Course Library
Annuities
Annuities examines the annuity concept and explains what an annuity is and how it works. The mechanics of the accumulation and payout phases of an annuity are examined and sample calculations are discussed. An explanation of settlement options and their appropriate uses are covered.
The course also discusses annuity taxation. Federal income tax treatment of premature withdrawals, lump-sum distributions and periodic payments is considered. Annuities discusses the different annuity contracts available and compares them with respect to client suitability, with particular emphasis on variable and fixed annuities. Both product types are discussed in terms of single vs. periodic premium, immediate vs. deferred, qualified vs. non-qualified, and settlement options.
Upon successful completion of this course, the agent should be able to:
1. Explain the demographics of annuity buyers
2. Discuss the reasons why most annuity owners buy annuity contracts
3. Explain the characteristics of annuities in general and the benefits of tax deferral
4. Discuss how variable annuities work
5. Explain the tools available to a variable annuity contract owner for managing cash value volatility
6. Understand the requirements for variable annuity suitability
7. Demonstrate how interest is credited under specific fixed annuity contracts, including bonus annuities, multi-year guarantee annuities and interest indexed annuities
8. Explain how equity indexed annuities work
9. Discuss annuity taxation with respect to cash values, withdrawals and periodic payments
California Eight-Hour Annuity Training
California Eight-Hour Annuity Training is designed to meet the requirements of California law. The course begins with a brief discussion of the development of modern annuities and an explanation of the annuity concept. It explains what an annuity is, how it works and the parties that are important in the formation of an annuity contract. The mechanics of the accumulation and payout phases of an annuity are examined and sample calculations are demonstrated. An explanation of settlement options and their appropriate uses are covered.
Federal income tax treatment of premature withdrawals, lump-sum distributions and periodic payments is considered. The course addresses the different annuity contracts available and compares them with respect to client suitability, with particular emphasis on variable, fixed and indexed annuities. Annuity product types are discussed in terms of single vs. periodic premium, immediate vs. deferred, qualified vs. non-qualified, and their settlement options.
The primary uses of annuities are examined, the needs of the senior market are discussed, and the customary senior-market financial and insurance concerns are described. Sales practice issues when working with senior clients are considered, including California requirements with respect to appropriate advertising, the sale of annuities to affect Medi-Cal eligibility, in-home insurance solicitations, commission sharing with attorneys, unnecessary replacements, and the use of bait and switch tactics. Penalties that may be imposed for the violation of those requirements are described. The need for client suitability in the sale of annuities is discussed, and required disclosures are identified. The important issues concerning insurer reserving for variable annuities with minimum guarantees are described.
The role of the California Life and Health Insurance Guarantee Association is examined. In that examination, covered persons and contracts are identified, and the limits of coverage are discussed.
Upon successful completion of this course, the agent should be able to:
1. Discuss the historical development of annuity contracts and explain the demographics of annuity buyers
2. Explain how annuities are classified
3. Identify the parties to an annuity contract
4. Discuss how fixed, variable and indexed annuity contract provisions affect consumers, and demonstrate how interest is credited under specific fixed annuity contracts, including bonus annuities, multi-year guarantee annuities and indexed annuities
5. Describe the tax treatment of qualified and non-qualified annuities
California Four-Hour Annuity Training
California Four-Hour Annuity Training is designed to meet the requirements of California law.
California 4-Hour Annuity Training is intended to meet California’s statutory requirement for life insurance licensees to complete a four-hour continuing education course addressing the sale of annuities each license renewal period. Accordingly, the course begins with a review of the applicable California annuity regulations, including those regulations addressing:
• Annuity sales and purchases by senior citizen consumers;
• Replacements; and
• Disclosure requirements.
The course continues with an examination of the annuity contract provisions and characteristics common to all annuities, including their tax treatment and illiquidity, and how they impact on consumers. The various types of annuities are then considered, and declared-rate fixed annuity, indexed annuity, and variable annuity provisions and their impact on consumers are compared, with particular emphasis on the impact of annuity provisions on senior consumers.
California 4-Hour Annuity Training concludes with a discussion of suitability requirements and sales practices appropriate in the sale of annuities. Students are provided with an analytical form to assist them in performing an annuity suitability analysis (Decisional Factors in Annuity Suitability) and an annuity sales checklist.
Upon successful completion of this course, the agent should be able to:
1. Describe and apply the applicable California Insurance Code regulations to his or her sale of annuity contracts;
2. Discuss how fixed, variable and indexed annuity contract provisions affect consumers;
3. Demonstrate how interest is credited under specific fixed annuity contracts, including bonus annuities, multi-year guarantee annuities and indexed annuities;
4. Describe how fixed annuitization exposes annuitants to purchasing power risk and variable annuitization exposes them to investment risk;
5. Identify the tools normally available to a variable annuity contract owner for managing cash value volatility;
6. Explain the need for long term objectives in the purchase of annuities and the requirements for annuity suitability;
7. Discuss the principal concerns when selling annuities to senior citizens; and
8. Explain the specific California advertising and sales practice rules applicable to the sale of annuity contracts.
Designing Qualified Plans to Meet Employer Objectives
Designing Qualified Plans to Meet Employer Objectives introduces students to the elements of qualified plan design to meet the needs of business owners. It discusses qualified plan design issues as they apply to both large and small companies. The emphasis, however, is on small company plans—specifically, qualified plans for those employers who have fewer than 25 employees.
The treatment of qualified plan design begins with a discussion of the characteristics of particular qualified plans in order to provide a foundation for the student to understand, in a general way, what they can accomplish for an employer. The focus of the course then changes to an examination of the three areas that employers need to address in deciding on the right plan. Those three areas involve:
1. What the plan should accomplish for the company
2. Who the plan should favor
3. How much can be allocated to pay for the plan
Following a discussion of these three general areas of employer concern, the course looks at how to identify employer objectives. Finally, the student’s attention is focused on the more analytical aspects of plan design: matching the common employer objectives with the appropriate qualified plan. At the conclusion of this course, the student can be expected to understand:
1. The basis of suitable qualified plan recommendations
2. The benefits that employers normally seek by establishing qualified plans
3. The ways that plan design may differ for employers based on their size
4. The basic characteristics of qualified plans
5. How qualified plans meet specific employer needs
6. How modifications to basic plans help qualified plan sponsors achieve their goals
7. The importance of qualified plan data gathering
Disability Insurance
The Disability Insurance course consists of seven lessons covering the principal disability products: disability income, income replacement, business overhead expense and disability buyout. The course includes the following lessons:
1. Introduction to Disability Income Insurance
2. Disability Policy Definitions and Provisions
3. Principal Disability Rider Benefits
4. Disability Income Underwriting
5. Primary Sources of Disability Income Benefits
6. Special Coverage Disability Policies
7. Taxation of Disability Coverage
The text focuses primarily on disability income insurance although business-related disability products, such as disability buyout and business overhead expense policies, are also examined. Students are introduced to the various definitions of disability—own occupation, any occupation, etc.—that are used by insurers, as well as the important differences between the principal renewability provisions. Disability rider benefits are considered, including those benefits provided by the Social Insurance Benefits rider, the Purchase Option rider and the Return of Premium rider. Financial and medical disability insurance underwriting is discussed, and the use of occupational classification is explained. The important sources of disability income benefits are considered, including those provided by federal and state government programs, employer-related plans and individually purchased policies. The tax treatment of disability premiums and benefits is explained.
Upon satisfactory completion of this course, the student should be able to:
1. Explain the relative likelihood of disability and its relationship to an individual’s age, occupation and lifestyle;
2. Describe the traditional sources of income available to a disabled individual;
3. Discuss the important disability insurance policy provisions relating to renewability;
4. Explain the important differences between own occupation, limited own occupation, and any occupation definitions of total disability;
5. Describe how partial, residual and recurrent disability provisions affect an insured’s disability insurance coverage;
6. Identify the principal disability benefits provided by rider and explain their operation;
7. Explain the fundamentals of disability insurance underwriting;
8. Illustrate the coverage provided under business-related disability insurance products; and
9. Discuss the federal income tax treatment given to various disability insurance premiums and benefits.
Estate Tax Planning
Estate Tax Planning examines the various aspects of planning for the estate tax liability. The course begins with a discussion of the genesis of estate taxation in English common law and continues with an examination of the estate and its administration. The subjects included in the course include the following:
• The Estate and its Administration
• Federal Gift and Estate Taxes
• Common Estate Planning Trusts
• Calculating Federal Estate Taxes
• State Death Taxes
• Estate Tax Payment
The text serves as an introduction to the issues of estate settlement and includes a discussion of the probate estate and the federal gross estate. The roles of the executor and administrator are also explained. The student is taken through the steps of a federal estate tax calculation, beginning with a discussion of the components of the federal gross estate and continuing with an explanation of adjusted gross estate, taxable estate, tentative tax base, tentative tax and tax payable before credits. The various credits and deductions are examined—including the marital deduction, unified tax credit, state death tax credit, credit for foreign death taxes and credit for tax on prior transfers—and their place in the federal estate tax calculation is explained. The role of trusts in estate tax minimization is considered, and an explanation of the common trusts employed in estate tax planning is given. The uses of credit shelter trusts, QTIP trusts and irrevocable life insurance trusts are demonstrated. State death taxes are considered, and inheritance taxes are compared to estate taxes with respect to the party liable for payment and the role of decedent/beneficiary relationships in inheritance taxation. Finally, the sources of estate tax payment are examined and compared.
There are nine learning objectives for the agent or individual taking this course to gain knowledge from. These objectives are found throughout the text and are reinforced in the exam questions.
1. Explain the differences between an estate for tax purposes and a probate estate
2. Identify those assets that comprise the federal gross estate
3. Understand the duties of an executor
4. Understand the difference between inheritance taxes and estate taxes and the typical beneficiary classifications for state inheritance tax purposes
5. Explain how gifts are taxed under the federal gift tax system
6. Identify the deductions and credits allowed under the federal system of estate taxation
7. Discuss the common trusts employed in estate tax planning
8. Perform an estate tax calculation
9. Identify the methods of estate tax payment and their cost consequences
Ethical Considerations in Selling to Seniors
Ethical Considerations in Selling to Seniors teaches students to identify ethical concerns when working with seniors at each step of the sales process: the approach; the opening and fact-finding interview; presenting a proposal to the prospect or client; and implementing and following up if the client purchases a product or service. Special emphasis is placed on advertising, sales proposals and other business communications such as brochures, flyers and electronic communications. In addition, students learn how to present themselves and their professional credentials in an ethical manner.
Students have the opportunity to apply their new knowledge to real life scenarios that ask them to analyze the ethical issues involved and identify proper ways to handle them. These scenarios cover several of the most common unethical practices in selling to seniors: inappropriate product replacement; violation of the fiduciary relationship; and lack of communication that would ensure seniors fully understand their choices and their attendant consequences.
In addition, students learn to recognize the components of professional ethics and are introduced to several models of ethical decision-making that have developed over time and are being used to some degree today.
Upon completion of this course, the student should be able to:
1. Understand the fundamental principles underlying ethical systems
2. Discuss the foundations of professional ethics
3. Modify the tools and methods you use in the sales process to meet heightened ethical requirements
4. Identify specific ethical sales concerns and unethical sales conduct
5. Replace in your sales vocabulary those terms that have a high probability of misleading clients
6. Recognize the special issues concerning product replacement
7. Identify the special requirements involved when working with impaired clients
8. Implement a system for ethical decision making
Ethics for the Financial Services Practitioner
Ethics for the Financial Services Practitioner examines the nature and scope of ethics, as the foundation of integrity and honesty, and its relationship to compliance in the life insurance practice. It considers the tools and practices used in the sale of life insurance and applies the principles of ethics and compliance to them. The nature and consequences of misleading sales practices are discussed. The common law concept of agency is discussed, and its application to compliance is considered. In addition, the legal concepts of “course of conduct and custom,” waiver, estoppel and election are examined and their effect on both agent and insurer liability is addressed.
Compliance and ethical guidelines are applied to the review of sales tools, including the agent’s:
• Stationery and business cards
• Advertising and direct mail
• Personal brochures
• Articles written for publication
In addition to the agent’s sales tools, the sales process itself is examined with the intent of ensuring its compliance with legal and ethical standards. The areas in which ethical or compliances lapses may occur are detailed in each of the steps of the sales process. Common ethical and compliance problems are examined, including churning, twisting, abuse of the “free look” privilege, rebating and misrepresentation. Particular consideration is given to the ethical and compliance requirements present in replacement cases, including the need for a complete comparison and a full and fair disclosure.
Upon successful completion of this course, the agent should be able to:
1. Understand the nature of ethics and identify those parties to whom the practitioner owes an ethical duty;
2. Identify and change any misleading sales practices;
3. Identify and change any sales tools that may mislead customers;
4. Replace the use of misleading terms with those offering clarity and customer understanding;
5. Understand the need for increased professionalism and its consequences;
6. Discuss the sources of duty practitioners owe insurers;
7. Understand the common ethical issues that arise between financial services practitioners and customers; and
8. Differentiate his or her practice on the basis of its high ethical level.
Gaining Client Agreement to Gather Information
The Gaining Agreement course consists of five lessons addressing the critical sales process step of gaining the client’s agreement to gather information about his or her finances, responsibilities and objectives. The lessons include:
• Goal of the Approach Step
• Employing Mirroring Techniques
• Establishing Agent Credibility
• Motivating the Prospect to Proceed
• Negotiating Negative Responses
The text examines the methods of creating rapport with a prospect by employing creative listening, mirroring and other techniques. It discusses the methods that enable an agent to establish credibility through the publication of articles, obtaining professional designations, participating in professional organizations and using a personal brochure. A sample personal brochure is offered.
Dominant buying motives are considered, and specific areas of concern to business owners and other prospects that motivate them to work with life insurance agents are examined. Methods of negotiating negative prospect responses are discussed, and a formula for successful negative response negotiation is provided.
Upon successful completion of this course, the agent should be able to:
1. Create prospect rapport and trust through the use of open ended questions, creative listening and prospect mirroring
2. Understand the key components of establishing credibility with the prospect
3. Motivate the prospect to proceed with data gathering by using disturbing statements and follow-up questions that assess the prospect’s interest
4. Create approach language that is consistent with your selling style
5. Negotiate negative responses using the “feel, felt, found” formula
Healthcare Reform: Pre-Existing Conditions, Benefit Limits, Rescission & Patient Protection Rules
The course entitled Healthcare Reform: Pre-Existing Conditions, Benefit Limits, Rescission & Patient Protection Rules provides important information for insurance agents and other advisers who are counseling clients on certain requirements imposed on group health plans and individual insurance coverage by the Act and Regulations. The course begins with a discussion of “grandfathered” health plans, their definition and the implications of grandfathered status for the timing and applicability of the Act’s provisions.
The requirements of the Act and Regulations addressed in this course are those relating to ensuring patient protections—specifically, protections related to their ability to choose healthcare professionals and the provision of emergency services—and the ability of health plans to:
• Exclude coverage for pre-existing conditions;
• Impose annual and lifetime benefit limits for essential health benefits; and
• Rescind health coverage.
Accordingly, the course provides information concerning the rules applicable to the ability of a group health plan or a health insurer offering group or individual health insurance coverage to exclude coverage for pre-existing conditions and the effective dates of such rules. In addition, the course discusses the rules governing the ability of a group health plan or a health insurer offering group or individual health insurance coverage to impose dollar limits on essential health benefits. The limited ability of a group health plan or health insurer offering group or individual health insurance coverage to rescind such coverage is also addressed. Finally, the course discusses the protections guaranteed to patients in their choice of available healthcare professionals in plans involving a network of healthcare providers and in the availability of patient emergency services.
Upon completion of this intermediate course, the student should be able to:
1. Explain the rules applicable to grandfathered health plans;
2. Describe the effective dates and rules governing the use of pre-existing condition exclusions in group and individual health insurance plans;
3. Discuss the annual and lifetime benefit limit rules applicable to essential health benefits under healthcare reform legislation;
4. Identify the conditions that would permit an insurer to rescind health insurance coverage and the applicable notice requirements; and
5. Explain the patient protection provisions of healthcare reform.
HIPAA: The Significant Provisions
HIPAA: The Significant Provisions examines this landmark legislation by starting with a consideration of the genesis of its provisions in the National Uniform Billing Committee and in earlier attempts to impose healthcare reform. The course discusses the changes made in both group health insurance plans and individual health insurance plans with respect to the imposition of pre-existing conditions exclusions and the insurer’s ability to decline to offer coverage. Archer MSAs are explained, and the course looks closely at important MSA issues including eligibility, permissible contributions and the tax treatment of contributions and distributions.
A substantial part of HIPAA addresses the simplification of healthcare administration. Accordingly, the course examines HIPAA’s requirements concerning:
• Electronic transactions;
• Security;
• National Provider Identifiers; and
• Privacy of protected health information.
When the course has been successfully completed, the student should understand:
1. The background of the Health Insurance Portability and Accountability Act’s administrative simplification provisions;
2. The elements of healthcare reform that are included in the Health Insurance Portability and Accountability Act;
3. The effect of the Health Insurance Portability and Accountability Act on the use of pre-existing conditions exclusions;
4. The effect of the Health Insurance Portability and Accountability Act on the use of an individual’s health status to determine eligibility or premiums;
5. The rules governing Archer MSAs;
6. The rules governing the privacy of protected health information;
7. The requirements for privacy notices for protected health information;
8. The individual’s rights to restrict disclosure and use of protected health information; and
9. The individual’s right to access his or her own protected health information.
Individual Retirement Accounts
Individual Retirement Accounts examines the rules governing traditional and Roth IRAs, Education IRAs (now called Coverdell Education Savings Accounts), simplified employee pensions and SIMPLEs. With respect to traditional IRAs, the course considers the issues of eligibility, contribution limits and investment vehicles. Tax treatment of traditional IRA funds is discussed, including the treatment of contributions, accumulations, transfers and distributions. The premature distribution penalties and its exceptions are addressed. Roth IRAs, created by TRA’97, are discussed, including eligibility, contribution limits and distributions. Conversions from traditional to Roth IRAs are examined and the tax consequences discussed. The increased limits authorized by the Economic Growth and Tax Relief Reconciliation Act of 2001 are addressed and the Age 50+ catch-up provisions are explained. At the conclusion of this course, the student can be expected to understand:
• Traditional and Roth IRA rules with respect to eligibility and contributions
• The benefits of tax-deferred accumulation
• The rules governing traditional IRA distributions, rollovers, transfers and conversions to Roth IRAs
• The tax rules governing traditional and Roth IRA contributions and withdrawals
• The rules applicable to Coverdell Education Savings Accounts
• The contribution and distribution rules governing SEPs and SIMPLE IRAs
Individual Retirement Accounts has eight learning objectives that are reinforced by the examination.
1. To be able to discuss the rules governing eligibility and permitted contribution levels for traditional and Roth IRAs
2. To be able to explain the tax treatment of contributions to and distributions from traditional and Roth IRAs
3. To be able to demonstrate the benefits of tax-deferred accumulation
4. To understand the rules concerning permitted IRA investments
5. To be able to discuss traditional and Roth IRA distribution rules
6. To understand Education IRA contribution and distribution rules and their tax implications
7. To be able to discuss the contribution and distribution rules that apply to SEP IRAs
8. To understand the contribution and distribution rules that apply to SIMPLE IRAs
Long Term Care Fundamentals
Long Term Care Fundamentals is a basic long term care course that examines the subject in four chapters. Chapter 1 considers the nature of long term care. It begins with a discussion of the typical conditions requiring long term care and looks at the differences between skilled and custodial care. The chapter’s focus then changes to the settings in which long term care is delivered and considers nursing homes, alternative care facilities, community-based services, and informal care. The chapter concludes with a discussion of the risk of requiring long term care and the social and demographic factors that have affected its delivery.
Chapter 2 addresses the issues of long term care costs and payers. The national average costs for skilled and custodial care received in a nursing home are considered and compared with similar costs in assisted living facilities, adult day care facilities and in the care recipient’s home. Population trends are discussed, and the effects on long term care of the demographic bubble caused by the baby boom generation are considered. Chapter 2 ends with an examination of the various long term care cost payers, including Medicare, Medicare supplement policies, and Medicaid.
Chapter 3 discusses long term care insurance and various alternatives to stand-alone policies for payment of long term care benefits. The chapter considers the various approaches used by insurers to deliver benefits, including the pool of money concept, reimbursement and indemnity. Benefit triggers are looked at, including the inability to perform ADLs and cognitive impairment. Basic and optional long term care insurance provisions are then examined and explained. The tax treatment of long term care insurance premiums and benefits is discussed. The chapter ends with a consideration of the various alternatives for long term financing, including accelerated death benefits, viatical settlements, integrated annuity and life insurance benefits, and long term care insurance riders.
Chapter 4 addresses the suitability and ethical issues that impact the long term care insurance sale. In this chapter, the course examines the NAIC long term care insurance suitability tests and discusses the agent’s need to know his or her customer, coverage and insurer in order to make an appropriate suitability determination. The course concludes with an examination of the ethical issues with respect to a long term care insurance sale. The topics addressed include the need to provide full disclosure to enable the customer to make an informed decision, and the requirements for making an appropriate long term care insurance policy replacement.
When the student has completed the course, he or she should be able to:
• Explain the various types of long term care and the settings in which they may be delivered;
• Discuss the risk of requiring long term care services;
• Describe the average costs involved in obtaining long term care in nursing homes, assisted living facilities, and in the care recipient’s home;
• Identify the principal long term care cost payers;
• Describe the criteria that must be met before benefits are payable under Medicare and Medicaid for long term care services;
• Explain the basic provisions and optional benefits in long term care insurance policies;
• Discuss the income tax treatment of tax-qualified long term care policy premiums and benefits; and
• Perform an appropriate long term care insurance suitability analysis.
Nonqualified Plans
Nonqualified Plans examines the four popular nonqualified selective benefit plans being sold in the marketplace. The course considers the nature and use of:
• Split dollar plans
• Executive bonus plans
• Deferred compensation plans
• Group carve-out plans
The course examines the considerations that are relevant to establishing nonqualified plans, including the economic and tax issues, and discusses the financial products that are generally preferred in their funding. It looks at the tax treatment given the various plans and specifically addresses the tax issues surrounding split dollar plans.
Upon successful completion of this course, the agent should be able to:
1. Discuss the nature of nonqualified plans and how they differ from qualified plans
2. Explain the particular employer and executive needs met through nonqualified plans
3. Plan a target marketing approach designed to market nonqualified plans to business owners
4. Discuss the types of deferred compensation plans and the principal business motives for establishing them
5. Explain the use of rabbi and secular trusts in deferred compensation and the consequences of their use
6. Discuss the use of permanent life insurance in the establishment of a deferred compensation plan
7. Explain the basic characteristics of and prospects for split dollar plans
8. Explain the income tax treatment of split dollar plans and the tax consequences of policy ownership
9. Discuss how an insured executive bonus plan can assist a business to meet objectives
10. Explain the tax treatment of executive bonus plans
11. Design an executive bonus plan bonus arrangement
12. Present the benefits to employers and participating executives of a group carve out plan
13. Discuss the tax treatment of group carve out plans
Personal Life Insurance Planning
Personal Life Insurance Planning is divided into six lessons that include the following:
1. An Introduction to Human Life Value and Needs Analysis
2. Gathering Client Information
3. Identifying & Calculating Lump-sum Needs at Death
4. Social Security Survivor Benefits
5. Identifying Survivor Income Needs at Death
6. Calculating Survivor Income Needs at Death
Students learn the type of client data needed and how to build client rapport and create trust. The various lump-sum cash needs at the death of a breadwinner are identified, and guidelines are provided that enable students to recommend life insurance in amounts that fully protect their clients. The surviving family’s income needs are examined, and the students learn how to calculate adequate survivor income and the life insurance needed to provide that income. Social Security survivor benefits are discussed, including the Child’s benefit, the Mother’s or Father’s benefit, and Widow’s and Widower’s benefit.
Upon completion of this course, the student should be able to:
1. Explain the importance of basing client insurance requirements on a thoroughgoing analysis of needs.
2. Build client rapport and trust.
3. Gather the appropriate client information required to perform an insurance needs analysis.
4. Identify and calculate a client’s family’s lump-sum needs at the death of a breadwinner.
5. Describe the Social Security survivor benefits that need to be considered in analyzing survivors’ needs for life insurance to replace income.
6. Calculate survivor’s income needs during the dependency period, blackout period and retirement period.
Principles of Reinsurance
Principles of Reinsurance begins with a discussion of the origins and history of reinsurance in the life insurance and property & casualty industries. It examines the types of reinsurance available in the current market and their uses in enabling management to achieve particular objectives. The customary reinsurance agreements and their specific applications are discussed. The operation of reinsurance is examined with respect to claims payment, changes in risk, duration of agreements, experience rating, supplementary coverages and substandard issues, and the factors typically considered in a primary insurer’s establishment of retention limits are discussed. In conclusion, the current reinsurance environment is examined and the regulation of reinsurance is discussed.
Principles of Reinsurance has seven learning objectives that are reinforced by the examination.
1. To understand the historical context in which reinsurance operates
2. To understand the types of reinsurance available in the marketplace and their purposes
3. To understand the typical reinsurance agreements and their application
4. To understand the operation of reinsurance with respect to claims payment, risk changes, experience rating, supplementary coverages and substandard issues
5. To be able to explain the factors that influence a primary insurer’s establishing of retention limits
6. To understand the reinsurance environment, its regulation and vocabulary
7. To understand the possible use of reinsurance to finance life insurance company demutualization, mergers and acquisitions
Tax Sheltered Annuity Plans
Tax Sheltered Annuity Plans discusses the personal retirement savings plan available to employees of certain non-profit organizations and public schools under §403(b) of the Internal Revenue Code. The course begins with an examination of both employer and participant eligibility. The general limits on contributions are examined, and the special catch-up contributions are considered. The nature of the salary reduction agreement is discussed.
The rules governing premature and required distributions are discussed, and the limits applicable to participant loans from tax sheltered annuities are considered. The maximum loan repayment schedules are addressed, and the consequences of loan default are explained.
Estate and gift tax rules are discussed. The income tax treatment of plan contributions and distributions is examined, including:
• Premature distributions and exceptions to the 10% tax penalty
• Mandatory 20% withholding on certain lump-sum distributions
Permitted tax sheltered annuity investments are discussed. The term “annuity,” when used in a 403(b) plan includes incidental life insurance, a fixed annuity or a variable annuity. Custodial accounts may be used to fund tax sheltered annuity accounts. Through custodial accounts, a participant may purchase redeemable shares in an open-end mutual fund.
Finally, the course discusses the various plan requirements. Among the issues examined are the:
• Participation, coverage and non-discrimination requirements
• Non-forfeitability requirements
• Distribution requirements
Upon completion of this course, the student will be able to understand:
1. The tax sheltered annuity plan rules with respect to:
• eligibility of participants,
• eligibility of employers,
• contribution levels and
• tax treatment of contributions.
2. The rules governing catch-up provisions and the increase permitted to the limit on elective deferrals.
3. The benefits of tax-deferred accumulation.
4. The nature of and limitations as to permissible tax sheltered annuity funding vehicles.
5. The rules governing tax sheltered annuity distributions, loans and rollovers and their tax treatment.
6. The general tax sheltered annuity plan requirements.
Universal Life Insurance
Universal Life Insurance begins with an examination of the financial and political environment in the decade of the 1970s that gave rise to the conditions resulting in the development of the universal life insurance product. The student will understand the roles played by extraordinarily high interest rates that gave rise to disintermediation and a Federal Trade Commission report that was critical of whole life insurance in the decline of whole life insurance sales.
The key features of the universal life insurance product are examined, including its:
• Flexible premiums
• Adjustable coverage
• Expense and mortality charges
• Death benefit options and their relationship to the policy’s amount at risk
When the policy features have been discussed, the student is given an opportunity to see how the universal life insurance policy works and is introduced to the various interest rates that play a part in universal life insurance, including the guaranteed crediting rates, current crediting rates and assumed rates (for illustration purposes). Policy cash values are calculated for both Option A and Option B death benefits.
Cash value access and taxation are considered, and the appropriateness of withdrawals and policy loans are discussed in reference to the policyowner’s intent to repay. Universal life insurance taxation, following TRA ’84 is examined, and the limitations imposed by the legislation are considered, including the cash value accumulation test and the guideline premium/corridor test. Variable and equity indexed universal life insurance products are discussed, and their differences from declared rate UL products are examined.
Universal Life Insurance has nine learning objectives that are reinforced by the examination.
1. To understand flexibility of universal life insurance premiums and the adjustability of its death benefit
2. To be able to compare and contrast universal life death benefit Option A and Option B
3. To be able to explain universal life expense and mortality charges
4. To understand the role of universal life guaranteed, current and assumed interest rates
5. To be able to calculate universal life coverage, net amount at risk, cash value and mortality charges
6. To understand universal life transactions, premiums, surrenders, loans and withdrawals
7. To understand how VUL cash values are determined
8. To understand how cash values are determined in equity indexed products
9. To be able to explain universal life taxation
Variable Universal Life Insurance
Variable Universal Life Insurance begins with an examination of the financial and political environment in the decade of the 1970s that gave rise to the conditions resulting in the development of the universal life insurance product. The student will understand the roles played by extraordinarily high interest rates that gave rise to disintermediation and a Federal Trade Commission report that was critical of whole life insurance in the decline of whole life insurance sales. Fixed premium variable life insurance is considered, principally in its role as a precursor and foundation for the VUL product.
The key features of all universal life insurance products, including VUL, are examined, including their:
• Flexible premiums
• Adjustable coverage
• Expense and mortality charges
• Death benefit options and their relationship to the policy’s amount at risk
Cash value access and taxation are considered, and the appropriateness of withdrawals and policy loans are discussed in reference to the policyowner’s intent to repay. Variable universal life suitability is examined, and students are provided with decisional factors to consider in making any suitability analysis.
Variable Universal Life Insurance has nine learning objectives that are reinforced by the examination. Upon completion of the course, the student should be able to:
1. Understand the flexibility of variable universal life insurance premiums and the adjustability of its death benefit;
2. Compare and contrast variable universal life death benefit Option A, B and C;
3. Explain the applicable variable universal life expense and mortality charges;
4. Calculate variable universal life coverage, net amount at risk, cash value and mortality charges;
5. Understand variable universal life transactions, premiums, surrenders, loans and withdrawals;
6. Discuss the special VUL policyowner rights;
7. Explain the tools available to a VUL policyowner to manage cash value volatility;
8. Identify the basic VUL variable subaccounts and the risks normally found in various classes of investments;
9. Apply the NASD guidelines with respect to VUL suitability; and
10. Identify variable universal life suitability factors.
Viatical & Life Settlements
Viatical & Life Settlements examines the genesis of life and viatical settlements in the U.S. marketplace and considers the:
• Markets,
• Prospects,
• Process, and
• Taxation
related to such settlements. In addition, the course considers the market conduct and ethical concerns as well as the regulation of the life insurance secondary market.
After taking the course, students should be able to:
1. Explain how and why the life settlement industry developed in the U.S.;
2. Identify the markets for life settlements;
3. Discuss the rules governing life settlements;
4. Describe the distinctions between the various types of life settlements;
5. Identify the common uses of life settlements in business and estate planning;
6. Understand the tax treatment of life settlements;
7. Discuss the market conduct and ethical issues affecting life settlements; and
8. Explain the regulation of the life settlement industry.
CPE Course Library
Annuities
Annuities examines the annuity concept and explains what an annuity is and how it works. The mechanics of the accumulation and payout phases of an annuity are examined and sample calculations are discussed. An explanation of settlement options and their appropriate uses are covered.
The course also discusses annuity taxation. Federal income tax treatment of premature withdrawals, lump-sum distributions and periodic payments is considered. Annuities discusses the different annuity contracts available and compares them with respect to client suitability, with particular emphasis on variable and fixed annuities. Both product types are discussed in terms of single vs. periodic premium, immediate vs. deferred, qualified vs. non-qualified, and settlement options.
Upon successful completion of this course, the agent should be able to:
1. Explain the demographics of annuity buyers
2. Discuss the reasons why most annuity owners buy annuity contracts
3. Explain the characteristics of annuities in general and the benefits of tax deferral
4. Discuss how variable annuities work
5. Explain the tools available to a variable annuity contract owner for managing cash value volatility
6. Understand the requirements for variable annuity suitability
7. Demonstrate how interest is credited under specific fixed annuity contracts, including bonus annuities, multi-year guarantee annuities and interest indexed annuities
8. Explain how equity indexed annuities work
9. Discuss annuity taxation with respect to cash values, withdrawals and periodic payments
Individual Retirement Accounts
Individual Retirement Accounts examines the rules governing traditional and Roth IRAs, Education IRAs (now called Coverdell Education Savings Accounts), simplified employee pensions and SIMPLEs. With respect to traditional IRAs, the course considers the issues of eligibility, contribution limits and investment vehicles. Tax treatment of traditional IRA funds is discussed, including the treatment of contributions, accumulations, transfers and distributions. The premature distribution penalties and its exceptions are addressed. Roth IRAs, created by TRA’97, are discussed, including eligibility, contribution limits and distributions. Conversions from traditional to Roth IRAs are examined and the tax consequences discussed. The increased limits authorized by the Economic Growth and Tax Relief Reconciliation Act of 2001 are addressed and the Age 50+ catch-up provisions are explained. At the conclusion of this course, the student can be expected to understand:
• Traditional and Roth IRA rules with respect to eligibility and contributions
• The benefits of tax-deferred accumulation
• The rules governing traditional IRA distributions, rollovers, transfers and conversions to Roth IRAs
• The tax rules governing traditional and Roth IRA contributions and withdrawals
• The rules applicable to Coverdell Education Savings Accounts
• The contribution and distribution rules governing SEPs and SIMPLE IRAs
Individual Retirement Accounts has eight learning objectives that are reinforced by the examination.
1. To be able to discuss the rules governing eligibility and permitted contribution levels for traditional and Roth IRAs
2. To be able to explain the tax treatment of contributions to and distributions from traditional and Roth IRAs
3. To be able to demonstrate the benefits of tax-deferred accumulation
4. To understand the rules concerning permitted IRA investments
5. To be able to discuss traditional and Roth IRA distribution rules
6. To understand Education IRA contribution and distribution rules and their tax implications
7. To be able to discuss the contribution and distribution rules that apply to SEP IRAs
8. To understand the contribution and distribution rules that apply to SIMPLE IRAs
Healthcare Reform: Pre-Existing Conditions, Benefit Limits, Rescission & Patient Protection Rules
The course entitled Healthcare Reform: Pre-Existing Conditions, Benefit Limits, Rescission & Patient Protection Rules provides important information for insurance agents and other advisers who are counseling clients on certain requirements imposed on group health plans and individual insurance coverage by the Act and Regulations. The course begins with a discussion of “grandfathered” health plans, their definition and the implications of grandfathered status for the timing and applicability of the Act’s provisions.
The requirements of the Act and Regulations addressed in this course are those relating to ensuring patient protections—specifically, protections related to their ability to choose healthcare professionals and the provision of emergency services—and the ability of health plans to:
• Exclude coverage for pre-existing conditions;
• Impose annual and lifetime benefit limits for essential health benefits; and
• Rescind health coverage.
Accordingly, the course provides information concerning the rules applicable to the ability of a group health plan or a health insurer offering group or individual health insurance coverage to exclude coverage for pre-existing conditions and the effective dates of such rules. In addition, the course discusses the rules governing the ability of a group health plan or a health insurer offering group or individual health insurance coverage to impose dollar limits on essential health benefits. The limited ability of a group health plan or health insurer offering group or individual health insurance coverage to rescind such coverage is also addressed. Finally, the course discusses the protections guaranteed to patients in their choice of available healthcare professionals in plans involving a network of healthcare providers and in the availability of patient emergency services.
Upon completion of this intermediate course, the student should be able to:
1. Explain the rules applicable to grandfathered health plans;
2. Describe the effective dates and rules governing the use of pre-existing condition exclusions in group and individual health insurance plans;
3. Discuss the annual and lifetime benefit limit rules applicable to essential health benefits under healthcare reform legislation;
4. Identify the conditions that would permit an insurer to rescind health insurance coverage and the applicable notice requirements; and
5. Explain the patient protection provisions of healthcare reform.
Personal Life Insurance Planning
Personal Life Insurance Planning is divided into six lessons that include the following:
1. An Introduction to Human Life Value and Needs Analysis
2. Gathering Client Information
3. Identifying & Calculating Lump-sum Needs at Death
4. Social Security Survivor Benefits
5. Identifying Survivor Income Needs at Death
6. Calculating Survivor Income Needs at Death
Students learn the type of client data needed and how to build client rapport and create trust. The various lump-sum cash needs at the death of a breadwinner are identified, and guidelines are provided that enable students to recommend life insurance in amounts that fully protect their clients. The surviving family’s income needs are examined, and the students learn how to calculate adequate survivor income and the life insurance needed to provide that income. Social Security survivor benefits are discussed, including the Child’s benefit, the Mother’s or Father’s benefit, and Widow’s and Widower’s benefit.
Upon completion of this course, the student should be able to:
1. Explain the importance of basing client insurance requirements on a thoroughgoing analysis of needs.
2. Build client rapport and trust.
3. Gather the appropriate client information required to perform an insurance needs analysis.
4. Identify and calculate a client’s family’s lump-sum needs at the death of a breadwinner.
5. Describe the Social Security survivor benefits that need to be considered in analyzing survivors’ needs for life insurance to replace income.
6. Calculate survivor’s income needs during the dependency period, blackout period and retirement period.
Viatical & Life Settlements
Viatical & Life Settlements examines the genesis of life and viatical settlements in the U.S. marketplace and considers the:
• Markets,
• Prospects,
• Process, and
• Taxation
related to such settlements. In addition, the course considers the market conduct and ethical concerns as well as the regulation of the life insurance secondary market.
After taking the course, students should be able to:
1. Explain how and why the life settlement industry developed in the U.S.;
2. Identify the markets for life settlements;
3. Discuss the rules governing life settlements;
4. Describe the distinctions between the various types of life settlements;
5. Identify the common uses of life settlements in business and estate planning;
6. Understand the tax treatment of life settlements;
7. Discuss the market conduct and ethical issues affecting life settlements; and
8. Explain the regulation of the life settlement industry.
TAX COURSE LIBRARY
Retirement Plans, Pensions and Annuities
Retirement Plans, Pensions and Annuities discusses the federal income tax treatment of, and limitations related to a) qualified employee plan contributions and distributions, and b) commercial annuity contracts. It examines the qualified plan limits and income taxability of: employer and employee contributions (including designated Roth account contributions); plan loans; life insurance contained in the plan; plan distributions, including distributions as periodic payments and non-periodic payments; required minimum distributions; and rollovers. The course also examines the tax treatment of lump-sum distributions and periodic payments received under commercial annuity contracts.
Upon completion of this course, the student should be able to:
• Describe the types and characteristics of qualified employee plans;
• Explain the limits imposed on qualified employee plan contributions and benefits;
• Describe the requirements applicable to qualified employee plan loans and their tax treatment;
• Explain the rules governing rollovers to and from qualified employee plans;
• Apply the federal tax laws to qualified employee plan contributions and distributions;
• List the principal types of annuities and their characteristics; and
• Describe how annuity contributions and distributions are taxed.
Tax Return Preparer Ethical Issues
Tax Return Preparer Ethical Issues is an online course that examines tax preparer conduct standards. It addresses the issues of confidentiality, accuracy, conflict of interest, taxpayer omissions and return of client records. The ethical rules governing these issues are discussed, and tax preparers are presented with real-world scenarios that focus on the ethical issues that may be encountered in their professional activities.
Upon completion of this course, the student should be able to:
• Discuss the scope of registered tax return preparer responsibilities;
• Describe the best practices for tax advisors in preparing or assisting in the preparation of a submission to the Internal Revenue Service;
• Explain practitioner duties and restrictions with respect to –
....o Information to be furnished to the IRS,
....o The practice of law,
....o Dealing with taxpayer omissions, errors and noncompliance with U.S. revenue laws,
....o The requirement for preparer diligence as to accuracy,
....o Return of client records,
....o The existence of conflicts of interest, and
....o Solicitation of business; and
• List the various sanctions that may be imposed for a preparer’s failure to comply with applicable conduct rules.
Tax Treatment of Individual Retirement Arrangements
Tax Treatment of Individual Retirement Arrangements is an online course that examines the taxation of individual retirement arrangements (IRAs). In so doing, it discusses traditional and Roth IRAs, addressing the federal rules concerning: contribution limits and tax treatment; tax treatment of traditional IRA distributions, including regular, early and lifetime required minimum distributions; tax treatment of qualified and nonqualified Roth IRA distributions; required distributions at death; and IRA rollovers.
Upon completion of this course, the student should be able to:
• Discuss the rules governing eligibility and permitted contribution levels applicable to traditional and Roth IRAs;
• Identify the requirements and benefits related to a spousal IRA;
• Explain the tax treatment of contributions to and distributions from traditional and Roth IRAs;
• Describe the benefits of tax-deferred accumulation; and
• Discuss traditional and Roth IRA distribution rules.
Tax Treatment of Life Insurance Proceeds
Tax Treatment of Life Insurance Proceeds is an online course that discusses the income tax treatment of death benefits and living proceeds from life insurance contracts. It considers the statutory definition of life insurance contained in Internal Revenue Code §7702 and the tax consequences of a life insurance contract’s failure to meet the definition.
It addresses the general rules governing the taxation of life insurance policy death benefit proceeds and examines the consequences of: a transfer for value; inclusion of a policy in a qualified plan; corporate-owned life insurance; and the payment of death benefits under a settlement option. The course also discusses the tax treatment of proceeds received under viatical settlements and accelerated death benefits.
The course also examines the federal tax rules concerning taxation of life insurance policy living proceeds. In so doing, it considers: the modified endowment contract (MEC) rules and the tax consequences of a life insurance policy’s MEC status; the tax treatment of policy loans, withdrawals and surrenders; and the tax treatment of proceeds received under life settlements.
Upon completion of this course, the student should be able to:
• Explain the customary income tax treatment given to life insurance policy withdrawals, loans, surrender proceeds and death benefits;
• Explain how a life insurance contract’s failure to meet the statutory definition of life insurance changes its income tax treatment of death benefits and cash values;
• Describe the changes to the tax treatment of life insurance policy living proceeds resulting from the policy being deemed a modified endowment contract;
• Discuss the income tax treatment given to life insurance policy death benefits when the life insurance policy has been transferred for a valuable consideration;
• Compare the tax treatment of life insurance death benefits under a policy included in a qualified plan with the tax treatment of nonqualified life insurance death benefits;
• Identify the types of life insurance exchanges that are tax-free under IRC §1035;
• Define the terms “terminally-ill” and “chronically-ill” as used in the Health Insurance Portability and Accountability Act; and
• Describe the income tax treatment of accelerated death benefits, viatical settlements and life settlements.
Tax Treatment of Sickness and Injury Plans
Tax Treatment of Sickness and Injury Plans is an online course that addresses the tax treatment of plans designed to provide benefits upon the sickness or injury of a taxpayer. It examines the tax treatment of contributions to, and benefits received under, health insurance, health savings accounts (HSAs), Archer medical savings accounts (MSAs), health reimbursement arrangements (HRAs), disability insurance and long-term care insurance.
Upon completion of this course, the student should be able to:
• Describe the tax treatment of premiums for and benefits from health insurance policies;
• Explain the rules governing health savings accounts and Archer medical savings accounts, including their requirements and limits relative to –
....o Eligibility,
....o Contributions,
....o Distributions,
....o Transfers, and
....o Rollovers;
• Clarify the elements of a health reimbursement account and its tax treatment;
• Compare the tax treatment of employer-paid and individually-paid disability income insurance policies;
• Describe the tax treatment of business-related disability coverage, including –
....o Disability overhead expense policies,
....o Disability buyout policies, and
....o Keyperson disability policies; and
• Explain the tax treatment of long term care insurance.
What’s New for 2011
What’s New for 2011 discusses the important tax changes that became effective in 2011. It will review changes affecting: standard mileage rates; the standard deduction; the exemption amount; the reporting of self-employed health insurance deductions; the alternative minimum tax (AMT) exemption amount; the additional tax on HSA and MSA distributions not used for qualified medical expenses; the availability and repayment of the first-time homebuyer credit; the nonbusiness energy property credit; the health coverage tax credit; and reporting foreign financial assets.
Upon completion of this course, the student should be able to:
• Identify the changes in various amounts used in 2011 income tax preparation, including –
....o Standard mileage rates,
....o The standard deduction,
....o The exemption amount, and
....o The AMT exemption amount;
• Describe the changes in required tax forms including changes related to –
....o Reporting capital gains and losses,
....o Self-employed health insurance deductions,
....o Reporting foreign financial assets, and
....o Elimination of Schedule L;
• Explain tax credit changes affecting the –
....o Alternative motor vehicle credit,
....o Availability and repayment of the first time homebuyer credit,
....o Health coverage tax credit,
....o Non-business energy property credit, and
....o Making work pay credit; and
• Describe the changes affecting –
....o Distributions from Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs) not used to pay qualified medical expenses, and
....o 2010 conversions to Roth IRAs and designated Roth accounts in which taxpayers did not report taxable amounts on 2010 tax returns.
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