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CFP > High 5 Risk Management, Insurance, and Employee Benefits Planning > Flashcards

High 5 Risk Management, Insurance, and Employee Benefits Planning Flashcards

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CFP® flashcards
1
Q

true or false?

loans under a non MEC are usually tax free

A

true

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2
Q

true or false?

partial withdrawals are received tax free up to the basis unless it is a MEC

A

true

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3
Q

is the cash value in a life insurance policy taxed as it builds up/grows?

A

no

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4
Q

cash value withdrawals on life insurance policies typically use ____ tax accounting

A

FIFO

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5
Q

MEC are subject to ____ basis recovery

A

LIFO

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6
Q

can you ever switch a contract from a MEC to a non MEC?

A

no

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7
Q

true or false?

if the corporation is paying life insurance premiums for the employee and the corporation is not the beneficiary then they can deduct the premium payments for tax purposes and the employee includes the premium payments in their gross income

A

true

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8
Q

true or false?

if interest only payments are selected under a death benefit under a life insurance policy, the payments will be taxable

A

true

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9
Q

if there is a named beneficiary life insurance insurance death benefits will avoid ____

A

probate

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10
Q

ownership under a life insurance policy includes ______

A

right to assign the policy
right to change beneficiary
right to change policy provisions

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11
Q

true or false?

if the decedent owns the life insurance policy and the proceeds are payable to the spouse, the proceeds will be included in the gross estate

A

true, but then the spouse can use the unlimited marital deduction

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12
Q

under a viatical agreement, the insured is expected to die within ___ months

A

24

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13
Q

for annuities purchased before August ____ the FIFO method of taxation is used

A

14, 1982

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14
Q

what is the objective of split dollar life insurance?

A

to merge the employee’s need for life insurance with the premium paying ability of the employer

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15
Q

____ is used when the employer owns the policy and is primarily responsible for paying life insurance premiums

A

endorsement

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16
Q

____ method is used when the employee is the owner of the policy and is responsible for life insurance premium payments

A

collateral assignment

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17
Q

who benefits from key employee life insurance?

A

the employer

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18
Q

who pays the premium under key employee life insurance?

A

the employer

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19
Q

who owns the policy under a key employee life insurance?

A

the employer

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20
Q

are premiums deductible to the employer under key employee life insurance?

A

no

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21
Q

who benefits from an executive bonus life insurance policy?

A

employee

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22
Q

who pays the premiums under an executive bonus life insurance policy?

A

employer

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23
Q

who is the policy owner under an executive bonus life insurance policy?

A

employee

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24
Q

true or false?

a secular trust qualifies as a substantial risk of forfeiture

A

false

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25
Q

true or false?

a rabbi trust qualifies as a substantial risk of forfeiture

A

true

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26
Q

are rabbi trust funds still subject to employer’s creditors?

A

yes

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27
Q

are secular trust funds still subject to employer’s creditors?

A

no

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28
Q

when does taxation occur under a rabbi trust?

A

when the funds are distributed

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29
Q

when are payments deductible for the employer under a secular trust and a rabbi trust?

A 
secular = when contribution is made
rabbi = when payments are distributed to employee
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30
Q

what is the maximum value of stock with respect to which ISOs may first become exercisable in any one year?

A

$100k

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31
Q

True or false?

ISOs are only granted to employees of the company

A

true

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32
Q

short term disability usually provides coverage for up to ___ years

A

2

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33
Q

short term DI policies are often limited to ___% of weekly wages

A

60%

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34
Q

the inability to engage in one’s own occupation

A

own occupation DI

35
Q

true or false?

own occupation is the most expensive form of DI

A

true

36
Q

under a ____ the insured cannot be working to claim benefits

A

modified own occupation

37
Q

the inability to engage in any occupation

A

any occupation

38
Q

the inability to engage in any reasonable occupation for which one might be suited by education, experience, or training or for which one could easily become qualified

A

modified any occupation

39
Q

to receive social security disability benefits, the disability must have lasted for ___ months and be expected to last a total of ____ months or result in death

A

5 ; 12

40
Q

if disability benefits are received from an employer provided DI policy and the employer paid all premiums, will the benefits be taxable to the employee?

A

yes

41
Q

if a group disability policy premium is partially paid by the employer and partially paid by the employee, are the benefits received taxable?

A

yes, the employer share would be taxable

42
Q

if disability benefits are received from a personally paid DI policy, will the benefits be taxable?

A

no

43
Q

are business overhead expense insurance premiums deductible to the business?

A

yes

44
Q

are business overhead expense benefits taxable to the business?

A

yes

45
Q

true or false?

a transfer from a FSA to HSA counts against the annual contribution limit

A

false

46
Q

what are the 6 daily activities of daily living?

A

bathing, eating, dressing, toileting, transferring, continence

47
Q

Medicare covers only a maximum of ___ days of skilled nursing care and only the first ___ days are covered at 100%

A

100 ; 20

48
Q

medicaid is designed to provide benefits for the ___ and ___

A

indigent and impoverished

49
Q

true or false?

a qualified long term care insurance policy cannot pay for expenses reimbursable under Medicare

A

true

50
Q

can long term care benefits be included in a cafeteria plan or FSA account?

A

no

51
Q

this type of long term care insurance provides for a specific dollar amount of assets which would be protected if the client used up all of the long term care insurance benefit and had to apply for Medicaid

A

partnership long term care

52
Q

true or false?

an HO-3 policy can include open perils for personal property

A

true, but you have to add the endorsement

53
Q

HO -4 is a ____ insurance policy

A

renters

54
Q

HO-6 is a ____ insurance policy

A

condo

55
Q

HO-8 is a ____ insurance policy

A

historical

56
Q

HO-3 and HO-5 give you the ___ coverage

A

broadest

57
Q

a ___ policy provides open perils coverage for dwelling and personal property

A

HO-5

58
Q

a ____ endorsement can be added to HO-3 to add open perils coverage to personal property

A

HO-15

59
Q

Section 1 of HO policies include coverage for _____

A

property and loss of use

60
Q

Section 2 of HO policies include coverage for ___

A

liability and medical

61
Q

Coverage A is for the ___

A

dwelling

62
Q

Coverage B is for ___

A

other structures

63
Q

Coverage C is for ____

A

personal property

64
Q

Coverage D is for ___

A

loss of use

65
Q

Coverage D is usually equal to ___% of dwelling coverage

A

20%

66
Q

Coverage C is usally equal to __% of dwelling coverage

A

50%

67
Q

Coverage B is usally equal to __% of dwelling coverage

A

10%

68
Q

Coverage A should be equal to ___% of replacement cost

A

100%

69
Q

Coverage E is for ___

A

personal liability (bodily injury and property damage)

70
Q

Coverage F is for ___

A

medical payments

71
Q

HO-8 policies have ____ coverage for all coverages

A

basic

72
Q

HO-2 policies have ___ coverage for all coverages

A

broad

73
Q

HO-4 policies have ____ coverage for personal property

A

broad

74
Q

do HO-4 policies have coverage A or B?

A

no

75
Q

HO-4 policies have ___ coverage for loss of use

A

broad

76
Q

HO-3 policies have __ coverage for the dwelling and other structures

A

open

77
Q

HO-3 policies have ___ coverage for personal property unless there is an endorsement

A

broad

78
Q

HO-3 policies have ___ coverage for loss of use

A

open

79
Q

HO-5 policies have ___ coverage for all coverages

A

open

80
Q

HO-6 policies have __ coverage for personal property and loss of use

A

broad

81
Q

HO-6 policies have ___ coverage for dwellings

A

limited

82
Q

HO-6 policies have __ coverage for other structures

A

none

83
Q

are death benefits under key employee life insurance taxable?

A

no

84
Q

can employers deduct the bonus paid to executives for executive bonus life insurance plans?

A

yes

CFP (65 decks)

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