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Jing's CFP Review > Insurance > Flashcards

Insurance Flashcards

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1
Q

Characteristics of different types of Life Insurance

A
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2
Q

Definition of nonforfeiture value

A

Benefits that accrue to the insured when the policy lapses from nonpayment of premium.

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3
Q

Cross Purchase vs Entity Purchase

A
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4
Q

Key person insurance—protect a business upon a loss of a key employee. Premium deductible? Death benefit taxation?

A

Premium not deductible; Death benefit Tax free. Company own life insurance on EEs.

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5
Q

Tort Law

A

Typically insurance covers for negligent and not intentional acts caused by the insured.

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6
Q

Graded/Modified/Convertible Term

A

Low initial premium used by party expecting to have significant salary increases(example: doctor) and has permanent life insurance needs.

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7
Q

Credit life

A

Protects the lender, usually very expensive(more favorable than term life insurance)

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8
Q

Medicare part B does not cover

A

Dental care(dentures), cosmetic surgery, hearing aids, eye exams, routine physical exams

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9
Q

Frank salary $100,000, ER coverage 2X salary in a group term coverage. Cost is $0.12/month for $1000 coverage. How much income must Frank include in his gross income? What is Frank is a 3% owner in an S corp?

A

a. $150x0.12x12=$216 b. >2% owner on S Corp, everything taxable, don’t have the 50k free coverage. $288 taxable income

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10
Q

What is the rule of PPACA on Health Insurance policy?

A

All HI policies issued 2014 or later must be at least Guaranteed Issue and renewable per Patient Protection and Affordable Care Act (PPACA).

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11
Q

If 19FT EE, 2 PT EE, does the company need to offer COBRA?

A

YES 2PT=1FT. If #EE reaches 20, then offer COBRA.

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12
Q

How many days does EE have to make a COBRA election?

A

EE have 60 days to make a COBRA election.

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13
Q

LTC taxation on premium and benefits

A

A portion of premiums are tax deductible(subject to 7.5% of AGI, below the line) and benefits are tax free for qualified expenses

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14
Q

LTC policy renewal guaranteed?

A

LTC policy guaranteed renewable, could be cancelable.

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15
Q

Disability Insurance Benefit Period

A

Short Term: Two years or less; Long Term: Coverage until normal retirement age, death or for a specified period of time

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16
Q

Disability Insurance Waiver of Premium

A

Accident and sickness, make sure it covers both

17
Q

Home Owners (HO) insurance: Basic coverages
Section I Coverages:

A
  • Coverage A: Dwelling
  • Coverage B: Other structures
  • Coverage C: Personal property
  • Coverage D: Loss of use
18
Q

Homeowner Insurance Coverage for HO1-HO8

A
19
Q

Categories of Social Security

A

Retirement benefit, disability benefit, death benefit($255) , survivor’s benefit, medicare

20
Q

Social Security FICA tax

A

OASDI : 6.2% on both ER and EE up to $160,200. Medicare: 1.45% on unlimited amount on both ER and EE. Additional Medicare tax of 0.9(EE only) on income excess of $200,000 if Single or $250,000 for MFJ.

21
Q

Social security bottom bend point
Social security top bend point

A

Bottom: $1115
Top: $6721

21
Q

Social security Disability Monthly Earnings Limit (how much can you earn and still collect Disability)

A

$1470

21
Q

Social security Medicare part B deductible

A

$226

22
Q

Social security disability monthly earnings if blind

A

$2460

23
Q

Social security earnings limitation under FRA
Social security earnings limitation at FRA

A

Under FRA $21,240
At FRA $56,520

24
Q

SS retirement benefits eligibility

A

Must be 40 quarters of coverage, 1 quarter=$1640. If age 25-35 fully insured and not working since then, retire at age 67 — still qualify for full SS retirement benefit b/c it meets 40 quarters.

25
Q

SS Disability eligibility

A

6 credits in 3 previous yrs if disabled before age 24; 2 credits per yr between age 24 and yr of disability if age 24-30; 20-40 credits depending on age if disabled after age 30; 20 of these credits must be earned in the 10 yrs prior to disability.

26
Q

Who Could claim SS benetfit?

A

Child age 18 is not eligible for SS benefit, must be under 18

27
Q

Requirement of Divorced spouse draw benefit from ex-spouse

A

Married 10 yrs, divorce >=2 yrs , at least age 62, ex did not remarry(before age 60)

28
Q

Premium and face amount of Decreasing term life insurance policy

A

Level premium, decreasing face amount

29
Q

Jim owner, Jen insured, Jill beneficiary of a life insurance. If Jim dies, what is going to happen with his estate?

A

Cash value added to Jim’s estate—Interpolated terminal reserve(cash value)

30
Q

How to maximize social security retirement?

A

Fully insured status: 40 quarters/credits, earn $1640/quarter; 10 year is the fastest path to fully insured

31
Q

Medicare eligibility

A

Age 65, disability via SS, kidney

Jing's CFP Review (6 decks)

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