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Patrick CFP > Insurance > Flashcards

Insurance Flashcards

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CFP® flashcards
1
Q

identify the last month rule

A

If eligible under HDHP on the first day of the last month of tax year may fund HSA as if eligible for entire year

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2
Q

describe the penalty for non-qualified HSA withdrawals

A

non qualified HSA withdrawals prior to age 65 are subject to a 20% penalty tax

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3
Q

when you can no longer contribute to an HSA

A

once you are enrolled in Medicare

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4
Q

identify the catch-up age for HSAs

A

age 55+

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5
Q

approaches to high frequency, high severity risks

A

risk avoidance and/or risk reduction

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6
Q

approaches to high frequency, low severity risks

A

risk retention and risk reduction

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7
Q

approaches to low frequency, high severity risks

A

risk transfer (insurance)

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8
Q

approaches to low frequency, low severity risks

A

risk retention

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9
Q

Identify the COBRA qualifying events

A
  1. termination
  2. SS disability
  3. Medicare enrollment
  4. Divorce
  5. Death
  6. Loss of “dependent child” status
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10
Q

Maximum cost of COBRA coverage

A

102%

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11
Q

maximum period of continuation coverage for termination

A

18 months

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12
Q

maximum period of continuation coverage for becoming disabled as defined by SS

A

29 months

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13
Q

maximum period of continuation coverage for beneficiaries when an employee enrolls in Medicare

A

36 months

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14
Q

maximum period of continuation coverage for beneficiaries when an employee goes thru a divorce

A

36 months

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15
Q

maximum period of continuation coverage for beneficiaries when an employee dies

A

36 months

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16
Q

maximum period of continuation coverage after losing “dependent child” status under their plan

A

36 months

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17
Q

list the options for LTC in order of increasing support

A
  1. Homemaker services
  2. Home health aide services
  3. Adult day health care (ADC)
  4. Assisted living facility (ALF)
  5. Nursing home care
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18
Q

Identify the periods of Medicare coverage for nursing home skilled care

A

Days 1-20: $0 co-pay
Days 21-100: $204 coinsurance / day
Days 101+: patient pays all ocsts

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19
Q

Elimination period

A

the waiting period before benefits become payable (0-365 days)

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20
Q

Waiver of premium

A

while receiving benefits, insured does not have to pay premiums

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21
Q

Identify the activities of daily living (ADLs)

A
  1. Bathing
  2. Eating
  3. Dressing
  4. Continence
  5. ON <> OFF Toilet
  6. Transferring
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22
Q

Identify how LTC benefits trigger

A

Option 1: unable to perform 2 of 6 ADLs for more than 90 days
Option 2: substantial cognitive impairment

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23
Q

Identify the renewability of LTCi

A

guaranteed renewable

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24
Q

Do LTCi policies provide cash surrender value?

A

No

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25
Q

Identify the uses for LTCi policy dividends

A
  1. reduction in future premiums
  2. increases in future benefits
26
Q

Identify when a LTCi provider can limit or exclude participants

A

if they have a pre-existing condition within 6 months of the application

27
Q

Any-Occupation Disability Insurance

A

Benefits are payable only if the individual is disabled severely enough that they cannot engage in any occupation

28
Q

Own-Occupation Disability Insurance

A

Allows a disability payment if the policyholder is unable to perform his or her occupation

29
Q

Modified Own-Occupation Disability Insurance

A

Policy maintains “own occ” definition of disability for a stated claim period and then applies an “any occ” definition for the balance of the claim period.

30
Q

SS Disability Definition

A

The insured must be unable to perform any occupation and the medical condition is expected to last no less than 12 months or result in death

31
Q

Elimination Period for SS Disability

A

5 months

32
Q

tax treatment: receiving disability income when employer paid the premiums

A

taxable

33
Q

tax treatment: receiving disability income when the employee paid the premiums with after-tax dollars

A

tax-free

34
Q

tax treatment: receiving disability income when the employee paid the premiums with pre-tax dollars

A

taxable

35
Q

tax treatment: receiving disability income when the employer paid the premiums as compensation to the employee

A

tax-free

36
Q

ID this life insurance category:
1. low premiums at issue
2. no cash value

A

term

37
Q

ID this life insurance category:
1. guaranteed death benefit
2. guaranteed premiums

A

whole life

38
Q

ID this life insurance category:
Universal life: death benefit is face amount + cash value

A

Option B

39
Q

ID This life insurance category:
Universal Life: death benefit remains the same

A

Option A

40
Q

Identify the options for life insurance termination

A
  1. Cash Surrender Value
  2. Extended Term
  3. Reduced Paid-Up Insurance
41
Q

What happens if a policy owner terminates life insurance and chooses cash surrender value?

A
  1. CV is paid as a lump sum
  2. Contract ends
42
Q

What happens if a policy owner terminates life insurance and chooses extended term?

A
  1. CV is used to purchase extended term insurance.
  2. Contract ends when the CV no longer supports the premium
  3. Reinstatement may be possible if the term is not expired
43
Q

What happens if a policy owner terminates life insurance and chooses reduced paid up insurance?

A
  1. CV is used to buy a paid-up policy of the same type
  2. Death benefit is reduced
  3. Some CV is retained and will grow at a reduced rate
44
Q

MEC

A

Modified Endowment Contract

45
Q

Conditions for a vatical settlement

A
  1. terminally ill (24 months)
  2. chronically ill (2 of 6 ADLs for 90+ days)
46
Q

what a viatical settlement is for

A

its a way for a seriously ill person to get cash by transferring their life insurance to a viatical settlement company in exchange for a discounted amount of the death benefit

47
Q

viatical settlement cooling off period

A

15 days during which the Viator can rescind their agreement

48
Q

tax treatment of a viatical settlement to the policy owner

A

excluded from gross income. if chronically ill, they can use it for LTC services

49
Q

tax treatment of a viatical settlement to the company

A
  1. amount paid to the Viator is considered basis
  2. at death, excess is taxable
50
Q

Inflation protection riders

A
  1. Increasing the benefit amount by 3% of the original amount per year.
  2. Increasing the benefit amount by 3% compounded annually.
  3. Adjusting the benefit amount annually according to increases in a price index (e.g. CPI)
51
Q

order of cash value distributions of life insurance

A

FIFO (basis first)

52
Q

order of cash value distributions of MEC Policies

A

LIFO (gains first)

53
Q

Penalty for taxable distributions of cash value from life insurance

A

None

54
Q

Penalty for taxable distributions of cash value from a MEC Policy

A

10% if prior to age 59.5

55
Q

when is a policy considered a MEC?

A

when it fails the 7-pay test, either at inception of the policy or when the policy experiences a material change

56
Q

Identify the characteristics of nursing home care

A

-highest level of care
-rehabilitation
-medication
-24 hour care

57
Q

Identify the characteristics of an ALF

A

-residential
-personal care
-health support

58
Q

Identify the characteristics of ADC

A

-residential
-gives socialization structure and supervision
-possible medical managment

59
Q

Identify the characteristics of Home Health Aide Services

A

non medical personal care

60
Q

Identify the characteristics of Homemaker Services

A

tasks and errands

61
Q

When does an ER need to have COBRA?

A

When they have 20+ REs

Patrick CFP (15 decks)

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