Advanced Uses of Life Insurance

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Understanding

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.


Additional Knowledge Expected of CFP Professionals
  • Explain advanced uses of insurance, such as:
    • Funding goals upon death
      • Bequests
      • Charitable giving
    • Preserving capital
    • Equalizing estate for survivors
    • Funding tax liability upon death
    • Funding business continuation or succession upon death of key person
    • Providing income stream
    • Maximizing defined benefit pension income
    • Funding for Retirement Compensation Arrangements (RCA) or Supplemental Executive Retirement Plans (SERP)
    • Diversifying assets
    • Maintaining privacy of assets
    • Guaranteeing future insurability
    • Acting as collateral against debt
  • Identify the purpose for which an insurance trust may be used. 
  • Identify that it may be possible to sell a life insurance policy to a third party, subject to jurisdictional legislation and regulation.
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