Insurance Flashcards
What are important criteria for selecting an insurer?
1) Policy types offered
2) A.M. Best rating
NOT things like whether they use agents or brokers, or the history of the company
Backing into a care while parking is considered what type of liability?
Unintentional negligence
Keeping dangerous pets is what type of liability?
Absolute Liability
What coverage provides for you hitting a prize bull, then being sued by rancher?
Hit bull = Other than collision
Being Sued = BI/PD under Part A, Liability
What are 2 ways to determine appropriate amount of life insurance?
1) Needs Analysis: Compares needs due to premature death with resources available
2) Human Life Value: The PV of the presumed income lost by dependents as a result of the insured’s death - does not account for other resources available
What are the functions and purposes of NAIC?
1) Oversees state accreditation program
2) Promotes law and regulation uniformity
3) Transmits information to regulators
4) Protects the interest of policy owners while preserving state regulations
A Health FSA CANNOT pay:
1) Health insurance premiums
2) Cosmetic items, incl cosmetic surgery
3) Items that improve “general health” (too broad)
When are dividends from a MEC taxable?
1) Cash distribution
2) Used to pay premiums
3) Used to pay off a policy loan
**2 and 3 are used like cash, therefore taxable
When are dividends from a MEC not taxable?
1) Used to purchase paid up additions
2) Kept w/ ins co to accumulate interest (but interest is taxable)
Skilled Nursing Facility coverage by Medicare
Medicare pays 1st 20 days in full
then patient has a deductiblfe of $194.50/day
Skilled Nursing Facility coverage by Medicare
- Medicare pays 1st 20 days in full
- then patient has a deductible of $194.50/day for days 21-200
- If 101+ days, patient pays 100%
Implied Authority
Agent shows signs or evidence of authority, such as rate books
Apparent Authority
Authority an agent appears to have because of actions of the past
Who pays for the insurance in a Buy-Sell agreement for:
1) S-Corp
2) Partnership
1) Corp buys ins
2) Partner buys ins
Auto ins
- If driver sued, what portion of insurance covers?
BI/PD - Liability
If ER offers a legal services plan, is it taxable or nontaxable to EE?
Benefits are taxable to EE
(and premiums are tax deductible by ER)
Health Reimbursement Arrangement (HRA)
ER funded, reimburses EEs for substantiated medical expenses up to a max $ amt
- B/c ER sets limits, can be inexpensive
Purchase of Life insurance is protection against what?
Risk
If a person has expensive collection - jewelry, furs, cars - how should they be covered on insurance policy?
On a “Valued” basis, not replacement value
Non-qualified annuity - determining how much of payout is tax free
1) Monthly payment x life expectancy in months = Expected lifetime return
2) (Original Investment amount / Expected lifetime return) x monthly payment = non-taxable portion of payment
What type of insurance offers an APL?
APL = Automatic Premium Loan
- Only available on Whole Life
