Student Question

Course: Insurance PlanningLesson 10: Fundamentals of Social Security and Medicare  Student Question: Hi, Under the ‘late enrollment penalty’ link, there is a example given by Medicare.  It states that there is a 20% penalty because 30 months had lapsed, or at least 2 12-month periods post initial enrollment had lapsed.  The date given for initial…

Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Hello, Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable…

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello, What is the difference between Stock options and Restricted stock plan or phantom stock?  Seems confusing. Instructor Response: Hi, Onward and Upward,

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. Instructor Response: Hi Certainly.   A lot of different terms in insurance, to be sure. Assume you pay…

Course: Income Tax PlanningLesson 7: Arriving at Adjusted Gross Income Student Question: Am I correct that this looks like paying taxes over taxes by first adding the 2.9% for Medicare taxes, and then paying Social Security tax over that? “3. Calculate self-employment tax: Instructor Response: Hi This is a really common point of confusion, so…

Course: Estate PlanningLesson 9: Income Taxation of Trusts and Estates Student Question: I wanted to make sure I understand this correctly. Irrevocable non grantor tax is on the trust. If it distributes the income, then the tax is on the beneficiaries. The only case in which an Irrevocable non grantor trust doesn’t distribute the entire income is…

Course: Insurance PlanningLesson 10: Social Security Student Question: Does the maximum family benefit apply to a husband and wife that are both fully insured if the combined total between the two exceeds the maximum family limit?   If I understand correctly, the maximum family limit only applies if there are beneficiaries within the family receiving benefits…

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Course: Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: Hi, Why is the answer to review question down below 22,500 (only 3 months of income needed)? I would have thought it would be 45,000 (six months of income needed). I thought six months would be needed since they (1) both did not have…

Course: Investment PlanningLesson 4: International Equity Securities Student Question: Hi, On the CFP board practice question (below), the correct answer was “4 only.”  How come ADRs don’t eliminate currency risk? Aren’t they purchased and sold with US dollars? American depository receipts (ADRs) are used to Instructor Response: Hi Great question.  I can see exactly why you…