Review Flashcards
The two sections included in all homeowners policies are?
property losses and liability losses
The three main categories of auto-related losses covered by the standard personal automobile policy (PAP) include which of the following?
damage to or loss of the automobile
injury to the insured or other family member
legal liability
Traditional Whole life characteristics
considered “permanent” coverage
has higher initial premiums than term life
offers the potential to build cash value
offers level premiums throughout the life of the insured
Annuities
variable deferred annuities generally have earnings that vary during the accumulation and annuity periods.
Earnings and payments are both variable
Systematic risk
interest rate
market
Advantages of investing in mutual funds?
pooling of investors’ funds
diversification
access to professional money managers
detailed record keeping of shareholder investments and transactions
Standard deviation generally tells the investor?
“the bumpiness of the ride” of an investment.
Measure of risk - tells how much variability there is in a return compared to the average of the return. We refer to this as the “bumpiness of the ride”
Funds that should be held in an emergency fund.
liquid
SWOT analysis
Strengths Weaknesses Opportunities Threats
A small-business owner who is paid $200,000 each year by his company wants to establish a retirement plan. He only wants to include full-time employees (and not part-time employees). The profits and cash flow of the business fluctuate from year to year, and the owner wants the flexibility of having up to 20% of his compensation contributed to a retirement plan for his benefit each year.
profit sharing
403(b)
Simple IRA
SEP-IRA
What are requirements to receive Social Security?
at least age 62
must be fully insured
must have at least 40 credits of coverage
Alan makes $60,000 per year and is contributing 4% of his salary to his 401(K) plan. His company provides a 50% match on up to 10% of compensation. How much is the company match for Alan’s contribution?
$3,000
Which education credits or contributions do not have any phaseouts because of income being too high?
Section 529 contributions
During the current tax year, George sold several securities that resulted in the following types of gains and losses:
- long-term capital gain: $6,700
- short-term capital gain: $7,000
- long-term capital loss: $1,900
- short-term capital loss: $9,200
What is the net capital gain or loss on George’s security sales?
net long-term gain of $2,600
net long term $6,700 - $19,00 = $4,800
net short-term $7000 - $9,200 = -$2,200
net long-term gain $4,800 - $2,200 = $2,600
Roth IRA characteristics
funded with after-tax dollars
must have earned income to contribute
qualified distributions are tax-free
Will can name
personal representative
guardian for dependent children
avoid intestacy laws
cannot transfer property held in joint title
longer elimination period will
reduce the premium for a long-term care policy
