Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFP Exam Study > Insurance > Flashcards

Insurance Flashcards

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
1
Q

Best life insurance option for couple to pay for estate taxes?

A

Survivorship Life (2nd to die)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What must be shown to exercise a guaranteed insurability option on disability insurance?

A

Proof of higher earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Can group coverage be converted to individual health policy

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Business Overhead Expense policy: a company deduct premium and are benefits taxable?

A

Premium not deductible, benefits not taxable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Risk

A

Possibility of a loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Peril

A

Cause of a loss (windstorm, fire, theft)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Hazard

A

Increases the chance of loss (home on earthquake line or river)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Requirements/ Elements of Insurance (4)

A

Large number of homogeneous exposure units
Loss must be definite and measurable
Must be fortuitous or accidental
Must not be catastrophic (for insurance company)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Methods to Avoid/ Reduce loss (5)

A

Avoidance
Diversification
Transference (Insurance)
Retention
Risk Reduction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When is Insurance Interest required (Property/Casualty)

A

At inception and at time of claim

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When is Insurance Interest required (Life)

A

At inception but need not be at time of claim

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Parts of Insurance Contract (DDICE) with explanation

A

Declarations Page- identifies what is insurance
Definitions- key policy terms
Insurance Agreements- basic promise of insurance company
Conditions- duties and rights of both parties
Exclusions- circumstances when Insurer will not pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Negligence/Liabilities (5)

A

Attractive Nuisances
Negligence per se (violates statue)
Strict Liabilities (product)
Absolute Liability (workers comp)
Vicarious Liability (principal for agent)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Defenses of Insurer (4)

A

Assumption of Risk
Contributory
Comparative
Last Clear Chance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Calculating Life Insurance Needs (2 methods)

A

Capital Utilization- uses annuitization/ leaves no money
Capital Needs- interest only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Insurance Rating Service (2 best) with rating range

A

A.M Best (A++ to F)
Standard & Poor (AAA to CCC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Sections of Homeowners’ Policy (I & II ABCDEF)

A

Section I
A- dwelling and attached structures
B-separate structures
C-contents and personal property
D- loss of use

Section II
E- liability
F- medical payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Personal Property Exclusion (4 groups)

A

Animals
Motorized land vehicles or aircraft
Property of roomers, boards, or other tenants
Property in rental apartment/house

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Basic Form Perils (WHARVVES FLT)

A

Windstorm
Hail
Aircraft
Riot
Vandalism
Vehicles
Explosion
Smoke
Fire, Lightning, Theft

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Broad Form Perils (RAFF)

A

Rupture of a system
Artificially generated electricity
Falling objects
Freezing of Plumbing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Homeowner’s policies (1-8)

A

HO-1 Basic
HO-2 Home Basic
HO-3 Home Open
HO-4 Renters
HO-5 Home Open
HO-6 Condo
HO-7 mobile home
HO-8 older home

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Homeowner Exclusions (OPENN WIF)

A

Ordinance/Law
Power Failure
Earthquake
Neglect
Nuclear
War
Intentional
Flood

Sink Hole is covered peril

23
Q

Replacement Cost Coverage formula

A

Replacement cost X Coinsurance %= Insurance Required

Insurance carried/required X loss - deductible= amount paid by Ins

24
Q

Requirements for Auto to be insured with PAP (4)

A

Owned by individual, spouses in same household, or kid in college
Private passenger automobile
Not to be used as public livery conveyance (for hire)
Not to be rented to others

25
Q

Auto Insurance Policy Parts (A-D)

A

A- limited to third parties (liability)
B-medical payments
C- uninsured/underinsured motorists
D-damage to covered auto

26
Q

Persons insured under medical payments coverage of PAP (3)

A

Name insured and family member occupying the covered auto
Name insured and family member stuck as pedestrian
Other passengers in insured auto

27
Q

Uninsured Motorist Coverage

A

Liability coverage that could have been collected if other driver had adequate insurance

28
Q

Perils Covered under “Other than Collision” (12)

A

Breakage of Glass
Falling Objects
Fire
Theft
Explosion
Earthquake
Windstorm
Hail
Water
Flood
Riot or civil commotion
Contact with birds or animals

29
Q

Professional Liability (two types of coverage)

A

Malpractice
Errors and Omissions

30
Q

Workers Compensation coverages (5)

A

Unlimited Medical Expenses
Disability Income (Tax Free)
Death Benefits
Rehabilitation (medical and vocational)
Absolute Liability

31
Q

Medicare does not cover (5)

A

Foot Care
Glasses
Hearing Aids
Dental Work
Emergency care outside US

32
Q

Medicare Long Term Care (how long)

A

Pays all of first 20 days for skilled care
Everything over a specified amount for next 80 days for skilled care

33
Q

HMO VS PPO

A

HMO- Provider paid monthly fee regardless of services rendered
No out of network
PPO- Provider paid for actual services
out of network partially covered (usually 70%)

34
Q

Cobra Coverage Length (3)

A

18 month coverage for employees/ dependents -termination
29 moth coverage for employees/ dependents- disability
36 month coverage for dependents- employee’s death, divorce, Medicare eligibility, child reaching age limit

35
Q

Disability Income policy continuation provisions (2)

A

Noncancelable- continuous term policy- guaranteed right to maintain policy at stated premium

Guaranteed renewable- right to maintain policy, but insurer may increase premium by class of insured

36
Q

Taxation of Disability Insurance- Employee pays premium

A

Premium not deductible for employer
Benefits tax free to employee

37
Q

Taxation of Disability Insurance- Employer pays premium (162 bonus)

A

Premium tax deductible for employer as bonus
Benefits tax free to employee

38
Q

Taxation of Disability Insurance- Employer pays premium (group plan)

A

Premium deductible by employer
Benefits taxable to employee

39
Q

Permanent Life Insurance- low risk tolerance (2 types)

A

Whole Life
Universal Life

Insurance company controls investment return, assets part of general account

40
Q

Permanent Life Insurance- high risk tolerance (2 types)

A

Variable Life
Variable Universal Life

Client controls investment return, assets part of separate account

41
Q

Life Insurance Dividend Options (CRAPO)

A

Cash
Reduce Premium
Accumulate with interest
Paid -up additions
One-year term/ 5th dividend

42
Q

Life Insurance Nonforfeiture Options (3)

A

Cash
Extended Term
Paid Up Reduced Amount

43
Q

Life Insurance Settlement Options (6)

A

Cash
Pure Life/Single life
Refund
Period Certain
Specified Income Period
Interest Only

44
Q

Requirements to be MEC (2)

A

Entered into after June 21, 1988
Fails to meet seven pay test

45
Q

Taxation of MEC (3)

A

Distributions/ Withdrawals LIFO (interest first)
Distributions before 59 1/2 10% penalty
Death Benefit tax free

46
Q

MEC grandfather rules (2)

A

If death benefit increases by $150k or less with no proof of insurability required

If policy increases by any amount and insured is required to prove insurability the policy MAY lose grandfather status

47
Q

Life Insurance Proceeds taxable for Transfer of Value exceptions (4)

A

to the insured
to a partner or partnership in which insured is partner
to a corporation in which the insured is a shareholder or officer
Divorce

48
Q

When is 1035 exchange not allowed?

A

Annuity to Life

49
Q

Buy-Sell Stock Redemption vs. Cross Purchase

A

Stock Redemption- no step up in basis, entity is owner and beneficiary

Cross Purchase- Step up in basis, individual is owner and beneficiary

50
Q

Split Dollar Insurance Endorsement VS Collateral Assignment

A

Endorsement - Employer is Owner, Employee not shareholder

Collateral Assignment- Employee is owner, is shareholder, assigns policy

51
Q

Annuity taxation

A

Basis/payout= tax free

Lump Sum- LIFO, 10% penalty under 59.5

52
Q

FSA facts (4)

A

Must be used by March 15, Dependent care by 12/31
Not subject to income tax
Not for insurance premiums paid
No long term care expenses

53
Q

Tax Free Fringe Benefits (6)

A

Health care premiums
Group Life up to $50k
Company car
Transit passes or parking ($300 monthly)
Occasional meal money, cab fare, theater or sports
Discounts up to 20% of sales price

54
Q

Taxable Fringe Benefit for S Corp, Partnership, Self Employed

A

Health Insurance premiums, but deductible on front of 1040

CFP Exam Study (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions