C17 & C19 - Life Cycle Risks & Life Insurance

C17 - Life Cycle Risks/Exposures

• Understand various life cycle risks, such as mortality, longevity, morbidity, disability, and annuity.
• Be proficient with statistical tables for these factors.
• Evaluate economic value of human life (deceased), including income they'd have acquired if they survived.
• Assess needs of dependents (financial).
• Know capitalization approach (principal reservation + income).
• Differentiate between cash (taxable) and non-cash (non-taxable) employment-based benefits.

C19 - Life Insurance

• Understand how life insurance works through pooling and discounted mortality rate calculations.
• Calculate cost of death protection (#dying/#alive) * $1,000.
• Differentiate between term, whole, universal (type a/b), and variable life insurance.

Term Life Insurance

• Year-to-year premiums, premiums increase annually, pure death protection.
• Only insured during policy period.

Whole Life Insurance

• Lifetime protection, fixed-premium.

Universal Life Insurance

• Guaranteed minimum interest rates based on only bonds.
• Flexible death benefits.
• Face amount increases as cash accumulates.

Variable Life Insurance

• Mutual fund based (risky).
• Value depends on stock performance.
• Fixed premiums.

C20 - Whole Life Insurance Policy Provisions

• Understand the level premium payment method, reserve (cash value) accumulation.
• Understand cash value accumulation for meeting saving needs.
• Know difference between living and death benefits and associated tax implications.
• Know about living benefits (e.g., terminal illness coverage) — typically tax-free if used for qualified expenses, otherwise potentially taxable.
• Understand death benefits (lump sum paid upon death), typically tax-free but may be taxable if estate related.
• Calculate after-tax value of a terminated whole life insurance policy.
• Know life riders like waiver of premium and accidental death benefit features.

Group vs Individual Life Insurance

• Group Life Insurance: Offered by employers, covers multiple people under one policy, generally lower premium, limited customization, and limited portability if you leave the group.
• Individual Life Insurance: Purchased by an individual, tailored coverage, higher cost, independent of employment or group affiliations.

C21 - Retirement Plans

• Define qualified versus non-qualified retirement plans (and their features).
• Know basic retirement types (e.g., DC, DB plans, 401(k), IRA).
• Understand advantages and disadvantages of each type of plan.
• Be familiar with annuities: types, options, advantages/disadvantages, and how they mitigate longevity risk.

C22 - Health Care System

• Understand U.S. Health Care System: its operation, costs, and changes.
• Understand advantages and disadvantages of the system.

C18 - Social Security

• Understand what the acronym OASDHI program stands for
• Discuss financial problems of Social Security and some potential fixes.
• Understand how you qualify for Social Security benefits, and when benefits can be received.

Medicare Coverage

• Explain components of the Medicare Health Insurance Program.
• Medicare parts A, B, and D coverage specifics.