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CFP - July 2023 Exam > Fundamentals & Insurance > Flashcards

Fundamentals & Insurance Flashcards

1
Q

Types of Social Security Benefits

A

Retirement
Disability
Death
Survivors’
Medicare

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2
Q

Important Social Security Beneficiaries

A
  • Disabled insured worker under 65
  • Retired insured worker 62 or older
  • Spouse of retired or disabled worker who is at least 62
  • Spouse of retired or disabled worker caring for a child under 16 or disabled
  • Divorced spouse of retired or disabled worker who is 62 and married to worker for at least
    10 years & did not remarry by 60
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3
Q

Social Security Disability Benefit Definition

A
  • Disability expected to las 12 months
  • Disability will result AND can’t perform ANY OCCUPATION duties
  • Severe physical and mental impairment preventing working for 1 year or result in death
  • Depends on credits earned and when disabled

*Being Blind is NOT a SS disability

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4
Q

Medicare Definition

A
  • 65 Years OR disabled for 2 Years
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5
Q

Medicare Part B - Does Not Cover

A
  • Dental care, dentures
  • Cosmetic surgery
  • Hearing aids
  • Eye Exams
  • Routine physical exams
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6
Q

Personal Property & Liability Insurance - BASIC Named Perils

A

1 - Fire
2 - Vehicles
3 - Lightning
4 - Smoke
5 - Windstorm
6 - Vandalism
7 - Hail
8 - Explosion
9 - Riot
10 - Theft
11 - Aircraft
12 - Volcano

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7
Q

Personal Property & Liability Insurance - BROAD Named Perils

A
  • Includes all BASIC Named Perils, Plus:
    13 - Falling Objects
    14 - Weight of ice, snow, sleet
    15 - Accidental overflow of water (NOT FLOOD)
    16 - Sudden bursting of appliances
    17 - Freezing of system or appliance
    18 - Damage from electrical current
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8
Q

Financial Advice Requires 7 Elements

A

1 - Description
2 - Pay
3 - Compensation
4 - Bankruptcies/ Regulator Events
5 - Conflicts of Interest
6 - Economic Benefits of Referrals
7 - Other Material Information

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9
Q

Risk Benchmarks
Life Insurance

A

10 - 16 x Gross Income

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10
Q

Risk Benchmarks
Health Insurance

A

At Least $1M Lifetime Cap

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11
Q

Risk Benchmarks
Disability Insurance

A

60 - 70% of Gross Income

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12
Q

Risk Benchmarks
Property Insurance

A

FMV Policy

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13
Q

Risk Benchmarks
Long-Term Care Insurance

A

Provide Daily Benefit with Inflation Protections

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14
Q

Risk Benchmarks
Personal Liability Umbrella Policy (PLUP)

A

$1M - $3M in Liability Protection

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15
Q

Legacy Benchmarks

A

NEED ALL THREE BELOW OR CONSIDERED A WEAKNESS:

  • Will
  • Durable POA for Healthcare
  • Advanced Medical Directive
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16
Q

Short-Term Savings & Investment Benchmarks
Emergency Fund

A

3-6 Months of Non-Discretionary Expenses

17
Q

Short-Term Savings & Investment Benchmarks
Housing Rate - 28%

A

PITI Should NOT Exceed 28%

(PITI/Gross Monthly Income)

Principal
Interest
Taxes
Insurance

18
Q

Short-Term Savings & Investment Benchmarks
Housing + All Other Debts - 36%

A

PITI + Recurring Debt Should NOT Exceed 36%

(PITI+Recurring Debt/Gross Monthly Income)

19
Q

Long-Term Savings & Investment Benchmarks
Education Funding (18 Years)

A

$3,000 for Public State Universities
$6,000 for Semi-Private Universities
$9,000 for Competitive Private Universities

20
Q

Long-Term Savings & Investment Benchmarks
Retirement Amount

A

16 x Income Needed Annually in Retirement

21
Q

Long-Term Savings & Investment Benchmarks
Savings Rate

A

10-12% (Education Goal is Extra)

22
Q

Long-Term Savings & Investment Benchmarks
Return on Investments

A

8-10%

23
Q

Long-Term Savings & Investment Benchmarks
Risk

A

8-14% STD

24
Q

Insurance Dividend Options

A
  • Cash
  • Accumulate at Interest
  • Reduce Premiums
  • Paid-Up Additions
  • One-Year Term
25
Q

Insurance Non-Forfeiture Options

A
  • Cash Surrender Value
  • Reduced Paid-Up Insurance
  • Extended Term Insurance
  • Accelerated Death Benefits
26
Q

COBRA Eligibiliity
Group Coverage Must Terminate Because:

A
  • EE Dies
  • EE is Voluntarily or Involuntarily Terminated
  • EE goes from FT to PT
  • EE Separates from Spouse
  • EE becomes eligible for Medicare
  • Dependent child is no longer eligible for coverage
27
Q

Private LTC Coverage

A
  • Skilled Nursing
  • Intermediate Nursing
  • Custodial Care
  • Home Health Care
  • Assisted Living
  • Adult Day Care
  • Hospice Care
28
Q

Social Security Beneficiaries

A
  • Disabled Insured worker under 65
  • Retired Insured worker 62 or older
  • Spouse of a Retired/Disabled worker who is at least 62
  • Spouse of a Retired/Disabled worker who is caring for a Disabled Child or Under 16 Child
  • Divorced Spouse of a Retired/Disabled worker who is at least 62 & married to the worker for at least 10 Years & did not remarry by 60

CFP - July 2023 Exam (4 decks)

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