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Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance Syllabus

The Health, Disability, and Long-Term Care Insurance syllabus for Chartered Life Underwriter (CLU) in full: 4 chapters, 15 topics and 24 sub-topics, every one listed below, plus 51 Health, Disability, and Long-Term Care Insurance flashcards with answers.

4Chapters
15Topics
24Sub-topics
51Flashcards

Health, Disability, and Long-Term Care Insurance syllabus: all 4 chapters

Expand any chapter to see its topics and sub-topics.

  1. Disability Income Insurance

     4 topics
    • Definitions of Disability
      • Own-occupation versus any-occupation
      • Residual and partial disability
    • Policy Provisions and Benefit Design
      • Elimination and benefit periods
      • Cost-of-living and future increase options
    • Taxation of Disability Benefits
      • Individual versus employer-paid premiums
    • Business Disability Coverage
      • Business overhead expense insurance
      • Disability buy-out coverage

  2. Medical Expense and Health Coverage

     4 topics
    • Individual and Group Medical Plans
      • HMOs, PPOs, and high-deductible plans
      • Cost-sharing structures
    • Health Savings Accounts and Consumer-Driven Plans
      • Eligibility and contribution limits
      • Qualified distributions
    • Affordable Care Act Provisions
      • Essential health benefits and exchanges
    • COBRA and Continuation Coverage

  3. Long-Term Care Insurance

     4 topics
    • Long-Term Care Risk and Need
      • Activities of daily living triggers
      • Cognitive impairment triggers
    • Policy Features and Benefit Structures
      • Daily benefit and benefit period
      • Inflation protection options
    • Tax-Qualified LTC Contracts
      • Premium deductibility limits
      • Benefit taxation
    • Hybrid and Combination Products
      • Life and LTC linked-benefit policies
      • Annuity-LTC combinations

  4. Medicare and Senior Health Planning

     3 topics
    • Medicare Parts A and B
      • Coverage and cost-sharing
      • Enrollment periods and penalties
    • Medicare Advantage and Part D
    • Medicare Supplement (Medigap) Policies
      • Standardized plan letters
      • Guaranteed-issue rights

Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance flashcards — 51 questions with answers

  1. In a disability income policy, what does an "own-occupation" (own-occ) definition of total disability require?

    The insured is considered totally disabled if unable to perform the material and substantial duties of their OWN occupation, even if able to work in another job. It is the most liberal (favorable) definition.

  2. How does an "any-occupation" definition of total disability differ from own-occupation?

    "Any-occupation" pays benefits only if the insured cannot perform the duties of ANY occupation for which they are reasonably suited by education, training, or experience. It is stricter (less favorable) and cheaper.

  3. What is a "split definition" (also called "modified own-occ") of disability?

    It uses own-occupation for an initial period (e.g., first 2 years), then switches to an any-occupation standard for the remainder of the benefit period.

  4. What is the elimination (waiting) period in a disability income policy?

    The time between the onset of disability and when benefits begin to accrue; it functions as a time deductible. Common periods are 30, 60, 90, or 180 days. Longer elimination periods lower the premium.

  5. Define "residual disability" benefits in a DI policy.

    Residual benefits pay a partial benefit when the insured can work but suffers a loss of income (typically 20%+ income loss) due to a disability; the benefit is proportional to the percentage of income lost.

  6. What is "presumptive disability" in a disability income policy?

    A provision that automatically deems the insured totally disabled (full benefits, often with no elimination period) upon certain losses, such as loss of sight in both eyes, hearing, speech, or use of two limbs.

  7. In DI policies, what is the difference between "noncancelable" and "guaranteed renewable"?

    Noncancelable: insurer cannot cancel, raise premiums, or change terms to the stated age. Guaranteed renewable: insurer must renew but CAN raise premiums for an entire class of insureds (not individually).

  8. What does a Cost-of-Living Adjustment (COLA) rider do in a DI policy?

    It increases the monthly benefit during a claim (after disability begins) to keep pace with inflation, typically tied to the CPI, protecting the purchasing power of benefits over a long claim.

  9. What does a Future Increase Option (FIO)/Guaranteed Insurability rider do in DI?

    It lets the insured increase the monthly benefit amount in the future as income rises, without evidence of medical insurability (financial proof of income still required).

  10. Are benefits from an individually-owned disability income policy paid with after-tax premiums taxable?

    No. When the individual pays premiums with after-tax dollars, the disability benefits received are income-tax-free.

  11. How are disability income benefits taxed when the employer pays the premiums?

    If the employer pays premiums and does not include them in the employee's income, the disability benefits received are fully taxable to the employee.

  12. In a group DI plan, if the employer pays 60% of the premium and the employee pays 40% with after-tax dollars, how are benefits taxed?

    Benefits are taxed proportionally: 60% of the benefit (employer-paid share) is taxable, and 40% (employee after-tax share) is tax-free.

  13. What is a business overhead expense (BOE) disability policy and how are its benefits taxed?

    BOE reimburses a disabled business owner for fixed business expenses (rent, utilities, employee salaries) while disabled. Premiums are tax-deductible as a business expense, and benefits are taxable (but offset by deductible expenses).

  14. What is the purpose of a disability buy-sell policy?

    It funds a buy-sell agreement by providing money for the healthy owners (or business) to buy out a permanently disabled owner's interest. Premiums are not deductible, and benefits are received income-tax-free.

  15. What is "key person" disability insurance?

    Coverage owned by and payable to the business to offset losses from the disability of a key employee. Premiums are not deductible; benefits are received tax-free by the business.

  16. Distinguish an HMO from a PPO in managed care.

    HMO: requires a primary care physician (PCP) gatekeeper, restricts coverage to in-network providers, lower cost. PPO: no PCP required, allows out-of-network care at higher cost-sharing, more flexibility/higher premium.

  17. What is a coinsurance provision in a medical plan, and how does it relate to the out-of-pocket maximum?

    Coinsurance is the percentage of covered costs the insured pays after the deductible (e.g., 80/20 = plan pays 80%, insured 20%). The out-of-pocket maximum caps the insured's total annual cost-sharing, after which the plan pays 100%.

  18. What are the four "metal" tiers of ACA marketplace plans and their actuarial values?

    Bronze (~60%), Silver (~70%), Gold (~80%), Platinum (~90%). The actuarial value is the percentage of total covered costs the plan pays on average.

  19. What are the three eligibility requirements to contribute to a Health Savings Account (HSA)?

    (1) Be covered by a qualified High-Deductible Health Plan (HDHP), (2) have no other disqualifying coverage, and (3) not be enrolled in Medicare and not be claimed as a dependent on another's return.

  20. How are HSA contributions, growth, and qualified withdrawals taxed (the "triple tax advantage")?

    Contributions are tax-deductible (or pre-tax), earnings grow tax-deferred, and withdrawals for qualified medical expenses are tax-free.

Show the other 31 Health, Disability, and Long-Term Care Insurance flashcards

  1. What is the tax penalty for non-qualified HSA withdrawals, and when does it stop applying?

    Non-qualified withdrawals are taxed as ordinary income plus a 20% penalty. The 20% penalty no longer applies after age 65, death, or disability (though ordinary income tax still applies if not used for medical expenses).

  2. How does a Health Reimbursement Arrangement (HRA) differ from an HSA in ownership and funding?

    An HRA is employer-owned and employer-funded only (employees cannot contribute), and is generally not portable. An HSA is employee-owned, portable, and can be funded by both employee and employer.

  3. How does a Flexible Spending Account (FSA) differ from an HSA regarding the "use-it-or-lose-it" rule?

    FSA funds are generally forfeited at year-end (subject to a limited carryover or grace period) and are not portable. HSA funds roll over indefinitely and are owned by the employee.

  4. Under the ACA, what is guaranteed issue and what limits exist on premium rating?

    Insurers must offer coverage regardless of health status (guaranteed issue) and cannot use health/gender to set rates. Premiums may vary only by age (3:1 ratio max), geographic area, family size, and tobacco use (1.5:1 max).

  5. Under the ACA, until what age may dependent children remain on a parent's health plan?

    Until age 26, regardless of marital status, financial dependency, student status, or residence.

  6. What does the ACA prohibit regarding preexisting conditions and lifetime limits?

    It prohibits denial of coverage or exclusions for preexisting conditions, and bans lifetime and annual dollar limits on essential health benefits.

  7. What is a premium tax credit under the ACA?

    A refundable, advanceable subsidy that helps eligible individuals (based on household income relative to the federal poverty level) pay for marketplace coverage, generally pegged to the second-lowest-cost Silver plan.

  8. What is the maximum continuation period under COBRA for a covered employee who is terminated (non-gross-misconduct) or has reduced hours?

    18 months.

  9. Under COBRA, what is the maximum continuation period for the spouse/dependents due to a qualifying event like divorce, death of the employee, or Medicare entitlement?

    36 months.

  10. What size employers are subject to COBRA continuation requirements?

    Employers with 20 or more employees on more than 50% of typical business days in the prior calendar year (counting both full- and part-time).

  11. How much may a plan charge for COBRA continuation coverage?

    Up to 102% of the full premium cost (the full group cost plus a 2% administrative fee). During an 11-month disability extension, up to 150% may be charged.

  12. Under COBRA, how long can the 18-month period be extended if a qualified beneficiary is determined disabled by Social Security?

    An additional 11 months, for a total of 29 months.

  13. What are the six Activities of Daily Living (ADLs) used to trigger LTC benefits?

    Bathing, Continence, Dressing, Eating, Toileting, and Transferring (moving in/out of bed or chair).

  14. Under a tax-qualified LTC policy, what benefit trigger based on ADLs must be met?

    The insured must be unable to perform at least 2 of the 6 ADLs for at least 90 days, OR require substantial supervision due to severe cognitive impairment, as certified by a licensed health practitioner.

  15. What is the difference between a reimbursement (expense-incurred) and an indemnity (cash) LTC benefit model?

    Reimbursement pays actual covered expenses up to the daily/monthly maximum. Indemnity pays the full stated daily/monthly amount regardless of actual costs incurred, giving more flexibility.

  16. What is an inflation protection rider in an LTC policy, and name a common type.

    It increases the daily/monthly benefit over time to keep pace with rising care costs. A common type is 5% compound annual inflation (or simple inflation, or CPI-linked).

  17. What is the elimination period in an LTC policy?

    A deductible measured in days of care needed before benefits begin (e.g., 30, 60, 90 days); the insured pays for care during this period. Longer elimination periods lower premiums.

  18. What does the "pool of money" / maximum benefit concept mean in LTC policies?

    Total lifetime benefit = daily/monthly maximum x benefit period. The insured can draw from this pool until exhausted; using less than the daily max extends how long the pool lasts.

  19. How are benefits from a tax-qualified LTC contract taxed, and what is the per diem limit concept?

    Qualified LTC benefits are generally received income-tax-free. Reimbursement benefits are fully excludable; per diem/indemnity benefits are tax-free up to an IRS-indexed daily limit (excess over that limit is taxable unless actual costs are higher).

  20. How are premiums for a tax-qualified LTC policy treated for individual income tax purposes?

    Premiums count as deductible medical expenses (itemized), subject to age-based dollar limits and the AGI threshold for medical deductions.

  21. What is a hybrid/combination LTC product?

    A life insurance policy or annuity with an LTC rider that lets the owner accelerate the death benefit/account value to pay for LTC. If LTC is never needed, beneficiaries receive a death benefit, avoiding the "use-it-or-lose-it" concern of standalone LTC.

  22. Under what tax provision can a life insurance or annuity policy with a qualified LTC rider provide tax-free LTC benefits, and what about 1035 exchanges?

    The Pension Protection Act allows tax-free acceleration of life/annuity value for qualified LTC, and permits tax-free 1035 exchanges of life or annuity contracts into qualified LTC or hybrid contracts.

  23. What does Medicare Part A cover, and how is it typically funded?

    Part A is hospital insurance: inpatient hospital, skilled nursing facility (post-hospital), home health, and hospice. It is funded by payroll (FICA/Medicare) taxes and is generally premium-free for those with sufficient work history (40 quarters).

  24. What does Medicare Part B cover, and how is it funded?

    Part B is medical insurance: physician services, outpatient care, durable medical equipment, and preventive services. It is funded by monthly premiums (income-adjusted via IRMAA) and general revenue; it is optional.

  25. What is the Medicare Part A benefit period and the role of the deductible?

    A benefit period begins on hospital admission and ends after 60 consecutive days without inpatient/SNF care. A new Part A deductible applies for each new benefit period (a patient can have multiple per year).

  26. What is Medicare Part C (Medicare Advantage)?

    A private alternative to Original Medicare in which an approved insurer provides Part A and B benefits (usually with Part D and extra benefits), typically through HMO/PPO networks. Enrollees must keep paying their Part B premium.

  27. What does Medicare Part D provide, and what was the historical "donut hole"?

    Part D is prescription drug coverage offered through private plans. The "donut hole" was a coverage gap between initial coverage and catastrophic coverage where beneficiaries paid more out of pocket; recent law added an annual out-of-pocket cap.

  28. What is the Medicare Part B late enrollment penalty?

    A 10% premium surcharge for each full 12-month period the person was eligible but did not enroll (without qualifying creditable coverage); the penalty is permanent and added to the monthly premium for life.

  29. What is a Medicare Supplement (Medigap) policy designed to cover?

    It fills gaps in Original Medicare (Parts A and B) such as deductibles, coinsurance, and copayments. Medigap works only with Original Medicare, not with Medicare Advantage.

  30. What is the Medigap open enrollment period and its guaranteed-issue protection?

    A 6-month period beginning when the person is age 65+ AND enrolled in Part B. During this window, insurers must sell any offered Medigap policy on a guaranteed-issue basis without medical underwriting or preexisting-condition exclusions.

  31. Why are Medigap plans standardized by letter (e.g., Plan G, Plan N), and what is a key restriction for newer enrollees?

    Plans are standardized (lettered A-N) so benefits are identical across insurers, making them comparable. Newer Medigap plans (for those newly eligible on/after Jan 1, 2020, e.g., Plans C and F) may no longer cover the Part B deductible.

Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance FAQ

What is in the Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance syllabus?

Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance is split into 4 chapters: Disability Income Insurance, Medical Expense and Health Coverage, Long-Term Care Insurance and Medicare and Senior Health Planning. Together they contain 15 topics and 24 sub-topics.

How many chapters are in Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance?

4 chapters, containing 15 topics and 24 sub-topics. The largest chapter is Disability Income Insurance, with 4 topics.

Are there flashcards for Chartered Life Underwriter (CLU) Health, Disability, and Long-Term Care Insurance?

Yes — a 51-card Health, Disability, and Long-Term Care Insurance deck, printed in full in the flashcards section of this page and available in the Examius app with spaced repetition. The free plan covers one exam of your choice, including its flashcards; Examius Pro, a one-time purchase, unlocks every other exam and deck.