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CFP current - Own > Insurance > Flashcards

Insurance Flashcards

1
Q

While away at college, a child is still considered a resident of the parents home ( dependent ) for car insurance. After taking a job and residing in another state, what must you do?

A

The child must license and ensure the car in another state

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2
Q

Are MEC withdrawals FIFO or LIFO?

A

LIFO

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3
Q

Group health insurance allows for conversion to what?

A

Individual health policies

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4
Q

A group life policy must be converted to what?

A

A permanent plan

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5
Q

In a business overhead expense (BOE) policy

The premiums to the company are…

The benefits are received by the company…

A

Not deductible

Received tax-free

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6
Q

Are group life insurance benefits and workers compensation taxable?

A

No received tax-free

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7
Q

Are sick pay benefits taxable?

A

Yes, they are like salary

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8
Q

To be eligible for cobra how many employees must you have?

A

20 or more part-time count as a fraction

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9
Q

What is BI / PD on a personal auto policy (PAP)?

A

Liability coverage

Bodily injury and property damage

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10
Q

Difference between ordinary income and compensation income?

A

Ordinary income: not subject to FICA or self-employment taxes

Compensation income : subject to FICA or self-employment tax (W-2 income)

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11
Q

How long is the waiting Period for Social Security disability benefits?

A

Benefits payable at the beginning of the sixth month, reflects a five month waiting Period.

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12
Q

When using the retention method to figure out how much insurance you need what must you add to the final calculation?

A

The first years income

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13
Q

What are the parts of an insurance contract?

A
  1. Declarations; person, property, activities, insured, and parties.
  2. Definitions
  3. Insuring agreements; basic promise of the insurance company.
  4. Conditions.; duties and rights of both parties.
  5. Exclusions; circumstances ensure will not pay.
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14
Q

Perils (basic form)

WHARVVES / FLT

A

W - windstorm
H - hail
A - aircraft
R - riot
V - vehicle
V - vandalism
E - explosion
S - smoke
F - fire
L - lightning
T - theft

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15
Q

Broad form

A

Basic perils plus broad

Everything basic plus RAFF

R - rupture of a system

A - artificially generated electric electricity

F - falling objects

F - freezing of plumbing

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16
Q

Exclusions that apply to all homeowners policies

OPEN WIF

A

O - ordinance by law
P - power failure
E - earthquake
N - neglect, nuclear hazard
W - war
I - intentional loss
F - flood

17
Q

If umbrella liability insurance is given as an answer on the exam it is…

A

Always correct

18
Q

Errors and omissions insurance covers who?

A

Lawyers

Insurance agents

Stock brokers

Financial planner

19
Q

Who does malpractice insurance cover?

A

Physicians and dentist

20
Q

The beneficiary to a variable universal life policy receives what

A

The death benefit plus cash value

21
Q

What is the one year term option when it comes to dividends?

A

Dividends by one years worth of insurance equal to the cash value

22
Q

What describes a modified endowment contract (MEC)

A

Meets requirements of a life insurance contract

Was entered into on or after June 21, 1988

Fails to meet the 7 pay test

23
Q

What are some of the most important criteria when selecting an insurance company?

A

Policy types offered

A rating service

24
Q

Facts about participating insurance policies

A

May pay an annual dividend

Larger premium

Extra premium not needed it is returned to the policyholder , tax free if still has principle in contract

25
Q

What is respondent superior?

A

A superior can be held responsible for the actions of a subordinate

26
Q

Is a cost benefit analysis used in the underwriting process?

What is used?

A

No

What is used is

Application

Information from the agent or broker

Investigations

Information bureaus

Physical examinations or inspections

27
Q

What is a BOP?

A

Business owners policy

28
Q

Workers compensation and unemployment insurance are taxed or not taxed?

A

Workers compensation is income tax-free

Unemployment is gross income and is taxable

29
Q

What is an HO-15 endorsement?

A

Ads open pay coverage to personal property on an HO-3 policy, basically making it HO-5 policy

30
Q

What is usually the best answer on the exam when it comes to disability insurance?

A

Own occupation

31
Q

What transfers are not jeopardized by the transfer for value rules?

A

Transfers to the insured

Transfers, to a partner of the in (partnerships)

Transfers to a corporation in which the insured is a shareholder or an officer

Transfer pursuant to a divorce

32
Q

1035 exchange

Life insurance for

A

Insurance policy

Annuity policy

Qualified, long-term care policies

33
Q

1035 Exchange

Annuity contract for

A

Annuity contract

Qualified, long-term care policy

CFP current - Own (18 decks)

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