Karteikarten
Life Exam
Karten in diesem Stapel (91)
- 1Term Life Insurance Term Lengths10 and 20 years
- 2Explain RenewabilityAt the end of the term the insured may renew yearly without proof of insurability until age 95.
But their can be an increase in the premium after the term. - 3Explain ConvertibilityThe insured can convert their term policy anytime during the policy period WITHOUT proof of insurability
- They will maintain the same classification but rate will be set at the age of conversion.
-If they do it within the first 5 years they will receive a 20% credit on the first years premium (Option 1) - 4Name the 5 risk classifications for Life InsurancePreferred Plus
Preferred Non-Tobacco
Preferred Tobacco
Standard NON-Smoker (Table)
Standard Tobacco (Table) - 5All the rights in the policy belong to who?The owner of the policy
- 6Explain the three types of beneficiariesPrimary - Person named to receive the death benefit
Contingent - Next person up if the primary beneficiary dies.
Irrevocable - Cannot be removed without written consideration (usually court ordered) - 7The entire contract is made up of three parts - name them-The policy
-The application, delivery receipt and questionnaires
-Any rider and endorsements - 8Explain Contestability and how it suicide relates to it?We cannot contest the policy after 2 years. However, we can investigate within the first 2 years to make sure there was no misrepresentation during the application.
- If there is a case of suicide then the premiums up until that point will be reimbursed and no death benefit will be paid. - 9Explain Waiver of premium in regards to Life InsuranceWe will waive premiums if the insured becomes
-Totally Disabled
-For at least 6 months
-Before age 60
-Own Occupation 2 years
- After that it will be become any occupation - 10Explain the Children's Insurance Rider in regards to life insurance (3 bullets)- For Current and Future Children
- Between the ages 14 days and 25 years
- 5k to 15k of coverage per child. - 11Universal Life Flexible Premium PaymentsAs long as there is enough money in the policy to cover the next month's cost of insurance and expense charges then the policy will not lapse.
- 12Describe Differences between option 1 and 2Option 1 is a level death benefit, cash values build up in the policy, less expensive.
Option 2 increasing death benefit, cash value outside of the policy, more expensive. - 13Interest Rates Current Rate? Guaranteed Rate? Loan Rate? Credited/Net Loan rate?Current: 5%
Guaranteed: 3%
Loan Rate: 7%
Credit/Net Loan Rate: 4% - 14What is the smallest policy we can write? What is the smallest increase we can make?$50,000 for both
- 15Minimum face amount to get preferred rates?$100,000
- 16Surrender charges last for how long? Why do we have surrender charges?10 years
Keep the insured motivate to keep the policy in place - 17Length of time for contestability?2 years
- 18Loans and Partial Surrenders - When does it make more sense for someone to do one over the other?Loan - Short term plan on paying it back
Partial Surrender - Long term don't plan on paying it back - 19What is the surrender fee? How do both options pay it out?$50
Option 1 reduces face amount
Option 2 taken out of the top cash value - 20Universal Life Insurance Children's Rider (3 Points)- Current and Future kids
- 14 days to age 25 years
- 5k to 25k - 21Universal Life Insurance Waiver of Cost of Insurance - Explain (3 additional Points)Waives the monthly deduction (cost of insurance and expense charges) NOT the entire premium
-Disabled at least 6 months
- before age 60
- Own Oc for 2 years and any for after - 22Option to Increase Rider - Explain -(4 additional Points)The ability to increase their permanent insurance without proving insurability
- Every 3 years
- Between ages 25-43
- Increase options 50k/250k or 100k/500k
-Can advance at marriage, birth, or adoption - 23Disability Income What percentage of disabilities come from sickness/illness?80/85%
- 24Disability Income 1 in how many people have a disability for at least 90 days between ages of 30-651 in 4 people
- 25At what point do we have to verify income for disability income?$100,000
Except in Cali Bro - 26What are the two parts of the disability payment? Which part is guaranteed? Which part of the benefit corresponds with social insurance? And what is the Max?Basis (guaranteed) and the
SIS - correlates with the social benefit
SIS Max: $1400 - 27Be able to explain an example of how the SIS benefit is reduced by social insurance kicking in.The SIS is originally $1400
Social Insurance: $1000
The SIS is reduced to $400 - 28Income Includes what 3 parts?Regular Earnings
Business Profit
Rents from Personally owned Buildings - 29What is the range of income Federated covers?$12k to $300k
- 30Explain a Non-Cancellable Does Fed have this policy or the competitors?The policy may not be canceled and the premium is locked in as long as the insured pays the premium.
FED has Non-Cancellable - 31Guaranteed Renewable (Most Competitors)The Policy may not be canceled as long as premium is paid BUT the premium can be raised at any time on a class basis.
- 32Disability must lead to (Loss of what) for the benefit to be paid out?Loss of Income
- 33Disability Income - Own occupation last for how long?3 years
- 34Benefit period for Disability Income Period2 years
5 years
Age 67 benefit - 35-Explain what the waiting period is for DI? -What are the waiting periods available for Disability Income? -When will the death benefit be paid out- Amount of time the insured has to be disabled before you receive your benefit
- 30, 60, 90, 180, 365
- First benefit payment will be received 30 days after end of waiting period - 36Explain Regular Occupation in regards to DisabilityFederated will look at what you were doing just prior to your disability
- 37Occupation class B - Give an exampleOwner of a higher hazard occupation
- 38Occupation class 1A - What is the percentage of hands on threshold?- Owner of a contracting business that goes out on the job frequently
- More than 25% - 39Occupation Class 2A - Example and the hands on threshold?Business owner (Check specific example)
Less than 25% on the job - 40Occupation 3A - Example-Professionals with some travel involved, -owners with 20 plus employees that
-No hands on work - 41Occupation Class 4A - ExampleCPA or attorneys
Highly educated, skilled people - 42Waiver of Premium - Explain Is it (automatically/non automatically) included on DI policyWe will waive the premiums (If disabled for more than 90 days) for the remainder of the disability and will refund any premiums paid up until that time.
-AUTOMATIC - 43Explain Rehabilitation benefits in regards to DI Is it (automatically/non automatically) included on DI policy?If there is a program of occupational rehab that will help the insured return to work to their regular occupation that would pay at least 75% of their earning then we will pay for the cost of the program
-AUTOMATIC - 44Disability Income Riders GMI Rider - What does it stand for 4 PointsGuaranteed Medical Insurability
-Increase the benefit by 100/200/300
-Increase every 2 years
-Until age 52
-WITHOUT PROVING INSURABILITY - 45Disability Income Rider EROR stands for? What does it do?Extended Regular Occupation Rider
-Removes the three year rule and gives the insured own occupation for the remainder of their policy (must be 2A, 3A, 4A) - 46Disability Income Rider COLA what does it stand for?Cost of Living Adjustment Rider
Will adjust total benefit every 12 months
- After a total disability
- Adjusted from the CPI
- 3% - 8% - 47Disability Income Rider Business Owner Benefit Rider (3 to 4 points)-$1000 - $5000 of extra DI benefit
- first 12 months Max limitation is 24 months
- Must own at least 25% of the business and work 30 hours per week.
- Can spend the money on anything they want - 48Explain Key Person Life Insurance? - Name examples of expenses - How is this taxed?A policy used to protect the business due to the hardships the business will undergo when that key employee dies.
- Such as Loss of profit, hiring, training etc...
- Is not a tax write-off since it is an asset to the business. - 49Explain Executive Bonus -How is taxed- Business wants to provide a life insurance policy to a key employee in order to provide something extra to incentivize them to stay. An arrangement in which the business pays for a life or DI policy that is owned by the employee. Employee controls the policy.
- Business gets to write off the premium as a payroll tax deduction and the employee will be taxed at the end of the year - 50Explain the Split Dollar Endorsement- Can either attach this to a key person or on a private bonus arrangement. Special beneficiary designation done by splitting the death benefit for both the business and employee.
- 51Explain the Private Bonus PlanServes two purposes. If the employee were to die the business gets to replace the employee. Cash value is used to pay the employee bonuses.
- 52Key Person Owner? Payor? Beneficiary Tax implication?Owner: Business
Payor: Business
Beneficiary: Business
Tax: Not tax deductible to the business - 53Executive Bonus Owner? Payor? Beneficiary? Tax Implication?Owner: Employee
Payor: Business
Beneficiary: Employee Choice
Tax Implication: Tax deductible to the business as a salary expense. EE pays taxes at the end of the year based as a bonus for the premiums. - 54Endorsement Split Dollar Owner? Payor? Beneficiary? Tax Implication?Owner: Business
Payor: Business
Beneficiary: Business and Employee Choice
Tax Implication: Not tax deductible to the business. The EE will be taxed on the term cost of the benefit - 55Private Bonus Owner? Payor? Beneficiary? Tax Implication?Owner: Business
Payor: Business
Beneficiary: Business
Tax Implication: Deferred tax benefit in that the business can write off the cash value bonus as a salary expense. EE will be taxed on the bonus. - 56Explain the purpose of the Value estimator? What do we need from the business?Informal estimate of the value of their business using three different methods.
- Three years of financials and some basic information - 57What is the purpose of the agreement evaluator? What do we need to know? What do we need to get a copy of?- Tool used to look over a business's buy-sell agreement.
- Must first find out if they have one already in place and what exactly they want to have happen with their business in the future.
- Need a copy of the current agreement - 58What is an Estate? How is it valued? Is Life insurance included?Everything you own at fair market value on the date of your death**
- Life insurance face amount included in the estate for estate tax purposes - 59What is the annual gift tax exclusion? Lifetime exclusion? What is the maximum per couple? Why is getting rid of some of your estate used?$14k
Individual: $5.49 Million
Couple: $10.98 Million
To lower their taxable estate while they are living. - 60If the estate exceeds the limits what is the max percentage it can be taxed?40%
- 61What is the Marital and Charitable deduction?- There is none
A person can pass as much of their assets they want to a spouse or charity. - 62Explain IntestacyDying without having a will or a plan. State Determines how your assets will be passed.
- 633 reasons why Probate Sucks? What is a way to avoid Probate?Time Consuming
Expensive
Privacy Concerns
- Creating a Trust - 64Explain the LS5 - what it is and how the rating works?Last survivor policy (both have to die) the two people can be different risk classifications (one can be completely insurable) as long as one is rated D or better and the other is expected to live for 12 more months.
- 65LS5 - what is the guaranteed rate? Current Rate? Explain the loyalty Bonus? Surrender charges last how long?Guaranteed: 3% Current: 5%
- Loyalty Bonus: Crediting .5% extra once the policy has been kept for more than 15 years
- Surrender Charges: Last 15 years - 66LS5 Explain the 4 Year Term Rider?- This rider allows the person to increase the amount of death benefit their beneficiaries will receive within the first 4 years to account for the additional estate taxes.
- 67Life Link - Know how to do a - Term and Universal Life illustration - Combination of Term and Perm - Term vs. Perm Comparison - Disability Income Illustration- Combo of term/perm based on what the insured wants to pay
- Term vs. Perm - Know Break Even Point, Net cost
- DI illustration - how to tack on supplement coverage's if someone already has a DI policy - 68Group Health 4 tiers of plan levels and name their participation percentage?Bronze (60%)
Silver (70%)
Gold (80%)
Platinum (90%) - 69Group Health How many hours must a person work to be eligible for group health?Minimum of 30 hours
- 70Group Health Explain the following HMO's PPO's- Health Maintenance Organization - most restrictive coverage, must use a gate keeper to manage your health care, no out of network coverages.
- Preferred Provider Organization - Insured gets both in and out network coverage - not many rules/restrictions - 71Group Health Explain the following POS EPO- Point of Service - Similar to the PPO in that both in/out of network has coverage but there is a much more limited selection of service providers that are in-network
- Exclusive Provider Organization - Large network like a PPO but has NO out of network coverage - 72Group Health Prescription Drug Program is available on what two types of plans? What are the 4 levels of drugs?- Copay and Copay Plus
- Generic, Preferred, Non-Preferred, Specialty ($$$) - 73Life Insurance How long do Expense Charges last?5 to 15 years
- 74Life Insurance Explain the premium load year 1-3First year: 10%
Second Year: 7.5%
Third year and after: 5% - 75Explain the Closed Formulary concept for group healthSome drugs will not be covered even if prescribed but there will be an equivalent available.
- 76Explain the coverage for: Preventative care Diagnostic CarePreventative: Covered 100%
Diagnostic: Deductible/Coinsurance - 77Group Health What two dates can the employer change their plan?Normal Renewal Date or Jan 1.
- 78Group Health When is open enrollment? When is the effective date typically?- October 1 - December 15th
- Effective date of Jan 1 - 79Group Health Large Group requirements Small Group requirementsLarge: 51+
Small: 50 and below - 80Group Health What goes towards the Max OOP in an ACA plan (name the components) What goes towards the Max OOP for Non-ACA plans?ACA: Everything (Deductible, Copays-Prescriptions, Coinsurance)
Non-ACA: Copays do not count towards your OOP. You can hit your max and still have to pay Copays. - 81Group Health Explain Coinsurance in regards to Group HealthThe amount after the deductible the insured must share in cost with the insurance company.
- 82Dawns explanation of LS5 - 4 Year term rider.If they both die within the first four years they get an extra benefit to take care of the Estate Taxes that would become due.
- 83Estate Planning 5 options to pass your estate at death - Name them- Do nothing (Intestacy)
- Holding Title
- Beneficiary Designation
- Will (Probate)
- Trust (Revocable/irrevocable) - 84Estate Planning Be able to explain the Holding Title Option- When they hold their home the Joint Tenancy over rides all other estate planning.
- If the home is Joint Tenancy this overrides any will other estate planning. - 85Estate Planning 3 Year RuleIf they bought the property within the last three years it is included in their estate amount.
- 86Estate Planning What does the following mean? - Financial Power of Attorney - Health Care Power of Attorney - Advanced Directive or Living WillFinancial: gives someone the ability to act on your behalf financially
Health Care: Gives someone the ability to act on behalf for medical matters
Advanced: Outlines your wishes for end of life care if you are in a permanent vegetative state - 87Why is putting this in a Trust a good idea?The owner, the beneficiary is the trust.
The Trust can have beneficiaries as well. The owner's of the Trust can specifically cite what they want to have happen.
Also avoid Probate - 88Cross purchase - Who owns the policy, how does the pay out work? Stock Redemption - Who owns the policy, how does the pay out work?Cross Purchase: Owners own the policy on each other. One dies and FED pays the surviving owner to buy out the dead owners estate.
Stock: Business owns the life insurance and if an owner dies FED pays the business and the business buys out the dead owner estate. Shares dissolve. - 89Business Succession Disadvantage of Stock Redemption planNo Step up in Basis. Taxed on the entire amount of the business even though they have only invested half.
- 90Step up in Basis - explainStep up in basis happens when someone inherits assets from someone at the time of their death and gets the asset at the fair market value at that time. By having the step up in basis the person that inherits the asset will have a better tax break when they go to sell the property (Capital Gain).
- 91Increase in basis - ExplainIncrease in basis occurs when you buy into the asset more
- Example a business owner owns 50% of a 1mil company. The business owner buys out his partner and now owns 100% (1mil). His basis is now 1 million.
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- Karteikarten am Life Exam, erstellt von Dylan Overstreet am 14/02/2017.
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