PFS Communication with Teachers & Parents 3

Question 1

A PFS advising a parent on estate planning should communicate that assets held in a revocable living trust at death:

Accepted Answer

Pass outside of probate to named beneficiaries

Answer

Assets in a revocable living trust pass to beneficiaries outside probate, but they remain part of the grantor's taxable estate for estate tax purposes.

Question 2

When a teacher client inquires about disability insurance, a PFS should explain that an 'own-occupation' disability policy pays benefits when the insured:

Accepted Answer

Cannot perform the specific duties of their own occupation

Answer

An own-occupation policy pays benefits if the insured cannot perform the material duties of their specific occupation, regardless of whether they could work in another field.

Question 3

A parent asks their PFS about the dependent care FSA benefit. The annual maximum contribution limit per household for a dependent care FSA is:

Accepted Answer

$5,000

Answer

The dependent care FSA contribution limit is $5,000 per household ($2,500 if married filing separately), not per individual.

Question 4

A PFS should advise a teacher with a defined benefit pension that the pension's value for net worth purposes is best estimated using:

Accepted Answer

The present value of projected future pension payments

Answer

The present value of projected future pension payments, discounted at an appropriate rate, is the most accurate method to estimate a defined benefit pension's value.

Question 5

When communicating life insurance needs to a parent, a PFS using the human life value approach bases the death benefit primarily on:

Accepted Answer

The present value of the insured's projected future earnings

Answer

The human life value approach calculates life insurance need based on the present value of the income the insured is expected to earn over their remaining working life.

(PFS) Personal Financial Specialist Practice Test

(PFS) Personal Financial Specialist Practice Test

PFS Communication with Teachers & Parents 3