Insurance Flashcards

Question

Subrogation

Answer 1

The insurer pays-out your claim and pursues and civil action on your behalf. You have been "made-whole" and no longer have right to sue or settle a suit. The exception is under the "collateral source" rule - additional damages that are not adequately covered by your insurer. You can still sue. (Ex: PTSD or mental impairments present after a catastrophic event)

Answer 2

Annuitization; generates needed income; leaves NO MONEY at the end of the planned period Takes into account all current resources held (other insurance, assets, etc.)

Answer 3

Determined amount needed to replace wage-earner's income. PV of income at the earner's death. Does not take into account other resources/assets/policies currently held.

Answer 4

Uses interest only so original capital is left at the end of the planned period

Answer 5

Expected return - inflation *only divide expected return by inflation when time is a factor mentioned in the question; time value of money

Answer 6

May be issued by mutual (owned by policyholders) or stock (owned by stockholders) insurance Co's - Pays dividends to the policyholder; excess investment returns or fewer claims in a given year (lower mortality/expenses) - "willful overcharge" - extra premium - Any return of extra premium is generally tax-free

Answer 7

Does not issue dividends to policyholders Any excess investment returns or lower mortality-expenses are retained for shareholders

Answer 8

Owned by policyholders, typically issues participating (dividend granting) policies.

Answer 9

Owned by shareholders. May issue participating (dividend granting) or non-participating (retains gains for shareholders) policies

Answer 10

On the Declarations Page ``` Section I: A. Dwelling (and structures attached) B. Other structures C. Personal Property D. Loss of use (additional living expenses) ``` Section II: E. Personal Liability F. Medical

Answer 11

$1,000 per person other than the insured

Answer 12

(Personal Liability; Subrogation) - business activity or professional services - Use of motorized land vehicles (except recreational vehicles used on premises) - Watercraft; except motorboat

Answer 13

HO-6 Open personal property (C), Broad 50% Loss of use (D) A and B are partially covered for names perils on installed items - wall-to-wall carpeting and cabinetry, fixtures $5,000 base loss assessment coverage, (can purchase more) for protection against assessments made by the condo association on losses to collectively owned property

Answer 14

HO-1 Basic (WHARVES/FLT) coverage on all parts

Answer 15

Broad (WHARVES/FLT + RAF) coverage on all parts

Answer 16

Basic plus RAF Rupture of a system, Artificially generated electricity, Falling Objects, Freezing of plumbing **Basically failure of any man made system that could cause damage to property

Answer 17

Open - Dwelling (A) Open 10% A - Other Structures (B) Broad 50% A - Personal Property (C) Open 30% A - Loss of Use (D)

Answer 18

Open all parts Most comprehensive coverage available

Answer 19

HO-8 Basic all parts. Same as HO-1

Answer 20

Broad Personal Property (C), Broad 30% C for Loss of Use

Answer 21

ACV ("Actual Cash Value") uses depreciation - original cost is non-essential information Structures are covered under replacement cost and personal property uses ACV

Answer 22

Part C of PAP This is liability coverage, not medical - though the money can be used for medical payments

Answer 23

Enrollment in Medicare B Cannot purchase medigap until enrolled in B

Answer 24

Capitation (pay flat fee to provider) Gatekeeper - no out of network except emergency

Answer 25

Pay fee-for-service basis Can go outside of network with reduced benefits

Answer 26

Single: 65% Family: 75% No FICA

Answer 27

Single: $3,350 Family: $6,650 Catch-up $1,000 over 55 yrs NO FICA

Answer 28

Proceeds are taxed at ordinary income rates Benefits - (Basis + Additional Premiums Paid) = ordinary income taxable amount

Answer 29

Proceeds to insured are split taxed as... Ordinary income: (Cash Value - premiums paid) LTCG: Recognized Income* - Ordinary income (from above) * Proceeds - Adjusted premiums** = Recognized Income ** Premiums Paid - Cost of Insurance = Adjusted Premiums

Answer 30

With the exception of the below, any transfer of life insurance for a valuable consideration eliminates the federally tax-free status for life insurance benefits. Exceptions: - transfer to the insured - transfer to partner of insured (partnerships only) - transfer to corporation of the insured (shareholder or officer) * *Common violation: - Using the life insurance for a stock purchase to fund a cross purchase plan - key person insurance transferred to a spouse or child of the insured. (MUST go to the insured, not a dependent or bene)

Answer 31

Similar to a deductible, Medicare will pay expenses above this amount. EX: Cost of nursing home is $257.50 per day, Medicare specified amount is $157.50. First 20 days, Medicare pays full $257.50. Next 80 days, Medicare pays $100 per day ($257.50-$157.50=$100)

Insurance Flashcards

(55 cards)