Insurance Needs/Evaluating Risk Flashcards
Death Risk Exposure
$ related to death include remaining medical bills, funeral and burial, probate, taxes, executor fees, estate and admin
Indirect death expenses
-outstanding debt - home, car, -personal belongings
-child education
-loss of spouse income stream
Disability insurance
-ins. used to replace lost wages and out of pocket med expenses
-payment usually between 60-80% of income depending on taxability
Short term disability plan lasts how long
typically 6 months or less but up to 2 years
Longterm disability how long
more than 2 years
Poor health
may be ineligible or pay higher premiums for health ins if not part of an employer plan
Unemployment
unemployment insurance (30 weeks)
If you’re self employed can you get unemployment
no
Superannuation
outliving income and accumulated assets in retirement
Annuity Approach
find the payment - using both annuity due and ordinary annuity - MOST funding will use annuity due calc. as $ is needed at beginning of period to pay expenses
Capital Preservation Model
lifetime annuity without invading principal - calc w/purchasing power risk and w/o purchasing power risk. - purchasing power risk uses inflation adjusted rate
How do you find inflation adjusted rate on hp12c
first rate ENTER second rate “delta sign change”
Are disability premiums deductible to self employed policyholder?
No
What percent of income will self employed typically cover with disability ins?
60% of earned income
80% taxable benefit on disability insurance is same as what
60% tax free policy assuming 25% tax rate
2 ways LTC policies provide coverage
-specific period of time
-specific dollar amount
What are a few ways to consider to pay for LTC
self insurance, traditional LTC policy, or combination of both
Is a health insurance premium deductible to a self employed person?
Yes - disability is not
What is the premium deduction limit on health insurance for self employed?
deductible against AGI up to the self employed income of the taxpayer. Excess is itemized deduction (if the taxpayer itemizes) up to 10% of AGI
Health insurance Coinsurance
amount insured will pay as co-payment, usually provided as 80/20 copayment provision
Health insurance stop loss
total out of pocket amount during calendar year
Health insurance maximum lifetime payout
max amount a person can receive in HI payments during their lifetime
Open Perils (property insurance)
“all risks” policies, covers all losses to covered property unless the loss is specifically excluded
Named Perils
“specific perils” policies - contains a list of covered perils. If its not listed, not covered
Some types of liability policies
automotive, homeowners, employer, general
Umbrella policy
protects against catastrophic liability - kicks in when underlying liability coverage has been met
