Insurance Flashcards
HSAs entail which risk management techniques?
Risk retention and risk transfer.
A client is 62 years old and is covered under his company’s group health plan. How long does he need to work to maintain his health insurance?
To 63-1/2
Does form ho-3 provides open peril’s coverage on insured’s personal property?
No.
Premiums for which business insurance policies are tax deductible?
Workers compensation insurance, unemployment insurance, commercial umbrella insurance, and a bop policy.
Which ho covers broad form policy? What does it cover?
Ho-2. Wharves.
Does ho-4 exclude coverage on structures?
Yes
Homeowners section I and II coverage.
I = dwelling, other structures, personal property, and loss of use.
II = personal liability and medical payment.
Does personal auto policy cover earthquake, flood, and falling objects?
No.
Difference b/t ho-2 and ho-3.
Damage to an attached garage is covered under for coverage A in an ho-2 policy, but damage to a detached garage is protected under coverage B under ho-3 policy.
Characteristics of umbrella liability insurance policy.
It provides excess coverage when the limits of the insured’s basic liability coverage are adequate and inadequate. it also provides broader coverage than basic underlying policies.
The 80% to 20% applies to what limit?
The stop loss
Client: 55 years old, healthy, single, plans to retire around 62, max. 401(k) contribution. What benefit should he continue?
His PPO plan
Medicare part B characteristics:
- Benefits are subject to a calendar- year deductible, and only 80% of the Medicare approved charges are paid.
- The cost of doctor visit is covered both in and out of a hospital.
- Part B is a voluntary program of health insurance.
- Outpatient services by a participating hospital are a covered expense.
For how many days does the cobra election period last?
60 days after the actual notice of the event to the qualified beneficiary by the plan administrator.
Is the disability insurance premium taxable when it is added to the salary in the form of bonus?
No
Client is 85. Alzheimer’s disease. Falls repeatedly. Admitted to nursing home because he is unable to care for himself. Can he be covered by Medicare or Medicaid?
He could be covered by Medicaid if he qualifies.
Which disability insurance clauses are included and which can increase premium?
Included are the presumptive disability clause and the continuance provisions clause. Cola is a rider (extra cost) and the non-cancellable provision.
What is the most important factor in determine whether a variable life policy is suitable?
Risk tolerance
What policy is most suitable for a buy-sell agreement?
Variable life due to its cash value component along with the growth potential.
Which Life Insurance riders need extra premiums and which are not?
Standard contract provision: conversion provision, APL, grace period, reinstatement clause, misstatement of age clause, incontestable clause, suicide clause
Extra cost: disability waiver provision, accidental death benefit, and guaranteed insurability
A client wants to borrow substantially from a whole life policy. Concerned about a reduced DB. Which dividend option to select?
5th dividend as paid-up additions may or may not be equal to the amount of the loan.
Functions and purposes of the NAIC.
I. Oversees state accreditation program
II. Promotes law and regulation uniformity
III. Transmits information to regulators
IV. Protects the interest of policy owners while preserving state regulations
Which dividend option is suitable if a client wants to increase the death benefit each year for a whole life insurance contract?
One-year term
Which non-forfeiture option could impose a delay clause?
Cash surrender value
Universal Life Insurance features a guaranteed cash value. True or false?
False
Characteristics of the NAIC model law.
I. Name of the insurer
II. Name and address of producer
III. Name, age, and sex of proposed insured
IV. Underwriting and rating of classification
V. Initial death benefit
The proceeds from a Life Insurance policy is not subject to income tax when a client sells his policy to a vitical company.
False
A MEC policy meets the guideline premium and corridor test or cash value accumulation test.
False
Under what types of distributions are dindends paid by the MEC contract taxable?
When they’re received in cash or used like cash to reduce the premium or to pay back policy loans.
A company paid $ to a beneficiary of an employee with out a group Life Insurance plan. What is the income tax effect to the beneficiary?
The full amount is taxable as ordinary income.
Are annuity contract premiums deductible?
Yes, b/c annuity contracts premiums are deductible when the annuity premiums are paid as a bonus to the employee.
Does disability buy-sell agreement get step-up basis for the remaining owner?
No
A CEO of a small, profitable corporationwants a more personal Life Insurance, and she would like the corporation to pay the premium. Endorsement or collateral assignment?
Collateral assignment type split- dollar. The endorsement method is typical for the employee who isn’t a shareholder.
Takia earned her series 6 and all applicable state licenses. Which investment can’t she sell?
REITs are tradable securities, so she needs a series 7 license.
Company x purchases a group term Life Insurance policy on each of its employee for $100,000. It is the owner and names itself as beneficiary of the policy. Can the company deduct the premium?
No if the ER is directly or indirectly the beneficiary under the policy.
Which group type insurance policies do not offer a conversion feature? Life, health, or short-term /long-term disability?
St and lt disability.
Are the premiums paid for group term Life Insurance treated as a deductible business expense by the company?
Yes
Some benefits available from an FSA if the partnership is simultaneously adopting an HSA.
- FSA contribution can be made to an HSA and the partnership can save FICA and FUTA taxes on the contributions to the FSA (and HSA).
II. Medical expense FSA benefits (but not HSA benefits) can continue under cobra if triggering event occurs and can allow the participants to avoid the 7.5% AGI floor that otherwise limits itemized deductions for medical costs.
What happens if you elect to withhold $5,000 for childcare expenses and then gets married to a non-working spouse?
The $5,000 would become taxable.
Under which type of plan, FSA or HSA, can premiums be paid for LTC and cobra?
HSA
True/false: dependent care is limited to 2 children.
False
Can you use the remaining dollars in the 2.5 month grace period if you fail to use all the salary deduction ($5,000) by year end.
No
What is the limit on total medical expenses that can be covered under a health FSA in 2023?
$3,050 per year
A Health FSA cannot pay for which of the costs?
Health insurance premiums, cosmetic items, cosmetic surgery, and items that can improve general health.
A first-to-die policy can cover as a key person policy.
False.
To be eligible for Medicare part A, the insured must be at least age 65.
False: Disabled workers can be eligible under age 65.
Does Medicare part A cover hospice care?
Yes
Are business overhead expense (boe) policy bềnits s income-tax free?
Yes
Formula for replacement value of the home.
Purchase price -value of the land = replacement/ home value
The selling price of a split-dollar policy to the insured.
The greater of cash value or the premium paid by the employer.
Can a group health insurance be converted to an individual policy? What about group Life Insurance?
Yes but expensive for health. For Life, it must be converted to a permanent policy.
What is covered under other than collision policy?
Some examples: breakage of glass, loss caused by missiles, falling objects, fire, theft, or larceny, flood, earthquake, windstorm, hail, vandalism, riot, contact with a Sid or animal, Or explosion.
What are the characteristics ofa salary continuation plan if an employer pays for the disability insurance premium?
If in the form of bonus, the bonus would be taxable, then the benefits will be excluded from the income and be tax free. If pays for the premium, then benefits will be taxable as ordinary income, and the employer can deduct premium.
If you’re injured while on the job,which benefits will not be tax free? Workers compensation, sick pay benefits, or Life Insurance benefits?
Sick pay benefits
Should you advise a client to buy long term care if they’re older (-65)?
No as its either not available or too expensive.
Uninsured motorist (UM) protection is under what category?
Liability protection
What should be the recommendation for clients who need assisted living?
Seek legal /attorney.
