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Questions of the Week

Unused Premium

Course: Insurance PlanningLesson 8: Gift and Estate Valuation Student Question: Could you please clarify for me what the unused premium would be in term life insurance?  I don’t quite understand how you could not use the premium.  Thanks. John Instructor Response: Hey John- Certainly.   A lot of different terms in insurance, to be sure. Assume…

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Incontestability Period

Course: Insurance PlanningLesson 2: Fundamentals of Insurance Student Question: For the question below, the answer was #3. Susan died yesterday, exactly ten years after a life insurance policy on her life was issued to her. The policy was in effect at her death. She understated her age on the initial policy application and the underwriter…

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Child Care Credit Calculation

Course: Income Tax PlanningLesson 14: Tax Credits, Payments, and Forms Student Question: Could you show me the calculation for Question 3? I calculate 20% of $12,000 , which is $2,400. Emily’s job requires that she put her three children, all under the age of 13, in daycare. She is unmarried and files as Head of…

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How Many Tax-Free IRA Rollovers Per Year?

Course: Income Tax PlanningLesson 1: Using IRAs to Build and Distribute More Retiremnt Income Student Question: Is it okay to roll over ( via direct trustee, not 60–day) from Traditional to Roth several times throughout the year if needed? Thanks, Matt Instructor Response: Great question Matt. The IRS limits tax-free IRA rollovers to one per…

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Multiple Insurance Provider Claim Solutions

Course: Insurance PlanningLesson 2: Fundamentals of Insurance Student Question: I’m having difficulty seeing the difference between pro-rata liability, contribution by equal shares, and primary and excess. Could you explain the review exercise? Review Exercise Three companies insure Josh’s $250,000 house. Insurer A has it insured for 10%, insurer B for 35%, and insurer C for…

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Unmarried Child Retirement Benefits

Course: Income Tax PlanningLesson 10: Social Security Student Question: Does the retired worker have to also be drawing on their Social Security benefits for the unmarried child of the retired worker to receive benefits? For instance, a 63-year-old man has a 13-year-old daughter and he is retired but not drawing his SS benefits yet? Melinda…

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Time-Weighted vs Dollar-Weighted Return

Course: Investment Planning Lesson 14: Evaluating Portfolio Performance Student Question: For both the Treynor and Sharpe, part of the calculation involves using the average portfolio return (rp). In most examples, the average portfolio return is being given. However, if I need to calculate this in real life, do I use the dollar-weighted return (internal rate…

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Recognizing Income – Cash Basis

Course: Income Tax Planning Lesson 3: Accounting of Gross Income Student Question: The first example in “Recognizing Income” about not recognizing the check payment until it can actually be cashed seems contradictory to the CFP Board question below which states that income is included when a check is RECEIVED. Any clarification you can provide here? Thanks. Jay Coursework…

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Maxing Out Defined Benefit Plans

Course: Retirement Planning Lesson 8: Fitting Deferred Compensation into the Retirement Plan Student Question: Curious as to why the net result is $525,000.00 and not $500,000.00. Wouldn’t 100% of her current year compensation be $500,000.00? Is it just that the Board decided to max out the limits of the DBP and the NQEBP so that’s…

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SIPC Reimbursement

Course: Investment Planning Lesson 2: Securities Markets and the Fed Student Question: The coursework states that the SIPC will pay claims up to $500,000, but in Example 2, they only gave Bruce $350,000. Why is that? Thanks. Wesley Example 2 Bruce had $400,000 in cash and $100,000 in securities in his brokerage account. His broker/dealer…

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