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CFP > Financial Planning > Flashcards

Financial Planning Flashcards

(53 cards)

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1
Q

CFP board code of ethics

A 
Integrity
Objectivity
Competence
Fairness
Confidentiality 
Professionalism
Diligence 
I only choose fun chilled party drinks
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2
Q

CFP boards practice standards

A 
Establishing relationship
Gathering data and goals
Analyzing financial status
Present and recommend
Implementation
Monitoring
EGAPRIM
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3
Q

Total consumer debt as a % of net income

A

20%

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4
Q

Medicare parts

A

A: hospital, hospice, zero premium if 40 quarters of contribution
B: physician and out of hospital, ambulance, lab services
C: Medicare advantage a,b,d
D: prescription drugs out of pocket $4,700

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5
Q

Truth in lending 1968

A

$50 limit of lost/ stolen credit cards

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6
Q

Fair credit reporting act 1971

A

Credit agencies must have correct and accurate info

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7
Q

Life insurance 5th dividend option

A

Dividends treated as net single premium, purchasing one year term insurance at insured attained age

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8
Q

4 elements of insurable risk

A

1) must have a sufficient large number of homogeneous exposure to make losses reasonably predictable
2) loss must be definite and measurable
3) loss must be fortuitous or accidental
4) loss must NOT be catastrophic

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9
Q

Rules of risk management

A

Do not risk more than u can afford to loss
Consider the loss
Do not risk a lot for a little

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10
Q

3 pronged test for investment advisor

A

A, advice or analysis
B, business
C, compensation

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11
Q

Insurance broker

A

Represents the insured

Works with many insurers

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12
Q

Insurance agent

A

Represents the insurance company
Has implied or apparent authority to bind coverage
Passes legal liability to the insurer

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13
Q

Life ins settlement options

A

1) interest option- proceeds left with with insurer
2) fixed period option
3) fixed amount option
4) life income options
Straight life
Period certain
Income refund
Joint and last survivor

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14
Q

Life ins non forfeiture options

A

1) cash surrender
2) reduced paid up premium
3) extended term, keep existing DB for a specified time period

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15
Q

CFP rules of conduct

A 
D, defining the relationship
I, information disclosed
C, client information and property
O, obligations to client
O, obligation to employer
O, obligation to CFP board
Report to CFP board within 10 days
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16
Q

RBC ratio

A

Risk based capital as it pertains to insurance companies

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17
Q

Vatican agreements and life settlements

A

Death benefit is taxable to the purchaser as an investment
( above cost basis)

Insured is diagnosed terminally ill, die in 2 years

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18
Q

Homeowners insurance ho5

A

Cadillac of insurance open peril a,b,c

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19
Q

Homeowners insurance ho8

A

Antique home, basic a,b,c

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20
Q

Homeowners insurance ho6

A

Renters insurance, ( renter has 6 letters)

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21
Q

Section 1 under homeowners insurance

A 
Covers property losses
A= insures dwelling (some landscape)
B= other structures ( detached garage)
C= general personal property ( renters excluded)
D= loss of use coverage ( expenses)
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22
Q

Linton yield

Study These Flashcards
A

Compares cash value life insurance vs buying term insurance and investing the difference

23
Q

Buy/sell agreement life insurance
Stock redemption
Or
Cross purchase

Study These Flashcards
A

Stock redemption= business agrees to buy the deceased shareholders stock

Cross purchase = each business owner agrees to buy out the interest of the deceased business owner

24
Q

Investment advisor EXCEPTIONS, does not have to register with the SEC…not considered advisors

Study These Flashcards
A

Bank
Lawyer, accountant, teacher
Broker, dealer ( incidental without compensation)
Publisher
Person who advise is limited to government issues securities
Other persons not within the intent of SEC law

25
Exemption to register as investment advisor
1) clients are all residents in the state which is the advisors principle residence and advise is only on non-listed securities 2) clients are only insurance companies 3) fewer then 15 clients during the last 12 months 4) charitable organizations 5) provides advice to church group plan 6) commodity futures trader, not providing advice
26
Disability insurance continuation provisions
Non-cancelable (non can): no can increase premium for stated number of years Guaranteed renewable: similar to non-can, but insurer can raise premium for an entire class
27
Life insurance method that requires the greatest amount of insurance
Interest only method, because it will replace lost income without depleting principle
28
``` 1933 1934 1940 1970 1988 ```
1933: new issue requires prospectus 1934: secondary market 1940: requires registration with SEC, mutual funds, UIT 1970: SIPC protects investors from losses due to brokerage house failure 1988: insider trading
29
Legal characteristics of insurance contracts
Aleatory, unequal dollars Adhesion, you wrote it, your stuck with it Conditional, pay premium Personal, between insurer and insured Unilateral, only one side is under legal obligation
30
Types of permanent life insurance
Whole life, insurer invests & bundled Variable life, insured invested & bundled Universal life, insurer invests & Unbundled Variable Universal, insured invests & Unbundled
31
Basic home owner perils
``` Fire & lightening Wind and hail Explosion Riot Vehicle Aircraft Smoke Vandalism Theft Volcanic eruption NOT earth movement or FLOOD ```
32
Cobra coverage terms
18 months for termination 29 months disability 36 months for spouse if employee is eligible for Medicare or dies
33
Presumptive disability
Loss of 2 limbs is viewed as totally disabled | As is loss of sight, hearing or speach
34
Per stirpes Per capita
Per stirpes, by branch, only on share of the deceased Per capita, by head, share equally
35
Part time student financial aid
Pell grant or supplementary grant DO NOT get loans
36
Life insurance dividends
1) dividends paid out in cash 2) reduce premiums 3) accumulate at interest 4) paid up dividend additions 5) one year term insurance
37
Monthly housing payment, PITI, principle, interest, taxes, insurance No more than_______% gross income
28%
38
Total monthly debt payments no more than | _________% of gross income
36%
39
Grants for graduate students
Grad students ONLY get grants for teaching Grad students DO NOT get grants
40
HIPPA rules
Pre-existing condition : can not apply coverage exclusion for more than 12 months Pregnancy NOT a pre-existing condition If between job plans more than 63 days, NO pre-existing allowed
41
Surrogation
Repayment of insurance claim by the party at fault to the insurance co NOT at fault
42
Non participating life insurance company dividends
Dividends are paid to shareholders, taxable
43
Participating life insurance companies
Mutual insurance Dividends are paid the policy holders as return of premium, NOT taxable
44
HSA limits
HDHP min. Deductible $1,200/$2,400, single / family HDHP max out of pocket $6,050/$12,100, single/family Max annual contribution, $3,100/$6,250 + $1,000 over age 55 20% penalty for non eligible expenses
45
Medicare part D parts
1) $320 deductible 2) $652.50 co-pay 3) $3727.50 , 100% paid out of pocket = $4,700, total paid out of pocket
46
Unemployment benefits last ? Weeks
Unemployment benefits can last 26 weeks - also require minimum income and A period of covered employment is required
47
Employers with less than ? Employees are NOT subject to COBRA rules
Less than 20 employees
48
Employer Penalty for not offering continuation (cobra) coverage
$110/day, per beneficiary fine
49
Employee funded secular trust
``` Funded Deferred comp plan Employer gets tax deduction Employee is taxed Employe gets partial tax free income from trust in retirement ```
50
Constructive receipt of non qualified deferred comp
Constructive receipt results in taxation of benefits , this is generally only relevant for funded plans
51
Individuals who are eligible for Medicare Part A area automatically enrolled in
Medicare Part B
52
Penalty for a disqualified person (fiduciary) engaging in prohibited transaction
15% penalty is imposed annually until transaction is corrected
53
Standard, required percent coverage for home owners on dwelling
80% coverage on dwelling

CFP (5 decks)

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