CFP512: RISK MANAGEMENT, INSURANCE, AND EMPLOYEE
BENEFITS PLANNING EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED GRADED A++
Taxation on life insurance transfer due to divorce
2018 & Before: premiums deductible to payor, taxable to payee
2019+: premiums NOT deductible to payor or taxable to payee
Investment in life insurance contract =
premiums - dividends - loans/withdrawals
Guaranteed lifetime withdrawal benefit (GLWB)
can withdraw certain % of contract each year for life regardless of subaccount
performance
Guaranteed minimum withdrawal benefit (GMWB)
can withdraw certain amount of contract (typically return of premium) during specific
period regardless of subaccount performance
Guaranteed minimum income benefit (GMIB)
can annuitize to a certain minimum guaranteed income regardless of subaccount
performance
Guaranteed minimum accumulation benefit (GMAB)
guarantees at least return of principal after specific waiting period
Fixed annuity exclusion ratio =
investment in contract / expected return
, Variable annuity exclusion ratio =
investment in contract / # expected annual payments
Taxable annuity payments
amount in excess of excluded amount
payments beyond projected life expectancy
Non-natural person as annuity holder
income on contract treated as ordinary income in that year
loss on contract treated as ordinary loss without limit
Modified own occupation
Unable to work in occupation reasonably fitted by education, training, experience, and
prior economic status
Presumptive disability conditions
blindness
deafness
loss of speech
loss of two or more limbs
Social Security disability definition
inability to engage in any substantial gainful activity longer than 12 months
Social Security disability elimination period
5 months
Residual disability rider
policy will pay difference in income prior to disability after returning to work and earning
lower income
BENEFITS PLANNING EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED GRADED A++
Taxation on life insurance transfer due to divorce
2018 & Before: premiums deductible to payor, taxable to payee
2019+: premiums NOT deductible to payor or taxable to payee
Investment in life insurance contract =
premiums - dividends - loans/withdrawals
Guaranteed lifetime withdrawal benefit (GLWB)
can withdraw certain % of contract each year for life regardless of subaccount
performance
Guaranteed minimum withdrawal benefit (GMWB)
can withdraw certain amount of contract (typically return of premium) during specific
period regardless of subaccount performance
Guaranteed minimum income benefit (GMIB)
can annuitize to a certain minimum guaranteed income regardless of subaccount
performance
Guaranteed minimum accumulation benefit (GMAB)
guarantees at least return of principal after specific waiting period
Fixed annuity exclusion ratio =
investment in contract / expected return
, Variable annuity exclusion ratio =
investment in contract / # expected annual payments
Taxable annuity payments
amount in excess of excluded amount
payments beyond projected life expectancy
Non-natural person as annuity holder
income on contract treated as ordinary income in that year
loss on contract treated as ordinary loss without limit
Modified own occupation
Unable to work in occupation reasonably fitted by education, training, experience, and
prior economic status
Presumptive disability conditions
blindness
deafness
loss of speech
loss of two or more limbs
Social Security disability definition
inability to engage in any substantial gainful activity longer than 12 months
Social Security disability elimination period
5 months
Residual disability rider
policy will pay difference in income prior to disability after returning to work and earning
lower income
