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122 Cards in this Set

  • Front
  • Back
Types of Life Insurance Policies
1. Term Insurance
2. Whole Life Insurance
3. Universal Life Insurance
4. Other Types
Policy of life insurance written to cover specific period of time
Term Insurance
in Texas, the longest you can write term insurance is ___ years
provides at _______ ages, the most dath protection per premium dollar spent
the amount of the insurance
"face amount variability"
2 choices when setting up
1. level term
2. decreasing term
face amount stays the same
level term
face amount decreases over time
decreasing term
in addition to providing life insurance, there is an automatic savings account built in
whole life insurance
if you decide you don't want the policy, you can...
take out the cash value or only some and keep the policy
3 different payment methods for whole life insurance
1. straight life
2. limited pay life
3. single premium life
premiums are paid as long as the insured is alive
straight life
pay premiums for only a specified period of time
limited pay life
pay all premium at once
single premium life
only difference b/t this type and universal life is that this type is more flexible
universal life insurance
universal life insurance is flexible in two ways
1. premium payments
2. death benefit
death benefits flexibility
- you can change it
- you can put money in it
- you can increase it
other types of life insurance
1. variable life insurance
2. credit life insurance
insurance company lets you make the decisions of how to invest the cash value
variable life insurance
- a decreasing term policy that is used to pay of a debt
- it is the same cost for everybody
credit life insurance
2 types of loss of health exposures
1. medical expenses
2. loss of income
type of insurance for medical expenses
health insurance
type of insurnce for loss of income
disability income insurance
providers of health insurance
1. insurance companies
2. blue cross/blue shield companies
3. HMO's:Health Maintanence Organizations
4. Self Insurance
5. Medicare (65+)/Medicaid (poor)
types of health insurance
1. health discount plan
2. basic health insurance policy
3. HMO
4. Point of Service Plans
5. Major Medical Policy
6. PPO:Preferred Provider Organization
- "1 stop shop for healthcare"
- pay a set fee to get fixed
- you have a primary care physician
HMO:Health Maintainance Organization
- still have one-stop-shop & primary care physician
- if you need to see a specialist, they will give you choives on which you can see
Point of Service Plans (HMO with a twist)
- choose your doctor and hospital
- downside: it will cost you more, has deductible
Major Medical Policy
deductible specifics
after cost is shared (usually 80% company 20% you) there is usually a cap (around $5,000) where insurance company pays the rest
- written with Major Medical
- $30 per isit if you go to a doctor on the list
PPO:Preferred Provider Organization
Other types of health insurance policies
1. dental insurance
2. long term care insurance
covers things like a cavity and root canal
dental insurance
- covers the need for assistance with daily living
- if you have issue with two of these, policy will pay
long term care insurance
provides income payments if the insured is disabled as a result of an injury or illness
disability income insurance
3 types of disability definitions
1. unable to perform the major duties of your occupation (best)
2. unable to perform the major duties of any occupation for which you are suited through education/training (good)
3. unable to perform any gainful employement (bad)
how long will the policy pay?
- short term policy pays up to 2 years
- long term policy may pay either up to age 65 or some even for life
what is the elimination period?
it is a "waiting period" (a deductible in some ways)
- stated in a # of days
- short term will have 7 days usually
- most have 60 days (this helps bring premium down)
elimination period
benefit level of disability income insurance
usually up to 60% of your former income
can the premium change?
better policies are guaranteed forever
2 health insurance policy provisions
1. pre-existing conditions
2. grace period
how does the policy respond to a health condition that exists prior to taking on the policy
pre-existing conditions
says you have 30 days to pay the premium
grce period
3 sources of retirement planning
1. social security
2. employer sponsored retirement plans
3. person savings
a contract that provides for the liquidation of a sum of money through a series of payments over a specified period of time often for the lifetime of one or more persons
2 ways annuity premiums are paid
1. annual/flexible premium annuity. ex:401K
2. Single premium annuity
when does the annuity benefit begin?
might be immediately, might be at a later date
how long are the benefits payable? (5)
1. annuity certain
2. straight life annuity
3. joint & survivor annuity
4. period certain guarantee
5. refund guarantee
paid for a specific period of time
annuity certain
pays only for the life of the annuitant
straight life annuity
stops paying when the second person dies
joint & survivorship annuity
pays for life but guarantees to pay a certain minimum number of payments
period certain guarantee
pays for life but guarantees to pay all the money pay
refund guarantee
annuity taxation
before benefits begin, we don't have to pay on the growth but you are penalized for taking it out early
Reason for Employee Benefits
1. Improved Employee Relations
2. Tax Advantage
2 Tax advantages
1. cost is deductible
2. it is normally not taxable
Distinguishing features of Group Insurance
1. underwriting unit is the group
2. lower expenses
3. experience rating
4. contributory vs. non-contributory
they don't ask health questions
underwriting unit is the group
cost is determined by how good/bad the group has done
experience rating
whether or not the company has to pay part of the cost
contributory vs. non-contributory
the employee pays for it all
the employee pays for part of the cost
allows avoidance of being taxed on money taken out of paychecks for their plans
cafeteria plan
eligibility for benefits of group life insurance
1. must be working full-time (usually 30 hours a week)
2. must have worked for company for a minumum number of days (usually 60)
Amounts of group life insurance
1. level amount (everyones the same)
2. classification (higher up in the company you go, the more insurance you get)
3. multiple of earnings (1.5x your annual salary)
typically, term insurance may include _______ & ________
accidental death & dismemberment
says you will get double or get paid for loss of body parts
- allows you to continue coverage under health insurance plan even though you are no longer elligible
- allows coverage for 18 months
- optional to take, mandatory for employer to give
3 cost containment features
1. pre-certification
2. review of charges
3. wellness program
must notify insurance company of care you will receive if it is not an emergency or else they won't pay as much
incentive for you to look through your hospital bills
review of charges
insurance pays for routine physical and sometime will pay for membership to health clubs
wellness program
group discount sick leave plans
paid time off
group disability income insurance short term vs long term
most quit paying at the age of 65
group disability income insurance coverage
same as individual disability insurance
group disability income insurance benefit level
different from individual policy
Chp 20
Employee benefits & retirement plans
Chp 20
Employee benefits & retirement plans
a plan for retirment
pension plan
goal of plan
to provide retirement income for employees
2 types of plans
1. defind benefit plan
2. defind contribution plan
example forumule for month pension payment for retirement under defined benefit plan
2% of final salary for every year with the firm
IRS recognizes these types of plans and approves them as pension plans
qualified plans
whenn the plan is qualified, money that does in is ______
tax deductible
non-qualified plans _____ against different employees
IRS has very strict discrimination rules
deals with what right does the employee have to the $ in the retirement account if they leave before retirement
%100 vested means
the employee gets all of the employer's money
0% vested means
you get none of the employer's contributed money
Genereal rule for vested is
you get 100% after 7 years
- an employee can put up to $15000 per year into this
- it is a defined contribution plan
- conpany will have a certain amount that they will match
(403b for non profit)
Chp 21
Financial and Estate Planning
Chp 21
Financial and Estate Planning
involves looking at a person's comprehensive financial plan
financial planning
involves taking steps to ensure that when you die, your assets go to your desired beneficiary and no the federal government
estate planning
IRS says you can leave $__ million behind to your beneficiary and they won't get taxed
4 objectives for estate planning
1. minimizing the cost of transfering property to heirs
2. providing liquid funds to pay transfer costs in the most exonomical way
3. assure that estate assets will be transferred to desired beneficiary
4. planning for the most efficient use of an estate's assets
costs associated with estate transfer
1. debts: most are paid out of assets
2. adminstrative costs: executor of the state, person in charge of estate when you die
3. death taxes
risk of death
someone is financially hurt by our death
these are normally not tax deductible
these are not subject ot income tax
beath benefits
savings account in life insurance policies
cash value
will grow over time, no tax owe on growth
take money from cash value, only pay tax on amount in excess of premiums you have paid
no income tax on money, benefits go down by amount borrowed
policy as been in effect for two years, insurance company can't deny coverage because of concealment, misrepresentation or fraud (takes away an out for insurance policies)
incontestability clause
happens during first two years, no coverage, premiums returned without interest to beneficiary
suicide clause
lie about age or sex
misstatement of age or sex
death benefits = insurance that would have been paid had true age or sex been stated
if insured lies
most people will be owner, insured and pick beneficiary
beneficiary designation
make sure it is clear because you are dead. Change as issues come up in life
importance of wording
reveives money if primary beneficiary isn't alive
contingent beneficiary
chioces beneficary has when insured dies
settlement options
insurance company holds money, you get interesting in money market, you get checks to take out money, more popular for large amounts
interest option
pays a specified amount each month
fixed amount option
proceeds paid with installments over a fixed period of time
fixed period option
pays beneficiary a monthly income for life. see this with older people who die and have a spouse as beneficiary
life income option
owner becomes disabled, premiums are waived. policy will remain in force
waiver of premium benefit
policy pays more (double) if death results because of an accident
accidental death benefit
under certain circumstances a percent of policies face amount can be paid prior to the insured's death
living benefit option
details of living benefit option
terminal illnes < 24 months
amount varies
people pay money for another person's life insurance policy (started by crooks)
viatical settlement
HB 1440 TX
government needs to do something to keep more people under health insurance
specifics about HB 1440 TX
- applies to business with home offices in Texas
- applies to business that have an insured health insurance plan
- most offer coverage to unmarried children until age 25