Insurance

Question 1

Characteristics of different types of Life Insurance

Answer 1

Question 2

Definition of nonforfeiture value

Answer 2

Benefits that accrue to the insured when the policy lapses from nonpayment of premium.

Question 3

Cross Purchase vs Entity Purchase

Answer 3

Question 4

Key person insurance—protect a business upon a loss of a key employee. Premium deductible? Death benefit taxation?

Answer 4

Premium not deductible; Death benefit Tax free. Company own life insurance on EEs.

Question 5

Tort Law

Answer 5

Typically insurance covers for negligent and not intentional acts caused by the insured.

Question 6

Graded/Modified/Convertible Term

Answer 6

Low initial premium used by party expecting to have significant salary increases(example: doctor) and has permanent life insurance needs.

Question 7

Credit life

Answer 7

Protects the lender, usually very expensive(more favorable than term life insurance)

Question 8

Medicare part B does not cover

Answer 8

Dental care(dentures), cosmetic surgery, hearing aids, eye exams, routine physical exams

Question 9

Frank salary $100,000, ER coverage 2X salary in a group term coverage. Cost is $0.12/month for $1000 coverage. How much income must Frank include in his gross income? What is Frank is a 3% owner in an S corp?

Answer 9

a. $150x0.12x12=$216 b. >2% owner on S Corp, everything taxable, don’t have the 50k free coverage. $288 taxable income

Question 10

What is the rule of PPACA on Health Insurance policy?

Answer 10

All HI policies issued 2014 or later must be at least Guaranteed Issue and renewable per Patient Protection and Affordable Care Act (PPACA).

Question 11

If 19FT EE, 2 PT EE, does the company need to offer COBRA?

Answer 11

YES 2PT=1FT. If #EE reaches 20, then offer COBRA.

Question 12

How many days does EE have to make a COBRA election?

Answer 12

EE have 60 days to make a COBRA election.

Question 13

LTC taxation on premium and benefits

Answer 13

A portion of premiums are tax deductible(subject to 7.5% of AGI, below the line) and benefits are tax free for qualified expenses

Question 14

LTC policy renewal guaranteed?

Answer 14

LTC policy guaranteed renewable, could be cancelable.

Question 15

Disability Insurance Benefit Period

Answer 15

Short Term: Two years or less; Long Term: Coverage until normal retirement age, death or for a specified period of time

Question 16

Disability Insurance Waiver of Premium

Answer 16

Accident and sickness, make sure it covers both

Question 17

Home Owners (HO) insurance: Basic coverages
Section I Coverages:

Answer 17

• Coverage A: Dwelling
• Coverage B: Other structures
• Coverage C: Personal property
• Coverage D: Loss of use

Question 18

Homeowner Insurance Coverage for HO1-HO8

Answer 18

Question 19

Categories of Social Security

Answer 19

Retirement benefit, disability benefit, death benefit($255) , survivor’s benefit, medicare

Question 20

Social Security FICA tax

Answer 20

OASDI : 6.2% on both ER and EE up to $160,200. Medicare: 1.45% on unlimited amount on both ER and EE. Additional Medicare tax of 0.9(EE only) on income excess of $200,000 if Single or $250,000 for MFJ.

Question 21

Social security bottom bend point
Social security top bend point

Answer 21

Bottom: $1115
Top: $6721

Question 21

Social security Disability Monthly Earnings Limit (how much can you earn and still collect Disability)

Answer 21

$1470

Question 21

Social security Medicare part B deductible

Answer 21

$226

Question 22

Social security disability monthly earnings if blind

Answer 22

$2460

Question 23

Social security earnings limitation under FRA Social security earnings limitation at FRA

Answer 23

Under FRA $21,240 At FRA $56,520

Question 24

SS retirement benefits eligibility

Answer 24

Must be 40 quarters of coverage, 1 quarter=$1640. If age 25-35 fully insured and not working since then, retire at age 67 --- still qualify for full SS retirement benefit b/c it meets 40 quarters.

Question 25

SS Disability eligibility

Answer 25

6 credits in 3 previous yrs if disabled before age 24; 2 credits per yr between age 24 and yr of disability if age 24-30; 20-40 credits depending on age if disabled after age 30; 20 of these credits must be earned in the 10 yrs prior to disability.

Question 26

Who Could claim SS benetfit?

Answer 26

Child age 18 is not eligible for SS benefit, must be under 18

Question 27

Requirement of Divorced spouse draw benefit from ex-spouse

Answer 27

Married 10 yrs, divorce >=2 yrs , at least age 62, ex did not remarry(before age 60)

Question 28

Premium and face amount of Decreasing term life insurance policy

Answer 28

Level premium, decreasing face amount

Question 29

Jim owner, Jen insured, Jill beneficiary of a life insurance. If Jim dies, what is going to happen with his estate?

Answer 29

Cash value added to Jim’s estate---Interpolated terminal reserve(cash value)

Question 30

How to maximize social security retirement?

Answer 30

Fully insured status: 40 quarters/credits, earn $1640/quarter; 10 year is the fastest path to fully insured

Question 31

Medicare eligibility

Answer 31

Age 65, disability via SS, kidney