CPCU556 review guide

CPCU 556 Personal Financial Planning Review Aid

Educational Objectives 1 Intro to Fin Planning

Describe personal financial planning goals and the personal financial planning cycle Explain how individuals and families use financial planning techniques to achieve personal

financial planning goals Summarize the types of personal insurance that can be used by individuals and families to

transfer risk Demonstrate how each of the steps in personal financial planning process guides individuals and

families in their personal financial planning decisions.

Educational Objectives 2 Life Insurance

1. Describe the financial impact of the premature death personal loss exposure on the following types of family structures

a. Singles w/o childrenb. Single-parent familiesc. Two-income familyd. Traditional familiese. Blended familiesf. Sandwiched families

2. Describe the needs approach and the human life value approach for determining the appropriate amount of life insurance

3. Describe the basic concepts underlying the major types of life insurance4. Describe the characteristics, types, and purpose of term life insurance5. Describe the characteristics, types, and purpose of whole (ordinary) life insurance6. Describe the characteristics and purpose of universal life insurance7. Describe the characteristics of variable universal life insurance8. Explain how life insurance can be used to enhance the value of a business and provide business

continuity9. Given an individual’s or a family’s financial information, risk tolerance, and premature death

exposures, apply the personal financial planning process to select an appropriate life insurance plan.

Educational Objectives 3 Annuities

1. Describe the parties to and fundamental purposes of an annuity2. Describe the characteristics of the major categories of annuities3. Describe the financial elements of a variable deferred annuity4. Compare annuities and life insurance5. Explain how an annuity is used to fund a structured settlement6. Given an individual’s or a family’s financial information, risk tolerance, and retirement funding

goals, apply the personal financial planning process to select an appropriate annuity

Donna M. Kesot, CPCU Page 1The Institutes Financial Planning©


Educational Objectives 4 Disability and Health Insurance Planning

1. Describe the financial impact of disability and other health-related personal loss exposures on individual and families.

2. Summarize the distinguishing characteristics of each of the following types of disability income insurance

a. Individual disability income insuranceb. Group disability income insurancec. Social Security disability income program

3. Describe the characteristics of the following non-governmental programs for providing healthcare benefits

a. Traditional health insurance plansb. Managed-care plansc. Consumer-directed health plans

4. Describe each of the following programs for providing health-care benefitsa. Original Medicareb. Medicare Advantagec. Medicare Supplemental Insuranced. Medicare Part D Prescription Drug Coveragee. Medicaid

5. Describe the considerations an individual should review when choosing a long-term care insurance policy, including typical benefits provided or excluded, coverage triggers, eligibility provisions, and other economic issues

Educational Objectives 5 Postsecondary Educational Funding

1. Describe the planning considerations for funding postsecondary education and how they relate to the annual funding estimate

2. Explain how to determine need-based financial aid for postsecondary education3. Describe the advantages and disadvantages of various types of postsecondary education funding

sources4. Given an individual’s or family’s financial information, risk tolerance, and postsecondary

education funding goals, apply the personal financial planning process to develop an appropriate postsecondary education funding plan.

Educational Objectives 6 Retirement Planning

1. Describe the financial impact of the retirement personal loss exposure on individuals and families

2. Describe the steps in the retirement planning process3. Explain how to determine annual savings needs for retirement4. Given an individual’s or a family’s financial information and retirement goals, apply the

retirement planning process to develop an appropriate paln



Educational Objectives 7 Retirement Funding

1. Describe (a) the evolution of retirement funding, (b) retirement funding categories, and (c) tax advantages available for funding retirement.

2. Explain how employer-sponsored retirement plans are categorized3. In terms of operation, eligibility, and advantages and disadvantages, compare these types of

employer-sponsored retirement plansa. Qualified defined benefit plansb. Qualified defined contribution plansc. Nonqualified plans

4. Compare the various types of individual retirement accounts (IRAs)5. Describe the advantages and disadvantages of a nonqualified annuity as a retirement funding

vehicle6. Describe the following with regard to the US Social Security program

a. The basic characteristics of OASDHIb. Covered occupationsc. The eligibility requirements for insured statusd. The types of benefits provided

7. Describe the retirement income choices for an individual or a family8. Given an individual’s or a family’s financial information and retirement goals, recommend an

appropriate retirement savings and income strategy

Educational Objectives 8 Estate Planning

1. Describe the goals of estate planning and the parties involved in it2. Describe the steps in the estate planning process3. Recommend techniques an individual or a family can use to minimize federal gift and estate

taxes4. Describe the benefits of using wills, trusts, and life insurance as estate planning tools5. Given an individual’s or a family’s financial information and estate planning goals, recommend

an appropriate estate plan

Educational Objectives 9 Investment Basics

Describe basic investment risk and return concepts Describe types of investment risk Describe the types of investment strategies Describe the characteristics of various types of investments Given an individual’s or a family’s savings goals and tolerance for various investments risks,

recommend an appropriate investment strategy



Educational Objectives 10 Income Tax Planning

Describe basic concepts that apply to federal income tax for individuals Describe the income taxation of life insurance and annuities Describe the income tax concepts that apply to postsecondary education funding Describe the income tax concepts that apply to retirement funding Describe the income tax concepts that apply to the taxation of transferred property Given information on a families retirement plan and its current and future tax brackets,

develop a tax minimization strategy


Economy & Finance

CPCU556 review guide