole point: NONCANCELABLE or NONCANCELABLE AND GUARANTEED RENEWABLE may be used only where the insured may continue the policy by timely payment UNTIL THE AGE OF 65 OR TO ELIGIBILITY FOR MEDICARE and THE INSURER HAS NO RIGHT TO MAKE UNILATERALLY ANY CHANGE IN ANY PROVISION; GUARANTEED RENEWABLE has the same continuation right and the same bar on unilateral change EXCEPT THAT THE INSURER MAY MAKE CHANGES IN PREMIUM RATES BY CLASSES. The second option removes that exception, which would make guaranteed renewable and noncancelable the same thing. Both terms are barred WITHOUT FURTHER EXPLANATORY LANGUAGE in accordance with the disclosure requirements of 36.7(1)'a'. There is one relaxation for periodic payment coverage: an accident and health or accident only policy providing weekly or monthly payments for a specified period during disability may give the insured the right to continue ONLY TO AGE 60 IF, AT AGE 60, THE INSURED HAS THE RIGHT TO CONTINUE THE POLICY IN FORCE AT LEAST TO AGE 65 WHILE ACTIVELY OR REGULARLY EMPLOYED. Paragraph 'c' adds that in a family policy covering both spouses THE AGE OF THE YOUNGER SPOUSE MUST BE USED as the basis for meeting the age and durational requirements. Paragraph 'a' is what the fourth option reverses: a noncancelable or guaranteed renewable policy SHALL NOT PROVIDE FOR TERMINATION OF COVERAGE OF THE SPOUSE SOLELY BECAUSE OF THE OCCURRENCE OF AN EVENT SPECIFIED FOR TERMINATION OF COVERAGE OF THE INSURED, OTHER THAN NONPAYMENT OF PREMIUM, and THE POLICY SHALL PROVIDE THAT IN THE EVENT OF THE INSURED'S DEATH, THE SPOUSE OF THE INSURED, IF COVERED UNDER THE POLICY, SHALL BECOME THE INSURED. Paragraph 'g' fixes the nursing facility gap at a floor rather than a ceiling: such benefits SHALL NOT CONDITION THE BENEFITS UPON ADMISSION TO THE NURSING FACILITY WITHIN A PERIOD OF LESS THAN 14 DAYS AFTER DISCHARGE FROM THE HOSPITAL, so a seven-day requirement is unlawful and a twenty-one-day one is not. Paragraph 'j' permits a recurrent disability provision PROVIDED, HOWEVER, THAT NO PROVISION SHALL SPECIFY THAT A RECURRENT DISABILITY BE SEPARATED BY A PERIOD GREATER THAN SIX MONTHS - so a disability recurring after eight months may be treated as a new one, but the insurer may not require more than six. The third option removes that cap. Several other general rules are worth carrying: accidental death and dismemberment coverage must give the insured THE OPTION TO INCLUDE ALL INSUREDS and not just the principal insured; a status type military service exclusion or suspension must carry a PRO-RATA REFUND OF PREMIUMS on written request; where the insurer cancels or refuses to renew, pregnancy benefits must be EXTENDED as to a pregnancy commencing while the policy was in force; family coverage must CONTINUE for a dependent child incapable of self-sustaining employment due to mental retardation or physical handicap who is chiefly dependent on the insured, with proof of incapacity permitted to be required WITHIN 31 DAYS; a transplant policy must reimburse A LIVE DONOR'S medical expenses to the extent benefits remain after the recipient's own; accidental death and dismemberment benefits are payable IF THE LOSS OCCURS WITHIN 90 DAYS FROM THE DATE OF THE ACCIDENT, IRRESPECTIVE OF TOTAL DISABILITY, and disability income benefits may NOT REQUIRE THE LOSS TO COMMENCE LESS THAN 30 DAYS AFTER THE DATE OF ACCIDENT; and termination of the policy is WITHOUT PREJUDICE TO COVERAGE FOR ANY CONTINUOUS LOSS WHICH COMMENCED WHILE THE POLICY WAS IN FORCE.

A graded-premium whole life policy charges premiums that:

1. Are invested in equity sub-accounts chosen by the policyowner each year
2. Decrease every year until the coverage is fully paid up
3. Start low and increase for a period, then level off ✓
4. Stay exactly the same for the entire life of the policy

Why: Graded-premium whole life begins with low premiums that rise over an initial period before leveling, easing early affordability.

A bank tells a borrower the loan will be approved only if they buy the lender's insurance. This unfair practice is:

1. Twisting
2. Coercion ✓
3. Rebating
4. Defamation

Why: Using economic force — conditioning a loan on buying particular insurance — is coercion.

An Iowa viatical settlement broker is assembling the disclosure document a client will sign with his application. The client wants to know how long he has to change his mind, how quickly he will be paid, and how often the buyer may telephone him afterwards to see how he is. What does Iowa Code 508E.8, subsection 1, require the disclosure to tell him?

1. That the viator has the right to rescind the contract BEFORE THE EARLIER OF THIRTY DAYS AFTER THE DATE THE CONTRACT IS EXECUTED BY ALL PARTIES OR FIFTEEN DAYS AFTER THE PROCEEDS HAVE BEEN PAID TO THE VIATOR, that rescission is effective only if notice is given AND the viator repays all proceeds and any premiums, loans and loan interest within the rescission period, and that if the insured dies during the rescission period the contract is DEEMED RESCINDED subject to repayment WITHIN SIXTY DAYS OF THE INSURED'S DEATH. That funds will be sent to the viator WITHIN THREE BUSINESS DAYS after the provider has received the insurer's or group administrator's written acknowledgment that ownership has been transferred and the beneficiary designated. And that contact with the insured to determine health status is LIMITED TO ONCE EVERY THREE MONTHS if the insured has a life expectancy of MORE THAN ONE YEAR, and NO MORE THAN ONCE PER MONTH if the life expectancy is ONE YEAR OR LESS. ✓
2. That the viator has the right to rescind the contract before the LATER of thirty days after the date the contract is executed by all parties or fifteen days after the proceeds have been paid to the viator, the longer of the two periods being the one that protects a consumer who has only just seen the money; that rescission is effective only if notice is given and the viator repays all proceeds, premiums, loans and loan interest within the rescission period; and that if the insured dies during the rescission period the contract is deemed rescinded subject to repayment within sixty days of the death. That funds will be sent within three business days after the provider receives the insurer's or group administrator's written acknowledgment of the transfer of ownership and designation of beneficiary. And that health status contact is limited to once every three months where life expectancy exceeds one year and to once per month where it is one year or less. The provider must also tell the viator that the disclosure document itself may be signed by the broker on the viator's behalf where the viator has given the broker written authority, an authorised agent's signature satisfying the signing requirement.
3. That the viator has the right to rescind before the earlier of thirty days after execution by all parties or fifteen days after the proceeds have been paid; that rescission is effective only if notice is given and the viator repays all proceeds and any premiums, loans and loan interest within the rescission period; and that if the insured dies during the rescission period the contract is deemed rescinded subject to repayment of all proceeds, premiums, loans and loan interest within sixty days of the death. That funds will be sent within three business days after the provider receives the insurer's or group administrator's written acknowledgment that ownership of the policy has been transferred and the beneficiary designated. And that contact with the insured to determine health status is limited to once every three months where the insured's life expectancy is ONE YEAR OR LESS, and to no more than once per month where it is MORE THAN ONE YEAR, the shorter expectancy calling for the lighter touch on a dying insured.
4. That the viator has the right to rescind before the earlier of thirty days after execution by all parties or fifteen days after the proceeds have been paid, NOTICE ALONE BEING SUFFICIENT TO RESCIND, the repayment of all proceeds and any premiums, loans and loan interest being a separate debt the provider may sue on afterwards rather than a condition of the rescission itself; and that if the insured dies during the rescission period the contract is deemed rescinded subject to repayment within sixty days of the death. That funds will be sent within three business days after the provider receives the insurer's or group administrator's written acknowledgment of the transfer of ownership and designation of beneficiary. And that health status contact is limited to once every three months where life expectancy exceeds one year and to once per month where it is one year or less, those contacts being permitted to be made by the provider, the broker or any person either of them engages for the purpose.

Why: Iowa Code 508E.8, subsection 1, sets out eleven disclosures that must reach the viator NO LATER THAN THE TIME THE APPLICATION FOR THE VIATICAL SETTLEMENT CONTRACT IS SIGNED BY ALL PARTIES, in a SEPARATE DOCUMENT SIGNED BY THE VIATOR AND THE PROVIDER OR BROKER. Three of them carry the figures this item turns on. Paragraph "f": the viator has the right to rescind BEFORE THE EARLIER OF THIRTY DAYS AFTER THE DATE UPON WHICH THE VIATICAL SETTLEMENT CONTRACT IS EXECUTED BY ALL PARTIES OR FIFTEEN DAYS AFTER THE VIATICAL SETTLEMENT PROCEEDS HAVE BEEN PAID TO THE VIATOR. EARLIER, not later - the second option's reasoning sounds consumer-friendly and is simply not what the paragraph says, and reading it as the later of the two would keep a paid-out contract unwound for a month. The same paragraph makes rescission effective ONLY IF BOTH NOTICE OF THE RESCISSION IS GIVEN, AND THE VIATOR REPAYS ALL PROCEEDS AND ANY PREMIUMS, LOANS, AND LOAN INTEREST PAID ON ACCOUNT OF THE VIATICAL SETTLEMENT WITHIN THE RESCISSION PERIOD - both limbs, which is what the fourth option splits apart. It closes with the death case: if the insured dies during the rescission period the contract SHALL BE DEEMED TO HAVE BEEN RESCINDED, subject to repayment of all proceeds and any premiums, loans and loan interest WITHIN SIXTY DAYS OF THE INSURED'S DEATH. Paragraph "g": FUNDS WILL BE SENT TO THE VIATOR WITHIN THREE BUSINESS DAYS AFTER THE VIATICAL SETTLEMENT PROVIDER HAS RECEIVED THE INSURER'S OR GROUP ADMINISTRATOR'S WRITTEN ACKNOWLEDGMENT THAT OWNERSHIP OF THE POLICY OR INTEREST IN THE CERTIFICATE HAS BEEN TRANSFERRED AND THE BENEFICIARY HAS BEEN DESIGNATED. Paragraph "k": contact to determine health status SHALL BE LIMITED TO ONCE EVERY THREE MONTHS IF THE INSURED HAS A LIFE EXPECTANCY OF MORE THAN ONE YEAR, AND NO MORE THAN ONCE PER MONTH IF THE INSURED HAS A LIFE EXPECTANCY OF ONE YEAR OR LESS, and only a licensed provider or its authorized representative may make the contact. The third option inverts that pairing; the frequency rises as the expectancy shortens, because the buyer's interest in the answer rises with it. The remaining disclosures are worth knowing as a list: possible alternatives including accelerated death benefits or policy loans under the viator's own policy; that the broker represents exclusively the viator and owes a fiduciary duty; that some or all of the proceeds may be taxable and a professional tax advisor should be consulted; that the proceeds could be subject to the claims of creditors; that receipt may adversely affect eligibility for Medicaid or other government benefits; that entering the contract may cause other rights or benefits, including conversion rights and waiver of premium benefits, to be forfeited; a brochure describing the process, on the national association of insurance commissioners form unless another is approved; and the prescribed privacy paragraph, which tells the viator he may be asked to renew his permission to share information EVERY TWO YEARS.

An Iowa viatical settlement broker's file clerk notices that a medical record and an insurance application in the same file cannot both be true. The broker asks whether it must report this, whether it can be sued for reporting it, and what its own antifraud programme must contain. Its contracts carry no fraud warning at all. What does Iowa Code 508E.15 provide?

1. Any person engaged in the business of viatical settlements having knowledge or a reasonable suspicion that a fraudulent viatical settlement act is being, will be, or has been committed MAY provide the commissioner with the information required by rule, reporting being permissive throughout section 508E.15 so that a licensee is never compelled to accuse its own client on a suspicion it cannot yet prove. No civil liability shall be imposed on a person who, acting reasonably and in good faith, furnishes such information. A provider or broker shall have antifraud initiatives including a fraud investigator and an antifraud plan submitted to the commissioner, the plan describing procedures for resolving material inconsistencies between medical records and insurance applications. The lack of the required fraud warning in a contract or application is not a defense in any prosecution for a fraudulent viatical settlement act.
2. Any person engaged in the business of viatical settlements having knowledge or a reasonable suspicion that a fraudulent viatical settlement act is being, will be, or has been committed shall provide the commissioner with the information required by rule, while any other person having knowledge or a reasonable belief may do so. No civil liability shall be imposed on a person who, acting reasonably and in good faith, furnishes such information. A provider or broker shall have antifraud initiatives including a fraud investigator and an antifraud plan submitted to the commissioner. Where the contract and the application omit the fraud warning required by subsection 2, NO PROSECUTION for a fraudulent viatical settlement act arising out of that contract may be brought, the warning being the notice on which the offense depends; the reporting duty and the antifraud plan requirement fall away with it, the chapter's antifraud machinery resting on the warning as its foundation. Any document or evidence the broker furnishes the commissioner in an investigation of a suspected fraudulent act becomes a PUBLIC RECORD under chapter 22 once the investigation is concluded.
3. Any person engaged in the business of viatical settlements having knowledge or a reasonable suspicion that a fraudulent viatical settlement act is being, will be, or has been committed shall provide the commissioner with the information required by rule, while any other person having knowledge or a reasonable belief may do so. A person who furnishes that information to the commissioner, to a law enforcement or regulatory official or to the life insurer that issued the policy enjoys IMMUNITY FROM CIVIL LIABILITY WITHOUT QUALIFICATION, the protection being absolute so that no informant is deterred by the prospect of a suit, and bad faith or actual malice goes only to the weight the commissioner gives the report. A provider or broker shall have antifraud initiatives including a fraud investigator and an antifraud plan submitted to the commissioner. The lack of the required fraud warning is not a defense in any prosecution for a fraudulent viatical settlement act.
4. Any person ENGAGED IN THE BUSINESS OF VIATICAL SETTLEMENTS having knowledge or a REASONABLE SUSPICION that a fraudulent viatical settlement act is being, will be, or has been committed SHALL provide the commissioner with the information required by rule, while any OTHER person having knowledge or a reasonable belief MAY do so. No civil liability shall be imposed on and no cause of action shall arise from a person who, ACTING REASONABLY AND IN GOOD FAITH, furnishes such information to the listed recipients, that immunity not applying to a statement made in bad faith or with actual malice. A provider or broker shall have antifraud initiatives including a FRAUD INVESTIGATOR and an ANTIFRAUD PLAN submitted to the commissioner, the plan describing procedures for detecting and investigating possible fraudulent acts and for resolving material inconsistencies between medical records and insurance applications, procedures for reporting to the commissioner, the plan for antifraud education and training, and the organizational arrangement of antifraud personnel. THE LACK OF THE REQUIRED FRAUD WARNING IS NOT A DEFENSE in any prosecution for a fraudulent viatical settlement act. ✓

Why: Iowa Code 508E.15 is the chapter's antifraud machinery and it turns on four distinctions. Subsection 3 splits the reporting duty in two: paragraph "a" says ANY PERSON ENGAGED IN THE BUSINESS OF VIATICAL SETTLEMENTS HAVING KNOWLEDGE OR A REASONABLE SUSPICION THAT A FRAUDULENT VIATICAL SETTLEMENT ACT IS BEING, WILL BE, OR HAS BEEN COMMITTED SHALL PROVIDE TO THE COMMISSIONER SUCH INFORMATION AS REQUIRED BY AND IN A MANNER PRESCRIBED BY RULES, while paragraph "b" says ANY OTHER PERSON having knowledge or a REASONABLE BELIEF MAY do so. Shall for the industry, may for everyone else - which is what the second option flattens; and note the threshold words differ too, suspicion inside the business and belief outside it. Subsection 4 is the immunity and it is conditional, not absolute: no civil liability shall be imposed on and no cause of action shall arise from a person who, ACTING REASONABLY AND IN GOOD FAITH, furnishes information to the commissioner and staff, to federal, state or local law enforcement or regulatory officials, to a person involved in the prevention and detection of fraudulent viatical settlement acts, to the national association of insurance commissioners, the financial industry regulatory authority, inc., the North American securities administrators association or another regulatory body, or to a life insurer that issued the policy. Paragraph "b" then says the immunity DOES NOT APPLY TO A STATEMENT MADE IN BAD FAITH OR WITH ACTUAL MALICE, and requires a plaintiff to plead bad faith or malice specifically - which is what the fourth option removes. Paragraph "c" adds an award of attorney fees and costs to a prevailing informant where the action was not substantially justified, except to a person furnishing information about the person's own fraudulent act. Subsection 7 is the antifraud programme: initiatives REASONABLY CALCULATED TO DETECT, PROSECUTE, AND PREVENT FRAUDULENT VIATICAL SETTLEMENT ACTS, which SHALL INCLUDE a fraud investigator - who may be the provider or broker itself, an employee, or an independent contractor - and an antifraud plan submitted to the commissioner describing the procedures for detecting and investigating possible fraudulent acts AND PROCEDURES FOR RESOLVING MATERIAL INCONSISTENCIES BETWEEN MEDICAL RECORDS AND INSURANCE APPLICATIONS, the procedures for reporting to the commissioner, the plan for antifraud education and training of underwriters and other personnel, and a description or chart of the organizational arrangement of the antifraud personnel. That first item is exactly the clerk's discovery. The plan itself is privileged and confidential notwithstanding chapter 22, is not a public record, and is not subject to discovery or subpoena. Subsection 2 requires every contract and application to carry the statement that ANY PERSON WHO KNOWINGLY PRESENTS FALSE INFORMATION IN AN APPLICATION FOR INSURANCE OR VIATICAL SETTLEMENT CONTRACT IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND CONFINEMENT IN PRISON, or a substantially similar statement - and then closes the door the third option opens: THE LACK OF A STATEMENT AS REQUIRED IN PARAGRAPH "A" DOES NOT CONSTITUTE A DEFENSE IN ANY PROSECUTION FOR A FRAUDULENT VIATICAL SETTLEMENT ACT.

'Twisting' is an unfair trade practice defined as:

1. Using misrepresentation to induce a client to replace an existing policy ✓
2. Charging two clients different premiums for identical coverage by mistake
3. Sharing a small portion of one's commission with a licensed co-agent
4. Recommending the lowest-cost policy a client genuinely qualifies for

Why: Twisting is inducing a policy replacement through misrepresentation or incomplete comparisons; doing so within the same insurer is called churning.

An Iowa producer has repeatedly advised applicants to answer 'no' to the replacement question so that their existing insurers are not notified, and the applicants have then replaced their policies. What does IAC 191 chapter 16 make of that pattern, what does a failure to comply with the chapter amount to, and what may follow?

1. Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer is given as an example of a violation. But a pattern of owners replacing after saying they did not intend to is not evidence against the producer: owners have the right to change their minds, the rules say so expressly, and a rule that turned the exercise of that right into evidence against the producer would penalise the producer for the customer's decision. Any failure to comply with the rules is considered a violation of two named rules of the division, and violations may lead to revocation or suspension of a licence, monetary fines, the forfeiture of any commissions or compensation paid to a producer as a result of the transaction in connection with which the violations occurred, or any other penalties authorised by Iowa Code chapter 507B or by the division's own penalty chapter.
2. Advising an applicant to respond negatively to any question regarding replacement is given as an example of a violation, and patterns of such action by owners of the same producer are deemed prima facie evidence of the producer's knowledge and intent. Any failure to comply with the rules is considered a violation of two named rules of the division, and violations may lead to revocation or suspension of a licence or to monetary fines; but a producer's commissions on the transaction cannot be forfeited, commission being compensation already earned for work done.
3. Advising an applicant to respond negatively to any question regarding replacement is given as an example of a violation, and patterns of such action by owners of the same producer are deemed conclusive evidence of the producer's knowledge that replacement was intended. Any failure to comply with the rules is considered a violation of two named rules of the division, and violations may lead to revocation or suspension of a licence, monetary fines, forfeiture of commissions, or any other penalties authorised by Iowa Code chapter 507B or the division's penalty chapter.
4. Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer is given as an example of a violation. Policy and contract owners do have the right to replace after indicating that replacement is not their intention; but patterns of such action by owners of the same producer are deemed prima facie evidence of the producer's knowledge that replacement was intended and of the producer's intent to violate the rules. Any failure to comply with the rules is considered a violation of two named rules of the division, and violations subject the violator to penalties that may include revocation or suspension of a producer's or insurer's licence, monetary fines, forfeiture of any commissions or compensation paid to a producer as a result of the transaction, or any other penalties authorised by Iowa Code chapter 507B or the division's penalty chapter. ✓

Why: Rule IAC 191—16.29(1) provides that ANY FAILURE TO COMPLY WITH THESE RULES SHALL BE CONSIDERED A VIOLATION OF RULES 191-15.7(507B) AND 191-15.8(507B), and gives five examples: ANY DECEPTIVE OR MISLEADING INFORMATION SET FORTH IN SALES MATERIAL; FAILING TO ASK THE APPLICANT IN COMPLETING THE APPLICATION THE PERTINENT QUESTIONS REGARDING THE POSSIBILITY OF FINANCING OR REPLACEMENT; THE INTENTIONAL INCORRECT RECORDING OF AN ANSWER; ADVISING AN APPLICANT TO RESPOND NEGATIVELY TO ANY QUESTION REGARDING REPLACEMENT IN ORDER TO PREVENT NOTICE TO THE EXISTING INSURER; OR ADVISING A POLICY OR CONTRACT OWNER TO WRITE DIRECTLY TO THE INSURER IN SUCH A WAY AS TO ATTEMPT TO OBSCURE THE IDENTITY OF THE REPLACING PRODUCER OR INSURER. The producer in the stem has done the fourth. What rules 191-15.7 and 191-15.8 provide is not stated here; neither is in this corpus. 16.29(2) is the sentence this item is built on and it does two things at once: POLICY AND CONTRACT OWNERS HAVE THE RIGHT TO REPLACE EXISTING LIFE INSURANCE POLICIES OR ANNUITY CONTRACTS AFTER INDICATING IN OR AS A PART OF APPLICATIONS FOR NEW COVERAGE THAT REPLACEMENT IS NOT THEIR INTENTION; HOWEVER, PATTERNS OF SUCH ACTION BY POLICY OR CONTRACT OWNERS OF THE SAME PRODUCER SHALL BE DEEMED PRIMA FACIE EVIDENCE OF THE PRODUCER'S KNOWLEDGE THAT REPLACEMENT WAS INTENDED IN CONNECTION WITH THE IDENTIFIED TRANSACTIONS, AND THESE PATTERNS OF ACTION SHALL BE DEEMED PRIMA FACIE EVIDENCE OF THE PRODUCER'S INTENT TO VIOLATE THESE RULES. It preserves the owner's right AND makes a pattern evidence against the producer - the second option keeps the first half and denies the second, and its argument is answered by the word PATTERNS: one customer changing her mind proves nothing, and a run of them across one producer's book is a different fact. The evidence is PRIMA FACIE, not conclusive, so it can be answered - the fourth option's error. This is also the reason 16.25(2)'e' requires an insurer to be able to produce replacements INDEXED BY REPLACING PRODUCER AND EXISTING INSURER: without the index the pattern is invisible. 16.29(3): where the requirements have not been met, THE REPLACING INSURER SHALL PROVIDE TO THE POLICY OWNER AN IN-FORCE ILLUSTRATION IF AVAILABLE OR POLICY SUMMARY FOR THE REPLACEMENT POLICY OR AVAILABLE DISCLOSURE DOCUMENT FOR THE REPLACEMENT CONTRACT AND THE APPROPRIATE NOTICE REGARDING REPLACEMENTS. 16.29(4) lists what may follow: THE REVOCATION OR SUSPENSION OF A PRODUCER'S OR INSURER'S LICENSE, MONETARY FINES, THE FORFEITURE OF ANY COMMISSIONS OR COMPENSATION PAID TO A PRODUCER AS A RESULT OF THE TRANSACTION IN CONNECTION WITH WHICH THE VIOLATIONS OCCURRED, OR ANY OTHER PENALTIES AUTHORIZED BY IOWA CODE CHAPTER 507B OR 191-CHAPTER 15. The commission forfeiture is expressly there, which the third option denies. What penalties 191-Chapter 15 authorises is not stated here.

A life insurance company wants to deliver variable contracts in Iowa. It also asks what the contracts themselves must say about how the variable benefit is worked out. What does Iowa Code chapter 508A require?

1. No company shall deliver or issue for delivery variable contracts within this state unless it is licensed or organised to do a life insurance or annuity business in this state. That licence is the whole of the requirement: the commissioner's satisfaction about the company's condition or method of operation is a matter for the ordinary certificate of authority process and is not revisited for variable business. Any contract providing benefits payable in variable amounts must contain a statement of the essential features of the procedures to be followed in determining the dollar amount of the variable benefits, and where benefits vary to reflect investment experience the contract must state that the dollar amount will so vary and must contain on its first page a statement to the effect that the benefits are on a variable basis.
2. No company shall deliver or issue for delivery variable contracts within this state unless it is licensed or organised to do a life insurance or annuity business in this state and the commissioner is satisfied that its operation will not be hazardous to the public or its policyholders; the commissioner shall consider the history and financial condition of the company, the character, responsibility and fitness of its officers and directors, and the law and regulation of its state of domicile. Any contract providing benefits payable in variable amounts must contain a statement of the essential features of the procedures to be followed in determining the dollar amount of the variable benefits, and must state that the dollar amount will vary; the statement that the benefits are on a variable basis may appear anywhere in the contract provided it is conspicuous, and a group certificate need carry no such statement. A company organised under the laws of another state may deliver variable contracts in this state on the strength of its domiciliary licence alone, the commissioner's satisfaction as to condition and method of operation being required only of domestic companies; and in that connection the commissioner's consideration is confined to the history and financial condition of the company, the character, responsibility and fitness of its officers and directors being a matter for the domiciliary regulator.
3. No company shall deliver or issue for delivery variable contracts within this state unless it is licensed or organised to do a life insurance or annuity business in this state and the commissioner is satisfied that its operation will not be hazardous. Where the company is a subsidiary of an admitted life insurance company, or affiliated with one through common management or ownership, the parent's or affiliate's compliance is disregarded and the applicant must meet the requirements in its own right. Any contract providing benefits payable in variable amounts must contain a statement of the essential features of the procedures used, must state that the dollar amount will vary, and must contain on its first page a statement to the effect that the benefits are on a variable basis.
4. No company shall deliver or issue for delivery variable contracts within this state unless it is licensed or organised to do a life insurance or annuity business in this state AND the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state; in that connection the commissioner shall consider among other things the history and financial condition of the company, the character, responsibility and fitness of its officers and directors, and the law and regulation under which the company is authorised in its state of domicile to issue variable contracts. Any contract providing benefits payable in variable amounts must contain a statement of the essential features of the procedures to be followed in determining the dollar amount of the variable benefits; and where benefits vary to reflect investment experience, the contract - including a group contract and any certificate issued under it - must state that the dollar amount will so vary and must contain on its FIRST PAGE a statement to the effect that the benefits are on a variable basis. ✓

Why: Iowa Code 508A.3 sets a TWO-PART gate and the second part is what the second option removes: NO COMPANY SHALL DELIVER OR ISSUE FOR DELIVERY WITHIN THIS STATE VARIABLE CONTRACTS UNLESS IT IS LICENSED OR ORGANIZED TO DO A LIFE INSURANCE OR ANNUITY BUSINESS IN THIS STATE, AND THE COMMISSIONER OF INSURANCE IS SATISFIED THAT ITS CONDITION OR METHOD OF OPERATION IN CONNECTION WITH THE ISSUANCE OF SUCH CONTRACTS WILL NOT RENDER ITS OPERATION HAZARDOUS TO THE PUBLIC OR ITS POLICYHOLDERS IN THIS STATE. A licence is necessary and is not sufficient; there is a separate satisfaction to be obtained about variable business specifically, which is why the section then lists what the commissioner SHALL CONSIDER AMONG OTHER THINGS - an open list, not a closed one - namely THE HISTORY AND FINANCIAL CONDITION OF THE COMPANY; THE CHARACTER, RESPONSIBILITY AND FITNESS OF THE OFFICERS AND DIRECTORS OF THE COMPANY; AND THE LAW AND REGULATION UNDER WHICH THE COMPANY IS AUTHORIZED IN THE STATE OF DOMICILE TO ISSUE VARIABLE CONTRACTS. The third consideration carries two riders. THE STATE OF ENTRY OF AN ALIEN COMPANY SHALL BE DEEMED ITS PLACE OF DOMICILE FOR THAT PURPOSE. And: IF THE COMPANY IS A SUBSIDIARY OF AN ADMITTED LIFE INSURANCE COMPANY, OR AFFILIATED WITH SUCH COMPANY THROUGH COMMON MANAGEMENT OR OWNERSHIP, IT MAY BE DEEMED BY THE COMMISSIONER OF INSURANCE TO HAVE MET THE PROVISIONS OF THIS SECTION IF EITHER IT OR THE PARENT OR THE AFFILIATED COMPANY MEETS THE REQUIREMENTS HEREOF - which the fourth option reverses into a prohibition on looking through to the group. Iowa Code 508A.2 governs the contract: ANY CONTRACT PROVIDING BENEFITS PAYABLE IN VARIABLE AMOUNTS DELIVERED OR ISSUED FOR DELIVERY IN THIS STATE SHALL CONTAIN A STATEMENT OF THE ESSENTIAL FEATURES OF THE PROCEDURES TO BE FOLLOWED BY THE INSURANCE COMPANY IN DETERMINING THE DOLLAR AMOUNT OF SUCH VARIABLE BENEFITS. ANY SUCH CONTRACT UNDER WHICH THE BENEFITS VARY TO REFLECT INVESTMENT EXPERIENCE, INCLUDING A GROUP CONTRACT AND ANY CERTIFICATE IN EVIDENCE OF VARIABLE BENEFITS ISSUED THEREUNDER, SHALL STATE THAT SUCH DOLLAR AMOUNT WILL SO VARY AND SHALL CONTAIN ON ITS FIRST PAGE A STATEMENT TO THE EFFECT THAT THE BENEFITS THEREUNDER ARE ON A VARIABLE BASIS. Two details the third option loses: the placement is fixed - ON ITS FIRST PAGE, not merely conspicuously - and the requirement expressly reaches A GROUP CONTRACT AND ANY CERTIFICATE IN EVIDENCE OF VARIABLE BENEFITS ISSUED THEREUNDER, so a certificate holder sees it too. Note also the two different requirements in the section: the essential-features statement applies to ANY contract with variable benefits, while the first-page warning applies to those under which the benefits vary TO REFLECT INVESTMENT EXPERIENCE.

IAC 191 chapter 30 defines four life insurance policy forms and provisions before it goes on to prohibit or regulate them. Which set of definitions matches the rules?

1. A 'founders policy' is one offered to the public by a newly organised MUTUAL life insurance company, issued on a nonparticipating basis. A 'profit-sharing policy' is a form which contains provisions or is represented in such a way that the policyholder will be eligible to preferentially participate in any future distribution of general corporate profits. A 'coupon policy' is a life policy, other than annuity, which contains in addition to basic life benefits a series of annual pure endowment benefits evidenced by coupons. A 'pure endowment benefit' is a guaranteed insurance benefit, actuarially determined, payment of which is contingent upon the survival of the insured to a specific point in time.
2. A 'founders policy' is one offered to the public by a newly organised stock life insurance company, issued on a participating basis with representations that purchasers will share preferentially in the future divisible surplus earnings of the company arising from all classes of business, both participating and nonparticipating, and all plans of insurance. A 'profit-sharing policy' is a form which contains provisions or is represented in such a way that the policyholder will be eligible to preferentially participate in any future distribution of general corporate profits. A 'coupon policy' is a life policy, other than annuity, which contains in addition to basic life benefits a series of annual pure endowment benefits evidenced by coupons each maturing on the maturation date of an annual pure endowment. A 'pure endowment benefit' is a guaranteed insurance benefit, actuarially determined, payment of which is contingent upon the survival of the insured to a specific point in time. ✓
3. A 'founders policy' is one offered to the public by a newly organised stock life insurance company, issued on a participating basis with representations that purchasers will share preferentially in the future divisible surplus earnings of the company. A 'profit-sharing policy' is a form under which the policyholder shares in the profits of that class of participating business. A 'coupon policy' is a life policy which contains a series of annual pure endowment benefits evidenced by coupons, but a policy whose pure endowments are evidenced by a passbook or other savings-type device is not a coupon policy, the rules confining the term to the coupon form itself so that a company which chooses another such device is outside the definition entirely and falls to be dealt with under the general prohibition on misleading and improper policy names instead. A 'pure endowment benefit' is a guaranteed insurance benefit, actuarially determined, the payment of which is specific point in time.
4. A 'founders policy' is one offered to the public by a newly organised stock life insurance company, issued on a participating basis with representations that purchasers will share preferentially in the future divisible surplus earnings of the company arising from all classes of business. A 'profit-sharing policy' is a form which contains provisions or is represented in such a way that the policyholder will be eligible to preferentially participate in any future distribution of general corporate profits. A 'coupon policy' is a life policy, other than annuity, which contains a series of annual pure endowment benefits evidenced by coupons. A 'pure endowment benefit' is a benefit, not necessarily guaranteed, payable on the survival of the insured to a specific point in time.

Why: Rule IAC 191—30.3 defines four terms and each definition is doing work for a prohibition in rule 30.4. FOUNDERS POLICY MEANS A POLICY OF INSURANCE OFFERED TO THE PUBLIC BY A NEWLY ORGANIZED STOCK LIFE INSURANCE COMPANY, ISSUED ON A PARTICIPATING BASIS WITH THE REPRESENTATIONS THAT THE PURCHASERS WILL SHARE PREFERENTIALLY IN THE FUTURE DIVISIBLE SURPLUS EARNINGS OF THE COMPANY ARISING FROM ALL CLASSES OF BUSINESS, BOTH PARTICIPATING AND NONPARTICIPATING, AND ALL PLANS OF INSURANCE. A STOCK company on a PARTICIPATING basis - the second option reverses both - and the vice is in the words ALL CLASSES OF BUSINESS, BOTH PARTICIPATING AND NONPARTICIPATING: the early buyer is promised a preferential share of everything the company ever earns, including business other people will pay for. PROFIT-SHARING POLICY MEANS A POLICY FORM WHICH CONTAINS PROVISIONS OR IS REPRESENTED IN SUCH A WAY THAT THE POLICYHOLDER WILL BE ELIGIBLE TO PREFERENTIALLY PARTICIPATE IN ANY FUTURE DISTRIBUTION OF GENERAL CORPORATE PROFITS - GENERAL CORPORATE PROFITS, which is what distinguishes it from an ordinary participating policy where the dividend comes out of that class of participating business; the third option collapses the two, and 30.4(3) says in terms that the prohibition DOES NOT INTEND TO RESTRICT OR PROHIBIT THE SALE IN THIS STATE OF ANY PARTICIPATING LIFE INSURANCE POLICY WHERE THE DIVIDEND OR ABATEMENT OF PREMIUM IS DERIVED SOLELY FROM THE PROFITS OF THAT CLASS OF PARTICIPATING BUSINESS. COUPON POLICY MEANS A POLICY OR CONTRACT OF LIFE INSURANCE, OTHER THAN ANNUITY, WHICH CONTAINS IN ADDITION TO BASIC LIFE INSURANCE BENEFITS A SERIES OF ANNUAL PURE ENDOWMENT BENEFITS EVIDENCED IN THE POLICY CONTRACT BY A SERIES OF COUPONS EACH OF WHICH MATURES ON THE MATURATION DATE OF AN ANNUAL PURE ENDOWMENT - and the definition then closes the obvious loophole: FOR THE PURPOSES OF THESE RULES, POLICIES CONTAINING ANNUAL PURE ENDOWMENTS EVIDENCED BY COUPONS, PASSBOOKS OR OTHER DEVICES GENERALLY ACQUAINTED WITH SAVINGS, BANKING OR INVESTMENT INSTITUTIONS SHALL BE CONSIDERED COUPON POLICIES. The third option argues that loophole back open. PURE ENDOWMENT BENEFIT MEANS A GUARANTEED INSURANCE BENEFIT, ACTUARIALLY DETERMINED, THE PAYMENT OF WHICH IS CONTINGENT UPON THE SURVIVAL OF THE INSURED TO A SPECIFIC POINT IN TIME - GUARANTEED and ACTUARIALLY DETERMINED are both part of it, which the fourth option removes.

An Iowa member insurer fails to pay a guaranty association assessment when it falls due. Separately, the same insurer wishes to challenge a final action of the association’s board taken three weeks ago. It asks what the commissioner may do about the unpaid assessment and how the challenge is brought.

1. The commissioner must suspend the certificate of authority to transact business in this state, without notice or hearing and without any alternative penalty, the sanction following automatically on the association's certification that the assessment is unpaid; and a final action of the board is not appealable to the commissioner at all, the insurer's only remedy being an action against the association in a court of competent jurisdiction brought within one year of the action complained of and tried as an original proceeding rather than on the board's record.
2. After notice and hearing the commissioner may suspend or revoke the certificate of authority, or may as an alternative levy an administrative penalty not exceeding one percent of the unpaid assessment per month, the chapter fixing no minimum sum; and a final action of the board may be appealed to the commissioner if the appeal is taken within thirty days of the date the action was taken rather than of the insurer's receipt of notice.
3. The commissioner may levy an administrative penalty not exceeding five percent of the unpaid assessment per month and not less than one hundred dollars per month, but may not suspend or revoke a certificate of authority for nonpayment of an assessment, that sanction being reserved for a member insurer which fails to comply with the plan of operation; and a final action of the board must be taken directly to a court of competent jurisdiction rather than to the commissioner in the first instance, the chapter fixing no time limit for that action.
4. After notice and hearing the commissioner may suspend or revoke the insurer’s certificate of authority, or as an alternative may levy an administrative penalty not exceeding five percent of the unpaid assessment per month and not less than one hundred dollars per month; and a final action of the board or the association may be appealed to the commissioner if the appeal is taken within sixty days of the insurer’s receipt of notice of that action. ✓

Why: Iowa Code 508C.11(2) gives the commissioner a choice of sanctions against a member insurer which fails to pay an assessment when due OR fails to comply with the plan of operation: after notice and hearing, suspension or revocation of the certificate of authority to transact business in this state; or, as an alternative, an administrative penalty on a member insurer which fails to pay an assessment when due. That penalty is bounded at both ends — not more than five percent of the unpaid assessment per month, and not less than one hundred dollars per month — so it has a floor as well as a ceiling, and nonpayment reaches both sanctions rather than only the penalty. Subsection 3 fixes the appeal: a final action of the board of directors or of the association may be appealed to the commissioner if taken within sixty days of the MEMBER INSURER’S RECEIPT OF NOTICE of the action, not from the date of the action itself; and a final action or order of the commissioner is then subject to judicial review pursuant to chapter 17A in a court of competent jurisdiction. Subsection 1 sets out what the commissioner SHALL do: on request of the board, provide a statement of premiums for each member insurer; and, when an impairment is declared and quantified, serve a demand on the impaired insurer to make the impairment good within a reasonable time, notice to the insurer being notice to its shareholders, with the insurer’s failure to comply not excusing the association from performing its own duties. A separate sixty-day period governs a different dispute: under 508C.9(9) an insurer protesting an assessment must pay it in full when due with a written statement of the grounds, and the association then has sixty days from that payment to notify the protesting insurer of its determination.

An Iowa employee is terminated on 1 March and the employer gives him written notice of his continuation rights on 5 March. He decides on 20 March that he wants to continue his coverage. He asks what he must do, by when, and what he will have to pay. What does Iowa Code 509B.3 provide?

1. An employee who wishes continuation must request it in writing within the ten-day period following the later of the date of termination or the date notice of the right is given, and if proper notice is given may not elect more than thirty-one days after the date of termination. AN EMPLOYEE ELECTING CONTINUATION SHALL PAY THE FULL COST OF THE COVERAGE PLUS A REASONABLE ADMINISTRATIVE CHARGE, the employer having no obligation to subsidise a former employee; the election and first contribution must reach the employer within thirty-one days of the date the group insurance would otherwise terminate.
2. An employee who wishes continuation must request it in writing within the ten-day period following the later of the date of termination or the date notice of the right is given, and if proper notice is given may not elect more than thirty-one days after the date of termination. An employee electing continuation shall pay monthly in advance the contribution the employer requires, but not more than the group rate otherwise due. THE ELECTION AND FIRST CONTRIBUTION MUST REACH THE EMPLOYER WITHIN TEN DAYS OF THE DATE THE GROUP INSURANCE WOULD OTHERWISE TERMINATE, the same ten days that govern the request itself.
3. An employee who wishes continuation MUST REQUEST CONTINUATION IN WRITING TO THE EMPLOYER OR GROUP POLICYHOLDER WITHIN THE TEN-DAY PERIOD FOLLOWING THE LATER OF the date of the termination or the date the employee is given notice of the right of continuation - here 5 March, so the window closed on 15 March. IF PROPER NOTICE IS GIVEN, THE EMPLOYEE IS NOT ELIGIBLE TO ELECT CONTINUATION MORE THAN THIRTY-ONE DAYS AFTER THE DATE OF TERMINATION. An employee electing continuation SHALL PAY MONTHLY TO THE EMPLOYER OR GROUP POLICYHOLDER, IN ADVANCE, THE AMOUNT OF CONTRIBUTION REQUIRED BY THE EMPLOYER OR GROUP POLICYHOLDER, BUT NOT MORE THAN THE GROUP RATE OTHERWISE DUE for the insurance being continued; and if proper notice was given, THE ELECTION TOGETHER WITH THE FIRST CONTRIBUTION MUST BE GIVEN TO THE EMPLOYER OR GROUP POLICYHOLDER WITHIN THIRTY-ONE DAYS OF THE DATE THE GROUP INSURANCE WOULD OTHERWISE TERMINATE. ✓
4. An employee who wishes continuation must request it in writing within the ten-day period following THE EARLIER of the date of termination or the date notice of the right is given - here 1 March, so the window closed on 11 March and the request on 20 March is out of time. If proper notice is given the employee may not elect more than thirty-one days after termination. An employee electing continuation shall pay monthly in advance the contribution the employer requires, but not more than the group rate otherwise due; the election and first contribution must reach the employer within thirty-one days of the date the group insurance would otherwise terminate. The thirty-one day backstop applies whether or not the employer ever gave notice of the right of continuation, the period running from the termination itself; and the employee may pay the contributions annually in arrear if the employer agrees to that arrangement.

Why: Iowa Code 509B.3, subsections 4 and 5, run three clocks and the item is built so that each one has to be worked. Subsection 4, paragraph 'a': the employee MUST REQUEST CONTINUATION IN WRITING TO THE EMPLOYER OR GROUP POLICYHOLDER WITHIN THE TEN-DAY PERIOD FOLLOWING THE LATER OF EITHER OF THE FOLLOWING: THE DATE OF THE TERMINATION; THE DATE THE EMPLOYEE IS GIVEN NOTICE OF THE RIGHT OF CONTINUATION AS PROVIDED IN SECTION 509B.5. THE LATER, which is what the fourth option reverses - and the difference is the whole protection, because an employee who is told about the right four days after he loses his job would otherwise have four days less to use it. On these facts the later date is 5 March and the ten days run to 15 March, so a request on 20 March is out of time. Paragraph 'b' is the backstop: IF PROPER NOTICE IS GIVEN, THE EMPLOYEE OR MEMBER IS NOT ELIGIBLE TO ELECT CONTINUATION MORE THAN THIRTY-ONE DAYS AFTER THE DATE OF TERMINATION. Read the condition on the front of it - IF PROPER NOTICE IS GIVEN - and read it with section 509B.5, subsection 1, which says that CONTINUATION RIGHTS SHALL NOT BE DENIED BECAUSE OF FAILURE TO PROVIDE PROPER NOTICE. An employer that never gave the notice cannot rely on either deadline. Subsection 5 fixes the money and the third clock. The employee SHALL PAY MONTHLY TO THE EMPLOYER OR GROUP POLICYHOLDER, IN ADVANCE, THE AMOUNT OF CONTRIBUTION REQUIRED BY THE EMPLOYER OR GROUP POLICYHOLDER, BUT NOT MORE THAN THE GROUP RATE OTHERWISE DUE FOR THE INSURANCE BEING CONTINUED UNDER THE GROUP POLICY. That ceiling is what the second option removes: Iowa's continuation chapter caps the charge at the group rate and allows no administrative loading on top of it, which is a real difference from the federal continuation scheme candidates may have met elsewhere. And the election TOGETHER WITH THE FIRST CONTRIBUTION REQUIRED TO ESTABLISH CONTRIBUTIONS ON A MONTHLY BASIS IN ADVANCE SHALL BE GIVEN TO THE EMPLOYER OR GROUP POLICYHOLDER WITHIN THIRTY-ONE DAYS OF THE DATE THE GROUP INSURANCE WOULD OTHERWISE TERMINATE - thirty-one days, not the ten of the third option, which confuses the deadline for ASKING with the deadline for PAYING. Subsection 7 requires a NOTIFICATION OF THE CONTINUATION PRIVILEGE to be included WITH OR IN EACH CERTIFICATE OF COVERAGE and to CONTAIN THE TIME LIMITS FOR REQUESTING THE CONTINUED COVERAGE, so the employee should have met these dates once before, in his certificate.

An Iowa consumer complains about a life insurer, and a journalist later asks the division for the investigation file. Under Iowa Code 505.8, what is the position, and what may the commissioner nevertheless disclose?

1. The confidentiality in the section attaches only while an inquiry is under way, so the file becomes a public record under the open records chapter on the day the division closes the investigation, and the journalist may obtain the closed file on request without any showing of need. While the inquiry remains open the commissioner may in the commissioner's discretion provide the information to the insurance company or producer that is the subject of the complaint, to the consumer who filed it and to the individual insured who is its subject, without waiving confidentiality, and may disclose or release it in the course of an administrative or judicial proceeding, and may share it with other regulatory authorities or governmental agencies where the commissioner determines that doing so is necessary or appropriate in the public interest.
2. Notwithstanding the open records chapter, the commissioner shall keep confidential the information submitted to or obtained by the division in the course of an investigation or inquiry into a consumer complaint, including all notes, work papers or other documents. That confidentiality is absolute as against everyone outside the division: the subsection carries no saving for the persons concerned, so providing the information to the insurance company or producer that is the subject of the complaint, or to the consumer who filed it, or to the individual insured who is its subject, would waive the protection for all purposes and against all comers. The commissioner may therefore release the material only under an order made in an administrative or judicial proceeding, and may share it with another regulatory authority only on that authority's subpoena.
3. Notwithstanding the open records chapter, the commissioner shall keep confidential the information submitted to or obtained by the division in the course of an investigation or inquiry into a consumer complaint, including all notes, work papers or other documents. The commissioner may in the commissioner's discretion provide that information to the insurance company or producer that is the subject of the complaint, to the consumer who filed it, and to the individual insured who is its subject, without waiving confidentiality, and may disclose or release it in the course of an administrative or judicial proceeding; and if the commissioner determines it necessary or appropriate in the public interest or for the protection of the public, the commissioner may share information with other regulatory authorities or governmental agencies or publish information concerning a violation, redacted so that personally identifiable information is not made available. ✓
4. Notwithstanding the open records chapter, the commissioner shall keep confidential the information submitted to or obtained by the division in the course of an investigation or inquiry into a consumer complaint, including all notes, work papers or other documents, and may in the commissioner's discretion provide it to the company or producer that is the subject of the complaint, to the complainant and to the individual insured without waiving confidentiality. The commissioner may share information with other regulatory authorities or governmental agencies, or publish information concerning a violation, where the commissioner determines that to be necessary or appropriate in the public interest; but any such publication must identify by name the persons involved in the violation, since a notice from which personally identifiable information had been redacted would warn the public about nobody and would serve none of the protective purpose.

Why: Iowa Code 505.8(8)(a) provides that NOTWITHSTANDING CHAPTER 22, THE COMMISSIONER SHALL KEEP CONFIDENTIAL THE INFORMATION SUBMITTED TO THE INSURANCE DIVISION OR OBTAINED BY THE INSURANCE DIVISION IN THE COURSE OF AN INVESTIGATION OR INQUIRY PURSUANT TO SUBSECTION 6, INCLUDING ALL NOTES, WORK PAPERS, OR OTHER DOCUMENTS RELATED TO THE INVESTIGATION. Nothing in the paragraph makes the file public when the inquiry closes, which is what the second option supposes. The same paragraph then supplies the working exceptions: INFORMATION OBTAINED BY THE COMMISSIONER IN THE COURSE OF INVESTIGATING A COMPLAINT OR INQUIRY MAY, IN THE DISCRETION OF THE COMMISSIONER, BE PROVIDED TO THE INSURANCE COMPANY OR INSURANCE PRODUCER THAT IS THE SUBJECT OF THE COMPLAINT OR INQUIRY, TO THE CONSUMER WHO FILED THE COMPLAINT OR INQUIRY, AND TO THE INDIVIDUAL INSURED WHO IS THE SUBJECT OF THE COMPLAINT OR INQUIRY, WITHOUT WAIVING THE CONFIDENTIALITY AFFORDED TO THE COMMISSIONER OR TO OTHER PERSONS BY THIS SUBSECTION. THE COMMISSIONER MAY DISCLOSE OR RELEASE INFORMATION THAT IS OTHERWISE CONFIDENTIAL UNDER THIS SUBSECTION, IN THE COURSE OF AN ADMINISTRATIVE OR JUDICIAL PROCEEDING. The words WITHOUT WAIVING are the point: the confidentiality is not an all-or-nothing thing, which is what the third option makes it - an investigation could not be conducted at all if putting the complaint to the producer destroyed the privilege. Iowa Code 505.8(8)(b) extends confidentiality to material obtained under chapters 514J and 515D, and (8)(c) requires rules protecting the privacy of information held by an insurer or agent consistent with the federal Gramm-Leach-Bliley Act. Iowa Code 505.8(8)(d) is the release valve: NOTWITHSTANDING PARAGRAPHS A, B, AND C, IF THE COMMISSIONER DETERMINES THAT IT IS NECESSARY OR APPROPRIATE IN THE PUBLIC INTEREST OR FOR THE PROTECTION OF THE PUBLIC, THE COMMISSIONER MAY SHARE INFORMATION WITH OTHER REGULATORY AUTHORITIES OR GOVERNMENTAL AGENCIES OR MAY PUBLISH INFORMATION CONCERNING A VIOLATION OF THIS CHAPTER OR A RULE OR ORDER UNDER THIS CHAPTER. SUCH INFORMATION MAY BE REDACTED SO THAT PERSONALLY IDENTIFIABLE INFORMATION IS NOT MADE AVAILABLE - redaction is expressly permitted, which the fourth option forbids. Iowa Code 505.8(9) adds a narrower protection: the commissioner MAY KEEP CONFIDENTIAL ANY SOCIAL SECURITY NUMBER, RESIDENCE ADDRESS, AND RESIDENCE TELEPHONE NUMBER contained in a licensing, registration or filing record where disclosure is not required.

A life insurer domiciled in Iowa is placed in liquidation. One policy owner lives in Iowa. A second lives in a neighbouring state which has a guaranty association of its own, and is not eligible for coverage there because the insurer was never licensed in that state at the time that state’s guaranty law specifies. The liquidator asks who the Iowa association covers.

1. Only the Iowa resident is covered, because coverage under the chapter turns on residence in this state at the date the order of liquidation is entered, and a nonresident policy owner must look to the association of the state in which the policy was delivered, whatever the domicile of the member insurer that issued it.
2. Both are covered: the resident is covered outright, and the nonresident is covered because all three statutory conditions are met — the state of residence has a similar association, the person is not eligible for coverage there because the insurer was not licensed in that state at the time that state’s law specifies, and the member insurer is domiciled in Iowa. ✓
3. Both are covered, but on different footings: the resident is covered by the chapter outright, while the nonresident is covered only to the extent that the association of the state of residence declines the claim in writing, the Iowa association standing as payer of last resort wherever a similar association exists.
4. Only the nonresident is covered, because a person eligible for coverage by the association of the state in which the member insurer is domiciled takes coverage there, while an Iowa resident whose insurer is domiciled in Iowa is covered by the receivership estate directly and falls outside the association's obligations under the chapter altogether.

Why: Iowa Code 508C.3(1)“b” covers persons who own, or hold certificates or are enrollees under, the policies specified in subsection 2, and who are either residents of this state or nonresidents meeting three cumulative conditions in subparagraph (2): the state of residence has an association similar to Iowa’s; the person is not eligible for coverage by that association in any other state because the insurer or health maintenance organization was not licensed there at the time that state’s guaranty law specifies; and the member insurer that issued the policy is domiciled in this state. The facts given satisfy all three. Paragraph “a” extends coverage to beneficiaries, assignees and payees of those persons regardless of where they reside — including health care providers rendering services covered under health policies — but expressly excepts nonresident certificate holders under group policies. Paragraph “e” supplies the anti-duplication principle that drives the whole scheme: a person who would otherwise be covered here but is covered under another state’s law is not covered here, and where more than one association could cover a person the chapter is construed with other states’ laws so that only one association covers. Subsection 2 fixes the instruments: direct life insurance, health insurance and annuities, supplemental contracts, certificates under group policies, and unallocated annuity contracts issued by member insurers — with health insurance including health maintenance organization subscriber contracts and certificates, long-term care insurance, and disability insurance policies.

An Iowa insurer is working out which of its products the life insurance illustration rules reach. Its book includes variable life insurance, individual and group annuity contracts, credit life insurance, a group whole life plan with certificates of $50,000, and individual policies with initial face amounts of $8,000. It also asks from when the rules run. What does IAC 191 chapter 14 provide?

1. The rules apply to all group and individual life insurance policies and certificates except variable life insurance, individual and group annuity contracts, credit life insurance, and life insurance policies or certificates with initial face amounts of $10,000 or less - so only the group whole life certificates are within them. The rules are effective as of April 24, 2024, and apply to policies sold on or after February 1, 1997. ✓
2. The rules apply to all group and individual life insurance policies and certificates except variable life insurance, individual and group annuity contracts, and credit life insurance - so the group whole life certificates and the $8,000 individual policies are both within them. There is no exclusion by face amount: an exclusion of that kind would leave the buyers of the smallest policies, who are the least able to evaluate a nonguaranteed projection for themselves, without the protection of the chapter, and the figure a candidate may remember belongs to the identification requirement for policy forms rather than to the scope rule. The rules are effective as of April 24, 2024, and apply to policies sold on or after that date.
3. The rules apply to all group and individual life insurance policies and certificates except variable life insurance, individual and group annuity contracts, credit life insurance, and life insurance policies or certificates with initial face amounts of $10,000 or less - so only the group whole life certificates are within them. The rules are effective as of April 24, 2024, and apply only to policies sold on or after that date, a rule of practice having no application to a sale made before it existed.
4. The rules apply to individual life insurance policies only; group policies and certificates are outside them, the chapter's protections running to the person who buys a policy rather than to a certificate holder under a contract bought by somebody else. The exclusions are variable life insurance, individual and group annuity contracts, credit life insurance, and policies with initial face amounts of $10,000 or less. The rules are effective as of April 24, 2024, and apply to policies sold on or after February 1, 1997.

Why: Rule IAC 191—14.3 is short and exhaustive: THESE RULES APPLY TO ALL GROUP AND INDIVIDUAL LIFE INSURANCE POLICIES AND CERTIFICATES EXCEPT: VARIABLE LIFE INSURANCE; INDIVIDUAL AND GROUP ANNUITY CONTRACTS; CREDIT LIFE INSURANCE; OR LIFE INSURANCE POLICIES OR CERTIFICATES WITH INITIAL FACE AMOUNTS OF $10,000 OR LESS. GROUP AND INDIVIDUAL, which the fourth option cuts to individual only, and note that the chapter runs on CERTIFICATES as well as policies - which is why 14.4 defines POLICYOWNER as THE OWNER NAMED IN THE POLICY OR THE CERTIFICATE HOLDER IN THE CASE OF A GROUP POLICY. FOUR exclusions, and the fourth is the face-amount one the second option argues away. Its reasoning is a good policy argument and it is not the rule; the $10,000 figure is in rule 14.3 and nowhere else in the chapter, so it cannot be relocated to the identification requirement in 14.5(1), which carries a DATE rather than an amount. On the stem's facts the $8,000 policies fall out and the $50,000 group certificates stay in. Rule 14.14 supplies the dates and they are the oddity of the chapter: THESE RULES ARE EFFECTIVE AS OF APRIL 24, 2024, AND APPLY TO POLICIES SOLD ON OR AFTER FEBRUARY 1, 1997. A rule taking effect in 2024 that reaches back twenty-seven years is exactly what a candidate reads past, and both the second and third options collapse the two dates into one. The 1997 date is not arbitrary: it is the same date that appears in 14.5(1), under which FOR POLICY FORMS FILED AFTER FEBRUARY 1, 1997, THE ILLUSTRATION IDENTIFICATION SHALL BE MADE AT THE TIME OF FILING. Rule 14.1 states the purpose the chapter serves - to PROTECT CONSUMERS AND FOSTER CONSUMER EDUCATION, to ENSURE THAT ILLUSTRATIONS DO NOT MISLEAD PURCHASERS OF LIFE INSURANCE AND TO MAKE ILLUSTRATIONS MORE UNDERSTANDABLE, with insurers to ELIMINATE THE USE OF FOOTNOTES AND CAVEATS as far as possible. Rule 14.2 records the authority: IOWA CODE SECTION 507B.4.

A convertible term policyholder converts to whole life before the conversion deadline. They:

1. Can only convert to another term policy
2. Need not provide new evidence of insurability ✓
3. Forfeit all prior premiums paid
4. Must pass a new medical exam

Why: A conversion privilege lets the insured switch term to permanent coverage without new evidence of insurability.

A producer makes untrue statements in a public advertisement about a policy's benefits. This is:

1. False advertising, an unfair trade practice ✓
2. Unfair discrimination in policy benefits
3. Twisting, because the statements induce a policy exchange
4. Permissible puffery, since opinions about benefits are not statements of fact

Why: Untrue or misleading advertising about insurance is the unfair practice of false advertising/misrepresentation.

Medicare Part B generally pays what share of the approved amount after the annual deductible is met?

1. 80% ✓
2. 100%
3. 50%
4. 20%

Why: After the Part B deductible, Medicare typically pays 80% of the approved amount and the beneficiary pays the remaining 20% coinsurance.

Which dividend option increases both death benefit and cash value with no new underwriting?

1. Cash payment
2. Paid-up additions ✓
3. Reduction of premium
4. Accumulate at interest

Why: Paid-up additions use dividends to buy single-premium whole life, raising both the death benefit and cash value without evidence of insurability.

The principle of indemnity, which applies to medical expense insurance, means the insured is:

1. Restored to their pre-loss condition, but not allowed to profit ✓
2. Paid a stated daily sum no matter what the medical care actually cost
3. Paid only after suing the provider who furnished the care
4. Entitled to keep a gain above the actual medical bills

Why: Indemnity restores the insured to their prior financial position without gain; reimbursement-type medical plans follow this principle.

In a variable annuity, accumulation units measure the contract's value:

1. During the pay-in phase before income payments begin ✓
2. Only after the contract has been fully annuitized into a stream of income
3. While the annuitant is receiving level, guaranteed monthly income payments
4. According to a fixed interest rate the insurer declares anew each year

Why: Accumulation units track value during the accumulation phase; annuity units are used during the payout phase.

Telemedicine benefits in a health plan allow members to:

1. Receive only in-person care at a designated network hospital
2. Purchase prescription medications at a government-set price
3. Consult a provider remotely using phone or video technology ✓
4. Bypass all deductibles and copayments for every service

Why: Telemedicine lets members access care remotely via phone or video, often at lower cost and with greater convenience for routine issues.

Iowa Code 511.10 gives a rule for valuing bonds and other evidences of debt having a fixed term and rate. Whose holdings does it govern, on what conditions may the rule be used, and how are the values arrived at?

1. It governs such instruments held by any life insurance company authorised to do business in this state. They may be valued under the rule only if amply secured and not in default as to principal and interest: at par value if purchased at par, and if purchased above or below par on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and the commissioner has full discretion in determining the method of calculating values according to the rule.
2. It governs such instruments held by any fraternal beneficiary association authorised to do business in this state. They may be valued under the rule only if amply secured and not in default as to principal and interest: at par value if purchased at par, and if purchased above or below par on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and the commissioner has full discretion in determining the method of calculating values according to the rule. ✓
3. It governs such instruments held by any fraternal beneficiary association authorised to do business in this state. They may be valued under the rule whether or not in default, since a default affects the collectability of the debt rather than the arithmetic of amortisation and the section is concerned with the latter: at par value if purchased at par, and if purchased above or below par on the basis of the purchase price adjusted so as to bring the value to par at maturity. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and the commissioner has full discretion in determining the method of calculating values according to the rule.
4. It governs such instruments held by any fraternal beneficiary association authorised to do business in this state. They may be valued under the rule only if amply secured and not in default as to principal and interest: at par value if purchased at par, and if purchased above or below par at the actual market value at the time of valuation. The commissioner has full discretion in determining the method of calculating values according to the rule.

Why: Iowa Code 511.10 is short and its first six words decide the item: ALL BONDS OR OTHER EVIDENCES OF DEBT HAVING A FIXED TERM AND RATE, HELD BY ANY FRATERNAL BENEFICIARY ASSOCIATION AUTHORIZED TO DO BUSINESS IN THIS STATE MAY, IF AMPLY SECURED AND NOT IN DEFAULT AS TO PRINCIPAL AND INTEREST, BE VALUED AS FOLLOWS. The section sits in a chapter otherwise about life insurance companies and it names FRATERNAL BENEFICIARY ASSOCIATIONS, which is easy to read past and is what the second option changes. Two conditions gate the rule and both must be met: AMPLY SECURED and NOT IN DEFAULT AS TO PRINCIPAL AND INTEREST. The third option removes the second on reasoning that separates collectability from arithmetic; the statute does not, and the reason is obvious once stated - an amortised value assumes the instrument will pay out at par at maturity, and a defaulted instrument will not. The method itself is amortisation: IF PURCHASED AT PAR, AT THE PAR VALUE. IF PURCHASED ABOVE OR BELOW PAR, ON THE BASIS OF THE PURCHASE PRICE ADJUSTED SO AS TO BRING THE VALUE TO PAR AT MATURITY AND SO AS TO YIELD IN THE MEANTIME THE EFFECTIVE RATE OF INTEREST AT WHICH THE PURCHASE WAS MADE. A premium is written down and a discount written up, on a constant-yield basis, so that book value meets par on the maturity date - which is a quite different thing from the market valuation the fourth option substitutes. Subsection 2 caps the starting point: PROVIDED THAT THE PURCHASE PRICE SHALL IN NO CASE BE TAKEN AT A HIGHER FIGURE THAN THE ACTUAL MARKET VALUE AT THE TIME OF PURCHASE - note AT THE TIME OF PURCHASE, not at the time of valuation. Subsection 3: THE COMMISSIONER OF INSURANCE SHALL HAVE FULL DISCRETION IN DETERMINING THE METHOD OF CALCULATING VALUES ACCORDING TO THE FOREGOING RULE. The rule fixes the principle and the commissioner fixes the arithmetic.

Compared with a life-only annuity, an installment refund annuity:

1. Stops all payments the moment the annuitant dies, leaving nothing to anyone
2. May be purchased only with a single lump-sum premium paid at retirement
3. Guarantees total payments at least equal to the premium ✓
4. Always pays a higher monthly amount than every other available payout option

Why: A refund annuity guarantees that payments (to the annuitant plus beneficiary) total at least the premium paid; life-only pays the most but stops at death.

A structured settlement annuity is typically used to:

1. Provide an employer's executives with deferred bonuses
2. Fund a child's college education through a trust
3. Replace a key employee who has died
4. Pay periodic settlement amounts from a legal claim over time ✓

Why: A structured settlement funds court/insurance settlement payments as periodic income; amounts for physical-injury claims are generally tax-free.

An Iowa insurer is filing a disability income policy with a two-year benefit period and an elimination period of two hundred days, and an accident only policy paying $800 for accidental death. It also wants the disability benefit to halve at age 62 and to be reduced whenever social security benefits rise. What does IAC 191—36.6 provide?

1. DISABILITY INCOME PROTECTION COVERAGE must provide that periodic payments payable at ages after 62 and reduced solely on the basis of age are at least 50 percent of the amounts payable immediately prior to 62; must contain an elimination period no greater than 90 days where the benefit is one year or less, 180 days where it is more than one year but not more than two years, and 365 days in all other cases; and must have a maximum period of at least six months, except one month for disability arising out of pregnancy or childbirth. A REDUCTION IN BENEFITS MAY BE PUT INTO EFFECT BECAUSE OF AN INCREASE IN SOCIAL SECURITY OR SIMILAR BENEFITS DURING A BENEFIT PERIOD, disability income being designed to replace lost earnings rather than to duplicate a public benefit that has risen since the claim began. ACCIDENT ONLY COVERAGE must provide accidental death and double dismemberment amounts of at least $1,000 and a single dismemberment amount of at least $500. So the $800 accidental death benefit falls short.
2. DISABILITY INCOME PROTECTION COVERAGE must provide that periodic payments PAYABLE AT AGES AFTER 62 AND REDUCED SOLELY ON THE BASIS OF AGE ARE AT LEAST 50 PERCENT OF THE AMOUNTS PAYABLE IMMEDIATELY PRIOR TO 62; must contain an ELIMINATION PERIOD NO GREATER THAN 90 DAYS where the benefit is one year or less, 180 DAYS where it is more than one year but not more than two years, and 365 DAYS in all other cases; and must have a MAXIMUM PERIOD OF AT LEAST SIX MONTHS, except one month for disability arising out of pregnancy or childbirth. NO REDUCTION IN BENEFITS SHALL BE PUT INTO EFFECT BECAUSE OF AN INCREASE IN SOCIAL SECURITY OR SIMILAR BENEFITS DURING A BENEFIT PERIOD. Where a policy provides both total and partial disability benefits ONLY ONE ELIMINATION PERIOD MAY BE REQUIRED. ACCIDENT ONLY COVERAGE must provide ACCIDENTAL DEATH AND DOUBLE DISMEMBERMENT AMOUNTS OF AT LEAST $1,000 AND A SINGLE DISMEMBERMENT AMOUNT OF AT LEAST $500. So the 200-day elimination period and the $800 death benefit both fall short. ✓
3. DISABILITY INCOME PROTECTION COVERAGE must provide that periodic payments payable at ages after 62 and reduced solely on the basis of age are at least 50 percent of the amounts payable immediately prior to 62; must contain an elimination period no greater than 90 days where the benefit is one year or less, 180 days where it is more than one year but not more than two years, and 365 days in all other cases; must have a maximum period of at least six months, except one month for pregnancy or childbirth; and no reduction may be made because of an increase in social security benefits during a benefit period. Where a policy provides both total and partial disability benefits A SEPARATE ELIMINATION PERIOD MAY BE REQUIRED FOR EACH. ACCIDENT ONLY COVERAGE must provide accidental death and double dismemberment amounts of at least $1,000 and a single dismemberment amount of at least $500.
4. DISABILITY INCOME PROTECTION COVERAGE must provide that periodic payments payable at ages after 62 and reduced solely on the basis of age are at least 50 percent of the amounts payable immediately prior to 62; must contain an elimination period no greater than 180 DAYS where the benefit is one year or less and 365 DAYS in all other cases, the two-band scheme turning on nothing but whether the benefit runs beyond a year; and must have a maximum period of at least six months, except one month for pregnancy or childbirth, with no reduction for an increase in social security benefits during a benefit period. ACCIDENT ONLY COVERAGE must provide accidental death and double dismemberment amounts of at least $500 and a single dismemberment amount of at least $250.

Why: IAC 191—36.6, subrule 7, defines DISABILITY INCOME PROTECTION COVERAGE as a policy providing PERIODIC PAYMENTS, WEEKLY OR MONTHLY, FOR A SPECIFIED PERIOD DURING THE CONTINUANCE OF DISABILITY RESULTING FROM EITHER SICKNESS OR INJURY OR A COMBINATION OF THEM, and then sets three minimum standards. Paragraph 'a': payments PAYABLE AT AGES AFTER 62 AND REDUCED SOLELY ON THE BASIS OF AGE must be AT LEAST 50 PERCENT OF AMOUNTS PAYABLE IMMEDIATELY PRIOR TO 62 - so an age-based halving at 62 is exactly at the floor and is permitted. Paragraph 'b' sets three elimination-period ceilings and they are graduated by the length of the benefit, which is the point the fourth option loses: NINETY DAYS IN THE CASE OF A COVERAGE PROVIDING A BENEFIT OF ONE YEAR OR LESS; ONE HUNDRED EIGHTY DAYS IN THE CASE OF COVERAGE PROVIDING A BENEFIT OF MORE THAN ONE YEAR BUT NOT GREATER THAN TWO YEARS; and THREE HUNDRED SIXTY-FIVE DAYS IN ALL OTHER CASES. A two-year benefit period sits in the middle band, so two hundred days exceeds the 180-day ceiling and the filing fails. Paragraph 'c' requires a MAXIMUM PERIOD OF TIME FOR WHICH IT IS PAYABLE DURING DISABILITY OF AT LEAST SIX MONTHS, EXCEPT IN THE CASE OF A POLICY COVERING DISABILITY ARISING OUT OF PREGNANCY OR CHILDBIRTH IN WHICH CASE THE PERIOD FOR DISABILITY MAY BE ONE MONTH, and closes with the sentence the second option reverses: NO REDUCTION IN BENEFITS SHALL BE PUT INTO EFFECT BECAUSE OF AN INCREASE IN SOCIAL SECURITY OR SIMILAR BENEFITS DURING A BENEFIT PERIOD. A policy may integrate with social security at the outset; it may not claw back a cost-of-living rise once a claim is running. Two closing rules: IF A POLICY PROVIDES TOTAL DISABILITY BENEFITS AND PARTIAL DISABILITY BENEFITS, ONLY ONE ELIMINATION PERIOD MAY BE REQUIRED - which the third option turns into two, so that an insured moving from partial to total disability would sit out a second waiting period - and the subrule DOES NOT APPLY TO THOSE POLICIES PROVIDING BUSINESS BUY-OUT COVERAGE. Subrule 36.6(8) defines ACCIDENT ONLY COVERAGE as a policy providing coverage, SINGLY OR IN COMBINATION, FOR DEATH, DISMEMBERMENT, DISABILITY, OR HOSPITAL AND MEDICAL CARE CAUSED BY ACCIDENT, and sets two floors: ACCIDENTAL DEATH AND DOUBLE DISMEMBERMENT AMOUNTS UNDER SUCH A POLICY SHALL BE AT LEAST $1,000 AND A SINGLE DISMEMBERMENT AMOUNT SHALL BE AT LEAST $500. Eight hundred dollars is below the floor, so the accident only filing fails too. The fourth option halves both figures. Read this subrule with the general rules in subrule 36.6(1): accidental death and dismemberment benefits are payable IF THE LOSS OCCURS WITHIN 90 DAYS FROM THE DATE OF THE ACCIDENT, IRRESPECTIVE OF TOTAL DISABILITY; SPECIFIC DISMEMBERMENT BENEFITS SHALL NOT BE IN LIEU OF OTHER BENEFITS UNLESS THE SPECIFIC BENEFIT EQUALS OR EXCEEDS THE OTHER BENEFITS; and any accident only policy whose benefits VARY ACCORDING TO THE TYPE OF ACCIDENTAL CAUSE must PROMINENTLY SET FORTH IN THE OUTLINE OF COVERAGE THE CIRCUMSTANCES UNDER WHICH BENEFITS ARE PAYABLE WHICH ARE LESSER THAN THE MAXIMUM AMOUNT PAYABLE UNDER THE POLICY.

An Iowa insurer learns that one of its existing policies is being replaced, and separately receives a request from that policyholder to borrow against the policy values. A different insurer sells by direct-response solicitation and has just received an application on which the applicant did not answer the replacement question. What does IAC 191 chapter 16 require of each?

1. The existing insurer must retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later; send a letter notifying the owner of the right to receive information regarding the existing policy values, including an in-force illustration or, if one cannot be produced within five business days of receipt of the replacement notice, a policy summary, the information to be provided within five business days of receipt of the owner's request; and on receipt of the borrowing request send a notice advising that the release of policy values may affect the guaranteed elements, nonguaranteed elements, face amount or surrender value, sent separately from the cheque if the cheque goes to anyone other than the policyowner. The direct-response insurer, the applicant having failed to respond, must send the applicant with the policy the prescribed notice regarding replacement. ✓
2. The existing insurer must retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later; send a letter notifying the owner of the right to receive information regarding the existing policy values, including an in-force illustration or a policy summary where an illustration cannot be produced in time; and on receipt of the borrowing request send a notice advising that the release of policy values may affect the guaranteed elements, nonguaranteed elements, face amount or surrender value, which must be sent with the cheque so that the policyowner receives both together and can weigh the warning against the money at the same moment. The direct-response insurer, the applicant having failed to respond, must send the applicant with the policy the prescribed notice regarding replacement, and must obtain from the applicant a signed acknowledgment of that notice before the policy is treated as delivered, an unacknowledged notice leaving the insurer unable to rely on the applicant's silence in any later proceeding.
3. The existing insurer must retain and be able to produce all replacement notifications received, indexed by producer, for at least five years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later; send a letter notifying the owner of the right to receive information regarding the existing policy values, including an in-force illustration or a policy summary, the information to be provided within thirty days of receipt of the owner's request; and on receipt of the borrowing request send a notice advising that the release of policy values may affect the guaranteed elements, nonguaranteed elements, face amount or surrender value of the policy from which the values are released. The direct-response insurer need do nothing where the applicant has failed to respond to the replacement question: the notice requirement is triggered only by an applicant who states that no replacement is intended, and an applicant who answers nothing at all has given the insurer no indication either way, so that the rule leaves the company to deal with the application as an ordinary new sale.
4. The existing insurer must retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later; send a letter notifying the owner of the right to receive information regarding the existing policy values, including an in-force illustration or, if one cannot be produced within five business days of receipt of the replacement notice, a policy summary; and on receipt of the borrowing request send a notice advising that the release of policy values may affect the guaranteed elements, nonguaranteed elements, face amount or surrender value, sent separately from the cheque if the cheque goes to anyone other than the policyowner. The direct-response insurer must obtain the applicant's signed acknowledgment of the notice regarding replacement before it issues the policy, a diligent effort to obtain the signature not being enough where the applicant left the replacement question blank.

Why: Rule IAC 191—16.27 gives the EXISTING insurer three duties where a replacement is involved. 16.27(1): RETAIN AND BE ABLE TO PRODUCE ALL REPLACEMENT NOTIFICATIONS RECEIVED, INDEXED BY REPLACING INSURER, FOR AT LEAST FIVE YEARS OR UNTIL THE CONCLUSION OF THE NEXT REGULAR EXAMINATION CONDUCTED BY THE INSURANCE DEPARTMENT OF ITS STATE OF DOMICILE, WHICHEVER IS LATER. INDEXED BY REPLACING INSURER - the third option says by producer, which is the REPLACING insurer's index under 16.26(1)'c'; each company indexes by the party it does not control. 16.27(2): SEND A LETTER TO THE POLICY OR CONTRACT OWNER NOTIFYING THE OWNER OF THE RIGHT TO RECEIVE INFORMATION REGARDING THE EXISTING POLICY OR CONTRACT VALUES INCLUDING, IF AVAILABLE, AN IN-FORCE ILLUSTRATION OR POLICY SUMMARY IF AN IN-FORCE ILLUSTRATION CANNOT BE PRODUCED WITHIN FIVE BUSINESS DAYS OF RECEIPT OF A NOTICE THAT AN EXISTING POLICY OR CONTRACT IS BEING REPLACED. THE INFORMATION SHALL BE PROVIDED WITHIN FIVE BUSINESS DAYS OF RECEIPT OF THE REQUEST FROM THE POLICY OR CONTRACT OWNER. Two five-business-day periods again, and the third option substitutes thirty days. 16.27(3) is the one with the sting in its last sentence: UPON RECEIPT OF A REQUEST TO BORROW, SURRENDER OR WITHDRAW ANY POLICY VALUES, SEND TO THE APPLICANT A NOTICE, ADVISING THE POLICYOWNER THAT THE RELEASE OF POLICY VALUES MAY AFFECT THE GUARANTEED ELEMENTS, NONGUARANTEED ELEMENTS, FACE AMOUNT OR SURRENDER VALUE OF THE POLICY FROM WHICH THE VALUES ARE RELEASED. THE NOTICE SHALL BE SENT SEPARATE FROM THE CHECK IF THE CHECK IS SENT TO ANYONE OTHER THAN THE POLICYOWNER. The second option requires the notice to go WITH the cheque, on reasoning that reads well and gets the rule backwards: the whole point is that where the money is going somewhere else - to a replacing insurer, say - the warning must still reach the owner, so it travels separately. Rule 16.28 covers direct response. 16.28(1): the insurer must require a statement asking whether the applicant INTENDS TO REPLACE, DISCONTINUE OR CHANGE AN EXISTING POLICY OR CONTRACT, and IF THE APPLICANT INDICATES A REPLACEMENT OR CHANGE IS NOT INTENDED OR IF THE APPLICANT FAILS TO RESPOND TO THE STATEMENT, THE INSURER SHALL SEND THE APPLICANT, WITH THE POLICY OR CONTRACT, THE NOTICE REGARDING REPLACEMENT IN APPENDIX B. Silence is treated exactly like a denial, which the third option denies. 16.28(2) covers the case where the insurer proposed the replacement or the applicant says one is intended: the Appendix C notice, with the same diligent-effort safe harbour that IAC 191-14.9(3) uses for a mailed illustration - the obligation to obtain a signature IS SATISFIED IF THE INSURER CAN DEMONSTRATE THAT THE INSURER HAS MADE A DILIGENT EFFORT, and a self-addressed postage prepaid envelope with return instructions is deemed to be one. The fourth option turns that into a precondition of issue; it is not.

An Iowa charity is drafting its first qualified charitable gift annuity agreement. It asks whether issuing the annuity makes it an insurer, whether the agreement has to be in writing, what it must tell the donor, and whether an annuity it issued in 1999 is caught. What do Iowa Code 508F.2, 508F.3 and 508F.7 provide?

1. The issuance of a QUALIFIED charitable gift annuity DOES NOT CONSTITUTE ENGAGING IN THE BUSINESS OF INSURANCE in this state, and the same treatment extends to a qualifying annuity issued BEFORE JULY 1, 2001, so the 1999 annuity is covered. An agreement for a qualified charitable gift annuity executed by a charitable organization and a donor SHALL BE IN WRITING, and the agreement MUST INCLUDE NOTICE that a qualified charitable gift annuity is not insurance under the laws of this state and is not subject to regulation by the commissioner, in TYPE NO SMALLER THAN THAT USED GENERALLY IN THE AGREEMENT. The issuance of a qualified charitable gift annuity DOES NOT CONSTITUTE A VIOLATION OF CHAPTER 507B. ✓
2. The issuance of a qualified charitable gift annuity does not constitute engaging in the business of insurance in this state, but THAT TREATMENT RUNS ONLY FROM JULY 1, 2001 FORWARD, so an annuity issued in 1999 is not covered and the charity must answer for it under the insurance laws as they stood when it was written. An agreement for a qualified charitable gift annuity executed by a charitable organization and a donor shall be in writing and must include notice that the annuity is not insurance under the laws of this state and is not subject to regulation by the commissioner, in type no smaller than that used generally in the agreement. The issuance of a qualified charitable gift annuity does not constitute a violation of chapter 507B.
3. The issuance of a qualified charitable gift annuity does not constitute engaging in the business of insurance in this state, and the same treatment extends to a qualifying annuity issued before July 1, 2001, so the 1999 annuity is covered. An agreement for a qualified charitable gift annuity executed by a charitable organization and a donor shall be in writing, but NO NOTICE TO THE DONOR IS REQUIRED where the agreement itself states on its face that it is a charitable gift annuity, the label being sufficient warning that the arrangement is a gift rather than an insurance contract regulated by the commissioner. The issuance of a qualified charitable gift annuity does not constitute a violation of chapter 507B.
4. The issuance of a qualified charitable gift annuity does not constitute engaging in the business of insurance in this state, and the same treatment extends to a qualifying annuity issued before July 1, 2001, so the 1999 annuity is covered. An agreement for a qualified charitable gift annuity executed by a charitable organization and a donor shall be in writing and must include notice that the annuity is not insurance under the laws of this state and is not subject to regulation by the commissioner, in type no smaller than that used generally in the agreement. The issuance of a qualified charitable gift annuity IS AN UNFAIR TRADE PRACTICE UNDER CHAPTER 507B UNLESS THE ORGANIZATION HAS FIRST OBTAINED A CERTIFICATE OF AUTHORITY, chapter 508F exempting the annuity from the insurance code but leaving the trade practices code to apply to it in full.

Why: Three short sections, one proposition each. Iowa Code 508F.2: THE ISSUANCE OF A QUALIFIED CHARITABLE GIFT ANNUITY DOES NOT CONSTITUTE ENGAGING IN THE BUSINESS OF INSURANCE IN THIS STATE. The section then extends the same treatment to qualifying annuities issued BEFORE JULY 1, 2001 - an annuity that meets the requirements is deemed qualified regardless of whether it was issued before that date - which is what the second option reverses. That is a grandfathering provision, and it exists because the chapter was enacted in 2001 and charities had been writing these annuities long before. Section 508F.3 carries the writing and notice duties: AN AGREEMENT FOR A QUALIFIED CHARITABLE GIFT ANNUITY EXECUTED BY A CHARITABLE ORGANIZATION AND A DONOR SHALL BE IN WRITING, and the agreement MUST INCLUDE NOTICE THAT A QUALIFIED CHARITABLE GIFT ANNUITY IS NOT INSURANCE UNDER THE LAWS OF THIS STATE AND IS NOT SUBJECT TO REGULATION BY THE COMMISSIONER, in TYPE NO SMALLER THAN THAT USED GENERALLY IN THE AGREEMENT. There is no self-labelling shortcut, which is the third option's invention; the whole point of the notice is that a donor handing over property in return for lifetime payments would otherwise assume the arrangement carries the protections an insurance contract carries. Section 508F.7 completes the picture: THE ISSUANCE OF A QUALIFIED CHARITABLE GIFT ANNUITY DOES NOT CONSTITUTE A VIOLATION OF CHAPTER 507B - it is not an unfair or deceptive trade practice, and no certificate of authority is in issue, which disposes of the fourth option. PROVENANCE: the second-source stamp on disk records that the corpus capture of section 508F.3 and the independent 2025 edition AGREE that the notice must be given, must be in writing and must be in type no smaller than that used generally in the agreement; those are the propositions keyed here. The independent source alone adds closing words about an insurance guaranty fund or association and a requirement that the notice appear in a separate paragraph. Those are recorded as second-source only and NOTHING IN THIS ITEM TURNS ON THEM. Both sources show 2001 Acts, ch 28 as the chapter's only source act.

An Iowa insurer wants to deliver group accident and health certificates electronically to a large employer, which will pass them to its employees the same way. It also has a new form to file, and it asks whether the commissioner will review a certificate delivered in Iowa under a group policy issued in another state. What do IAC 191—35.8, 35.7 and 35.21 provide?

1. The insurer is DEEMED TO COMPLY with the certificate delivery requirement if the certificate is delivered to the GROUP POLICYHOLDER electronically and it takes appropriate and necessary measures to ensure ACTUAL RECEIPT - by return-receipt electronic mail, periodic reviews or surveys, or any other method the commissioner approves; the electronic documents contain THE SAME CONTENT AND APPEAR IN REASONABLY THE SAME FORMAT as the certificates previously approved; the policyholder is notified of the electronic delivery, its significance, the policyholder's obligations and ITS RIGHT TO REQUEST AND RECEIVE A PAPER COPY FOR EACH PARTICIPANT; and on request the insurer furnishes paper copies. The GROUP POLICYHOLDER is deemed to comply on the same four conditions as to individual plan members, whose paper copies must be FREE OF CHARGE. Filings must be submitted NOT LESS THAN 60 DAYS PRIOR TO THE EFFECTIVE DATE of the filing. A certificate delivered in this state under a group policy issued to a NONDISCRETIONARY group MAY NOT BE REVIEWED by the commissioner if the policy is issued outside this state. ✓
2. The insurer is deemed to comply if the certificate is delivered to the group policyholder electronically and it ensures actual receipt, the documents have the same content and reasonably the same format as those previously approved, the policyholder is notified, and paper copies are furnished on request. The group policyholder is deemed to comply on the same conditions as to individual plan members, BUT MAY CHARGE A PARTICIPANT A REASONABLE FEE FOR A PAPER COPY, the electronic form being the delivery the plan has paid for. Filings must be submitted not less than 60 days prior to the effective date. A certificate delivered in this state under a group policy issued to a nondiscretionary group may not be reviewed by the commissioner if the policy is issued outside this state. A certificate issued under a policy delivered to a DISCRETIONARY group is treated in exactly the same way, the commissioner's review being barred by the fact that the policy was issued elsewhere without any inquiry into whether the other state reviewed and approved it; and a filing the division finds deficient is deemed approved on the sixty-first day, the deficiency going to the insurer's record rather than to the effectiveness of the filing.
3. The insurer is deemed to comply if the certificate is delivered to the group policyholder electronically and it ensures actual receipt, the documents have the same content and reasonably the same format as those previously approved, the policyholder is notified, and paper copies are furnished on request; the group policyholder is deemed to comply on the same conditions as to individual plan members, whose paper copies are free of charge. Filings must be submitted not less than 30 DAYS prior to the effective date of the filing. A certificate delivered in this state under a group policy issued to a nondiscretionary group may not be reviewed by the commissioner if the policy is issued outside this state.
4. The insurer is deemed to comply if the certificate is delivered to the group policyholder electronically and it ensures actual receipt, the documents have the same content and reasonably the same format as those previously approved, the policyholder is notified, and paper copies are furnished on request; the group policyholder is deemed to comply on the same conditions as to individual plan members, whose paper copies are free of charge. Filings must be submitted not less than 60 days prior to the effective date. A CERTIFICATE DELIVERED IN THIS STATE IS REVIEWABLE BY THE COMMISSIONER WHEREVER THE GROUP POLICY WAS ISSUED, delivery in Iowa being what brings the document within the commissioner's authority.

Why: IAC 191—35.8 sets up a two-stage electronic delivery permission, and the structure is the point: stage one is INSURER to GROUP POLICYHOLDER, stage two is GROUP POLICYHOLDER to INDIVIDUAL PLAN MEMBER, and each stage has its own four conditions. Subrule 35.8(3) covers the insurer: it is deemed to comply if the certificate is delivered electronically to the group policyholder AND it TAKES APPROPRIATE AND NECESSARY MEASURES TO ENSURE THAT THE SYSTEM FOR FURNISHING GROUP INSURANCE CERTIFICATES RESULTS IN ACTUAL RECEIPT OF TRANSMITTED INFORMATION - by USING RETURN-RECEIPT ELECTRONIC MAIL FEATURES, PERIODIC REVIEWS OR SURVEYS TO CONFIRM RECEIPT, or ANY OTHER METHOD APPROVED BY THE INSURANCE COMMISSIONER; the electronic documents CONTAIN THE SAME CONTENT AND APPEAR IN REASONABLY THE SAME FORMAT AS THE CERTIFICATES PREVIOUSLY APPROVED BY THE INSURANCE COMMISSIONER; each group policyholder is given notice of the fact of electronic delivery, THE SIGNIFICANCE OF THE CERTIFICATE, its own obligations under the rule and ITS RIGHT TO REQUEST AND RECEIVE A PAPER COPY OF THE DOCUMENT FOR EACH PARTICIPANT; and on request the insurer furnishes paper copies so the policyholder can pass them to participants who asked. Subrule 35.8(4) repeats the four for the policyholder, and twice inserts the words the second option removes: each participant must be told of THE PARTICIPANT'S RIGHT TO REQUEST AND RECEIVE, FREE OF CHARGE, A PAPER COPY, and on request the policyholder FURNISHES, FREE OF CHARGE, A PAPER COPY. A charge for the paper copy is what the rule forbids. Rule 35.7 handles filings: insurers required to file rates or forms submit them pursuant to rule 191—20.1, and EACH FILING MUST BE SUBMITTED TO THE DIVISION OF INSURANCE NOT LESS THAN 60 DAYS PRIOR TO THE EFFECTIVE DATE OF THE FILING - sixty, not the thirty of the third option, which is the individual-policy deemer figure in Iowa Code 514A.13 and belongs to a different process. The rule adds that ANY DEFICIENCIES OR DISCREPANCIES IN THE FILING WILL DELAY FINAL APPROVAL and that in case of disapproval the company will be notified. Rule 35.21 answers the out-of-state certificate and defeats the fourth option, and it does so in two subrules with different conditions. Subrule 35.21(1), NONDISCRETIONARY GROUPS: a certificate delivered in this state under a group life or accident and health policy issued to a group SUBSTANTIALLY AS DESCRIBED IN IOWA CODE SECTIONS 509.1(1) TO 509.1(7) MAY NOT BE REVIEWED BY THE COMMISSIONER IF THE POLICY IS ISSUED OUTSIDE OF THIS STATE. Subrule 35.21(2), DISCRETIONARY GROUPS - those NOT substantially as described in those subsections - adds a second condition before the same bar applies: the policy must also be ISSUED OR OFFERED IN A STATE WHICH HAS REVIEWED AND APPROVED THE POLICY UNDER A STATUTE SUBSTANTIALLY SIMILAR TO IOWA CODE SECTION 509.1(8). A discretionary group's certificate escapes Iowa review only where some other state has actually done the reviewing.

In a health maintenance organization (HMO), the primary care physician acts as a 'gatekeeper,' meaning the member usually must:

1. Pay the full cost of every visit out of pocket first
2. Submit all claims directly to the state insurance department
3. Get a referral before seeing a specialist ✓
4. Choose a new physician each calendar year automatically

Why: In a gatekeeper HMO, the PCP coordinates care and must refer the member before specialist services are covered.

An Iowa organization contracts with a network of independent clinics to furnish medical care to its members, collects a fixed monthly prepayment from each member rather than a charge for each service rendered, and arranges through those contracts for basic health care services. Its counsel is asked which further element the organization must satisfy before it answers to the statutory definition of a health maintenance organization.

1. It must be responsible for the availability, accessibility and quality of the health care services that it provides or arranges. ✓
2. It must own or lease outright the hospitals in which the contracting clinics treat its members.
3. It must employ the physicians who furnish basic health care services directly, since an organization that reaches its members only through contracts with independent clinics is arranging insurance rather than furnishing health care services.
4. It must confine its membership to persons residing inside a single county service area approved by the commissioner in advance, because the definition is territorial and an organization enrolling across county lines is a multiple employer welfare arrangement.

Why: Iowa Code 514B.1(6) defines a health maintenance organization by three limbs, all of which must be met: the person provides health care services to enrollees on a fixed prepayment basis (paragraph “a”); provides, either directly or through arrangements with other persons, for basic health care services (paragraph “b”); and is responsible for the availability, accessibility and quality of the health care services provided or arranged (paragraph “c”). The organization described already meets the first two, so the third is what remains. Note what the definition does not turn on. Paragraphs “a” and “b” both say “either directly or through arrangements with others”, so contracting out rather than owning facilities or employing physicians is contemplated by the text itself, and no geographic limit appears anywhere in 514B.1. The companion definition in 514B.1(1) sets what “basic health care services” must include as a minimum: emergency care, inpatient hospital and physician care, and outpatient medical services rendered within or outside of a hospital.

An Iowa insurer has not paid its appointment renewal fees by the middle of March. Under IAC 191-10.16, what should have happened by then, and what follows?

1. On or about December 1 the division or its designee delivers reminders that appointment renewals are imminent; on or about January 2 a list of the producers currently appointed with each company and a billing statement are provided via the NIPR Gateway; payment is due on or before March 15, so a company which has not paid by the middle of March has only just missed the due date; and failure to pay by March 31 will result in termination of a company's appointments, which may be reappointed using the NIPR Gateway.
2. On or about December 1 the division or its designee delivers reminders that appointment renewals are imminent; on or about January 2 a list of the producers currently appointed with each company and a billing statement are provided via the NIPR Gateway, and the company may alter and amend that billing statement to appoint or terminate producers at the same time as it pays; payment is due on or before March 1; and failure to pay renewal appointment fees by March 15 will result in termination of a company's appointments.
3. On or about December 1 the division or its designee delivers reminders that appointment renewals are imminent; on or about January 2 a list of the producers currently appointed with each company and a billing statement are provided via the NIPR Gateway; payment is due on or before March 1; and failure to pay renewal appointment fees by March 15 will result in termination of a company's appointments, which may be reappointed using the NIPR Gateway. ✓
4. On or about December 1 the division or its designee delivers reminders that appointment renewals are imminent; on or about January 2 a list of currently appointed producers and a billing statement are provided via the NIPR Gateway; payment is due on or before March 1; and failure to pay renewal appointment fees by March 15 will result in termination of a company's appointments, which can be restored only by a fresh appointment application on paper, because the Gateway will no longer accept a company whose appointments have lapsed.

Why: Rule IAC 191—10.16 sets out an annual calendar and the dates are exact. By 10.16(1), ON OR ABOUT DECEMBER 1 OF EACH YEAR, THE DIVISION OR ITS DESIGNEE WILL DELIVER REMINDERS TO INSURANCE COMPANIES THAT APPOINTMENT RENEWALS ARE IMMINENT, and APPOINTMENTS MUST BE RENEWED ELECTRONICALLY VIA THE NIPR GATEWAY. By 10.16(2), ON OR ABOUT JANUARY 2 OF EACH YEAR, A LIST OF THE PRODUCERS CURRENTLY APPOINTED WITH EACH INSURANCE COMPANY AND A BILLING STATEMENT WILL BE PROVIDED TO EACH INSURANCE COMPANY VIA THE NIPR GATEWAY. THE BILLING STATEMENT MUST NOT BE ALTERED, AMENDED OR USED FOR APPOINTING OR TERMINATING PRODUCERS - the statement is a bill, not a form, and that express prohibition is what the third option ignores. By 10.16(3), PAYMENT IS DUE ON OR BEFORE MARCH 1. By 10.16(4), FAILURE TO PAY RENEWAL APPOINTMENT FEES BY MARCH 15 WILL RESULT IN TERMINATION OF A COMPANY'S APPOINTMENTS. APPOINTMENTS THAT ARE TERMINATED DUE TO NONPAYMENT OF RENEWAL FEES MAY BE REAPPOINTED USING THE NIPR GATEWAY. TWO MARCH DATES, TWO WEEKS APART, DOING DIFFERENT WORK: March 1 is when the money is due and March 15 is when the appointments fall - so a company which pays on March 10 is late but keeps its appointments. The second option shifts both dates by a fortnight. And the way back is the same Gateway, which the fourth option closes off. By 10.16(5) insurance companies must file the name, address and electronic address of a contact person TO WHOM THE APPOINTMENT RENEWALS WILL BE SENT and notify the division of a change of that address, on pain of A $100 FEE. Note that this contact-person duty and the one in 10.15(7) are two separate duties about two different correspondents - billing statements in 10.15(7), appointment renewals here - each carrying its own hundred-dollar fee.

Annuitization differs from a systematic withdrawal because annuitization:

1. Always returns the full account value in one immediate lump sum
2. Lets the owner take any amount at any time with no schedule at all
3. Permanently freezes the account so no further access is possible
4. Converts the account into a guaranteed stream of income payments ✓

Why: Annuitization exchanges the accumulated value for a guaranteed income stream; systematic withdrawal keeps the account and takes flexible amounts.

An Iowa health maintenance organization has been in operation for eighteen months. It offers coverage to individuals and to groups, and it asks whether it is yet obliged to hold an open enrollment period and, if so, on what terms it must accept those who apply.

1. The obligation attached at the six-month mark, and the annual period must run at least one month, but the organization is free to select among those who apply in whatever order it considers most consistent with the preservation of its own financial stability.
2. No such obligation exists at any point in the life of the organization, because open enrollment under the chapter is a voluntary undertaking available to any organization that sets its own capacity limits and then applies those limits evenhandedly to everyone.
3. The obligation attached as soon as the organization accepted its first enrollee, and it requires a continuous rather than an annual open enrollment, subject only to the capacity limits that the organization determines for itself and files with the commissioner.
4. The obligation has not yet attached; it arises after the organization has been in operation twenty-four months, and the annual period must then run at least one month, with applicants taken up to the limits of capacity in the order in which they apply. ✓

Why: Iowa Code 514B.13(1) fixes all three elements. The duty attaches only “after a health maintenance organization has been in operation twenty-four months”; the period is annual and must be “at least one month”; and during it the organization accepts enrollees up to the limits of its capacity, as the organization itself determines that capacity, “in the order in which the prospective enrollees apply for enrollment”. Order of application is therefore regulated, not left to the organization. The section does supply a relief valve: the organization may apply to the commissioner for authorization to impose such underwriting restrictions on enrollment as are necessary to preserve its financial stability, to prevent excessive adverse selection by prospective enrollees, or to avoid unreasonably high or unmarketable charges, and the commissioner approves or denies within a reasonable period. 514B.13(2) adds that an organization serving enrollees exclusively on a group contract basis may confine the open enrollment to members of the covered group, including members who previously waived coverage. Separately, section 514B.10 permits charges to be set by actuarial principles for categories of enrollees but forbids their being determined according to an individual enrollee’s health status or sex.

An Iowa long-term care insurance policy has been in force for fourteen months when the insurer, reviewing a claim, discovers that the insured gave an answer on the application that misstated a material fact. The insurer wishes to rescind the policy and to recover the benefit payments it has already made.

1. Rescission is open to the insurer only on a showing that the misrepresentation was both material to the acceptance for coverage and pertains to the condition for which benefits are sought; and benefits already paid may not be recovered even if the rescission succeeds. ✓
2. Rescission is open on a showing of material misrepresentation alone, the stricter test applying only once the policy has been in force for two or more years; and benefits already paid may be recovered as money had and received once the rescission takes effect.
3. Rescission is closed to the insurer, because a long-term care policy in force for more than twelve months may be contested only on a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured’s health.
4. Rescission is open on a showing of material misrepresentation alone, and the insurer may additionally offset the benefits it has already paid against any future claim made under a replacement policy that the same insurer later issues to the same insured, because the chapter treats the two policies as a single continuous contract for this purpose.

Why: Iowa Code 514G.106 sets three tiers by duration. Under subsection 1, a policy in force for less than six months may be rescinded, or a claim denied, on a showing of misrepresentation material to the insurer’s acceptance for coverage. Under subsection 2 — the tier that governs a policy fourteen months old — the policy has been in force at least six months but less than two years, and the showing must be that the misrepresentation was both material to the acceptance for coverage and pertains to the condition for which benefits are sought. Under subsection 3, once the policy has been in force two or more years it may not be contested solely on misrepresentation, and may be contested only on a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured’s health. So the test tightens with time, and the twelve-month line does not exist. Subsection 5 answers the recovery question flatly: an insurer that has paid benefits shall not recover those payments if the policy or certificate is rescinded. Two further points sit in the same section. Subsection 4 permits field issuance by a producer or third-party administrator acting under underwriting authority granted by the insurer and using the insurer’s underwriting guidelines, but only if the field issuer’s compensation is not based on the number of policies or certificates issued. Subsection 6 applies the section to life policies that accelerate benefits for long-term care, except that on the insured’s death the remaining death benefits are governed by section 508.28 instead.

A 'shared care' rider on long-term care policies allows:

1. Two unrelated insureds to split a single premium payment
2. A child to inherit the parent's unused benefits tax-free
3. The insurer to reduce benefits when both spouses are healthy
4. Spouses to draw from each other's pool of benefits ✓

Why: A shared care rider lets a couple access one another's benefit pool if one spouse exhausts their own coverage.

The optional 'misstatement of age' provision in a health policy provides that, if the insured's age was misstated, the benefits will be:

1. Adjusted to what the premium paid would have purchased at the correct age ✓
2. Doubled as a penalty against the insurer for issuing the policy at the wrong age
3. Forfeited in full, with every premium the policyowner paid returned without interest
4. Paid in full, since age never affects health benefits

Why: Benefits are adjusted to the amount the premium actually paid would have bought at the correct age, rather than voiding coverage.

'Rebating' generally refers to:

1. Refunding the unearned premium when a policy is properly cancelled
2. Charging a higher premium to a substandard, higher-risk applicant
3. Returning a claim overpayment to the insurer after a billing error
4. Offering something of value not in the contract to induce a sale ✓

Why: Rebating is giving a prospect any inducement (such as part of the commission or a gift) not specified in the policy to persuade them to buy; it is illegal in most states.

A client wants a guaranteed income they cannot outlive, accepting that payments stop at death with nothing to heirs. The option offering the highest payment is:

1. Life with 20-year period certain
2. Joint and survivor annuity
3. Straight life (pure life) annuity ✓
4. Installment refund annuity

Why: Pure life pays the most because payments cease at death with no refund or survivor benefit; the other options pay less to protect a beneficiary.

An Iowa issuer is preparing its Medicare supplement portfolio for an applicant who attained age sixty-five in 2024 and is therefore newly eligible for Medicare after the federal cut-off. The issuer wants to offer the applicant its Plan C and its Plan F, both of which pay the Medicare Part B deductible in full.

1. Neither may be offered to this applicant: no policy providing coverage of the Medicare Part B deductible may be advertised, solicited, delivered or issued for delivery to an individual newly eligible for Medicare on or after January 1, 2020, and Plans C and F are redesignated as Plans D and G, which carry the same benefits without any portion of that deductible. ✓
2. Both may be offered to this applicant, because the restriction on coverage of the Medicare Part B deductible reaches only the high deductible versions of the standardized plans, the ordinary Plan C and Plan F remaining available to every applicant regardless of the date on which the applicant first became eligible for benefits under Medicare.
3. Plan C may be offered but Plan F may not, because the redesignation operates on the more comprehensive of the two plans only, and an issuer withdrawing Plan F from a newly eligible applicant must substitute Plan G while leaving its Plan C portfolio available on the same terms to newly eligible and previously eligible applicants alike.
4. Neither may be offered to this applicant, and neither may be offered to anyone else either, because on and after January 1, 2020, the redesignated plans wholly displace the earlier standardized plans for all applicants and an issuer may no longer renew a Plan C or Plan F already in force for an individual who was eligible for Medicare before that date, such a policy being required instead to be converted to the redesignated plan at its next renewal.

Why: IAC 191—37.9 implements the Medicare Access and CHIP Reauthorization Act of 2015. Its opening paragraph bars any policy or certificate providing coverage of the Medicare Part B deductible from being advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy to individuals newly eligible for Medicare on or after January 1, 2020. Subrule 37.9(1) then applies the 2010 standards in rule 191—37.8 with four exceptions: Plan C is redesignated as Plan D with the same benefits but no coverage of any portion of the Part B deductible; Plan F is redesignated as Plan G on the same footing; Plans C, F and F with high deductible may not be offered to the newly eligible; and Plan F with high deductible becomes Plan G with high deductible, with the Part B deductible the individual pays counting as an out-of-pocket expense toward the annual high deductible. Subrule 37.9(2) confines the rule to those newly eligible on or after that date by attaining age sixty-five or by the specified Part A entitlements, so it does not reach back. Indeed subrule 37.9(4) expressly permits the redesignated high deductible plan to be offered to individuals who were eligible before January 1, 2020, in addition to the plans in subrule 37.8(4), and rule 37.9's opening paragraph leaves benefit standards for the previously eligible subject to rules 191—37.6, 191—37.7 and 191—37.8. Subrule 37.9(3) carries the redesignation across into the guaranteed issue rule, 191—37.36.

An Iowa insurer ends its relationship with a producer, and in a second case terminates a producer for cause under Iowa Code 522B.14. Under IAC 191-10.17, what must the insurer do in each, and what does it cost?

1. In both cases the company must notify the division using the NIPR Gateway within 30 days, and must also notify the producer that the appointment has been terminated; a fee is payable for the filing of an appointment termination in the same way as for an appointment. Where the termination is for cause, the supporting documents must be submitted within ten days of the filing of the notification and must include a certification by an officer or authorized representative of the insurer.
2. In both cases the company must notify the division using the NIPR Gateway within 30 days of the date it terminated the agency relationship; there is no fee at all for the filing. Notifying the producer is a matter of contract between the insurer and the producer rather than a requirement of this rule. Where the termination is for cause, the supporting documents must be submitted to the division within 30 days of the filing of the notification, and must include a certification by an officer of the insurer.
3. In both cases the company must notify the division using the NIPR Gateway within 30 days of the date it terminated the agency relationship, and must also notify the producer that the appointment has been terminated; there is no fee for the filing of an appointment termination. Where the termination is for cause, the supporting documents must be submitted to the division at the same time as the notification itself, no separate period being allowed, and must include a certification signed by an officer of the insurer itself.
4. In both cases the company must notify the division using the NIPR Gateway within 30 days of the date it terminated the agency relationship, and must also notify the producer that the appointment has been terminated; there is no fee for the filing of an appointment termination. Where the termination is for cause, the supporting documents the statute requires must be submitted to the division within ten days of the filing of the notification, and must include a certification by an officer or authorized representative of the insurer. ✓

Why: Rule IAC 191—10.17(1) provides that WHEN AN INSURANCE COMPANY TERMINATES ITS RELATIONSHIP WITH A PRODUCER, THE COMPANY MUST NOTIFY THE DIVISION USING THE NIPR GATEWAY. THE TERMINATION MUST BE FILED WITHIN 30 DAYS OF THE DATE THE INSURER TERMINATED ITS AGENCY RELATIONSHIP WITH THE PRODUCER. THE COMPANY MUST ALSO NOTIFY THE PRODUCER THAT THE PRODUCER'S APPOINTMENT HAS BEEN TERMINATED. Telling the producer is a requirement of the rule and not merely a matter of contract, which the third option supposes. By 10.17(2), THERE IS NO FEE FOR THE FILING OF AN APPOINTMENT TERMINATION - the asymmetry with an appointment, which does carry a fee under 10.26(6), is what the second option flattens. By 10.17(3) the division MAY ADOPT SPECIAL PROCEDURES FOR THE FILING OF TERMINATION REQUESTS FOR A GROUP OF AFFILIATED INSURANCE COMPANIES THAT COMPRISE A HOLDING COMPANY. The termination-for-cause limb is 10.17(4): WHEN AN INSURER TERMINATES AN APPOINTMENT FOR CAUSE PURSUANT TO IOWA CODE SECTION 522B.14, THE NOTIFICATION OF TERMINATION MAY BE FILED ACCORDING TO SUBRULE 10.17(1). THE SUPPORTING DOCUMENTS REQUIRED BY IOWA CODE SECTION 522B.14 MUST BE SUBMITTED TO THE DIVISION WITHIN TEN DAYS OF THE FILING OF THE NOTIFICATION. THE DOCUMENTS MUST INCLUDE A CERTIFICATION BY AN OFFICER OR AUTHORIZED REPRESENTATIVE OF THE INSURER. THE TEN DAYS IS THE POINT OF THIS ITEM: the notification and the supporting documents are two separate filings on two separate clocks, the second running from the FILING of the first rather than from the termination - which is what the fourth option collapses and the third option stretches to thirty days. Ten days here is one of three ten-day periods in the chapter, the others being the substitution of a designated responsible producer under 10.18(2) and the written notice of a suspension under 10.21(8). Note also that the certification may come from an officer OR an authorized representative. 10.2 defines TERMINATION FOR CAUSE by reference to the reasons set forth in Iowa Code section 522B.11. What Iowa Code 522B.14 itself requires - the notice period, the supporting documents, and the terminated producer's right to reply - is keyed at IA-PC-SL-0054 to 0056 in the Iowa P&C bank and is not restated here.

An Iowa life insurance company whose articles authorise it wants to add several lines: health cover for individuals and groups, cover against personal injury or death from travel or general accidents, employers' liability for accidents to employees and to property, and cover against loss from the explosion of steam boilers. It also wants to contract with health care providers and offer different benefit levels depending on those contracts. What does Iowa Code 508.29 permit?

1. All of them except the steam boiler cover. A life company organised on the stock or mutual plan and authorised by its charter or articles may in addition to life insurance insure, individually or on the group plan, the health of persons and against personal injuries, disablement or death resulting from traveling or general accidents by land or water, and insure employers against loss in consequence of accidents or casualties of any kind to employees or other persons, or to property; but nothing in the section authorises a life company to insure against loss or injury to person or property growing out of explosion or rupture of steam boilers. An insurer may contract with health care service providers and offer different levels of benefits to policyholders based upon the provider contracts. ✓
2. All of them. A life company organised on the stock or mutual plan and authorised by its charter or articles may in addition to life insurance insure the health of persons and against personal injuries, disablement or death from traveling or general accidents, and insure employers against loss from accidents or casualties of any kind to employees or other persons or to property. The explosion or rupture of a steam boiler is an accident or casualty to property like any other and falls within the employers' liability limb; the reference a candidate may remember is a restriction on writing boiler inspection contracts rather than on insuring the loss. An insurer may contract with health care service providers and offer different levels of benefits based upon those provider contracts.
3. All of them except the steam boiler cover and except the employers' liability cover, which belongs to the casualty chapters and may not be written by a life company at all, whatever its articles say. An insurer may contract with health care service providers and offer different levels of benefits to policyholders based upon the provider contracts.
4. All of them except the steam boiler cover. But an insurer may not offer different levels of benefits to policyholders based upon its contracts with health care service providers, since that would be unfair discrimination between insureds of the same class and essentially the same hazard.

Why: Iowa Code 508.29 is one long sentence with a sting at the end, plus a modern addition. It permits a life company AUTHORIZED BY THE COMPANY'S CHARTER OR ARTICLES OF INCORPORATION to insure, EITHER INDIVIDUALLY OR ON THE GROUP PLAN, THE HEALTH OF PERSONS AND AGAINST PERSONAL INJURIES, DISABLEMENT OR DEATH, RESULTING FROM TRAVELING OR GENERAL ACCIDENTS BY LAND OR WATER, AND INSURE EMPLOYERS AGAINST LOSS IN CONSEQUENCE OF ACCIDENTS OR CASUALTIES OF ANY KIND TO EMPLOYEES OR OTHER PERSONS, OR TO PROPERTY RESULTING FROM ANY ACT OF THE EMPLOYEE OR ANY ACCIDENT OR CASUALTY TO PERSONS OR PROPERTY, OR BOTH, OCCURRING IN OR CONNECTED WITH TRANSACTING THE EMPLOYER'S BUSINESS, OR FROM THE OPERATION OF ANY MACHINERY CONNECTED WITH TRANSACTING THE EMPLOYER'S BUSINESS. So employers' liability IS within a life company's powers - the third option's error, and a surprising provision, but the words are plain. Then: BUT NOTHING CONTAINED IN THIS SECTION SHALL BE CONSTRUED TO AUTHORIZE ANY LIFE INSURANCE COMPANY TO INSURE AGAINST LOSS OR INJURY TO PERSON, OR PROPERTY, OR BOTH, GROWING OUT OF EXPLOSION OR RUPTURE OF STEAM BOILERS. One named exclusion, sitting oddly beside a general power to insure machinery risks, and the second option argues it into the employers' liability limb - which is exactly what the words NOTHING CONTAINED IN THIS SECTION SHALL BE CONSTRUED TO AUTHORIZE prevent. Finally the sentence added long after the rest: AN INSURER MAY CONTRACT WITH HEALTH CARE SERVICE PROVIDERS AND OFFER DIFFERENT LEVELS OF BENEFITS TO POLICYHOLDERS BASED UPON THE PROVIDER CONTRACTS. That is the statutory footing for network-based benefit design, and the fourth option denies it by invoking unfair discrimination - a real concept, in Iowa Code 507B.4(3)'g', but one that cannot override an express authorisation in this section. Note the opening condition: the company must be AUTHORIZED BY ITS CHARTER OR ARTICLES, so the power is not automatic, and 508.2 and 508.3 are how the articles get there. Note also 508.31, which is one sentence long: ANY LIFE INSURANCE COMPANY ORGANIZED ON THE STOCK OR MUTUAL PLAN MAY GRANT AND SELL ANNUITIES.

A nonresident producer license allows a producer to:

1. Waive the resident state's prelicensing and examination requirements
2. Sell only inside the producer's home state
3. Solicit business anywhere without holding a resident license
4. Transact insurance in a state other than their home state ✓

Why: A nonresident license lets an already-licensed producer do business in another state, typically via reciprocity with their resident license.