Life Insurance and Health Insurance Studyguide 2023
Section 529 Plans - ANSWER - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - ANSWER private retirement plan that taxes income before it is saved,
but which does not tax interest on that income when funds are used upon
retirement
Distributions don't have to start before 70.5
401(k) plan - ANSWER Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often
the employer matches the employee contributions
Simplified Employee Pension (SEP) - ANSWER A qualified plan in which a
smaller employer contributes specified amounts directly into IRA accounts on
behalf of eligible employees
403(b) plan - ANSWER An elective deferral plan for employees of organizations
such as school systems, churches, and hospitals
Keogh Plan - ANSWER Retirement plan for self-employed individual and their
qualified employees
Rollover - ANSWER Tax free withdrawal of cash or other assets from one
retirement program and its reinvestment in another program. It is not considered
income and it is not taxable until a later withdrawal. Has to be completed in 60
days
Transfer - ANSWER When amounts of a qualified plan are transferred to another
qualified plan
Employee Retirement Income Security Act (ERISA) - ANSWER Federal law that
increased the responsibility of pension plan trustees to protect retirees,
established certain rights related to vesting and portability, and created the
,Pension Benefit Guarantee Corporation
profit-sharing plan - ANSWER a benefit whereby employees may share in the
profits of the business
Catch-up Contributions - ANSWER -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) -
established the catch up provisions**
Rollover time frame - ANSWER 60 days
Keogh Plan - ANSWER A federally-approved, tax-deferred savings program for
self-employed people, allowing them to set money aside for their retirement.
Annuity Period - ANSWER the payout period of an annuity
Flexible Premium Annuity - ANSWER allows the owner to vary the premium
payments
Deferred Annuity - ANSWER An annuity that starts sometime in the future.
Variable Annuity - ANSWER Annuity that has a varying rate of return based on
the mutual funds in which one has invested
Gramm-Leach-Bliley Act - ANSWER requires financial institutions to ensure the
security and confidentiality of customer data
,Certificate of Insurance (COI) - ANSWER proof that the insured has insurance
Market conduct - ANSWER refers to the marketing practices of insurers and
agents that involve interaction with insureds, claimants, or consumers
expense loading - ANSWER the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition
expenses, and an allowance for contingencies and profit
Straight Life Annuity - ANSWER The payout option that will guarantee an
annuity payment for the remainder of an individual's life. This option typically
provides the largest monthly payment.
Refund Life Annuity - ANSWER Provides annuity payments for the annuitant's
lifetime with the guarantee that in no event will total income be less than the
purchase price of the contract. If the annuitant dies before receiving this amount,
the difference is paid to a named beneficiary either as a cash refund or in
installments.
convertible term policy - ANSWER
Aleatory Contract - ANSWER a contract where the values exchanged may not be
equal but depend on an uncertain event
Insurance Dividends - ANSWER Considered to be a return of overpaid premiums
and is not taxable. You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned
, dividend is taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and
the price will change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year
(after 1 year, the term expires)
insurance benefit - ANSWER Advantage, privilege, right, or financial
reimbursement
Insurance Considerations - ANSWER The easiest way to protect yourself and
your organization from the legal liability and financial loss associated with
environmental safety risks is through insurance. Coverage by insurance allows the
facility to transfer the potentially devastating financial risk of a future loss for the
cost certainty of a monthly or yearly payment (i.e., premium).
Adverse Selection - ANSWER A high-risk person benefits more from insurance,
so is more likely to purchase it.
qualified retirement plan - ANSWER A retirement savings plan approved by the
Internal Revenue Service that provides individuals with a tax benefit
Unilateral Contract - ANSWER promise in exchange for an act
Elements of a Contract - ANSWER offer, acceptance, consideration
Section 1035 (Policy Exchanges) - ANSWER Due to the fact that life insurance,
annuities and endowments are all similar in nature (though they have their
differences), the IRS, under certain circumstances, allows for the exchange of one
Section 529 Plans - ANSWER - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - ANSWER private retirement plan that taxes income before it is saved,
but which does not tax interest on that income when funds are used upon
retirement
Distributions don't have to start before 70.5
401(k) plan - ANSWER Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often
the employer matches the employee contributions
Simplified Employee Pension (SEP) - ANSWER A qualified plan in which a
smaller employer contributes specified amounts directly into IRA accounts on
behalf of eligible employees
403(b) plan - ANSWER An elective deferral plan for employees of organizations
such as school systems, churches, and hospitals
Keogh Plan - ANSWER Retirement plan for self-employed individual and their
qualified employees
Rollover - ANSWER Tax free withdrawal of cash or other assets from one
retirement program and its reinvestment in another program. It is not considered
income and it is not taxable until a later withdrawal. Has to be completed in 60
days
Transfer - ANSWER When amounts of a qualified plan are transferred to another
qualified plan
Employee Retirement Income Security Act (ERISA) - ANSWER Federal law that
increased the responsibility of pension plan trustees to protect retirees,
established certain rights related to vesting and portability, and created the
,Pension Benefit Guarantee Corporation
profit-sharing plan - ANSWER a benefit whereby employees may share in the
profits of the business
Catch-up Contributions - ANSWER -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) -
established the catch up provisions**
Rollover time frame - ANSWER 60 days
Keogh Plan - ANSWER A federally-approved, tax-deferred savings program for
self-employed people, allowing them to set money aside for their retirement.
Annuity Period - ANSWER the payout period of an annuity
Flexible Premium Annuity - ANSWER allows the owner to vary the premium
payments
Deferred Annuity - ANSWER An annuity that starts sometime in the future.
Variable Annuity - ANSWER Annuity that has a varying rate of return based on
the mutual funds in which one has invested
Gramm-Leach-Bliley Act - ANSWER requires financial institutions to ensure the
security and confidentiality of customer data
,Certificate of Insurance (COI) - ANSWER proof that the insured has insurance
Market conduct - ANSWER refers to the marketing practices of insurers and
agents that involve interaction with insureds, claimants, or consumers
expense loading - ANSWER the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition
expenses, and an allowance for contingencies and profit
Straight Life Annuity - ANSWER The payout option that will guarantee an
annuity payment for the remainder of an individual's life. This option typically
provides the largest monthly payment.
Refund Life Annuity - ANSWER Provides annuity payments for the annuitant's
lifetime with the guarantee that in no event will total income be less than the
purchase price of the contract. If the annuitant dies before receiving this amount,
the difference is paid to a named beneficiary either as a cash refund or in
installments.
convertible term policy - ANSWER
Aleatory Contract - ANSWER a contract where the values exchanged may not be
equal but depend on an uncertain event
Insurance Dividends - ANSWER Considered to be a return of overpaid premiums
and is not taxable. You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned
, dividend is taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and
the price will change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year
(after 1 year, the term expires)
insurance benefit - ANSWER Advantage, privilege, right, or financial
reimbursement
Insurance Considerations - ANSWER The easiest way to protect yourself and
your organization from the legal liability and financial loss associated with
environmental safety risks is through insurance. Coverage by insurance allows the
facility to transfer the potentially devastating financial risk of a future loss for the
cost certainty of a monthly or yearly payment (i.e., premium).
Adverse Selection - ANSWER A high-risk person benefits more from insurance,
so is more likely to purchase it.
qualified retirement plan - ANSWER A retirement savings plan approved by the
Internal Revenue Service that provides individuals with a tax benefit
Unilateral Contract - ANSWER promise in exchange for an act
Elements of a Contract - ANSWER offer, acceptance, consideration
Section 1035 (Policy Exchanges) - ANSWER Due to the fact that life insurance,
annuities and endowments are all similar in nature (though they have their
differences), the IRS, under certain circumstances, allows for the exchange of one
