Insurance Needs/Evaluating Risk

Question 1

Death Risk Exposure

Answer 1

$ related to death include remaining medical bills, funeral and burial, probate, taxes, executor fees, estate and admin

Question 2

Indirect death expenses

Answer 2

-outstanding debt - home, car, -personal belongings
-child education
-loss of spouse income stream

Question 3

Disability insurance

Answer 3

-ins. used to replace lost wages and out of pocket med expenses
-payment usually between 60-80% of income depending on taxability

Question 4

Short term disability plan lasts how long

Answer 4

typically 6 months or less but up to 2 years

Question 5

Longterm disability how long

Answer 5

more than 2 years

Question 6

Poor health

Answer 6

may be ineligible or pay higher premiums for health ins if not part of an employer plan

Question 7

Unemployment

Answer 7

unemployment insurance (30 weeks)

Question 8

If you’re self employed can you get unemployment

Answer 8

no

Question 9

Superannuation

Answer 9

outliving income and accumulated assets in retirement

Question 10

Annuity Approach

Answer 10

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

Question 11

Capital Preservation Model

Answer 11

lifetime annuity without invading principal - calc w/purchasing power risk and w/o purchasing power risk. - purchasing power risk uses inflation adjusted rate

Question 12

How do you find inflation adjusted rate on hp12c

Answer 12

first rate ENTER second rate “delta sign change”

Question 13

Are disability premiums deductible to self employed policyholder?

Answer 13

No

Question 14

What percent of income will self employed typically cover with disability ins?

Answer 14

60% of earned income

Question 15

80% taxable benefit on disability insurance is same as what

Answer 15

60% tax free policy assuming 25% tax rate

Question 16

2 ways LTC policies provide coverage

Answer 16

-specific period of time
-specific dollar amount

Question 17

What are a few ways to consider to pay for LTC

Answer 17

self insurance, traditional LTC policy, or combination of both

Question 18

Is a health insurance premium deductible to a self employed person?

Answer 18

Yes - disability is not

Question 19

What is the premium deduction limit on health insurance for self employed?

Answer 19

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

Question 20

Health insurance Coinsurance

Answer 20

amount insured will pay as co-payment, usually provided as 80/20 copayment provision

Question 21

Health insurance stop loss

Answer 21

total out of pocket amount during calendar year

Question 22

Health insurance maximum lifetime payout

Answer 22

max amount a person can receive in HI payments during their lifetime

Question 23

Open Perils (property insurance)

Answer 23

“all risks” policies, covers all losses to covered property unless the loss is specifically excluded

Question 24

Named Perils

Answer 24

“specific perils” policies - contains a list of covered perils. If its not listed, not covered

Question 25

Some types of liability policies

Answer 25

automotive, homeowners, employer, general

Question 26

Umbrella policy

Answer 26

protects against catastrophic liability - kicks in when underlying liability coverage has been met