Risk Management and Insurance Planning Flashcards
What is the definition of Social Security disability?
- any occupation
- medical condition must be expected to last no less than 12 months or expected to result in death
What is the most favorable definition of disability for an insured?
own occupation
What is the least favorable definition of disability for an insured?
any occupation
What requires a 90-day certification for LTC claims?
being unable to perform 2 of 6 ADLs
What are the 6 ADLs?
1) Bathing
2) Eating
3) Continence
4) Dressing
5) Toileting
6) Transferring
Can LTC premiums paid be used as qualified medical expenses for itemized deductions?
yes
For HSAs, what is the penalty for making a non-eligible transaction before age 65?
- 20% penalty
- distribution will be taxable
What is the penalty for taking a non-eligible distribution from an HSA after age 65?
the distribution will be taxable
What is the catch-up contribution age for an HSA?
55
Part-time employees count as how many people towards a census for COBRA?
1/2 a person
COBRA does not apply for which type of termination?
gross misconduct
36 months for COBRA applies for:
1)
2)
3)
4)
1) divorce
2) death
4) dependent reaches age of majority
5) Medicare enrollment
How are qualified LTC premiums that are paid by an employer taxed to the employee?
they are tax-free
How are disability benefits received by an employee when the premiums are paid by an employer taxed to the employee?
the benefits are taxable to the employee
How are disability benefits received by an employee as part of their compensation from their employer taxed to the employee?
the benefits are received tax-free
Is the cash value in variable life policy sub-accounts subject to the creditors of an insurance company?
no
If the surrender of a life insurance policy is a taxable event, how is it taxed?
as ordinary income
Distributions from MECs are taxed how?
LIFO, ordinary tax rates
What is the penalty if a distribution is taken from a MEC before 59 1/2?
10%
A chronically ill person must do what with the money they receive from a viatical settlement in order for it to remain tax-free?
use it for LTC purposes
What is the requirement to be classified as “terminally ill” for purposes of a viatical settlement?
must not have a life expectancy of more than 24 months
A terminally ill person must do what with the money they receive from a viatical settlement in order for it to remain tax-free?
there are no requirements; the money is tax-free no matter how they spend it
What happens if a viatical settlement company pays premiums on a policy they purchased?
the premiums paid become a part of their basis
This rider waives future premiums if the insured becomes permanently disabled as a result of injury or illness prior to a specified age
waiver of premium rider
This rider allows you to purchase additional insurance coverage in the stated period without the need for further medical examination
guaranteed insurability rider (results in higher premiums)
This rider pays out an additional amount if the insured dies from the result of an accident. Sometimes referred to as the “double indemnity rider”
accidental death rider
This rider pays a monthly income to the beneficiary in addition to the policy face amount for a stated period of time to help with expenses in a transition period after the death of the insured
family income benefit rider
This rider provides a death benefit in case a child dies before a specified age
child term rider
What can you do with a child term rider if the child reaches maturity?
it can be converted into permanent insurance, often up to a multiple (4-5x) of the rider amount, without medical underwriting
This rider allows the spouse of the insured to have a term life insurance rider under a permanent policy insuring their spouse
spouse term rider
