High 5 Risk Management, Insurance, and Employee Benefits Planning Flashcards
true or false?
loans under a non MEC are usually tax free
true
true or false?
partial withdrawals are received tax free up to the basis unless it is a MEC
true
is the cash value in a life insurance policy taxed as it builds up/grows?
no
cash value withdrawals on life insurance policies typically use ____ tax accounting
FIFO
MEC are subject to ____ basis recovery
LIFO
can you ever switch a contract from a MEC to a non MEC?
no
true or false?
if the corporation is paying life insurance premiums for the employee and the corporation is not the beneficiary then they can deduct the premium payments for tax purposes and the employee includes the premium payments in their gross income
true
true or false?
if interest only payments are selected under a death benefit under a life insurance policy, the payments will be taxable
true
if there is a named beneficiary life insurance insurance death benefits will avoid ____
probate
ownership under a life insurance policy includes ______
right to assign the policy
right to change beneficiary
right to change policy provisions
true or false?
if the decedent owns the life insurance policy and the proceeds are payable to the spouse, the proceeds will be included in the gross estate
true, but then the spouse can use the unlimited marital deduction
under a viatical agreement, the insured is expected to die within ___ months
24
for annuities purchased before August ____ the FIFO method of taxation is used
14, 1982
what is the objective of split dollar life insurance?
to merge the employee’s need for life insurance with the premium paying ability of the employer
____ is used when the employer owns the policy and is primarily responsible for paying life insurance premiums
endorsement
____ method is used when the employee is the owner of the policy and is responsible for life insurance premium payments
collateral assignment
who benefits from key employee life insurance?
the employer
who pays the premium under key employee life insurance?
the employer
who owns the policy under a key employee life insurance?
the employer
are premiums deductible to the employer under key employee life insurance?
no
who benefits from an executive bonus life insurance policy?
employee
who pays the premiums under an executive bonus life insurance policy?
employer
who is the policy owner under an executive bonus life insurance policy?
employee
true or false?
a secular trust qualifies as a substantial risk of forfeiture
false
true or false?
a rabbi trust qualifies as a substantial risk of forfeiture
true
are rabbi trust funds still subject to employer’s creditors?
yes
are secular trust funds still subject to employer’s creditors?
no
when does taxation occur under a rabbi trust?
when the funds are distributed
when are payments deductible for the employer under a secular trust and a rabbi trust?
secular = when contribution is made rabbi = when payments are distributed to employee
what is the maximum value of stock with respect to which ISOs may first become exercisable in any one year?
$100k
True or false?
ISOs are only granted to employees of the company
true
short term disability usually provides coverage for up to ___ years
2
short term DI policies are often limited to ___% of weekly wages
60%
the inability to engage in one’s own occupation
own occupation DI
true or false?
own occupation is the most expensive form of DI
true
under a ____ the insured cannot be working to claim benefits
modified own occupation
the inability to engage in any occupation
any occupation
the inability to engage in any reasonable occupation for which one might be suited by education, experience, or training or for which one could easily become qualified
modified any occupation
to receive social security disability benefits, the disability must have lasted for ___ months and be expected to last a total of ____ months or result in death
5 ; 12
if disability benefits are received from an employer provided DI policy and the employer paid all premiums, will the benefits be taxable to the employee?
yes
if a group disability policy premium is partially paid by the employer and partially paid by the employee, are the benefits received taxable?
yes, the employer share would be taxable
if disability benefits are received from a personally paid DI policy, will the benefits be taxable?
no
are business overhead expense insurance premiums deductible to the business?
yes
are business overhead expense benefits taxable to the business?
yes
true or false?
a transfer from a FSA to HSA counts against the annual contribution limit
false
what are the 6 daily activities of daily living?
bathing, eating, dressing, toileting, transferring, continence
Medicare covers only a maximum of ___ days of skilled nursing care and only the first ___ days are covered at 100%
100 ; 20
medicaid is designed to provide benefits for the ___ and ___
indigent and impoverished
true or false?
a qualified long term care insurance policy cannot pay for expenses reimbursable under Medicare
true
can long term care benefits be included in a cafeteria plan or FSA account?
no
this type of long term care insurance provides for a specific dollar amount of assets which would be protected if the client used up all of the long term care insurance benefit and had to apply for Medicaid
partnership long term care
true or false?
an HO-3 policy can include open perils for personal property
true, but you have to add the endorsement
HO -4 is a ____ insurance policy
renters
HO-6 is a ____ insurance policy
condo
HO-8 is a ____ insurance policy
historical
HO-3 and HO-5 give you the ___ coverage
broadest
a ___ policy provides open perils coverage for dwelling and personal property
HO-5
a ____ endorsement can be added to HO-3 to add open perils coverage to personal property
HO-15
Section 1 of HO policies include coverage for _____
property and loss of use
Section 2 of HO policies include coverage for ___
liability and medical
Coverage A is for the ___
dwelling
Coverage B is for ___
other structures
Coverage C is for ____
personal property
Coverage D is for ___
loss of use
Coverage D is usually equal to ___% of dwelling coverage
20%
Coverage C is usally equal to __% of dwelling coverage
50%
Coverage B is usally equal to __% of dwelling coverage
10%
Coverage A should be equal to ___% of replacement cost
100%
Coverage E is for ___
personal liability (bodily injury and property damage)
Coverage F is for ___
medical payments
HO-8 policies have ____ coverage for all coverages
basic
HO-2 policies have ___ coverage for all coverages
broad
HO-4 policies have ____ coverage for personal property
broad
do HO-4 policies have coverage A or B?
no
HO-4 policies have ___ coverage for loss of use
broad
HO-3 policies have __ coverage for the dwelling and other structures
open
HO-3 policies have ___ coverage for personal property unless there is an endorsement
broad
HO-3 policies have ___ coverage for loss of use
open
HO-5 policies have ___ coverage for all coverages
open
HO-6 policies have __ coverage for personal property and loss of use
broad
HO-6 policies have ___ coverage for dwellings
limited
HO-6 policies have __ coverage for other structures
none
are death benefits under key employee life insurance taxable?
no
can employers deduct the bonus paid to executives for executive bonus life insurance plans?
yes
