Insurance Flashcards
Insurance risk are:
CHAD: not catastrophic, homogeneous exposure units, accidental, and measurable and determinable
A legal contract required:
COALL: competent parties, offer and acceptance, legal consideration, and lawful purpose
Indemnity:
an insured is only entitled to compensation to the extent of the insured’s financial loss
Subrogation
the insured cannot receive compensation from both the insurer and a 3rd party for the same claim
Concealment:
when the insured is silent about a material fact that is material to the risk
Adhesion:
insurance contracts are “take it or leave it”
Alegtory:
the money exchanged may be unequal
Unilateral
only one promise is made by the insurer which is pay in the event of a loss
Express authority:
given through an agency or written agreement
Implied authority:
authority that the public perceives, and a valid agency agreement exists
Apparent authority:
when the insured believes that the agent has authority to act on behalf of the insurer. when in fact, no authority exists
Dividend options
CRAP-O
Cash options, reduced prem, Accumulate at Int., Paid-up Additions, One Year Term
Nonforfeiture Options
(1) Cash (2) Reduced Paid-Up Insurance (3) Extended Term Insurance
Catch-up contributions for HSAs:
age 55 and older
Penalty for non-qualified medical expense distributions from an HSA:
ends at age 65
COBRA:
18 months for a reduction in hours or normal termination & 36 months for all others
A rule of thumb is that covered losses must result from something:
that is “sudden and accidental”
Structures that are used for business purposes:
are not covered under a homeowners policy
HO-4:
renters insurance
HO-6:
condominium owners
Medicare Part B does not cover:
dental care, dentures, cosmetic surgery, hearing aids, eye exams
Coverage F:
Medical Payments to Others
Comparative Negligence
allocates negligence and loss proportionately
Floods are:
excluded from homeowners insurance
Absolute liability:
a situation where someone has undertaken activities or actions that bring about extraordinary hazardous circumstances
Irrevocable beneficiaries on life insurance contracts:
have all of the rights of the policy owner
Life Insurance contracts, even a MEC:
no income taxes levied on the proceeds to the beneficiary, while the proceeds must be included in the gross estate
Conversion privileges are generally part of the:
term insurance policy that allows them to be changed over to a cash value insurance without proof of insurability
The incontestable clause:
prevents an insurer from canceling a life insurance policy after a 1 or 2 year period
Under no circumstances does a variable policy:
guarantee cash value
If one is on disability and the company cancels the policy:
coverage is still continued
Paid-up additions:
is a dividend option that represents an inexpensive way to add coverage without concern to health risks or ratings
A testamentary trust:
will provide the surviving spouse w. access to the proceeds. Any amount remaining in the trust at the death of the surviving spouse will pass to the children
Annuities:
avoid probate and pay proceeds to a named beneficiary
Immediate annuities are not subject to a:
premature distribution penalty tax. The 10% penalty only applies to deferred annuities.
Group term insurance:
minimum size is 10, unless specific requirements are met.
Personal auto policies:
are the only ones that offer coverage for flooding
Employees are allowed to borrow or withdraw cash from:
a group universal life insurance plan
If a client wants to use an annuity to purchase life insurance,
begin taking annuity payments & use the cash to pay premiums on a permanent life insurance policy.
Decreasing need for coverage over time:
decreasing term policy
Disability premiums paid by an individual are received:
tax-free ; disability benefits paid by the C Corp are fully taxable upon receipt
Medicare:
is an 80 / 20 split without stop-loss limits
If a non-qualified distribution is made from an HSA:
the distribution will be subject to income tax and a 20% penalty. The penalty is waived if the individual has attained age 65.
Social security survivor benefits (widow benefits) are available to a surviving spouse beginning at age:
60, whether they are divorced or not. The benefits are available to a former spouse, if the marriage lasted at least 10 years, and the surviving spouse has not remarried.
Insurance premiums to fund buy-sell agreements in a cross-purchase plan are:
buy-sell agreements in a cross-purchase plan are:
not tax deductible.
