CPCU 553 Flashcards – Module 5
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[h] CPCU 553 – Module 5
[q] Personal Financial Planning
[a] A process in which individuals or families implement a comprehensive plan to achieve their goals and objectives.
[q] Basic financial goals for most individuals
[a] Goals include:
Protecting against loss of income or wealth.
Providing for basic living expenses.
[q] Robo-adviser
[a] A computer program that uses a set of rules to make financial recommendations to an individual. The recommendations are based on an individual’s age, risk tolerance, and income.
[q] Benefits of a robo-adviser
[a] Benefits include:
Lower fees.
Appeal to younger individuals.
Accessibility.
[q] Financial planning life cycle
[a] The process of adjusting an individual’s or family’s financial goals as their circumstances change
[q] Major financial planning focuses of an empty nester
[a] Major focuses include:
Retirement planning.
Long-term care insurance.
Estate planning.
[q] Financial planning techniques included in a comprehensive financial plan
[a] Techniques included:
Risk management planning.
Investment planning.
Tax planning.
Retirement planning.
Estate planning.
[q] Primary method of risk management planning
[a] Insurance
[q] Loss exposures typically not handled through private insurance
[a] Retirement loss exposures.
Unemployment loss exposures.
[q] Dollar cost averaging
[a] A strategy that involves investing the same dollar amount every period, regardless of the movement of the stock market.
[q] Will
[a] A legal document outlining specifics of property distribution upon someone’s death.
[q] Trust
[a] A legal document controlling property.
[q] Special needs trust
[a] A trust that allows an individual to receive benefits from an inheritance without losing government assistance.
[q] Types of social insurance
[a] Types include:
Social Security.
Medicare and Medicaid.
Unemployment insurance.
[q] Annuity
[a] A source of periodic income that the annuitant cannot outlive.
[q] Steps of the financial planning process
[a] Steps (in order):
1) Establishing and prioritizing goals.
2) Gathering information.
3) Analyzing the current situation.
4) Identifying and evaluating alternatives.
5) Developing a plan.
6) Implementing the plan.
7) Monitoring and revising the plan.
[q] Financial statements are created during this step of the financial planning process
[a] Gathering Information (Step 2).
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