Insurance

Question 1

Tort

Answer 1

Wrongful act other than breach of contract where civil action can be taken, usually a crime

Question 2

Intentional Tort

Answer 2

Deliberately performed act

Question 3

Unintentional Tort

Answer 3

Negligence or carelessness

Question 4

Medicare

Answer 4

Part A: Hospital

Part B: Medical pays 80% approved charges, no stop loss for insured

Part D: Drugs, but must have A & B

Medigap: Covers deductibles and coinsurance

Question 5

Unemployment Insurance

Answer 5

Determined by previous earnings, payable up to 26 weeks + 13 week high unemployment extension; taxable

Question 6

Health Reimbursement Arrangement (HRA)

Answer 6

Solely funded by the employer & reimburses employees for substantial medical expenses up to max dollar amount

Question 7

Disability Provisions

Answer 7

Residual: Extra premium benefit to pay propositional to reduced earnings on own occupation policy

Partial: 50% of the benefit for total disability

Waiver of Premium: If totally disabled and last minimum period (90 days or longer)

Question 8

Long Term Care

Answer 8

Tax qualified: Premiums paid and unreimbursed expenses deductible. Subject to 7.5% of AGI floor. Benefit is generally tax free

Non-Tax Qualified: Traditional LTC. Premiums NOT deductible

Partnership Qualified: Partnership between state, insurance company and state residents. Can apply for Medicaid

Question 9

Medicaid

Answer 9

Services offered:

1. Impatient hospital
2. Outpatient hospital
3. Nursing facility
4. Physician
5. Lab & x-ray
6. Home health

Question 10

Life Insurance Provisions

Answer 10

Incontestable: Contract can NOT be questioned after 2 yrs

Suicide: Return of premium if within 2yrs

Grace: Days allowed before default

APL: Whole ONLY. Pay premium via loan on cash value

Reinstatement: Within specified time AND proof of insurability

Conversion: Exchange to premium without insurability

Question 11

Accelerated Benefit
Viatical & Life Settlements

Answer 11

Accelerated Benefit: Due to dreaded disease, withdrawal tax free

Viatical: due to dreaded disease sells proceeds tax free

Life Settlement: Not terminally or chronically ill must be 65+y/o taxed LTCG

Question 12

Annuities

Answer 12

Pure/Single Life: Payments as long as annuitant lives

Period Certain & Life: Minimum payments paid even after death

Refund: Payout at least equal value

Specified Period: Fixed guaranteed period NOT lifetime

Specified Income: Fixed amount

Question 13

Qualified Longevity Annuity Contract (QLAC)

Answer 13

Deferred fixed annuity funded from IRA or qualified retirement plan

Guaranteed monthly stream of income later in life

Question 14

Group Life

Answer 14

Employee not taxed on premium paid by employer < $50,000

Question 15

Group Disability

Answer 15

$2000 tax free for spouse & dependent

Question 16

Dependent Life

Answer 16

Employer deductible and employee taxable income

Question 17

Section 125

Answer 17

Permits employee to choose form of employee benefits, must include cash option

i.e. Term = 2x salary, ST/LT disability, medical insurance

Question 18

Voluntary Employees’ Benefit Association (VEBA)

Answer 18

Section 501(c)(9) fund certain benefits

• medical expenses
• death benefits
• disability
• legal expenses
• unemployment
• child care
• severance
• education

Question 19

Term Insurance

Answer 19

ART = Protection for one year, renew yearly higher premium without insurability

Level = Premium guaranteed

Decreasing = Level premium, decreasing death benefit

Re-entry = Requalify at new level premium via age based simplified underwriting

Question 20

Homeowner’s Coverage B

Answer 20

Other structures are 10% of coverage

Question 21

Split Life Insurance

Answer 21

EndoRsement
Owner: Employer
Insured: Employee
Beneficiary: Split #1 employer gets greater of CV or DB #2 employee’s beneficiary

Collateral ASSignment
Owner: Employee aSSigns policy
Insured: Employee
Beneficiary: Split #1 employer return of premium #2 employee’s beneficiary