Insurance and Risk

Question 1

Split Definition of Disability

Answer 1

Own occupation’ changing to ‘modified any occupation’.

At first, the insured is considered disabled if he or she cannot perform his or her specific occupation. After a period of time (usually 2 to 3 years), the definition is broadened to include any occupation to which the insured is fit to undertake based education or training.

Question 2

Guaranteed renewable

Answer 2

policies are renewable on a guaranteed basis and the premium cannot be changed unless changed for entire class of policy holders. Premiums can increase over time if the change in premiums affects many policyholders.

Question 3

What is a Non-Cancellable policy

Answer 3

A noncancellable insurance policy is a life or disability insurance policy that an insurance company can’t cancel, increase the premiums on, or reduce the benefits of for as long as the customer pays the premiums.

Question 4

Modified Endowment Contract (MEC)

Withdrawals are made on what basis?
Any penalties?

Answer 4

Once a contract is a MEC, it remains so even after a 1035 Exchange for a different policy.

Any withdrawals are made on a LIFO basis.

all the earnings are withdrawn and tax and penalty paid on them if not 59 1/2, the basis is not taxed, nor is there a penalty.

loans from a MEC are taxable and the penalty is applied.

Question 5

SPLIT-DOLLAR LIFE INSURANCE

Answer 5

A) Stock redemption plans can be funded by split-dollar life insurance.
B) Only the portion of benefit in the policy that is attributable to the actual contributions of the company are subject to the claims of company creditors.
C) The insurance premium of a split-dollar life insurance contract is generally divided between the employee and the employer.
D) The insurance death benefit of a split-dollar life insurance policy is generally divided between the employee and the employer.

Question 6

BUY-SELL AGREEMENT PREMIUMS

Are they tax deductible?

Answer 6

No

Question 7

MEDICARE COVERAGE

What is the co-insurance for medicare?

What doesn’t medicare cover?

Answer 7

Medicare is an 80/20 split without stop-loss limits.

Medicare does not provide custodial care coverage, eye care or dental coverage