Insurance Flashcards
Hazards
Increase the chance of a loss (and frequency or severity)
Capital Retention Calculation
Divide yearly need by RoR or (RoR - inflation)
Absolute Liability
an extra hazordous condition which causes a loss for others
ex: wild animals, blasting, workers comp
Vicarious Liability
individual held responsible for the negligence of another
Participating Policies
- pays annual dividend to policy holder
- overcharge premium, then returns
- issued by both types of insurance companies
Property Loss Calculations
If the amount of insurance is less than 80% (90% for biz) of the replacement, insurer pays:
1. Actual Cash Value
2. [(Insurance Carried/Insurance Required) x loss] - deductible = insurance payment amount
* 3. Insurance Required = Replacement cost x coinsurance %
Insurance 3-7
Exclusions
from ALL homeowner isurance
OPEN WIF
* Ordinance of Law
* power failure
* earthquake
* Neglect, nuclear hazard
* War
* Intentional loss
* Flood
Insurance 3-5
Basic Perils
WHARVES/FLT
* Windstorm
* Hail
* Aircraft
* Riot
* Vandalism, Vehicles
* Explosion
* Smoke
* Fire
* Lightning
* Theft
Broad Perils
Everything in basic plus RAF:
* Rupture
* Artificially generated electricity
* Falling objects, freezing plumbing
Open Perils
Insurer pays for damage by any peril except ones that are specifically excluded
Section II Coverage (Homeowners)
Covers personal liability (E) and Medical payments (F)
is included in all policies, including renters
HO-4
Renters policy (no coverage for dwelling (A))
HO2
homeowners for broad form perils
HO-3
homeowners but open perils for A, B, D
HO-6
Condo owner policy
Section I Coverage
A: Dwelling
B: Other Structures
C: Personal Property
D: Loss of Use
Medicare Part B
General rules
- voluntary
- deductible first
- medicare pays 80% of approved charges
- NO stop-loss, leaving client w/ unlimited (20% of expense) exposure
Medicare Part B Benefits
- doctor visits
- test, radiology, blood transfusion, PT/OT, mental illness
- preventative care
COBRA Eligibility
Must have 20+ employees and then:
18 Months
* termination, full to part time
36 Months
* death, divorce, medicare, loss of dependent status
Note: disability w/in 60 days extends coverage by 11 months
Medicare Nursing Facility Coverage
- First 20 days - covered 100% by Medicare
- 21-100 days, insured pays $200/day
- 100+ insured pays 100%
Medicare Nursing Facility Requirements
- Must be expected to improve
- requires 3 consecutive days of hospitalization
- must be no more than 30 days between hospital and nursing
- covered under Part A
Viatication
For terminally ills persons
* terminally ill = physician certified to die w/in 24 months
ALL sales proceeds are tax free if terminally ill
Life Settlement
In the case of sale of a policy when NOT terminally ill:
* Tax free
* income = cash surrender - basis
* LTCG on the rest
non-forfeiture options
- Cash
- reduced paid-up insurance
- extended term
“Can’t Even Pay”
Dividend Options
- cash
- reduced premium
- accumulation w/ interest
- paid-up additions
- one year term/5th dividend
Settlement Options
- cash
- interest only
- fixed period
- fixed installment
- 4 life income
Transfer for Value
If a policy is transferred for valueable consideration, income tax exclusion is lost
exceptions (transfers to):
* insured
* partner of insured
* corp where insured is sharehold or officer
* puruant due to divorce
MEC
- meets requirements of life insurance policy
- entered into after 6/21/1988
- fails “7 pay test (excess premium in first 7 years)
- taxed similar to annuity
- once an MEC always an MEC
Social Security Disability Coverage
- Disability must be 12+ months or result in death
- 5 month waiting period, benefits start in month 6
Comparative Negligence
when the injured party plays a role in the damages - leads them to pay a portion of the loss
ex: pedestrian is foudn 20% negligent (injured) and the driver is 80% negligent, damages are adjusted accordingly
