CFP - Insurance - March 2012

Gives insurer the right to pursue others for a claim you make.

Unilateral - only one party bound by commitment
Adhesion - a 'take it or leave it' contract.
Waiver provisions: Only the president, VP, secretary may alter contract.
Aleatory: Outcome affected by chance where payoff is unequal and large

Declarations - factual statements that ID the specific people & property insured
Definitions - explanation of key policy terms.
Insuring Agreement - basic promise of Ins Co.
Conditions - detailed description of duties & rights of both parties.
Exclusions

1) Assumption of risk - skiing
2) Contributory - jaywalking
3) Comparative (apportions blame)
4) Last clear chance

Abode (Dwelling & attached structures)
Buildings
Contents - personal property
'Ditional (indemnity - i.e. loss of use)
Enemies (liability)
First Aid (Medical payments to others)

Wind
Hail
Aircraft
Riot
Vandalism
Explosion
Smoke
Fire
Lightning
Theft

Rupture of a system
Artificially generated electricity
Falling object

Earthquake
Flood
Intentional Loss
Neglect
Ordinance
Earth movment, War, Power failure, nuclear hazard

Cash:
Reduction of premiums:
Accumulation with interest: (taxable interest)
Paid up Additions:
1 year term (aka 5th dividend option - div used to buy 1yr term = to CV)

- Cash Option
- Usage
- Reduced amount of paid-up
- Paid up term (aka 'extended term') policy stays in force as term for as long as CV pays term premium

Abode (dwelling & attached structures
Buildings (detached buildings)
Contents - Boats & trailers ltd to $1K. Excl property of renters.
'Dittional (Loss of use)
Enemies (personal liability)
First aid (medical payments to others)

Wind
Hail
Aircraft
Riot
Vandalism
Explosion
Smoke
Fire
Lightening
Theft

WHARVES / FLT
+
Rupture of a system
Artificially generated electricity
Falling objects / Freezing of plumbing

1) Ordinance of law
2) Earthquake
3) Water damage (flood)
4) Power failure
5) Neglect
6) War
7) Nuclear hazard
8) Intentional loss
also sinkhole is a covered peril

HO-1 - Basic
HO-2 - Broad
HO-3 - Open (B = 10%, C = 50%, D = 30%)
HO-5 (3/15) - Open
HO-8 - Older home - Basic
HO-4 - (renter's) - C = broad, D = 30% of C
HO-6 - Condo owner - C - Open, D - Broad + $5K of loss assessment

Eligibility: >65 & entitled to SocSec or disabled & receiving benefits >2yrs.
Benefits: A) Hospital stays for 60 days (1st deductible), add'l 30 days (2nd deductible), add'l 60 days (3rd deductible). Inpatient hospital care ltd to 150 days. B) SNF for ≤100days. C) Unltd post-hospital home health services D) Hospice E) 3 pints of blood

Voluntary program - premiums payable. Medicare pays 80% of approved charges (with no out of pocket limit).
Benefits: A) Doctors services (house calls, office visits & in hospital) B) Diagnostic tests, radiology/pathology, OT, drugs that CANNOT be self-administered. C) Outpatient services D) Unltd home health services E) Preventative care (colorectal & mammograms) & annual physical

1) Routine dental care and dentures
2) Optometry needs
3) Most immunizations (although 1 free flu and pnemonia shot)
4) Prescription drugs`

Need to be part of a private insurance program. Must have Part A/B. Entitles patient to 50% drug discount

Ten medicare supplement policies available (A - J).
Generally incl deductibles & co-insurance. Further down the list incl add'l benefits. Retirees may only be sold 1 medigap policy at a time.

Deductible for AGI on front of 1040. Contributions by individual or employer. Tax deductible up to $3050-S/$6150-MFJ. Must be covered under a High-deductible health plan. Deductible from plan (min) $1200 single/$2400 family.

Either individual OR employer may contribute but NOT both. Suitable for self-employed or small employers (<50). Must have High-deductible Health Plan. Deductible range = $2-$3K for single & $4.1-$6.15K for family.

Distributions can be for health-care needs not covered by HDHP & are tax free. No OTC drugs. Funds can be used to pay for retiree health insurance, prescription drugs, COBRA & LTC. Can be carried forward. Can do one-time IRA to HSA/MSA rollover. Can be used for dental, optical,

Pays a portion of the DB if insured deemed to be terminally ill (<2yrs) or chronically ill (unable to perform ≥ 2 ADL's & will qualify for LTC expenses only). May typically make available 50% of DB payable tax-free now & the other 50% at death.

Sale by a terminally ill (2yrs to live) insured to a company specializing in these transactions. Amounts received tax free to insured. Viatication company receives full DB, taxable only on amount received above basis (basis incl's premiums paid + initial purchase amount).

Sale by non-terminally ill person. Proceeds received are taxable as follows;
a) Up to basis (tax-free)
b) Ordinary income on difference between basis & cash-value (represents growth in cash-value)
c) LTCG above ≥ CV or basis to proceeds received.