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A.D.Banker&Company

Life & HealthArkansas State Laws

Arkansas Steps to Get Your License

A.D.Banker&Company®

Arkansas Insurance Department Testing Provider (Pearson VUE)

(501) 371-2750 (888) 204-6259www.insurance.arkansas.gov www.pearsonvue.com/ar/insurance

1. Complete a Prelicensing CourseIf you would like to sell insurance as an insurance producer in Arkansas, you must pass a licensing exam. To prepare for the licensing exam, you must take a state approved insurance course. Insurance prelicensing courses are provided by A.D. Banker & Company in many different formats: classroom, web classes, lecture videos, online courses, or self-study. All courses are cross-referenced with the exam content outline. You can view course options for Arkansas and register at www.adbanker.com/pre-licensing.aspx#.AR.

Line Hours

Life 20Accident/Health/Sickness 20Property/Casualty 20Personal Lines 20

When you satisfy the requirements for your course, you will receive a Certificate of Completion. Prelicensing education is valid for two years from the date of completion; you will need to take and pass your state exam within this timeframe.The Certification Exam must be monitored by a disinterested third party (A disinterested third party, with a minimum age of 18 years old, who can be any person except for family members or individuals who have a financial interest in the student’s success of the exam. Co-worker proctors must not be above or below in the student’s line of supervision.)

2. Apply for a LicenseBefore taking an examination, apply for your license by contacting PearsonVUE at (501) 663-2878.

3. Pass a Licensing ExamMaking Exam ReservationsYou can make a reservation online or by phone. An exam fee must be paid at the time of reservation by credit card, debit card, voucher or electronic check.

■ Online: You must make an online reservation at least twenty-four (24) hours before the desired exam date or 5 days in advance if paying by electronic check

■ Phone: Before calling, you must have the following: □ Legal name, address, Social Security number, daytime phone number, and date of birth□ Name of the exam□ Preferred exam date and test center location

What to BringTwo forms of current signature identification:

1. A primary ID (photograph and signature, not expired) such as a Driver’s License or Passport2. A secondary ID (signature, not expired) such as a Debit or Credit card

You are required to present a certificate of completion of prelicensing education to be admitted to the exam.

Arkansas Steps to Get Your License


Exam Procedures■ Report to the test center 30 minutes before the exam to verify identification and be photographed for the

score report.■ No personal items are allowed in the testing room such as cell phones, watches, wallets, or purses.■ Studying is not allowed in the test center.■ The test administrator will provide you with materials to make notes or calculations. You may not write

on these items before the exam begins or remove these items from the testing room.■ You will have the opportunity to take a tutorial that will not reduce the exam time.

Exam Format■ Each major line exam is given in a multiple-choice format.■ The exam consists of two parts:

1. The general section deals with basic insurance product knowledge2. The state section deals with insurance laws, rules, and regulations, and practices that are unique to

Arkansas■ Each exam contains “pretest” questions that are mixed in with the scored questions and are not

identified. Pretest questions may not be covered in your educational materials and do not affect your final score!

■ The passing score required on each exam is 70%.■ When you complete the exam, they will receive a score report marked “pass or fail”.■ If you fail, you will receive a score report that includes a numeric score, diagnostic and re-testing

information.

Arkansas Exam Information

Exam Code Exam Name Exam Time Scoreable

QuestionsPretest

QuestionsTotal

Questions01 Life 2 hr 30 min 80 20 10002 Health 2 hr 30 min 80 20 10003 Multi-Line (Property & Casualty) 3 hr 30 min 125 25 15055 Personal Lines 3 hr 30 min 100 13 11314 General Adjuster 1 hr 30 min 25 0 2515 Property Adjuster 1 hr 30 min 25 0 2516 Casualty Adjuster 1 hr 30 min 25 0 2517 Worker’s Compensation Adjuster 1 hr 30 min 25 0 25

www.adbanker.com 1-800-866-2468

Arkansas State Laws

This edition is valid starting March 2016

TABLE OF CONTENTS

Life and Health Laws ........................................................................................................ 3

Life Laws .................................................................................................................... 15

Retention Questions ........................................................................................................ 42

Retention Question Answer Key ...................................................................................... 44

Key Word Index .............................................................................................................. 45

Life Students (Students studying for the Life Only exam must read pages 3-22)


Health Laws .................................................................................................................... 23



Key Word Index .............................................................................................................. 45

Health Students (Students studying for the Health Only exam must read pages 3-13 and 25-41)


Life Laws .................................................................................................................... 15

Health Laws .................................................................................................................... 23



Key Word Index .............................................................................................................. 45

Life & Health Students

A.D.Banker&Company®2

Copyright 2016© A.D. Banker & Company®, L.L.C. All rights reserved. No part of the material protected by this copyright notice may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission from the copyright owner.

Disclaimer: This course, seminar, or publication provides general information regarding the subject matter. It is sold with the understanding that the publisher is not engaged in rendering legal or accounting advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The publisher hereby expressly excludes all warranties.

To the extent allowed by law, I release A.D. Banker & Company, L.L.C. from any and all liability for my use of course materials and agree to indemnify and hold them harmless for all losses. I acknowledge that any liability of A.D. Banker & Company, L.L.C. not covered by the above release, is limited to the amount paid for this course.

A.D.Banker&Company® 3

Life and Health Laws

OVERVIEWThe purpose of this chapter is to acquaint the student with the insurance regulatory and licensing process in the state of Arkansas and inform the student of the ethical standards and practices expected of the insurance professional. The primary purpose of licensing is to protect the general public.

Take NoteInformation in this chapter modifies or amends information from previous content.

The Insurance Commissioner

AppointmentThe Commissioner of Insurance is appointed by the Governor with the advice and consent of the Senate. A person must be a resident of this state and be of at least 30 years of age to eligible for appointment as Commissioner. At the time of taking office, the Commissioner shall execute a $50,000 bond to the State of Arkansas for the faithful performance of his/her duties.

General Duties and Powers 1. The Commissioner of Insurance has general supervision, control and regulation of persons

and companies authorized to transact the business of insurance in Arkansas. He/she has the authority to make any rules necessary to enforce the insurance laws of this state.

2. The Commissioner regulates premium rates, policy forms, insurer solvency and receiverships, as well as other matters relating to the regulation of insurance.

3. The Commissioner issues the proper insurance license for agents, brokers and Certificates of Authority for the insurers who qualify to conduct business in the state of Arkansas.

4. The Commissioner may institute audits, examinations, investigations and proceed in the courts to enforce any provision of the Insurance Code.

Examination of Records1. The Commissioner of Insurance may examine the transactions, accounts and records of each

insurer as often as he/she feels is necessary.2. The Commissioner must examine each authorized insurer at least once every 5 years.3. The Commissioner may examine each insurer applying for a Certificate of Authority to

transact insurance business in this state.4. The Commissioner has the authority to examine or investigate any person necessary or

material to the examination of an insurer.5. The Commissioner may subpoena witnesses, administer oaths and require the disclosure of

books and records with respect to an examination.6. In lieu of making his/her own examination of any foreign or alien insurer authorized in

Arkansas, the Commissioner may accept a full report of the most recent examination of a foreign or alien insurer as prepared by its state of domicile’s insurance department.

ARKANSAS STATE INSURANCE LAWS

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7. Self Incrimination – Any person who asks to be excused from attending, testifying, or producing any documents in connection with any examination on the ground that the testimony or evidence required may tend to incriminate him/her shall still must give the testimony or produce the evidence. a. He/she shall not be prosecuted or subjected to any penalty or forfeiture because of the

testimony or evidence he/she provides. b. No testimony given or evidence produced shall be received against him/her upon any

criminal action, investigation, or proceeding. However, the person is not exempt from prosecution or punishment for any perjury committed by and his/her license may still be suspended or revoked.

Hearings/Notice of Hearings/Orders1. The Commissioner may hold a hearing for any purpose within the scope of the Insurance.2. The Commissioner must hold a hearing within 30 days of its demand and will give a notice

of the date, time, and location of a hearing 10 days in advance.3. The Commissioner will make his/her order on the hearing within 30 days after the end of the

hearing.4. Any person who is aggrieved by an order of the Commissioner may appeal such order. The

appeal will take place within 30 days after the notice of appeal has been received by the Commissioner.

PenaltiesUnless a greater penalty is provided by another law of Arkansas, any person who violates any provision of the Insurance Code is subject to the following:

1. Refusal, suspension or revocation of license or Certificate of Authority.2. A fine of up to $1,000 for each violation.3. Order for restitution of actual losses to affected persons.

State-Specific DefinitionsInsurance transaction includes any:

1. Solicitation.2. Preliminary negotiations.3. Execution of an insurance contract.4. Transaction of matters arising out of the contract.

Licensing

Persons Required to Be Licensed1. Producer – A person, firm, limited liability company, or corporation who solicits, negotiates,

effects, procures, delivers, renews, continues, or binds an insurance policy (including an annuity) for risks residing, located, or to be performed in this state.

2. Consultant – An individual, firm, limited liability company, or corporation which, for a fee, advises or counsels anyone as to his/her insurance needs under any insurance policy or contract. “Consultant” does not include licensed attorneys, actuaries, certified public accountants, medical bill analysts, or any other person who gives or offers incidental advice to the public in the normal course of normal business activity other than insurance consulting.

LIFE AND HEALTH LAWS

5A.D.Banker&Company®

3. Resident – An agent whose residence is in or who may vote in this state or who is licensed as a resident insurance producer by the commissioner.

4. Nonresident Agent – An individual or business entity currently licensed in and a resident of another. The agent must make application and be in good standing in their home state and their home state must award nonresident agent licenses to residents of Arkansas on the same basis.

5. Temporary License The Commissioner of Insurance may issue a temporary insurance agent license for a period not exceeding 180 days, without requiring an examination, in the following circumstances:

a. The surviving spouse or court-appointed personal representative of a licensed insurance agent who dies or becomes mentally or physically disabled: (a) for the sale of the insurance business owned by such insurance agent; (b) for the recovery or return of such insurance agent to the business; or (c) to provide for the training and licensing of new personnel to operate such insurance agent’s business.

b. Any member or employee of a business entity licensed as an insurance agent, upon the death or disability of an individual, designated in such business entity’s application or the insurance agent’s license.

c. The designee of an individual licensed as an insurance agent who is entering active service in the armed forces of the United States.

d. Any other person deemed necessary by the Commissioner.

Qualifications 1. Anyone at least 18 years of age who wants to transact business as an insurance agent must

submit a license application to the Commissioner of Insurance. The applicant must also meet the following requirements:a. Pay appropriate nonrefundable application fee.b. Pass a prelicensing course for each class of insurance he/she wishes to transact. For life/

health producers, the course of instruction must be at least 20 hours.c. Pass a licensing examination for each class of insurance he/she wishes to transact.

2. Any business entity that acts as an insurance agent, and holds a direct agency appointment from an insurance company, must obtain an insurance agent license. Business entities must also comply with these requirements:a. Provide the name and address of a licensed agent who will be responsible for the

business entity’s compliance with the insurance laws, rules and regulations of this state.b. Ensure that each officer, director, partner, and employee of the business entity who acts

as an insurance agent is licensed as an insurance agent.c. Disclose to the Department each officer, director, partner, and employee who is licensed

as an insurance agent.3. Any person who meets the requirements will be issued an insurance agent license. The lines

of authority are:a. Lifeb. Accident and health or sicknessc. Casualty d. Propertye. Variable life and variable annuity productsf. Personal linesg. Credith. Any other line of insurance permitted



4. Unless suspended, revoked, or refused renewal, an insurance agent license remains in effect as long as education requirements for resident individual agents are met and the requires fee is paid by such insurance agent’s due date.

Producer Appointment/Termination of Contract1. An insurance producer may not act as an agent of an insurer unless the producer becomes an

appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.

2. To appoint a producer as its agent, the appointing insurer must file a notice of appointment within 15 days after the date the agency contract is executed or the first insurance application is submitted.

3. Upon receipt of the notice of appointment, the Commissioner shall verify that the insurance producer is eligible for appointment within 30 days.

4. Each appointment shall remain in effect until the agent’s license is revoked or otherwise terminated unless written notice of earlier termination of the appointment is filed with the Commissioner by the insurer or agent.

Examination 1. Any individual applying for an agent’s license must be given an exam to determine whether

he/she possesses the competence and knowledge of the kinds of insurance and transactions under the license applied for.

2. The applicant must be tested on each insurance class that may be written. 3. There is a waiting period of 4 weeks before reexamination of an applicant who has failed

to pass the examination 3 times. This waiting period applies after every third unsuccessful attempt.

Exemptions/ExceptionsThe licensing examination is not required for:

1. Transportation ticket agents of common carriers. 2. Applicants for licenses as nonresident agents or nonresident brokers. 3. Any applicant for a temporary license. 4. Applicants for licenses to sell credit property insurance.5. Applicants for licenses to sell funeral expense insurance exclusively. 6. Applicants for licenses to sell mortgagor’s decreasing term life insurance or mortgagor’s

decreasing term disability insurance to debtors. 7. Applicants for licenses to sell for farmers’ mutual aid associations.

Maintaining a License1. All insurance agents, brokers, consultants or adjuster licenses shall continue in force unless

non-renewed, expired, suspended, revoked, or terminated, but shall be subject at all times to annual payment to the Commissioner of the applicable continuation fee, accompanied by a written request for the continuation: a. On or before the licensee’s birthday if an individual; or b. The annual period from the date of issue if a firm, limited liability company, or

corporation. 2. A licensee who allows his/her license to lapse may reinstate the same license within 12

months after the due date of the renewal fee without the necessity of passing a written examination. However, a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.



Continuing Education1. Agents must complete 24 hours of continuing education courses in the line(s) for which they

are licensed, 3 hours of which must be in ethics. Continuing education is due biennially under the following schedule: a. For existing individual licensees born in odd-numbered years, a 2-year license will

be issued for the 2011 renewal on the licensee’s birth date, and renewed biennially thereafter.

b. For existing individual licensees born in even-numbered years and beginning in 2012, licenses will be renewed for a 2-year period and renew biennially on their birth date thereafter. The continuing education requirement will be due at the first two year license renewal cycle based on the licensee’s birth date in 2014 and biennially on the birth date thereafter.

c. For new individual licensees issued in 2011 and subsequent years, license renewal periods will not be based on birth year. The initial license will be issued for a 2-year period and renewed biennially on the licensee’s birth date.

2. For good cause, the Commissioner may grant an extension of up to 1 year in which to complete the continuing education requirements.

3. A person teaching any approved course or program of instruction shall be credited the same number of hours as a person taking and successfully completing the course.

4. Subject to the Commissioner’s approval, an agent/broker’s active annual membership in local, regional, state, or national professional insurance organizations or associations may be approved for up to 2 annual hours of instruction.

Exemption from Continuing Education RequirementThe continuation education requirements do not apply to any of the following:

1. Natural persons holding licenses for any kind of insurance for which an examination is not required.

2. Any limited or restricted license the Insurance Commissioner may exempt.3. Any natural person who is at least 60 years of age.4. Any natural person who has held an active license as an agent, solicitor, consultant, or

broker for a period of at least 15 consecutive years.5. The licensee as a firm, limited liability company, or corporation. 6. Nonresident producers.7. Licensed insurance consultants.8. Any person called to active duty in any branch of the United States military services.

Place of Business/Maintenance1. Every resident agent or resident broker shall have a place of business in Arkansas or in a city

whose border passes through Arkansas that is accessible to the public and where the licensee principally conducts transactions under his/her license. The agent/broker license shall be conspicuously displayed.

2. The agent/broker shall keep all records pertaining to transactions under his/her license for at least: a. 5 years from the date the record was created; or b. 1 year following the final settlement or final adjudication of a criminal proceeding, civil

litigation, or an administrative proceeding.



Change of AddressProducers must promptly notify the Commissioner in writing of any change of address within 10 days of that change of address.

Renewal, Suspension or Revocation of License1. The Commissioner may suspend, revoke or refuse renewal of any license issued for any one

of the following causes:a. The licensee provided incorrect, incomplete or materially untrue information in the

license application.b. The licensee has violated any insurance law, regulation, subpoena or order of the

Commissioner, or of another state’s insurance commissioner.c. The license was obtained through fraud or misrepresentation.d. The licensee improperly withheld, misappropriated or converted any monies or

properties received in the course of doing business.e. The licensee misrepresented the provisions, terms and conditions of an insurance policy.f. The licensee has been convicted of a misdemeanor or felony.g. The licensee admitted to or was found to have committed any insurance unfair trade

practice.h. The licensee had an insurance agent license denial, suspension or revocation in any other

state.i. The licensee forged another person’s name in an application or document related to

insurance.j. The licensee improperly used notes or reference material to complete an examination.k. The licensee knowingly accepts business from a producer who is not licensed.l. The licensee failed to comply with any order imposing a child support obligation on him/

her.m. The licensee failed to pay state income tax or an order directing payment of such tax.n. The licensee intentionally omitted material facts during the presentation of an insurance

policy.o. The licensee made misleading representations or incomplete policy comparisons in order

to induce someone to surrender an existing policy.p. The licensee violated any subpoena or order of the Commissioner or of the regulatory

official of insurance in another state.q. The licensee has used fraudulent, coercive, or dishonest practices or demonstrated

incompetence, untrustworthiness, lack of good personal or business reputation, or financial irresponsibility.

r. The licensee has failed to provide a written response after receipt of a written inquiry from the Commissioner within 30 days after receipt thereof.

2. In addition to or in lieu of revocation or suspension the Commissioner may discipline with one of the following.a. Order payment of an administrative penalty of up to $1,000 per violation or up to $5,000

for the same violation if the person should have known that his/her actions could result in license suspension or revocation.

b. Order restitution of actual losses to affected persons.3. The Commissioner may suspend or revoke the license of an insurance agent who places

excess lines risks without first obtaining an excess lines license.4. The Insurance Commissioner may suspend a license for up to 36 months.



5. Upon the suspension or revocation of a license, the Commissioner shall immediately notify the licensee and the insurers he/she represents. The insurer(s) shall retrieve all solicitation materials, policy applications, binders, and all other materials that are the insurer’s property.

6. License Restoration or Reissue – The Commissioner may not again issue a license under the Arkansas Insurance Code to any person whose license has been revoked until after 3 years and not until: a. The person has paid in full any fines or penalties imposed at the time of revocation.b. The person has paid restitution of actual losses to affected persons. c. The person again qualifies for license in accordance with the applicable provisions of the

Arkansas Insurance Code.7. If a business has its license suspended or revoked, no member, partner or employee shall be

licensed or be designated in any license during the suspension/revocation period unless the Commissioner determines that such person was not personally at fault and did not acquiesce in the matter which resulted in the license suspension/revocation.

Return of License to Commissioner1. All licenses are the property of the State of Arkansas. 2. Upon any expiration, termination, suspension, or revocation of the license, the licensee must

immediately return it to the Commissioner. 3. For any license lost, stolen, or destroyed, the Commissioner may accept the affidavit of the

licensee or concerning the facts of the loss, theft, or destruction. 4. Any licensee who ceases to maintain residence in this state must deliver his/her insurance

license to the Commissioner within 10 days after terminating residency.

Producer Responsibilities

Fiduciary Capacity1. All funds, fees or premiums received by a licensee shall be trust funds for which the licensee

is accountable and must to the insured, insurer or any other person so entitled. 2. Any licensee who diverts or appropriates trust funds to his/her own use shall upon conviction

be guilty of theft of property and shall be punished as provided by law. 3. A licensed agent may be licensed as a broker, and be a broker as to insurers for which he/

she is not then licensed as agent. A licensed broker may be licensed as an agent as to insurers appointing him/her as agent. Transactions between a broker and an insurer to which he/she is then licensed as an agent shall be that of insurer and agent and not that of insurer and broker.

Commissions1. An insurer or producer may not pay a commission, service fee, brokerage, or other valuable

consideration to a person for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed and is not so licensed.

2. No person may accept a commission, service fee, brokerage, or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed and is not so licensed.

3. Renewal or other deferred commissions may be paid to a person for selling, soliciting, or negotiating insurance in this state if:a. Such person was required to be licensed at the time the sale, solicitation, or negotiation

of insurance occurred; andb. Such person was licensed when the sale, solicitation, or negotiation of insurance

occurred.



4. Any insurance agent may pay or assign a commission, service fee, brokerage, or any other valuable consideration to an insurance agency or any financial holding company which does not sell, solicit or negotiate insurance in this state unless such payment or assignment violates a state provision.

Fraud Reporting 1. Any producer who has reason to know that an insurer is not licensed must report the insurer

to the Department. 2. Any producer who knows or has reason to know that a health plan is not licensed in

accordance with the Arkansas Insurance Code shall immediately report the health plan to the Insurance Department.

Life and Health Insurance Guaranty Association Act 1. The Arkansas Life and Health Insurance Guaranty Association provides protection to

policyowners and beneficiaries in the event of insurer impairment or insolvency.2. All insurers authorized to transact life and health insurance in Arkansas are required to be

members of the Association. The Association is under the immediate supervision of the Insurance Commissioner.

3. If a member insurer becomes impaired or insolvent, an assessment will be made against the other members to provide money for the claims of the insolvent insurer.

4. The Association’s liability is limited to the lesser of the following:a. The insurer’s contractual obligation had it not become impaired or insolvent; orb. For one life (regardless of the number of policies written):

1) $300,000 in life insurance death benefits and net cash surrender and withdrawal values.

2) $300,000 in health insurance benefits.3) $300,000 in the present value of annuity benefits.4) $300,000 in present value annuity benefits, including net cash surrender and net cash

withdrawal value of 401(k), 403(b) and 457 plans covered by unallocated annuity contracts.

5) $1 million for each holder of unallocated annuity contracts, regardless of the number of contracts held.

5. The Association is not liable to pay more than $300,000 in the aggregate for any one life for any combination of insurance benefits. Remember, this does not apply to a holder of unallocated annuity contracts. That limit is $1 million.

6. The Association assumes all the rights (e.g. subrogation), duties, and obligations of the insolvent insurer.

7. Protection provided by the Association shall not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state of the impaired or insolvent insurer other than this state.

8. Impaired insurer means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

9. Insolvent insurer means a member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

10. Detection and Prevention of Insolvencies/Impairments – To aid in the detection and prevention of insurer insolvencies or impairments, the Commissioner will notify all other insurance commissioners when he/she takes any of the following actions against a member insurer:



a. Revokes or suspends a license.b. Makes any formal order that such company restrict its premium writing, obtain additional

contributions to surplus, withdraw from the state, reinsure all or any part of its business, or increase capital, surplus, or any other account for the security of policy owners or creditors.

11. Such notice shall be mailed to all commissioners within 30 days following the action taken or the date on which such action occurs.

Marketing Practices

Unfair Claim Practices The following are considered acts constituting improper claim settlement practices:

1. Misrepresenting to claimants pertinent facts or provisions in the insurance policy that relate to any coverage at issue.

2. Failing to promptly acknowledge communications pertinent to a claim.3. Failing to use reasonable standards in the prompt investigation of claims.4. Failing to attempt to promptly and fairly settle claims in which liability is clear.5. Compelling an insured to file suit by offering substantially less than what a lawsuit would

award.6. Refusing to pay claims without conducting a reasonable investigation.7. Failing to affirm or deny coverage on a claim within a reasonable time after receiving a proof

of loss.8. Attempting to settle a claim for less than the amount to which the claimant believed he/

she was entitled by reference to written or printed advertising material accompanying the application.

9. Attempting to settle a claim based on an application that was altered by the agent or company without notice to, or consent of, the insured.

10. Making claim payments that are not accompanied by statements indicating the coverage under which payments are being made.

11. Delaying the investigation or payment of a claim by requiring the claimant to submit both a formal proof of loss form and subsequent verification when both submissions contain the same information.

12. Failing to promptly explain the denial of a claim or an offer of compromise in relation to the facts and applicable law.

13. Making known to claimants a policy of appealing arbitration awards that favor claimants, for the purpose of compelling them to accept a lesser settlement than that awarded.

14. Failing to promptly settle claims (where liability is clear) under one section of the policy coverage in order to influence settlements under other sections.

15. Failing to acknowledge and act promptly upon communications regarding claims.16. Upon receiving notification of a claim, every insurer must acknowledge the receipt of such

notice within 15 working days unless payment is made within such period of time. 17. An insurer must advise the claimant of the acceptance or denial of the claim within 15

working days after receipt of proofs of loss.18. Every insurer must complete investigation of a claim within 45 calendar days after

notification of claim, unless such investigation cannot reasonably be completed within such time. If an investigation cannot be completed within the 45 day time period, insurers shall notify claimants that additional time is required and include with such notification the reasons therefore.



Unfair Methods of CompetitionThe following acts are defined by statute as unfair methods of competition and unfair or deceptive acts or practices:

1. Rebating – Offering any rebate of premiums payable, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy.

2. Misrepresentations and False Advertising of Insurance Policies – Making, issuing or circulating any statement that misrepresents the benefits, advantages, conditions or terms of any insurance policy. This includes:a. Misrepresenting the dividends or share of the surplus to be received on any insurance

policy.b. Using any name or title that misrepresents the policy’s true nature. For example,

representing a standard whole life policy as a “savings plan.” c. Misrepresentation for the purpose of effectuating a pledge or effecting a loan against any

insurance policy. d. Misrepresenting any insurance policy as being shares of stock.

3. False Advertising – Publishing or disseminating in any fashion, or through any media, any untrue, deceptive, or misleading statement about the business of insurance or, with respect to any person, in the conduct of such person’s insurance business. This includes knowingly making any false entry of a material fact or knowingly omitting a true entry of any material fact with the intent to deceive.

4. Defamation – Making any false or maliciously critical statement regarding the financial condition of any person, with the intent to injure such person.

5. False Financial Statements – Making any false or misleading statements to the dividends or share of surplus previously paid on any insurance policy.

6. Boycott, Coercion, Intimidation – Entering into action resulting in an unreasonable restraint of, or monopoly in, the business of insurance.

7. Unfair Discrimination – Permitting individuals of the same class and equal life expectancy to be charged different rates for life insurance or annuities. Permitting individuals of the same class and essentially the same hazard to be charged different rates for accident or health insurance. Refusing to insure or charging a different rate to an individual based solely on blindness or partial blindness. Refusing to insure or charging a different rate for life or health insurance to an individual who is, has been, or may be a victim of domestic abuse.

8. Twisting – Misrepresenting for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy.

9. Churning of Business – Replacing an existing policy of life insurance or accident and health insurance, or both, where such replacement: a. Does not include the required memorandum comparing the existing coverage to the

proposed coverage. b. Is without demonstration by the licensee of the purpose of replacing the policy for the

benefit of the insured.10. Producer Responsibility Regarding Advertising

a. Producers must ensure that any advertisements they use provide accurate and balanced information on the benefits and limitations of a policy. If a producer creates an advertisement, he/she along with the insurer is responsible for its content.

b. All advertisements used by producers must be approved by the insurer for whom it advertises. Insurers must annually notify producers that company approval is required before an advertisement not furnished by the company, any other advertisement, may be used.



Penalties1. If the Commissioner determines after a hearing that a person charged has engaged in an

unfair method of competition, the Commissioner may take one or more of the following actions:a. Issue a Cease and Desist Order.b. Order payment of a monetary penalty of not more than $1,000 per violation, not to

exceed an aggregate total of $10,000 in any six-month period.c. Order payment of a monetary penalty of not more than $5,000 per violation if the person

knew or should have known he/she was engaging in an unfair method of competition or an unfair or deceptive act or practice, not to exceed an aggregate of $50,000 in any six-month period.

d. Suspend, revoke or refuse renewal of the person’s license if that person knew or should have known he/she was engaging in an unfair method of competition or an unfair or deceptive act or practice.

2. Anyone who violates a Cease and Desist Order is subject to one or both of the following penalties:a. A fine of up to $10,000 for each violation.b. Suspend or revoke the person’s license.


Life Laws


Life Laws

Life Insurance Policy Provisions, Options and Riders1. Right to Examine (Free Look) – The free-look period on individual life insurance policies is

10 days.2. Grace Period – The grace period for individual life insurance policies is not less than 30

days.3. Reinstatement – The period within which to reinstate a lapsed life insurance policy is 3

years.4. Incontestability – An individual life insurance policy is incontestable after it has been in

force during the lifetime of the insured for 2 years from its date of issue, except for fraud in procurement and for nonpayment of premiums. Insurers may omit “except for fraud in procurement.”

5. Suicide – Death by suicide is contestable for 2 years.

General Provisions1. Life insurance policies may exclude coverage for death while the insured is a resident outside

the continental United States or Canada. They may also exclude death benefits for specified hazardous occupations.

2. The death benefit under a policy of life insurance shall be exempt from the claims of creditors.

3. Participating Life insurance policies must include a provision that by the end of the third policy year, the insurer will annually determine the dividends, if any, to be paid under the policy.

4. Any life insurer may hold the proceeds of any policy as agreed to in writing by the insurer and the policyholder.

5. In determining the death benefit due under a life insurance policy, a deduction may be made for any unpaid premiums and the principal and accrued interest of any outstanding policy loan or other indebtedness.

6. The proceeds payable upon death under an individual life insurance policy must include the amount of any premiums paid beyond the end of the policy month in which death occurred. Death benefits and unearned premiums must be paid within 30 days after the insurer receives proof of death. If death proceeds and unearned premiums are not paid within 30 days of receiving a proof of death, these funds will accrue interest from the insured’s date of death.

Standard Nonforfeiture LawNo policy of life insurance, except for term life insurance, may be issued for delivery in this state unless it contains the following provisions:

1. In the event of default in any premium payment, the insurer will grant a paid-up nonforfeiture benefit not later than 60 days after the due date of the premium in default.

2. Upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years (5 full years for industrial insurance) the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value.



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3. A specified paid-up nonforfeiture benefit becomes effective unless the policyowner elects another available option within 60 days after the due date of the premium in default.

4. A life insurance policy must state that the cash surrender values and the paid-up nonforfeiture benefits are not less than the minimum values and benefits required by the insurance law in the state in which the policy is delivered.

5. The insurer reserves the right to defer the payment of any cash surrender value for a period of 6 months after it has been requested.

Insurable Interest1. Insurable Interest means a lawful economic interest in having the insured’s life continue,

differing from an interest which only arises by the insured’s death. A person related by blood or law also has an insurable interest engendered by love and affection.

2. No person may procure any insurance contract upon the life or body of another individual unless the benefits are payable to: a. The individual insured or his or her personal representatives; or b. A person having an insurable interest in the individual insured at the time the contract

was made. 3. An individual party to a contract for the purchase or sale of an interest in a business

partnership or firm, has an insurable interest in the life of each individual party to the contract.

4. Any employer, corporation, business entity, or trustee of a trust may purchase or otherwise acquire an interest in personal insurance as a beneficiary or owner.

5. Employers have a lawful and substantial economic interest in the lives of key employees. 6. Any employer, corporation, business entity, or trustee must obtain the consent of any

employee for which it obtained personal insurance, if the personal insurance names the employer, corporation, business entity, or the trustee as a beneficiary.

Life Advertising1. The name of the insurer must be clearly identified in all advertisements, and if any specific

individual policy is advertised it must be identified either by form number or other appropriate description.

2. No advertisement may use any combination of words or symbols which are so similar to those used by a governmental program or agency or otherwise appear to be of such a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with such governmental program or agency.

3. Advertisements may not imply that prospective purchasers become a group of members who enjoy special rates or privileges ordinarily associated with group insurance.

4. Testimonials used in advertisements must:a. Be genuine.b. Represent the current opinion of the author.c. Be applicable to the policy advertised; and d. Be reproduced accurately.

5. In using a testimonial, the insurer or agent is responsible for the statements made. 6. It must be clearly and prominently disclosed in the advertisement if the individual making a

testimonial or an endorsement is being compensated or has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee, or otherwise.


LIFE LAWS

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7. Advertisements may not imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association, or other organization unless it is true and unless any proprietary relationship between an organization and the insurer is disclosed.

8. Advertisements of an individual policy or combination of policies may not imply: a. That such policy or combination of policies is an introductory, initial, or special offer.b. That applicants will receive special advantages not available at a later date; orc. That the offer is available only to a specified group of individuals, unless it is true.

9. Advertisements may not imply that the insurer, its financial condition, the payment of its claims, or its policy forms are recommended or endorsed by any governmental entity, unless it is true and the entity authorizes its recommendation or endorsement to be used in such an advertisement.

10. Each insurer must maintain at its home or principal office a complete file containing a specimen copy of every printed, published or prepared advertisement of its individual policies and specimen copies of typical printed, published or prepared advertisements of its blanket, franchise and group policies disseminated in Arkansas. Such file must be subject to inspection by the Arkansas Insurance Department. All such advertisements must be maintained in said file for a period of either 4 years or until the filing of the next regular report on its examination of the insurer, whichever is the longer period of time.

11. The phraseology used in advertisements must be in language that can be easily understood by persons of average education or intelligence.

12. If an amount of insurance coverage is advertised, a disclosure of the type of insurance being offered must also be made in close proximity to such amount.

13. Advertisements must refer to “premiums” only as a premiums. Use of words such as “deposit,” “deposit premium,” “investment,” or other such misleading wording is prohibited.

14. The use of terms such as savings, deposits, investments, etc., in such a way as to mislead the prospective purchaser to believe that the life insurance solicitation is of an investment nature is prohibited.

15. Comparisons or analogies or the manipulation of amounts and numbers may not be used in such a way as to mislead the prospective purchaser.

16. The use of any presentation for comparing cost of life insurance that does not recognize the time value of money is prohibited.

Disclosure Requirements1. A cost index must be made available to prospective purchasers of life insurance which will

provide a uniform basis to compare the relative cost of similar plans of insurance. It is in the public interest to make a cost index available so that price competition in the life insurance market is encouraged and stimulated.

2. Producers may not use terms such as financial planner, investment advisor, financial consultant, or financial counseling to imply that he/she is generally engaged in an advisory business in which compensation is unrelated to sales unless it is true.

3. An agent must inform the prospective purchaser that he/she is acting as an insurance agent and give the full name and home address of the insurance company for which he/she is a licensed agent.

4. An agent must provide the prospective purchaser with a written proposal prior to or at the time of policy delivery. If dividends are to be illustrated, the proposal must disclose that such dividends are neither guarantees nor estimates of future results.

5. When the sale involves a product in addition to life insurance, the life insurance solicitation must be independently available without the purchase of another product and all information applicable to the life insurance sale must be separately disclosed.



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6. The premiums for the life insurance must be shown separately from the premiums for each additional benefit provided. Also, the life insurance face amount must be shown separately from the additional coverage amounts. a. If the coverage amount or premium decreases or increases at any time, representative

amounts of coverages and premiums must be shown to indicate to the prospective purchaser how such amounts will change.

b. The amount of cash value per $1,000 or for the insurance face amount, which develop such values, shall be shown no less frequently than at the end of 5-10-15-20 years and at age 60 and 65.

7. If an advertisement uses the term “Non-medical,” “No Medical Examination Required,” or similar term where issue is not guaranteed, the advertisement must further disclose that health questions are involved, that policy issue may depend upon the answers to the health questions, and that policy issue is not guaranteed.

Group Life Insurance

Eligible Groups/Conversion Rights1. In Arkansas, the following groups may purchase and use group life insurance:

a. Employer/Employee b. Labor Unionc. Trusteed. Debtor/Credit Unione. Association

2. Under a group life insurance policy, a provision must state that in the event there is no designated beneficiary living at the time of death of the insured, the insurer at its option may pay up to $10,000 to any person appearing to be equitably entitled thereto by reason of having incurred funeral or other expenses inherent to the last illness or death of the insured.

3. Conversion – A group life policy must contain a provision that, if the policy itself terminates, every person insured at the date of termination who has been insured for at least 5 years prior to the termination date will be entitled to have issued to him/her within 31 days of the termination date, and without evidence of insurability, an individual policy that will not exceed the smaller of the amount of insurance ceasing, or $10,000.

4. A group life policy must contain a provision that, if a person insured under the policy dies during the conversion period within which he/she would have been entitled to have an individual policy issued, the amount of life insurance which he/she would have been entitled to have issued under an individual policy must be payable as a claim under the group policy whether or not application for the individual policy has been made.

5. A group life policy must contain a provision specifying the conditions, if any, under which the insurer may require evidence of insurability. Insurers may reject anyone whose evidence of insurability is unsatisfactory.

6. Continuation – Where active employment is a condition of insurance, a group life policy must include a provision that an insured may continue coverage on a premium-paying basis during the insured’s total disability for up to 6 months from the date that total disability started.


LIFE LAWS

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Standard Required Provisions and Coverage1. A group life policy must contain a provision that the insurer will issue individual certificates

to the policyholder for delivery to each insured.2. No group policy may be delivered in this state unless the Commissioner finds that:

a. The issuance of the group policy is not contrary to the best interest of the public.b. The issuance of the group policy would be actuarially sound.c. The issuance of the group policy would result in economies of acquisition or

administration. d. The benefits are reasonable in relation to the premiums charged.

3. The premium for a group life policy shall be paid either from the policyholder’s funds or from funds contributed by the insured persons, or from both. If group policy premiums are paid entirely by the group, the policy must cover everyone except those who reject the coverage in writing.

4. A group life policy may be issued to a creditor, its parent holding company under which such creditor or holding company shall be deemed the policyholder, to insure debtors of the creditor.

5. A group life policy may be issued to an association or to a trust or to the trustee or trustees of a fund established, created, or maintained for the benefit of members of one or more associations. The association shall have: a. At the outset a minimum of 100 persons.b. Been organized and maintained in good faith for purposes other than that of obtaining

insurance. c. Been in active existence for at least two years.

6. A group policy may provide that the term “employees” shall include:a. The individual proprietor or partners if the employer is an individual proprietorship or

partnership.b. Retired employees and directors of a corporate employer. c. Elected or appointed officials.

Credit Life Insurance1. Credit life insurance is insurance on the life of a debtor in connection with a specific loan or

other credit transaction for a period of time not to exceed 10 years. 2. Credit disability insurance is insurance on a debtor to provide indemnity for payments

becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.

3. Credit life insurance and credit disability insurance must be issued only in the following forms: a. Individual policies of life insurance issued to debtors on a term plan. b. Individual policies of disability insurance issued to debtors on a term plan, or disability

provisions in individual life policies. c. Group policies of life insurance issued to creditors providing insurance upon the lives of

debtors on a term plan. d. Group policies of disability insurance issued to creditors on a term plan insuring debtors,

or disability provisions in group life policies. 4. An individual policy or group certificate must be delivered to the insured debtor at the time

the indebtedness is incurred.



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5. If an individual policy or group certificate is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for the policy or a notice of proposed insurance signed by the debtor and a brief description of the coverage must be delivered to the debtor at the time the indebtedness is incurred.

6. The copy of the application or notice of proposed insurance must refer exclusively to insurance coverage and shall be separate and apart from the loan, sale, or other credit agreement unless the required information is prominently set forth therein.

7. Upon approval of the application or acceptance of the insurance the individual policy or group certificate must be delivered to the debtor within 30 days of the date upon which the indebtedness is incurred.

8. Upon acceptance by the insurer, the insurance becomes effective as of the date the indebtedness is incurred.

9. If credit life insurance or credit disability insurance is rescinded due to material misrepresentation on the part of the insured, the insured shall be entitled to a full refund of the premium paid.

10. Penalties – In addition to any penalty provided by law, any person who violates an order of the Insurance Commissioner concerning credit insurance after it has become final, may be fined up to $250 and up to $1,000 if the violation was willful.

Replacement Whenever any agent is aware that a sale of permanent life insurance will result in the lapse, surrender, forfeit, or change in the prospective purchaser’s existing permanent life insurance coverage, the agent must:

1. Furnish the applicant with a written memorandum comparing the existing and the proposed life insurance coverage. The memorandum must be signed by the agent and by the insured to acknowledge receipt of the written memorandum.

2. The memorandum must include at least:a. Name of insurer as it appears on the policy.b. Face amount of policy.c. Policy number or, if number is not available, type of policy.d. The signature of both the agent and the insured.e. The document should be dated.

3. A copy of the memorandum must be furnished to the policyholder and the existing insurer. 4. A copy of the memorandum must be sent to the company represented by the agent and such

company must retain the copy for 3 years. 5. Any agent who violates the provisions of the Insurance Code governing replacement shall be

guilty of a Class A misdemeanor and shall be subject to such reasonable disciplinary action as may be provided by the Arkansas Insurance Code.


Health Laws


Health Laws

State-Specific Definitions1. Accident and Health Insurance – Insurance of human beings against bodily injury,

disablement, or death by accident or accidental means or against loss of income due to disablement or expense resulting from sickness. Accident and health insurance does not include Workers’ Compensation.

2. Basic Hospital Expense Coverage is a policy of accident and health insurance which provides coverage for a period of at least 31 days during any continuous hospital confinement for each person insured for necessary treatment and services rendered as a result of accident or sickness.

3. Basic Medical-Surgical Expense Coverage is a policy of accident and health insurance which provides coverage for each person insured for the necessary services rendered by a physician for treatment of an injury or sickness.

4. Hospital Confinement Indemnity Coverage is a policy of accident and health insurance which provides daily benefits for hospital confinement on an indemnity basis in an amount of at least $80 per day and for not less than 31 days during any one period of confinement.

5. Major Medical Expense Coverage or Comprehensive Health Expense Coverage is a policy of accident and health insurance which provides hospital, medical and surgical expense coverage, to an aggregate maximum of at least $35,000.

6. Accident Only Coverage is a policy of accident and health insurance which provides coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by accident. Accidental death and double dismemberment amounts must be at least $1,000 and a single dismemberment amount must be at least $500.

7. Specified Accident Coverage is an accident insurance policy which provides coverage for a specifically identified kind of accident (or accidents) for each person insured for accidental death or accidental death and dismemberment.

8. Intensive Care Unit Indemnity Coverage is a policy of accident and health insurance which provides daily benefits for hospital confinement in an intensive care unit on an indemnity basis in an amount not less than $150 per day and not less than 15 days during any one period of confinement.

9. Disability Income Protection Coverage is a policy that provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from either sickness or injury or both.a. Periodic payments payable at ages after 62 and reduced solely on the basis of age are at

least 50% of the amounts payable immediately prior to age 62. b. The policy cannot have an elimination period greater than:

1) 90 days for a benefit period of 1 year or less.2) 180 days for a benefit period greater than 1 year but less than 2 years.3) 365 days in all other benefit periods.

c. A benefit period must be at least 6 months, except for normal pregnancy which is 1 month.

d. No reduction in benefits shall be put into effect because of an increase in Social Security or similar benefits during a benefit period.

Policy Requirements1. Preexisting condition may not be defined to be more restrictive than “the existence of

symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment or for which medical advice or treatment was recommended by a physician or received from a physician within a five year period preceding the effective date of the coverage.

2. In the event the insurer cancels or refuses to renew, policies providing pregnancy benefits must provide for an extension of benefits as to pregnancy commencing while the policy is in force.

3. Family coverage must continue for any unmarried dependent child who is incapable of self sustaining employment due to mental retardation or physical handicap.

4. Accidental death and dismemberment benefits must be payable if the loss occurs within 90 days from the date of the accident, irrespective of total disability.

5. Termination of the policy must be without prejudice to any continuous loss which commenced while the policy was in force.

6. The amount of benefits payable, or any term, condition or type of coverage may not be restricted in any of the following manner:a. Treatment of complications of pregnancy on a different basis from any other illness or

sickness. b. Restriction of benefits for disorders of the genital organs of only one sex. c. Application of arbitrary waiting period to maternity benefits in such a way as to exclude

coverage for premature births. d. Offering of lower maximum benefits to females than to males who are in the same risk

classifications. e. Providing more restrictive benefit periods or more restrictive definitions of the risk

assumed under the contract to one sex than to the other. f. Limiting the amount of coverage an insured or prospective insured may purchase based

on the insured’s or prospective insured’s marital status. g. Denying benefits for normal pregnancy to an unmarried female when such benefits are

available to a married female. 7. Individual health insurance coverage for major medical benefits must be renewable or

continue in force at the option of the insured. 8. An insurer may nonrenew health insurance coverage providing major medical benefits for an

individual based only on one or more of the following: a. Nonpayment of the premium. b. Fraud. c. Termination of the plan whereby the insurer ceases to offer major medical coverage in

the individual market. d. Movement outside the service area. e. Association membership ceases.

9. Time Limit on Certain Defenses – In Arkansas, a policy cannot be voided once it has been in force for 3 years, except if it’s found that the application contains fraudulent misstatements. No claim for loss incurred or disability beginning after 3 years from the date of policy issue shall be reduced or denied on the ground that a non-excluded disease or physical condition had existed prior to the policy’s effective date of coverage.



10. Reinstatement – In Arkansas, if a renewal premium is paid after the grace period, and the insurer accepts the payment without a new application, the policy will be reinstated. a. However, if the insurer requires an application for reinstatement and issues a conditional

receipt for the premium submitted, the policy will be reinstated:1) Upon application’s approval or (lacking such approval).2) Upon the 45th day after the conditional receipt is given, unless the application has

been disapproved. b. The reinstated policy shall cover only:

1) Loss resulting from an accidental injury occurring after the reinstatement date; or 2) Loss due to sickness which begins 10 days after the reinstatement.

c. In all other respects the insured and insurer shall have the same rights as they had under the policy immediately the policy lapsed.

d. Any premium accepted in connection with a reinstatement shall be not applied to a period of nonpayment longer than 60 days.

NoteThe last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force until at least age 50 or for 5 years if the policy is issued after age 44.

11. Notice of Claim – In Arkansas, written notice of a claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy. a. If it can’t be provided within that time, it must be provided as soon as is reasonably

possible. If the notice cannot reasonably be provided to the insured’s agency of purchase, it may be provided to any authorized agent of the insurer or any other office designated by the insurer.

b. For policies providing loss-of-time benefits payable for at least 2 years, the insurer may require the insured to provide once every 6 months a notice of the disability’s continuance. If the insured is late in providing such notice, his coverage is to continue.

12. Proof of Loss – In Arkansas, written proof of loss must be furnished to the insurer as follows:a. When the policy provides for periodic payments, contingent upon continuing loss, the

proof must be provided within 90 days after the period ends for which the insurer is liable.

b. Claims for any other losses must have proof provided within 90 days of the loss.c. Failure to furnish such proof within the time required shall not invalidate nor reduce

any claim if it was not reasonably possible to do so. In any event, proof of loss must be provided no later than 1 year from the time the proof is otherwise required.

13. Time Payment of Claims – In Arkansas, claims will be paid immediately upon receiving proof of loss, unless the policy authorizes periodic payments. Periodic payments must be made at least monthly.

14. Payment of Claims – In Arkansas, payments for loss of life will be payable in accordance with the beneficiary designation and the policy provisions. If there are no beneficiary or specific policy provisions, the payment will be made to the insured’s estate. Any other benefits that are unpaid at the insured’s death may be paid either to a beneficiary or to the estate. In addition to this provision, the following may be included at the insurer’s option:a. If any indemnity of this policy shall be payable to an insured’s estate or to a beneficiary

who is a minor or otherwise not competent to give a valid release, the insurer may pay up to $1,000 to any relative of the insured who is connected by blood or marriage, whom the insurer considers entitled to it.


HEALTH LAWS

b. Subject to any written direction in the application or otherwise by the insured, all or a portion of any indemnities provided on account of hospital, nursing, medical, or surgical services may be paid directly to the hospital or person rendering such services. Such payments are at the insurer’s option unless the insured requests otherwise in writing not later than when the proofs of loss are submitted.

15. Legal Action – In Arkansas, an insured cannot take any legal action against the insured for nonpayment of claim until at least 60 days after providing written proof of a loss. After that, all legal actions must be brought within 3 years after proof of loss is submitted.

16. Limiting Age and Exceptions – In Arkansas, the limiting age for a child dependent health coverage is age 19. However, if Arkansas follows the Patient Protection and Affordable Care Act, this will extend up to age 26. If a child who has reached the limiting age is incapable of sustaining employment by reason of intellectual or physical disability and became so incapacitated prior to the limiting age, he/she may continue to be covered by a parent’s health policy. The child must be chiefly dependent upon the policyholder for support and maintenance. At the request and expense of the insurer, proof of the incapacity or dependency must be furnished to the insurer by the policyholder.

17. Outpatient Services Required – Health policies in Arkansas must cover the following outpatient services:a. Laboratory and pathological tests.b. X-rays.c. Chemotherapy.d. Radiation treatment. e. Renal dialysis.

NoteThese coverages may be rejected in writing.

Newborn Infant Coverage1. All accident and health insurance policies, must include coverage for newborn infant

children by the insured from the moment of birth. 2. Coverage for tests for hypothyroidism, phenylketonuria, galactosemia, sickle-cell anemia,

and all other disorders of metabolism must be covered. 3. Coverage must also be provided for routine nursery care and pediatric charges for a well

newborn child for up to five full days in a hospital nursery or until the mother is discharged from the hospital following the birth of the child.

4. Notification of birth must be provided within 90 days of the birth or before the next premium due date, whichever is later, in order for coverage to continue beyond 90 days.

Mental Health Services Coverage1. Every group accident and health policy must provide benefits for the treatment of mental

illness of at least $7,500 per insured, per calendar year.2. Mental illness coverage must include benefits for inpatient and outpatient care, and partial

hospitalization.



Substance Abuse1. Group health policies in Arkansas must offer benefits for the care and treatment of alcohol

and other drug dependency.a. Such benefits cannot be less favorable than those for physical illness and generally are

subject to the same durational and dollar limits, deductibles, and coinsurance factors, except as otherwise provided.

b. The insured may reject these benefits or select any alternative level of benefits. The rejection shall be in writing.

2. Treatment may include detoxification, administration of a therapeutic regimen, and related services.

3. A policy that provides annual benefits exceeding $6,000 for all illnesses is subject to the following conditions: a. For each 24-month period, no more than $6,000 may be provided for alcohol/drug

dependency care.b. For each 24-month period, no more than 1/2 of the maximum benefits for alcohol or drug

dependency shall be paid in any 30-day period. c. The policy shall provide a minimum benefit of $12,000 for alcohol/drug dependency

care for the recipient’s life.

Chiropractic ServicesAn accident and health policy may not exclude coverage for the services of a licensed chiropractor on the basis that a chiropractor does not fall under the definition of “physician” or “practitioner”.

Unfair Gender Discrimination1. The amount of benefits payable, or any term, condition or type of coverage shall not be

restricted, modified, excluded, or reduced on the basis of the insured’s gender or marital status.

2. Specific practices prohibited by this rule shall include but not be limited to the following:a. Treatment of complications of pregnancy on a different basis from any other illness or

sickness under the contract. Pregnancy on the effective date of the contract may be considered a pre-existing condition to the complication of pregnancy.

b. Restriction, reduction, modification or exclusion of benefits for disorders of the genital organs of only one gender.

c. Application of an arbitrary waiting period to maternity benefits in such a way as to exclude coverage for premature births when normal maternity benefits are included in the contract.

d. Offering of lower maximum benefits to females than to males who are in the same risk classifications, solely because of gender.

e. Providing more restrictive benefit periods or more restrictive definitions of the risk assumed under the contract to one gender than to the other.

f. Establishing different conditions under which the policyholder may exercise benefit options contained in a contract where the differences are determined by the gender of the insured.

g. Limiting the amount of coverage an insured or prospective insured may purchase based on the insured’s or prospective insured’s marital status.


HEALTH LAWS

h. Denying benefits for normal pregnancy to an unmarried female when such benefits are available to a married female. However, this does not mandate coverage for normal pregnancy benefits for dependent children.

Medicare Supplements1. Medicare Supplement Policy means a group or individual policy of accident and health

insurance other than Medicare insurance, that is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare.

2. No Medicare Supplement Policy may contain benefits that duplicate benefits provided by Medicare.

3. A Medicare Supplement Policy or certificate must not exclude or limit benefits for losses incurred more than 6 months from the effective date of coverage because it involved a preexisting condition.

4. Every Medicare Supplement must be at least guaranteed renewable.5. Right to Return (Free Look) – The free look period on Medicare Supplement policies is 30

days.6. Required Disclosure Provisions – Issuers must provide:

a. A description of policy provisions relating to renewability, cancellation, or continuation of coverage, including any reservation of rights to change premium.

b. The premiums for the policy or certificate separately from the premiums for any optional or supplemental riders.

c. The agent’s name and address, or the employee of the insurer, who assumes responsibility for completing the outline.

7. Termination of a Medicare Supplement Policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force.

8. A Medicare Supplement Policy may not be canceled or nonrenewed based on the health status of the insured.

9. A Medicare Supplement Policy must provide that benefits and premiums under the policy will be suspended at the request of the policyholder for the period (not to exceed twenty-four (24) months) in which the policyholder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act. The policyholder must request suspension within 90 days after the date the individual becomes entitled to assistance.

10. Applicants for Medicare Supplement Insurance must be provided with a Guide to Health Insurance for People with Medicare in the form developed by the National Association of Insurance Commissioners.

11. The first year commission for the sale of a Medicare Supplement Policy may not exceed 200% of the commission paid for selling or servicing the policy or certificate in the second year.

12. The renewal commission must be the same as that provided in the second year and paid for no fewer than five renewal years.

13. In the case of replacement, an agent may not receive compensation greater than the renewal commission payable by the replacing issuer.

14. Compensation includes any kind of payment relating to the sale or renewal of the policy including bonuses, gifts, prizes, awards and finders fees.



Health Advertising1. The purpose of the regulation governing advertisements of health insurance is to protect

prospective purchasers with respect to the advertisement of health insurance in the same manner as the rules governing advertisements of Medicare Supplement Insurance.

2. Advertisements must be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception.

3. No advertisement may contain descriptions of a policy limitation, exception or reduction, worded in a positive manner to imply that it is a benefit, such as, describing a waiting period as a “benefit builder,” or stating “even preexisting conditions are covered after 2 years”.

4. No advertisement of a benefit for which payment is conditional upon confinement in a hospital or similar facility shall use words or phrases such as “tax free”; “extra cash”; “extra income”; “extra pay”; or substantially similar words or phrases that tend to mislead the public into believing that the policy will enable them to profit from being hospitalized.

5. No advertisement of a policy covering only one disease or a list of specified diseases may imply coverage beyond the terms of the policy.

6. An advertisement for a policy providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, must clearly state, in prominent type, the limited nature of the policy. The statement must be worded in language substantially similar to the following: “THIS IS A LIMITED POLICY”; “THIS IS A CANCER ONLY POLICY”; “THIS IS AN AUTOMOBILE ACCIDENT ONLY POLICY.”

7. An advertisement which is an invitation to contract and refers to either a dollar amount, or a period of time for which any benefit is payable, or the cost of the policy, or specific policy benefit, or the loss for which such benefit is payable, must also disclose those exceptions, reductions and limitations affecting the basic provisions of the policy.

8. Unless it is true, an advertisement of an individual policy may not imply: a. That a policy or combination of policies is an introductory, initial or special offer.b. That applicants will receive substantial advantages not available at a later date; or c. That the offer is available only to a specified group of individuals.

9. An advertisement may not contain phrases describing an enrollment period as “special,” “limited,” or similar words or phrases when the insurer uses such enrollment periods as the usual method of advertising accident and sickness insurance.

10. An advertisement may not imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy because of special advantages available in the policy, unless such is the fact.

11. An advertisement may not overemphasize the availability and the amount of an initial reduced premium in a policy.

12. Special awards, such as a “safe drivers’ award,” may not be used in connection with advertisements of accident or health insurance.

13. No advertisement shall use words or phrases such as “all,” “full,” “complete,” “comprehensive,” “unlimited,” “up to,” “as high as,” “this policy will help fill some of the gaps that Medicare and your present insurance leave out,” “the policy will help to replace your income,” (when used to express loss of time benefits), or similar words and phrases in a manner that exaggerates any benefits beyond the terms of the policy.


HEALTH LAWS

Long-Term Care Insurance Act1. A LTC Insurance Policy may not exclude coverage for a loss or confinement that is the result

of a preexisting condition unless such loss or confinement begins within 6 months following the effective date of coverage of an insured person.

2. Right to Examine (Free Look) – The free look period on LTC policies is 30 days.3. Nonforfeiture Provision – Each LTC policy or certificate issued must offer a nonforfeiture

benefit. 4. Contingent Benefit Upon Lapse – Each LTC policy or certificate issued must provide a

contingent benefit upon lapse. 5. Inflation Protection – Increases benefit levels annually at a rate of at least 5%.

Policy Practices, Provisions and Disclosures 1. Renewability – Individual LTC insurance policies shall contain a renewability provision. A

policy issued to an individual shall not contain renewal provisions other than “guaranteed renewable” or “noncancellable.”

2. Limitations and Exclusions – A policy may not be delivered or issued for delivery in this state as LTC insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition or accident. The following are exceptions:a. Preexisting conditions or diseases.b. Mental or nervous disorders. However, this shall not permit exclusion or limitation of

benefits on the basis of Alzheimer’s Disease.c. Alcoholism and drug addiction.d. War or act of war (whether declared or undeclared).e. Participation in a felony, riot or insurrection.f. Service in the armed forces or units auxiliary.g. Suicide (sane or insane), attempted suicide or intentionally self-inflicted injury.h. Aviation (this exclusion applies only to non-fare-paying passengers).i. Treatment provided in a government facility (unless otherwise required by law).j. Expenses for services or items available or paid under another LTC insurance or health

insurance policy.k. In the case of a qualified LTC insurance contract, expenses for services or items to the

extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.

3. Extension of Benefits – Termination of LTC insurance shall be without prejudice to any benefits payable for institutionalization if such institutionalization began while the LTC insurance was in force and continues without interruption after termination.

4. Continuation or Conversion a. Continuation of coverage is a policy provision that maintains coverage under the existing

group policy when the coverage would otherwise terminate and that is subject only to the timely payment of premiums when due.

b. Conversion of coverage is a policy provision for individuals whose coverage under the group policy would otherwise terminate or has been terminated for any reason. Evidence of insurability will not be required if the person has been covered under the group policy for at least 6 months.

c. Group LTC insurance shall provide covered individuals with a basis for continuation or conversion of coverage.



d. Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed by the insurer not later than 31 days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.

e. A group policy converted to an individual policy may contain a provision that benefits will be reduced if the person is already covered by a LTC policy and both policies together would pay more than 100% of incurred expenses.

f. A converted policy must provide benefits equal to or greater than the policy being converted.

g. Age shall be calculated from the inception of the most recent policy being replaced or converted.

h. Any insured individual whose eligibility for group LTC coverage is based upon his or her relationship to another person, shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.

5. Discontinuance and Replacement – If a group LTC policy is replaced by another group LTC policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. The new policy coverage:a. Shall not result in an exclusion for preexisting conditions that would have been covered

under the group policy being replaced. b. Shall not vary or otherwise depend on the individual’s health or disability status, claim

experience, or use of LTC services.6. Premiums – The premium charged to an insured shall not increase due to any of the

following:a. The increasing age of the insured at ages beyond 65.b. The duration the insured has been covered under the policy.c. The purchase of additional coverage shall not be considered a premium rate increase,

the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

d. A reduction in benefits shall not be considered a premium change, but the initial annual premium shall be based on the reduced benefits.

7. Electronic Enrollment for Group Policies – Any requirement that the insured’s signature be obtained by an agent or insurer shall be deemed satisfied if the consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer.

8. Rates – An LTC insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change.

9. Riders and Endorsements a. All riders or endorsements added after date of issue or at reinstatement or renewal that

reduce or eliminate policy benefits or coverage shall require signed acceptance by the insured. This is not the case if the rider or endorsement was requested in writing by the insured.

b. After the date of policy issue, any rider or endorsement that increases benefits or coverage with a increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law.


HEALTH LAWS

c. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the policy, rider or endorsement.

10. Payment of Benefits – An LTC insurance policy that provides for the payment of benefits based on standards described as “usual and customary,” “reasonable and customary,” or words of similar meaning shall include a definition of these terms and an explanation of the terms in its accompanying outline of coverage.

11. Pre-Existing Condition Limitations – If an LTC insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as “Preexisting Condition Limitations.”

12. Other Limitations or Conditions on Eligibility for Benefits – An LTC insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited shall list them in a separate paragraph of the policy or certificate and shall label such paragraph “Limitations or Conditions on Eligibility for Benefits.”

13. Disclosure of Tax Consequences a. With regard to life insurance policies that provide an accelerated benefit for long-term

care, a disclosure statement must be included that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor.

b. The disclosure statement is required at the time of application for the policy or rider and shall be prominently displayed on the first page of the policy or rider and any other related documents. This paragraph shall not apply to qualified LTC insurance contracts.

14. Benefit Triggers – Activities of daily living and cognitive impairment shall be used to measure an insured’s need for long-term care and shall be described in the policy or certificate in a separate paragraph labeled, “Eligibility for the Payment of Benefits.” a. Any additional benefit triggers shall also be explained in this section. If these triggers

differ for different benefits, explanation of the trigger shall accompany each benefit description.

b. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

15. Qualified Plans – A qualified LTC insurance contract shall include a disclosure statement in the policy and in the outline of that the policy is intended to be a qualified LTC insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986.

16. Non-Qualified Plans – A nonqualified LTC insurance contract shall include a disclosure statement in the policy and in the outline of coverage that the policy is not intended to be a qualified LTC insurance contract.

Prohibition Against Post-Claims Underwriting 1. All applications for LTC insurance policies except those that are guaranteed issue shall

contain clear and unambiguous questions designed to ascertain the applicant’s health. 2. If a condition listed in the application, or medications being taken were known or should

have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, the policy may not be rescinded for that condition.

3. Before issuance of an LTC policy to an applicant age 80 or older, the insurer must obtain one of the following: a. A report of a physical examination.b. An assessment of functional capacity.



c. An attending physician’s statement.d. Copies of medical records.

Minimum Standards For Home Health Care 1. Home health care benefits that are at least 50% of those provided for care in a nursing

facility. The evaluation of the amount of coverage shall be based on aggregate days of care covered for home health care when compared to days of care covered for nursing home care.

2. Home health care benefits must meet the National Association of Insurance Commissioners’ minimum standards for home health care benefits in LTC insurance policies.

3. Home health care benefits may not be excluded or limited by requiring: a. The insured to first receive care in an institutional setting.b. The insured to need institutional level of care.c. The home health care to be provided by a registered nurse or licensed practical nurse.d. That the insured have an acute condition.e. That benefits be limited to services provided by Medicare certified agencies or providers.

4. Home health care or adult day care services may not be excluded or limited for:a. Adult day care services.b. Maintenance or personal care services provided by a home health aide.

Inflation Protection1. Insurers must offer the following inflation protection no less favorable than one of the

following:a. Increases in benefit levels compounded annually at no less than 5%.b. Increases benefit levels annually in a manner so that the increases are compounded

annually based on changes to the Consumer Price Index.c. Covers a specified percentage of actual or reasonable charges and does not include a

maximum specified indemnity amount or limit.d. Alternative methods that account for reasonably anticipated increases in long term care

costs. 2. The option for inflation protection is not required under life insurance policies that accelerate

the death benefit.

Training Requirements1. Producers must be licensed in either life or accident & health lines of insurance in order to

sell LTC policies.2. Producers must undergo an initial 8-hour training course before being allowed to sell LTC

policies and must also complete 4 hours of continuing education within each 24-month licensure period.

Suitability1. Every LTC insurer must develop and use suitability standards to determine whether the

purchase or replacement of LTC insurance is appropriate for the needs of the applicant.2. A completed “Long Term Care Insurance Personal Worksheet” must be returned by the

applicant to the insurer prior to being considered for coverage. 3. It is prohibited for the insurer or producer to sell or disseminate information obtained through

the personal worksheet.4. If the insurer determines that the applicant does meet its financial suitability standards, the

insurer must send the applicant a LTC insurance suitability letter.


HEALTH LAWS

Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies If an LTC insurance policy replaces another LTC policy, the replacing insurer shall waive any probationary time periods applicable to preexisting conditions in the new policy to the extent that such probationary periods have been satisfied under the original policy.

Nonforfeiture Benefits A nonforfeiture benefit for level premium, qualified LTC insurance contract must be offered and provide at least one these requirements:

1. Reduced paid-up insurance.2. Extended term insurance.3. Shortened benefit period.4. The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy.

In the event the policyholder declines the nonforfeiture benefit, the insurer shall provide a contingent benefit upon lapse that shall be available for a specified period of time following a substantial increase in premium rates.

Outline of Coverage An outline of coverage shall be delivered to a prospective applicant at the time of the initial solicitation and the recipient’s attention must be directed to it.

1. In the case of agent solicitations, an agent shall deliver the Outline of Coverage prior to the presentation of an application or enrollment form.

2. In the case of direct response solicitations, the outline of coverage shall be presented in conjunction with any application or enrollment form.

3. In the case of a group policy, the outline shall be delivered to certificate holders when the certificate is delivered.

4. The Outline of Coverage shall not contain any advertisements in any form.

Marketing Standards1. Every insurer providing LTC insurance or benefits in Arkansas shall provide a copy of any

insurance advertisement intended for use in Arkansas to the Director for review or approval.2. All advertisements shall be retained by the insurer for at least 3 years from the date the

advertisement was first used.3. Every insurer marketing LTC insurance coverage in Arkansas shall establish marketing

procedures and agent training requirements to assure that:a. Any marketing activities, including any comparison of policies, by its agent or other

producers will be fair and accurate.b. Excessive insurance is not sold or issued.

4. An Outline of Coverage shall display prominently by type, stamp, or other appropriate means, on the first page of the outline of coverage and policy the following: “Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.”



Prohibited Marketing Practices 1. Twisting – Knowingly making any misleading representation, or any incomplete or fraudulent

policy or insurer comparison, to induce a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow against, or convert a policy or to get a policy with another insurer.

2. High Pressure Tactics – Using any marketing method that tends to induce insurance purchase through force, fright, threat, or undue pressure.

3. Cold Lead Advertising – Using any marketing method that fails to disclose that insurance is being solicited and an insurance producer or company will make contact.

4. Misrepresentation – Knowingly and deliberately making false or even partially true statements about a policy’s coverage or benefits to make it appear more beneficial than it truly is.

Availability of New Services or Providers 1. Insurers must notify policyholders of the availability of a new long-term policy series that

provides coverage for new LTC services or providers material in nature and not previously available through the issuer to the general public. The notice must be provided within 12 months after the date the new policy series is made available for sale.

2. The new coverage shall be made available in one of the following ways:a. By adding a rider to the existing policy and charging a separate premium for the new

rider based on the insured’s attained age.b. By exchanging the existing policy or certificate for one with an issue age based on the

attained age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits must be based on premiums paid or reserves held for the prior policy or certificate.

c. By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status is recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate.

3. Policies issued pursuant to this rule shall be considered exchanges and not replacements.4. This rule does not apply to life insurance policies or riders containing accelerated LTC

benefits.

Right to Reduce Coverage or Benefits 1. Every LTC insurance policy must include a provision that allows the policyholder or

certificate holder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:a. Reducing the maximum benefit.b. Reducing the daily, weekly or monthly benefit amount.

2. The insurer may also offer other reduction options that are consistent with the policy or certificate design or the issuer’s administrative processes.

3. The age to determine the premium for the reduced coverage must be based on the age used to determine the premiums for the coverage currently in force.

4. This rule does not apply to life insurance policies or riders containing accelerated LTC benefits.


HEALTH LAWS

Requirement to Deliver a Shopper’s Guide 1. A Shopper’s Guide shall be provided to all prospective applicants of an LTC insurance policy

or certificate.2. In the case of insurance producer solicitations, an insurance producer must deliver the

Shopper’s Guide prior to the presentation of an application or enrollment form.3. In the case of direct response solicitations, the Shopper’s Guide must be presented in

conjunction with any application or enrollment form.4. Life insurance policies or riders containing accelerated long term care benefits are not

required to furnish the Shopper’s Guide, but shall furnish the policy summary required.

Penalties In addition to any other penalties provided by the laws of Arkansas, any insurer and any agent found to have violated any requirement to LTC insurance shall be subject to a fine of up to 3 times the amount of any commissions paid for each policy involved in the violation or up to $10,000, whichever is greater.

Incontestability 1. For a policy or certificate that has been in force for less than 6 months an insurer may rescind

a LTC insurance policy or certificate or deny an otherwise valid LTC insurance claim upon a showing of misrepresentation that is material to the acceptance for coverage.

2. For a policy or certificate that has been in force for at least 6 months, but less than 2 years, an insurer may rescind a LTC insurance policy or certificate or deny an otherwise valid LTC insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and which pertains to the condition for which benefits are sought.

3. After a policy or certificate has been in force for 2 years it is not contestable upon the grounds of misrepresentation alone; the policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured’s health.

Group/Blanket Health1. Blanket accident and health insurance covers the following groups:

a. Passengers on a common carrier. b. An employer to cover all employees, dependents, or guests. c. A school or camp covering students or campers. d. Any religious, charitable, recreational, educational, or civic organization covering

participants in activities sponsored by the organization. e. A sports team covering members, officials, and supervisors. f. Any volunteer fire department covering all of the members of the fire department. g. Any other risk or class of risks which, in the discretion of the Insurance Commissioner,

may be properly eligible for blanket accident and health insurance. 2. Every blanket policy must contain the following provisions:

a. Entire contract. b. Notice of Claim. c. Proof of loss. d. Time of Payment of Claims. e. Physical Exam and Autopsy. f. Legal Actions.



3. An individual application or certificate is not required under a blanket accident and health policy.

4. All benefits under any blanket accident and health policy shall be payable to the person insured, to the designated beneficiaries, or to his/her estate.

5. In addition the provisions required under blanket insurance, group heath insurance policies must contain the following provisions:a. A provision that the insurer will furnish to the policyholder for delivery to each insured a

summary of the essential features of the insurance coverage. b. A provision that eligible new employees or members or dependents may be added from

time to time to the group originally insured.6. Every group health policy, must provide that an insured or covered dependent whose

insurance under the group policy has been terminated for any reason is entitled to have issued a conversion policy. The insured must apply for the conversion policy within 30 days after the termination of the group coverage.

7. Every group health policy must provide that the insurer shall continue benefits for any insured who is hospitalized on the date of termination, if the policy or contract is terminated and replaced by a group health insurance policy or contract issued by another insurer.

8. A group health policy must provide that an insured or covered dependent whose insurance under the policy has been terminated for any reason, including discontinuance of the policy in its entirety, who has been continuously insured under the policy or under any group policy providing similar benefits that it replaces for at least 3 months immediately prior to termination, is entitled to continued coverage under the group policy for a period of 120 days and have issued to them at the end of such 120 day period of continuation, a conversion policy.

9. Benefits other than for loss of time will be payable immediately upon receiving a proof of loss. All accrued loss of time benefits will be paid within 30 days.

10. The time limits for legal actions against an insurer are the same for blanket policies as for individual and group health policies.

11. Covered outpatient services may be provided by:a. A hospital, (medical or psychiatric).b. An outpatient psychiatric center.c. A physician licensed under the Arkansas Medical Practices Act.d. A licensed psychologist.e. A community mental health center or other mental health clinic certified by the Division

of Mental Health Services of the Department of Human Services.

Small Group Coverage1. Small Employer – Any person, firm, corporation, partnership, or association actively engaged

in business who, on at least 50% of its working days during the preceding year, employed no fewer than two nor more than 25 eligible employees. The provisions governing small employer group health insurance applies to any health benefit plan which covers two or more employees of a small employer, but not to individual health insurance policies.

2. For a class of small employer business, the premium rates charged to small employers with similar case characteristics for the same or similar coverage, may not vary by more than 25% of the index rate.

3. A small employer carrier may not involuntarily transfer a small employer into or out of a class of business.


HEALTH LAWS

4. A small employer carrier may not offer to transfer a small employer into or out of a class of business unless such offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status or duration since issue.

5. Class of Business – All or a distinct grouping of small employers as shown on the records of a small employer carrier.

Health Maintenance Organizations1. Because the primary responsibility of a Health Maintenance Organization lies in providing

quality health care services on a prepaid basis without regard to the type and number of services actually rendered, rather than providing indemnification against the cost of the services, the General Assembly finds it necessary to provide a statutory framework for the establishment and continuing regulation of Health Maintenance Organizations which is separate from the insurance laws of this state.

2. Health care services means any services included in the furnishing to any individual of medical or dental care, or hospitalization, or services incident to the furnishing of care or hospitalization, as well as the furnishing to any person of all other services or goods for the purpose of preventing, alleviating, curing, or healing human illness or injury.

3. The powers of an HMO include, but are not limited to, the following: a. The making of loans to a medical group under contract with it in furtherance of its

program. b. The furnishing of health care services through providers which are under contract with

the HMO. c. The contracting with any person for the performance on its behalf of certain functions

such as marketing, enrollment, and administration. d. The contracting with an insurance company or with a hospital or medical service

corporation for the provision of insurance, indemnity, or reimbursement against the cost of health care services provided by the HMO.

e. The offering, in addition to basic health care services, of: 1) Additional health care services. 2) Indemnity benefits covering out-of-area or emergency services, and special services

not provided on a direct service basis. 3) Indemnity benefits on a point-of-service basis.

f. The contracting with providers located out of state. 5. Every enrollee residing in this state is entitled to evidence of coverage under a health care

plan through an HMO. 6. An evidence of coverage must contain:

a. No provisions or statements which are unjust, unfair, inequitable, misleading, or deceptive.

b. A clear and complete statement if a contract, or a reasonably complete summary if a certificate, of: 1) The health care services and the insurance or other benefits to which the enrollee is

entitled under the health care plan. 2) Any limitations on the services, kind of services, benefits to be provided, including

any deductible or copayment feature. 3) Where and in what manner information is available as to how services may be

obtained.



4) The total amount of payment for health care services and the indemnity or service benefits which the enrollee is obligated to pay.

5) A clear and understandable description of the HMO’s method for resolving enrollee complaints.

7. An HMO must make available a list of providers upon enrollment and re-enrollment. 8. Every HMO must provide a notice of any material change in the operation of the

organization, including any major change in its provider network within 30 days. 9. An enrollee must be notified in writing by the HMO of the termination of the primary care

provider who provided health care services to that enrollee. 10. An HMO must provide to subscribers information on how services may be obtained and a

telephone number where the enrollee can contact the HMO, at no cost to the enrollee. 11. After an HMO has been in operation 24 months, it must have an annual open enrollment

period of at least one month during which it accepts enrollees up to the limits of its capacity. 12. An HMO may apply to the Commissioner for authorization to impose such underwriting

restrictions upon 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 for enrollee coverage for health care services.

13. Health care provider – Those individuals or entities licensed by the State of Arkansas to provide health care services.


HEALTH LAWS

RETENTION QUESTIONS


Life and Health

1. The Insurance Commissioner attains office by ______.2. The Insurance Commissioner has general ______, ______ and ______ of persons and

companies authorized to transact insurance in Arkansas.3. An insurer that desires to transact business in this state must first obtain a ______ of

Authority.4. The Commissioner may examine the financial condition of any insurer whenever he/she

deems it ______.5. The Commissioner must give a notice of the date, time, and location of a hearing ______

days in advance of such hearing.6. Any person who violates any provision of the Insurance Code may be subject to an order

for ______ actual losses to affected persons.7. “Insurance transaction” includes transaction of matters arising out of the contract. (T or F)8. An insurance consultant is exempt from the licensing examination. (T or F)9. A nonresident license may be issued to an individual who is licensed as an agent in the

agent’s ______ of domicile.10. A temporary license can be issued to the ______ of the estate of a deceased agent to

provide services to existing policy holders.11. A licensing candidate must be at least ______ ______ of age to be licensed.12. Agents must complete __ hours of continuing education courses annually.13. A person who holds a limited license is exempt from the continuing education

requirements. (T or F).14. An agent must notify the Commissioner within ____ days of a change of address, be it

home or business.15. All funds, fees or premiums received by a licensee must be ______ ______ for which the

licensee is accountable.16. The purpose of the Arkansas ______ ______ ______ ______ ______ is to protect

policyowners and beneficiaries, in the event of impairment or insolvency of an insurer.17. The funding for the Arkansas Life and Health Guaranty Association comes from ______ of

member companies.18. The Arkansas Life and Health Guaranty Association pays up to $______ in benefits for

one life.19. When an agent places a deceptive newspaper ad, this is an example of an unfair trade

practice. (T or F)20. Agent Jones pays the first six months premium for a friend while writing a life insurance

policy for the friend, Jones is guilty of ______.21. When an agent returns a portion of his/her commission to an insured, it is an example of

______.

43

RETENTION QUESTIONS


Life Only

22. An insured may reinstate an individual life insurance policy up to 3 years after it has lapsed. (T or F)

23. Advertisements for life insurance must be maintained at the insurer’s home or principal office for a period of either ______ years or until the filing of the next regular report, whichever is the longest period of time.

Health Only

24. A Small Employer must have no more than ______ eligible employees to qualify for group coverage.

25. Accident and health insurance policies, must include coverage for newborn infant children by the insured from the ______ __ ______.

26. Which of the following is the correct time limit for an eligible employee in Arkansas to continue his/her group health insurance? (A) Six weeks (B) 120 days (C) Three weeks (D) One month

27. A group policy providing hospital, medical or surgical expense benefits may impose a preexisting condition exclusion for up to 24 months after the effective date of coverage. (T or F)

28. The free-look period for Medicare Supplement and LTC policies is ______ days. 29. The Arkansas Comprehensive Health Insurance Pool provides an alternate market for

health insurance for all Arkansas residents. (T or F)

Record Answers Below

RETENTION QUESTION ANSWER KEY


Life and Health1. Appointment

2. Supervision, control and regulation

3. Certificate

4. Necessary

5. 10

6. Restitution

7. True

8. False

9. State

10. Court-appointed personal representative

11. 18 years

12. 24

13. True

14. 10

15. Trust funds

16. Life and Health Guaranty Association

17. Assessment

18. $300,000

19. True

20. Rebating

21. Rebating

Life Only22. True

23. Four

Health Only24. 25

25. Moment of birth

26. B

27. False

28. 30

29. False

44

KEY WORD INDEX


BBoycott, Coercion, Intimidation

12

CChange of Address 8Chiropractic Services 29Churning of Business 12Commissioner of Insurance

Penalties 4Continuing Education 7Credit Life Insurance 21

DDefamation 12

EExamination of Records 3

FFalse Financial Statements 12False Information and Advertis-

ing 12Fiduciary Capacity 9

GGroup Life Insurance 20

Conversion Rights 20Eligible Groups 20Standard Required Provisions and

Coverage 21

HHealth Advertising 31Health Maintenance Organiza-

tions (HMO) 40Health Policy Requirements 26Hearings/Notice of Hearings/

Orders 4

IIndividual Life Policy Require-

ments 17Insurable Interest 18

Insurance CommissionerAppointment 3Examination of Records 3General Duties and Powers 3Hearings/Notice of Hearings/Or-

ders 4

LLaws Pertinent to Health Insur-

ance OnlyState-specific Definitions 25

Laws Pertinent to Life Insurance Only

Life Advertising 18Life Insurance Policy Provisions,

Options and Riders 17Replacement 22Standard Nonforfeiture Law 17

Licensing 4Continuing Education 7Exemptions/Exceptions 6Maintaining a License 6Persons Required to Be Licensed

4Producer Appointment/Termina-

tion 6Renewal, Suspension or Revoca-

tion of License 8Life and Health Insurance Guar-

anty Association Act 10Life Insurance Policy Provisions,

Options and Riders 17Grace Period 17Incontestability 17Reinstatement 17Right to Examine (Free Look) 17Suicide 17

Long-Term Care Insurance Act 32

Policy Practices, Provisions and Disclosures 32

MMaintaining a License 6Marketing Practices 11

Producer Responsibility Regard-ing Advertising 12

Unfair Claim Practices 11Unfair Methods of Competition

12

Medicare Supplements 31Mental Health Services Cover-

age 28Misrepresentations 12

NNewborn Infant Coverage 28

PPersons Required to Be Licensed

4Consultant 4Nonresident Agent 5Producer 4Temporary License 5

Producer Appointment/Termina-tion 6

Producer Responsibilities 9Commissions 9Fiduciary Capacity 9Fraud Reporting 10

Producer Responsibility Regard-ing Advertising 12

RRebating 12Renewal, Suspension or Revo-

cation of License 8

SSmall Group Health Coverage

39State-specific Definitions 4

Insurance Transaction 4Substance Abuse 29

TTwisting 12

UUnfair Claim Practices 11Unfair Discrimination 12Unfair Gender Discrimination

29

KEY WORD INDEX


Unfair Methods of Competition 12

Boycott, Coercion, Intimidation 12

Churning of Business 12Defamation 12False Financial Statements 12False Information and Advertis-

ing 12Misrepresentations 12Rebating 12Twisting 12Unfair Discrimination 12

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