Rhode Island Life & Health Study Guide

Rhode Island splits life and health into two examinations, so the state material you meet twice is the material that belongs to neither paper: what happens when the insurer fails, what happens when a policy is replaced, and which instrument carries which prohibition. That is where a well-prepared candidate loses marks, and it is where this chapter starts.

Two chapters, one name — and only one of them is alive

The body is the Rhode Island Life and Health Insurance Guaranty Association, and the live chapter is 27-34.3. Chapter 27-34.1 carries the identical name and is marked [Repealed] — cite it and you have cited a dead chapter. Inside the live chapter, the money is in section 27-34.3-3, headed “Coverage and limitations.” It is not in the definitions at 27-34.3-5 and not in “Powers and duties” at 27-34.3-8 — Rhode Island’s property and casualty chapter files its caps the other way round, in the powers section.

The caps, and the word that ruins them

Section 27-34.3-3(c)(2)(i) gives $300,000 in death benefits per life, “but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values.” Read the operator: the $100,000 is carved out of the $300,000, never added to it. Annuities are $250,000 in present value, including net cash surrender and withdrawal values. Health runs in three tiers: $500,000 for basic hospital, medical and surgical insurance; $300,000 for disability and $300,000 for long-term care; $100,000 for other health coverage.

Paragraph (c)(2)(iv) then sits above that whole schedule: $300,000 with respect to any one life, whatever mix of coverages produced it — a $300,000 life claim plus a $250,000 annuity claim does not pay $550,000. The single exception raises the ceiling to $500,000 where the benefits are for “basic hospital, medical, and surgical insurance and major medical insurance” — major medical sits inside the exception and is easy to lose — and the wording shifts from “any one life” to “with respect to any one individual” when it does. Two further ceilings sit at (c)(2)(iv) and (v): $5,000,000 with respect to one owner regardless of how many policies and contracts are held, and $5,000,000 on unallocated annuity contracts.

Selling on the association is banned; disclosing it is required

Section 27-34.3-19 has two halves that pull in opposite directions, and reporting one of them is reporting half the rule. Subsection (a) opens “No person, including an insurer, agent, producer, or affiliate of an insurer” — the enumeration is illustrative, so the ban reaches any person — and forbids using the association’s existence as an inducement to buy — in print, by e-mail, on a website, by radio or television — excluding only the association itself and entities that do not sell or solicit insurance. A breach is an unfair method of competition and an unfair or deceptive act under chapter 27-29, “subject to the sanctions imposed in that chapter.” Subsection (b) then runs the other way: an insurer “may not deliver a policy or contract to a policy or contract owner unless the summary document is delivered” at the same time. Rhode Island bans the sales pitch and mandates the disclosure.

Replacement: read the clock, then read whose it is

Every numbered day count in 230-RICR-20-25-4 belongs to an insurer. The replacing insurer notifies any existing insurer within five business days of a completed application (section 4.6(A)(2)); the existing insurer supplies values within five business days of the request (section 4.7(A)(2)); and the replacing insurer owes 30 days of unconditional refund after delivery (section 4.6(A)(4)).

Every duty section 4.4 puts on the producer is timed by an event rather than by a calendar. The one day count inside that section is not the producer’s either: 4.4(B) makes the replacing insurer mail a paper copy “within five (5) business days after the application is submitted” where the notice was presented electronically. Present and read the replacement notice “not later than at the time of taking the” application; obtain a statement signed by both applicant and producer as to existing policies; leave the applicant the original or a copy of all sales material; and submit the documentation to the replacing insurer. A question asking what the producer must do by when is testing whether you have merged the two sets.

Twisting and churning — the word is in one place, the prohibition in another

Here the exam is testing instruments, not conduct. The words twisting and churning appear as the heading of section 4.9 of 230-RICR-20-25-4 — a regulation. The prohibition you are reaching for is statutory: section 27-29-4(1), on misrepresentation and false advertising, which reaches statements made to induce a lapse, forfeiture or surrender.