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