Insurance Flashcards
Characteristics of different types of Life Insurance
Definition of nonforfeiture value
Benefits that accrue to the insured when the policy lapses from nonpayment of premium.
Cross Purchase vs Entity Purchase
Key person insurance—protect a business upon a loss of a key employee. Premium deductible? Death benefit taxation?
Premium not deductible; Death benefit Tax free. Company own life insurance on EEs.
Tort Law
Typically insurance covers for negligent and not intentional acts caused by the insured.
Graded/Modified/Convertible Term
Low initial premium used by party expecting to have significant salary increases(example: doctor) and has permanent life insurance needs.
Credit life
Protects the lender, usually very expensive(more favorable than term life insurance)
Medicare part B does not cover
Dental care(dentures), cosmetic surgery, hearing aids, eye exams, routine physical exams
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. $150x0.12x12=$216 b. >2% owner on S Corp, everything taxable, don’t have the 50k free coverage. $288 taxable income
What is the rule of PPACA on Health Insurance policy?
All HI policies issued 2014 or later must be at least Guaranteed Issue and renewable per Patient Protection and Affordable Care Act (PPACA).
If 19FT EE, 2 PT EE, does the company need to offer COBRA?
YES 2PT=1FT. If #EE reaches 20, then offer COBRA.
How many days does EE have to make a COBRA election?
EE have 60 days to make a COBRA election.
LTC taxation on premium and benefits
A portion of premiums are tax deductible(subject to 7.5% of AGI, below the line) and benefits are tax free for qualified expenses
LTC policy renewal guaranteed?
LTC policy guaranteed renewable, could be cancelable.
Disability Insurance Benefit Period
Short Term: Two years or less; Long Term: Coverage until normal retirement age, death or for a specified period of time
Disability Insurance Waiver of Premium
Accident and sickness, make sure it covers both
Home Owners (HO) insurance: Basic coverages
Section I Coverages:
- Coverage A: Dwelling
- Coverage B: Other structures
- Coverage C: Personal property
- Coverage D: Loss of use
Homeowner Insurance Coverage for HO1-HO8
Categories of Social Security
Retirement benefit, disability benefit, death benefit($255) , survivor’s benefit, medicare
Social Security FICA tax
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.
Social security bottom bend point
Social security top bend point
Bottom: $1115
Top: $6721
Social security Disability Monthly Earnings Limit (how much can you earn and still collect Disability)
$1470
Social security Medicare part B deductible
$226
Social security disability monthly earnings if blind
$2460
Social security earnings limitation under FRA
Social security earnings limitation at FRA
Under FRA $21,240
At FRA $56,520
SS retirement benefits eligibility
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.
SS Disability eligibility
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.
Who Could claim SS benetfit?
Child age 18 is not eligible for SS benefit, must be under 18
Requirement of Divorced spouse draw benefit from ex-spouse
Married 10 yrs, divorce >=2 yrs , at least age 62, ex did not remarry(before age 60)
Premium and face amount of Decreasing term life insurance policy
Level premium, decreasing face amount
Jim owner, Jen insured, Jill beneficiary of a life insurance. If Jim dies, what is going to happen with his estate?
Cash value added to Jim’s estate—Interpolated terminal reserve(cash value)
How to maximize social security retirement?
Fully insured status: 40 quarters/credits, earn $1640/quarter; 10 year is the fastest path to fully insured
Medicare eligibility
Age 65, disability via SS, kidney
