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CFP > Insurance > Flashcards

Insurance Flashcards

1
Q

What type of risk does insurance protect against?

A

Pure risk NOT speculative risk

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2
Q

Pure risk vs speculative risk

A

PR - Loss or no loss // SR - Loss or gain

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3
Q

Avoidance - What severity/frequency?

A

HS HF

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4
Q

Reduce - What severity/frequency?

A

LS HF

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5
Q

Insure transfer - What severity/frequency?

A

HS LF

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6
Q

Retain - What severity/frequency?

A

LS LF

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7
Q

Terms to know - Law of large numbers

A

As an insurance company, they need to make sure there are a lot of homes that can get insurance (10 homes vs 3000 homes) if 3% of homes catch on fire

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8
Q

Terms to know - Perils

A

Cause of financial loss (Fire)

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9
Q

Terms to know - hazards (Physical, moral, morale)

A

Condition that increases the likelihood of a peril going to happen // Physical - Living in Oklahoma where there are tornados // Moral - Dishonesty // Morale - Unaware, indifference

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10
Q

Terms to know - Adverse selection

A

your insurance is based on your answers to questions - Adverse selction is when someone who has high risk but gets an average cost of insurance (Gain)

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11
Q

Terms to know - Requisites for an insurable risk

A

Cant be catrosphic for the insurance company // has to happen at some occurance // needs to be affordable

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12
Q

Terms to know - Principle of Indemnity

A

To make you whole (Car fully fixed)

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13
Q

Terms to know - Elements of a valid contract (COALL)

A

Competent parties, Offer and Acceptance, Legal Consideration, and Lawful purpose

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14
Q

Terms to know - Subrogation clause

A

your insurance pays for the collision that wasn’t your fault and then your insuance company will go get the money from the other person’s insurance company

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15
Q

The principal of insurable interest - Property and liability

A

Must exist at the time of policy inception AND at time of loss

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16
Q

The principal of insurable interest - Life insurance

A

only need insurable interest at time of policy inception

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17
Q

What is the principle of insurable interest mean?

A

Must having an emotional or financial hardship resulting from damage, loss or destruction

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18
Q

Terms to be familiar with-Agent/general agent/independent agent/broker

A

Agent - Legal rep of the insurer // General agent - represent one insurer (AllState) // Independent agent - Represents multiple insurer // Broker - represents policy owner

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19
Q

Riders and endorsements

A

written additions to an insurance contract and takes more importants over what the original policy says (moving the valuation from actual cash value to replacement cost)

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20
Q

Exclusions on insurance contracts

A

What will NOT be covered // helps keep the premiums down

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21
Q

Insurance contract valuation - replacement cost

A

This is the best option - current cost or replacing property with new materials

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22
Q

Insurance contract valuation - Actual cash value

A

the replacement cost - depreciation (Furniture is usally like this)

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23
Q

Insurance contract valuation - Agreed upon value

A

this is for art - they come to an agreement

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24
Q

What do deductibles do?

A

Help eliminate small claims and reduce the premiums (Higher the deductible, the lower the premiums)

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25
Q

What is co-insurance?

A

the insured pays a portion of the losses that have been incurred (Usually 80/20)

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26
Q

What is the co-insurance formula?

A

(Amount of Coverage Purchased / Coinsurance ) * Loss - Deductible

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27
Q

For a house - if the coverage is less than coinsurance requirement, then the insurer will pay

A

the greater of the ACV or the coinsurance formula

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28
Q

A.M. Best’s ratings for highest and lowest

A

Highest - A++ to A/A- // Lowest C/C to D

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29
Q

Moody’s ratings for highest and lowest

A

Highest - Aaa to Aa1/Aa2 // Lowest - B1/B2/B3 to Caa

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30
Q

Who regulates the insurance industry?

A

each state does // NOT THE FEDERAL

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31
Q

NAIC (National Assoc. of Insurance Commissioners) What do they do?

A

Issue model legislation but it goes as only as far as a suggestion not forced!

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32
Q

What is taken into consideration for the “Capital needs approach”

A

Income needs, education, and retirement funding

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33
Q

What is taken into consideration for the “Human life value approach”

A

amount of income earned, less the amount that would be used by the insured person

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34
Q

What is taken into consideration for the “Capital Retention”

A

Not going into the capital and taking that but using the capital as a income generator

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35
Q

What is taken into consideration for the “Income retention”

A

Maintain the income level

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36
Q

What is taken into consideration for the “Income multiplier”

A

Multiplier of income

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37
Q

Term life insurance

A

No cash value, savings component or investment component // protection goes away after term is done // best for younger people

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38
Q

Whole life insurance

A

Provides lifetime protection, has savings and investment component (Cash value) - Premums are fixed

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39
Q

Participating vs non- participating

A

Part - Paying dividends // Non-Part - Doesn’t pay dividentds

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40
Q

Dividends options (CRAPO)

A

Cash, Reduce future premiums, Accumulate at interest, Paid-up permanent additions, One year term insurance addition

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41
Q

Ordinary Whole life Insurance

A

You will pay premiums until 100/120

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42
Q

Limited pay whole life insurance

A

Pay premiums quicker and the premiums are more

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43
Q

Variable whole life

A

Cash is invested into stock and bonds (Which are located into subaccounts) - Death benefit fluctuates on performance

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44
Q

First to Die vs second to die insurance policies

A

First to die - DB gets paid when first dies // Second to die - DB paid when second dies (this would be better for estate planning)

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45
Q

Universal life insurance - what is this and who directs the investments?

A

think Flexible! For premiums, face value, cash value. Insured doesn’t touch the investment portion (Up to the insurance co.)

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46
Q

Universal life A vs Universal life B

A

A - flexible premium, which the DB will go up when the cash value exceeds the DB // B - Same at universal A but DB benefits rise directly with the cash values

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47
Q

Variable universal life

A

Insured gets to invest into stocks and bonds with no minimum guaranteed of return. Cash values get invested into separate account. In the event of insuranc company failure - not be treated as asset of insurance company. More safety

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48
Q

Surrender value may taken up (List the options)

A

Taken in cash, used as a single premium to purchase a paid up insurance policy (Never have to pay anymore premiums), and buy extended term insurance

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49
Q

Settlement options (Lump sum and Interest only)

A

LS - All at once // Interest only - keeping it at company and getting interest on it

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50
Q

Annuity Payments types - (Fixed amount, Life income, Fixed period)

A

FA - $10,000 for 10 years // LI - Pay me the rest of my life // FP - Pay me over 20 years

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51
Q

Annuity Payments types - (Life income with period certain, joint and last survivor income)

A

LIWPC - Pay me over my life but but atleast 10 years // JALSI - Pay this amount while I am alive and pay a different amount when I die

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52
Q

Cross Purchase agreement (Pros/cons)

A

Pros - increases partner’s basis // Cons - Lot of polices N*(N-1) (8 people is 56 policies)

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53
Q

Entity purchase agreement (Pros/cons)

A

Pros - company pays, fewer polices needed (8 peopleis 8 policies // Cons - does not increase surviving basis

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54
Q

Key person insurance - who/taxable or nontaxable?

A

Designed to protect business from the death of a key employee // Premiums are not deductible BUT Death benefits are tax-free!

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55
Q

What is an annuity not appropiate for?

A

If you want to leave your assets to your heirs

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56
Q

Annuites do a great job of not allowing…

A

someone from outliving your assets

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57
Q

Annuities Types- (immediate vs Deferred)

A

I - Single lump sum payment that pays out right away // Deferred - Lump sum or periodic installment premiums tha pay at some future date

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58
Q

Annuities Types- (Flexible premium deferred annuity vs Single premium deferred annuity)

A

FPDA - Allows insured to vary the premiums paid which affects the retirement income // SPDA - Lump sum as a payment premium (can be used from life insurance policy proceeds)

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59
Q

Annuities Types- (Fixed, Variable, Equity indexed)

A

F - Fixed interest rate over time // V - Subaccounts which is more risky and no guaranteed rate of return // EI - Linked to index and has particpation in it (70%)

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60
Q

Pure life annuity - What is it and what is the risk?

A

Payments made to annuitant over time, payments stop at death of annuitant which could be very soon! (risky)

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61
Q

Life annuity with gauranteed minimum payments (Period Certain)

A

Minimum amount of term paid even if annuitant dies prior (5 year term) - Monthly income is less than pure life because it is more risk to company

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62
Q

Installment refund annuity

A

Payments contine for a minmum term or until death of annuitant with a cash refund option (Sam paid $250k, received $175k before death, beneficiary received $75k)

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63
Q

Joint and survivor annuity

A

Two annuitants, usually spouses - payments end at death of second annuitant

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64
Q

Life insurance proceed - what is taxable and non taxable? (DB, Interest earned, loans)

A

DB - not taxble // Interest earned on cash value is not taxable Until withdrawn // Loans are tax-free unless it’s a MEC

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65
Q

If you are trying to exchange an annuity for life insurance or vice versa.. Or for same product, which is taxable?

A

Annuity for Life insurance creates a taxable event (everything else is no)

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66
Q

MEC - how does it become one and what is it?

A

Fails the 7 pay test (Putting money in too fast), taxed on LIFO basis (Tax earnings first) - subject to 10% penalty if withdrawn before 59 1/2

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67
Q

Not a MEC - how is it taxed?

A

FIFO basis (Basis comes out first)

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68
Q

Are dividends taxable with life insurance?

A

Not taxable as it is considered a return of basis // IF dividends it were to exceed premiums, then taxable

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69
Q

transfer of policy for value - How is this taxed?

A

Taxable to transferee to the extent that proceeds exceed basis (Bought for $500k, DB was $750k, $250 gain)

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70
Q

transfer of policy for value - exceptions

A

Transferred to: the insured, business partner of insured, partnership of the insured, corporation which insured is a shareholder, transfer that results in carryover basis (gift)

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71
Q

Group life premiums - Deductible or not?

A

Deductible - taxable income for coverage in excess of $50,000

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72
Q

What is the exclusion ratio?

A

[Basis|what you put in / Total payments|total you expect to get] = Exclusion ratio

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73
Q

The exclusion ratio only applies until?

A

The principal is returned… after that all payments are fully taxable!

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74
Q

Taxation of viatical settlements

A

Insured who is chronically or terminally ill sells their life insurance policy // No taxes to insured but taxes on the gain for the buyer

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75
Q

Annuity LIFO Or FIFO for either before or after 1982 for withdrawals etc.

A

Prior 1982 - FIFO // After 1982 - LIFO

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76
Q

What does major medical cover and not cover?

A

Covers - Hospitalization, physican, and surgeon fees, physical therapy, prescription drugs // Not covers Eye exams and dental care

77
Q

How does the pay of major medical work?

A

Deductibles and there is a coinsurance portion // Also a max out of pocket

78
Q

How to solve Max out of pocket

A

1) loss - deductible ($10.5k - $500) 2) Co-insurance (($10k*20%) + Deductible (CAPPED at $1.5k - says in problem)

79
Q

Patient Protection & Affordable Care Act (PPACA) - Who does this apply to?

A

Required citizens to have health insurance along with companies with more than 50 EE’s

80
Q

Patient Protection & Affordable Care Act (PPACA) - what criteria must the health insurance policy have?

A

Guarantee issue and renewability // Dependent coverage for children up to age 16 // Prohibits lifetime limits and annual limits on coverage

81
Q

Preferred Provider Organization (PPOs)

A

Network of heathcare providers and discount on services within network // Allowed to go outside of network but might not have high discount (flexible)

82
Q

Health maintenance organization (HMOs)

A

In network medical and related services to their program participants (in network only)

83
Q

Differences between HMO and PPO - Cost and doctor access

A

HMO - Cheaper and in-network only // PPO - More expensive and more flexiblility

84
Q

Health savings accounts (HSAs)- What must a person be enrolled in to get this?

A

Have medical insurance under a high deductible heath plan (HDHP)

85
Q

Contributions to HSA - what are they for Single and Family? Catch up

A

S - $3,850 // F - $7,750 // Note that age 55+ $1,000 catch up contribution (REMINDER - IRA have catch up contribution at 50 (this is different))

86
Q

HSA qualified distributions (what are and arnt the permitted expenses)

A

Permitted - 1)Dental & Vision 2)CORBA & LTC premiums 3)Healtcare premums 4)Medicare 5)Over the counter meds (cold, flu) // Not permitted - cosmetic surgery

87
Q

HSA non qualified medical expenses - what is the consequence?

A

Subject to income tax and 20% penalty // If over age 65, only subject to income tax

88
Q

Steps in risk management (DIEDIE)

A

1)Determine objectives 2) Identify risks clients are exposed 3)Evaluate risks of probablity occurrence and potential loss 4)Determine alternatives for risk 5)Implement program 6)Evaluate, monitor, and review

89
Q

Are premiums deductable for the insured?

A

Not for insured but they are for the premiums that are taxable income for the employee

90
Q

What is a non-cancelable health insurance policy?

A

Fixed premium and it is continuous

91
Q

What is a Guaranteed renewable policy health insurance policy?

A

the right to be renewed but this can give the insurance company the ability to increase the premiums (this is a requirement of all health insurance policies)

92
Q

What would be the extra cost for someone that is on a CORBA policy?

A

ER may charge 2% for admin expense which would mean that it would be 102% of the actual cost

93
Q

To be offered COBRA, what must exist?

A

20 Full time EEs, ER offers group health plan, EE is already participating in group health plan

94
Q

How long do employees have to make the COBRA election?

A

60 days

95
Q

COBRA Election for: 1) Reduction in hours/termination 2)Death,divorce,medicare eligibility 3) Loss of dependency status by children of EE 4) EE meets Social security def of disabled

A

Study tip: 18 hours for reduction of hours/termination and 36 hours for everything else (disabled is 29 but disregard)

96
Q

What does Long term care provide?

A

Skilled Nursing, Intermediate nursing, Custodial Car, Adult day care, hospice care, assisted living

97
Q

Who can be eligible for long term care?

A

Chronically ill (Unable to perform 2 of 6 ADLs for at least 90 days) or substantial cognitive impairment - behaviors threatens saftey of own or others

98
Q

Chronically ill ADLs (Activities of daily living)

A

NOT WALKING // BED to Chair (Bathing, Eating, Dressing, Transferring from bed to chair, Toliet, Continence

99
Q

What are the qualified requirements for LTC?

A

No surrender value, limited to LTC services, does not pay for expenses covered under medicare, use dividends to reduce premiums or increase benefits

100
Q

Maximum deduction for Age 70 Long term care benefits

A

$5,960 (LTC premiums are tax deductible subject to medical deduction of 7.5% of AGI

101
Q

Disability insurance - Any occupation

A

($) - Considered disabled if insured cannot perform the duties of any occupation (Cheapest because it’s the least risky for insurance company)

102
Q

Disability insurance - Own occupation

A

($$$$) - Considered disabled if insured cannot perform the duties of his own occupation (Most expensive)

103
Q

Disability insurance - Modified Any occupation

A

($$) - Considered disabled if unable to perform duties of some job in the industry (He will be able to use his experience and knowledge but it might not be the same job) Surgeon –> Teacher in this subject

104
Q

Disability insurance - Split definition

A

($$$) - Begins in own occupation but moves into modified any occupation (Pays 5 years for own occupation and then moves into modified)

105
Q

Disability insurance - benefit period (What is short and long term)

A

Short - 2 years or less // Long - Coverage until normal retirement age

106
Q

Disability insurance - Elimination period

A

this is the amount of time between you becoming disabled and getting the benefits (Deductible)

107
Q

Disability insurance - Integration with social security

A

Benefits reduce by how much Social security is giving you (you are still getting the same amount either way)

108
Q

What should be the benchmark for disability insurance?

A

60-70% tax free benefits

109
Q

What are the tax implications of if the employee pays the premium?

A

Premiums are not deductible but the benefits are TAX FREE

110
Q

What are the tax implications of if the Employer pays the premium?

A

Premiums are deductible by the ER but the benefits to EE are taxed

111
Q

What are the tax implications of if the Employee pays the premium with pre taxed dollars (Cafeteria plan)?

A

Benefits are TAXED

112
Q

What HO polices are section I and which are Section II?

A

1) Dwelling, other structures, personal property, loss of use 2) Personal liability, medical payments to others

113
Q

Basic Named Perils (We don’t like these) (There are 12)

A

ONE WORD (Fire, lightning, windstorm, hail, riot, vehicles, theft, volcano etc)

114
Q

Broad Named Perils (There are 18)

A

Basic named perils (1-12) plus TWO WORD - falling objects, weight of ice, sudden bursting of appliances, freezing of system

115
Q

What is an open peril policy?

A

Protects against all perils EXCEPT those specifically excluded from policy

116
Q

General exclusions for all HO polices

A

Movement of groud (Earthquakes), Ordinance or law, Damage from water (flood), nuclear hazard or war, power failure, intentional act (Burning down your own house), neglect( termite damage)

117
Q

Section I Coverage A - Definition

A

(DWELLING) Repair or replacement of the house, attached structures - should purchase an amount equal to replacement cost of building

118
Q

Section I Coverage A - What is the least amount of coinsurance the insured must carry?

A

80%

119
Q

Section I Coverage B - Definition

A

(OTHER STRUCTURES) Includes detached garages or storage buildings (NOT BUSINESS PROPERTY)

120
Q

Section I Coverage C - Definition

A

(PERSONAL PROPERTY) Includes, electronics, clothing, painting (there are limits on cash, jewelry etc)

121
Q

Section I Coverage C - What is the standard coverage?

A

Actual cash value

122
Q

Section I Coverage D - Definition

A

(LOSS OF USE) Combination of additional living expenses and loss of rental income (Tree falling on your house and you have to live in a hotel)

123
Q

Section II Coverage E - Definition

A

(PERSONAL LIABILITEEEE) Protects the insured against claims arising out of both bodily injury and property damage (Insurer covers claims and the defense of the suit)

124
Q

Section II Coverage F - Definition

A

(MEDICAL PAYMENTS TO OTHERS) “Maybe if I am real nice to you, maybe you will not sue me coverage” // Medical expenses include reasonable charges for medical procedures // fault does not matter

125
Q

Section II Coverage F - Who does this apply to?

A

People that are not the insured and not the insured household (Feel good coverage)

126
Q

HO-1 Basic Form - What does it cover? (Open, Broad, basic?)

A

Covers only basic named perils (1-12)

127
Q

HO-2 Broad Form - What does it cover? (Open, Broad, basic?)

A

Covers basic and broad perils (1-18)

128
Q

HO-3 Special Form - What does it cover? (Open, Broad, basic?)

A

Coverage A-Dwelling & Coverage B- structures = Open Peril (Good) // Coverage C - Personal property = Named peril basis (Bad) // Coverage D- Loss of use = Can be broad/open

129
Q

HO-4 Contents Broad Form - Who is this designed for and what items does it protect against?

A

For renters/tenants - provides potection for furniture/clothes (C & D - Broad)

130
Q

HO-4 Contents Broad Form - what is the cover basis? (Open, Broad, basic?)

A

Coverage C (Personal Property) Coverage D (Loss of use)- Same perils as HO-2 Broad form (Basic and broad named perils (1-18))

131
Q

HO-5 Comprehensive Form - What does it cover? (Open, Broad, basic?) & For what items?

A

Open peril for dwelling and personal property (ABCD)

132
Q

HO-6 Unit Owners Form - what does it cover? (Open, Broad, basic?) & for who is this intended for?

A

Condo owners - Covers Coverage A - Dwelling & Coverage C - Personal property & Coverage D - Loss of use = All are broad - can get endorsements to make it open peril

133
Q

HO-8 Modified Form - what does it cover? (Open, Broad, basic?) & for who is this intended for?

A

Historical property - Cov A, B, C,D = Basic perils & this covers the repair rather than the replacement cost

134
Q

Flood Insurance - Waiting period

A

30-day waiting period

135
Q

Flood Insurance - Coverage on which objects?

A

Coverage on Dwelling/Contents // Coverage on other

136
Q

Watercraft insurance - What does it protect and not protect?

A

Actual cash value for the boat and permanently attached equipment (Not rod/reels/garmin) - Covers boats up to 25Hp

137
Q

Personal Auto Policy Part A - Definition

A

(LIABILITY COVERAGE) - Covers you, family or anyone with permission driving your auto

138
Q

Personal Auto Policy Part A - What does 50/100/25 means?

A

50 - Bodily damage per person // 100 - Bodily damage per Occurrence // 25 - Property damage per occurrence (Stated in thousands)

139
Q

Personal Auto Policy Part A - What happens to your insurance as you drive from state to state?

A

Increases depending on what the minimums are for each state

140
Q

Personal Auto Policy Part B - Definition

A

(MEDICAL PAYMENTS) Covers you, family member stuck in auto or as a pedistrian struck by auto // other person occupying auto

141
Q

Personal Auto Policy Part C - Definition

A

(UNINSURED MOTORISTS) - Pays what and “undersured” or uninsured driver

142
Q

Personal Auto Policy Part C - Who must be at fault for this policy to follow through?

A

It must be “undersured” or uninsured drivers FAULT (Not yours)

143
Q

Personal Auto Policy Part D - Definition

A

(COVERAGE FOR DAMAGE TO YOUR AUTO) covers damage on your auto and any non owned auto (Rental or borrowed car) // 2 types (Collision/Comprehensive or other than collison)

144
Q

Personal Auto Policy Part D - Two types of accidents

A

2 types (Collision/Comprehensive or other than collison)

145
Q

What falls under collision? (Part D)

A

Colliding with tree, other car, running off the road in creek/wall (THINK COLLISION)

146
Q

What falls under Comprehensive or other than collision? (Part D)

A

falling objects, fire, theft, explosion, earthquake, windstorm, hail, water, flood, or contact with bird or animal (THINK NON COLLIDING)

147
Q

Personal Auto Policy Part E - Definition

A

(DUTIES AFTER AN ACCIDENT OR LOSS) - 1) notify the insurer 2) File proof of loss 3) Cooperate with insurer in the investigation 4) If uninsured or theft - file a police report

148
Q

Personal Auto Policy Part F - Definition

A

(GENERAL PROVISIONS) - Coverage only in the US, PR, Canada (Not in Mexico)

149
Q

What are some Personal auto policy exclusions?

A

Motorcyles, Public livery (Uber), using friends vehicle with no end date of giving it back, racing, auto used without permission, auto used in insured’s business

150
Q

Legal Liability - What is “Negligence”?

A

Failure to act as a prudent person

151
Q

Legal Liability - What is “Defense to neligence”?

A

Assumption of risk (going on an expert path at a ski resort)

152
Q

Legal Liability - What is “Negligence on the part of the injured party”? Contributory vs Comparative

A

Contributory - the person who got hurt contributed to the loss, the victim cannot recover even if 5%/95% // Comparative - Victim can recover up the the negligence of other person

153
Q

What is a Personal Liability Umbrella Policy (PLUP)

A

Another layer of protection // Requires higher limits on underlying auto and home // CLIENTS NEED PLULP! $1 Million

154
Q

What is “Errors and Omissions insurance” and who should have them?

A

Covers negligent acts, errors, omission // For Accountants, Lawyers, Engineers, Financial Planners

155
Q

Who needs “Malpractice insurance”?

A

Doctors - if any bodily harm happens

156
Q

Social Security - what is the death benefit?

A

$255

157
Q

What is the tax for OASDI?

A

6.2% (Both ER and EE) up to wage base up to $160,200

158
Q

What is the tax for Medicare? (Also Additional Tax)

A

1.45% (Both ER and EE) on umlimited amount of wages // 0.9% (EE) in excess of $200k (S) / $250k (MFJ)

159
Q

What are the rules around reduction of benefits for Social security if you take them early?

A

Permanent reduction: 5/9 each month up to 3 years + 5/12 for each month beyond three years

160
Q

What is the increase in benefits for people that delay their social security benefits?

A

Simple interest of 8% per year after reaching Full retirement age

161
Q

Social Security “Disability” Definition

A

(Really tough to actually achieve) - “Disability is expected to last for 12 months or disability will result in your death AND cannot perform the duties of any occupation”

162
Q

How can someone qualify for medicare?

A

1) Attained 65 years old 2) Disabled for two years // Spouses can qualify at 65 based on other spouses work record

163
Q

Social Security - What are the qualifications for retirement benefits?

A

1)Must have 40 quarters of coverage 2) Your benefits depend on what your earnings are 3) You can earn all 4 quarters in one day of working

164
Q

Social Security Disability - You are covered for disability if you are 1)Age 31 or greater 2)Age 24-31 3)Age 21-24

A

1) 40 quarters in total and earned 20 out of last 40 2) 1/2 quarters covered since worker turned 21 3) 6 quarters earned

165
Q

Social Security beneficiary requirements for divorced spouse?

A

If Age 62 // married to worker for 10 years // has not married after

166
Q

Social Security beneficiary requirements for widow?

A

age 60 AND is caring for child under 16

167
Q

Social Security beneficiary requirements for spouse of retired/disabled worker?

A

Who is atleast 62 OR caring for child who is under age 16 or disabled

168
Q

What are the benefits of beneficiaries of the fully insured worker is still alive?

A

Worker-100%, Spouse w/ Child under 16-50%, Spouse age @FRA-50%, Dependent parent (Atleast age 62)-0% (Others are not important)

169
Q

What are the benefits of beneficiaries of the fully insured worker has died?

A

Worker-Deceased, Spouse age @FRA-100%, Dependent parent (Atleast age 62)-75/82.5% (Others are not important)

170
Q

What are the benefits of beneficiaries of the fully insured is on disability?

A

Worker-100% (Others are not important)

171
Q

What children can have social security benefits?

A

Children 17 or under (OR under 18)

172
Q

What would cause a temporary reduction in benefits?

A

Earning too much while having social security benefits - If above threshold 1)before FRA - SS reduced $1 for every $2 2)FRA -SS reduced $1 for every $3

173
Q

Taxation of Social security benefit: Max taxation and its based on (the number)

A

Up to 85% of SS can be taxable //Based on AGI + Nontaxable interest + 1/2 SS Benefit

174
Q

Social Security - Hurdles for MFJ and Single

A

MFJ - 32K & 44K // S - 25K & 34K

175
Q

What is medicare? Who provides it?

A

Federal health insurance (Provides hospital and medical insurance)

176
Q

Medicare Part A - What insurance is this?

A

Hospital insurance (Inpatient Hospital care, skilled nursing care, home health care, hospice)

177
Q

Medicare Part A - What is covered / not covered?

A

Covers: Semi private room, meals, lab tests, x-rays // Not covered: Custodial services

178
Q

Medicare Part A - Information about the benefit period/Coinsurance and pay around it? (Hospital)

A

Benefit period starts on day 1 in hospital, ends after 60 days ($1600) deductible // Coinsurance - Days 61-90 ($400 per day), 91-150 ($800 per day)

179
Q

Medicare Part A - Information about the benefit period/Coinsurance and pay around it? (Skilled nursing care)

A

Days 0-20 (Free), Days 21-100 ($200 a day)

180
Q

Medicare Part B - What does it cover?

A

Covers: Doctor visits, equipment, lab tests

181
Q

Medicare Part B - What does Not cover? Know this

A

Not cover: Dental care, cosmetic, hearing aids, eye exams

182
Q

Medicare Part B - How does someone pay?

A

Coinsurance - they pay 80% of approved charges // Premiums + Yearly deductible

183
Q

Medicare Part C - What is this and why would someone buy this?

A

Medicare advantage - Something you have on top of Medicare Part A+B

184
Q

Medicare Part C - What does this cover?

A

Covers everything that original medicare covers except hospice care, covers emergency and urgent care, Covers dental care + eyeglasses, These plans usally include Medicare part D (Prescription)

185
Q

Medicare Part D - What does this cover?

A

Prescription Drug coverage

186
Q

When does Medicare not cover you?

A

When you are out of the country

187
Q

Applying for Medicare: When are you automatically enrolled?

A

If you are collecting social security at 65 or under - auto enrolled // If you are not collecting Social security at 65 (Lets say your FRA is 67) - you must enroll

188
Q

Homeowner insurance losses: If sudden & accidental then ______, if Neglect and intentional then _______

A

If sudden & accidental then COVERED, if Neglect and intentional then NOT COVERED

CFP (7 decks)

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