Chapter 19: Employee Benefits

Question 1

General Feature/ Group Insurance

Answer 1

Insurer provides coverage for many people under one master contract

Question 2

Insurance that requires contract between employer and insurer and what do employees receive

Answer 2

group life, disability, health
employees receive certification of participation and explanation of benefits

Question 3

Experience rated premiums

Answer 3

large groups request insurance. If employer data has credibility, insurer has confidence in tailoring premium to particular group’s outcome

Question 4

Credibility

Answer 4

few deaths, disability and hospitalization in a year

Question 5

Good credibility means

Answer 5

lower premium in future or current year

Question 6

Group Life Insurance

Answer 6

death benefit for specific period based on average age of employees or set as flat amount

Question 7

settlement options

Answer 7

lump sum payments, lifetime income, limited periods

Question 8

Individuals should not solely rely on group benefits

Answer 8

1. may be inadequate to meet financial goals/needs
2. benefits unavailable
3. no savings involved

Question 9

Group Disability Income

Answer 9

short or long term, workers compensation not enough. Disabled by work accident or illness

Question 10

Short term disability

Answer 10

continue employees salary for 6 or fewer months, sick leave plans

Question 11

Long Term Disability

Answer 11

worker is permanently disabled for 5-10 or 65 years. Compensation based on tier basis

Question 12

Integrated LTD plans

Answer 12

social security benefits considered when determining disability insurance (offset, CPP or QPP)

Question 13

Exclusions LTD (3)

Answer 13

self inflicted injuries, commission of felony, loss arising from war

Question 14

Pension Plan

Answer 14

provides employee with retirement income, ends active employment

Question 15

Replacement ratio

Answer 15

retirement income divided by pre-retirement income, ideally 60-100%

Question 16

Contribution Plans

Answer 16

require covered employees to make payments toward their own retirement plan

Question 17

non-contribution plans

Answer 17

employer assumes full financial responsibilty

Question 18

qualified

Answer 18

requirements of section from IRC and employer each receive tax advantage

Question 19

not qualified

Answer 19

employee reports income as soon as employer makes payment in plan

Question 20

Defined Benefit Plan

Answer 20

Calculate pension benefits based on formula. etc employees financial contribution in years immediate prior to retirement. plan takes on risk and longevity

Question 21

Cash balanced plan

Answer 21

hybrid defined benefit plan. Inputs are percentage of employers annual salary while working,

Question 22

Defined Contribution Plan

Answer 22

requires employer to make specified input payments, no promise regarding output, you take on risk and longevity

Question 23

money purchase plan

Answer 23

employer deposit 6% of employees annual salary into the plan, contributions are invested and bear financial risk

Question 24

Qualifying a employee benefit plan (3)

Answer 24

Plan in writing
For exclusive benefit of employees
Expected to last indefinitely

Question 25

Common exclusion in group health

Answer 25

Intentional losses
Custodial care
Cosmetic surgery