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what is the distinction between laws and regulations?

congress and the state legislatures pass laws (hence legislations) and the executive branch enforces the laws that the legislatures pass.


There are 3 basic types of government that exists today. Name them

unitary system: most common. Power is concentrated at the national level, with little power being held in political subdivisions.
confederation: union of equal states
Federal system: major system. national government holds sig power but the small political subdivisions also hold sig power.

* CAN and US are federal


In the federal system in the states there are two sources of legislation impacting life insurance. Name them

1. federal level, congress routinely passes laws impacting may aspects of financial services (Li insurance)
2. state level- state legislatures are the primary source of insurance legislation, enacting a sig body of legislations that regulates the life insurance industry. (licensing, solvency, marker conduct review)


True or False
In many cases State legislatures pass laws that are recommended to them through the "model acts" created by the NAIC (national associations of insurance)



Which office is responsible for international insurance agreements and why?

The Federal Insurance office (FIO) was created in the Treasury Department by the Dodd Frank Act passed, in 2009. Which included the provisions that created the FIO.
- The act also included the mandate to protect the US financial system from systemic risk presented by financial institutions deemed :too be to fail"


What is the purpose of the FSOC (financial Stability Oversight Council)

Given authority to identify and monitor systemic risks
identify both bank and non-bank financial institutions whose financials failure can have a widespred -ve impact on the US economy.
- "non-bank" are financial instituitions with over 50$ billion in assets.


What do you call a financial instituion that is deemed to present a systemic risk?

Systemic important financial institution (SIFI).
- they are required to be surpervised by the Federal Reserve and adhere to stricture standards.
- there are 4 insurance companies given SIFI in 2014.


What is the purpose of the IAIS? (International Association of Insurance Supervisors.

A significant regulator for many U.S. Insureers.
-NAIC now collaborates with IAIS.


What is the purpose of the HIPAA (health Insurance Portability and Accountability Act of 1996)

designed to improve efficiency in health care through the standardization of electronic data interchange and provide security measures to protect health information and disclosure.


Which organization issued regulations in 2003 establishing, for the first time, a set of national standards for the protection of certain health information./

The US department of Health and Human Services (HHS)


What is the purpose of the Privacy Rule standards

address the use and disclosure of individuals health information called "protective health information" by organizations subject to the privacy rule called covered entitites, as well as standards for individuals privacy rights to understand and control how their health information is used.
- make sure the individuals health information is properly por


Within the HHS, who has the responsibility for implementing and enforcing the PRivacy Rule with respect to Voluntary compliance acitvities and civil money penalties.

The Office for Civil Rights (OCR)


The privacy rule and the administrative simplification rules apply to who

health plans, health care clearinghouses and to any health care provider who transmits health information to electronic form in connection with transactions for which the secretary of HHS has adopyted standards under HIPAA.


The " individually identifiable health information" is information, including demographic data, that includes what?

1. relates to the individual's past, present or future physical or mental health or condition
2. relates to the provision of health care to the individual's
3. relates to the past, present or future payment for the provision of health care to the individual
4. indentifies the individual or for which there is a resonable basis to believe it can be used to identify the individual.
5. Includes and common identify


Who falls under the " Health Care Providers" umbrella?

providers of services
providers of medical or health services.
any anyone defined by MEdicare and any other person or organization that furnishes, bills, or is paid for health care.


True or False
Canada has the same privacy legislations as the US?

CAD has its own set of vary comprehensive privacy guidelines.


What is the purpose of the Canadian Life and Health Insurance Association (CLHIA)

developed a comprehensive set of privacy guidelines, and in 1980 the Ontario legislature decreed that all life and accident and sickness carriers must follow the guideline if they want to do business in Ontario.


What does the Personal Information Protection and Electronic Documents Act (PIPEDA) establish?

ground rules for how private sector organizations can collect, use or disclose personal information in the course of commercial activities.
- applies to organizations' commercial activities in all provinces


What is the role of the Consumer Reporting Act (CRA)

regulating the collection of information in the underwriting process at the provincial level.


What legilation protects personal information in quebec?

Quebec bill 68,
it establishes specific rules regarding notifications, disclosure, and accuracy in the collection of personal information in the underwriting process


What is the USA patriot Act was signed into law by president bush in response to 911 terrorist attachs. What does it enhance/enforce.

enhances the authority of the US law enforcement for the stated prupose of investigating and preempting potential terrorist acts against the US.


The US Paritot ACT, contains regularions of certain insurance companies such as Li and annuity providers to establish formal anti-money laundering (AML) programs. The regulations define the term "insurance company to include any individual engaged with the US as a business in what 3 acts?

1. the issuing, underwriting, or reinsuring of a life insurance policy
2. the issuing, granting, purchasing or dispositing of any annuity contract
3. the issuing, underwriting, or reinsuring of any insrance product with investment features similar to those of Li policy or annuity contract, or which can be used to store value and transfer that value to another person.


Any company that is a target for possible money laundering will have to establish an AML program that includes what minimum criterias?

1. the development of internal policies, procedures and controls
2. the designation of a compliance officer
3. an ongoing employee training program
4. an independent audit function to test the program.


Define the planning technique of " Stranger Owned life insurance" in terms of evaluating insurable interrests.

known as STOLI or SOLI, may also be called "investor owned life insurance" (IOLI). Transaction steps include:
a. individual is solicited with an offer of "free insurance" for a short duration, typically 2-3 years
2. individual purchases a life insurance directly through a trust of business entity as as limited liability corporation (LLC) or partnership using non-recouse or hybrid financing for all premiums and accured interrests.
3. as an enticement to enter into the transaction, the individual is often paid an upfront "participation" fee
4. when the loan takento pay the premiums matures, the inidividual is given 3 choices.
a) keep the policy by repaying the accumulated loan balance
b) relimquish the policy to the lender in satisfaction of the debt
c) sell the policy on the open markert for cash to a life settlement company, repay te loan balance and pocket the difference.


STOLI transactions raise a number of issues for cx, advisors, producers, and u/w. Why?

1. lack of insurable interrest.
2. Shifting legal landscape
3. Is the loan a "Bona Fide" loan
4. hybrid financing
5. Insurance capacity. ( those who participate in a STOLI program may preclude obtaining their coverage in the future)
6. SEC/NASD Action
7. rebating
8. legal complexity
9. Health and privacy issues
10. discrimination
11. Congressional Action Regarding the Tax Tx of Life Insurance.
12. Fraud


Which act contains specific rules on what is an insurable interrest in canada?

Canadian Uniform life insurance act (ULIA)
- this act states if there is no insurable interrest at the time of application then the application is void.


What are hybrid fianancing contracts

contract collateralized, typically with non-liquid assets such as real estate. Loan rates are very steep compared to fully collateralized financing. the accertive impact of the continuously compounding interest will inevitably result in the hybrid financial structure becoming economically unfeasible prior to the payment of death proceeds. Contract owner is faced with the choice of liquidating invested collacteral assets or settling the contract owner is faced with the choice of liquidating invested collateral assets or settling the contrcat.


Programs that promise a "participation" fee or provide a peroid of "free" insurance protection can consititute a rebate if they what? (2)

1. offer an advantage or benefi to a proposed insured not contained in the insurance policy
2. offer a method of purchasing coverage that is not presented to similarly situated clients.
- in this regard the value of the rebate could be deemed to taxable income to the insured.


How to some insurance companies fight the risk of Fraud for STOLI policies?

they add disclosure forms or application questions to their process designed to uncover the intent of the policy ie: settle the policy, or sell it.


What is CHOLI (charity owned life insurance)

- leaveraged with the loan proceeds being used to finance a large block of charitable own llife insurance policies.
- some cases SPIA's (single premium immediate annuities) will be purchased with the loan proceeds.