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Patrick CFP > Insurance > Flashcards

Insurance 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
Identify the uses for LTCi policy dividends
1. reduction in future premiums 2. increases in future benefits
26
Identify when a LTCi provider can limit or exclude participants
if they have a pre-existing condition within 6 months of the application
27
Any-Occupation Disability Insurance
Benefits are payable only if the individual is disabled severely enough that they cannot engage in any occupation
28
Own-Occupation Disability Insurance
Allows a disability payment if the policyholder is unable to perform his or her occupation
29
Modified Own-Occupation Disability Insurance
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
SS Disability Definition
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
Elimination Period for SS Disability
5 months
32
tax treatment: receiving disability income when employer paid the premiums
taxable
33
tax treatment: receiving disability income when the employee paid the premiums with after-tax dollars
tax-free
34
tax treatment: receiving disability income when the employee paid the premiums with pre-tax dollars
taxable
35
tax treatment: receiving disability income when the employer paid the premiums as compensation to the employee
tax-free
36
ID this life insurance category: 1. low premiums at issue 2. no cash value
term
37
ID this life insurance category: 1. guaranteed death benefit 2. guaranteed premiums
whole life
38
ID this life insurance category: Universal life: death benefit is face amount + cash value
Option B
39
ID This life insurance category: Universal Life: death benefit remains the same
Option A
40
Identify the options for life insurance termination
1. Cash Surrender Value 2. Extended Term 3. Reduced Paid-Up Insurance
41
What happens if a policy owner terminates life insurance and chooses cash surrender value?
1. CV is paid as a lump sum 2. Contract ends
42
What happens if a policy owner terminates life insurance and chooses extended term?
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
What happens if a policy owner terminates life insurance and chooses reduced paid up insurance?
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
MEC
Modified Endowment Contract
45
Conditions for a vatical settlement
1. terminally ill (24 months) 2. chronically ill (2 of 6 ADLs for 90+ days)
46
what a viatical settlement is for
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
viatical settlement cooling off period
15 days during which the Viator can rescind their agreement
48
tax treatment of a viatical settlement to the policy owner
excluded from gross income. if chronically ill, they can use it for LTC services
49
tax treatment of a viatical settlement to the company
1. amount paid to the Viator is considered basis 2. at death, excess is taxable
50
Inflation protection riders
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
order of cash value distributions of life insurance
FIFO (basis first)
52
order of cash value distributions of MEC Policies
LIFO (gains first)
53
Penalty for taxable distributions of cash value from life insurance
None
54
Penalty for taxable distributions of cash value from a MEC Policy
10% if prior to age 59.5
55
when is a policy considered a MEC?
when it fails the 7-pay test, either at inception of the policy or when the policy experiences a material change
56
Identify the characteristics of nursing home care
-highest level of care -rehabilitation -medication -24 hour care
57
Identify the characteristics of an ALF
-residential -personal care -health support
58
Identify the characteristics of ADC
-residential -gives socialization structure and supervision -possible medical managment
59
Identify the characteristics of Home Health Aide Services
non medical personal care
60
Identify the characteristics of Homemaker Services
tasks and errands
61
When does an ER need to have COBRA?
When they have 20+ REs

Patrick CFP (15 decks)

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