Insurance Planning Course Syllabus

Topic 1: Fundamentals of Risk Management

 Definitions of risk, hazard, loss; types of each (Text 1.2-1.11, Kaplan 3)

 Insurable risks (Text 1.12-1.15, Kaplan 5)

 Methods of handling risk (Kaplan 4-5, Text 2.4-2.12 and 2.22)

Topic 2: Insurance Company Types, Operation and Regulation

 Stock vs. mutual, fraternals (Text 3.3-3.7)

 Agent vs. broker; agents’ sources of authority (Text 3.12-3.15, Kaplan 11)

 Basic insurance company functions: underwriting, claims, rate-making, etc (Text

4.1-4.19)

 Insurance company regulation (Text 5.5-5.20)

 Insurance company ratings (Text 5.24-5.26), Kaplan 131)

Topic 3: The Insurance Contract

 Elements of a contract (Text 6.2-6.4, Kaplan 7-8)

 Void vs. voidable (Kaplan 8, Text 6.13)

  Insurance contract characteristics (Text 6.5-6.14, Kaplan 13-15)

o Unilateral
o Personal nature
o Conditional nature
o Adhesion
o Indemnity and subrogation
o Insurable interest
o Utmost good faith ( concealment, misrepresentation)

 Noncancelable vs. guaranteed renewable (Text 6.19)

 Endorsements and riders (Text 6.23)

Topic 4: Government Benefits: Social Security and Medicare

 Social Security: Background and extent of coverage (Text 7.2-7.4, Kaplan 76-77)

 Tax rates and wage bases (Text 7.4-7.5)

 Eligibility: fully, currently and disability insured (Text 7.5-7.6, Kaplan 76)

 Benefits (Text 7.6-7.17, Kaplan 77-83)

o Retirement benefits
o Survivor benefits
o Disability benefits
o Benefit amounts
o Early/delayed benefits
o Earnings test/reduction in benefits
o Filing for benefits
  Medicare: Tax rates, eligibility (Text 7.17-7.19, Kaplan 84-85)
 Medicare Part A (Text 7.17-7.22, Kaplan 85-86, 88)
o Types of benefits
o Exclusions

 Medicare Part B (Text 7.22-7.25, Kaplan 87-88)

o Benefits
o Exclusions

 Medicare Part D:prescription Drugs (Text 7.27-7.37, Kaplan 87-88)

o Characteristics, coverage, costs
o Benefits
o Gaps in coverage

 Taxation of premiums and benefits (Text 7.41-7.42)

 Unemployment Insurance (Text 7.42-7.46, Kaplan 91)

 Workers’ Compensation (Text 7.46-7.50, Kaplan 90-91)

Topic 5: Life Insurance Types and Uses

 Term Insurance types and characteristics (Text 8.9-8.13, Kaplan 23-24)

 Whole life Insurance (Text 8.13-8.24, Kaplan 24-26)

o Participating vs. non-participating

o Ordinary life vs. limited-payment life
o Endowments
o Variations: current assumption whole life and variable life

 Universal Life (Text 8.25-8.33, Kaplan 26)

o Features
o Flexibility
o Withdrawals
 o Level and Increasing death benefits
o Internal funds flow
o Variable universal

 Survivorship life (Text 8.34, Kaplan 27)

 Life Insurance policy provisions (Text 9.3-9.26, Kaplan 16-22)

o Grace period
o Policy loans, automatic premium loan provision
o Incontestable clause
o Dividend options
o Entire contract
o Reinstatement
o Misstatement of age or gender
o Nonforfeiture provisions
o Settlement options
o Beneficiaries
o Suicide clause
o Assignment provision
o Accelerated benefits provision
o Accidental death benefits
o Guaranteed purchase option
o Waiver of premium (Whole life) vs. waiver of cost (Universal life)

 Calculating the Insurance need (Text 8.1, 10.2-10.12, Kaplan 35-38)

o Human life value
o Rule-of-thumb
o Financial needs analysis
o Capital needs analysis

 Measuring the cost of life insurance (Text 10.15-10.18, Kaplan 52-54)

o Traditional net cost method
o Surrender cost index
o Net payment cost index

 Viatical agreements and life settlements (Text 10.27-10.31

Topic 6: Annuities

 Terminology (Text 11.2)

 Ways to classify annuities (Text 11.4-11.10, Kaplan 39-40)

o Single life or joint

o Immediate or deferred
o Single premium or multiple premiums
o Different payout options
o Fixed or variable

 Relative payouts (Text 11.10-11.12)

 Joint annuities (Text 11.15-11.16)

 Variable annuities (Text 11.16-11.20)

 Indexed annuities (Text 11.20-11.23)

o Participation rates
o Caps
o Indexes

Topic 7: Taxation of Life Insurance and Annuities

 Income tax-free death benefits unless transfer for value rule is violated (Text
10.39, Kaplan 43) (Don’t forget the Corporate Alternative Minimum Tax rule)

 Income tax definition of a life insurance policy (Text 10.40)

 Income taxation of living proceeds (Text 10.41-10.42, Kaplan 42-44)

o Dividends
o Withdrawals
o Loans
 o Policy surrenders
 Modified Endowment Contracts (MECs) (Text 10.43)

 Section 1035 Exchanges (Text 10.44)

 Deductibility of Premiums (Text 10.44, Kaplan 43)

 Income tax treatment of viaticals (Text 10.29, Kaplan 46-47)

 Income tax treatment of annuities (Text 11.26-11.27, Kaplan 47-48)

Topic 8: Business and Estate Uses of Life Insurance (Text and Kaplan are weak here). Notice the
extra reports posted on Moodle for this topic under the heading “Back Room Technician”

 Group (term) life (Text 10.36-10.38, Kaplan 29-30)

 Key person coverage (Text 10.31-10.33)

 Buy-sells (Text 10.33-10.36)

 Split Dollar (Text 10.38, Kaplan 30-32)

Topic 9: Group and Individual Medical Expense Insurance

 Major medical plans (Text 12.6-12.13, Kaplan 63-65)

o Supplemental vs. comprehensive major medical

o Covered expenses and exclusions
o Deductibles
o Coinsurance
o Out-of-pocket maximums
o Lifetime maximums
o Calculation of an insured’s costs (Text 12.12, Kaplan 65)
 HMOs and PPOs (Text 12.20-12.27, Kaplan 65)

 Group Medical Portability (Text 12.37)

 Coordination of benefits (Text 12.38-12.39)

 Federal tax treatment of employer-sponsored plans (Text 12.47)

 Tax treatment of self-employed persons (Text 12.50, Kaplan 65)

 Continuation of employer sponsored coverage (Text 13.2-13.3)

 COBRA (Text 13.3-13.6, Kaplan 66-67)

o Qualified beneficiary
o Qualifying event
o Time periods for each
o Notice and premium provisions

 Conversion privilege (Text 13.8-13.9)

 Medicare supplements (Text 13.12-13.16)

 Health Savings Accounts (HSAs) (Text 13.22-13.30, Kaplan 68-70)

o Eligibility
o High-deductible health insurance plans
o Breadth of eligible expenses
o Contribution limits
o Account investments and growth
o Distributions
o Taxation and penalties
Topic 10: Disability Income and Long-Term Care

 Sources of disability income (Text 14.1-14.2)

 Employer sick –leave plans-uninsured (Text 14.4-14.5)

 Employer-provided group insurance plans (Text 14.6-14.16)

o Short-term plans
o Long-term plans

 Income tax treatment of employer provided coverage, both as to when

premiums are paid and when benefits are received (Text 14.16-14.17)

 Individual disability income policies (Text 14.18-14.36, Kaplan 56-59)

o Definitions of disability : occupations (“your occ”, et al)

o Definitions of disability: loss of earnings (residual)
o Presumptive disability
o Continuance provisions: non-can vs. guaranteed renewable
o Waiting (elimination) period
o Benefit durations
o Increasing benefits, both pre-claim and post-claim
o Waiver-of-premium
o Rehab benefits
o Social Security offset riders
o Limits on amounts of coverage issued

 Income taxation of disability benefits from individually-owned coverage (Text

14.36)

 Business overhead expense policies (Text 14.37)

 Salary Continuation Plans (Text 14.38)

 Disability buy-outs (Text 14.39)

  Need for long-term care (LTC) planning (Text 15.2-15.4, Kaplan 71)

 Ways to pay for LTC (Text 15.6-15.7, Kaplan 71-73)

 NAIC model legislation (Text 15.8-15.10, Kaplan 73-74)

 “Qualified” policies (Text 15.10-15.12, Kaplan 74-75)

o Contract requirements
o Benefit triggers
o Income tax treatment

 Individual Long Term Care Insurance Policies (Text 15.12-15.31)

 State partnership programs (Text 15.31-15.34)

Topic 11: Homeowners’ and Automobile Policies

 Actual cash value vs. replacement cost (Text 16.6-16.7, Kaplan 92-93)

 Agreed value, stated amounts (Text 16.7-16.8)

 Named perils vs. open perils (Text 16.9-16.10, Kaplan 92)

 Policy deductibles (Text 16.13)

 Coinsurance (Text 16.14-16.16)

 Types of liability losses (Text 16.17-16.18)

 Legal basis for liability (Text 16.18-16.25)

 Income tax treatment of premiums, benefits and losses (Text 16.25-16.27)

 Homeowners coverage: Start with Table 17-3 (Text 17.25)
o Forms (types of units covered)
o Perils insured against
o Scheduled amounts
o To who are payments made?

 HO-3 Policies (most frequently tested form, Text 17.3-17.22, Kaplan, basically
92-106)

 Section I (Text 17.3-17.14, Kaplan 94-98)

o Definitions: “insured” and “insured location”
o Coverage A; Dwelling (Text 17.4-17.8)
o Coverage B: Detached structures (Text 17.8)
o Coverage C: Personal Property (Text 17.8-17.12)
o Coverage D: Loss of use (Text 17.12)
o Additional Section I coverages (Text 17.12-17.14)

 Section II: Liability coverages (Text 17.15-17.22, Kaplan 98-101)

o Coverage E: Personal liability (Text 17.14-17.18)
o Coverage F: Medical payments to others (Text 17.19-17.20)

 HO-2 policies (Text 17.23, Kaplan 104)

 HO-4 policies (Text 17.23,Kaplan 106)

 HO-5 policies (Text 17.23, Kaplan 106)

 HO-6 policies (Text 17.23-17.24, Kaplan 107)

 HO-8 policies (Text 17.24-17.25, Kaplan 107)

 Additional Coverages—Endorsements (Text 17.26-17.35)

 Flood insurance (Text 17.37-17.40, Kaplan 113-114)

 Floaters, inland marine (Text 17.42-17.43, Kaplan 114)

 Title Insurance (Text 17.43-17.44)

 Auto insurance intro: uninsured and underinsured coverage (Text 18.5-18.7)

 PIP (personal injury protection)

 Personal Automobile Policy (PAP):

o Covered vehicles (Text 18.9-18.12)

o Part A; Liability coverage (Text 18.12-18.16, Kaplan 122-124)
o Part B: Medical payments (Text 18.16-18.17, Kaplan 124)
o Part C: Uninsured Motorists (Text 18.17-18.19, Kaplan 125)
o Part D: Damage to your auto (Text 18.19-18.23, Kaplan 125)
o Endorsements (Text 18.23-18.28)
 Personal umbrella coverage (Text 18.33-18.37)
 Professional liability insurance (Text 19.23-19.24)