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Insurance Flashcards

(112 cards)

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1
Q

Are disability benefits taxable to owner of a s corp?

A

NO!!! On exam!!

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2
Q

Homeowners insurance Coverage C

A

Personal property

Covered anywhere in the world

Boats and trailers are limited to $1000

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3
Q

Is it true that qualified LTC policies must be non-cancelable?

A

No, they MUST be guaranteed renewable

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4
Q

Homeowners insurance Coverage D

A

Loss of use

Additional living expenses arising from damage to property

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5
Q

What does absolute assignment mean?

A

Insured gives up right to change beneficiary

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6
Q

Are distributions from HSA tax free

A

No, unless she’s for qualifying medical expenses

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7
Q

In conjunction with a major medical insurance policy, what does the term breakpoint mean?

A

Insurer begins to pay 100% of all medical expenses

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8
Q

For how many days does the COBRA election last?

A

60 days after the actual notice of event to the qualified beneficiary by the plan administrator

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9
Q

If a spouse drops coverage for healthcare to join Medicare, how long can family go on COBRA?

A

36 months

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10
Q

What is part D of auto insurance?

A

Collision/ other than collision

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11
Q

2 reasons life insurance policy can become a MEC

A

Increase in DB 150k or more

If have to prove insurability

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12
Q

If there is a loan on your life insurance policy, for dividend options, If you are concerned with a reduced benefit, why would you choose 5th dividend over paid up additions?

A

The 5th dividend will buy an amount of one year of term insurance equal to the outstanding loan

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13
Q

Why do you have non-forfeiture options?

A

Trying to keep policy in force

Don’t want to forfeit it

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14
Q

Tort

A

Wrongful act other than a breach of contract for which a civil action may be brought against the tortfeasor

Regarded as a crime

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15
Q

Homeowners insurance Coverage e

A

Personal liability

“Enemies”

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16
Q

What is the time frame for a disability qualifying event under COBRA?

A

29 M

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17
Q

What is included and excluded from coverage A

A

Dwelling

Ex: garage, deck, fence

Land is excluded

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18
Q

Homeowners insurance Coverage b

A

Other structures

Swimming pool, detached garage, fence, patio

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19
Q

What is the required percentage for commercial buildings vs homes for replacement value?

A

Commercial-90%

Homes-80%

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20
Q

Subrogation

A

When an insurer pays a claim, it takes over the legal rights it’s insured has against the negligent 3rd party

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21
Q

What is part c for auto insurance?

A

Uninsured motorist

Insurer pays compensatory damages that insured is entitled to recover from owner of uninsured vehicle because of BODILY INJURY

This is liability protection NOT medical payments

individuals covered:
Named insured, spouse, family members
Any other occupant if the covered auto
Any other person entitled to damages bc of bodily injury

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22
Q

What is part b for auto insurance

A

Medical payments

Provides payment for reasonable/necessary medical expenses of insured

Covered persons:
Named insured
Spouse
Family members while occupying vehicle
Any person injured while occupying vehicle
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23
Q

What is part a of auto insurance

A

BI/PD- liability coverage

Provides protection against judgements and covered exposures resulting from bodily injury and property damage caused by insured

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24
Q

Are life insurance proceeds subject to tax when gifted

A

No

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25
Do ratings need to be included in illustration and are they important compared to other included factors?
Rating is not required and not as important as features, provisions and options
26
Does a universal life policy have guaranteed cash value?
No
27
Can qualified LTC policies have cash value?
No
28
What is covered under “other than collision”
``` Breakage of glass Missles Falling objects Fire, theft, larceny Flood Earthquake Explosion Windstorm Hail Vandalism Riot Bird/animal ```
29
What are the non forfeiture options
Cash or loan value Reduced paid up insurance Paid up term insurance/extended term
30
What does residual disability coverage provide?
Provides less than the total disability benefit for the policies maximum benefit period
31
Collateral source rule
You can collect money from the person at fault
32
What are the 4 principles that support indemnity
Insurable interest Concept of actual cash value Other insurance Subrogation
33
When are distributions of dividends taxable in a life insurance contract
They are received in cash They are used to reduce premium They are used to pay off a policy loan
34
What are the insurance dividend options?
CRAPO ``` Cash option Reduction of premiums Accumulated with interest Purchase paid up additions One year term/5th dividend ```
35
What clauses are automatically included in disability insurance
Presumptive disability Continuance provision *included at no extra cost
36
What are the settlement options for life insurance
``` Cash Interest only Fixed period Fixed installments 4 life income options ```
37
The reason to purchase insurance is to provide protection from what?
Risk
38
If someone is an uninsurable risk, under what principle will the company refuse them?
Adverse selection
39
A high deductible reduces what?
Premium
40
If someone is trying to reduce premiums what kind of risk is that?
Retention
41
What kind of life insurance has an APL provision
Only whole life
42
What kind of insurance policies have non-forfeiture options?
Only permanent policies
43
When does coverage begin for conditional receipt
As of the date of the application, provided the applicant was found to be insurable
44
How long are medical expenses covered for workers comp
There are no limits on time or amount
45
Is there a time limit on the transfer for value rule
No! There is no 3 year gifting limit
46
What is HO-7
Mobile home
47
Unilateral
Only one party is bound, the insured makes no promise
48
Adhesion
Contract is accepted as is, it is not negotiated
49
Aleatory
Number of dollars given up is unequal Outcome is uncertain
50
Principle of indemnity
The insurer generally seeks to reimburse the insured for approximately the amount lost, no more and no less
51
Parts of an insurance contract
DDICE Declaration page-factual statements that identify specific person or promise Definitions-explanation of key policy terms Insuring Agreements-the basic promise of the insurance company Conditions-the duties and rights of both parties Exclusions-circumstance when the insurer will not pay
52
Unintentional tort
Negligence or carelessness
53
Attractive nuisance
Situation in which a high degree or care is imposed on the land occupier for certain conditions of the land Ex: swimming pool, vacant lot
54
Negligence per se
A situation where the standard of care is set by a statute Violation of a statute Ex: school zone, cross walk
55
Absolute liability
Extra hazardous condition which results in losses to others Ex: workers comp, keeping wild animals, blasting
56
Strict liability
Limited to manufacturers and distributors of defective products Ex: Firestone tires, Ford motor company, product liability
57
Vicarious liability
Occurs when one person is held liable for negligent behaviors of another person Also called respondent superior Ex: principals responsible for their agents
58
Assumption of risk
If one person understands the danger in an activity yet nevertheless voluntarily chooses to encounter it, another party cannot be held liable Ex: skiing, stock car races
59
Contributory negligence
Any negligence on the part of the injured party, even though slight, defeats the claim Ex: jaywalking, driving while drunk
60
Comparative negligence
Any degree of negligence on the part of the insured party does not defeat the claim but is used to mitigate damages payable by the other party Ex: A is 20% negligent, B is 80%
61
Last clear chance
Any contributory negligence of the third party will not bar recovery if the other party, immediately prior to the accident, had a last clear chance to prevent the accident but failed to seize the chance Ex: road rage
62
Negligences vs defenses
Negligences: attractive nuisance, negligence per se, strict liability, absolute liability, vicarious liability Defenses: assumption of risk, contributory, comparative, last clear chance
63
Types of life insurance needs analysis
Capital utilization approach - uses annuitization to provide needed income - leaves no money at end of term Capital needs approach - factors interest only so original capital is left at the end of the income term - also called capital retention
64
Property excluded under homeowners insurance coverage c
Animals, birds, fish Motorized land vehicles and aircraft Property of roomers/boarders/tenants Property contained in an apartment regularly rented
65
Homeowners insurance coverage F
Medical payments to others NOT for family members
66
Is a sinkhole a covered peril for the exam?
Yes! If it does damage to property
67
HO-8
Old home that may have structural problems or construction defects (open foundation)
68
What percent is coverage B, C and D of coverage A for an HO-3?
B-10% C-50% D-30% Examples: If coverage A is 250k B will be 25k and D will be 75K
69
How do split limits work on coverage limits
Per person/per occurrence/property damage
70
General liability
A company is liable if a member of the public or the property of others is harmed by an activity of the owner or an employee
71
What is covered under workers comp
Medical expenses without limit on time and money Disability income with short waiting period Death benefits payable to family members Rehabilitation benefits
72
What type of benefits are covered under Medicare part A?
Hospital care Care in nursing home or extended care facility Home health services Hospice
73
What does Medicare part B cover?
Physician services Home health services Diagnostic tests All outpatient services or a participating hospital
74
How much does Medicare cover for skilled nursing care
Pays all of first 20 days and everything over $194.50 for next 80 days (max of 100 days) For coverage to apply patient must be expected to improve (not Alzheimer’s) Coverage must fall within 30 days of a 3 day hospital stay
75
Is group disability covered under COBRA?
No!
76
Deductible amounts for qualified LTC
Age 51-60 $1,690/yr | Age 61-70 $4,510/yr
77
How is a viatical company taxed when the insured dies?
Ordinary income
78
How are life settlements taxed?
Long term capital gains
79
Where would a notice of loss be found in an insurance policy
Conditions Is a duty of the insured
80
What is non cancelable
Premiums will not increase
81
What is guaranteed renewable
Individual can keep policy on force by paying the premiums, but the premiums may increase
82
Conditionally renewable
Allows policy to continue beyond age 65
83
Health reimbursement account
Used only by c corps Funded ONLY by employer Reimbursed employee for substantial medical expenses up to a maximum amount
84
Can a business take a loan on a whole life policies that covers key employees?
Yes, but limited to 50k and it is deductible
85
What percentage does Medicare part b cover for approved charges for doctor services (co-payment)?
80% after the deductible has been met (no stop loss)
86
What drugs does Medicare part b cover
Oral anti cancer drugs Certain drugs for hospice enrollees Certain drugs that can’t be self administered
87
What does Medicare NOT cover
Foot care Eye care Glasses Hearing aids Dental work Emergency care outside of US
88
What is the age at which insurance policies generally endow?
100 or 121
89
How do you calculate insurance need under capital retention?
Divide annual income you are replacing by rate of return. Then add 1 more year of income **if inflation is included in question subtract inflation from rate of return and that is the percentage you use for calculation
90
For a guaranteed renewable and non cancelable policy, which one is less expensive?
Guaranteed renewable This is bc with a guaranteed renewable, the premiums can increase. With a non cancelable, they cannot
91
Are disability benefits taxable to the employee under a 162 bonus?
NO!
92
What happens if someone intentionally/fraudulently misstates material information for life insurance
Policy will be rescinded and will not be paid
93
Are dividends used to buy paid up additions treated as income first distributions under a MEC?
No
94
If income from a trust is used to purchase life insurance on the grantor, how is it taxed?
This is a grantor trust and is taxed to the grantor
95
Can an HSA pay for LTC premiums?
Yes, the HSA can pay for qualified LTC premiums *there are age based limitations
96
Is a missing wedding ring covered under an HO-3 policy?
Only if theft is involved
97
Do you have coverage a for an HO-6 policy?
Limited basis (typically 1-5k), could be named perils Depends on the condo association
98
Can both the employer and eligible person contribute to a MSA in the same year?
No
99
What is the limit for silver in property insurance coverage?
Internal limit of $2500 in coverage for theft only
100
What is the limit of coverage for gold coins in property insurance coverage?
$200
101
Under Medicare part b, what shots are covered at no cost to the patient?
Annual flu shot | Pneumonia
102
What is APL?
Automatic premium loan This will pay the premium if it remains unpaid beyond the grace period
103
What is a disability waiver of premium
Insurer will pay the premium for the life of the contract with no future premium notices if they are seriously injured
104
Reinstatement provision
You have to provide proof of insurability to reinstate the policy if it lapses
105
Where do the forfeited funds from an FSA go?
Used to defray future administrative expenses of the FSA itself
106
How much does an HO-15 endorsement cover for collectible coins?
5k
107
When should you apply for Medicare benefits?
Prior to turning 65 so you have Medicare on your 65th birthday
108
What may happen if you delay your Medicare application later than 65
May result in permanent increases in Medicare part b monthly premium
109
How is the monthly Medicare part b premium calculated?
Medicare enrollees AGI TWO years prior
110
With Medicare part a what costs are involved
There is no premium Subject to a flat deductible of $1,556 Subject to copay from days 61-90 at $389 and 91 and beyond at $778
111
Medicare part b premium cost
$170.10
112
Medicare part b deductible
$233/yr

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