Insurance Planning & Risk Management Flashcards

Which type of Medicare supplement (Medigap) plan is the only one that covers the Medicare Part B deductible under plans sold after January 1, 2020?

Answer: Plan G

After January 1, 2020, Plan F and Plan C were discontinued for new enrollees; Plan G is now the most comprehensive plan available, covering everything except the Part B deductible.

A 'split-dollar' life insurance arrangement in a corporate setting most commonly involves which two parties sharing which component of a permanent policy?

Answer: Employer and employee share the policy's cash value and death benefit

Split-dollar plans typically involve the employer and employee sharing the premium payments, with each entitled to a portion of the cash value and death benefit.

An RFC client wants liability coverage that sits above all underlying primary policies. Which type of policy provides this broad excess coverage?

Answer: Umbrella liability policy

An umbrella policy provides broad excess liability coverage over underlying auto, homeowners, and other primary policies, often filling coverage gaps as well.

When evaluating a client's risk management needs, which step in the risk management process immediately follows identifying and analyzing the risk exposures?

Answer: Select the appropriate risk management technique

After identifying and analyzing exposures (including measuring potential severity and frequency), the next step is selecting the appropriate technique (avoid, reduce, retain, or transfer).

A client's disability policy has a 90-day elimination period. The insured becomes disabled on March 1. When would the first benefit payment most likely be received?

Answer: July 1

A 90-day elimination period means benefits begin after 90 days of disability (June 1), with the first payment typically issued at the end of that first benefit month (July 1).

Which of the following best describes the 'incontestability clause' in a life insurance policy?

Answer: After two years the insurer cannot void the policy based on material misrepresentations in the application

The incontestability clause prohibits the insurer from challenging the policy's validity due to application misrepresentations after the policy has been in force for two years.

A key-person life insurance policy is owned and paid for by the corporation. When the insured key employee dies, how is the death benefit treated for tax purposes to the corporation?

Answer: Received income-tax-free under IRC Section 101(a)

Life insurance death benefits paid to a corporate beneficiary are generally received income-tax-free under IRC Section 101(a), provided the COLI notice and consent rules are met.