Life Insurance Concepts C17 & C19

C17

• Understand various life cycle risks/exposures
• Be familiar with statistical tables (mortality, longevity, morbidity, disability, annuity)
• Assess the economic value of human life (income they would've acquired if survived)
• Needs assessment (financial needs of dependants)
• Capitalization approach (principal reservation + income)
• Know the difference between cash (taxable) and non-cash (non-taxable) employment-based benefits
• Non-cash benefits are like non-cash benefits (not free)

C19

• Understand how life insurance works (pooling) and rate calculation (discounted mortality)
• Calculate cost of death protection (# dying/# alive) * $1,000
• Understand term, whole, universal (type a/b), and variable life insurance
• TERM: year-to-year premiums, death protection during policy period
• WHOLE: Lifetime protection, level premiums
• UNIVERSAL: guaranteed min interest based on bonds, flexible death benefit, cash accumulation
• VARIABLE: Mutual fund (riskier), fixed, depends on stock value

C20

• Be familiar with level premium payment method and reserve (cash value) accumulation
• Level premiums: remain constant
• Cash value: accumulated funds for savings
• Understand living and death benefit differences and tax implications
• Living benefit: payouts while alive, tax-free if for qualified expenses
• Death benefit: lump sum to beneficiaries, tax-free unless in estate
• Calculate after-tax value of whole life insurance policy
• Review whole life policy provisions
• Waiver of premium: skip payments if disabled
• Accidental death benefit: additional payout for accidental death
• Guaranteed insurability option: buy coverage without medical exam
• Understand group vs. individual life insurance
• Group: multiple people, lower premiums, employer-sponsored
• Individual: tailored coverage, higher cost

C21

• Understand employee benefits, group insurance, and total compensation
• Non-cash compensation (group insurance, educational assistance, etc.)
• Employer-employee group insurance pricing
• Nondiscrimination concept and enforcement
• Contributory vs. non-contributory plans
• Non-contributory: funded only by employer
• Contributory: employee pays part of pension fund
• Qualified vs. non-qualified plans
• Qualified: deductible business expense, not taxable income until received
• Non-qualified: business expense deduction only if compensation
• Understand types of retirement plans (DC, DB, 401(k), IRA, Roth IRA)
• Be familiar with annuities (types, options, advantages/disadvantages, longevity risk mitigation)

C22

• Understand Health Care System in the U.S., changes, advantages/disadvantages
• Be familiar with spectrum of health plans (costs, coverage, advantages/disadvantages)
• Understand Affordable Care Act components, controversies, and health care costs in US
• Continuum of health plans, major medical plans
• Importance of disability protection, group LTD coverage
• Accountable Care Organization (advantages/disadvantages, quality of care, cost)
• Know how US social security program (OASDHI) works, its benefits, financial problems, and potential solutions.
• Understand Medicare Health Insurance Program (Parts A, B, D) and SS benefits

This quiz covers essential concepts of life insurance, including life cycle risks, statistical assessments, and the evaluation of human life economics. Additionally, it explores different types of life insurance policies, their functions, and calculations involved in determining premiums and benefits. Test your knowledge on these crucial financial topics!